Bob Metcalfe — The Man (and Lessons) Behind Ethernet, Metcalfe's Law, and More

Bob Metcalfe (@BobMetcalfe https://twitter.com/BobMetcalfe) is an MIT-Harvard-trained engineer-entrepreneur who became an Internet pioneer in 1970, invented Ethernet in 1973, and founded 3Com Corporation in 1979. About 1.2B Ethernet ports were shipped last year — 400M wired and 800M wireless (Wi-Fi). 3Com went public in 1984, peaked at $5.7B in annual sales in 1999, and after 30 years became part of HP last year. Bob was a publisher-pundit for IDG-InfoWorld for about 10 years and a venture capitalist for about 10 years with Polaris Venture Partners, where he continues as a Venture Partner. Bob is a member of the National Academy of Engineering and a recipient of the National Medal of Technology. In this conversation, we talk about everything from how he toasts when drinking with friends, how he learned to recruit and fire, what he does to scale businesses, different approaches to talent evaluation, critical decisions and mistakes made, and much more. Please enjoy! This episode is brought to you by WeWork https://we.co/tim. I haven't had an office in almost two decades, but working from home and coffee shops isn't always what it's cracked up to be. When I moved to Austin, one of the first things I did was get a space at WeWork, and I could not be happier. It's dog friendly and serves the best cold-brew coffee on tap I've ever had! WeWork https://we.co/tim is a global network of work spaces where companies and people grow together — in fact, more than ten percent of Fortune 500 companies use WeWork. The idea is simple: you focus on your business, and WeWork takes care of the rest — front desk service, utilities, refreshments, and more. WeWork now has more than 200 locations all over the world, so chances are good there's one near you. Check out we.co/tim https://we.co/tim to become a part of the global WeWork community! This episode is also brought to you by Peloton https://www.onepeloton.com/, which has become a staple of my daily routine. I picked up this bike after seeing the success of my friend Kevin Rose, and I've been enjoying it more than I ever imagined. Peloton is an indoor cycling bike that brings live studio classes right to your home. No worrying about fitting classes into your busy schedule or making it to a studio with a crazy commute. New classes are added every day, and this includes options led by elite NYC instructors in your own living room. You can even live stream studio classes taught by the world's best instructors, or find your favorite class on demand. Peloton https://www.onepeloton.com/ is offering listeners to this show a special offer. Visit onepeloton.com https://www.onepeloton.com/ and enter the code TIM at checkout to receive $100 off accessories with your Peloton bike purchase. This is a great way to get in your workouts, or an incredible gift. Again, that's onepeloton.com https://www.onepeloton.com/ and enter the code TIM.

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

• 0:01Tim Ferriss?

  At this altitude, I can run flat out for a half mile before my hands start shaking.

• 0:06Speaker 01

  Can I answer your personal question? Now would seem an appropriate time.

• 0:12Speaker 01

  I'm a cybernetic organism, living tissue over metal endoskeleton.

• 0:24Tim Ferriss?

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• 1:04Tim Ferriss?

  subscription purchase. So learn more, check it out, go to drinkag1.com/tim. That's drink A G one, the number one, drinkag1.com/tim. Last time, drinkag1.com/tim. Check it out.

• 1:24Tim Ferriss?

  Hello, boys and girls, ladies and gents, Magui and gremlins. This is Tim Ferriss, and welcome to another episode of The Tim Ferriss Show, where it is my job each and every episode to tease out the habits, routines, favorite books, et cetera, of world-class performers from a wide, wide spectrum of fields. Sometimes they come from sports, other times military, chess, business, you name it. In this case, we have a serial entrepreneur, Bob Metcalfe, at Bob Metcalfe on Twitter. That's B O B M E T C A L F E. Bob is an MIT Harvard-trained engineer and entrepreneur who became an internet pioneer in 1970,

• 2:08Tim Ferriss?

  invented Ethernet in 1973, and founded 3Com Corporation in 1979. Roughly 1.2 billion Ethernet ports were shipped last year. 400 million wired and 800 million wireless Wi-Fi. 3com went public in 1984, peaked at 5.7 billion in annual sales in 1999, and after 30 years became part of HP, and that was last year. Bob was a publisher pundit for IDG Infoworld for about 10 years and a venture capitalist for approximately 10 years with Polaris Venture Partners, where he continues as a venture partner. Bob is a member of the National Academy of Engineering and a recipient of the National Medal of Technology.

• 2:51Tim Ferriss?

  We talk about just about everything, from how he cheers, in other words, when he does a salutation, when people are drinking wine or whiskey, whatever it might be. We talk about the early days. We talk about how he learned to hire and fire, the right things, the wrong things to do, scaling businesses, different types of approaches to evaluating talent, the critical decisions he made, the mistakes in some cases that he has made, how he's gotten himself out of very dark periods, and from start to finish, a really fascinating journey of a conversation that I tremendously enjoyed. So, I'll leave it at that.

• 3:33Tim Ferriss?

  Without further ado, that's, I think, how you say it. Without further ado, what the hell am I trying to say here? Without further ado, there we go. I was trying to make it French. Without further ado, please enjoy this wide-ranging conversation with Bob Metcalfe. Bob, welcome to the show.

• 4:02Speaker 01

  Thank you.

• 4:03Tim Ferriss?

  I am really thrilled to connect and so happy to have you here, especially given that I suppose I'm now technically, I don't know if I should call myself an Austinite, but I live in Austin.

• 4:13Speaker 01

  Well, nice of you to move here. It makes this interview so much more convenient.

• 4:16Tim Ferriss?

  It does make it more convenient. Is Austinite one of those self-descriptions that you have to wait a certain period of time to earn, or as soon as someone lives here, can they call themselves that? I think back to Long Island, we both have some history with Long Island. And where I grew up on eastern Long Island, if you were to call yourself a bonaker, that has a very specific association with families that have been around for a long time. Does Austenite have that or not so much?

• 4:42Speaker 01

  You know, I don't know about it. I consider myself an Austenite because I live in Austin, but maybe I'm being presumptuous there.

• 4:48Tim Ferriss?

  You've been here how long now?

• 4:50Speaker 01

  Seven years and a month.

• 4:51Tim Ferriss?

  Seven years and a month.

• 4:52Speaker 01

  And I say that makes me a native, but then they look at you.

• 4:57Speaker 01

  I actually prefer to think of myself as a Texan rather than an Austenite. Technically, I don't live in the city of Austin, even though that's my mailing address. I overlook the city of Austin.

• 5:07Tim Ferriss?

  So I think we'll come back to Austin, given your teaching. But what I thought we might start with is, for many people, something they probably don't associate you with, and that is tennis. So I actually, for the first time in my life, had proper tennis instruction last summer. I really wanted to, I've always wanted to learn tennis, but I associated that, growing up as a Taiwanese on Long Island, with the city people. That just wasn't something that the Taiwanese did. And I secretly pined after learning how to play tennis. And it seems like this sport has had an impact on your life. And if I understand correctly, you've learned so much from the game that you considered writing a book about it? Is that just an internet misquote? Or?

• 5:50Speaker 01

  Well, I didn't write the book.

• 5:52Tim Ferriss?

  But you considered it.

• 5:53Speaker 01

  Yeah, because I've learned so much. And I think about tennis, I don't play much of it anymore. I intend to get back, but I have to lose 50 pounds. My playing weight was 50 pounds lighter than this. So I've been out there, I almost hurt myself. Last time I went out, one of my specialties in tennis is chasing the ball down on a clay court. And so I got up ahead of steam on one of these balls, I got over my head and ran it down and returned it, and then realized I was running at the fence at full speed, carrying an extra 50 pounds. And I went bam, right into it. So I think I'm going to go back to tennis after losing some weight.

• 6:31Tim Ferriss?

  Well, I can, I'll extend the offer to help if you like, just having spent so much time in that world. But tennis, why does tennis appeal to you? Or what have you learned or observed in the game of tennis that can apply elsewhere?

• 6:43Speaker 01

  Lots of things, but the first word that comes to mind is how to compete, compete, competition. And what it takes to win. I like to win, and I've become more, I became more competitive. I played competitive tournament tennis. This was a long time ago before I never turned. In fact, I preserved my amateur status. Twice, I won a hundred dollar prize and I turned it down.

• 7:06Tim Ferriss?

  Ah, to preserve amateur.

• 7:07Speaker 01

  To preserve my amateur status, which I effectively did it. Another way to preserve your amateur status is to lose.

• 7:17Speaker 01

  So I got to the finals of the New England B Championship and lost in the finals. And I got to the, uh, nineteen seventy-two was ranked sixth in New England with my doubles partner in tubs. And we secured that position by losing in the semifinals of the New England Hard Court Championship. So that's an effective way of staying amateur.

• 7:40Tim Ferriss?

  What makes a good competitor?

• 7:44Tim Ferriss?

  In tennis or otherwise, it could be specific to tennis. But when you say you learn to compete, what does the before and after look like? Once someone has learned to compete?

• 7:53Speaker 01

  Lots of differences, but the one I hang on is that some people, when they miss a shot, they'll throw their racket or smash it on the ground and stomp around and that positions them to do even worse on the next point. So one of the things I focused on was if I make a mistake, I don't

• 8:12Speaker 01

  throw my racket, I don't smash it, I don't get upset, I try to correct and improve. And I think that makes a big difference. My doubles partner actually would take his racket and smash it on the tennis post. Now, in those days, you'd carry two or three rackets, so he would smash it. They were wooden rackets, by the way, so when you smashed it, it was quite dramatic. But I never smashed a racket because I tried to channel my energy and that made me a more effective competitor.

• 8:39Tim Ferriss?

  Did you, how old were you at the time at your peak of competition? Roughly?

• 8:45Speaker 01

  My peak would be nineteen seventy-two, let's see.

• 8:50Speaker 01

  Oh, that's arithmetic now.

• 8:51Tim Ferriss?

  Yeah, we're talking end of high school?

• 8:55Speaker 01

  No, no, that's the end of, that's four years after my PhD. My PhD I got the same year, so it was.

