EP 30: Conversation with Plaid & Column Founder William Hockey, Covering Adam Neumann with Author Maureen Farrell and Common Founder Brad Hargreaves

In the 30th episode, William Hockey joins for a conversation on founding Plaid, what it’s like running Column with his wife, and the state of startups and fintech. Plus author of “The Cult of We” Maureen Farrell and founder of Common Brad Hargreaves join to discuss Adam Neumann and his latest real estate venture in Flow. (0:00) Intro (1:55) Introducing William (4:48) Kids today (6:22) William’s first pitch to Zach (10:44) Data prioritization (12:21) Providing services others don’t want to do (21:29) Strategic decisions (25:48) Organizing a new UI (31:38) Selling Plaid to Visa (33:13) Fintech in current market conditions (38:27) William bought a bank (44:00) Running Column as a couple (52:03) Crypto’s role in finance (59:57) Funding (1:05:45) A changing path for entrepreneurs (1:11:21) Neumann and Flow (1:13:46) Introducing Maureen and Brad (1:15:30) WeWork recap (1:22:06) Common vs WeLive (1:27:23) Community Narrative (1:33:21) Flow’s potential use cases (1:36:36) Why Andreessen would back this (1:42:58) Does it help when founders are crazy? (1:47:38) What will Neumann need to do? (1:52:03) Outro Mixed and edited: Justin Hrabovsky Produced: Andrew Nadeau and Rashad Assir Executive Producer: Josh Machiz Music: Griff Lawson 🎙 Listen to the show Apple Podcasts: https://podcasts.apple.com/us/podcast... Spotify: https://open.spotify.com/show/5WqBqDb... Google Podcasts: https://podcasts.google.com/feed/aHR0... Follow on Socials 📸 Instagram - https://instagram.com/cartoonavatars 🐦 Twitter - https://twitter.com/cartoonavatars 🎬 Clips on TikTok - https://www.tiktok.com/@cartoonavatars Executive Producer: Rashad Assir Producer: Leah Clapper Mixing and editing: Justin Hrabovsky Check out Unsupervised Learning, Redpoint's AI Podcast: https://www.youtube.com/@UCUl-s_Vp-Kkk_XVyDylNwLA 🎥 Subscribe on YouTube: https://www.youtube.com/channel/UCugS0jD5IAdoqzjaNYzns7w?sub_confirmation=1 Follow on Socials 📸 Instagram - https://www.instagram.com/theloganbartlettshow 📱 X - https://twitter.com/loganbartshow 🎬 Clips on TikTok - https://www.tiktok.com/@theloganbartlettshow About the Show Logan Bartlett is a Software Investor at Redpoint Ventures - a Silicon Valley-based VC with $6B AUM and investments in Snowflake, DraftKings, Twilio, and Netflix. In each episode of The Logan Bartlett Show, we sit down with the people behind today’s most important startups and extract the tactics, lessons, and frameworks they’ve learned the hard way. Conversations span hiring to GTM, product, growth, fundraising and everything in between - collectively forming the ultimate playbook to make you a better CEO, investor or board member. Tap follow and enable notifications to stay ahead of the game.

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

• 0:04Logan Bartlett?

  Welcome to the 30th episode of Cartoon Avatars. I'm your host, Logan Bartlett. What you're going to hear on this episode is a conversation that Zach Weinberg and I had with William Hockey. William Hockey is the founder of Plaid, where he was president and CTO, and then he's now the co-CEO of the business called Column. This actually might be up there for my favorite interview. William is a very entertaining guy. Zach and he go way back, and he was very much a natural to talking about Plaid, talking about the industry, talking about his new company, working. His wife is his co-CEO as

• 0:47Logan Bartlett?

  well, which is interesting. He has some hot takes on crypto, although it's not a crypto podcast, I promise that for all the people that are complaining about how many crypto podcasts we have. And so I would very much encourage people to listen to that. And then on the back half of the episode, we have a conversation between Maureen Farrell, who was the author of The Cult of We, along with Elliot Brown. They wrote a book about Adam Newman and WeWork, as well as Brad Hargreaves. Brad is the founder of a business called Common that actually shares a lot of parallels with what it seems like Adam Neumann's doing here with his new company Flow that was announced this week, that they had raised $350 million

• 1:32Logan Bartlett?

  from Andreessen Horowitz. And so it was an interesting discussion that we had about both what went wrong with WeWork and what Adam's undoing was then, what he's been up to since, as well as what he's trying to do now. And so definitely an interesting and topical conversation. So what you'll hear next is William Hockey, followed by the discussion on Adam Neumann. William Hockey, founder, co-CEO of Column.

• 2:00Logan Bartlett?

  And founder, were you CTO of Plaid? What was the official title?

• 2:05Speaker 01

  Yeah, I was, I was a president and CTO about at Plaid. So, you know, unclear what that means. Just, there's still a lot of titles up on LinkedIn. So.

• 2:12Logan Bartlett?

  Yeah, I don't know. President sounds good. Sounds official.

• 2:15Speaker 01

  I mostly just try to copy Zach. I'm like, whatever Zach did, I would just, you know, Zach Weinberg, whatever he did, I would try to copy it. So.

• 2:21Speaker 02

  That's typically the best path. So I assume you'll be joining the crypto podcast next week then?

• 2:27Logan Bartlett?

  Yeah. Yeah. What are your thoughts on Web3?

• 2:30Speaker 01

  Honestly, don't get me started. I'm into it. Let's do this. Let's do this.

• 2:35Speaker 02

  See, look, we got another one. Now we have a third amigo who wants to talk about crypto. And if there's someone who knows more about fintech than me, it's William.

• 2:44Logan Bartlett?

  I don't even know if I thought about crypto as a potential topic, but I feel like, you know, we might need to, if we have enough time left, I feel like we should bring it back to, bring it back to that.

• 2:52Speaker 01

  We can make it messy. I'm in, I'm in for a fight.

• 2:55Logan Bartlett?

  Zach, what was your, what was your actual title at, at Flatiron?

• 2:58Speaker 02

  Co-founder and COO.

• 2:59Logan Bartlett?

  COO, got it.

• 3:02Speaker 02

  Another made up title that was a hodgepodge of different functions that I ran, that were separate from what Nat ran. That was basically how we did it.

• 3:11Logan Bartlett?

  Yeah, makes sense. Well, uh, well, William, thanks for doing this. So, uh, you, Zach, you were investor in, are an investor in Plaid? Is that, maybe, maybe take us through how you guys know each other.

• 3:22Speaker 02

  This is really curious because I have my version of the story and I wonder if it lines up with your version of the story, William. I'm like, not sure.

• 3:30Logan Bartlett?

  This is like what they do at rehearsal dinners or something, right? It's like, you know, they, the, they're, they're, each person's giving their version of events. Yeah, I like this.

• 3:38Speaker 02

  Do you remember? Now I'm actually curious because, you know, you guys are memorable to us, given you're the best performing company in our entire portfolio. Uh, do you remember the first pitch meeting that you did with us?

• 3:49Speaker 01

  Yeah, I think I remember most of it. I think there's a skill set to being a founder, which you have to be this forever optimist. And you just don't remember pain in your past. And so I really only remember things that were like in the past six months. And so anything past a year or two really bothers my wife. I have like no recollection of. But, I mean, so, so Plaid is an interesting story. We started since looking 2012 when like it's weird to say this like fintech really wasn't cool. The only thing that was cool is payments. It was like Stripe and Square. And so if you weren't doing something like that, you weren't taken seriously. And, you know, to their credit, the original idea that Zach and I had was pretty bad, where we wanted to be in financial services. And we can get to the story later if we want.

• 4:32Logan Bartlett?

  Other Zach, your co-founder also, which we.

• 4:35Speaker 01

  Yeah. So it's very confusing. Zach Peray.

• 4:37Logan Bartlett?

  We should go Plaid Zach. Yeah.

• 4:39Speaker 01

  Yeah, Plaid Zach. Plaid Zach and I had this. We like wanted to do something in financial services. We had no idea what to do. And so we decided to like do something in the consumer space.

• 4:48Logan Bartlett?

  By the way, how did you decide like financial services was something that you wanted to actually go into?

• 4:53Speaker 01

  I mean, let's be real, like, we were all like 20 to 21 year olds men. We weren't like super introspective and smart at that moment. I kind of feel like they breed them a little smarter these days.

• 5:03Logan Bartlett?

  They definitely do. By the way, the preparation that these kids have.

• 5:07Speaker 01

  I was like, what?

• 5:08Logan Bartlett?

  Well, it's funny because I was, I got staffed. So I was in investment banking in 2010, 2011, and I got put into fintech group. And I was like, this shit is so boring. Right? I'm like, what? I, I was like, get me, I, I, so I ran the software as like what, what I was trying to, so clearly, I mean, you guys were smarter than I to all the software has been a good industry, but.

• 5:29Speaker 02

  They really are better, by the way, these days, like the quality of the pitch relative to the shit you pitched me that was terrible back in 2012. Like, it's remarkable how good the young founders are right now.

• 5:40Logan Bartlett?

  Well, they have podcasts and stuff to help them out, you know?

• 5:43Speaker 01

  I mean, I can kind of go on a rant on this. I think it's actually kind of worse. And this is maybe I'm just like a cranky old man at this point. I kind of feel like Silicon Valley though, like puts everybody into this formula. You know, you're like, oh, you have to go to Y Combinator. If you go to Y Combinator, here's your pitch deck. Here's the recruiting email you have to send. Like, I feel like now startups are kind of by recipe. You're like, oh, enterprise, here's a recipe. Crypto, here's the recipe. And people just like rinse and repeat. And so it looks good and it sounds good. I don't need a lot of, you know, can't wait creativity, first principles thinking. And to our credit, I think when all of us started companies back in the early days, it wasn't like, you know, super, super crazy hard, but you kind of got to, you kind of had to make things up as you go. And so, I mean, the first time I pitched Zach,

• 6:24Speaker 01

  we were kind of doing this consumer app that was, am I allowed to cuss? I feel like a dog shit idea.

• 6:29Logan Bartlett?

  Yeah, yeah, yeah, of course.

• 6:31Speaker 01

  Okay, it was a dog shit idea. And, you know, as you can imagine, Nat sat there like pretty silently and was like, mm-kay, okay. And then like Zach, just like, you know, just like lays into it like five minutes, five minutes into it, kind of tells us how shitty of an idea it was. It, well, it wasn't that surprising because we pretty much had 65 people before that also tell us it was a really terrible idea. But we ended up going back a little bit later with it, with a slightly different pitch, which is kind of what Plaid is today. And we ended up conning them out of their money, which was, which was, which was quite good.

• 7:04Speaker 02

  No, that's, that was the story. They can't, I'm glad we remember the same story. I remember, it's like my claim to fame is I passed on Plaid. And then eventually I said yes, but.

• 7:14Logan Bartlett?

  Yeah. And now you have web three arguments and stuff. So, you know.

• 7:18Speaker 02

  That's it. Yeah. I'm never going to outlive that one. No, they came and pitched this like horribly idiotic consumer idea. Or they were trying to like monetize people's credit card data. I was like, no one's, what are you going to pay them four cents a year? And it was, it was really bad, but, but at the same time, you could tell that they were sharp and learned quickly. And then they came back. I remember, I think we were sitting in the first round capital office in New York.

• 7:42Speaker 01

  Yeah, it was at Union Square, right?

• 7:44Speaker 02

  Yeah, it was their old office and you guys came back and I remember, William, you in particular, walked us through this like problem you had discovered, at least at the time you described it as like a data quality issue. Which was essentially like if you hooked up your bank account, or I believe at the time, it was even you were contemplating like credit card data as well. And you walked us through actually like the effectively like the the data file that you would get back from wherever you were pulling data from and being able to actually turn that into mapping to, you know, a specific restaurant or a specific merchant or retailer, whomever it be and like how messy and dirty it was.

• 8:27Speaker 02

  And that the idea was more about the data cleansing than it was actually like the API into the underlying systems. And then that at least was like very specific and technical. And that's why we ended up saying, ended up saying yes. And then I think you ended up tweaking it, obviously, since since then. I don't know if you remember that like twist. Sometimes, as you said, like as a founder, you kind of throw out the the bad history.

• 8:49Speaker 01

  Yeah, exactly. No, I think that's really right. I mean, I think Plaid is an interesting, we kind of interesting story because we kind of came a secure this route into where we are today, which is most people in financial services at the time were very much focused on like the transaction. I would just focus on like the payment. And so how do we broaden payment acceptance, whether that be in person with something like Square or online with a brain cherry stripe or something like that. And I think we we thought, which, you know, I think proved to be correct, is this entire other branch of fintech that is less about commerce and it's more about how do we provide these ancillary services? You know, we didn't predict it, but if you think about like the Robin Hoods or the neo-banks or the wealth planners or the payment apps or something like that, those are all, they

• 9:32Speaker 01

  need financial data that isn't payment related. It's it's not commerce related. And we recognize that we weren't smart enough to actually come up with that really interesting consumer idea, but we could probably make the process to build that a lot easier. And in our unlock was actually the hardest part about building this was actually connecting that legacy institution because a legacy institution has the data you need, has the payment credentials and stuff like that. And so if we could figure out a way to deliver that to a developer, they could potentially build something really cool. The problem was in the first two years, nobody was really building anything cool. Kind of because the fintech, as we think about it right now, really didn't come into prominence until, you know, 2014, 2015, 2016.

