#AIS: Pear VC's Mar Hershenson on making successful founders

This talk was recorded LIVE at the All-In Summit in Miami and included slides. To watch on YouTube, check out our All-In Summit playlist: https://bit.ly/aisytplaylist 0:00 Pear VC Founding Managing Partner Mar Hershenson gives a talk on making successful entrepreneurs: can great founders be created, or is it something they are born with? 17:04 Bestie Q&A with Mar: Catalyzing great founders, why the PayPal Mafia created more unicorns than early Google employees, creating more opportunity for underrepresented founders, inducing failure & more Follow Pear VC: https://twitter.com/pearvc Follow the besties: https://twitter.com/chamath https://linktr.ee/calacanis https://twitter.com/DavidSacks https://twitter.com/friedberg Follow the pod: https://twitter.com/theallinpod https://linktr.ee/allinpodcast Intro Music Credit: https://rb.gy/tppkzl https://twitter.com/yung_spielburg Intro Video Credit: https://twitter.com/TheZachEffect

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Jason Calacanis?

  Next up is Mara Hirschenstein, who's going to talk about entrepreneurship. Come on out, Mara. Mara is going to talk about creating successful founders. Please welcome Mara.

• 0:10Speaker 01

  Thank you.

• 0:22Speaker 01

  Well, I have a pretty positive and optimistic talk. I know the mood may be a little bearish in general. My name is Mara. I'm one of the founders of Pair VC. And I am very fortunate. I actually work with many startups. I've worked for the last decade with 100-plus startups. They're worth over $100 billion. And they all have one thing in common. When I invest, there's actually nothing. I'm the first check. There is no product. There's no customers. There's just the founders. So it is no surprise that I often wonder, are these founders born? Are my cards dealt as soon as I invest in one of these founders?

• 1:08Speaker 01

  Or is there anything I can do to change them? That's a big question. And I think many of you would say founders are born. Take, for example, Palmer Lucky. He's talking tomorrow. He was a prodigy. He created the first prototype of the Oculus Rift at 17, and he sold the company to Facebook at 22. Clearly, there's something special about him. Or Melanie Perkins. She started her first business at 14. Then at 19, went on to build the largest yearbook business in Australia. And now she runs one of the most successful startups. And then Elon Musk. I don't think I need to say anything.

• 1:53Speaker 01

  He's definitely someone special.

• 1:56Speaker 01

  Something in his DNA, right? So you wouldn't be surprised. Many people ask me what makes a good founder. And there's a bunch of characteristics. You can Google it. People come up with a bunch of things like risk-taking, resilience, ambition, etc.

• 2:12Speaker 01

  And in fact, there's some research by academia that shows that people have some innate properties. So researchers at Northeastern surveyed hundreds of entrepreneurs, and they counted that forty-two percent of them had started a business as a kid. So actually, that's a good hint for anybody making angel investments. Maybe it's a question you can ask. Now, there's also data that shows that founders can be made. And while there are thirty-seven percent of founders, the repeat founders in companies today, fifty-nine percent repeat founders are in the top unicorns.

• 2:53Speaker 01

  So that means at least you learned something from your first experience. So it would be reasonable to believe that there is some relationship about, you know, what's your chances of being successful to how you're born. However, I do believe there is some form, something you can do, right? There's some energy or some modification that would put you up in that chart. And I think the wider arrow shows that the early parts of that chart, you need a lot of effort. And in fact, this is what I've learned from being an investor. Roughly, and these are all rough numbers, out of the ten companies we back, two will fail, no matter what we do.

• 3:35Speaker 01

  That's just almost their destiny. And Jason wrote a blog post in 2015, so that's a long time ago, that's titled "You Don't Have What It Takes." I recommend you're reading it. And basically, the summary is, some people just don't have what it takes. It would take so much effort to change them that you might as well give up, right? Okay, so now out of ten companies we back, two will succeed no matter what. You know, us people in venture like to take credit. But truly, the founders, there's a percentage of founders that work independently of us. We backed DoorDash early on, there's a picture of their founders.

• 4:18Speaker 01

  And I can tell you that Tony Hsu, the CEO, would have made it with or without any of his investors.

• 4:25Speaker 01

  And then there are six companies that I think we can influence. Okay, there's something we can do. And the question is, perhaps, what could you do with that 60%? How can you make them more successful? Or maybe better, if you're at the top 10%, can you accelerate their success? That's a big question. And that's what I'm really passionate about. Can you create more successful entrepreneurs? And why is it important? Why should you care? I think this is the right audience. You don't have to say. There are many numbers to show that having more entrepreneurs is good for the economy.

