00:00this is a log scale logarithmic scales
00:04exist because certain Trends exponential
00:06Trends are growing so quickly that
00:09they're tough to comprehend on linear
00:11axes and you've probably seen a lot of
00:14these lately exponential compute
00:16exponential connectivity exponential
00:19energy exponential research exponential
00:22genomics exponential AI models even
00:26exponential space exploration
00:29but can organizations also be
00:36there are companies with a handful of
00:38Engineers that outperform others with
00:40hundreds Instagram for example had 13
00:43employees when it was sold for a billion
00:45dollars and that was in 2012. today we
00:49have two very special guests join us to
00:51chat about how organizations can indeed
00:53turn exponential those two guests are
00:55Peter D Mendes and Saleem Ismail
00:58co-authors of exponential organizations
01:00and coming very soon exponential
01:03organizations 2.0 so they actually wrote
01:05the first book in 2014 but felt the need
01:08to come back with round two because of
01:10just how much technology had changed in
01:12a mere decade Peter and Saleem are also
01:15serial entrepreneurs both well known for
01:17their involvement in xprize and
01:19Singularity University among many other
01:22companies now this topic is especially
01:24timely given that so many companies are
01:26grappling with the macro downturn
01:28potential layoffs and restructuring
01:30trying to keep up with all the latest
01:32tech runs and all while still
01:34maintaining a growth trajectory and it
01:37turns out that this may be the perfect
01:38window to rethink how your company runs
01:40as several technology Trends intersect
01:42and fundamentally change the way that
01:45companies are built and change is only
01:47accelerating so today you'll hear
01:49stories from two sides of the disruption
01:51coin Kodak and Instagram blackberry and
01:55apple and a lot more
01:57so what are we waiting for let's Dive In
02:00as a reminder the content here is for
02:02informational purposes only should not
02:05be taken as legal business tax or
02:07investment advice or be used to evaluate
02:09any investment or security and is not
02:11directed at any investors or potential
02:12investors in any a16z fund please note
02:15that a16z and its Affiliates may also
02:18maintain investments in the companies
02:20discussed in this podcast
02:21for more details including a link to our
02:23investments please see a16c.com
02:36I think the best place that we can start
02:38is maybe you guys could just start by
02:41explaining what an exponential
02:42organization is and maybe what aspects
02:45of the organization are exponential
02:47because I assume we're not talking like
02:49exponential headcount exponential
02:50Capital raised how do you think about
02:53sure so the definition we have for an
02:56EXO or exponential organization as we
02:58call it is that it's delivering 10x
03:00better faster cheaper than its non-exo
03:04peers the great example is Ted which is
03:07just a nice conference a thousand people
03:09a year Chris Anderson takes it over he
03:11establishes a massive purpose ideas
03:13worth spreading then he puts all the TED
03:16Talks on YouTube leveraging rich media
03:18then he allows anybody to go create a
03:21tedx event leveraging community and boom
03:23he has a global media brand you know
03:25Steph I think we're living in a very
03:26different day and age uh you know I'd be
03:28an entrepreneur now for
03:3035 40 years and on my 25th or 26th
03:34company at the end of the day it's very
03:36different right now I mean the ability
03:37to go from an idea to a billion dollar
03:40startup in record time with a really
03:43small number of individuals there's
03:45something different and it really is the
03:48digitization of every aspect both of us
03:51were involved in the starting of
03:52Singularity University and started
03:54studying all of these companies and why
03:56was Uber Airbnb different elements of of
04:00Google and Tesla what was going on that
04:03was different and there really are
04:06unique attributes that make a company
04:09capable of scaling massively at the same
04:13time you're not scaling headcount right
04:15and I mean you mentioned several of
04:16these companies and I'd say those were
04:18companies from maybe a decade or in some
04:20cases even two decades ago but here we
04:22are in 2023 and both of you felt the
04:25need to come back and say you know what
04:27we want to discuss exponential
04:28organizations 2.0 we we think there's
04:31something new here right in 2023 so
04:33could you maybe touch on what you think
04:35maybe is fundamentally new today
04:37everything everything right yeah I mean
04:41it's interesting you can realize that
04:43the technologies that were only
04:45available to largest corporations that
04:47required tens of millions of dollars to
04:49get going are now completely demonetized
04:52and democratized I mean obviously unless
04:54you're hiding under a rock It's All
04:56About generative AI right now which is a
04:58tool that's spawning not thousands maybe
05:01tens of thousands of new startups
05:04um you know individual single person
05:05startups out of no place but then it's
05:07you know massive compute it's 5G
05:11capabilities it is access to not you
05:15know a few thousand individuals but the
05:18ability to go Global instantly and touch
05:20the lives of tens of millions hundreds
05:22of millions of people all these things
05:24are just accelerating when we were
05:25building the singularity University uh
05:28we had this amazing experience with the
05:29dean of one of the top Business Schools
05:31in the world came to visit
05:33and after trying to understand the model
05:35for about an hour he goes you know how
05:37many people are you and we look around
05:39the table and we're like well there's
05:40the five of us and you can see his mind
05:42break like literally he left the
05:45um uh five minutes later I kid you not
05:47he was like can I play Frisbee outside
05:48and that was it he was gone and I was
05:51like what happened there
05:53um and I and it wasn't like we were
05:55doing anything special we were using
05:57Google docs for everything you know one
05:58person was wearing four hats website
06:00developer and this and that just a
06:02normal startup stuff and I brought him
06:04back and I tried to query this and he
06:06goes you know my personal staff at my
06:08university is 12 people how are you
06:10building a university with five people
06:12and and I realized something
06:13fundamentally changed between the way we
06:16used to build companies and The Way We
06:18Were building companies going forward we
06:20have now a dozen technologies that are
06:22accelerating all of them individually
06:24and where they intersect that adds a
06:27whole other multiplier to the equation
06:28and so we went back it when we we first
06:30wrote the book and put the model
06:31together for what we call an exponential
06:33organization it was kind of a hypothesis
06:36we're seeing this company do this we're
06:37just doing this now we have 10 years of
06:39data case studies etc etc yeah I love
06:42that example because sometimes it really
06:43is like brain breaking when you're like
06:45this is a reality that I just didn't
06:47know existed and we saw little inklings
06:50of this you know Instagram's a great
06:51example where we saw I think when they
06:53sold there was 13 employees right people
06:56always follow that right but we're
06:58seeing that more and more and more these
07:00tiny teams with outsized returns or
07:03outsize impact but I guess the Uber
07:06example is also interesting because it
07:09maybe is obvious Uber is an exponential
07:10company the taxi medallions are not
07:13there you guys even use the term linear
07:16organization yes right how do you
07:18differentiate when it's maybe more gray
07:20maybe it's somewhere in between
07:23well I think what we found is there's a
07:26set of techniques and if you're using uh
07:28more than about half then you're clearly
07:30over that line and you're scaling very
07:33very fast and the key is that you can
07:35keep a very small resource footprint and
07:37use a set of externalities to scale very
07:39quickly what we came across over the
07:42number of years of studying these is
07:44there's a really important economic
07:45driver right so when you're building a
07:48business to worry about demand and
07:50supply and very specifically the cost to
07:52demand and the cost of Supply right
07:54hopefully on the right side of that
07:55equation when the internet came along it
07:57allowed us to drop the cost of demand
07:59exponentially online marketing referral
08:01marketing every one of your portfolio
08:03companies is trying for the viral Loop
08:05in which case customer acquisition costs
08:08go to zero near zero and for the first
08:10time in business history you could
08:12acquire customers at very low cost right
08:14amazing what we find with exponential
08:16organizations they found a way of
08:18dropping the cost of Supply
08:20exponentially right so you think about
08:22Airbnb the cost of adding a room to
08:25their inventories near zero if you're
08:27Hyatt you have to build a hotel same
08:29with Uber and same with taxis right same
08:31with Waze so there's now this whole
08:33category of companies that are building
08:36with almost zero cost of supply
08:39and if you take out the cost of Supply
08:41you take out the denominator market cap
08:44right and so therefore now you have this
08:46incredible environment that we've never
08:48seen in the history of business where
08:49you can acquire customers at low cost
08:51and you can supply those customers at
08:53low cost and that's just a magical thing
08:55to be able to do and that's the economic