• 10:16Speaker 01

  And so really, we were just kind of, you know, slaking away without a lot of traction. But I think luckily, people like Zach and Nat believed in us and we got a, we'd have money to kind of. Worked through those first couple of years or wait until the market really started to peak, which it did. And now there's obviously these amazing companies out there, you know, like a Chime or a Square Cash or Coinbase or Robinhood or something that are these consumer staples. And, you know, we, we got a chance to work with all of them when they were, you know, one, two, three, four people.

• 10:44Speaker 02

  When you were early on, how did you decide from a prioritization standpoint between like new sources of data versus what I would think of more as like data quality enhancement, like making the data, how did you trade those off?

• 11:00Speaker 01

  I don't know if we've actually ever figured out the correct answer to that because I think the problem you have in our space is you have a very classic long tail problem where most people bank with the top 20 institutions. And so the, the easy answer in the early days was, okay, like most people who go sign up to buy crypto on Coinbase, they're all coming from like three institutions. And so as long as we can cover that institution, we have a 90, 10, and so we're good enough to go. But as these problems start to go mainstream, that 10, 15% that can't onboard, they end up becoming extremely noisy. And so you end up actually not being super profitable on that long tail, but you have to do that in order to keep your

• 11:43Speaker 01

  customers happy. And so what we did is tactically for the first year or two, we focused on super high quality data on the first, on the top 20 institutions. And then over time, we really had to build out that long tail. I mean, even to an extent now, if you work, if you are at some like very small institution and you, there's a chance you may not actually be able to connect with Plaid. It's something that we're, you know, there's 10,000 institutions in the US, we can't cover all of them. And so that will always be kind of a common problem. But the problem is that last institution we add, I don't know, maybe we'll get three people on in a year. And so it's not, it's not super profitable, but we have to do that. And so we keep consumer complaints down. We keep our customers happy and things like that.

• 12:21Logan Bartlett?

  You know what I think, I mean, so many companies that pitch us over time will say, hey, you know, we do this and then we can do the interesting stuff, right? And it's like, this is all, you know, we're just kind of doing this as a means. And you're one of the few examples, I feel like at least some, I don't know the big ones originally that you guys were working with. Maybe, maybe it was Capital One or one of those big institutions that you kind of had to do this in a, in a Less pure way initially, right? And it was kind of screen scraping to be able to integrate the bank information with the fintech product. And then you were actually able to get enough critical mass that they started to work with you.

• 13:06Logan Bartlett?

  Is that right?

• 13:07Speaker 01

  Yeah, no, I think that's exactly right. I mean, this is something I always feel strongly about, which I do feel that sometimes companies in Silicon Valley is too obsessed with pure problems, right? We want like a very clean engineering solution, which is, hey, you know, the input is great, the output is great, and we're just transforming things in a way, right? That's great when you kind of own the environment end to end, like your Slack or something like that, right? You can control the distribution. But I think for us, we are probably the exact opposite of that business. Like Plaid, and just to go on the record, it's a pretty dirty business. There's nothing clean about it. And that always caused a lot of consternation. A lot of investors didn't like that. They're like, huh, you know, you're like, you're getting data from sources that you don't have like, you know, 10,000 page MSAs with?

• 13:52Speaker 01

  That's crazy. And, you know, and then consumers will go online and be like, oh, screen scraping is terrible. And I totally empathize with that perspective. But I think when you're a startup, you kind of got to do the hard thing. And usually that hard thing is dirty. And so absolutely, I mean, we didn't have a first contract with banks for years. And so we had a very, you know, I'd say tense relationship with a lot of them because from a strategic perspective, it kind of made sense, right? Where they had this data, they thought it was theirs. We were working on the, we were working for the consumer and the consumer was like, hey, this is our data. We want to be able to port this over. And things like, and a lot of kind of the, you know, consumer data protection stuff and portability protection stuff that are popular now was not really a thing back then.

• 14:37Speaker 01

  And so we didn't really have the law on our side. And so we definitely had to do some stuff that I probably won't go into that is definitely pretty intense and pretty, pretty dirty. And that's why we could charge money and that's why we actually deliver a lot of value to our consumers, who are customers. We never really had a problem where our customers were like, oh, we're going to vertically integrate, do what Plaid does. Everybody was like, oh my God, I do not want to do this. Thus, I'm willing to pay for this to go away.

• 15:03Logan Bartlett?

  Because the long tail problem is so long, a lot of these banks are built on like old mainframe stuff. And so like you have to go, once you get past the big three, you're talking to community banks affected, I mean, probably, you know, 25 to 50 or community banks that are built on mainframe software. And so it's a really hard problem that only proliferates on down the line, right?

• 15:30Speaker 01

  Yeah, but I think, you know, dirty problems and kind of these like hard where like everybody isn't super aligned and there's conflicting interests. I actually think this is where some of the best businesses are made. It's like what I'm looking at, I don't really invest that much. But when I do, I like these problems. I kind of like the problems where it's pretty hustly, it's pretty grindy, and it's very clear that if you can unlock it, you can drive a lot of value. I think if the barrier to entry into the problem is super low, like, I don't know how much value can you create? All you're doing is you're saving that customer time. If your pitch is, hey, you can do this in six months, or you can pay us $9.99 a month, you know, that doesn't have a lot of sticking power. And I think if the answer is, hey, even if you have a thousand people in like three years, do you actually want

• 16:12Speaker 01

  to solve this problem yourself? And if the answer is no, then I think you have a pretty good business.

• 16:18Speaker 02

  I'll tell you, I don't know if the statute of limitations on the Flatiron acquisition has ended yet, but I'll tell you one like gross little story, which I'm sure it just like hearing you talk about this reminds me, we had to do similarly disgusting data integrations with like third party electronic health record systems. If you think like a bank has like shitty infrastructure, welcome to healthcare. Eerily shit, it gets the same shittiness. And so we had to do these like essentially these data polls, and there's no API, there's no like web hooks into this thing. It's literally like a MySQL database that we have to go and like find and copy over. And we're looking for like all the like intricate nitty gritty healthcare data. And obviously, the tables aren't labeled and there's no data dictionary.

• 17:01Speaker 02

  So we're like, we don't know what this database looks like. I remember having this problem. We're like, we get all this data, we don't even know what it is. We have to go find the schema somewhere. Can we get like a copy of the schema from someone? Turns out, the schema and like that data dictionary essentially that like tells you what's in the database is considered IP. So you're not allowed to share with us, but we needed to do the data integration. And I'm not gonna explain, I'm not gonna share exactly how we did it. But there was kind of like a briefcase in a hotel lobby type of situation where we got somebody to effectively share it with us and we put it on a machine that wasn't connected to the internet. And we're like, all right, learn this schema, guys, because like, we're not allowed to have it. Uh, and then we did the data integration and it's like, you know, those gross shitty

• 17:46Speaker 02

  problems are where the value is created because like, uh, Google's not doing that.

• 17:50Speaker 01

  I, I agree. You know, if, if the government ever allows us to do anything to sell the company, I, I'll, I'll tell you lots of insane war stories about the exact same thing.

• 17:59Logan Bartlett?

  On that, like, when you got to, because the advantage that you had were not, was not only that you got to the scale you did with, with Plaid, but then you also, uh, suddenly there were other people that wanted to do this. And then you were like, the, the best of the worst, uh, of the people, right? Cause like, you're the biggest and like, at least, you know, the banks already hate you, but they, they might as well hate only one of you, right? And so then they started to be more accommodating to working with you. Was that kind of how the flywheel ultimately? Because it went from like, oh, this is kind of gross, this company just does screen scraping to like, the hottest company in Silicon Valley, right? And I think part of that was the fintechs all took off and all that. And you guys were

• 18:43Logan Bartlett?

  the underlying infrastructure that enabled it. But then also it felt like there was a real domino that shifted in terms of like, the, some elements of the purity that people were working with you and the network effect really started going.

• 18:55Speaker 01

  Yeah, definitely. I mean, I think it is a business that definitely has a lot of economies of scale. Um, I think Plaid is interesting in the fact that it is, you know, it's maybe somewhat of flat iron, which is you can kind of only have one or two in, in the market because the market isn't like $5 trillion. And so if you want to build a big company, you kind of have to dominate the whole thing. And so you have to capture a, a good amount of the pie. And so I think, you know, luckily we've been able, we've been able to achieve that. And I think also the politics have changed a lot. And I think the banks' understandings of technology and fintech and all this stuff, I think has evolved. I think there was this nervousness kind of in 2012 to 2018 that I think has changed, which is, oh, my gosh, these fintechs are here to take our customers and kill our business.

• 19:41Speaker 01

  I mean, if you really look at bank earnings, you look at fintech and stuff like that, that's actually not true. I think a lot of these things can run in parallel, which is I don't think, you know, Venmo has decreased, you know, net income of JP Morgan or Bank of America at all. And I think our pitch, which actually is true, is if you allow interoperability between your bank and these fintech apps, that actually locks the consumer in more, which is, you know, if you've hooked up your Chase to your Square Cash account and your Robinhood account and your Coinbase account and your payroll accounts, that's really, really sticky. And if, and, and I think that was a hard narrative to say without data, but I think as this stuff got larger, we actually had the data to prove that.

• 20:24Speaker 01

  And I think now that, I think that assumption is a little bit more market standard. And so there's less hostility between the two. And also, I mean, now I own a bank now, and so I can kind of appreciate this. I think there's just, it's harder to understand the risk of the ecosystem. And now that we're larger and have teams and we work with a lot of stuff, we can really help them underwrite everything better. And so we just know a bit more how to navigate. Because we started this, you know, we're 22 or 23 and you're in there and you're getting yelled at by Jamie Dimon, like, we're not going to be successful. We're not set up for success in that situation. But as you get larger and you have more people and you can kind of understand how to navigate these larger bureaucracies, you can do a lot better. And so now I think we actually have quite good relationships with the banks. There's always a couple that are a little bit more tense, but I think we kind of understand how they play the politics that we maybe didn't when we were 22.

• 21:09Speaker 02

  Are we gonna acknowledge that you dropped, that you own a bank halfway through that spiel as like a casual, like, well, you know, I've got a Balenciaga shoes, but yours is just like a bank?

• 21:21Logan Bartlett?

  We'll get there eventually. I mean, everyone has their vices, Zach. You own a nightclub, Nat has all these trading cards and, and William owns a bank.

• 21:29Speaker 02

  Speaking of which, uh, just because like I love the product stories, were there any, were there any decisions that you look back on that you, because there was competition, right? It wasn't just you guys in the beginning and then you broke out. Any product decisions or strategic decisions that you made that you can point to, you're like, thank God, we did this thing A or B because that drove the outcome?

• 21:51Speaker 01

  Yeah. Do you want the, it's a little technical and complicated. Is the audience cool with that?

• 21:56Logan Bartlett?

  Yeah. I mean, take us down is if I can keep up, I'm sure most of our audience can. But no, it just take us, take us down as much as you can, but I'm sure people would want to nerd out on it.

• 22:06Speaker 01

  Yeah. So I think the most successful decision we made was, was actually owning the interface, like actually the physical design and owing the, owing the client side. And so what that means is when we first started, we were this transparent infrastructure provider. And so the consumer had no idea who we were. And so, and so you were a fintech app. You would collect the necessary credentials for the consumer. You would send that to your system. You would send that to Plaid. Plaid would do what it needs to do and send you back the data.

• 22:35Logan Bartlett?

  So, so just to give the use case here. So, so Venmo, I have Bank of America and I'm signing up for Venmo for the first time. I need to deposit money into my Venmo account. Venmo is a customer of Plaid's. And so the integration that ends up happening is powered by Plaid and Plaid has the infrastructure that will go integrate into my bank and help deposit the money into Venmo. Right? Is that fair characterization?

• 23:04Speaker 01

  Yeah, exactly. That, that, that's, that's definitely close to it. And so what you need to do is let's say you bank with JP Morgan. You need to hook up your JP Morgan account to Venmo. And so Venmo can pull money and send it to Zach. And so what happened is you didn't know as a consumer that Plaid existed in that flow. And we realized that this was kind of problematic because as a consumer, you were not getting the same experience hooking up your bank account to Venmo as you were when you hooked up your, your account to Square Cash, to Chime, to Coinbase, own whatever. And that had a lot of issues. It had a lot of security issues, but also had conversion issues because every application thought that their design was best or whatnot. And so what we decided to do is we actually

• 23:48Speaker 01

  made them kind of display a Plaid designed UI.

• 23:54Speaker 01

  To the consumer.

• 23:55Speaker 02

  And they, in this case, was Venmo or whoever, whoever your actual customer was. They had, and you guys actually had the logo as well, right? It wasn't just the UI, it became the brand too?