• 5:06Speaker 01

  You can read them, but just more entrepreneurs means a better world. So the question is, how can you build these entrepreneurs? Is there a magic machine where you can actually take a regular founder or a regular person and out comes a successful founder? Okay, so at the risk of being elitist, I am going to say that one of the closest machines of entrepreneurship is Stanford University. And the numbers actually show it. 10% of unicorns have founders that attended Stanford. And what's even more, in the All In Summit, I actually went through all the LinkedIn's,

• 5:48Speaker 01

  40% of the speakers attended Stanford. And I think all of us have started something, whether it's 538, like made, or a venture firm, or a company, or multiple companies. So there's some special gene, right? And the question is, what does Stanford have that other people don't have? Right? It's a higher ed institution. So for sure, you're going to go and take some classes, gain some skill sets. They put you around people that are like you. And they have a brand, so you have access to capital, network, etc. Having been there though, I will tell you that the skillset doesn't quite matter as much. You can go online and learn some of that.

• 6:30Speaker 01

  But your peers around you and the next degree around you actually really, really matter. And in a way, what these people are doing is transforming your character. And I can tell you that firsthand. Just imagine yourself, you may be a founder or an investor, I don't know. You are dropped in a world where you're basically are surrounded by people that are constantly thinking about starting new companies. This is smart people. The ambition is very, very high. There is innovation almost breathing everywhere. And nerding out is very okay, right? So by doing this throughout years, you actually become one of them. And your peers are really fundamentally changing your character.

• 7:14Speaker 01

  You become somebody that starts to believe in themselves. You can do it. You learn basically to expand your own ambition, right? You may think 100 million exit is good, but if you go to Stanford, you know that's not good enough, right? So you're setting your own bar. It's a really interesting process. And the question is, are there other machines like this? Or is Stanford just the only way to do it? But the good news is there are other places that do this. Or there are other forms of doing this, I would say. And one of them perhaps is the PayPal mafia. I think a lot of them running around here in the next couple of days. You all know that they started many successful companies.

• 7:58Speaker 01

  Tesla, LinkedIn, Palantir, Affirm, YouTube, Yelp, Yammer, et cetera, et cetera, et cetera, right? There's something magic about having been there at that point in time. I haven't researched them and I don't have that much direct contact, but according to Sarah Lacy, who's a journalist and she spent a lot of time researching them, she concluded there was the confidence that they gained when they were there. Now, I'm not sure, but maybe in the Q and A, they will reveal the secret.

• 8:28Speaker 01

  There's other mafias, this one I'm more familiar with. This is Rappi. Rappi is a company that was founded in 2015, so not that long ago, in Colombia. And it really transformed the LatAm startup environment. There's been 100-plus companies created by Rappi employees. It's crazy, even almost 50 in Colombia. It almost, it literally changed the country, which is a big deal. I have the privilege of working with a few of these founders. And there's something common in them. They all have this sense of ambition, that, you know, super fast growth. It's, it's really interesting how they're almost cut from the same cloth.

• 9:11Speaker 01

  So there are other places, and I think we had the mayor here earlier. I guess he would claim that Miami is on its way to doing some of that. So there are places. So, I want to tell you about a couple of experiments that are personal to me, that I've been running, and hopefully will inspire you to do something on your own. Okay.

• 9:33Speaker 01

  The first one is, I teach a class at Stanford. It's a startup simulation class. You have to, for one sec, forget it's at Stanford. I'm actually taking it to other colleges as well. It's not your usual class, okay? So, it's actually not your usual class in the sense that I never lecture. There is no lectures for me, there's almost no communication from me. So, I've been teaching this class for six years. We will take eight teams. These teams have four to five people. And you cannot have a startup when you come to this class. In fact, you must be way earlier. You only have an idea, or you may have a couple of ideas. But if you have something that you've been working on for a while,

• 10:16Speaker 01

  you're automatically disqualified, okay? So everybody that comes in knows very, very little. And then, what the class is designed to do is to just maximize your peers' interaction. Because I believe that that's the way that you can create founders. So, how do we do that? First, we're very lucky that I can actually craft the class. So, even within Stanford, you have to get admitted to this class. There's only 20% acceptance, so I'm able to figure out who do we want to get in. And then, the trick is to force each of the teams to present to each other every week. And I know it sounds really simple, but just by doing that,

• 11:00Speaker 01

  you're actually motivating and teaching by example. And the results are pretty incredible. We actually have one to three companies per year that get started. I think we have two unicorns, there's 600 million capital raised. And I think what's really, really interesting is that every year, I'll get some pretty nerdy PhD student that goes off to be a successful founder. So, it's very impressive. And this one, which is really interesting, when I first started, 20% of the kids were females. And I said, "Well, I bet we can shape the class."