08:57thesis and basis for what we call these
08:59exos the challenge is if you're a large
09:01established company trying to retrofit
09:04your organization to become an
09:05exponential organization is almost
09:07impossible and there's lots of reasons
09:09for it right you're basically fighting
09:10everything you've been doing for the
09:12last 5 10 20 years and the only way to
09:15do it is to rebuild an organization
09:17outside of your organization sort of on
09:19the edge the difficulty is we're going
09:21to see such massive disruption in this
09:24decade right so if you're a large
09:27organization with the layers of
09:31um and a massive lead Keel of of assets
09:36and and and resources that you can't
09:39offload during ups and downs uh you're
09:42likely not to be around by the end of
09:45absolutely it's it's real it's a real
09:48disruption you know the um the analogy I
09:51use Steph is you know 65 million years
09:53ago an asteroid hit the earth a massive
09:5610 kilometer size asteroid and it
09:58changed the environment so rapidly that
10:00the slow lumbering dinosaurs all died
10:03they went extinct because they couldn't
10:05adapt to the rapid change and it was the
10:07furry little mammals our ancestors that
10:11survived they were able to be agile
10:13enough to change with the environment
10:14and become the dominant
10:16um uh Kingdom if you would and it's the
10:19same thing going on today the asteroid
10:22that's striking the business world the
10:24entrepreneurial world or these
10:25exponential Technologies they're
10:27changing the game so rapidly that large
10:30corporations are sort of deers in the
10:32headlights and and they're not going to
10:34stick around and it's the
10:35entrepreneurial companies that are the
10:37ones that are rapidly iterating of one
10:40of my summer interns is you know he
10:43started and he's been working on three
10:45star startups and generative AI on his
10:47own it's incredible it's insane I mean
10:50we interviewed someone who I yeah he's
10:52done maybe six projects in the last few
10:53months all revenue generating all doing
10:56very very well and so we are seeing this
10:58phase of the truly independent
11:00entrepreneur but also tacking onto your
11:03dinosaur analogy something even more
11:06recent I saw this this infographic that
11:09basically showed the largest companies
11:13the top 10 or top 20 none of them are in
11:16the top 20 today and maybe to some
11:18people that's not surprising but these
11:20are the same companies that people back
11:22you know 30 years ago were saying
11:24they're too big to fail these companies
11:27have this huge moat all the talent all
11:29the capital and you see the same
11:32the same story being applied to some of
11:35the companies today but to your point
11:37we're seeing massive shifts in the
11:40market it sounds like you think that the
11:42incumbents can't transform or it's
11:44incredibly hard to transform into an
11:47exponential organization I mean case in
11:52bases everything they're doing now on
11:55open AI right open AI is 130 person
11:58company why didn't Microsoft do this you
12:01know at the end of the day it was Google
12:03buying YouTube and shutting down Google
12:07right I mean I think in that case was
12:09more the lawyers that were causing the
12:11issues but that's a different story but
12:13it's going to be that the larger
12:14corporations are going to be surviving
12:18um Innovation versus creating it inside
12:20in-house yeah you know this this goes to
12:23when a big company tries to do anything
12:25disruptive they get an immune system
12:27response from the rest of the company
12:28and they get attacked and what we found
12:30is three possibilities for a big company
12:33either they spin off that that new coat
12:36into a completely separate entity like
12:38Nestle spinning off Nespresso and leave
12:40it alone is so very important very
12:42important right the second is buy them
12:44like Facebook bought Instagram and
12:46WhatsApp Etc and then they couldn't have
12:48the discipline to leave it alone and and
12:50they got into a mess there and the third
12:52option is to turn into a platform
12:55and you just look back on the internet
12:56Yahoo Blackberry Nokia all failed to
12:59become platforms right Google Apple
13:01Facebook Amazon all successfully became
13:03platforms and that business model
13:06basically carries you through because
13:07now you wire yourself into the
13:09infrastructure and essentially the
13:11future of an exponential organization
13:12when it feels big enough is to basically
13:14be a platform and be a coral reef and
13:16have other things built on top of you
13:18which is where they're all trying to get
13:20to yeah one of the things Jeff that I I
13:22point out when I'm in in the boardroom
13:24of large companies or speaking to a
13:26group of CEOs is you know we're living
13:29in a time of such rapid accelerating
13:34we're going to be seeing these
13:35disruptive breakthroughs all the time
13:37and you've got to be incorporating them
13:40you've got to be experimenting the
13:42challenge is that the day before
13:44something is really a breakthrough it's
13:47if it wasn't a crazy idea it wouldn't be
13:49a breakthrough it'd be an expected
13:51incremental Improvement so I turn and
13:53say to these these individuals where's
13:55your crazy idea department where are you
13:57trying crazy ideas embracing them trying
14:00them and allowing them to sort of you
14:02know flourish and fail and and if you're
14:06not then you're stuck in incrementalism
14:08and if that's the case you're moving
14:10backwards and you're not going to be
14:11around 10 years from now yeah you're in
14:13a protective phase instead of innovative
14:16one Peter uses the asteroid uh hitting
14:18and the big dinosaurs I use that for
14:21different slightly different framing
14:23where we have all these Technologies
14:24converging and I say that we have 20
14:26major Gutenberg moments hitting us at
14:28the same time right just solar energy
14:30changes the world chat jpt completely
14:33changes the world blockchain completely
14:34changes the world and we've added up to
14:36roughly about 20 of them it took us a
14:38hundred years just to absorb the
14:41right so now we have 20 of these things
14:43hey I guess how are we going to absorb
14:45that in society and big companies I
14:47think have a very very difficult time uh
14:49dealing with this to support Peter's
14:53um there's the reason for big companies
14:55as an old economic Paradigm called
14:57kosa's law okay uh this fellow in the
15:001930s wrote a nine page paper for which
15:02he won the Nobel prize in economics
15:04saying that big companies exist because
15:06transaction costs are lower on the
15:08inside than the outside and you can get
15:11and that's essentially the rationale the
15:14thesis behind the companies well today
15:15neither of those true two are true so in
15:18the book we actually declare kosa's law
15:20which has been uh very touted for a
15:23hundred years essentially gone because
15:25the the pay the need to control a big
15:28company makes it too slow to navigate
15:30all these massive changes that are
15:32happening and B the transaction costs
15:34are actually cheaper on the outside than
15:35they are on the inside today with all
15:37the web services available and and you
15:39don't need a big company and so we think
15:41small companies offering powerful
15:43services and then scaling to become
15:45platforms is going to be the default
15:46modality for business building in the
15:49yeah well let's let's jump into how
15:52companies either start as or transition
15:54to the exos so I mean if you are this
15:58big company this incumbent and you're
16:00listening to this I feel like even if it
16:02sounds like it's impossible they're
16:04gonna try right they know that they need
16:05to innovate in this new environment the
16:08way we came up with this was in 2012 to
16:112014 we analyzed the 200 fastest growing
16:14unicorns in the world and said how are
16:16they doing this how is Uber scaling so
16:17faster Airbnb or Ted or others we found
16:20that all of these organizations had what
16:23we call an MTP or a massive
16:24transformative purpose and Google
16:27organize the world's information Uber
16:29everybody's private driver and it was
16:31this tagline of what fundamental problem
16:33are you trying to solve what purpose are
16:35you there for right it goes to the Simon
16:38sinek question of why do you exist Let
16:40Me Go a bit deeper on this because MTP
16:42which is chords the first step if you're
16:44a large corporation you're going to
16:46adapt an MTP if you don't have one if
16:48you're an entrepreneur where when you're
16:50starting out it's that massive
16:52transformative purpose
16:54that you need to begin with versus a
16:57cool technology and I think the the
16:59thing for folks to realize is doing
17:01anything big and bold in the world is
17:02hard and it's going to take time and
17:05unless you've got this emotional energy
17:07and an MTP is driven by an emotional
17:10energy it's like the awe of wanting to
17:12go and make this beautiful thing that
17:14you envision to happen or it's the pain
17:16of seeing something that exists that
17:18needs to be you know disrupted or
17:20changed like for me right now I one of
17:23my mtps is decimating and Reinventing
17:25the healthcare industry I think it's
17:27pathetic how expensive it is but it
17:29comes with this this emotional energy of
17:32Desiring something extraordinary and you
17:35know classically for SpaceX it's making
17:38humanity multi-planetary and going to
17:40Mars and when you've got a powerful MTP
17:43it brings people to you it brings the
17:47smartest Talent on the planet and still
17:49until until we have AGI having smart