• 24:07Speaker 01

  Exactly, and so we kind of made the application insert our branding, our logo and all experience into the application. And that was extraordinarily controversial, as you can imagine, because these applications want to control the experience. And I totally empathize with them. But I think for us, we recognized that we needed to establish some level of relationship with the consumer and provide uniformity across these applications. Because we were the only one focused this hard on conversion. And what we found is when we did that, it actually started converting a lot better. And the, and the, and the consumer actually started to feel comfortable like, hey, I know this screen, I've seen this before. And it also allowed us to do a lot of micro optimizations around messaging certain banks

• 24:52Speaker 01

  and just allowed us to kind of have a platform that we could actually deliver content and software directly to the consumer. And it was never to actually cut the application out, but it was more to actually deliver a better service to them. And now 100% of traffic flows this way, and it's actually one of the only reasons that we have good relationships with the banks. Because those sensitive data never actually hits the application anymore. And we can also, if a bank wants to make you accept some terms of service or something like that, we can deploy that instantly. Or if a bank, you know, we need to take down for a second, we can immediately do that. And so it allows us kind of instant flexibility, but it was a very, very challenging rollout. You know, it took almost 18 to 24 months. There's a lot of pushback to it. But I think if we didn't do that, A, consumers would have a good enough experience.

• 25:37Speaker 01

  Also, we also would have got commoditized and it would have been really easy for these applications to switch it out. It would have just been a worse experience for everybody. But I think that, I'd say probably generated like 90% of our market cap today.

• 25:48Speaker 02

  One of the things we were talking about before you jumped on is like the culture of execution at a smaller nimble company versus a Google. I mean, kind of the classic combo, but you just had like a really interesting example, right? Like you build this new UI, this new workflow is controversial, you've got to go roll it out to all your customers over like 18 to 24 months. You expect feedback that's not necessarily so positive and nice at all time.

• 26:14Speaker 02

  How do you do it? Like, how did you organize it? How did you think through that problem? What would you change?

• 26:19Logan Bartlett?

  And when in the process, right? Because like, if you did it too early, they would have been like, fuck off. We're going to go work with these other people, right?

• 26:26Speaker 01

  And I think this may be controversial, but I think this is kind of why founder like companies win a lot is it was not a popular decision, right? You look at any sort of metric, you're like, okay, we're like pull consumers and consumers like, I don't care about this. You pull our customers and like, I objectively don't want this. You pull the banks and they're like, we're not even going to respond to your survey. And, and you could, you could clearly, and you could clearly pull your employees and you're like, well, this is obviously bad. And it was just something, I'll be honest, and I just felt very strongly about. And, you know, we were young enough that you can just make these high conviction bets. And you say, I think this is right. I can't back it up with data, but we're just going to do this. And that was kind of how it works. And, and that's what we did. And it, and I think it was a controversial decision for three or four years.

• 27:09Speaker 01

  And I think now it's definitely the right, the right answer. But it was a supplement that you have to have conviction and just, and just go with. And it goes also, we just knew, like, I think as a founder, as an early employee, you just have so much fine-grained nuanced knowledge about this area that nobody else spends time on. And I see this with founders a lot is when they go try to do product interviews or customer interviews, they are assuming that the people they're interviewing has similar knowledge, interest or insight to them. And that's just not the case. And so we just felt like there was a bit of an arbitrage or we kind of knew where the industry was going to play out. We knew what the banks were going to react. And so we just made the, made the gut and did it.

• 27:53Speaker 02

  Did you personally oversee it? Did you like the rollout? Did you have a deputy who did it? How did you handle the actual operation?

• 28:00Speaker 01

  You know, we, we made it when we were small enough that I just, I just did it myself. And I do think when you have to roll out something as high conviction on that is you need to be responsible. You need to say like, hey, this is my decision and I'm just going to push this through. I think a lot of times people Are too obsessed with consensus and consensus can actually make product decisions slower and less effectual. It also allows you to distribute blame more, which is a bad thing. And I think you need to understand ahead of time, like, hey, who owns this thing and who is the decision maker? And in that situation, it was me and we're just gonna do this. And like, if it messes up, it's my fault. Nobody else's problem, but here's what we're gonna do and we're gonna go do it.

• 28:41Speaker 01

  I tend to, you know, this is probably a little less popular. I do think when you're a smaller, smaller company, it needs to be a little bit more command and control from a product perspective. As you get larger and your workforce gets a bit more distributed, you obviously need to start deputizing people and passing ownership around. But for the first couple of years, you, you need to kind of suffer through some of these problems with force of will.

• 29:03Speaker 02

  Well, you're, you're telling me that you don't think every member of the DAO should vote on every product decision at all times, especially in the beginning?

• 29:14Speaker 01

  Yeah, the tragedy of the commons is real. It's a real thing. And we're just starting to realize that now.

• 29:21Logan Bartlett?

  Well, it's, Zach, he's not, he's not saying the member, the, the customers, in the DAO case, the customers are gonna vote and then they're gonna tell the, so it's the employee. Yeah, it's, it's this big circular thing.

• 29:33Speaker 02

  Right. No, that's definitely, that's definitely better. That's totally, yeah, for sure.

• 29:37Logan Bartlett?

  Yeah, the alignment with the customers being the employees is all, that makes it a lot better. No, it's, it's interesting. I mean, I will say it's, it's a, there's kind of this like fuck you mindset that the best founders that I've worked with have that are kind of like, hey, this came from nothing. And I have, it was just me or me and my co-founders in the early days. And so I could burn it down to nothing and I'll be fine. That was where it was when I started, right? Versus the whole John Sculley coming into Apple as the professional manager, right? And the ability to make those decisions, you almost feel more of a steward for someone else's product, right? Versus if it's your own, you're kind of like, well, I, we were making this up as we were going

• 30:20Logan Bartlett?

  along or in the early days. And so I'm just gonna keep making it up, even if it's at a bigger scale, right? So I think there's this attitude that Founders could have that just leads you out of these, I don't know, in these traps that like a business school textbook would tell you to avoid.

• 30:37Speaker 01

  It's a really hard balance because, you know, what it takes to be a really good founder for 10 employees is very different than 100, which is very different than a couple of thousand. And because, you know, in the early days, you'd be like kind of dictatorial, you need to be extremely opinionated, consensus is the worst. And then when you're a thousand, if you're a micromanager and you're trying to make every single decision, it's going to be terrible. And so as a founder, you need to kind of make this shift to like, hey, when is it my decision versus what I'm empowering people? And I think a lot of people don't really succeed in that transition. And I think a lot of times people don't really recognize, I mean, if you look at Zenefits, if you look at Uber, you had these founders that were just like exceedingly incredible up to a point.

• 31:18Speaker 01

  And then they just like didn't morph well enough, but it's kind of hard when you're a founder, you're like, when do I change? Like, when do I go from like being a crazy, like, when is being like opinionated and having a strong product conviction? When does that turn into like insane micromanagement? I don't know. It's kind of hard. And so you just kind of have to naturally make that transition.

• 31:38Logan Bartlett?

  And so, so speaking of, I guess, transitions, what, so you left when? When did you, when did you step down from a day-to-day operational role at Plaid?

• 31:50Speaker 01

  Yeah, so it could have been 2019, 2020, you know, Plaid, Zach and I had been running the company for, you know, almost eight years at that point. And we decided to sell the business to Visa. And at that point, I thought that it was a good opportunity to kind of step back and build something new. I thought it was like, could be a pretty nice transition point, you know, everybody had a really great outcome. I thought it was a great buyer that would allow us to really continue our journey. And I'll be honest, I was a little bit nervous about the market. And so we thought it was a good outcome. That obviously didn't work out. And so then I ended up kind of staying on in the background for a while.

• 32:23Logan Bartlett?

  For people that don't know, the, there was a DOJ investigation into the whole, I mean, I'm sure you can't share all the details of this, but you sold for, how big was the acquisition? Five and a half billion or something?

• 32:34Speaker 01

  Yeah, so we sold the company for five and a half billion to Visa. It closed and everything, but ended up, we ended up getting sued by the Department of Justice for antitrust. Not us being anti-competitive, but Visa was being anti-competitive. And so the acquisition ended up being canceled. But I had already kind of left at that point because I thought it was going to go through. And so I ended up, you know, working kind of in the behind the scenes as we were getting sued. And we ended up losing the lawsuit and so ended up getting wound down. And so, and I think it's actually been all for the better. Plaid is amazing right now. I'm still on the board along with Plaid Zach and I are the largest shareholders. And so I'm still very involved, but from a day to day, all my time is on something new.

• 33:13Speaker 02

  Maybe this is a controversial question. I'm not supposed to ask this, especially as a much smaller shareholder than you.

• 33:20Speaker 02

  Do you think the kind of like current market conditions and the fact that obviously like fintech valuations are getting reset? And it's going to be harder for smaller companies to raise money. I could see like there's good and there's bad, especially as like the dominant or one of the bigger ones. Like, how do you view the current, let's call it market reset as it relates to Plaid itself? And obviously don't share anything you don't want to share.

• 33:43Logan Bartlett?

  And just to add, by the way, some color on this, I guess, for people that aren't as close to this situation as you guys are. So it was a five and a half billion dollar sale, which is amazing by every, you know, metric. And then there was a period in which fintech totally blew up and it looked like, you know, I mean, you're, the most recent round was 12 billion. Right? And then that was, and now fintech market has sort of cooled or the overall market has cooled off a little bit since all of that. So there's a bunch of like different, you know, points in time that I guess you're referring to, Zach, right?

• 34:16Speaker 01

  Yeah. So I mean, I'm, I am still incredibly bullish on Plaid. If anybody shares a sell, go ahead and buy them. I think it's the best, it's the best business to be in, in fintech. I think you have to be intellectually honest with yourself and look across fintech and say, hey, like, were the valuations sustainable? Were some of these businesses actually fintech? I don't know. And I'll maybe point to a couple of examples, which is, I think. Like take loan origination. There's a lot of businesses out there that were simply just originating consumer loans. And they were like, hey, we're technology enabled because we have a good app and like we have engineers. Thus, we want to be traded on like, you know, 200x forward ARR. Like, that's bullshit. Like, that's not a fintech company. It's a legend originator.

• 35:00Speaker 01

  It could be a really good business, right? Like, loan origination could be a great business, but it's definitely not a fintech company. And so I think what you had is you had a bunch of businesses, I think, were masquerading as fintech. And the market got a little bit smarter and totally priced out. I think also, you know, there is a lot of, I think, consumer fintech that you have to be a little bit more insightful on, hey, what is the business model here? And are the unit economics actually positive? And I think what happened is when you had a huge amount of venture capital popping into the space, the cost of acquisition went way up. And then you add on to that, Apple made a bunch of advertising changes that made the acquisition go that higher up from there. And then you recognize that like, hey, how are we going to monetize these consumers?

• 35:44Speaker 01

  And a lot of these consumers are being monetized through pure debit card purchases, which makes money, but usually not enough to actually pay that consumer acquisition cost. And what you have is you have a lot of these kind of unprofitable segments. I don't, I think there's still a lot of amazing businesses out there. And I think fintech will be super resilient and will continue to grow. But I think there's a lot of companies that are going to have a hard time over the next couple of years and probably won't survive the next cycle. And I think that's actually healthy because I think there's a lot of bullshit in the space that was causing everyone to be like, oh, my God, fintech sucks, which is, which is dumb. And so I, I, I wish them well and the stronger ones will continue to survive. I mean, like, I also built another company that's powering fintechs.

• 36:25Speaker 01

  I'm clearly a fintech bull in the future, but I think I'm, you know, generally pretty bearish on the next couple of years.

• 36:32Speaker 02

  Makes sense. I always wondered like as a large but not yet like a successful but not yet public business, right? Where you don't have a liquid balance sheet and you know, making acquisitions is still a little clunky. You know, how a market downturn plays out because on one hand, you're going, yeah, you know, my multiples are getting reset. My valuation may come down or stay flat. It doesn't feel great. On the other hand, you're pretty successful already. And now you've got stability in a way that maybe some of the up and coming companies or potential competitors don't. And you've got this like window in time where you can actually expand or buy things or you know, just kind of use your existing success actually as an offensive tool rather than, you know, having to worry about all these little companies nipping

• 37:15Speaker 02

  at your heels because they won't exist. That was kind of what I'm curious about.

• 37:20Speaker 01

  Yeah, I know. And I don't want to, I probably can't speak too much on like plot strategy over the next couple of years, but I definitely, I definitely sleep pretty well. I think you're right. I think you have to look at yourself and say, okay, yeah, maybe my valuation isn't like the $30 billion that I could have got last year, but like, does that really matter? I think everybody's expectations have kind of reset. And I think you kind of reset in line with everybody else. But hey, I have a super strong business model. I have a lot of cash. I think, hey, there's a potential, a lot of really interesting things that we can do, whether it be getting really great employees, whether it be potentially doing a little bit of M and A on some depressed prices. I think there's a lot of really interesting things to do. I think you just have to be cognizant that I think, like, I, I, I think, I don't think we're in a blip. I think we're probably in a bit of a valley. And so you have to, you

• 38:04Speaker 01

  have to understand, hey, can we do this strategy for four to five years? I think a lot of people in the industry are assuming things are going to pick up in a year or two, which I think is probably not accurate. And so you just have to make sure that, hey, I'm good for the long term. And I think, you know, you also have to, I don't know, only losers pick the bottom. And so you have to be smart on when, when you're going to pounce. And I'm not quite sure we're there yet.