• 11:42Speaker 01

  So, throughout the years, we've been increasing female enrollment. And I can tell you that the results have not changed. We actually now have more female-founded companies. And this is actually something I care about. So, I went... Thank you.

• 12:02Speaker 01

  Okay, so this takes me to my second experiment, which is actually even more successful and has nothing to do with Stanford. Okay, so there's no Stanford involved. Okay, so, about a year ago, a year and a half ago, I decided...

• 12:18Speaker 01

  Let's get a group of women together artificially. And again, the same idea. These women cannot be founders. Okay, these are women that are just high potential. Okay. And we actually have 30 to 40 women per cohort. We've done it twice.

• 12:36Speaker 01

  And the goal is like, hey, can we teach them about being a founder? Increase our confidence, our ambition, the risk-taking, et cetera, et cetera. So how do we do it? Same thing. First thing is we inspire them with great leaders. So we would bring women that are successful in their own right to tell them that it is possible to be like them. Right? I think in many occasions, we just lack that role model. And the next is we force them to connect with each other. So sometimes it's talks, sometimes it's fun events or dinners. We even had a manicure pedicure session. The point is like, can you get them to talk to each other? And the results are literally insane. So we had 78 women through the process.

• 13:21Speaker 01

  I think they've incorporated 45-plus companies. 35 of them have raised more than a million dollars. And they're backed by people like Sequoia, Andreessen, Paradigm, Dragonfly, and of course, Pair. So I mean, it's incredible numbers. These are not regular numbers that you would see in a random group of people. And I think, again, it's important because I think we have something to say about what... Thank you. About what the next generation looks, right? I mean, it's for all of us in the audience. 2% of all companies have an all-female founder team. That is very crazy, if you can imagine, if you can do the numbers.

• 14:04Speaker 01

  So, you know, I think perhaps Richard Branson said it better.

• 14:09Speaker 01

  Everyone is born an entrepreneur and everyone has the potential to learn to be an entrepreneur. It's just that not everyone gets the opportunity, right? So I think my quest is about making those opportunities. And I will say that you as an individual have your first responsibility about doing that, right? You have to create opportunities for yourself. And I would say the most important is to surround yourself by the best people. So you have to play up and challenge yourself. And sometimes, you know, people don't go to places that have the best people because they have the worst job at the company and that's the wrong attitude. You should go to wherever the best people are so you can learn, you know, transform yourself.

• 14:54Speaker 01

  I have two very tactical pieces of advice that I give my founders. First, this is very simple, but you can actually read. You can read a lot. One of my founders, Asdr, was the founder of Dropbox, how he became a great CEO. And he said, "I read a lot." But then I have actually gone and looked at our top 10% of our portfolio. And there's one thing those CEOs have in common. They are reading machines. So I don't know if reading will make you a great CEO, but I know it won't hurt you. So, and the second one is get a coach. I say even Steve Jobs had a coach. If you don't have money to get a coach, get a peer group, because again, it's about character building.

• 15:39Speaker 01

  And I think what investors can do, so if you're an investor in the room, I know it's a very ego high business, but it is not about us, you know? We are not the ones who make the companies. I think our role is to have, create opportunities for our founders to grow. And that actually will help the portfolio. And I think for society, perhaps we should have an early intervention program, much like a gifted program in schools. If you detect that there are kids that have that gene in them, why not pull them aside and create an early intervention program? And I'll give you an analogy, which you'll understand. I'm from Barcelona, Spain. My fellow countrywoman is Montserrat Caballé. She was a great opera singer.

• 16:25Speaker 01

  And of course, today, probably I'm too old to become a great opera singer, but perhaps I would have had some chance, right? Maybe to just sing opera in the bathroom at some point if I had been taught early on. So that's the thought. And, you know, just imagine a world where you can actually increase the total founder potential by just 10%, or even shape who becomes to be a founder. So with that, I guess I'll go to the Q and A.

• 17:04Speaker 01

  In the middle.

• 17:05Jason Calacanis?

  You're in the middle. That's amazing. What a great talk. That's amazing.