17:51humans on your team is really important
17:53it brings those people to you in a way
17:56that bonds you and you're driven by
17:58something greater than just making money
18:01making money is fine but it's got to be
18:02secondary to a huge service to humanity
18:05in some fashion and we found that when
18:07we analyzed these 200 unicorns all of
18:10them without exception all of them had
18:12this tagline huge problem that they were
18:15trying to solve right and became an
18:17attractor for talent it became it
18:19generated a community around that
18:21startup it attracted other developers
18:23that wanted to solve the similar problem
18:25and when you're growing very very fast
18:28it provides Focus how can you tell a
18:31good MTP relative to a bad because I can
18:34imagine a company with maybe some very
18:36inspiring MTP but at the same time if
18:39it's not grounded in reality if it's
18:41something that people don't resonate
18:43with how can you tell you know I can
18:45imagine many companies have quote
18:47unquote inspiring taglines well age
18:49gotta be massive Elon like let's make
18:52Humanity multi-planetary B it's got to
18:54be transformative it has to be
18:56fundamentally different from what we
18:58were doing before and and finally it has
19:00to be very Purpose Driven it has to be
19:02going after some problem that really out
19:04is out there to solve and unfortunately
19:06we see historically a lot of the
19:08traditional Blue Chip companies like you
19:10know to provide outsized shareholder
19:13returns I'm sorry that's just not going
19:15to cut it today a lot of the smartest
19:18um you know gen whatever you want are
19:20looking for purpose in life uh not to
19:23give a better shareholder return at the
19:24end of the day to the investors both can
19:27come together let's give the viewers a
19:28couple of quick heuristics here one uh
19:30if you had a billion dollars what
19:32problem would you go solve with that
19:33billion dollars to make the world a
19:35better place right yeah B
19:37um what would get you what problem would
19:38get you up at 6am every day for five
19:41years to solve that would get you so
19:43excited and if if you're if the problem
19:45you're going after doesn't hit those
19:47criteria then it's not your MTP right so
19:49iterate on it figure out what deeply are
19:52you here to do on the world what problem
19:55are you there to solve and that's the
19:56one to go after and out of that MTP is
19:59also going to come the moon shots right
20:00your moonshot is going to drive a lot of
20:03what you're doing and these Moon shots
20:04are you know going 10 times bigger in
20:07the world a thousand percent where the
20:10rest of the world is going 10 and it's
20:12these combinations of an MTP and a moon
20:14shot together that really uh you know
20:16wake up uh the entrepreneurs in the
20:19morning keep them going and inside a
20:21large organization that's where the
20:23problem occurs that you know these crazy
20:25mtps and these Moon shots you know is
20:28the CEO is the leadership team is the
20:30board prepared to stand up and say this
20:33is what we're doing this is why we're
20:35doing it yeah I think Netflix is you
20:37know the canonical example right where
20:39they disrupted themselves when we wrote
20:41the first book about around 2015 Paul
20:43Pullman who was CEO of Unilever asked me
20:45to come and talk to his top 200
20:47Executives and after that session he
20:49ordered every brand in Unilever to take
20:51on an MTP and every brand had to be
20:54Purpose Driven from then on four years
20:56later the five most profitable Brands
20:57were the ones that were adopting it the
20:59most can you share an example of one of
21:01those brands in their MTP they took
21:03their soap Brands and made them all
21:05completely sustainable and using only
21:07recycled products all their packaging
21:10was created with recycled plastic for
21:13example and so they were able to kind of
21:15relive the brand promise of solving for
21:18the planet and not just selling more
21:26've companies what do they do next
21:28they've got this great transformative
21:30purpose it's potentially hopefully
21:32attracting Talent who also believe in
21:35that and then what comes next so we we
21:37found that the MTP was the most
21:39important that we found after studying
21:41these 200 fast growing companies there
21:43were five externalities they were all
21:45using one or more of and then five
21:47internal mechanisms that they were all
21:49using in order to manage the control
21:51framework and drive culture the five
21:53externalities map to the acronym scale
21:55okay and the first one is staff on
21:57demand like uber as much as possible
21:59have a Workforce that's external so that
22:03you have high flexibility because that's
22:06a very important heuristic and can we
22:08smash that with covid-19 I mean
22:10listening if you have a huge Workforce
22:12that is on your salary base and you
22:15don't have any agility to flex up and
22:17flex down you can be bankrupted by an
22:21externality like a pandemic or like
22:23whatever it might be yeah so staff on
22:25demand gives you that flexibility
22:27ability and by the way you know uh the
22:31train you know what staff you need uh is
22:34going to be constantly changing faster
22:36and faster we're in this period of
22:38massive rapid change yeah so you have
22:40companies like gig walk and taskrabbit
22:43and Fiverr and all of these that are now
22:44offering platforms for folks to be
22:47available to companies right so that's
22:50number one the second is community and
22:52crowd that's the C so Ted uses Community
22:55X prize is famous for taking incentive
22:57prizes and incentive prizes turn crowd
23:00into Community just to Define this right
23:02crowd is everybody it's the world that
23:04you can reach when you have an article
23:06or a Blog that goes out to a large group
23:09of people that's the crowd that's being
23:12touched and then how you convert that
23:14crowd inwards to you where you have a
23:17two-way Communications with them and
23:18they become part of your community for
23:21xprize the crowd was everybody who heard
23:23about next prize a community or those
23:25people who are helping us design prizes
23:27or are building teams to compete for
23:29prizes and this these crowd and
23:32Community are not late they're not paid
23:34right they're not on salary but they can
23:37provide a massive amount of benefit to
23:40you helping you shape your products and
23:42your services giving you feedback
23:44helping to promote your products and
23:46services the more you can tap that the
23:49more exponential you can be as an
23:51organization yeah and they're all
23:52feeding into the MTP like Wikipedia with
23:54all this you know millions of editors
23:56that helped watch everything so that's a
23:59great example so second one is community
24:01and crowd the third one is algorithm Ai
24:03and algorithms and all of these
24:05externalities allow you to keep a small
24:07footprint and use these to scale fast
24:09outside and upward yeah especially in a
24:12world in a world of massive amount of
24:14data and your crowd your community can
24:16be feeding you all of this data right
24:18and we'll talk about experimentation
24:20later but you know Ai and algorithms are
24:23the means by which you manage that crowd
24:26and Community gather whether the data
24:28makes sense of the data the fourth one
24:29is the L which is leveraged assets so
24:31this is Airbnb leveraging other people's
24:33bedrooms ways piggybacking on other
24:35people's GPS devices right Bitcoin
24:38leveraging other people's compute power
24:39to do the nodes Apple tapping into
24:41Foxconn as a manufacturing partner and
24:44not owning the manufacturing capability
24:45itself but Outsourcing it essentially
24:48leveraging assets that you don't own
24:50becomes the cloud computing was probably
24:53the most uh relevant here and the kind
24:55of we consider the birth of an EXO when
24:58Amazon web services launch because now
25:00you can take Computing off the balance
25:02sheet and make it a truly variable cost
25:03right and so now everything becomes
25:05scalable which becomes really powerful
25:07so that's the L and the final one is
25:10engagement and and this is where Peter
25:12talked about incentive prizes for Action
25:13prize gamification in the community all
25:16the digital marketing and digital
25:18connection you have with your user base
25:20and now with crypto economics and token
25:22economics all of these nft projects are
25:25basically exos they have a big purpose
25:27they they use crypto economics and they
25:30reach multi-billion dollar ecosystems
25:32incredibly fast just by incentivizing
25:34them in the right ways we're entering
25:36into massive uh attention economy right
25:40we have the more and more information
25:42we're generating on the planet uh the
25:44more and more we need to be able to get
25:46people's attention yeah Gary vaynerchuk
25:48is running his vcon conference right now
25:51and the best description I've heard
25:53about him is he day trades attention
25:55right you're like it's just amazing that
25:58people can navigate that world those are
26:00externalities that most of these exos
26:03use one or more of to it allows them to
26:05keep a very small resource footprint and
26:08very quickly scale outwards and then we
26:10identify five internal mechanisms that
26:12map to the acronym ideas the first of
26:15those is interfaces Apple's interface to
26:17its App Store developers or Uber to its
26:19drivers it's actually a form of Ip
26:21allowing you to automate the interaction
26:24so Google's AdSense whether you're the
26:26demand inside our supply side right I
26:29mean you could automate both sides you