• 38:27Logan Bartlett?

  Maybe we've alluded to this a few times, but so your new project, so you bought a bank. Maybe take us through like, what was the journey to ending up here? And yeah, like what you're, what you're doing today?

• 38:42Speaker 01

  Yeah, I think there's, there's two ways to kind of look at what I'm doing now is one is from an industry perspective and what the product is. And then the second is kind of how we're doing it and why we're doing it. And maybe the second one is slightly more important, but I think from an industry perspective, what we do is we purchased a bank. And what we do is we provide financial infrastructure to other companies. And so what does that actually mean? Which is there's a lot of companies out there, whether it be an enterprise or a fintech company, or pretty much anybody, and they want to do bank-like activities. So that could be, I don't know, I want to loan money, I want to hold money, or I want to move money. In the US, if you want to hold money, move money, or loan money, that is a monopoly. And the only people that can do that are a bank.

• 39:27Speaker 01

  And so historically, what that meant is the, the, the bank is vertically integrated. And so they're going to have the consumer presence, they're going to have the brokerage business, they're going to have the payments business. They're going to kind of be like the Walmart of, of banking or financial services. And I think what our thesis is, let's say, we're going to be that regulated entity. We are going to be that bank, but we're going to allow you as a third party who's not a bank, to be able to do stuff like that, whether it be hold money, move money, or lend money. And we're going to do that in a very developer friendly way, in a very kind of, I'd say like non-bank-like way. Well, we can actually be, have great developer experience, have great customer service, you know, you know, talk to me instead of, you know, some random old guy and things like that.

• 40:08Logan Bartlett?

  The way this manifests itself before this was people were loaning out essentially their bank licenses, right? So it was kind of this klugey thing that someone was acting as a bank, but it was really another bank's license that was liable for what that person acting as a bank would do. But it was one step removed, right? How did this work before and what, like, what made you tackle this problem?

• 40:32Speaker 01

  Yeah, I think unlike at Plaid, we kind of invented something new. We were like, hey, this thing has never invented, like, happened before and we're going to invent it. I think what I'm doing here is like, this industry has already existed. I'm just probably doing it a little bit better, faster, stronger. Because how it worked before is you had this very complicated supply chain. Where you had these community banks that were ostensibly writing out their charters. But they didn't really know what people were doing with it. And what happened is you had these banking as a service providers that were these technology companies that would sit in between the customer and the bank. And they would provide the APIs, they would provide the developer experience. They would kind of pass all the risk and complexity up to the bank.

• 41:13Speaker 01

  And the bank, you can kind of think about it as just a bunch of random people with a charter. They would then outsource all of their technology out to a core. And these cores are something called FIS, Fiserv and Jack Henry. And they provide all of what you actually think a bank does. And so we looked at the space and we're like, this seems kind of overcomplicated for something that should be, you know, relatively simple. And so we are a bank, but we also have built all of our own core. We built all of our own developer experience. And so if you want to do something, all you have to do is come to us and we'll kind of provide the end-to-end solution. And there's a lot of complexities to that around balance sheet and compliance and stuff like that I could probably bore you with. But you can generally think about it as we took this really elongated supply chain and condensed it into one institution.

• 41:59Speaker 02

  Was there like a wedge product in this that you felt was like clearly a problem for customers? And that would allow you to wedge in? Or is this one of these situations where a more complete holistic service has to be available before anyone will make the switch?

• 42:15Speaker 01

  I think it's a little bit of both, which is, I think we had a conviction that this market is massive, right? There's a ton of people that can win in this space. And I think what I wanted to do is just build a really great developer experience. And what I learned from Plaid is it's really hard to build a really great developer experience unless you control your entire end-to-end flow.

• 42:38Speaker 01

  Because if I don't actually own the bank or I don't own the core, I can't actually deliver you a good service because I have partners upstream that could mess up. And that's a little bit what happens in the industry right now, which is you have these really great companies that are super smart. They build really great technology, but they've ostensibly kind of offloaded a lot of the technology and their responsibility upstream to people they don't control. And so they actually can't deliver a good experience. And so they're like, hey, you know, sorry, this thing failed. It's not my fault. I've called the guy three times and he won't pick up his phone, but like, hey, I'm trying really hard. Please like, don't hate me. And it's kind of hard to blame them. But with me, I was like, at Plaid, we didn't really control the entire experience because we had to call up to banks and that caused a lot of issues.

• 43:23Speaker 01

  So this time I was like, hey, if I'm going to do anything, I want to control the entire thing, all the ways up to the Fed and back. And that's kind of what we did. And so in many ways, it's just a high conviction bet that I think, hey, this space is going to evolve a completely vertical solution that is controlled end to end. It will be the winner. And I think it's going to take me 10, 20, 30, 40 years to get there. But if we do, I think we have an opportunity to be the largest and most important financial institution out there. But it's a really long journey to get there.

• 43:52Speaker 02

  Well, after those 30 years, you'll be what, 36, 37?

• 43:56Speaker 01

  Yeah, something like that. Yeah, I'll just be slightly older than you. It'll be great.

• 43:59Logan Bartlett?

  You alluded to we a few times. So, Colum, you actually started with your, your wife as well, right? And you guys are co-CEOs?

• 44:09Speaker 01

  Yeah.

• 44:10Logan Bartlett?

  And how was, how did that come to, come to be? I've, yeah, I've actually, we have one or two in our portfolio, but was this something that you guys wanted to do from the start? Or were you just ruminating on it and sort of thought it made sense at some point along the way that you were ideating?

• 44:28Speaker 01

  Yeah, I think I'm really lucky where I have a partner or wife that's, you know, much more smarter and more talented than I am. And so I think we've always wanted to do something together. But I also think from a relationship side and a success side, it makes a lot of sense. Because when you have, when you have a partner or even a, you know, a co-founder, you're constantly, you're constantly struggling with like your incentives, right? Which is if you're a co-founder, like, are your incentives aligned? But when you are married to somebody, your incentives are definitely aligned. And I think it actually allows us to make much more, I think, I don't say like selfless, but like very like company focused. Decisions, because every decision we make, like, I hope she's right. I hope I'm wrong. Because whatever happens, we have the exact same incentives. And I was very lucky at Plaid

• 45:13Speaker 01

  to have an amazing co-founder, where I think I always felt that our incentives were very aligned. And we had an amazing, still have an amazing relationship. But I've seen too many other co-founder relationships struggle with that. And I was not, I didn't think I could, you know, hit, hit, hit, hit well twice. I didn't think I could find a co-founder that I had the perfectly same incentives with. Also, I don't think I was strong enough or tough enough to start a company by myself. And so, Papp and my wife, who happened to be super smart, started with me. I think it seemed like the logical decision at the time. And still is. Super cool.

• 45:45Speaker 02

  Like, it's just amazing to me that you guys can make that work. And it's like, power to you for getting it done. I do think the aligned incentives take is really fascinating. I always felt that with, with Nat, that like, even if we would, you know, fight to the death about an idea or decision or whatever, someone's making this decision because they think it's the right thing to do, not because they're chasing something that like benefits them and not the other person. I find a lot of times, the co-founder blow up ends up being because somebody wants the glory. Someone wants the press and the PR and the like, you know, the newspaper articles or whatever. And that's where the misalignment,

• 46:29Speaker 02

  it becomes more of like a me versus we. And equity is supposed to solve this. And for some reason, it doesn't, it doesn't always work.

• 46:35Speaker 01

  I think that's right. I think, I think we always, you know, Plaid, Zach and I always looked to Nat and Zach as inspiration, because I think they were one of the very few co-founders that were, I think, ostensibly equal. And I think Zach and I always try to model that with that. I think there's this kind of common situation where you get this like charismatic business-y CEO, and they're gonna go try to find some, you know, L7 engineer at Facebook to go be the CTO because they can't code or whatnot. And even though the equity is the exact same, there's this kind of like inherent power differential. And I think that can cause a lot of conflicting differences. And so usually, it's that second-tier person or their product or tech person who, you know, leaves after a couple of years. And I think obviously Zach and Nat were very successful about that. And my, my co-founder

• 47:18Speaker 01

  Zach and I, I thought were very successful about that. But I think they are rare. And so finding a situation where you are both equal, not in equity, but also kind of in power, I think is quite hard to find.

• 47:30Speaker 02

  I find that now with my two new co-founders of the biotech work I'm doing, which I haven't talked publicly about too much, but they just have such complementary skillsets to me. They do things that I could never do. I do some things that they can't do. And there's this like mutual respect that sits there of we are better together than we are apart. And that's kind of what makes it work for now.

• 47:53Logan Bartlett?

  Yeah. And in our case, Zach doesn't want any credit nor to be really associated with this podcast. And so it's actually pretty easy in my case where I, I get to either take the blame or credit myself. So.

• 48:03Speaker 01

  Yeah. When you're going to get a little cartoon avatar of Zach and put him on the, uh, put him on the website. Is that going to be soon?

• 48:08Speaker 02

  He keeps asking me. I said, no.

• 48:10Logan Bartlett?

  He won't take it. I've offered this before. I've offered, uh, I actually changed the Twitter bio that said like, uh, hosted by Logan Bartlett. And then in parentheses, it says Zach Weinberg won't be called a host or something, uh, was, is what it says. So that's the new description.

• 48:26Speaker 01

  Well, I think it's actually pretty smart.

• 48:27Speaker 02

  I don't want to be tied down, Logan.

• 48:29Speaker 01

  Yeah. Like, like when I, like when someone like me says something that's going to get them canceled. Like Zach wants to be able to, you know, cancel you and he can be like, I don't know what that is. Look, I was never in the bio. So I think it makes a ton of sense. There's this really, there's really like, uh, this, this capped upside and like uncapped downside in podcasting. So I am, uh, into it.

• 48:48Speaker 02

  I will say every once in a while, as I told Logan this, every once in a while when we're raising money for this new biotech work, uh, it's called Curie Bio. I'll talk about it in six months, Logan, when we're actually public about it. But like everybody, every once in a while I get an email from an LP saying, really excited to meet, learn about the work you're doing in biotech. Are we going to save any time for crypto conversations? Because they've actually watched the crypto thing and I still to this day, it's probably happened like five or six times. I'm still not sure if it's good or bad. I'm like very conflicted. Like I, I, do you think I'm distracted? Do you like crypto? Are you worried I'm going to critique it? Like I, I just, I can't get my finger on the pulse. So that's part of why Logan, I like the optionality of fading into the abyss, you know?

• 49:31Speaker 01

  Have you had like Aaron Levy on the podcast where you guys just like circle jerk around crypto for like, uh, for like two hours? Cause like I would, I would listen to that.

• 49:39Speaker 02

  I would love to. I also, people don't know, like, I've known Aaron since I was 18, because he was one of the first founders we ever met when he was starting Box. This is like way back in the day. So I've known him for a very long time. And we used to just like joke and DM each other on Twitter about the crypto stuff when it was first coming out.

• 49:58Logan Bartlett?

  So I've interviewed, I had Aaron on myself before Zach sort of came in. And then there was this period where like the Web 3 debates really took off, where every Saturday Zach and I got an email from Aaron with like show notes or something, just like commentary on the episode. And no, we should have him, we should have him come on and do, just, just mess around at some point now that we're.

• 50:22Speaker 02

  We have to wear Larry David wigs if we do it, though.

• 50:25Logan Bartlett?

  The very curmudgeonly group here.

• 50:26Speaker 01

  So like, I'm just more curious, like, and Zach, because I struggle with this as well. And so, you know, I'm a little bit more like Silicon Valley is a bit of a mafia believer. So I'm a slightly conspiracy theorist, but you know, we have billions of dollars that go into crypto. So you're like, Andreessen's Crypto Fund or like Paradigm, whatever. Like, do you think these things are going to go to zero? Because I just don't think there's ever been a venture capital firm that's just gone like to zero, right? Where they have like absolutely no assets to return. And because like, I don't know, like, maybe I'm too much of a private here. But like, I think Andreessen is actually pretty smart. And so I kind of feel like they already have hedged against this fat that like crypto is going to zero. And so I just like, I'm trying to figure out like where this ends.

• 51:04Speaker 02

  Well, you have to untangle like the venture fund from the end result. Because, you know, it's always the retail person holding the bag usually at the end of the day. And like clever VCs will find their way out of this problem in this market, I think. So it's one of these things where it's like, will the long-term returns for a long-term hold look good? No, but will they actually hold through the long-term? Like, probably not.

• 51:34Speaker 02

  I just, I think it's a, I think it's a law of physics problem. It's exactly what you said, which is like, there's probably something here. It's some combination of like, a little bit of Bitcoin, some like weird decentralized apps that run on Ethereum, and then some like gross disgusting financial plumbing between third world countries that like have no banks. It's like, okay, cool, plus some like NFT stuff. And if you add it all up, 10 billion, 8 billion, you know, whatever, something like that.

• 52:02Speaker 01

  Yeah.