• 9:00Tim Ferriss?

  I got it.

• 9:00Speaker 01

  Yeah, so I was twenty-seven.

• 9:02Tim Ferriss?

  Were you developing at that time the ability to compete or?

• 9:08Tim Ferriss?

  Not be emotionally reactive in other areas of your life? Or was it mostly siloed to tennis? I guess what I wonder is, did you enjoy competing in other aspects of your life simultaneously?

• 9:22Speaker 01

  No, that came later. I think my competition was channeled in tennis. I played a lot of tennis. You know, every weekend at a tournament, practice during the week. I played varsity tennis at MIT. I was captain of the MIT tennis team.

• 9:37Speaker 01

  So played a lot there, three or four hours a day. And the, and I love to win and I beat a lot of, everybody I ever beat always told me they were having a bad day.

• 9:51Tim Ferriss?

  Could be true. I mean, it's plausible, but...

• 9:53Speaker 01

  I played public court tennis. I learned, I played tennis at Bay Shore School System on asphalt. And when I say asphalt, I don't mean hard courts. I mean, like the kind they make roads out of.

• 10:04Tim Ferriss?

  Right.

• 10:05Speaker 01

  Then our courts were asphalt. And my coach used to say, Van Oostren was his name, you only have to win the last point. And so the goal is to get the ball back one more time than anybody else. And so I tended to outlast people on the points.

• 10:21Tim Ferriss?

  Did you get the competitive drive? Was that derived organically just through your life experiences? Or was that learned from parents or other influences?

• 10:34Speaker 01

  I wouldn't say my parents were very competitive. So I think I may have picked it up playing tennis.

• 10:40Tim Ferriss?

  And we're gonna jump around quite a bit. That's just the nature of how I tend to talk to my friends. And I know we're just getting to know each other, but my conversations tend to be somewhat memento-like in reference to the movie that is extremely hard to follow.

• 10:56Speaker 01

  So you mean we're leaving tennis already?

• 10:57Tim Ferriss?

  It means, well, we don't have to. We don't have to leave tennis. Is there anything you'd like to add related to tennis?

• 11:02Speaker 01

  Well, my specialty was doubles. And I loved to play with a partner and have teamwork and have specialties. And that was another way of winning because if you can optimize the two players... One's good at hitting hard, one's good at chasing the ball down, one's good at the second serve, and you just play the strengths of the two players. I liked, that was a part I really liked the best, so. So, so that sixth ranking in New England in 1972 was my highest ranking ever. And it was achieved with, uh, Brookfield. Skip Brookfield, who knocked the hell out of the ball, but it usually didn't, it usually went out.

• 11:41Speaker 01

  See, in tennis, you learn to hit the ball harder and harder and harder, but it's more important for it to be in.

• 11:45Tim Ferriss?

  Right.

• 11:46Speaker 01

  And, uh, Skip never had that, but he could knock the hell out of the ball, so.

• 11:51Tim Ferriss?

  How much time did you spend developing your strengths versus fixing your weaknesses? Or how did you think about, uh, how to allocate your time and energy to those two things? If you did.

• 12:03Speaker 01

  Well, one of the things I learned in tennis is the value of getting a coach. So, I would, um, and I was blessed with coaches in both high school and college who knew how to teach. It's, you know, you can win at tennis, but you can also teach tennis, and those are not the same thing. And I had great coaches. But they would point out weaknesses. I guess my answer to your question is I focused on fixing things that were wrong with my game to bring the whole thing up to a acceptable level. Cause your opponent will find your weakness and play it. So you have to be sure not to have too many of those.

• 12:34Tim Ferriss?

  I suspect we'll probably come back to this, just thematically, we're gonna come back to a lot of these points, probably in the realm of business, maybe elsewhere.

• 12:43Tim Ferriss?

  But I would love to hop ahead, and I think I'm getting the date right, May 22nd, 1973?

• 12:50Speaker 01

  That's an important date.

• 12:51Tim Ferriss?

  It's an important date. Could you explain why that's an important date for people?

• 12:56Speaker 01

  On May 22nd, 1973, I was sitting in my office at Xerox Palo Alto Research Center in Palo Alto, California. And, uh, I had been given the job of, for the first time in the history of the world, networking a building full of personal computers, because there weren't any personal computers in 1973 to speak of. And I was lucky enough to get that job. And so, leading up to that May 22nd day, you know, some ideation and travel and so on. But on that day, I sat down at my IBM Selectric typewriter and typed a memo outlining how Ethernet would work. So that's the Ethernet memo.

• 13:38Tim Ferriss?

  And did you refer to it at that time as Ethernet?

• 13:41Speaker 01

  That was the memo in which Ethernet was named.

• 13:44Tim Ferriss?

  How did you choose that name?

• 13:46Speaker 01

  Well, in building the network, we chose to use a thick, a half-inch-thick coaxial cable to carry, shared among all the attached PCs, to carry the packets back and forth among the PCs.

• 14:01Speaker 01

  But we chose the coax for very particular reasons, and we anticipated maybe if we did it again, we would choose a different medium: twisted pair, or optical fibers, or radio, for example. So we didn't call it coax net. We called it a generic thing, and there was this word ether floating around. You know, the ether was once thought to carry light from the sun to the earth. The luminiferous ether.

• 14:29Tim Ferriss?

  Luminiferous.

• 14:31Speaker 01

  Light barrier. And then around 1900, it was shown there was no ether. The light got here without a medium. So the word ether fell into disuse. And it was there for us. So omnipresent, this cable would go everywhere. Completely passive, it wasn't powered, it just sat there. And it was a medium for the propagation of electromagnetic waves, our data packets. So hence Ethernet. That's how it happened.

• 14:58Tim Ferriss?

  For people who are not familiar,

• 15:05Tim Ferriss?

  what did Ethernet represent in terms of change and innovation? What was the significance, in your words or the words of others, of Ethernet?

• 15:17Speaker 01

  So Ethernet is the plumbing of the Internet. Its job is to carry packets around, physically, around the world on these interconnected Ethernet's. So think of it as the plumbing. And what you generally think of is all the guys above it who have all the fun. You know, Google and Facebook and all those people, they're up there. But everything they do eventually becomes launching packets around the network. So we're the plumbing.

• 15:47Speaker 01

  I had in my office at Xerox the most modern computer terminal in the world, the Texas Instruments Silent 700. And it could type characters on a piece of paper at 30 characters per second. And those characters arrived over a thick cable that carried the bits at 300 bits per second. Remember that number, 300? When Dave Boggs and I built the first Ethernet, it ran at 2.94 megabits per second, roughly 10,000 times faster. So in one day, we went from 300 bits per second to roughly 3 megabits per second. So that is the principal change.

• 16:30Speaker 01

  We began to think of bandwidth not scarcity, not as a scarce commodity, but in abundance, because we had 10,000 times more than we'd had before.

• 16:41Tim Ferriss?

  Your interest, when did your interest in networks develop? I don't know if ARPANET came in early in that interest in networking or later, but how did you become interested in what would ultimately become Ethernet? I mean, what were the seeds that led you down that path?

• 17:06Speaker 01

  Well, I had, at MIT, between 64 and 69, was a computer science student, but there was no computer science then, so I was an electrical engineer and a management student at the same time. And then I went to grad school. I made a mistake and I went to Harvard grad school, which was terrible. I lasted a week before I was back working at MIT again.

• 17:28Tim Ferriss?

  Hold on, why was that?

• 17:32Speaker 01

  Because I'm an engineer and Harvard doesn't like engineers, to this day. By the way, you would think that by now, 50 years later, I would have lost this bitterness toward Harvard, but I haven't. It's still here, and that's a long story.

• 17:50Speaker 01

  Which you could ask me about later, because it has some fun parts.

• 17:53Tim Ferriss?

  I will ask you later.

• 17:54Speaker 01

  The roots of my animosity toward Harvard University. But the, uh, where was I going with that?

• 18:02Tim Ferriss?

  I was asking you about the seeds.

• 18:04Speaker 01

  Oh, yes. So, when you're a grad student, so I showed up at Harvard in the fall of sixty-nine, and I needed to find an advisor and a topic to get my PhD two or three or four, five years, ten, fifteen years later. And, uh, and the big, hot computer science research project was ARPANET. It had just been started. And so, being opportunistic, I said, "Okay, I'm gonna do something." So that's how I ended up in networking, was just because that's what grad students do. They, they do whatever's funded, and ARPANET was funded.

• 18:38Tim Ferriss?

  Could you explain for folks what ARPANET is, or was?

• 18:41Speaker 01

  Well, ARPANET is the Internet, only it's an early version of the Internet. And there's a lot of debate about that. The, uh, Advanced Research Projects Agency of the Department of Defense used to buy computers for each of its research universities, so they could do their computer research. And they got tired of buying one for every campus. So they said, "We should do resource sharing." And what that meant was, from any campus, you'd be able to use all the other computers at other ARPA sites. So the first app was called Resource Sharing, and it meant being able to log in from a terminal in one university and run programs and process your data at another university.

• 19:26Speaker 01

  And that killer, that app was not the killer app. It turned out, within a year, email became the killer app. But it started out as resource sharing. So as a grad student, see, I proposed, I had just finished learning digital electronics at MIT as an electrical engineer. So I'm up at Harvard, and I could see that Harvard needed to connect its, um, its computer to this packet switch. ARPA dropped off a packet switch at each of its major universities and connected them with high-speed modems. And then you had to connect your computer to the packet switch. So, fresh from MIT Digital School, I volunteered at ARPA, at Harvard, to build the hardware to connect Harvard's computer to the packet switch.

• 20:10Speaker 01

  And Harvard, just the beginning of my answer, Harvard said, "No, that's too important work to leave to a graduate student."

• 20:17Tim Ferriss?

  Ooh, singer.

• 20:20Speaker 01

  So I turned around, went down the street to MIT, and they gave me a job doing exactly the same thing. So they paid me. By the way, I was paid more than my Harvard advisor, which is a whole other story. And that annoyed him.