26:30can scale very very fast all platform
26:32businesses are basically fat protocols
26:35in the web 3 world are essentially
26:36interfaces apis is the classic example
26:39yeah apis how do you allow individuals
26:41to build businesses on top of you in a
26:44way that utilize your services without
26:46humans in the loop I mean let's get
26:48those pesky carbon life forms out of the
26:50way so to speak well I was just gonna
26:52say it may sound silly to some folks but
26:55you can imagine the human equivalent
26:56right so for Uber it was literally
26:58calling up someone who then would
27:00dispatch a taxi right or you know even
27:02Google Maps way back in the day like
27:04before we had digital Maps you might
27:07even call someone or look up you know a
27:09physical map and say Hey how do I get
27:10here staff one of my favorite examples
27:12is uh I'm a pilot and I applied a few
27:15different airplanes dear friend of mine
27:17Richard Kane built a company called
27:18verajet and uses the vision jet and the
27:21traditional aircraft chartering business
27:24is literally white boards and sticky
27:26notes where I'm taking this pilot and
27:28this airplane here the fuel is here and
27:31it's like pathetic so Richard who's a
27:33brilliant computer scientist built a
27:35platform on Vera jet where the
27:38everything is optimized uh he'll go to
27:41Quantum compute later for for doing even
27:44faster but where the airplanes the
27:46pilots where the person is being picked
27:48up and dropped off and how they're being
27:50all of it is fully digitized and he used
27:52the vision jet the sf50 because it is
27:56massively connected when the airplane
27:58lands it sends all of its data of its
28:03systems check back to the AI so you get
28:06humans completely out of the loop and
28:08that's beautiful it's efficiency it's
28:11safety and its speed God help us white
28:13boards and Post-it notes should be
28:20so so the first one is interfaces and we
28:23actually think it's one of the most
28:24under recognized aspects of business in
28:26the world today we think books will be
28:28written on the the richness of what's
28:31needed there the second is dashboards uh
28:34and there are two types of dashboard
28:35versus the external metrics that you
28:37track your business on in real time and
28:39then internally the use of okrs to
28:41manage team and performance so we worked
28:43out that only three and a half percent
28:45of big companies around the world use
28:46all cares so there's a long way to go to
28:49do better team and Performance
28:51Management going forward using
28:52dashboards to track everything becomes
28:54absolutely critical if you're an EXO and
28:57and if something's going right or
28:59something's going wrong you want to know
29:01very fast right and so having real-time
29:03feedback uh in fact what we're finding
29:05there's a whole section we have in the
29:06book called depth to The Five-Year Plan
29:08because for big companies by the time
29:11they finish their five year planets out
29:12of date and what we're finding is big
29:14companies now are operating on an MTP
29:16and a one-year operating plan with a
29:19dashboard and using that to steer the
29:21company NeXT is experimentation and for
29:24me this is one of the most critical uh
29:27and important and entrepreneurs who are
29:28building any kind of companies today
29:30especially if they're a part of the
29:31Anderson Horowitz Community know this
29:33right you're you're beginning from the
29:35beginning as an experimental based
29:37company it used to be the tyranny of
29:40confidence right that you'd have an
29:42expert and someone who you would hire a
29:44consultant to tell you what it should
29:46look like the marketing and such and
29:49today I you know I don't care about
29:51human opinion show me the data right run
29:53the experiments iterate on everything
29:55from taglines to colors to font sizes
29:58and run the experiments and build from
30:00the beginning we talk about this you
30:02know Jeff Holden was a friend of mine he
30:04was the chief product officer at Uber
30:06and at Amazon and talked about this
30:10experimentation engine that they built
30:12called Morpheus back then and teaching
30:15your team how to run experiments if
30:17you're starting a company now you need
30:19to be getting from the Inception as an
30:21experimentally minded organization when
30:24someone raises an idea it needs to be
30:27okay here's the experiment we're going
30:28to run not this is what we're doing the
30:31problem is large corporations are
30:34terrible they have a hard time
30:36navigating it yeah if you run an
30:38experiment in your fail your career is
30:40over over right so your does every
30:42disincentive to do that and we think of
30:44experimentation as having kind of two
30:46pieces one is like The Lean Startup
30:48constantly testing assumptions and
30:49running them and also inculcating a
30:52culture of taking risk so that the
30:54organization is constantly learning we
30:57saw for example in Amazon that every
30:59team is measured on how many experiments
31:01they ran this quarter how many succeeded
31:03how many failed if you're not running
31:05enough experiments and not enough or
31:07failing you actually your bonus gets
31:08dinged right so they were constantly
31:10learning on a Non-Stop basis what
31:12pricing models what customer what return
31:14policies work or don't work etc and
31:17that's never going to keep that's always
31:18going to keep them ahead of the game I
31:20mean it's like you both said it's a
31:22cultural it is also an operational idea
31:27I think most people listening have
31:28probably been in different companies
31:30some which have an experimental nature
31:33to them where to your point it's like we
31:35are open to other ideas and in fact we
31:37want to be wrong we want you to bring a
31:39new idea that proves our assumptions you
31:43know that Peter tells the story of
31:44astroteller at X where you go show me
31:46the assumptions you've made and pick the
31:49ones that were that you think will have
31:50the product fail and let's do those
31:53right and let's learn whether it works
31:55or not and then Cascade down the list
31:56and I think it's just a great way of
31:58thinking on a Non-Stop basis so that's
32:00experimentation then we have a which is
32:02autonomy and this means decentralized
32:05orc structures decentralized decision
32:07making leading all the way to Dao's
32:09right eventually where you
32:11programmatically have everything
32:12completely decentralized because you in
32:15a highly flexible volatile world you not
32:17want as much decision making done at the
32:19edges as possible and empower the
32:21individuals and employees like valve
32:24software in Seattle that has no CEO or
32:26reporting lines job descriptions
32:27management meetings of any kind they're
32:29like a beehive right and so more and
32:31more companies we think will be taking
32:33on this attribute this is again very
32:35hard to implement in Legacy
32:37organizations are impossible I mean talk
32:40about like okay you don't report to
32:42anybody anymore here's your budget
32:43autonomy requires having a really clear
32:46massive transformative purpose in an
32:48organization so everybody knows why they
32:51exist and why they're doing something
32:52and it requires having dashboards if
32:55you've got an MTP as your North Star and
32:57you have a dashboard measuring how
32:59you're moving in that direction then you
33:02and you trust your employees and they're
33:04brilliant and they care about this let
33:06them go and let them do their work
33:08really hard to do in a large
33:09organization I mean you guys are both
33:11speaking my language I've worked
33:12remotely for almost a decade now and I I
33:15completely believe in this idea but
33:17you're also noticing right now through
33:19this downturn many companies are laying
33:22a lot of people off they're kind of
33:24removing that manager layer and so just
33:26any thoughts in this particular point in
33:28time as we speak to this idea of
33:30autonomy setting organizations up for
33:33Success if you have proper dashboards
33:35and you have motivated people that
33:37believe in a big purpose like an MTP you
33:40essentially can just let them do their
33:41thing okay I'll give you the most
33:44extreme example we ever came across from
33:46this is a Chinese company called hire
33:47they're a appliance manufacturer they
33:50make 55 million fridges and ovens a year
33:52there were eighty thousand people in a
33:54classic pyramid structure Commander
33:56control top down Etc CEO one day wakes
33:59up and goes can't meet my corporate
34:01goals using the structure blows it up it
34:04turns 80 000 people into two thousand
34:06individ teams of about 40 people each
34:08okay each team has a p l each Target
34:11each team elects their own leader and
34:13each team decides to do whatever they
34:16right and you're like wait how do you
34:17make 50. so you go to any business
34:19school in the world and say I want to
34:20make I want to set up a structure to
34:22make 55 million fridges and they'll
34:24design for you incredibly centralized
34:26you know supply chain product uh uh
34:29definition demand forecasting all
34:32centralized right and here this guy's
34:34doing it on a decentralized basis the
34:37quality suffered for the first couple of
34:38years while they got their act together
34:39but once they got the machine working GE
34:43actually gave up and sold GE Appliances
34:45to them because they couldn't compete
34:47like when they want to decide what Pro
34:49feature should go into the new fridge
34:50they the teams vote and because you have
34:532 000 teams interfacing with vendors and
34:55customers as a suppliers they do a much
34:56better job and get a much better result