• 52:03Speaker 02

  We've done so many of these podcasts where it's just like me yelling like a crazy old person about use cases, uh, which sometimes makes me feel like I'm like shouting into the abyss, cause I am. But like you compare and you contrast the level of specificity when you get somebody who actually knows what they're talking about, like William on the podcast and talking about not just like the intricate nuanced details of the technology, but actually like why the customer cares and how they're gonna pay for it and can do it at this like very intricate level. And then you talk to a bunch of the other like web three oriented founders and it's very like, imagine a world that's just like, still to this day, like I hear myself saying out loud, out of curiosity, cause I have to go here. You know, you're in financial services broadly and obviously in the, in the guts of the financial system from a technology standpoint.

• 52:48Speaker 02

  How do you take, like, what is your perspective on the crypto role? If any, in the like underlying guts of the financial system, separate from payment, separate, you know, I guess just like your life philosophy, if you will, on the web three.

• 53:04Speaker 01

  Yeah, I think you have to kind of, you have to, you have to break out web three or crypto, but I can kind of give you my hot takes on the entire thing, since that's what we all want. I, I think crypto and web three is really great at one thing, which is trading in speculation. And I think, as you think about the intricacies of like securities markets, think about like market makers and stuff like that and exchanges. I think crypto and web three is super interesting there. And so if you want to build really good trading stuff and speculation things, I think crypto and web three makes a, makes a really great point. But the problem is, is you kind of have to boil down and you have to say like, okay, like, and then what? Like, and so like, what are you going to trade on the thing?

• 53:46Speaker 01

  Or the thing that you are trading, what use cases it have? And I just don't think we've answered that. And I don't know if we will answer that candidly. And so I think generally, I'll be honest, I'm a little bit more bearish. That being said, I am a tactician. I like solving very immediate problems. I like solving very clear use cases, and I have definitely missed a lot of really interesting boats. And there's a reason I'm not an investor, because it's hard for me to say, this is what I think the world's going to be like in 25 years, and I'm going to go make a high conviction bet on these various industries. I think also where we've made a bit of mistake in crypto is we've associated it with the internet, where people are constantly like, hey, this

• 54:29Speaker 01

  is the early days of the internet. And so we just have to be like, super bullish on our thesis holds. But I don't think they're really students of history, which is the internet actually started the exact opposite way of crypto, which is, hey, we have this very tactical use case, which is like, we need to like, communicate digitally between these academic institutions, these military institutions. It is like, perfect product market fit. What it suffered from was actually, distribution was bad, and there actually was a lack of vision. And so over time, people started to build up over time. And in crypto, we kind of did the opposite, which were like, hey, we have this really compelling vision, which I agree is super compelling, which is, you know, you don't have single party counterparties, you don't have any sort of centralized institutions. Everybody

• 55:11Speaker 01

  owns the thing. And then we tried to back into a use case of there. And I think we just solved it wrong. And the other thing that we've messed up a little bit is, we have kind of rebuilt, as we've started to scale crypto, we've rebuilt a lot of the problems that they were trying to solve. So if you look at everybody who's actually providing value in crypto, they're simply just centralized solutions, which is nothing wrong with that, but we've simply taken a centralized approach. And then you have to look at it and say, like, okay, like, what value are we actually adding? And I don't think there is one.

• 55:44Speaker 02

  If I could kiss you through the internet, I would do it right now. No, I just like, it's, that's, that's, the thing that always drove me a little crazy, and this comes down to, I think you nailed it in terms of like, the history of the internet, and it's honestly just like a phenomenal branding exercise, is this idea of like, web three, as if it's a new internet. And actually, if you look at the history of the internet, as you said, right, it started with this like, very specific use case, and what we lacked was the 5,000 other things you could do on top. But we solved like, a really very specific communication problem, day zero. And that was, you know, what we could build on top of. And here you're, you're, you're starting with like speculate on this thing that might have value downstream and going in the reverse order. And that tends to not find great product market fit.

• 56:29Speaker 01

  I think there is value somewhere. I think there is value inside of DeFi or crypto. And I just don't think we've discovered it yet, but I think we've been, there's been a lot of charlatans in the space that I think have unfortunately kind of misled a lot of people and got everybody distracted. And so I think, you know, from a 10 to 20 year perspective, I would, I would not be surprised if there are really great businesses. I just don't know what they are yet. I think the other problem is, this is the problem that all Silicon Valley has, is we don't think something's successful unless it's a hundred billion dollar business. Which like, honestly, what if like crypto is amazing, but it's actually like a four billion dollar like market maker? Is that a failure? Like, I don't know. But like, everybody would assume it was, everybody like came out of the, the gate and were like, hey, here's this new thing.

• 57:14Speaker 01

  If this is not a trillion dollars, it's a failure. And I think sometimes when you're innovative in the industry, you have to kind of maybe pare down your expectations and say, hey, let's start a bit smaller. And so my gut is I think crypto and DeFi is going to be around. But I think it's going to be like a couple billion dollar business here. It's a couple billion dollar business here. And they're solving a little bit more niche problems. Like, I don't know, they're providing like stable coin solutions as like remittances to like in between second and third world countries. Okay, cool. Great business. It's like better than Western Union. Is it the next, you know, straight plus Facebook plus Google? No, but it's providing real value.

• 57:50Speaker 01

  Maybe in 10 years, we've taken out all the market makers and just like, you know, coupon clipping trades. And now it's more decentralized and the actual end nodes make money somehow. I don't know. And like, that's a great $5 billion public company. Yeah, cool. I think that's probably where the world's going to end up.

• 58:07Speaker 02

  Yeah, people struggle with the math, right? They look at it and they go like, this is game changing. And then actually, when you do the math, to your point of, you know, international settlements to replace Western Union between a few third world and second world countries that don't have like trusted banking systems between them. Sure. But you know, what's the market cap of Western Union?

• 58:27Speaker 02

  3 billion.

• 58:28Logan Bartlett?

  Well, that's where I feel like it's VC's fault in a lot of cases with this is like when you're pumping $26 billion last year into this ecosystem, it's very hard to figure out utility and what's not speculation and what actually like it just it really leads to a lot of different perverse incentives and for people to feel like they have product market fit when they're really wash trading enablement or you know, they're like it's just it's like they're they're robbing one person to pay the other and then they're skimming off the top and they think they have a business when in truth, it's just this big circular jerk that's going on, right? And like, it's not a product market

• 59:13Logan Bartlett?

  fit that exists.

• 59:14Speaker 02

  Yeah, look, if you raise 30 billion a year for four years, it's let's just call it 100 billion of dollars that are, you know, looking for returns and at a minimum 2x, right? So you're searching for 200 billion, probably more of returns. And if the whole market size is actually to William's point, 10, 15, whatever, I don't know, something that's not 200, that's where you run into issues. And that's probably what ends up happening, right? You see a bunch of like, interesting companies that are pretty small in the grand scheme of things. And as a percentage of the total dollars that entered the ecosystem, it's just like mostly lighting that money on fire. But a few things will will will emerge that have some stability to them potentially.

• 59:57Logan Bartlett?

  Well, William, I think it's interesting. I mean, this kind of dovetails into your funding path here, where you actually haven't raised venture capital, right? And you're you're funding this yourself where Plaid, you raised a bunch. What were kind of the inputs into that? And is that like a just this like for now, as you sort of figure this stuff out and on your own timeline, do you think like that's the way you're going to run this company in perpetuity? Like, what were the inputs into it?

• 1:00:29Speaker 01

  You know, I think it kind of depends on how controversial I want to be today. I think, yeah, like, right now, right now, we're completely kind of owner and founder. So I guess, you know, employee and founder owned and operated. And I think that's what we'd like to be for the foreseeable future. You know, I don't know, some crazy tale that happens and, you know, we need to be outside capital. I'm not intellectually opposed to that. I just think that would be a non-optimal outcome. And I think, I think I wrote a blog post about this that got a little bit of heat and publicity. But what I said in it was, I don't think venture capital is right for me, but it's totally right for a lot of people. And I think it just depends on what you want to do, which is I've started a company before and it was, you know,

• 1:01:13Speaker 01

  hopefully it's successful, but I like to do high conviction things once. If I wanted to go do like 10 to 15 things, I would totally raise a bunch of venture capital because it de-risks my entire portfolio. But for me, I want to dedicate my life for the next 20, 30 years to one thing. And, you know, I'm lucky enough to have a little bit of money and so I can put my money where my mouth is and put it all in the one thing. And I think that's a much more empowering story to my clients and to my employees and say, hey, like I'm in this with you. I'm not trying to de-risk my position with somebody else. I also think that you have to understand where venture capitalists add value. And I think for me, I'm not totally sure where they do. I think as a young founder, they add a ton of value, right?

• 1:01:58Speaker 01

  Because you're like, hey, you know, Logan at Redpoint invested in my company. My parents and my employees know who Logan is, thus they're going to get legitimacy. Thus I can close these candidates more. Or these clients will think I'm legitimate because Redpoint, everybody knows Redpoint. Thus if they invest in my company, you know, that's really safe. I think candidly, we have less of that problem here. And so I'm not 100% sure where the value is. And I think what I care a lot about is, you know, it's kind of overused, but like looking at businesses from first principles. And, and I think a lot of times people raise venture or like go do the next round because that's what they think they are supposed to do. They're saying like, hey, okay, cool. After I raise a hundred, I need to go like,

• 1:02:41Speaker 01

  hire an executive coach. I need to hire like a chief of staff and I need to go like, you know, raise my series D from like the top tier venture capitalists because that's what my friends do. That's what Stripe did. That's what somebody else did. And I'm just gonna like follow that pattern. And I think very rarely do people actually pull back and say like, hey, is this right for me? Should I actually think about this creatively? And so, you know, when I did that, I think the answer, the answer was no. I generally think if, if more people did that, I think they would probably take less venture capital. But I think venture capital is an incredible job branding. And if sense of it said, hey, this is the only path to be a successful company, thus you have to do it.

• 1:03:23Speaker 01

  And, you know, they're probably right in like 99% of cases, but in the 1%.

• 1:03:27Logan Bartlett?

  I actually think they're wrong. I, I, I think that I agree with you. And it's sort of a trope of like VC discouraging founders from raising venture capital. I feel like it's a, hey, you don't want this type like thing that people now kind of joke about. But I actually try to discourage a lot of people, like the, the best way to, to make a lot of money is to own a hundred percent of your company, right? And like the best way to control your own destiny is to own a hundred percent of your company. And so, especially as these fund size have proliferated, there's so many perverse incentives that exist between venture capitalists and their, and the entrepreneurs that they back.

• 1:04:12Logan Bartlett?

  And there's generally some like a natural absorption point that a market has and or that like a natural size that a market can be and therefore what a company can be. And venture capitalists often will push, you know, it's almost like they'll, they'll make the, what is it for raw? Right? Or what, uh, what, what is it where, where the animal just gets fed until?

• 1:04:36Speaker 01

  Yeah, that's for sure. That's, that's it.

• 1:04:39Logan Bartlett?

  It's like they'll just keep feeding it beyond the, the healthy point of, of what makes sense. And so I, I actually am refreshed. I mean, it's nice to see people like yourself. Now, your situation's a little unique, both in terms of your, your means to do this yourself, as well as the longevity of your ambitions, as well as your comfort in doing things differently from a first principle standpoint, to use your language. But I'm encouraged by like the alternative capital sources that are popping up more and more of like, hey, we'll give you this type of line to fund your business. Because especially some of these SaaS businesses, they're not the most complicated things to underwrite.

• 1:05:21Logan Bartlett?

  And so it's not like you need this high valuation, you know, high dilution, lots of capital. You can get it incremental in different sources. I think banks have been a little slow to catch up or different lending sources have been slow to catch up to that, but I think it's happening now. And so hopefully more people will take a slightly different path than, you know, has happened over the last, whatever, two or three years especially.

• 1:05:45Speaker 01

  I think it's five years will be pretty interesting because I think it will cause people to have to be a little bit more self-reflective on why they want to start a company. Because in the past three or four years, it was, it was pretty sweet, right? You'd be like, I was an early, I was an employee at Flatiron. I found this niche problem and so I'm going to go leave and I'm going to go easily raise three to four million dollars because I put Zach Weinberg out on my resume and he can, and he can vouch for me. And then like, you know, a year and a half later, I can sell two million bucks in secondary and now I'm completely de-risk for anything I do at this point. And I don't actually need to make that much revenue. I just need to slap a bunch of logos on a page and like, I'm good to go. And, and then there's a playbook that I can probably download from my Combinator's website

• 1:06:29Speaker 01

  on tells me how to do like exec hiring and all this other stuff. And I'm just going to power through the formula and I'm good to go. And I think that's how a lot of businesses have been built over the past five years. And I don't know if those are the most successful businesses, but they were still alive because they did a couple of metrics correctly. And I think what's going to happen over the next four or five years is that path doesn't really exist anymore. And so the people that are actually going to be starting businesses are, I think, going to have a little bit more higher conviction. They're going to be a little bit tougher because the fundraising market, I think, will be quite a bit more challenging as well. And also what I generally hope, I'm sure Zach can agree with this, is the brightest minds of our generation, maybe in 2012, were like Zach in figuring out how people can better click on ads.