• 20:32Tim Ferriss?

  I can imagine.

• 20:33Speaker 01

  But, so I built this device to connect an IMP, that's the packet switch of the Internet, to the local computer at MIT, a PDP-10. And I built it. And MIT, I asked MIT, and they said, "You can build another one and give it to Harvard if you want." And Harvard wouldn't accept it, because it was too important for a graduate student. So I built that hardware. Now, that hardware could be described as carrying bits one at a time down a long wire, which is my essential skill. And I had actually practiced some of that at MIT prior, not for networking, but building digital electronics.

• 21:16Speaker 01

  So I sort of developed a specialty in sending bits one at a time down a long wire. And this device did that. Then, when I went to Xerox right after my PhD, I went to Xerox Research, and the first thing I did there was build another one of these devices to connect the Xerox computers into the Internet. And then it was in that moment that we started developing what are called personal computers.

• 21:36Tim Ferriss?

  There's so many different avenues we could go down here, but I'd like to help people with a definition, because I do find the plumbing of what we now think of as the Internet and the web fascinating, and it's helpful to understand some of the terms. So you've mentioned packet a few times. Can you explain to people what a packet is, in the context that you're using it?

• 22:07Speaker 01

  Okay, so you've got to start with bits, ones and zeros, and all computing is done, roughly speaking, with ones and zeros. No, not, all computing is done with ones and zeros. And the... And then you take those ones and zeros and you put them into groups. Call those bytes, or you could call them fields if they're bigger. So you string a bunch of fields of bits together. And then if you put on the front of it, a field which is the address of a place, so you'd like this, these bits to go, then you have the makings of a packet. So a packet is a bunch of bits with an address in the front. And you give that to a packet switch and it sends it off toward this destination.

• 22:49Speaker 01

  So a packet is a bunch of bits heading in a certain direction with an address on them.

• 22:54Tim Ferriss?

  Uh huh. Thank you.

• 22:57Speaker 01

  Uh, by the way, there's usually two addresses. A destination address and a source address. But actually, there's four addresses. Because there's the destination and the source in the local environment. And then there's the ultimate destination and source. So that's an Internet Protocol address as opposed to an Ethernet address.

• 23:19Tim Ferriss?

  Ethernet protocols, IP of the TCP IP?

• 23:22Speaker 01

  That's right, TCP IP, Transmission Control Protocol, Internet Protocol, TCP IP. And the IP is our Internet packets. And they have four addresses. They have the Ethernet address, which says where to go locally, like right over there. In order to get closer and closer and closer to the big address, which is the ultimate destination of the packet.

• 23:44Tim Ferriss?

  Thank you. When does Metcalfe's Law enter the picture? Uh, or what has become?

• 23:53Speaker 01

  You like to jump around, don't you?

• 23:54Tim Ferriss?

  I do. I do like to jump around. But we can go wherever you like.

• 23:58Speaker 01

  Well, let's do Metcalfe's Law for a while. So in, uh, in 1979, I founded a company called FreeCom to deliver the fundamental, deliver the plumbing, to build out the plumbing of the Internet, which was just now spreading. What Ethernet did was allow the Internet to go into a building and visit all the desks. Prior to that, Internet just came to the building and stopped in the computer room. This allowed it to go. And it led, so most machines are on Ethernet, they're not on the Internet directly. So the, so my company started selling Ethernet cards about this big. And they would plug into your PC and they'll allow a cable to come to your PC

• 24:42Speaker 01

  and put it on the Ethernet, which then put it on the Internet.

• 24:48Speaker 01

  And one of the problems my company had in 1981 where there were no personal computers. It was hard to sell. And we were running out of money. We had venture capital and and the, so we made up this idea of a a trial, a kit, three-node network for $3,000. You get three cards. You can plug them into your three IBM PCs, which were just beginning then. And then we, and then you'd hook them together with a cable. And then we had a diskette full of software. And the software allowed you to share a printer. So you'd connect a printer to one of the three PCs and then the other two PCs could share it. Or you could put a disk on one of the PCs and then the other two PCs could share it.

• 25:33Speaker 01

  And then there was software that allowed you to send an email from any one of the three PCs to any one of the other two. And this kit was a $3,000 kit. My company sold it and people bought it because it was novel and interesting. And it worked. That is, people found, we're heading toward Metcalfe's Law.

• 25:53Tim Ferriss?

  I'm in no rush.

• 25:54Speaker 01

  It's coming up.

• 25:55Tim Ferriss?

  We have as much time as we need.

• 25:57Speaker 01

  So people bought this trial kit and they put their three PCs together and it shared the printer, it shared the disk and exchanged the emails. Of course, how useful is email among the three nodes?

• 26:07Speaker 01

  And they told us that the product did what it said, but it was not useful.

• 26:14Speaker 01

  So I then went in a trance. I was head of sales and marketing at the company at that time. By then, I ran over to Stanford. We, Xerox had donated some early PCs called Altos. We had donated them to Stanford. And I went over there and I had access to the computer room there and I made up a slide. And the slide basically said that the cost of your network goes up linearly as you, as you buy one of my cards. The network gets bigger and bigger and the cost goes up linear. Say a thousand dollars a card, it was like that. But the number of possible connections went up as n squared. That is, each node could talk to the other n, the other n.

• 26:56Speaker 01

  And when you added another node, it could also talk to the other end, which could also talk to it. And if you do the math, the number of possible connections goes up roughly as n squared. So I made this slide showing the linear and then showing the quadratic passing the linear, as it always does, overtakes it at some point. And I call that the critical mass point. And I said, oh, and then I drew this out, took a picture with a camera, because we didn't have PowerPoint. So I took a picture with the camera, developed it into 35 millimeter slides, and handed six slides out to my sales force, which had six people in it. And we made the following argument.

• 27:37Speaker 01

  The reason your network is not useful is that it's too small. And what's the remedy to that? Buy more of our product. And they did. And it proved true that your networks turned useful. And we went public in March of 1984. Now, it's been asked many times, especially by engineers, who are suspicious of sales and marketing people, whether that slide was a lie. Was I lying by saying if you made the network bigger, it would be more useful? And the answer is no, I was not lying. And I'm fond of saying it's because I had a time machine. The Xerox Research Center was a time machine.

• 28:20Speaker 01

  And I took it out 10 years into the future, filled Xerox with PCs and LANs and laser printers and Internet routing boxes, and it was good. And everyone could see that it was good. So when I wrote that slide that night, I was not lying. I was predicting, based on 10 years of experience, what would happen. And it proved true, and my company went successfully public. 10 years later, that slide, which said that the value of a network grows as the square of the number of connections or users, by a man named George Gilder, he called it Metcalfe's Law. So since 1995, I've been enjoying and defending Metcalfe's Law.

• 29:07Tim Ferriss?

  I have several follow-up questions.

• 29:11Tim Ferriss?

  The first is, why did you name the company 3com?

• 29:16Speaker 01

  Oh, that's easy. In 1979, on June 4th, when the company was founded,

• 29:24Speaker 01

  what I wanted to accomplish with this company was to connect computers together. And what we had discovered in building the ARPANET is that every vendor of computers had their own programming languages and operating systems and computer protocols for communication. So the purpose of my company was to provide computer-communication compatibility. Com, com, com. 3com.

• 29:51Tim Ferriss?

  3com.

• 29:52Speaker 01

  Yep. So that's where I got the name.

• 29:55Tim Ferriss?

  And you mentioned in passing the general aversion, to put it lightly, that engineers have with respect to sales and marketing. How did you decide to start a company? Were you already entrepreneurial and had tried various things? What was the impetus behind starting the company? And not to say that being entrepreneurial is automatically sales and marketing, but it's certainly a component, generally speaking. How did you decide to pursue or create 3com?

• 30:27Speaker 01

  So my parents were not entrepreneurial. They never went to college. They... Actually, my father did start a company once. It was called BAM Electronics. Bailey, Abramson, and Metcalf Electronics. And it lasted a year and its purpose was to fix TVs. TVs were new then, and they would break. And the way you fix them is to replace tubes. So he had a company to replace tubes. But eventually, Metcalf believed that he was the hardest-working of the three. And Bailey thought he was the hardest-working of the three. And Abramson thought he was the... So the company blew apart in a year. But that's as close as my family got to entrepreneurship. But then I went to MIT. And when I arrived there in 64,

• 31:10Speaker 01

  MIT was at the heart of what would later be called Silicon Valley on the East Coast. So Route 128 was...

• 31:17Tim Ferriss?

  Absolutely.

• 31:18Speaker 01

  So suddenly, I'm surrounded by entrepreneurs and role models. And so I guess that was the beginning of it. And I was involved in starting three companies at MIT as an undergraduate. And then a little bit in grad school. And then I moved from 128 to Palo Alto, which was beginning to be Silicon Valley with some. So you could, you could say I moved Silicon Valley from. Or I was doing it the same year, anyway.

• 31:46Speaker 01

  And there, I suddenly surrounded, you know, I met Steve Jobs, I met Bill Hewlett and Dave Packard and Bob Noysen, all of them. And there is one impression that you walk away with when you meet those people, when you meet people like that.

• 32:00Speaker 01

  And the impression is, if this person can start a company, then I can.

• 32:07Speaker 01

  Well, they become human.

• 32:09Tim Ferriss?

  Yeah, they become human.

• 32:10Speaker 01

  You can see the limitation. They're human beings and you can, if they can do it, you can do it. And the question is how to, how to figure it out.

• 32:17Tim Ferriss?

  How did you end up the head of sales and marketing? And, and how did you get good at sales and marketing? Or how do you think about it? I know there's a lot of questions wrapped into one.

• 32:30Speaker 01

  Well, the, I was an engineer and at Xerox.

• 32:36Speaker 01

  And they had a charm school. That is, this company was so big, they had their own university in Virginia. And you could go there if you want as part of your development.

• 32:47Tim Ferriss?

  You said charm school, right?

• 32:48Speaker 01

  We called it charm school.