34:58than some product strategy team hunkered
35:00away with marker forecast and market
35:03research we're seeing the power of this
35:05to an incredible degree there's a
35:06Canadian bank called Tangerine bank
35:08which used to be ING Direct
35:10which actually operates like this so in
35:12a regulated bank there's no CEO
35:15reporting lines job descriptions Etc and
35:17you kind of go wait how is this working
35:19when they do an online promotion
35:20everybody goes to the phone Max and when
35:22it's when it's regulatory reporting time
35:24the chief risk officer goes hey I need
35:26help and everybody floods to help him
35:28right and everybody has a ton of fun
35:30they naturally find where they fit the
35:31best in the organization and they have
35:33more of a say and they're they feel more
35:36control they feel more ownership you
35:38know it it really during this time of of
35:41a rapid change and including downsizing
35:44including competition coming out of no
35:47place right your competition is no
35:48longer the company you thought it was it
35:50was a startup coming in from this crazy
35:52idea that's now a breakthrough and so
35:55that agility is key I think going back
35:57to your question around the downturn
35:59um if you're going to reduce your head
36:01count and flatten your organization you
36:04need these tools need the dashboard you
36:07need to give autonomy uh to your group
36:10fully incentivize them with clear
36:14objectives that are tied back to your
36:15MTP and sometimes you're going to see
36:17just massively increased performance it
36:20is the CEO and the board of directors if
36:23they're doing something different that's
36:25unlike what they've done for the last 10
36:2720 years especially if they're a public
36:28company they need their board of
36:30directors to give them top cover
36:31throughout the organization it's a
36:32choice to transform now you've had
36:35companies you know and incredible
36:37leaders like Jeff Bezos or Elon Musk or
36:40Larry Page who from the beginning had
36:42this Vision you know Jeff bezos's
36:45classical shareholders letters in the
36:48early days saying listen I don't care
36:50about profitability I'm talking about
36:52scale the cojones to go in that but
36:55that's what it took and he was right if
36:57you build the right and GP the right
36:59goals the right dashboards that's
37:02effectively what a manager does right
37:04when you think about like they're
37:05checking to make sure that you're
37:06working on the right things that you are
37:09experimenting towards those goals and
37:11then you're meeting them and again
37:12that's represented through the dashboard
37:14we find that the culture of trust gets
37:16built in as a as an intrinsic outcome of
37:19building an EXO so that's autonomy in
37:22the final attribute which is s in ideas
37:25is social Technologies so these are all
37:27the peer-to-peer collaborative
37:28Technologies like Asana slack Zoom
37:31Yammer chatter we have really good
37:32evidence today that peer-to-peer
37:34collaboration and communication is much
37:36more valuable than traditional top down
37:38your manager telling you what to do and
37:40how to do it and so the more you can
37:42enable that with technology the better
37:44if this is of interest to you if you're
37:46an entrepreneur at the beginning of your
37:48journey building your company or if
37:50you're a large corporation trying to
37:51figure out how do you make sense of this
37:53our new book is coming out and it's
37:56basically going to be available for free
37:59it's called exponential organizations
38:002.0 we're going to be doing a three hour
38:02workshop on June the 6th and it's a free
38:05Workshop Saleem and I are going to be
38:08basically showing you how to build and
38:11create your MTP and your moonshot talk
38:13about each of these of these 10
38:15attributes it will be interactive we'll
38:16be answering your questions if you go to
38:19dmandis.com my last name.com slash EXO
38:23you can register and there's another
38:25part we built in yeah because you know
38:27we have to eat our own dog foods over
38:28the last three months we've been
38:30building an AI chatbot to interface with
38:32the book so you can literally go to this
38:34chat bot and type in here's what I do
38:36with my company how do I turn it into an
38:38EXO or how do I apply dashboards because
38:40this is what I got right now and it
38:42literally researches the entire Corpus
38:44of the book and all the interviews we've
38:45done and all the tapes of recordings we
38:47have so this is now a living book we're
38:50going to load up into its 700 case
38:51studies that we have of exos I think the
38:54AI is so important because we've talked
38:56about how the world is changing and this
38:58is you know maybe one small example but
39:00the idea of a book itself is changing
39:02how you can interface with it how you
39:04can have it customized to your specific
39:06questions related to yours Business book
39:09today is pretty much out of date by the
39:11time you read it oh my God it's like the
39:14difference between a traditional car and
39:16a Tesla if you had a Honda Civic it was
39:18engineered 10 years ago designed seven
39:20years ago built through two three years
39:22ago and by the time you get it the
39:24design and the technology is 10 years
39:26out of date right whereas the Tesla is
39:28up to date on the spot because they're
39:30constantly updating the software and we
39:31think the future of books is going to be
39:33like this a book that was took a few
39:35years to write Etc will be out of date
39:37if it's not being constantly updated and
39:39refreshed I want to give you some data
39:41that we just came across stuff about the
39:43the validity of this so when we first
39:45came up with the model in 2013 2014 and
39:48kind of We did an initial test okay what
39:51we did was we went and ranked The
39:53Fortune 100 by this model okay so we
39:56looked at every one of the Fortune 100
39:58IBM Hewlett Packard Walmart unit and
40:01said okay to what extent one before they
40:03Purpose Driven what extent are they
40:04using lead startup thinking to what
40:06extent is their decision making
40:09etc etc and we came up with an index
40:11and we I went I did a segment on CNBC
40:13Squawk Box we presented the index here
40:16the Fortune 100 basically ranked by the
40:18flexibility agility purpose-driven
40:20nature of the org structure okay so that
40:25um a few months ago we did a seven year
40:26trailing analysis okay how did these
40:29companies do over seven years and what
40:31we did was we tracked over seven years
40:33the top ten that you continued to use
40:35the attributes the most and the bottom
40:3710 the least linear the least flexible
40:39that use the attributes the least we
40:42said all right let's compare the top 10
40:43and bottom 10 in our index and how they
40:45did it over seven years
40:47over a seven year period the top ten did
40:49better than the bottom 10 by 3x on
40:51Revenue growth uh 6.4 times on
40:5610.9 times on return on assets but
40:59shareholder returns compound annual
41:01growth rate top 10 outperformed the
41:05over 7 years 40 times right and you're
41:08like I should have created an index fund
41:10right like oh we completely went down
41:13the wrong business model we even looked
41:15at it and said we've got to see if the R
41:17square that correlates here and it
41:19absolutely does now we have a very very
41:21clear data grounded thesis that if
41:24you're not architected in this way you
41:27just won't deliver the returns going
41:29forward I mean it really represents that
41:31order of magnitude just like your
41:32earlier story of saying you know five
41:35employees versus you know 50 or 500 or
41:38500. that was really incredible was uh
41:40when the pandemic hit these the top ten
41:44did five times better than the bottom
41:45ten in responding to the pandemic right
41:48because the more FL as the external
41:50world gets more volatile your ability to
41:52adapt is going to drive market value
41:54and now we can measure that it seems
41:56obvious in retrospect but it's it's the
41:59incredibly important now the challenge
42:02is again the majority of our large
42:05corporations are built for uh building a
42:09wall a wall Garden uh you know it is a
42:13scarcity mindset we're going to own this
42:14asset and piece it out a little bit one
42:17of the concepts we talk about that I was
42:19in an earlier book I wrote called bold
42:21how to go big create wealth and impact
42:22the world the six D's of exponentials
42:24your job as an entrepreneur is to
42:27digitize any element of your business
42:30that you can seems obvious but when you
42:33digitize something in the beginning the
42:35growth of that is slow and deceptive so
42:38digitization is the first first D you
42:41know deceptive growth is a second then
42:43it you know when we double something 10
42:45times you know it's a thousand times
42:48better double it 20 times a million
42:49times double it 30 times it's a billion
42:51times and it becomes disruptive and did
42:54dematerializes demonetizes and
42:57democratizes the classic example is
42:59Kodak right so Kodak in 1996 the top of
43:03its game the 28 billion dollar market
43:05cap 140 000 employees what people don't
43:08realize is that 20 years earlier Kodak
43:11had invented the digital camera in their
43:13Labs a guy named Steven Sasson had
43:15invented it and he brings a digital
43:17camera into the board of Kodak and goes
43:19here it is the future of Kodak it takes
43:21.01 megapixel images in black and white
43:24on a tape drive and of course Kodak
43:27laughs and says no no we're in the paper
43:30and chemicals business right that was
43:33their profit area and this is a
43:36challenge because companies forget