• 1:07:14Speaker 01

  But we've wasted this entire generation of founders over the past three to four years that went to go build crypto companies. And they weren't building enterprise companies. They weren't building biotech companies. They weren't building things that actually can provide real value. And I think that has corrected a little bit. And so I think it is going to unlock an entire, an entire amount of founders that maybe would have, you know, built Ponzi schemes. And instead they're actually going to go provide enterprise value somewhere else. And so I think on that side, I'm actually quite, quite bullish on the next four or five years.

• 1:07:43Speaker 02

  I've heard this biotech thing could be big.

• 1:07:46Speaker 01

  Honestly, I'm not smart enough for it, man. That's so hard.

• 1:07:49Speaker 02

  One thing you, you hit on, you hit on and like, we can, we can wrap it a second, but I, there's these like little hidden tricks inside the startup ecosystem that the founders are aware of. Cause we kind of like talk to each other and everybody shares the dirty little secrets, but like aren't necessarily well understood. And you hit on one of them very subtly, which is this idea that like, by the time I do my A or my B, maybe I have a business, maybe I don't. But the market is so frothy, I can go raise it at like a hundred posts and I get to take like two or three million dollars off the table. Right? The like early founder secondary sale went from something that was kind of frowned upon and not really talked about to almost like in the docs by default.

• 1:08:31Speaker 02

  At the series A and the series B. And I, and I'm not, by the way, as a founder myself, I'm like, yeah, shit. If somebody's going to offer me the opportunity to do that in a business that, take it, do it all day. And that's what I always advise the founders, like if someone's offering you a few million dollars off the table and you're allowed to do it, take it. Like you should do it. With that said, it does create this like funky perverse incentive where run really fast, raise a bunch of money because you protect your downside. Right? That like super hot 20 on 80 series A, maybe you need it, maybe you don't, maybe the business deserves it, maybe it doesn't, but you just got $3 million. And before that, you were not making $3 million a year, right? And there you get the, you know, the playbook founder.

• 1:09:11Logan Bartlett?

  And by the way, it's kind of rational from the venture actor's perspective, having been on the other side of it, because it's like, hey, I don't want this guy or girl worried about two or $3 million when I need them to try to go build the next plaid or the next flat iron, right? And so if that's going to concern, if that's going to be a concern for them, like, let me take, let me have them take a little bit of chips off the table.

• 1:09:33Speaker 02

  That used to happen, by the way, at like the Series C or the D when there was a business and a model.

• 1:09:39Logan Bartlett?

  Same valuation, just more proven business. Yeah, that's right.

• 1:09:42Speaker 01

  Yeah, yeah, yeah. I'm very pro, let me be on the record, I'm extremely pro secondary. I think founders should take as much of it as they can. But I think what it has done is it's de-risked being a founder to an extent. Like now we have conversations like, hey, I don't know if I'm going to start, like start this company or should I go be an L5 engineer at Facebook? I'm like, I don't get how you're making these two decisions. Like, they're very different. But in 2015, you like, you know, or like, you know, maybe 2020, 21, you would put that in a model and honestly, maybe they probably should have been a founder, right? Because from a value capture perspective, they're kind of equal. But I just don't think they should be equal. And so hopefully that will correct a bit.

• 1:10:21Logan Bartlett?

  William Hocky, thank you for doing this. Rashad said best guest yet.

• 1:10:26Speaker 02

  He was talking about me, just to be clear.

• 1:10:27Logan Bartlett?

  I, you know, recurring guest, but William, thank you for doing this.

• 1:10:34Speaker 02

  Well, I just think like Logan, as a theme for us and whatever is like, look, you find people, they talk about a bunch of bullshit all the time, but it's rare to get somebody. And I think what's his face was phenomenal at this because he told that David Sacks story.

• 1:10:47Logan Bartlett?

  Parker Conrad.

• 1:10:47Speaker 02

  Barker. Yeah, he's the best. But like, you know, like I would work for Parker Conrad. Just like the little, the war stories I think are really interesting.

• 1:10:58Logan Bartlett?

  And I think, by the way, that's what, as we wind down, hopefully, the crypto series in my heart, I think you, talking to more founders like William, not that there are like that many like you, but just the ability to have those insights, I mean, that, it's really interesting to go in, into this level of detail on some of this stuff. So, thank you for doing it.

• 1:11:19Speaker 02

  Bye, guys.

• 1:11:20Speaker 03

  See you, guys.

• 1:11:21Logan Bartlett?

  Everyone's favorite barefoot Israeli hippie founder is back at it again. So, earlier this week, I'm sure as anyone that listened to this podcast probably saw, Adam Neumann raised $350 million for Marc Andreessen and Andreessen Horowitz, which was the largest investment ever made by Andreessen Horowitz for his company that they're calling Flow. As I understood, there's not a ton of detail out there about what exactly they're doing. I think some of the stuff we can probably speculate a little bit on, but the basic idea, as I understand it, is it's some version of a residential multifamily real estate we work, but it seems like instead of leasing, they're actually going to own these, these

• 1:12:06Logan Bartlett?

  buildings. I, it's been reported, I'm not sure exactly where this came from, but Flow has purchased around 3,000 apartment units, mostly across the, the American South, including Atlanta, Miami, and Nashville. Flow is going to operate both the properties that Adam Neumann has already bought, as well as offering managerial services to other owners and landlords. There also seems to be something of a crypto angle here. Forbes has reported that there's some digital wallet, they were hiring people for Web3. If you read Marc Andreessen's blog post about it, there is a, there's something about ownership and how constituents don't own elements of their community in the building, which, as a student of Andreessen crypto,

• 1:12:51Logan Bartlett?

  I think that's usually a harbinger for, there's going to be a token to come or something, as I've seen these things play out before. There was a fair amount of indignation about this online, as, as Twitter is, is wont to do. But I think that the criticisms of it were Adam Neumann was able to successfully light a fair amount of money on fire with WeWork. I think they raised about $21 billion and maybe it worth five to six today. So not exactly value accumulating as well as the other criticism was that there are thousands of women, people of color, that don't even get a first chance at raising even one one thousandth of the money that that Adam Neumann's

• 1:13:33Logan Bartlett?

  getting a second chance to go through. And so definitely some valid criticisms about all that. Maybe we'll get into that as we as we talk about this as a as a group, or maybe we'll just focus on Adam Neumann and the idea itself. But to help unpack some of these things and a lot of the debates we've seen on Twitter, I figured I would have two different people on. So one, we have Maureen Farrell, who quite literally wrote the book on WeWork entitled The Cult of We. She did that with Elliot Brown. And Maureen is a journalist at the New York Times. And then we have Brad Hargreaves, who is the founder of Common, which Common raised $150 million ish to date. Essentially, and

• 1:14:14Logan Bartlett?

  Brad, correct me if I'm wrong, but kind of tackling at least a similar concept to insofar as we know what Adam Neumann's doing. There's definitely some parallels to it, to the point that you had a Twitter thread about it. And a bunch of people suggested I talk to you about this topic. So that was a mouthful for me. Did I have most of that stuff for right for you, too? Yeah. Pretty much. Good deal. And then we'll have Rashad as well, our the Red Point TikTok guy, as he is colloquially known, and our producer on the podcast kind of chime in as well. But maybe a bad lead off. So Maureen, there's been a bunch of different documentaries or dramatic portrayals of what happened with WeWork. Obviously, you wrote a book, Cult

• 1:14:58Logan Bartlett?

  of We. But just so everyone's on the same page here, what what ultimately happened down the stretch of that like very weird kind of, I mean, I guess you could say, whatever, 12 year period, but the very specific three months that ultimately were was Adam Neumann's undoing with with WeWork, the company. I think people probably, all these things sort of came of the same vintage Theranos, Uber, WeWork. Like, I think people confuse a little bit who did what and like how bad the sins were. So maybe just a level set. What what what happened with WeWork down the stretch there?

• 1:15:30Speaker 04

  Sure. So basically, you know, Adam Neumann raised billions of dollars. It was really like supercharged through this fund that SoftBank, this Japanese investing conglomerate, gave them billions, gave Adam Neumann, WeWork, billions of dollars. They were worth $47 billion at the beginning of 2019. They were on a path to go public. The whole banking world, you know, everyone was sort of infatuated with this company. Obviously, there's some, a lot of people critiquing it, but banks who were hoping to take this company public and lead their IPO were telling Adam Neumann, this could be a trillion dollar company, or at least like worth, you know, $100 billion. I remember the minute the S1 came out,

• 1:16:14Speaker 04

  or like within 24 hours, a lawyer who works on a lot of these deals, but not on this one, said, he read it, and he's like, you know, there's a menu of things that founders can do to push the envelope. Usually, they pick a couple of things on the menu. And, you know, in terms of having control and different things you can do. And Adam Neumann picked every single one of those, and then some, really. I mean, his wife was one thing, like she was going to designate his successor, be part of the team, if anything ever happened to him. You know, he owned so many buildings. He had essentially, I mean, we had reported that he had taken, my colleague, Elliot Brown, and I, and my co-author,

• 1:16:56Speaker 04

  earlier in the summer, that he had taken out more than $700 million in loans and stock sales from the company. And it basically, I can't remember exactly with the S1, but it showed it was maybe even more than that. And, you know, people had just never seen really anything like this, even in this era where, you know, we saw most founders had a lot of control, like basically controlled the board. They had been given these super voting shares. Adams ties to the company were so wild and the financials just weren't good. Literally, I remember reporting this, you'd hear like, okay, well, maybe for $25 billion it can go out, maybe 20 billion. It just kept ticking down and down and down.

• 1:17:38Speaker 04

  But the final real nail in the coffin for Adam Neumann was my colleague Elliot, my co-author, wrote an article, this is just him, this was something he'd been reporting on for a really long time. And it was essentially about Adam Neumann flying to Israel with marijuana on the plane and leaving this marijuana in a tissue box on the plane and the authorities being called and he couldn't fly back on this plane. Basically, also within that, once that story came out, I guess the company was freaking out, every single advisor to them. I remember someone in Silicon Valley calling me and they said, Adam Neumann won't

• 1:18:19Speaker 04

  be CEO in 48 hours. No one can sign off on this company anymore because it was a felony. You were, it's in the Wall Street Journal that he transported marijuana, you know, on an international flight. No one can sign off on this company anymore. Like, and it was, I think, within 40, he was out, not 48 hours.

• 1:18:41Logan Bartlett?

  So down the stretch of this, just what was his mindset at that point in time? And to the extent you can comment on it, like, have you kept up with what he's been doing since then? Or like, was this a very, I've seen him wandering around Miami before in the last two years. It's like, almost Where's Waldo? It's this very tall Israeli man walking around. And so like, I've seen him around, but I don't really know, like. Shoes or no shoes, Logan? Uh, I, one time with and one time without. Miami, it's a little more acceptable to go shoeless. Yeah. It's Miami, though. In fairness, yeah, exactly. Like, one in three people don't wear shoes. I was gonna say, versus the, you know, whatever, where Astor Place or wherever

• 1:19:23Logan Bartlett?

  else I've seen him, walking shoeless. But so like, what was his mindset at that time as he stepped out? And then to the extent you've kept up at all with people in and around him, do you have any perspective on like, what he's been like since, since then?

• 1:19:40Speaker 04

  Sure. I mean, first of all, I get without, I don't really ask people for this, but like, as you said, the Where's Waldo, I mean, he's spot, you cannot spot him, I guess, if he's somewhere, he's so tall and distinctive and. So I just get so many texts on his whereabouts. Like, I don't need to know this, but he's spotted often by so many different friends of mine, and just various people I know. But he, so at that time, when this deal fell apart with Masa in late 2018, I mean, he was going to be on top of the world, they're going to be private forever, they were going to be direct partners on limited sums of capital to sort of like really like world domination, the two of them,

• 1:20:20Speaker 04

  fell apart. He was like utterly shocked by it. By all accounts, it seems like he had no idea this was going to happen. He thought he could still, you know, people would be willing to do anything to get into the company and it was going to be his forever. So I think he was completely in shock that he could ever lose power. When I talk to people about, you know, how he's been since he left power and lost WeWork, people will tell me he's been humbled, he's learned like really great lessons, he's like, you know, been even more focused on his

• 1:20:59Speaker 04

  family. I don't know, you know, he's a master storyteller, he's really masterful at bonding and connecting with people. So, you know, who knows what is there, but that that has been something he has articulated to a lot of people, this like humbling. And speculation had always been that, you know, there was no way you could not keep him down for long. He was going to have a next act and it was going to be bigger and wilder and crazier than the first. And who knows, but this seems like in keeping getting Marc Andreessen to write the biggest check he's ever written to him and find another person to sort of

• 1:21:42Speaker 04

  Joint forces with to take over the world.

• 1:21:45Logan Bartlett?

  Yeah, no, it's an interesting, I mean, that kind of dovetails into the what he's doing today with Flow. And I guess he's always had something of an interest in residential real estate as I've understood. I mean, WeLive was some was part of the WeWork thing. And I think maybe they have one building in downtown New York and and nothing really came of it. But but Brad, maybe over to you. Can you give a little bit of of background on what Common is? Just I know I did a little bit of a preamble at the top, what you guys have been up to. And then maybe we can use that as a segue into some of the parallels between what you guys did.