• 32:51Speaker 01

  And I went and I took a course called Xerox Selling Skills. And by the way, there were 35 people in the class and 34 of them were blonde women.

• 33:02Tim Ferriss?

  Why did you decide to take the course?

• 33:05Speaker 01

  There weren't that many choices.

• 33:07Tim Ferriss?

  Aside from 34 blonde women?

• 33:09Speaker 01

  That wasn't a fact, it wasn't until I arrived, I realized I had hit paydirt there.

• 33:15Speaker 01

  There was another course called Managing Tasks Through People. I took that one too. But then.

• 33:23Speaker 01

  Time passed. I started my company. I was chairman, CEO, president.

• 33:30Speaker 01

  And we raised-

• 33:31Tim Ferriss?

  This is 3Com.

• 33:31Speaker 01

  3Com Corporation in 1979, in 1980. We were initially consulting for revenue and then we started selling a book that we developed. Then we get, we're getting ready to have products and we raised venture capital. And one of the things that you do is then you recruit adult supervision. Term of art, adult supervision.

• 33:52Tim Ferriss?

  Still happens quite a bit now, yeah.

• 33:53Speaker 01

  Well, it's important.

• 33:55Tim Ferriss?

  Or it's foisted upon you, depending on how the board is composed, yeah.

• 34:00Speaker 01

  Well, you're lucky if they foist it on you.

• 34:01Tim Ferriss?

  Yeah, no, no, I'm not saying I have no supervision here.

• 34:06Speaker 01

  I didn't learn this from Steve Jobs, but I later saw that Steve knew this, which is you need adult supervision. A lot of people think Steve was the CEO of Apple. Well, he wasn't the CEO of Apple to 1996. He founded the company in 1976, so it took him 20 years to make CEO. Well, I was the CEO, but I, I saw that I needed adult supervision, so we recruited Bill Kraus from HP. And that was a good decision. Bill joined the company when there were 12 of us and we kicked him upstairs to chairman when there were 12,000 of us.

• 34:38Tim Ferriss?

  Wow.

• 34:39Speaker 01

  He did good.

• 34:40Tim Ferriss?

  Yeah, that's a hell of a run.

• 34:41Speaker 01

  He's good. But, but when he arrived, he then became the CEO. And we were running out of, we were starting to spend that venture capital. And the board of directors asked, I was kind of annoyed.

• 34:58Speaker 01

  I recruited Bill, but I didn't recruit him to be CEO. But then it became obvious to the board that he should be CEO and, uh huh. And the, the board then said, we, Bob, we want you to be head of sales and marketing. That's how I got the job. And there was, I was the VP of Sales and Marketing. I was also the only member of that function. There were no salesmen. There were no marketing. It was just me. So I started learning really quickly.

• 35:24Tim Ferriss?

  And, and did you have the, the skills?

• 35:30Tim Ferriss?

  The toolkit to do that job, partially because of the class that you took at Char School? Did it help? Or was that something?

• 35:37Speaker 01

  That helped enormously, but it was, keep in mind, our revenue was zero. So the kind of selling that was required was personal selling. And having invented the technology, I was in a good position to do personal selling because I could get an appointment with anybody.

• 35:51Tim Ferriss?

  Right.

• 35:52Speaker 01

  So I invented this, I'd like to come talk to you about it. And so I could get appointments that a normal salesperson couldn't get. And I took us from zero to a million a month in revenue. But then-

• 36:02Tim Ferriss?

  Just, just you alone?

• 36:04Speaker 01

  No, I recruited, recruited one, two, three. Eventually it was six regional managers, but initially three. And you'll be surprised how many more orders you get when you actually go out and ask for them. And so revenue started upward from zero. But when it hit around a million, this touches on one of my favorite metaphors, I redlined. And we needed to shift gears because selling is very complicated. So, you know, sales competition, territory management, channels of distribution, contracts, it's complicated.

• 36:46Speaker 01

  So Mike Aliberko was recruited to be, from HP, to be our new head of sales and marketing. And he took us from a million a month to five million a month. And then he redlined, so he succeeded and then redlined. And then we replaced him with Chuck Kempton. And Chuck took us from, I'm losing track of the numbers here, but five million to 25 million a month, and then he redlined. And then we got Bob Finocchio to take over there, and he took us into the billions. So what we were doing was shifting gears. And you have to do a lot of that when you're growing a startup. You have to be sure the- See, the company is growing more rapidly than the people. You have to pay attention to which people have been left behind by your accelerating company. And then you need to, in some cases, shift gears.

• 37:31Tim Ferriss?

  Does that relate to operating ranges?

• 37:35Speaker 01

  Yes.

• 37:36Tim Ferriss?

  Could you explain what that refers to, what operating ranges refer to?

• 37:41Speaker 01

  Well, people have, if you look at different sizes of companies, people have skills related to size, scale. So, for example, my specialty is when chaos reigns and the company doesn't quite exist yet. And that seemed to be where I performed the best. But then there's people like John Sculley, a buddy of mine, who knows how to run a multi-billion dollar company. We do not know the same stuff. We have a different temperament. So, his operating range is up in the billions per year. And my operating range is zero to a million or zero a month. That's what I mean by operating ranges. So, some of it is the details of the... Also, for example, when you're running a multi-billion dollar company,

• 38:24Speaker 01

  you have different divisions for different products. You have different channels of distribution. And there's many layers of management. And you have different skills. Like, when you're an engineer, you build things. When you're an engineering manager, you manage people who build things, which is different from building them. And then when you're a manager of managers of engineers, that's, even that's a different task. So, and so, different people, some people have very broad operating ranges and some people have very narrow ones.

• 38:53Tim Ferriss?

  And what did you find to be the most effective approach for informing someone that they needed to be replaced? So, you have these various players with different operating ranges. And you mentioned four or five names at different stages needed to be replaced with someone else. What did you find to be the best or most effective way to make those transitions?

• 39:22Speaker 01

  Well, what we're talking about is management. So, it's up to management to make the very subtle decisions about... If you have a salesperson who's underperforming in a region, is it because the salesperson isn't right? Or did you set their quota too high? Or is that market not really as big as you thought? And that's, thinking that through and deciding is called management. Then eventually, sometimes, you reach that it really, that person really needs to be replaced. So one thing I learned about that is never fire anybody alone.

• 39:54Tim Ferriss?

  Never fire anyone alone?

• 39:56Speaker 01

  No, you should bring help. So you usually bring the head of human resources to help you. Because funny things happen when you let people go. They, they um. By the way, in all these cases, we offered the person the option to take another job at the company. But that didn't work. I remember Chuck stormed out the door. He wasn't gonna put up with that. Because he disagreed with our management assessment that, that he was the problem.

• 40:22Tim Ferriss?

  Right.

• 40:23Speaker 01

  And we offered him a regional thing. I forget what it was, but he wasn't having it. He stormed out. In the case of Mike Halliburka, when we replaced him as national sales manager, he took over the western region and prospered. So you have different outcomes, but you should never do it alone.

• 40:41Tim Ferriss?

  So never fire alone. And is that just for moral support, or how does that, how does that help? And then uh.

• 40:48Speaker 01

  Well, it keeps, some people get very upset when you fire them.

• 40:51Tim Ferriss?

  Right. I'm sure.

• 40:53Speaker 01

  I'm sure I would.

• 40:55Tim Ferriss?

  I've been fired. I wasn't too happy about it.

• 40:57Speaker 01

  I'm smarter than you. I always quit just before they're gonna fire me.

• 41:02Speaker 01

  That's not smart from a compensation point of view, by the way. It's much better to be fired than to quit.

• 41:06Tim Ferriss?

  Right, you get your severance and.

• 41:08Speaker 01

  Get your severance package, right. No, it's just better to have um more than two people in the room to keep things calm. And it's not personal, it's business. And here's some alternatives and, so don't do it alone. That's. And the other thing I learned is about halfway through the um interview, you both realize it's the right thing. And you don't wanna do a job that you're not doing well. You wanna go find one that you can do well.

• 41:39Speaker 01

  So this is getting that message and then you make the adjustment. Some do and some don't. Some get very upset. I remember Marlene.

• 41:50Speaker 01

  We needed salespeople and she was our marketing person. And so I took her for a walk. We used to do this around the parking lot. See, the building had a parking lot around it. And this is before I learned about don't do it alone.

• 42:02Tim Ferriss?

  Yeah.

• 42:02Speaker 01

  So she and I went on this long walk around the building. We probably did it ten times. And I explained to her that I needed her to be a salesperson and to cover the Northern California region. And we didn't need the marketing she was doing. But she saw herself as a marketing person. So she argued with me ten times around the building and eventually quit. I mean, that day she quit because she wasn't going to take the sales job. And she went off and started another company and made millions of dollars. And so that would be evidence that she needed a different kind of job and she found it and everything went well.

• 42:38Speaker 01

  Anyway, you don't want to fire people. It's no fun.

• 42:41Tim Ferriss?

  No, and I was gonna, we came to this a little earlier than I anticipated because of the operating ranges. And I have questions about hiring coming up right after this. But are there any particular opening lines or any language that you found very helpful in having those difficult meetings? Because I've worked with many startups and I've largely stepped out of that type of work as of about two years ago. But every founder or CEO certainly has, at some point sooner or later, will have a conversation like this, or need to have, or should have, a conversation like this.

• 43:22Speaker 01

  Should and will.

• 43:23Tim Ferriss?

  Yeah, should and will. So is there any language or any guidelines that you've given founders for making that, for becoming better at that? Or not screwing it up terribly when you have those meetings?

• 43:41Speaker 01

  I think I will annoy a bunch of human resource executives with my answer to that.

• 43:45Tim Ferriss?

  That's okay.

• 43:46Speaker 01

  Well, one of them is not to give too many reasons.

• 43:51Speaker 01

  In fact, zero reasons is the best, which is we've concluded that you're no longer working out in this position and we'd like you to take that position or leave the company, whichever. When you start to give reasons, then you begin a debate.