43:37larger companies forget their purpose
43:40versus their profit centers right George
43:43Eastman the founder of Kodak didn't
43:44build Kodak to be in the paper and
43:46chemicals business he wanted to preserve
43:49memories that was you look at what he
43:51did that was his mission
43:53and rather than hopping on the digital
43:55camera they didn't and 20 years later
43:58they were bankrupt by the technology
44:00they had invented in the same year they
44:03go bankrupt going back to our friends at
44:04Instagram right Instagram gets acquired
44:07for a billion dollars by Facebook with
44:0913 employees and and then now it's worth
44:12100 billion dollars on on meta's uh
44:14balance sheet and so it's this notion
44:17that as an entrepreneur you need to
44:20digitize dematerialize right cameras
44:22have gone away they're now an app on
44:25your phone yep you know that allows you
44:28the marginal cost of replication of that
44:30app is zero so it's demonetized and it
44:33can go everywhere so it's democratized
44:35and this is over and over again and
44:37you're not working to dematerialize
44:39demonetize and democratize your products
44:41and services someone else will and
44:43they'll put you out of business well let
44:44me ask a question on that I feel like a
44:47lot of companies if they're listening
44:48are probably like yeah okay I should
44:51probably get some shared assets I should
44:52probably really get rid of some W-2
44:54employees and have more flexibility in
44:57my Workforce I should probably automate
44:59a dashboard I should probably build a
45:01platform so that I don't have humans in
45:03the loop instead the algorithms are
45:05running things and so I mean some people
45:07are like music to my ears other people
45:09are probably like but what about my
45:12employees what about the humans that
45:14I've employed for years if not decades
45:17and so I guess my question is is this
45:20just the reality that we're in or how
45:22would you think about maybe some of that
45:24pushback as people think about the
45:26transition to an exponential so it's a
45:29combination of both of those it's the
45:30reality that we're in okay and it's like
45:33if you were in the 90s and you didn't
45:35adopt cloud computing right you're not
45:38going to last very long you have to take
45:40on the world is changing so that's just
45:42the reality if you're not building
45:43generative AI into your products and
45:45services going forward you're not going
45:47to last so this is a fundamental reality
45:49of adapting to the new world the second
45:51part is how do you then transform the
45:54Legacy organization into something
45:57different new Etc and we found that
45:59there's and we've now worked with
46:01um dozens of big companies from Procter
46:04and Gamble to Unilever to TD Ameritrade
46:06to Black and Decker Etc and we found
46:08there's a three-fold path path Step One
46:11is Run a 10 week what we call an EXO
46:13Sprint which hacks the immune system and
46:16hacks culture at scale the default
46:18answer in a big company if you're trying
46:19to do anything disruptive is no and so
46:22how do you switch that to a yes step two
46:23is do not do disruptive things in the
46:25core organization because you'll have
46:27this immune system response they're
46:29geared and architected for efficiency
46:31and for predictability just keep letting
46:33them do that take the crazy people in
46:35your company The Edge and let them build
46:37an ex off the edge so Google X does this
46:41um the the master of this technique by
46:44okay and yes apple has a great
46:46technology supply chain and yes they
46:48have a great design capability I will
46:50argue that Apple's real real Edge is
46:53organizational because what they will do
46:55is they will form a small team that's
46:57really disruptive they will put that
46:59team at the edge of the company they'll
47:01keep them secret and stealth and they'll
47:02save them go disrupt another industry
47:04right whether it's payments or watches
47:06or retail or whatever so they have a
47:08portfolio of teams looking at different
47:10Industries when they think something is
47:12ready for disruption they go into it and
47:14fold it into the broader ecosystem
47:16there's no limit to their market cap and
47:18we think as we move forward more and
47:20more companies will have to adopt this
47:22type of a model because doing disruptive
47:25things at the edge gives you the upside
47:27and then you fold it into an ecosystem
47:29and a platform play and we're starting
47:31to see that happen and we think most big
47:34companies won't make it but there are
47:35companies learning look at the recent
47:37chat GPT thing Google was basically the
47:40foundation of llms right they were too
47:43nervous and careful and risk-averse to
47:45launching and so the other thing same
47:49Microsoft went let's just go for it and
47:52they did it and boom and so it you can't
47:55afford to sit back on your laurels today
47:57unless so if you're a big company let's
48:00talk about the humanitarian side of this
48:01right because people are saying hold it
48:03hold it you're talking about having my
48:05company disrupting and reduce number of
48:07jobs and you know what about my family I
48:10have to feed and and and such I mean the
48:13first of all the reality is this is
48:16going to be happening and what you
48:18really need to do is make sure that a
48:20company is going to be able to survive
48:21and and Thrive during these times it's
48:24not like if you choose to be we're going
48:26to employ everybody and not change
48:28organization that organ is you're going
48:29to lose your job anyway because the
48:30organization is going to be bankrupt
48:31soon enough now we have another tsunami
48:35coming I track these 20 meta trends of
48:38what's Happening AI is one of them but
48:40humanoid robotics is another right we
48:43have a at least a dozen uh humanoid
48:47robot companies that are in development
48:48you know people might know about Optimus
48:50uh out of out of Tesla or figure they
48:55um and they're going to become a massive
48:57Workforce and so there's going to be a
49:00transformation in culture and employment
49:03and we have to be ready to deal with it
49:05I get I want to touch on this because I
49:07go crazy when I hear this please when we
49:09looked in the past when we've had
49:11destructive technological innovation to
49:13come in and completely clean up we found
49:15that we don't lose jobs what we do is we
49:18increase capacity I'll give you a very
49:19clear example which is in the 70s we've
49:21created Bank ATM machines and you could
49:24automate banking to a large degree and
49:25there's lots of handwrinking going on oh
49:27my God what will we do with millions of
49:28bank tellers they'll all be out of work
49:30etc etc what actually happened was the
49:33cost of running a branch dropped by 10
49:34times and the banks went and created 10
49:36towns around branches and the number of
49:38bank tellers has not changed at all
49:40since the 70s right same thing with
49:42truck drivers when we automate Trucking
49:44we'll just be doing a ton more Trucking
49:46because we just don't have drivers right
49:48now and so what we found is when you
49:50automate for the most part you increase
49:52capacity the most robotic sized
49:54companies in the countries in the world
49:56that have the highest penetration of
49:58Robotics or South Korea Sweden Germany
50:01which have the lowest unemployment and
50:03so it's a it's very clear from the data
50:06but our minds go straight to oh my God
50:08we'll lose all the jobs right and we've
50:10never seen it happen right but but this
50:12is where Peter talks about scarcity
50:14versus abundance it's I was just going
50:17to say the idea that these jobs these
50:19specific jobs potentially being
50:20automated adds more productivity to the
50:23system which then allows more to be
50:25created exactly and you know listen and
50:27I run a program every year called
50:29abundance 360 and I you know I coach 360
50:32CEOs and entrepreneurs through
50:34throughout the year through this and
50:36this year we took a look at Ubi right
50:39and so we probably will have some
50:41version of universal basic income coming
50:43down as more robots and AIS come online
50:46uh there will be jobs disrupted but what
50:49we're going to enable is for people to
50:51level up what they do a lot of people
50:53who have jobs didn't dream about waiting
50:56tables or cleaning bathrooms when they
50:58were kid right what did they dream about
51:00and we're gonna you're gonna all have an
51:02AI co-pilot that helps you learn and do
51:05and and actually pursue your dreams and
51:08we'll probably end up splitting work for
51:11income and work for purpose in the
51:16not the subject of the book but
51:18something that from a societal
51:20standpoint we need to be thinking about
51:21but companies have an obligation to
51:24fulfill their massive transformative
51:26purpose and to do the do it in the most
51:28efficient way possible and all of this
51:30uplifts humanity and and that's the
51:33ultimate game here it is
51:39the one will out at you and just because
51:42we've been touching on AI I'd love to
51:44just hear from both of you
51:46I guess interesting ways that you've
51:49seen companies start to integrate this
51:51new technology because it is so ground
51:54shaking and it impacts you know just
51:56about everyone but at the same time you
51:59know a lot of people are familiar with
52:00chat gbt and using that on an individual
52:03basis so how have you seen this really
52:05be deployed effectively within
52:07exponential organizations so I think
52:09what we're going to do see is um foreign
52:12EXO there's a very clear place you