• 1:22:29Logan Bartlett?

  And also what we know about this company Flow.

• 1:22:34Speaker 05

  Yeah, absolutely. Thanks for having me on. So Common, you know, is a designer and operator of innovative residential spaces. So we started back in 2015, initially with co-living, so shared apartments. But we expanded into micro apartments, live workspaces, family oriented apartments. And today manage around 7,000 units across the U.S.

• 1:22:54Logan Bartlett?

  And by the way, micro apartments are, can you just explain that?

• 1:22:58Speaker 05

  Yeah, tiny apartments, really designed with affordability in mind. You know, many of the buildings were really community oriented. So there's a lot of programming as part of it. People form bonds. So, you know, we always, you know, shortly after we started back in 2015, WeWork launched WeLive, which, you know, had a very similar high level thesis, very different implementation and approach. Funny enough, we actually manage one of the buildings that were formerly WeLive today. It's about a 300 unit building outside DC. And it does, it does, does quite well. But, you know, it's from our vantage point, there needed to be a lot more innovation around real estate, around layouts, around design, around operations. Too many developers just come out and build the same thing.

• 1:23:42Speaker 05

  They build, you know, in the early days of Common, a developer told me, I don't build what the tenant wants, I build what the bank wants. And that is really a sentiment that is pervasive in this industry. And so we looked at this in the early days as let us build residential housing as a consumer product. Not a financial product. And even though what we do is very different than what Adam was doing with WeLive, and I think what he's doing at Flow, although nobody really knows what he's doing with Flow, it's all sort of in the same universe, using a lot of the same language.

• 1:24:16Logan Bartlett?

  And so what was WeLive as you would draw the distinctions between what Common does?

• 1:24:24Speaker 05

  Well, in my view, it's a great example of convergent evolution, where they were approaching it from a very different set of fundamentals. That is, they knew how to do office space. They were exceptionally good at renovating and building out office space, negotiating leases, and they wanted to build housing. So they went about that by taking two office buildings, one in Crystal City, Virginia, and another at One Town Wall Street, and converting them to residential. That is really, really tough to do. It requires an immense amount of capital. Office buildings, particularly the kind they chose,

• 1:25:06Speaker 05

  these 1960s-era, you know, boxes, basically, with square floor plates, don't work very well for residential. There's a big unlet core. You have to run gas lines, more electric lines, more plumbing. The elevators are often awkwardly located, so you end up with these oddly shaped units.

• 1:25:26Logan Bartlett?

  And so as, I guess, the overlapping part of this that I think we'd all agree on, but at least what you were doing with Common, what WeLive was doing, what Flow seems to be doing is, hey, affordable housing in urban areas that people want to live in is clearly broken in some way, shape, or form, right? And we can debate to what extent, we can debate how to solve it, but it's not an efficient and friendly market on the consumer side, right? It's serving a different master. And so everyone sees this problem, and it's an ambitious one. I admire you for-

• 1:26:04Speaker 05

  Huge market.

• 1:26:05Logan Bartlett?

  Yeah, huge market, right? Literally, like, the biggest market. You draw TAM, and this is a very, very big one.

• 1:26:12Speaker 05

  My hunch, though, is, obviously, it's a big TAM. It checks a lot of boxes. That there was another angle here that fueled it, just knowing a little bit about the arc here and having read a lot of great work about the mentality within WeWork, including what Maureen Elliott wrote, is that residential is in some ways a much more fertile ground for building community than office space. Because in residential, everyone who is a part of that community is choosing to be a part of that community. They're opting in. A big part of the issue with office, and I actually ran a coworking space back

• 1:26:51Speaker 05

  in 2010, 2011, is that most of the people who work there are not opting into that community. They just happen to work at a company that has a space.

• 1:27:02Logan Bartlett?

  The founder may be opted in, the office manager may be opted in, the CFO may be opted in, but the rank and file didn't choose to be a part of that building, right?

• 1:27:11Speaker 05

  But in residential, everyone's opting in, and it's much more natural to have a party in your building, in your apartment, than it is to have a party at your office. And I think that was part of the driver, too.

• 1:27:23Logan Bartlett?

  And so, I mean, community was always, and it's become a meme, like community adjusted EBITDA or whatever, right, in WeWork, but that was always an element of what they sold. And it always felt like kind of a square peg round hole. And I guess, to your point here, like, maybe there is something that, as someone that was once young in New York looking for apartments, like, there is this sense of, or this lacking of community in some of these cities, and getting to know your neighbors and all of that stuff. Like, there's clearly something that people are yearning for, that maybe 50 years ago was filled by organized religion and churches and all that, right? And like, now, there's

• 1:28:06Logan Bartlett?

  this element of something there. And so, I guess your point is, this was an awkward fit. They liked that within WeWork, but it was always kind of an awkward fit.

• 1:28:15Speaker 05

  Can I actually ask Maureen a question, because I think there's an interesting thread here, which is, do you really believe that at WeWork, Adam truly believed and bought into the community narrative? Or did he see it as a convenient way to? Build momentum and valuation.

• 1:28:32Speaker 04

  Um, I think he legitimately actually believed in the community.

• 1:28:36Speaker 05

  My hunch too.

• 1:28:38Speaker 04

  I mean, even like just from, he tells the story, but I've talked to a lot of people who were with him at the time is like, he moved to New York from Israel. He moved in with his sister who is a model and she had this apartment. It's where he met, uh, I think it was there exactly that he met his co-founder Miguel. But that he like, he got went to this apartment building downtown and it was all like 20 something people. No one talked to each other. And then him and his sister like joked that they wanted to, they were like, oh, in Israel, everyone talks to each other. This is so weird. We want to build community here or not. I don't think he said this, but he's like, let's see who can meet the most people. And then it really, I've talked to a lot of people who lived in that building. They were like, yeah, all of a sudden everyone was like friends in the building.

• 1:29:23Speaker 04

  Like they really facilitated that. So I think, I mean, that was truly the magic of the early Lee works that he did foster this community.

• 1:29:34Speaker 05

  That aligns with my understanding of it as well. And my hunch that this is a belief is coming from a, a genuine place. And, you know, in my view, residential is pretty obviously a more obvious play, you know, a more fertile ground to build that kind of community. And to build the kind of community that from all the stories you hear is what they're looking for. And, you know, for example, I know the one of the first buildings they bought as a part of flow is Society Losolos in Fort Lauderdale. And, uh, you don't, I'm not sure that's, I'm not sure it's public, but, um, it's a great asset. It's a ultra class A, beautiful luxury asset. And it is fully branded around building a.

• 1:30:23Speaker 05

  Party community. It is not, it's, it's, there's a little bit of wellness there. There's a little bit of mindfulness, but it's clearly appealing to someone who wants to party. And that, in my view, is frankly, much easier to do. And it's much more natural when you're building apartment buildings than when you're building office spaces.

• 1:30:42Logan Bartlett?

  And so Brad, Class A in this, like, in building a, a party centric class, like, what is it? What are those terms for people that are outside the real estate? Like, how does it actually manifest itself? A Class A, is that the highest class of, of buildings?

• 1:30:58Speaker 05

  Start of the jargon. Thank you for calling me out on it. Uh, that just means you have your, your shiny, beautiful glass tower with every amenity space the designer was able to cook up. And it is highly programmed. There's probably a concierge in the lobby. There is a calendar of events posted in the elevator. You've got yoga on Saturdays, Tuesdays and Thursdays. You've got a DJ playing on Friday and Saturday. You've got a garden on the roof. You've got an apiary. Like, it's highly, highly programmed.

• 1:31:31Logan Bartlett?

  So it's, it's the villages for, uh, for the Fratty sorority group, right?

• 1:31:35Speaker 05

  Precisely.

• 1:31:36Logan Bartlett?

  Yeah, I got it, got it. So, so this is now going down in Fort Lauderdale. And what does capital outlay for something like that look like? Like, I mean, in generalities, like, are you paying a hundred million dollars to buy this building or something like that?

• 1:31:49Speaker 05

  Uh, my hunch would be 150 million for an asset of that size. I don't, I don't know the details of that at all.

• 1:31:54Logan Bartlett?

  And that's how many units?

• 1:31:56Speaker 05

  I'd say around 500.

• 1:31:56Logan Bartlett?

  Oh, wow. Okay.

• 1:31:57Speaker 05

  But remember, that's, uh, your unlevered total cost. You're then going to put 75% leverage on top of that. So your actual equity outlay there is only going to be, say, 35, 40 million dollars.

• 1:32:11Logan Bartlett?

  So that's an interesting point for my, like, simple venture, uh, software oriented brain. Is there's a lot of different capitalization structures that you can do in real estate with these, these hard assets, rather than the, the bits and bytes that I, uh, that I typically work with. And so, like, how? Can this actually be, as you sort of lay out the potential path, obviously the market size is there, but what are the steps to actually making this a venture scalable business, right? I was looking at, someone tweeted, Grey Star has spent 30 years to get to 750,000 units, right? Maybe doing 350 million in revenue. And like that business

• 1:32:52Logan Bartlett?

  might be worth, you know, 600, 700 million, just based on like that part of the business? I know that they do a bunch of other stuff and we'll put the actual tweet itself in the show notes, but I get it's an interesting service. I'm sure at 23, I would have loved to go to Fort Lauderdale and party there, but like, how do you get this to be something that at a billion dollar valuation or whatever entries in front of that, that it can actually be a 10, 20, 50 billion dollar type opportunity?

• 1:33:21Speaker 05

  That's why I think this is sort of a, actually a really good founder opportunity fit, because you kind of need someone who is a bit of a lunatic to pull this off.

• 1:33:32Logan Bartlett?

  Yeah.

• 1:33:33Speaker 05

  They are really trying to create this hospitality-like consumer brand for residential.

• 1:33:40Logan Bartlett?

  Yeah, I mean, I guess as I sort of think about like what the potential use case is in these different neighborhoods and you sort of talk about the long-term stay component of it, there is, Airbnb has really traded off, like there is this some uniqueness to Airbnb, right? But you don't get the consistency and you're, there's no community associated with it, right? And so I guess I was kind of thinking about, hey, if you could do, and we're seeing more and more people in their twenties want to spend, you know, summers in Miami or LA, or winters in Miami or LA, and then summers in New York or wherever, right? And so I guess as I sort of thought about what the idealized state of this is, let's throw the crypto thing to aside, because I, you know, whatever, I don't believe in

• 1:34:23Logan Bartlett?

  that kind of stuff. So let's just throw that out because that's distracting. But if you sort of think about like the utility of it, I kind of get it, right? Like I kind of think, oh, well, if I can have the exact same room in, I don't know about Fort Lauderdale, but in Miami as I do in New York. And there's a community in each place and I'm 24 and we can go out together. I guess I kind of understand it. It seems like the guy that was passing, uh, Maureen, I'm sure you, you remember these stories or have all these stories, but the guy that's passing tequila shots around at like 2:00 PM on a, on a Tuesday afternoon is probably like a good person to enable this, right? I guess where I keep going back to is like, does the math actually hold? It feels like kind of a financial engineering, like yes, there's this community element of it, right?

• 1:35:06Logan Bartlett?

  Yes, there's this visionary funding element of it, but it feels like there's going to be a lot of like tactical financial operations associated with, uh, you know, how to lever these things, how to, um, how to, how to actually structure the, the individual tenants. Like one of the advantages of selling B2B is that, you know, these leases can be a couple of years versus when you're dealing with consumers, they're going to be much more fickle and you're dealing with credit reports and all that stuff. And so it just feels like a, a super complicated thing to get to the big pie at the end. Is that, is that, is that fair? Like this just seems like a very hairy problem that sounds good, but like might be really hard to execute on.

• 1:35:49Speaker 05

  Yeah. I mean, I think that, you know, residential management is hard. This is a hard business. I, and, and here's an example.

• 1:35:59Speaker 05

  In residential, when you're dealing with long-term leases, occasionally people stop paying and you have to evict them. That is part of the process. That is part of the business. If you're a grace star, if you are a huge property manager, you evict people all the time, nobody thinks about it. The first time somebody gets evicted from flow, they are going to go to the press and it's going to be a whole cycle of Adam Neumann is evicting tenants.

• 1:36:26Logan Bartlett?

  The Waymo driving problem, like one car, you know, people die in car accidents all the time, but one Waymo car kills one person and like every, you know, that's headlines everywhere. So.

• 1:36:36Speaker 03

  I'm interested from an investment perspective, now a little bit understanding the personalities of the, behind these firms, like I guess Logan, uh, like.

• 1:36:48Speaker 03

  Isn't this a huge risk from a reputation perspective? Like, why would Andreessen do this?

• 1:36:55Logan Bartlett?

  It's an interesting question. I've seen a bunch of people say like, oh, Andreessen raised 12 years or 14 years of building a brand in one investment. And, and I actually, from a, my very cynical, like watching the machinations of a venture industry, I actually feel like this is the, one of the most logical investments I've seen because, well, two things. One, I think Founder's Fund has done a really good job of cornering the, hey, we back ambitious founders going after crazy ideas and we're, we, we will never replace you in all of that. And I think, to some extent, they did it in the Palmer Lucky thing, right? And, and his next act with Androl after Oculus, they did it with, they did it with Parker Conrad after Zenefits, right?