• 44:03Tim Ferriss?

  Yep.

• 44:04Speaker 01

  And it's never-ending. And as venture capitalists, this was a rule of mine, which is to avoid giving reasons. Because as soon as you give a reason, you have a pen pal and you're in a discussion forever. So the thrust of it is the general management decision, not personal, that this job and you are not meant for each other, so you're not performing well and we want to get you to a job that you'll do better at. The company needs everyone to be doing a good job and you're not in this position, so we'd like you to move or leave sometimes is a recommendation. So spending a lot of time on reasons and debating and sort of sharing, no, the decision, oh, making clear the decision is a done deal, that we're not here to debate this with you, this has been concluded.

• 44:48Speaker 01

  So making that clear at the beginning is helpful. Otherwise, the employee begins to become a debater and becomes emotional and gets into the details. Getting into the details is not productive generally. So don't give a lot of reasons. Make sure it's clear it's a done deal and get some help to do it, bring help with you.

• 45:12Tim Ferriss?

  Good advice.

• 45:13Speaker 01

  But you spoke of language and I want to, I picked up a point. You asked me about hiring.

• 45:21Tim Ferriss?

  Yeah, that was going to be the next, the next set of questions, but I'll let you run with it and then I can ask my questions.

• 45:27Speaker 01

  Well, hiring is the wrong word.

• 45:29Tim Ferriss?

  Right, so this is exactly what I wanted to ask you about, so please continue.

• 45:33Speaker 01

  Yeah. And I learned this early, hiring, it's a small bit of language and people debate the semantics of the words, but my grandmother fought organized crime on the docks of Brooklyn, New York. And she would supervise the hiring of stevedores by the Longsherman.

• 45:54Tim Ferriss?

  What are stevedores?

• 45:56Speaker 01

  Stevedores are the people who move the cargo around on the docks. I'm sorry, I may have this backwards.

• 46:04Speaker 01

  The stevedores hired the longshoremen to move the stuff around on the dock. Now we have containers, so it's a little bit... In those days, they moved individual televisions around. But she supervised hiring. And hiring, the picture I have of hiring is there's a bunch of people dying to have this job. And you interview them and evaluate them and you deign to pick one of them to take the job. And they're so grateful to have the job. And all the others are waiting for the next one, and that's hiring. And that is the wrong mindset for growing your company. And the word I substitute is recruiting.

• 46:45Speaker 01

  You're after people who have other options, and they're the best. And you have to sell them on the proposition of joining your company. You're not hiring them, you're recruiting them. So I seize up when I hear that word hiring applied to growing your company. You need to recruit the very best people.

• 47:05Tim Ferriss?

  What is the playbook for being a good recruiter? Or are there specific, just like in the case of firing? Number, I guess there are many guests, there are many facets to successfully recruiting. How have you, in the past, picked your candidates or your targets, so to speak? And then what does it look like to recruit successfully?

• 47:33Speaker 01

  Well, I'll tell you my secret.

• 47:37Speaker 01

  Bill Kraus, he's our adult supervision, recruited him from HP. And Bill came into my office and said, "I'd like to hire Deborah Engel to be our VP of Human Resources." And I said, "Bill, we only have 35 people in this company. We can't afford a vice president of human resources. What, are you crazy?" And Bill said, "No, I'm not crazy. I know what I'm doing and you're gonna go along with me on this and we're gonna get Deborah in here to be HR." So we got Deborah to be HR and she knew how to recruit people. So she ran a process. She helped us all run a process. I can describe some of the aspects of that process, but that's how I learned how to recruit

• 48:21Speaker 01

  is I listened to Bill Kraus and allowed, very early in the history of our company, to get a superly qualified HR person who knew how to do everything because she had done it for years. So, one rule of recruiting is you should have three candidates, any one of which you think could do the job, before you choose one. If your company is rapidly growing, you trick them and you hire all three. You choose the one that's gonna be for this job and then you find other jobs for the other two because they're great and that's a side issue. So when you're rapidly growing and you invest all this time in a three candidate process,

• 49:06Speaker 01

  you gotta look at the other...after you choose one, the other two are pretty good, so you wanna not just throw them away. Find a place for them. These are people you're recruiting. They already have jobs. And then I got tricked early in my recruiting days. We were recruiting the salespeople. So we got a professional salesperson recruiter. See, an engineer doesn't know what a good salesperson looks like. So you need to recruit...you need a recruiting team that knows what a good salesperson looks like if we're recruiting a salespeople. And they sent me in to interview this guy, a very senior sales guy, and I came back and I said, "I love this guy. He's super." And then they said, "Well, what do you know about him? What'd you learn about him?"

• 49:50Speaker 01

  And I thought about it. I said, "Nothing, actually. I did all the talking." This guy had tricked me into doing all the talking, so...and I really liked myself, so it really...I thought he was super. So one of the things that you have to do is not be snookered, especially if you're recruiting salespeople who are good at this. Yeah.

• 50:15Tim Ferriss?

  By definition, if you're recruiting, as you mentioned, these people have jobs, they have other opportunities. How did you differentiate? If you ended up coming in as a closer, or watching people close the deal? How did you differentiate 3com? How did you make it more attractive than all the other opportunities it might have had in front of them?

• 50:42Speaker 01

  Well, it got easier and easier over time, but at the very beginning it was very hard, because no one really knew what networking was, or what the internet was, or what a personal computer was. So that was part of our sales proposition. And so a lot of hiring... oop, did I say hire just then?

• 50:59Tim Ferriss?

  You did.

• 51:00Speaker 01

  Yeah, I corrected myself. So we made... I made some recruiting mistakes early. And one of the reasons to, I was driven to, because I couldn't get anyone to come join the company, because they didn't believe that it would amount to much, or that networking was important, or something. But over time, as the internet emerged, and as networking became more important, it became easier and easier to sell the vision of a worldwide internet that people wanted to participate in building. But it is hard at the beginning, because you have very... you have to be really persuasive. Like Steve Jobs, who I'll keep mentioning, because he's a buddy, a mentor of mine. He was successful, because he was enormously persuasive. So he could persuade people to do stuff that others couldn't persuade them to do.

• 51:44Speaker 01

  You walked into his reality distortion field, and you'd believe anything. So part of the knack is learning how to be persuasive about your company, and why people should join it. And then there's the compensation subject. And I remember this event, it stuck with me. I was recruiting this kid as a... not so much a kid, as a engineering... a senior engineering manager, reporting to the vice president. And I offered him a stock option. And I asked him if the offer was attractive to him. And he said, "You know, Bob, I don't understand stock options or anything, so I'm counting on you," he says to me.

• 52:26Speaker 01

  "I'm counting on you that when we go public, people won't think that you took advantage of me."

• 52:35Speaker 01

  But this offer had been prepared by Deborah Engel, according to an airtight HR policy. I was confident this was a fair offer to him. And when we went public, he got a house, which is, was the rule of thumb. Not the VP of Engineering, but the directors of Engineering should all get a house out of it. He got his house, so my conscience is clear.

• 52:57Tim Ferriss?

  And on the, you have to be persuasive about the company piece that you mentioned. In practice, what did that look like for you guys? I mean, you turn it, I'm just making things up, but I know this is an approach that some people use. Do you make the company about more than the company? It's about a movement. It's about this seismic shift that you can be on the forefront of. How do you, what are the ingredients, or what were the ingredients in practice that made, that made the company? Made you persuasive in presenting the company?

• 53:28Speaker 01

  Well, all that you just said is part of the pitch. But the core of it is credibility. That is, are they going to believe you when you say all those things that you just said? So it's how do you get credibility? And I view it as a spiraling thing. You have to start with little bits of credibility and then spiral up to little bigger ones. And the technique for that is promises. Now, you've heard people say you need to keep your promises. My advice is slightly different. You need to make promises. And then keep them.

• 54:06Tim Ferriss?

  Right.

• 54:07Speaker 01

  But making promises is a way of spiraling up the credibility. So, so in dealing, in a sales situation, or dealing, and recruiting is a sales situation, you got to start with little bits of credibility, showing up on time, just being sure that what you say is true. Don't exaggerate much.

• 54:26Speaker 01

  And then eventually you believe you've spiraled up to the level of credibility where you can ask the question, are you going to join or not? And that's a test of how successfully you've spiraled up your credibility in that case.

• 54:39Tim Ferriss?

  Are there other ways to build credibility that were important ingredients aside from the making and keeping of promises, building from the small to the large?

• 54:51Speaker 01

  Well, the other is to use the team with which, in the case of recruiting, this person's going to work, it's that team that's recruiting the person, not you. Because these are the people that he or she is going to work with. And so they're the most important factor in their evaluation of whether they want to work with these people or not. So you have to push down the recruiting to the people who are going to work with this person.

• 55:18Tim Ferriss?

  What did the recruiting process look like in the sense that you're simultaneously recruiting, finding candidates you hope to recruit and vetting, in the sense that you're going to, in some cases, end up in a room with a salesperson who's very, very, very good at selling themselves, but they may not be very good at selling a product? And I'm curious to know if there were any aspects of the hiring process that you feel were particularly important? And I'll just to mention one thing that I do not have much experience hiring, I have some, but not a ton. And I was chatting with a friend, Kyle Maynard, who had been taught himself from a very successful CEO.

• 56:03Tim Ferriss?

  And there are many different approaches to hiring, that when the coworkers or the prospective colleagues would interview a prospect, he would have them, on a number of factors, rate them from one to 10, but they couldn't use a seven, because seven is a somewhat lukewarm, non-committal number, versus a binary six, which is barely passing, so that's a no, or an eight, which is much more committal. And I thought to myself, wow, that's quite clever. And so I've been applying that in many different situations in my life, not just hiring. But were there any particular rules or approaches that you have used or seen used that you believe to be very helpful for ensuring you're getting the right candidate?

• 56:45Speaker 01

  Obvious answer, reference checking.

• 56:48Tim Ferriss?

  Yeah.

• 56:48Speaker 01

  You must check references. But you have to be pretty creative.