• 17:09Speaker 01

  This is very intimidating.

• 17:11Jason Calacanis?

  I know, but somehow the four of us are going to get through it. It was an incredible talk.

• 17:16Speaker 01

  Somehow.

• 17:17Jason Calacanis?

  God, you're good.

• 17:23Jason Calacanis?

  I have to say, you know, we're watching the talk backstage and the nodding that we were each having, and, you know, collectively, we've invested in, you know, I would say closer to 1,000 companies now. And we're nodding and thank you for putting my blog post up there from years ago, "You Don't Have What It Takes," and I just realized, you know, wow. One of the fundamental problems we have, and I think having David here from the PayPal Mafia speaks volumes, one of the fundamental problems in entrepreneurship is, that you pointed out is, people have to see it in order to be it. And, you know, when you look at what happened at PayPal, and I'm really interested in hearing

• 18:06Jason Calacanis?

  David's perspective on this, they got to see each other at Stanford, and 40% of the speakers have been to Stanford here at this event. I didn't even know that. Thank you for doing that statistic. But it seems like the fundamental problem we have in society, you can expand this, and then we were talking about how the mayor being on before. Are you getting to a question? Yeah. And the rest of us have questions. But this is the fundamental problem. We need people to understand that entrepreneurship and opportunity in this country is available to 100% of the people here. They have that opportunity, but because they don't see someone like themselves, a woman, a person of color, a person of... A woman who is a person of color, et cetera, et cetera, et cetera.

• 18:51Jason Calacanis?

  They need to see it to be it. That's the problem, isn't it?

• 18:54Speaker 01

  Well, you summarized it really well. And I'll ask you to do the talk next time.

• 18:58Jason Calacanis?

  Well, I listened. I listened to that.

• 18:59Speaker 01

  Yes.

• 19:00Chamath Palihapitiya?

  When you started this program, what was your goal? What did you think was gonna happen?

• 19:05Speaker 01

  Honestly, I didn't think it was gonna be... I didn't think the conclusion was gonna be as big, right? I mean, if you get 20% of women to start a business, that would have been amazing. But we're getting almost, I would say, 60% of them or 70% of them are going off and starting a business. It's crazy.

• 19:23Chamath Palihapitiya?

  I mean, when you take both of those two programs together, the results are pretty...

• 19:28Speaker 01

  Crazy.

• 19:28Chamath Palihapitiya?

  They're pretty crazy.

• 19:29Speaker 01

  Yes.

• 19:31Chamath Palihapitiya?

  So, okay, take it out of the Stanford context for a second. How do people... I'll pick a city, you know, you're in Cincinnati. What does it mean to have a peer group and a network that

• 19:45Speaker 01

  Yes.

• 19:45Chamath Palihapitiya?

  can create or catalyze like a PayPal-like mafia there? Or even if it's in Miami, or in LA, or wherever you are? That seems like a really hard...

• 19:55Speaker 01

  It's a really hard problem, so luckily I'm young enough that I'll be able to iterate.

• 20:00Chamath Palihapitiya?

  But Zoom may make that a little bit easier too, right?

• 20:03Speaker 01

  I think you need that, you know... It's not just enough to get a bunch of people together, right? You have to seed it the right way. So that's why I said, you know, even for the female program, we'll get hundreds of applications. And we have to go and interview everybody and see who can have high potential, right? So again, there's a little bit on the choosing of who goes into that program, and then you can shape them. So again, it's that curve. If you are too far to the left, then your job is really, really high.

• 20:32Chamath Palihapitiya?

  I used to, probably once a week, read Business Insider or Insider. And then I stopped about seven months ago, or no, maybe like in the last few months. And I'll tell you why I stopped. It was for two reasons. There was this article that they kept running, basically bashing the founder of Glossier. And to me, it just didn't make any sense because it's like, there are lots of people who, you know, go through trials and tribulations at startups. And when you read about her journey, it didn't seem particularly different than anybody else. You try products, some of them work, some of them fail, you learn and you move on. But they would run it and they were just hammering, hammering, hammering.

• 21:11Jason Calacanis?

  They did it with the Away founder too.

• 21:12David Friedberg?

  Away luggage thing, which was the craziest story.

• 21:15Jason Calacanis?

  Unbelievable.

• 21:16David Friedberg?

  I read that story and I was like, what did she do wrong? I never really understood.

• 21:19Jason Calacanis?

  She yelled, "Everybody work harder."

• 21:20David Friedberg?