52:15basically say to a generative Ai and
52:17Chachi PT equivalent stability diffusion
52:20whichever you say here's my MTP
52:22here's what I'm currently doing what
52:24experiments should I be running right
52:26and we think the AI will then come back
52:28with here's the 55 things you should be
52:32etc etc and that performs a great tick
52:34list to go off and think about that I
52:35think that's one there's a clear huge
52:38area in Education and Training right go
52:41learn this job go learn this function go
52:43learn how to program whatever the best
52:45benefit is we'll replace most of the
52:48because you could just say generate me a
52:50contract that has these characteristics
52:52and it'll throw in the Clauses and etc
52:54etc it'll go wow so I think that's for
52:56me the most exciting one oh my God yeah
52:59so listen when I'm first of all uh one
53:02of the things I advise and talk about a
53:04lot to a company is every company needs
53:07to have what I call a chief AI officer
53:09it is someone who understands what's
53:11going on in the AI universe and is
53:14sitting next to the CEO as a strategic
53:16advisor to say we need to be injecting
53:19it here here and here and here and
53:21partner with this organization this
53:22organization and the challenge is and I
53:25I talk about this openly so they're
53:27going to be two kinds of companies at
53:28the end of this decade
53:30companies that are fully utilizing Ai
53:32and companies that are out of business
53:33and these be that black and white and so
53:37if you are you know a large Company CEO
53:40or an entrepreneur and you're not sure
53:43on how to be utilizing this it's even
53:45more reason for you to go and hire
53:47someone who's going to sit next to you
53:49it's like a college strategic officer
53:51but it's your Chief AI officer and their
53:54job is to be injecting uh platforms
53:57Partnerships capabilities at every level
53:59I talk about at every every board
54:02meeting every management meeting I want
54:04chat GPT open as another member of the
54:08team it's like when I'm asking questions
54:09I want people using it as a thought
54:12partner we don't know how to think other
54:14than the way we know how to think it's
54:16it's obviously obvious but when you
54:19bring in this other perspective that is
54:22bringing in the world's knowledge you
54:24get you get orthogonal thinking and
54:26again that's where breakthroughs come
54:28from you know if you're limit if you
54:31limit yourself to your leadership team
54:33you've got a very narrow window of new
54:37you know cognitive Surplus the last four
54:40presentations I've done to fix cpg
54:42boards and CB and c-suites I've said how
54:45would I disrupt this company and it
54:47gives me a list and then I show that on
54:49a slide and the looks on their faces you
54:52know and I go that took two seconds to
54:54generate right how would I attack this
54:56company if I was a startup and I think
54:58what's really powerful about today is
55:01when we were having this conversation
55:02when we first put this model Tesla was
55:04nowhere uh Uber and Airbnb were just
55:07kind of getting started etc etc now we
55:10can point to 50 things and say you have
55:12to adapt my favorite thing about
55:14interfacing with these AIS is exactly
55:16what you said about it kind of extending
55:18your own ideas and I had an experience
55:21yesterday where I was thinking through I
55:23was thinking through a tweet actually
55:24and I was just thinking you know cities
55:26are designed around cars and offices are
55:29designed around meetings and just you
55:30know how our current Society has been
55:32designed around things of the past that
55:34are changing and I asked chat gbt I said
55:37hey can you come up with a few more of
55:38these I just wanted to see what it came
55:39up with but the fascinating thing was
55:42not only did it come up with a bunch of
55:44them it had this altruistic view where
55:47my original ones were a little more
55:49negative right like oh you know we need
55:51to rethink cities so they're not
55:52designed around cars and they were
55:54beautiful they were like parks are
55:55designed around families and I was like
55:57oh I never really thought about that it
55:59was so surprising and then I said hey
56:01Chad GPT thank you so much for this but
56:04like these are really altruistic and and
56:06could you give me a few that I think are
56:07maybe more grounded in reality and it
56:10also spat out like the exact same 10
56:12things but with a totally different
56:15Viewpoint and I was like oh my gosh this
56:17is so clever and I guess to that end I
56:21agree with you that you know having
56:22someone within the organization who was
56:25solely focused on this is so important
56:27and we're seeing that across other
56:29dimensions as you know you mentioned
56:31Peter maybe 20 meta trends that are
56:33happening and I wonder you know we've
56:35seen a couple companies hire ahead of
56:37remote who are thinking about you know
56:38what what staff on demand should I be
56:40bringing in how do I incorporate async
56:42into my organization are there other
56:45roles that you both see emerging through
56:48these exponential Trends are I mean one
56:50of the things I think about Steph is a
56:52head of mindset in an organization which
56:54is a really weird and woo thing to talk
56:57about but your mindset is the single
57:00most important thing any entrepreneur
57:02any organization has right if I said to
57:04you what made Steve Jobs Jeff Bezos you
57:07know Mahatma Gandhi Martin Luther King
57:09successful was it their money their
57:11technology their Network or was it their
57:13mindset I think everybody would argue
57:15it's their mindset and if in fact your
57:18mindset is the most important thing that
57:19makes you successful as a leader or an
57:21organization my next question is what
57:24and I list off a number of mindsets that
57:28I think an EXO needs to have needs to
57:32have a curiosity mindset it needs to
57:34have an abundance mindset exponential
57:36mindset a moonshot mindset a gratitude
57:39mindset and a purpose-driven mindset
57:41most importantly here's the here's the
57:43thing where the world is speeding up and
57:46as a result of that the way you react to
57:50problems and opportunities is a uh is a
57:56instantaneous reaction to it right it's
57:59Instinct in this regard and that
58:01instantaneous reaction is shaped by your
58:04mindset and so if you have a dystopian
58:07negative mindset and you see a problem
58:09it puts you back on your heels and your
58:11cowering and you're in fear and scarcity
58:13mindset if you've got a abundance
58:15mindset and you see a problem it's like
58:17oh my God what's the opportunities
58:18coming out of this how do we how do we
58:20navigate this how do we bring in new
58:21capabilities and so you know I I haven't
58:25really thought about this before but a
58:27chief mindset officer that's really
58:29training your employees and your
58:31organization and how do we train
58:33ourselves same way an AI does you know
58:36and neural net is trained by showing an
58:39example after example after example and
58:41we need to be you know I train my own
58:44neural net my own brain by not watching
58:47the crisis news or Network CNN right and
58:50getting you know dystopian news all the
58:52time it's by the books I read I built an
58:54AI called futurescope that searches the
58:58world's information and brings me the
59:00stuff that's within my parameters of you
59:03know positive uh you know
59:06abundance-minded exponential in all of
59:09these industries so the news is out
59:11there it's just filtered by by editors
59:14who want click bait for their
59:16advertisers or filtered by what actually
59:18serves me there's a company in Australia
59:20that I came across that um that they
59:23read the book a few years ago and they
59:25have every quarter 10 projects running
59:28on the 10 attributes
59:29staff on demand autonomy and every
59:32quarter they just re-up the projects and
59:34everybody has to pick something they're
59:36going to drive the initiative for and
59:37somebody picks I'll drive dashboards
59:39this quarter and figure out how to
59:40implement dashboards into some new
59:42domain and they just keep doing that if
59:44an organization is at a place where it's
59:47assessing these different attributes the
59:4810 attributes is there a framework or a
59:51way of thinking in terms of where to
59:53start because I assume even not just
59:56large companies but some startups would
59:57look at those 10 and say oh man there's
01:00:00like eight of these that we are not
01:00:01doing well or we are not tackling we
01:00:03actually have a diagnostic survey where
01:00:05you can score your stuff and see where
01:00:07am I weak or strong okay once you kind
01:00:09of have the as is you can kind of go
01:00:10okay how strong do we need to be in AI
01:00:12or in in autonomy or in community and
01:00:15crowd like for example most big
01:00:17companies in the world don't leverage
01:00:20right they build a product and they try
01:00:22and push it into the marketplace okay
01:00:23then you have xiaomi in China the second
01:00:26biggest phone company and they're
01:00:28successful because they have a thousand
01:00:29super users that vote on what features
01:00:31should go into the new phone and they
01:00:33get the phone early and can both to
01:00:34people look I voted and they're all
01:00:36their water mouth product development is
01:00:37taken care of and they have no marketing
01:00:39or promotional costs at all that allows
01:00:42them to keep the cost low just by
01:00:43leveraging Community right so you can
01:00:46then once you know this is the Baseline
01:00:48and and the diagnostic is also free to
01:00:51take is how we score the fortune 100.