• 56:52Tim Ferriss?

  Yeah.

• 56:53Speaker 01

  Often, people will give you a list of references.

• 56:56Tim Ferriss?

  Right.

• 56:56Speaker 01

  And you need to call all of those people and check. You'd be surprised how many times there's a surprise there. But then you have to use backdoor references, so there's people that were not recommended.

• 57:07Tim Ferriss?

  Right.

• 57:07Speaker 01

  And you need to be very careful and listen carefully to your references when you're checking them. That matters. If you take shortcuts and you assume that the references that they gave would be positive, that you're... that's a slippery slope.

• 57:23Tim Ferriss?

  Right.

• 57:25Speaker 01

  You'd be surprised how many times people will give a reference who dings them.

• 57:29Tim Ferriss?

  It is surprising.

• 57:31Speaker 01

  It's sort of like fundraising, too. You should check with the... You're about to refer your customer or your VC to someone. You should check with them. "By the way, may I use you as a reference?" "Yes." "Will you say good things about us?" "Yes." "Oh, good. Thank you. I really appreciate it."

• 57:50Tim Ferriss?

  Important follow-up question.

• 57:52Speaker 01

  But when you call somebody cold and say, "Who are you?" "Oh, you're Tom. Oh, yeah." "Oh, my favorite thing is the good meeting thing." When you're a venture capitalist, this is a slightly different situation, but you're a venture capitalist and you're evaluating a company, and they say, "We've had a good meeting with Procter & Gamble." Yeah, that's great. And who did they meet with? They give you the name and phone number. Then you call the person, and they don't remember the name of the company or anything. They don't remember nothing. That's just forgetting to call the guy at Procter & Gamble and say, "I'd like to use you as a reference, and if so, will you say good things about me?"

• 58:26Tim Ferriss?

  Yeah.

• 58:27Speaker 01

  And if the answer's no, you don't give them as a reference. But checking references is all important. But you have to do it deeply. You can't do it superficially.

• 58:35Tim Ferriss?

  Creatively, too, right? Because, as you mentioned, at least in some cases, I know references are worried about liability if they say something negative that impacts the hireability of someone, so...

• 58:47Speaker 01

  That's why you have to listen carefully.

• 58:49Tim Ferriss?

  Listen carefully.

• 58:50Speaker 01

  Because they send you the signals.

• 58:51Tim Ferriss?

  Right.

• 58:53Speaker 01

  Under the cloak of that fear, so the worst thing you can get, you know, by, they'll say, "I can confirm that Fred worked here between April 17th, 1989 and October of the next year." And if that's all they're willing to say, you should take that as a bad reference.

• 59:13Tim Ferriss?

  Yes. I was chatting with one founder I worked with at a point, and one of his approaches was to, you would leave a voicemail and also send an email to the reference, and it would say, "If so-and-so is a nine or 10 out of 10," or if you would recommend them nine or 10 out of 10, then please call me back or respond to my email. If not, you don't need to reply." And so it gave them plausible deniability. They could say, "I never got it," but nonetheless, he was able to gather information without being explicitly told information, which I thought was quite clever.

• 59:51Speaker 01

  I wish I knew that.

• 59:52Tim Ferriss?

  There's so many, so many different ways I want to go here. You've mentioned Steve Jobs a few times, and we were, we were sitting across from the table before we started recording, and you were on your laptop, and I was doing a second review of my notes, and I laughed at one point, and you said, "Are you laughing at something?" You said, "Are you laughing at me or at something else?" And I know we were just, we were joking around. So it was a quote, it might be a misquote, but since you mentioned Jobs, I'd love to touch on that. And the quote, I guess this is from CNBC about a year ago, "So Steve Jobs came to our wedding," says Metcalfe, "and what's wrong with having Steve Jobs at your wedding? No one remembers anything about the wedding except the fact that Steve Jobs was there." So that's what I was laughing at. If you in fact said that, even if you didn't, it's

• 1:00:37Tim Ferriss?

  pretty funny.

• 1:00:38Speaker 01

  I did in fact say that, and it is in fact true.

• 1:00:41Tim Ferriss?

  So, A, can you describe what it was like having Steve Jobs at your wedding, and then B, since it is, since I believe you said, or at least based on my recollection, that he was something of a mentor, what you learned from him? What were some of the things you took away from spending time with him? Any and all thoughts?

• 1:01:02Speaker 01

  Well, he called me out of the blue, and I was sitting in my apartment in Boston, Massachusetts. I had two apartments, one in Boston and one in Palo Alto in 1979, and I was consulting, and I was going back and forth. And one lonely, dark evening in June of 79, a few days after I started my company, Incorporated. The guy named Steve from a company named Apple called me at night out of the blue. I'd never heard of Steve and I'd never heard of Apple. He was in a city I hadn't heard of. I had never heard of Cupertino, because that's way south of Palo Alto. I never got down to Cupertino. Or maybe I went past it on the way to San Jose, I'm not sure. And he was interested in, um, he knew I was a networking guy and he had these PCs.

• 1:01:47Speaker 01

  He was interested in networking them and would I come down and meet with him, which I did. And we went to a sort of a organic hippie restaurant on Stevens Creek Boulevard and he pitched me on joining Apple. But I told him I just started my company like last week. And not only that, Steve, I have a proposal for how to network your PCs together. And here it is, I've called it Orchard. See Orchard, Apple. I thought that was so clever. Anyway, that went right by Steve. He had no interest whatsoever in that. But then a good thing happened. He didn't, he wasn't pissed that I turned him down. He helped me build my company.

• 1:02:30Speaker 01

  It was helpful all along. He lived in Woodside. We were, uh, my wife and I were living, my soon to be wife and I were living in Palo Alto. We later moved to Woodside, by the way. And there's a little white church there in Woodside, California, and it turned out to be two or three blocks from Steve's house. So he, he was invited, of course, but then he actually showed up, which no one expected, with his then-girlfriend and was a perfectly fine wedding attendee and no one remembers anything else.

• 1:03:00Tim Ferriss?

  Well, I suppose, you know, at least they, they remember your wedding was associated with Steve Jobs. I suppose a lot of weddings just have no, no data point, no visual whatsoever to make them memorable. So there's at least that.

• 1:03:12Speaker 01

  Well, I had been, we had had double dated with Steve before that.

• 1:03:17Tim Ferriss?

  What was that like?

• 1:03:19Speaker 01

  Well, we have a vivid recollection. We went to the symphony one night up in San Francisco and we're driving back along 280 and there's a big hill coming up Daly City. And the car we were in, I forget what car it was, but it got a flat.

• 1:03:39Speaker 01

  And so he pulled over on this hilly road with, you know, Daly City over here to the left and, and it became clear to me what was about to happen. Steve stood with the two women chatting them up while I changed the tire. So he was an, I was the engineer, he was the leader and the spokesperson. But I think I learned, so Steve could be a jerk. Yep. And I've always viewed that as a package deal. It came with the rest of him. It was inseparable. He had to be a jerk because his standards were so high. And that's what I learned from him is to have high standards and not put up with mediocre things. And of course, if doing that, you piss people off and then they think you're a jerk.

• 1:04:24Speaker 01

  And I think that's how it happens. He was scary. I mean, he was superly persuasive and he could, he and Gates had the same feature. They could make you feel like you were gonna, that you were an idiot and you would suffer for the rest of your life if you didn't agree with him. That kind of intimidating, both of them had this feature. And he, he had it. But I had, I had learned a lesson that protected me from him. I worked, have I mentioned that I worked at the Xerox Palo Alto Research Center, which was packed with really brilliant people. Yep. Including Butler Lamson, who is another mentor of mine at Xerox.

• 1:05:04Speaker 01

  And I learned from Butler that you are not obligated to change your mind just because you lose an argument. Because Butler could win any argument. Right. But he wasn't always right. Yes. And I learned to step back and think about it a little more and maybe he wasn't right. You're not obligated to change your mind just because you lost the argument. And then you run into Steve Jobs and boy, is that a protective. Because he could win any argument too. Right. But you had to, you know, get away from his, out of his reality distortion field, which is an R squared field. You can back out of it about 15 or 20 feet. You're safe. And then you, then you could think about what he said.

• 1:05:48Speaker 01

  And mostly what he was saying was defending high standards.

• 1:05:53Tim Ferriss?

  Is there anything else that you would say you learned or observed from Steve Jobs that stuck with you? I mean, the high standards goes a long way. Just that alone obviously covers a ton of ground, I would think.

• 1:06:06Speaker 01

  Well, he called me one day. I'm fond of telling this story. And he said Pixar is debuting Toy Story at Danza College. And I'd love for you to come and I'll send a limo to your house, pick you up. And I'm this network plumber. So 3com had, this must have been, when was Toy Story debut? Ninety something?

• 1:06:31Tim Ferriss?

  Yeah, it was ninety, I want to say, this is a bit of a stab in the dark, but I want to say it's like ninety-five, ninety-six. It might have been when they IPO'd. Pixar was the first stock I ever bought, so I'm pegging it around.

• 1:06:42Speaker 01

  So around then.

• 1:06:43Tim Ferriss?

  Around then.

• 1:06:44Speaker 01

  So 3com was substantial and I was a minor tycoon. And so he sent the limo to my house and we went down to Danza College and we saw the movie. And he had a red carpet, like a Hollywood red carpet. And he shrewdly hired photographers with huge flash attachments who would then take our pictures and make us feel important. So it was really cool. And then I'm coming out of the movie and there's Steve at a sort of outgoing receiving line. And I told him this film was just fabulous and I really enjoyed it and how great he must feel. And then I said, but I want to remind you, Steve, that every pixel of that movie was carried by Ethernet. And Steve smiled.

• 1:07:29Speaker 01

  So this is another thing I learned from him. And he said, "Thank you." And I've been living off "thank you" forever since. So he was capable of gratitude and he was really good at it. Because I remember that moment today and I'm seeing, he paused, you know? So I would be in doubt about what he was going to say. And he said, "Thank you." And I think that was the purpose in inviting me to the opening was to thank me for lugging his bits around so he could make that movie.