  Yeah, she was like, "Work harder, let's make this company successful."

• 21:23Jason Calacanis?

  What my founder says, I give him a raise.

• 21:24Speaker 01

  Well, I mean, I think...

• 21:25Jason Calacanis?

  Can I give you more equity?

• 21:28Speaker 01

  Well, I think honestly, that happens even to me. I mean, on board meetings, I look, you know, I'm not an asshole, I'm a bitch, right? That's the summary of the situation.

• 21:38Chamath Palihapitiya?

  Welcome to the club, we're assholes.

• 21:39Speaker 01

  Well, I'm not, I'm a bitch.

• 21:41Chamath Palihapitiya?

  But anyway, so that's why I stopped reading it because I was like, this is really ridiculous because what is it telling people? And then separately, they kept running this ad promoting this company called Cerebral, which last week got a DOJ subpoena for selling Adderall illegally to people. And so it's like, this is the imbalance that you see when things are presented that don't really make a lot of sense to you.

• 22:03Jason Calacanis?

  There is a term for it in the industry, I didn't come up with the term, chicks for clicks. And so they will look for a female founder and know chicks for clicks.

• 22:11Chamath Palihapitiya?

  Chicks for clicks?

• 22:12Jason Calacanis?

  Chicks, as in a word for females, chicks for clicks. They're all trying to get clicks. If you go after a female founder, you're going to get 10 times as many clicks.

• 22:20David Friedberg?

  Oh, really? It's just more exciting. The Theranos story, I think, like, was such a great example of that. It was like, a failed biotech company, I'm not saying that there wasn't fraud and stuff that happened there, but man, I mean, the way that that escalated, the storyline, yeah.

• 22:36Jason Calacanis?

  There are no, as well, I mean, it's a founder plus a female founder. You know, a founder misbehaving, quote unquote, plus a female founder, just equals a little more.

• 22:45Speaker 01

  Even though, like, the founder of WeWork is more famous in some circles.

• 22:49Jason Calacanis?

  She seemed more talented. I'm curious what your questions are for David about the magical moment of the PayPal mafia.

• 22:59Chamath Palihapitiya?

  Yeah, what was the, what was the secret sauce?

• 23:02David Friedberg?

  Being the 17th most important guy at PayPal.

• 23:05Jason Calacanis?

  Hey, hey, hey, he's now the ninth.

• 23:07David Friedberg?

  What were your, what were your intentions?

• 23:08Jason Calacanis?

  No, he was clearly the fifth or sixth.

• 23:10David Sacks?

  You tried that joke already during your intros. It didn't work. Don't try, don't try and resuscitate it now. You had your chance on the pod.

• 23:19Jason Calacanis?

  That was brutal.

• 23:20David Friedberg?

  I know.

• 23:20David Sacks?

  No, no reuse of the same joke.

• 23:22Jason Calacanis?

  I apologize to the entire fanbase for Free Burge's intros.

• 23:24David Friedberg?

  Come on. Look, I'll tell you something. Every guy on this stage, no one will ever tell them what I said because everyone worked for him or wants money from him. So, we can only do it to each other. We can only do it to each other.

• 23:39David Sacks?

  All right, so the answer is that at PayPal, we recruited our friends to work at the company because literally nobody else like was willing to come work at this crazy startup. Peter recruited his friends who he had gone to college with at Stanford. Max recruited his friends from U of I. That's how the initial team was recruited is through friendship networks. But it wasn't like this was some exclusive club. It's just that nobody else wanted to be a member.

• 24:08Chamath Palihapitiya?

  Well, sorry, can I just say at Facebook, early days, it was exactly like that as well. It's like, we had like really qualified people from great schools, but it would not be the people that you would have thought. It's like the folks that like spun out of Microsoft, you know, couldn't succeed. And all of a sudden, we were like, oh, or like Boz used to teach Zuck CS. And it's like, yeah, why don't you just come in as like the TA of the class? It was not, it was very ragtag.

• 24:30David Friedberg?

  Did the trust make everyone, because they all knew each other from before? Did the trust give everyone like a stronger sense of like being vulnerable and then developing themselves better? Because I do see like a lot of these.

• 24:40David Sacks?

  Vulnerable.

• 24:40David Friedberg?

  Well, I mean, I see a lot of these companies and everyone's, it's all like, it's like, you see early-stage companies and it's very political, who's going to last, who's not? Because you didn't really trust each other. You never worked together. Like, you didn't know each other.

• 24:50David Sacks?