01:00:53um you can then say where do we want to
01:00:55be and then start filling in the gaps
01:00:56and building that capability actually
01:00:59every attribute you add moves you in
01:01:00that direction and it's it's important
01:01:02to realize you don't need to do
01:01:03everything at once but you need to have
01:01:05Clarity on where you're strong and what
01:01:08to add next and it's easiest by the way
01:01:11when you're doing this at the beginning
01:01:13one of the places I've seen people fail
01:01:15is when they start with a massive
01:01:17transformative purpose and then they
01:01:19Bend to the market place and deviate
01:01:21from it and follow path of least
01:01:23resistance and you end up with something
01:01:25that yeah maybe you've got some Revenue
01:01:28in markets but it isn't inspirational
01:01:30anymore and it's going to die guilty as
01:01:33charged people death we've done it a few
01:01:35times yeah we've all done it yes exactly
01:01:37we've all done it I mean kodak's a great
01:01:39example where you said they literally
01:01:40got lost they they had an MTP but based
01:01:43on their killer product for a period of
01:01:46time they got lost look at Blackberry as
01:01:49well Blackberry got to the biggest phone
01:01:51company in the world they didn't have an
01:01:52MTP to sustain what they were going to
01:01:56right and then eventually they just
01:01:57imploded also a great example of
01:02:00building a platform that other people
01:02:02can build on top of right that's one of
01:02:04the ways that Apple has succeeded and I
01:02:06had a Blackberry back in the day I
01:02:08remember they had maybe like one or two
01:02:10games on the phone and anything that
01:02:12went on a Blackberry had to be built by
01:02:15Blackberry yeah so it wasn't available
01:02:17very exponential biggest problem right
01:02:20you really want to create your apis your
01:02:23interface that allows the world to build
01:02:24business on top of you the most
01:02:26successful companies in the world and if
01:02:28you have something that's extraordinary
01:02:29open source it to share the cost of the
01:02:32operations is what Amazon did with their
01:02:34cloud services which was so brilliant
01:02:35and I want to go hit again you know
01:02:37Google had Google videos and I remember
01:02:40meeting Chad Hurley after Apple after
01:02:43Google just bought them it was like why
01:02:45why did they buy you they had Google
01:02:47videos and it was like well you know
01:02:50Google videos had a whole bunch of
01:02:51lawyers approving what could go on and
01:02:53what could be done and and YouTube just
01:02:56had none of that and it just took off
01:02:58and so you know it gets bought for 1.65
01:03:01billion dollars 18 months after startup
01:03:03this agility of a small Nimble mammal
01:03:07compared to the large numbering
01:03:09dinosaurs is is going to only be
01:03:11Amplified let me just say again uh
01:03:13please if this is of interest to you if
01:03:15you're a large corporation that wants to
01:03:17understand how do you implement this and
01:03:19you know hopefully slow or prevent A
01:03:21disruption or you're a startup at any
01:03:24stage this is a three hour Workshop
01:03:26we're going to run through all of these
01:03:28give you the best examples we can give
01:03:31you access to the book for free AI tools
01:03:34to help you shape your moonshot your MTP
01:03:36to access this it's uh diamandis.com
01:03:39backslash EXO we're bubbling with
01:03:42excitement to share what we've been
01:03:43we've been working on here and I think
01:03:47it's worth mentioning again you guys
01:03:49wrote this book originally in 2014 right
01:03:51and maybe we could just close out with
01:03:53one question I mean we've talked a lot
01:03:54about finding a big moonshot a big
01:03:57purpose that others can buy into given
01:04:00that both of you have been in technology
01:04:02for so long are there any large Grand
01:04:05challenges that you'd just love to be
01:04:07solved or have found you know take a
01:04:09stab at what's what's kind of catching
01:04:11your eye in terms of mtps so I do this
01:04:14for a living with X private exactly
01:04:16there's launch X prizes we just launched
01:04:19an X prize for wildfires you can monitor
01:04:22a thousand square kilometers detect a
01:04:24wildfire at ignition and put it out 10
01:04:26minutes automatically right we're
01:04:28getting ready to do an X prize my
01:04:30biggest area right now is Reinventing
01:04:32disrupting Health Care a health span X
01:04:36prize reverse your biological age or
01:04:38your functional age by 20 years right
01:04:40those are areas I care about I think
01:04:42there's two or three big areas one is
01:04:44education which desperately needs a
01:04:47passive transformation but it turns out
01:04:49our institutions have their own immune
01:04:51system right God help you if you're
01:04:52trying to disrupt Academia journalism
01:04:54Etc has we have institutional immune
01:04:57systems as well that need to be
01:04:58disrupted I think the biggest and most
01:05:00important one is that in our general
01:05:02institutions we don't have a feedback
01:05:04loop and there's no mechanism to update
01:05:07the UN or the the healthcare system or
01:05:10the legal system or the education system
01:05:12and we need to build those and I know
01:05:14many of your companies attack those
01:05:16areas but we need to figure out a way of
01:05:18jumping past all of that and going to a
01:05:20completely new model that's actually
01:05:22working for people I think this is where
01:05:24AI can really help for example uh we've
01:05:27been chatting with Imam mustache with
01:05:28stability AIS to believe diffusion we're
01:05:30like why can't we just use an AI
01:05:33load up all the data in the country and
01:05:35give every child a tutor a doctor a
01:05:38lawyer and an assistant and a link for
01:05:41each one and just let them go nuts
01:05:42you'll just instantly transform that
01:05:44country I think that's the kind of thing
01:05:45that we're really excited about seeing
01:05:47tons of yeah and by the way he might is
01:05:49working on that right now right he's
01:05:50looking to provide every child uh in the
01:05:53nation of Malawi into a Country-Wide
01:05:56experiment amazing and imagine the data
01:05:58you get from that yeah it's just
01:06:00fundamentally different
01:06:03thanks for listening to the a16z podcast
01:06:05if you like this episode don't forget to
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