• 1:08:00Tim Ferriss?

  What a great story. So we were talking about pixels, bits, as promised, early on and reiterated, to bounce around, to live up to my reputation that I don't have to defend.

• 1:08:20Tim Ferriss?

  Network effects. You are a network expert in many different respects. Are there particular misconceptions or misunderstandings of network effects? That people have. People talk about network effects a lot. And certainly in many company pitches, you hear it. It's a phrase that is used very, very widely. Is it often misused? If so, what are people missing? This may not be a good question, but I'd...

• 1:08:52Speaker 01

  No, it's a good question. There is a misuse. There's one principal misuse. People mix up word of mouth testimonials with the network effect. So, "I really like this product. I think you should use it too." Well, that's a good thing, but it's not the network effect. The network effect is when it's in my interest for you to use this.

• 1:09:19Tim Ferriss?

  Right.

• 1:09:19Speaker 01

  That's a different effect. It's much stronger than word of mouth testimonials. That's the one misuse. So Metcalfe's Law, which is about the... It's a quantification of the network effect. It says the value grows as the square of the number of users, which is pretty powerful. By the way, it's technically not exponential. Even though the 2 is in the exponent, we call that quadratic, not exponential. But in any case, I'll take exponential. And the trouble with it, the principal complaint, is that as n goes to infinity, the value goes to infinity. And everyone has a hunch that that's not really true about networks, that they don't go to infinity with n. So I looked at that. I wrote a paper a couple of years ago, looking at that feature.

• 1:10:04Speaker 01

  And of course, one of the constraints I brought to this paper is that I would defend my law. I would not revise it. So, just to be clear. This was not an honest investigation. But I figured out how to solve this problem without changing my law.

• 1:10:20Tim Ferriss?

  That's a good day.

• 1:10:21Speaker 01

  Yeah. And then I did some math. But the trick is that n doesn't go to infinity.

• 1:10:30Speaker 01

  So therefore, the value doesn't go to infinity. So that's how I fixed it. And then, over time. So I did a model. Called it the netoid. Which modeled adoption rates over, as a function of time. What, uh, it's, what an adopt, and you know what an adoption curve looks like. It looks like this, and it looks like this. And so this netoid function was a way of saying, well, you can't grow the network bigger than the universe. And there's only seven billion people here, and there's only three billion users of Facebook. You know, these are all caps on the value of the network. And then I took the first ten years of Facebook and mapped it onto Metcalfe's law using this adoption figure. And by the way, Facebook's about halfway there.

• 1:11:14Speaker 01

  About half a people, half the people in the world use Facebook. So then on the, on this adoption curve, they're right in the middle of the most, of the steepest part. But as they get close to everybody being on Facebook, well, then their growth will taper off. As they, and then the value will not go to infinity, the value will also. So I published that paper in a peer-reviewed journal, so. I'm happy to say, so I have some defense of my law. So that's the network effect. When was that published? December twenty fifteen or sixteen, in, in the IEEE Computer Magazine. Which is peer-reviewed. You know, I was about to jump all over you, but now I'll stand out.

• 1:12:00Speaker 01

  But I like to say, you know, Facebook is the, uh, Metcalfe's Law company. It's the, which reminds me, in the early days of Facebook, I went to visit, uh, Zuck and Cheryl. When their place, it was still on California Avenue in Palo Alto. Before they moved to Menlo Park. And I got an appointment with the two of them, and my mission was to discuss with them the impact of Metcalfe's Law, what they thought of Metcalfe's Law, and how it bore on the growth, on the growth of their company, and I had all sorts of questions. So I show up at the head of, um, California Avenue. It's up off El Camino, and it, and dead ends, and there's a building over here, and it was right over here, seething with activity. And I'm sitting in the lobby, cooling my heels in the lobby for an hour.

• 1:12:46Speaker 01

  And then a woman comes out and says, "I'm sorry, Zuck can't see you today, but Sheryl can see you, so please come in." I met Sheryl Sandberg, Zuck's adult supervision. And I began my little pitch to begin the discussion, and then I realized within 10 seconds that Sheryl Sandberg had never heard of Metcalfe's Law. So that was gonna be weak, but she summoned one of her Stanford PhD mathematicians to join the meeting, and he had never heard of Metcalfe's Law. So the whole meeting just ended, a complete collapse. Anyway, I still believe Facebook is a Metcalfe's Law company that well leverages the network effect.

• 1:13:30Speaker 01

  And not just positive word of mouth, but...

• 1:13:34Tim Ferriss?

  Utility.

• 1:13:35Speaker 01

  It's in the interest of each user to sign up other people, because it makes their use of the network better. And that creates this very strong network effect.

• 1:13:45Tim Ferriss?

  Is there... well, let me back into this. So as an investor, you've spent plenty of time in the role of venture capitalist. You've heard, no doubt, many, many pitches that in some respect use network effect as a claim for defensibility. We will have this network effect, and it will create this competitive moat of sorts. They'll be very hard to replicate. At least, that's something I've run into a lot. Is there an easy way, maybe not easy, simple either, to differentiate network effects

• 1:14:27Tim Ferriss?

  that are... create defensibility or improve defensibility versus those that don't? Or if it's defined the way that you're defining it properly, maybe that's always the case. I just don't know. So I figured I would ask. Is there any way to distinguish those two?

• 1:14:45Speaker 01

  Well, Metcalfe's Law says that the value grows as, meaning is proportional to the number squared. But it doesn't say what the constants of proportionality are. And those can be changed. So when Facebook...

• 1:15:05Speaker 01

  Adds a feature. You expect that curve, whatever that curve was before, my theory would say is still quadratic, but it's been moved because the constants of the services delivered are enhanced. While writing this paper, I discovered a sociologist, I'm blanking on his name now. But for decades, he studied people and he determined that you can have 150 friends. And he was using that term, friends, in the whatever it was, 50s, 60s, so on. What was his name?

• 1:15:40Tim Ferriss?

  We can put it in the show notes, too.

• 1:15:41Speaker 01

  I don't get it. But in any case, senior moment.

• 1:15:46Tim Ferriss?

  Based on your factual recall, I hate to even consider what kind of moments I'm always having. All right.

• 1:15:53Speaker 01

  So there it was, I encounter it. You can have, the human cognitive processing system can tolerate, you can take care of 150 friends. That's like a constant of the universe. So I call up Facebook and I say, well, how many connection friends, friends connections do you have? And how many friends do you have? And then you just divide one into the other. And I'll be damned, it was 140.

• 1:16:21Tim Ferriss?

  Wow.

• 1:16:22Speaker 01

  And remember, Facebook is rapidly growing now, so who knows what's gonna happen? Now you would, well, that was a surprising answer to me, both because you would think that now with the tools of Facebook, we can tolerate more friends than when the days of the campfire. But that number was still close to 150. I actually go back and try it again. Total number of connections divided by the total number of people, which is the average number of friends per person, was about the same as the sociologist had predicted.

• 1:16:56Tim Ferriss?

  That is really surprising. This is the first time I've heard it, but one would expect it to be anything but the same number, because I suppose one could make the argument that you might on some level expect many, many thin connections without much communication on a platform like Facebook, but that the number of active threads of communication would be even fewer because the volume of communication, the ease of communication.

• 1:17:27Speaker 01

  Oh, so it would be a lower number?

• 1:17:28Tim Ferriss?

  That's right, potentially. Because when you're at the campfire, it's like, alright, you see Joe, your neighbor farmer, when you walk a mile down the street and bump into someone from his family, but otherwise, Joe has no communication with you, whereas if you're on Facebook, any one of your preferred nodes can message you incessantly. So it's really interesting that it's so close to that 150 number.

• 1:17:51Speaker 01

  Well, another reason it should be lower is that Facebook is growing still, and especially then. So a lot of those networks of friends are just, are brand new, and they haven't finished growing out yet. So that would be another reason, and it was 140, not 150, but so it was a little bit below, but yours is another reason. But the reason it should be higher is that we now have tools for, like it's my practice to wish people a happy birthday, and there's a tool in Facebook that prompts you when the friends, your friends' birthdays are, and I type in "many happy returns!" exclamation point, every single time.

• 1:18:30Tim Ferriss?

  Many happy returns.

• 1:18:31Speaker 01

  Yeah, I wish there was a tool where I could just press a button and it would automatically say "many happy returns," but right now I type it each time, and I think that's more authentic for me to type it each time.

• 1:18:43Tim Ferriss?

  I think it seems much more authentic.

• 1:18:44Speaker 01

  But you see how I can say "happy birthday" to many more people than before because I have a computer helping me, reminding me and delivering it, and so I'm still betting that this new number will be bigger than that sociologist assessed.

• 1:18:59Tim Ferriss?

  So "many happy returns" is your go-to birthday greeting, in this case. Do you have a go-to salutation when you cheers with someone, or you're at a party and people want to make some type of, uh, announcement, it's not the right word, I guess, salutation? I'm blanking on the proper English word for this, but...

• 1:19:25Tim Ferriss?

  Do you have any go to or go tos in that type of situation?

• 1:19:28Speaker 01

  I do.

• 1:19:29Tim Ferriss?

  What are they?

• 1:19:29Speaker 01

  It's also the beginning and ending of every email that I send.

• 1:19:32Tim Ferriss?

  Alright.

• 1:19:33Speaker 01

  Ahoy.

• 1:19:34Tim Ferriss?

  Ahoy.

• 1:19:36Speaker 01

  And I have three reasons, and you only need one reason, by the way, but I have three reasons.

• 1:19:40Tim Ferriss?

  Three is very compelling.

• 1:19:41Speaker 01

  I love ahoy. First of all, according to 23andMe, I am mostly a Viking.

• 1:19:50Speaker 01

  And ahoy is the ancient Viking war cry. So to be true to my heritage, I must say ahoy. The second reason is I have a fleet of boats in Maine. They're tiny little boats. They're not Russian oligarch yachts. My big boat is 32 feet long.