  Yeah, what I'd say is that you would think that the friendships would, would make it like this sort of calm, friendly environment. PayPal was actually a very frictional, contentious environment. And, but I do think that there is a trust element to it, which is we were constantly debating what the truth was.

• 25:10David Friedberg?

  Right.

• 25:10David Sacks?

  And what we needed to do and what the big risks to the big business were. And so, we were young. In fact, Peter, when he hired me, he told some of the other people on the team, "Look, I want to hire David because I need someone here who I can yell at." Meaning, like, he didn't have to worry about hurting my feelings, he could just say what he really thought, and we could have an open conversation about what we need to do as a company, even if it meant yelling.

• 25:33David Friedberg?

  So was it a culture of brutal honesty?

• 25:35David Sacks?

  Yes, absolutely.

• 25:36David Friedberg?

  That's what Vino talks about a lot, right?

• 25:38Chamath Palihapitiya?

  Can I ask you guys a question, Mar and David? You use Rappi, so the last time I was here in Miami was to meet the Rappi founders, and I spent a couple of days with them, and I came away stunned. Kind of like what you said, I didn't realize it was that extensive, but there's a really special culture there.

• 25:53Speaker 01

  Yes.

• 25:54Chamath Palihapitiya?

  PayPal obviously had that as well, but do you guys, and don't take this the wrong way, but do you have to have somewhat more of a bounded outcome for then these networks to really explode? Meaning, if you look at a Google, or a Facebook, or even a Microsoft, when companies become almost too successful, it almost just locks these folks in, and the incentive to go off with that toolkit, the peer network, goes to zero because you're just too incentivized.

• 26:21David Friedberg?

  That's an interesting evolutionary trait, right?

• 26:23David Sacks?

  Or people make so much money that they just retire.

• 26:26Speaker 01

  I actually think you're totally right. The companies that they come from have to be a little hard. I don't think PayPal was easy, right?

• 26:32David Sacks?

  No, super hard, yeah.

• 26:35Speaker 01

  And when it's hard, you learn to be, you know, to overcome hard things. And the whole company learns if there's brutal honesty, right? If it's hidden at the top and you think it's alright, nobody learns. But if you do, you do. And actually, I think the rate of success of people that came out of founder of Google, relatively speaking, is not that high.

• 26:54Chamath Palihapitiya?

  Not that high.

• 26:54Speaker 01

  It's not that high, because everything works.

• 26:57Chamath Palihapitiya?

  And everything is easy.

• 26:58Speaker 01

  Everything is easy.

• 26:59Chamath Palihapitiya?

  But no, Friedberg, you run...

• 27:01David Friedberg?

  Oh shit, yeah, you're right.

• 27:02Chamath Palihapitiya?

  Sorry. But you're saying the Google people, Mar, to be clear, got very soft.

• 27:07Speaker 01

  They just never learned. They never learned.

• 27:09Chamath Palihapitiya?

  They never learned anything.

• 27:10Speaker 01

  They never learned.

• 27:11David Friedberg?

  Like an overcooked quinoa.

• 27:12David Sacks?

  Right. There are more, this is actually interesting, there are more unicorns founded by ex-PayPal people than ex-Google people, even though...

• 27:23David Sacks?

  At sort of the PayPal mafia, if you define it as the pre-IPO group of people who worked at PayPal, there were only a couple of hundred in the Bay Area, whereas Google had like 10,000.

• 27:35David Friedberg?

  So my theory on this, having observed it, the early days of Google, the organization grew, the success of the company was exponential out of the fucking gate. I mean, like more than most companies we talk about nowadays. And as a result, all of the success was baked in. The monopoly machine started rolling right away. So then the hires started being safer hires. People that could be more analytical, people that could be more execution oriented, not risk takers. And so a lot of people were hired, and I forgive, I went to Cal, but forgive me for saying, but all the Stanford people, who basically had always done really well on their SATs, got great grades, they'd always been successful, they'd always, you know, kind of been given that thumbs up, "You're awesome, you're smart, come here and do this job."

• 28:18David Friedberg?

  They weren't the risk takers, they weren't the people who were willing to take risk to fail. And so the orientation was build a culture of people that just took, didn't take a lot of risk, executed. And then those people, they had this false sense of entrepreneurial success by working at Google, because they were already on a rocket ship. Then a bunch of them left and tried to start companies, and they're like, "Oh yeah, you just build an app and a hundred million people use it." It's like, dude, failure, failure, failure, failure, failure, failure, failure. And by the way, if you make it to 87 failures, then you'll have your moment of success, and none of them make it past point 30, right? And so I think like my observation with so many Google people I knew that left and started companies, they either weren't risk takers, or they didn't have the grit and persistence needed to go through the failure to get there. And it was because that culture was defined by early success,

• 29:01David Friedberg?

  and then everyone that joined was just execution operations oriented.