• 1:37:39Logan Bartlett?

  And they've really leaned into that brand. And to some extent, I feel like Andreessen Horowitz has, has almost suffered on the other end of that, especially with the Parker stuff, right? And so, to some extent, in a very cynical way, I think that this is actually a perfect reclaiming of some element of that. When I was thinking, when someone asked me, who, who, who would have looked at this deal? I was like, well, Andreessen Horowitz did it. Founder's Fund's the only other one that I can think would have even possibly touched this, like had enough money to do it, like touch the ambitions of this and all of that. And so, from a branding standpoint, I actually think it's, it's, it's great and they have a lot of money. And as, as Brad mentioned, like this is an enormous, enormous market.

• 1:38:22Logan Bartlett?

  And who knows what the terms of the structure around all this stuff are? And so, I mean, one of the things that they just do, Andreessen Horowitz specifically does such a good job of is just like being on everyone's lips on a very regular basis, right? And just like constantly, all these things get repositioned as they're reinventing X or Y and like they became an RIA and that became like they're reinventing the venture model and all these things. And so, from a marketing standpoint, I feel like it's really logical for them. And then from a ambitions and founder type standpoint. Standpoint, I think it makes a lot of sense that like they would be the ones to want this type of person in their tent. Um, now from an investment standpoint, does it actually make sense? I, you know, I don't.

• 1:39:07Logan Bartlett?

  That's where you really need a squint for me, but all the other things I think are super like, if, if this were 50 million, I, I, I, I, whatever they have, 6 billion, 50 of 60, uh, sorry, 50 million of, of 6 billion. I'd be like, great, you know, biggest check ever. That's where I don't, I don't understand, but maybe there's some structure to it that, you know, there's more than meets the eye there.

• 1:39:28Speaker 04

  So Logan, that, um, I think the, that's interesting and sort of, I don't know, a little bit terrifying to me in terms of just like the founder friendliness. Cause I think that's something we explored so much in the book, just like how far the pendulum has swung. It seems like it has seemed like, and granted I've been on maternity leave for a few, the last few months as things have gotten really crazy. Um, but that things have swung back. There's been maybe like a little more sanity in the market of not just giving, I mean, that was the problem with all this. Giving, uh, Adam Neumann carte blanche and no one giving him any boundaries. So it's scary to me, but, and also, but also getting your rationale, knowing how things work.

• 1:40:09Speaker 04

  Um, but all that said is, um, I mean, first of all, I just find it, I mean, the margins are thin on this business. Um, at the end of the day, so I get Brad, like the, this, the TAM and the community. And I, and I get what you were saying earlier, Logan, like even if I was, you know, in the, I, I could imagine there being a huge market for this. But I don't, I still don't get how you make money. And I think that's in a big way, or how you ever get a tech multiple for this. Oh, and, and then one other point, my, this is my speculation, but when you say it could have been founders fund or more, or Andreessen Horowitz.

• 1:40:49Speaker 04

  I sort of bet, just knowing Adam Neumann, again, pure speculation, I haven't had a chance to report on this, um, nor I don't know if I will. But, um, I kind of picture him and Mark just. Bonding, having conversations rather than him sort of taking this to people, but it like them brainstorming and coming together and Adam almost having the leverage to say like, I have all my own money from SoftBank gave me, you know, from WeWork and that SoftBank gave me to leave. Um, I'll, you know, that's, I'll just pay for it myself. And that's his leverage there. And he's like, I don't even need money, but sure, if you'll give it to me, I'll let you be part of this. Like,

• 1:41:29Logan Bartlett?

  I do think he ultimately did need some brand validation and Andreessen Horowitz, like, what is, what is venture capital in general, uh, but some level of brand validation and hopefully some support and advice and comfort along the way. Right. And like, I guess you could say, I would be very interested in what the board structure and governance of this is because you could argue either side of who needed who more. Did Adam Neumann need Mark Andreessen and the stamp of the biggest check ever, uh, coming in after he was disgraced? My, I mean, you know, he, he didn't commit fraud, right? We could, we can talk about, uh, a bunch of the stuff that he did, but like, disgraced might be too strong of a word, but, but, uh, at a minimum, he got removed from his company.

• 1:42:12Logan Bartlett?

  Or did Andreessen, you know, he is this high profile. I mean, what a top 10 most famous, uh, CEO like in the world right now. And, you know, I, I don't know. It would be very interesting to see like, does Newman have a hundred percent control of the board because he's this famous CEO that built this company? Or, you know, did he touch the stove last time? And so they wrestled control and there needs to be checks and balances. I don't know. It's an interesting thing.

• 1:42:38Speaker 04

  That's a great point too, that like, the buzz and why we're all like, questioning this and intrigued and everything is like, the Andreessen Horowitz, if he just put three, if he put a billion dollars into this, we wouldn't, you're right. This is like a new, a stamp of something like he's, he's truly back and someone with a big name is willing to take that on him.

• 1:42:58Speaker 03

  What about the, like, if you were looking at this deal again, in this hypothetical situation, what about the? Airplanes and the, he spent $10 million on an offsite or whatever it was and smoking weed, like is that stuff thing, you know, stuff that you think about or is that just, oh, that's part of being a lunatic and lunatic is a good thing when you're trying to found the next massive company?

• 1:43:20Logan Bartlett?

  Yeah, it's a great question. I mean, uh, listen, I think Elon Musk has broken everyone's brain and framework for like what can and can't be allowed, uh, and what a successful CEO can and can't look like and do and all, and all of that. And so do I think that, uh, I don't know if Adam Neumann can have the reclamation, uh, path that he does now if Elon Musk wasn't as successful as he has been. And you're sort of afforded a bunch of luxuries around, uh, around all this craziness if you've, if you've been successful and if you can pattern match someone to Elon Musk. I mean, who is the next closest

• 1:44:01Logan Bartlett?

  clone of Elon Musk? Adam Neumann's gotta be on a short ish list of like people that could credibly be compared. Now, I, obviously one's created far, far more equity value. So, um, but I don't know. I think VCs at the end of the day are doing extrapolation and pattern matching in a lot of these things. And I think, uh, Elon Musk has afforded a lot of people to, uh, to be crazy or be themselves. So.

• 1:44:25Speaker 04

  You know, this has been on Twitter. I've gotten about like a dozen texts and emails on this, um, pattern matching if he was, um, if Adam Neumann was a woman, a person of color. I mean, there's no, that's like the first thing that people have, you know?

• 1:44:43Logan Bartlett?

  Oh, totally. And, and it's a very fair, uh, very reasonable criticism of this, right? And it's hard to know the counterfactual, like it's sort of this self fulfilling thing of like, well, women and people of color don't get enough money to begin with. And so we don't have so many data points to figure out, would women and people of color get another chance, right? And so it's sort of like a first principles funnel problem that we're not even giving them a first chance, let alone a second chance, right? Um, and it's a very fair criticism. And, um, to some extent, it's like, it should be the crux of the entirety of the story and also, uh, is, is, uh, such like can be distracting

• 1:45:26Logan Bartlett?

  to, to the other elements of the story. Cause that is such a fair criticism in general, right?

• 1:45:32Speaker 04

  I think what's come up a lot, people always ask me, so I'll just throw it out there is like, well, Elizabeth Holmes could go to jail and Adam Neumann's raising billions. And I think that's like a really ridiculous comparison because I'll just put it out there like, and she would, it seems like, you know, fraud, people could have been died and were like their lives were put in jeopardy and she was hiding things.

• 1:45:55Logan Bartlett?

  Yeah, fraud versus like pot and healthcare versus office space. I think like those that two by two matrix, I think gives you a little bit more forgiveness in there, but.

• 1:46:05Speaker 04

  And Adam Neumann also, like, people knew what they were getting into. I mean, they saw the financials, they saw it. He wasn't hiding things. They were willing to just believe this reality that he promised he would create. He, you know, he may have fudged things on the margins, but there were no like blatant lies. It was just that people were willing to, you know, he would say one thing and we always, we always call him in our book and kind of think about him like a magician, like, don't look here, look here.

• 1:46:32Logan Bartlett?

  Well, he clearly had some like messianic quality to it. But so Brad, what, as we, as we sort of wrap here, what, what do you think he will need to do without knowing the full vision of all this stuff? Like, what do you think for this to pan out and be the company that Andreessen Horowitz is underwriting it to, to, to be? What are some of the like the tactical milestones that you would want to see from, from here? Because it feels like one of these things that's going to work on a small scale. And I guess it's kind of like to what end, right? There's the end state of what the public market's going to value

• 1:47:13Logan Bartlett?

  it at. And that's going to be a long time from now. But what are like the little milestones that you're going to be interested to watch over the course of the next, you know, as this gets more public, over the course of the next six months, two years, five years? Is it, is it the occupancy rates in these buildings? Is it, you know, the hype and momentum behind this stuff? Is it? The parties, for sure. The parties, yeah, the quality of the parties.

• 1:47:38Speaker 05

  I think we're all kind of dancing around a question here, which is what is he going to do or planning to do that is going to be framework breaking in this industry? Because I don't think his goal is to rebuild Avalon Bay, but 15% better.

• 1:47:54Logan Bartlett?

  And Avalon Bay was, I know you referenced it earlier, but for people that don't know.

• 1:47:57Speaker 05

  They're a massive REIT. They own 40, 50,000 apartments nationwide. They're probably the closest thing we have to a residential brand today. So like AVB is their, you know, their ticker symbol, their AVA is their kind of young millennial brand. You know, they also own like big luxury garden style apartments in the suburbs and they do have a, they do have a consumer brand, just nothing compared to the big hospitality companies.

• 1:48:27Logan Bartlett?

  I'm just looking this up. It's a $30 billion company founded in 1978 was what I was able to pull up.

• 1:48:32Speaker 05

  That sounds right. Yes. And they own, oh, they're vertically integrated, they're REIT, they own and manage all their own assets. I believe all their assets are Avalon branded as well. And, you know, they've been broadly successful, but my hunch is that it is not Adam's aspiration, it is not Marc Andreessen's aspiration to build Avalon Bay, but just a little bit better. And that's already been done. Avalon Bay already exists. Equity Residential already exists. They're another huge REIT that is pretty good with technology, with building, you know, they've built some notion of a consumer brand. So that's where earlier we kind of pushed the crypto question aside, but I don't think you can really understand this if you push the crypto question

• 1:49:16Speaker 05

  aside. I truly do believe he is looking to create some new kind of ownership and that the community element of, of what he's doing, what he's thinking probably is tied in with that sense of ownership, almost perhaps more comparable to say a Bored Ape Yacht Club where people are part of a community and this is a bit of a physical manifestation of that. So I think you have to kind of draw from the crypto world and some crypto precedent and that puts a different lens on it. But I think whatever they do, I don't, I wouldn't be watching occupancy, I mean, obviously have to watch occupancy rates, but like, who cares? You know, their collections rate,

• 1:50:01Speaker 05

  who cares? Ultimately, if they're going to achieve their goal.

• 1:50:06Speaker 05

  And you're talking to big valuation, you're talking a lot of money, you're talking big names who have plenty of cash already.

• 1:50:13Logan Bartlett?

  Yep.

• 1:50:13Speaker 05

  They're going after something big. And I think you have to draw from other industries and other things that they're both doing to start a piece together, a narrative about what they might be doing here.

• 1:50:26Speaker 04

  Brad, I think that's like you, it feels like you hit the nail on the head with that there's some big thing that this is all predicated on that we don't get. Cause I mean, just to bring it back to we were, um, the business model never worked, you know, and now they've, they've sort of returned to their roots as an office-based leasing company. The $47 billion, maybe someday they will find a way somewhere, but it's a $4 billion company right now. You know, there's no, um, scale, you just can't, uh, it's not a SaaS, you can't turn office-based leasing into a SaaS company. And you think Marc Andreessen, as much as people want to believe in Adam Neumann, the

• 1:51:07Speaker 04

  visionary, there's something that they're at least trying to build this upon. That's not just like straight up residential, uh, community, because you just can't turn it into this, like a tech multiple ever. And we learned that very clearly. So it's, it's really interesting that you bring that up.

• 1:51:25Logan Bartlett?

  Well, as someone that, that once a week stands behind a microphone and records, uh, himself talk, Adam Neumann, Marc Andreessen, crypto, billion dollar value. This is like the bingo card of all bingo cards. So I, uh, I don't, I don't imagine there's going to be a shortage of like interesting things that come out of, come out of this. Uh, but I appreciate you guys coming on and talking. Uh, any final thoughts before we, uh, we hop?

• 1:51:51Speaker 04

  I think, I think that, that was my final one, but it was, this has been fun.

• 1:51:56Logan Bartlett?

  Uh, yeah. Thank you guys for doing this.

• 1:52:03Logan Bartlett?

  And that'll do it for the 30th episode of Cartoon Avatars. Thank you to William Hockey for coming on, uh, not co-host Zach Weinberg as usual, as well as Maureen Farrell and Brad Hargreaves, uh, and look forward to seeing everyone next week for episode 31. Thanks everyone for joining.