• 29:04Speaker 01

  Hundred percent.

• 29:05Chamath Palihapitiya?

  Yeah. You mentioned something, maybe you can just speak a little bit more about it, but we used to do these things, which you talked about, where every week you would force people basically to present. And what you're almost doing, and I think what we learned was, you're desensitizing people to failure itself. And it just becomes a nothing burger, because you're just seeing this litany of just randomly bad ideas almost.

• 29:29Chamath Palihapitiya?

  But that's what becomes so powerful because then these random little things just become enormous.

• 29:34Speaker 01

  They shape you.

• 29:35Chamath Palihapitiya?

  They shape you and you get very, very lucky. I remember like when, you know, at Facebook, we created, I created this thing called Growth Circle. We used to run thousands of experiments a week and we used to have folks present every week and it was just three hours of monotonous failure, right? It was just one after another, after another. But I think what it really did was allow people to feel okay trying the crazy idea.

• 29:58Speaker 01

  Yeah.

• 29:58Chamath Palihapitiya?

  Because they would see the 15 people in front of them wouldn't do it. So is that, was that the key?

• 30:03Speaker 01

  That is the key. That is actually the key and actually it makes a huge difference, right? If you hear every, and they also inspire you. Whoever is actually doing great, you're like, I don't want to be the last person, you know, the next week when I have to present. I want to be better than the person that presented last weekend. Great. So it motivates you.

• 30:22Chamath Palihapitiya?

  But Mar, how do you get people that are those high SAT overachiever types to be okay?

• 30:29Speaker 01

  Yeah, you have to put them in a position. So I'll tell you like one, for example, in the class, one exercise, you can tell people towards the end, it's like, you know, they're all having some startup or have some users or whatever. They don't have a startup. They have a project. I'll say, okay, your homework for next week is to 10x your sales. You have one week to do it. And people get really, really creative when you actually tell them that. And maybe they don't get to 10, but they'll get to two or three in a week. And I think that inspiration is enough for people to make the best of themselves. I think great leaders do that, right? They ask for more than you think is capable. People are capable.

• 31:09David Friedberg?

  What about learning failure, right? We were talking about this on the, yesterday we were having a conversation about, you know, how do we make sure that our kids grow up and learn failure like we all learned? And failure ultimately, I think, and persistent failure, I think really taught me a lot about, you know, putting up with failure, knowing that there's, as long as you're doing the right thing, you'll get there probabilistically. How do you teach that? Because, you know, folks, especially in an environment where they've always been successful,

• 31:39David Friedberg?

  and how do you keep them from saying, you know what, I don't want to fail. I want to succeed because my orientation is to succeed. So when they start to fail, they run and they go do something easy.

• 31:46Speaker 01

  Totally. And actually at Stanford specifically, right?

• 31:49David Friedberg?

  Yeah, exactly.

• 31:50Speaker 01

  If you made it to Stanford as an undergrad.

• 31:52David Friedberg?

  Not to keep bashing Stanford, but yeah.

• 31:54Speaker 01

  I'm just, I'm just, I'm just a California student. But you are very, I mean, you've, you've been an incredible student. I mean, you probably cured cancer or something if you had to, if you got into Stanford today, right? So you're, they've, they've never really failed at life. Because an 18-year-old has never suffered failure, at least as we understand it. You have to put them, you have to learn each of the students, what is their weak point, and make them actually do that, right? So one of the things I will do. To induce failure. Yeah, you provoke failure as quickly as you can. So, you know, if you're a typical, you know, computer science student, you probably can create an app, well, these days, within an hour, you'll have something great, right?

• 32:39Speaker 01

  Try to get a thousand users. Yeah. Without spending a single dollar. Let them fail. Can you do it? Yeah. It's hard. Yeah, and then do it again. And some of them, you know, the mental health problem is very, very high, right? I think a lot of these people, the first time they fail, they can't take it.

• 32:55David Friedberg?

  Let me ask you one more, because my, I'm sorry, Jake, but my, my, my big three predictors of entrepreneurial success are grit, persisting through failure, bias to action, like you don't have an orientation for being analytical, you have an orientation to taking action, and a narrative. Because I think that the greatest entrepreneurs that we all know, Elon's obviously the penultimate example, someone told me I use that word wrong, so I won't use it. Yeah, penultimate means second. Correct. Ultimate is what you're going for. I feel like you're wrong on that, but I'll accept it. It may be the quinoa getting to your brain, but go ahead. You may want some protein.

• 33:30Jason Calacanis?

  He had the ultimate definition, you had the penultimate definition.

• 33:32David Friedberg?

  More like mixed steaks. So, how does narrative get learned? Because we've seen that the best entrepreneurs are incredible storytellers.

• 33:41Speaker 01

  Yeah.

• 33:42David Friedberg?

  They tell the story and they tell the vision before it's built, as a way of attracting the best talent, and then as a way of attracting the capital.

• 33:48Speaker 01

  Great point.

• 33:48David Friedberg?

  And then as a way of attracting customers. And that, that ability is key to success, and how do you actually, is there a way to develop narrative?

• 33:55Speaker 01

  It's actually really important, you know. And I'm gonna even elevate it one more. Sales, you have to be a great salesperson. Your narrative, you're selling the story of your company, but you may be selling to an employee, to an investor, or whatever. You need to be a great salesperson. Unfortunately, teaching sales at a higher educational institution is considered like dirty work, so we don't even teach it, right? But it's the most important thing. So, you know, I run a little accelerator, just like Jason, and we spend the last few weeks just teaching people how to talk. You know, how do you explain what you do? And, you know, I tell people there's nothing like practice. You have to practice, practice, get coached, etc. Some people are born with that, some people you actually have to learn.

• 34:39David Friedberg?

  You think it is learned, though?

• 34:40Speaker 01

  It is. Well, you can definitely get better, right? If not, the world would be a better, a sad place.

• 34:46Jason Calacanis?

  Mars, we wrap here.

• 34:47Speaker 01

  Yes.

• 34:48Jason Calacanis?

  We have 10 daughters between the four of us.

• 34:50Speaker 01

  I love that.

• 34:51Jason Calacanis?

  We're all girl dads.

• 34:51David Friedberg?

  Yeah.

• 34:52Jason Calacanis?

  Three, two, two, three?

• 34:56David Friedberg?

  Whatever.

• 34:59Jason Calacanis?

  You can remind David of the names of his daughters. They're on your watch, I'll look them up. Mars, what can you... He's got a little card in here. I'd like to thank... My wife's name is... He's got a picture, a little picture. Mars, what have you learned about women in terms of entrepreneurship? What do we need to know about encouraging them to become entrepreneurs and to create companies?

• 35:30Speaker 01

  You know, I think the most important is

• 35:35Speaker 01

  for women to believe in themselves. I think a lot of us don't. I think you Google imposter syndrome, and we all have it, even myself, coming here today. I was probably the person that practiced the most, because I have that imposter syndrome. That is the most important. You have to overcome that, because for most men, it comes naturally, right? And us, we have to work a little harder to do that. But with confidence, we make amazing founders, I would say. And, you know, I am fortunate to work with many of them. This year, our accelerator, this session, we present on Wednesday, will have two-thirds of the founders are women. That's very impressive. And they're amazing. I'm not, you know, they're not... There's no cutting corners. We're the best people.

• 36:18Jason Calacanis?

  But we as a society have to do a better job of...

• 36:21Speaker 01

  Stop clicking on those clicks, you know, chicks for clicks.

• 36:24Jason Calacanis?

  Exactly.

• 36:24Speaker 01

  Stop clicking.

• 36:25Jason Calacanis?

  Well, and I think maybe, you know, them seeing more role models like you. And I think very specifically, you know, we as all girl dads appreciate the work you're doing.

• 36:36Speaker 01

  Oh, thank you.

• 36:37Jason Calacanis?

  Let's give it up for Mark.

• 36:46Jason Calacanis?

  Rain Man David Sacks.

• 36:51Speaker 05

  And it said, "We open sourced it to the fans and they've just gone crazy with it." Love you, Sacks.

• 37:04Speaker 05

  Besties are back. That is my dog taking a piss in your driveway, Sacks.

• 37:11Speaker 05

  Oh, man.

• 37:14Chamath Palihapitiya?

  We should all just get a room and just have one big, huge orgy because they're all just... It's like this sexual tension that they just need to release somehow.

• 37:22Speaker 05

  What, you're the bee? What, you're a bee? We need to get merge. Besties are back.