• 1:20:08Tim Ferriss?

  Yep.

• 1:20:08Speaker 01

  And when you're at sea, it's, ahoy is a way of greeting someone on the ocean, which you can see is not too far from a Viking war cry. But the third reason is really killer. When Alexander Graham Bell invented the telephone, the question arose, what do you say when you pick up the telephone? You have to say something or they won't know you're there. And Bell proposed that the word be ahoy.

• 1:20:34Speaker 01

  And I believe it was Edison who convinced everyone to use hello instead of ahoy. So in, and I have, in a previous life, won the Alexander Graham Bell medal. So in loyalty to Bell, I say ahoy.

• 1:20:48Tim Ferriss?

  Ahoy.

• 1:20:49Speaker 01

  And I like to say it three times, actually, but.

• 1:20:51Tim Ferriss?

  So you raise the glass and you say ahoy, ahoy, ahoy?

• 1:20:53Speaker 01

  Ahoy, ahoy, yep.

• 1:20:54Tim Ferriss?

  I like it.

• 1:20:55Speaker 01

  So I run a, a summer camp.

• 1:21:00Speaker 01

  Average age of the attendees is 60-ish.

• 1:21:05Speaker 01

  And we have toasts. And we're encouraged. We encourage really elaborate toasts. And there's, they're much longer than that, but they're, much of the same sentiment. That is around adventure and fellowship.

• 1:21:20Tim Ferriss?

  So what is this, how did this camp come to be?

• 1:21:24Speaker 01

  About 20 years ago, I have this island off the coast of Maine. It's a beautiful place. It's empty. And it's, I began to share it with friends. I would invite them to come out. We'd get in my boat, go out there and pitch tents. And there's a little camp there. A camp in Maine is a little cottage without a lectures. And we've been building it up since about.

• 1:21:49Speaker 01

  Nearly twenty or thirty of the big boys show up and more and more they come by boat. So I have many moorings in this little, I have a little cove and it, there were nine moorings last year, but I'm gonna have eleven moorings this year. Cause the big boys sometimes come by boat and that's kind of, then they can sleep on their boats and then I don't have to pitch a tent for them. And then we, we have adventures and tell stories and toasts, we do toasts. Now that you mention it.

• 1:22:14Tim Ferriss?

  Do you have any, do any stick in your mind in particular? Do you have any, any memorable toasts or alternate toasts that you like to give?

• 1:22:24Speaker 01

  I'm not nearly the most creative, but some of them are poems, just long poems. So it's an opportunity to,

• 1:22:34Speaker 01

  occasionally somebody dies. Not at the camp, but we acknowledge, well, not yet at the camp. And so my, my version, that's when I use, I have an E. Cummings poem that I've memorized that I use as my toast in that case to remember them.

• 1:22:51Tim Ferriss?

  Is it a long poem?

• 1:22:53Speaker 01

  No, it's not very long at all. Would you like me to recite it?

• 1:22:55Tim Ferriss?

  I would love for you to recite it.

• 1:22:58Speaker 01

  Buffalo Bills defunct, who used to ride a watery smooth silver stallion and shoot clay pigeons, one, two, three, four, five, just like that. Jesus, he was a handsome man. But what I wanna know is, how do you like your blue eyed boy, Mr. Death?

• 1:23:24Tim Ferriss?

  Wow.

• 1:23:26Speaker 01

  And occasionally somebody dies and that's my way of lamenting their departure. And I have blue eyes, so that's sort of a personal connection.

• 1:23:37Tim Ferriss?

  Yeah.

• 1:23:39Speaker 01

  How do you like your blue eyed boy, Mr. Death?

• 1:23:44Tim Ferriss?

  It's very, uh, makes me think of the expression, "Memento Mori", remembering that you were going to die in Latin. And what Renaissance, or some Renaissance, as I recall it, painters used to do is put a, a invisible to the layman's eye, for all intensive purposes, a skull in their painting, in some location that they knew was there, that they would notice every time they looked at the painting to remind themselves of their own mortality and the fact that their time was finite and limited.

• 1:24:17Speaker 01

  Have you seen these skulls?

• 1:24:18Tim Ferriss?

  I have.

• 1:24:19Speaker 01

  They have to be pointed out to you, I suppose.

• 1:24:21Tim Ferriss?

  Yeah, I have, and in fact, you know, this, it's, it's, this was not placed here for this, but, uh, now, it's a little obvious, but I never, I've never explained to anyone.

• 1:24:33Speaker 01

  Oh, there it is.

• 1:24:34Tim Ferriss?

  So I put a skull in the bottom of my, about the author photo, without any explanation, so that whenever I would look in this book, I would see that.

• 1:24:43Speaker 01

  And that's memento mori?

• 1:24:44Tim Ferriss?

  That is memento mori, there are many ways to do it. But it's good practice. So I would imagine, as you said, you have a personal connection to that. So every time someone passes, ending on a line with blue eyes, certainly serves as a, I would imagine, a very powerful reminder. So I'm going to shift gears a little bit, or a lot, as is, as is my want, and make sure I didn't miss anything critical in these notes, which I don't believe I did. And I'd love to ask you a number of questions that I ask many guests I have on this show.

• 1:25:28Tim Ferriss?

  The first is about books. Now, we had a little bit of conversation before this that may lead us, even if the answer is, "I don't have any", that will take us in and of itself in an interesting direction. Are there any books that you have gifted, frequently gifted to other people, or recommended to other people?

• 1:25:49Speaker 01

  There's one in particular, it's called Atlas Shrugged.

• 1:25:52Tim Ferriss?

  Atlas Shrugged, alright.

• 1:25:54Speaker 01

  Which is my favorite book.

• 1:25:55Tim Ferriss?

  Why is that your favorite book?

• 1:25:57Speaker 01

  Well, I read it for the first time right after it was written. And I was, I think, in eighth grade or so. At an impressionable age and I fell in love with Dany Taggart. And I always wanted to be Howard Rourke and there was something.

• 1:26:15Speaker 01

  There were some feelings I had at the time that it said were okay. Gave me permission to feel a certain way about myself. And wanting and it related to competitiveness and that. And winning and. And how this and it touched on the invisible hand of free enterprise and capitalism and that whole package I bought into lock, stock and barrel. So I've been. Giving out Atlas Shrugged since the sixties.

• 1:26:43Tim Ferriss?

  Ever since.

• 1:26:44Speaker 01

  Yeah. And I I understand that that labels me a kook of some kind, but I don't. Really care much about that anymore. That's my favorite book.

• 1:26:54Tim Ferriss?

  I will say if you're a kook, then you're in you're in you're in good company. Uh, the the last book I worked on Tribe of Mentors with something like a hundred and forty. Interviews with top performers from at at least twenty different fields. There were four or five books that popped up frequently and Atlas Shrugged was one of them. So.

• 1:27:14Speaker 01

  The second on my list, since you asked.

• 1:27:18Tim Ferriss?

  I, yes.

• 1:27:19Speaker 01

  I don't think you did, but anyway, is The Selfish Gene.

• 1:27:22Tim Ferriss?

  The Selfish Gene, Richard Dawkins.

• 1:27:23Speaker 01

  I am a, oh, I'm just arch Darwinian person. I love that book and how it just seemed to explain everything. Just trace it all back to the math of. Of natural selection and mutation and so on. So The Selfish Gene is another one that I recommend highly frequently. I read him a long time ago, so.

• 1:27:44Tim Ferriss?

  Have you always been involved with boats? Why do you have a fleet of boats?

• 1:27:49Speaker 01

  Well, on Long Island.

• 1:27:50Tim Ferriss?

  Yeah.

• 1:27:51Speaker 01

  We had a fourteen foot runabout with a ten horsepower motor, which I used every summer while growing up. So that would be it.

• 1:27:59Speaker 01

  My fleet is, is in Maine, so we go to Maine in the summer. And we have an island camp ten miles out in the ocean. And the big boat is a lobster yacht, thirty-two foot lobster boat thing with a little teak on it that we use to. Well, we have.

• 1:28:16Tim Ferriss?

  When you say teak, is that the wood or is that a feature of the boat? I don't know.

• 1:28:20Speaker 01

  It's wood.

• 1:28:20Tim Ferriss?

  It's wood, alright.

• 1:28:21Speaker 01

  So teak is a yachty wood. And the boat is a working boat hull, a lobster boat, but it's teaked out. So it's called a lobster, it's not called a lobster boat, it's called a lobster yacht.

• 1:28:32Tim Ferriss?

  I see.

• 1:28:33Speaker 01

  Right. It has a head, it has bunks, which are things that you don't have in a lobster boat.

• 1:28:37Tim Ferriss?

  I see.

• 1:28:37Speaker 01

  But that's the big, that's the flagship of the fleet. And then I have a fifteen foot runabout with a fif, a plastic runabout. We call her Tupperware, that's her name, and she has a fifty horsepower engine, so she moves right along. And then we have a twelve and a half foot wooden sailboat called Flash. And her principal use is to circumnavigate islands near our island. So you leave our island and go around Hurricane Island, or you, you know, just nav, circumnavigation of small islands in the Penobscot Bay of Maine. And then we have a bevy of dinghies and stand-up paddle boards and kayaks, which we keep generally out in the island camp.

• 1:29:18Speaker 01

  So we ply the waters of the North Atlantic like my Scandinavian four bears.

• 1:29:25Tim Ferriss?

  Ah, that sounds amazing. I have a friend who, whenever he is feeling, dear friend.

• 1:29:35Tim Ferriss?

  Well, actually, I shouldn't say whenever. He spends three to four weeks on the water per year and has done that with his family for some time. And he uses it as an opportunity to reset, and this will get to the question, but he, he uses it also as a means of

• 1:29:54Tim Ferriss?

  resetting on an annual basis and reassessing his priorities and gaining clarity. What, do you ever feel overwhelmed, this could be past tense too, overwhelmed or?

• 1:30:09Tim Ferriss?

  Scattered and in those circumstances, if that has ever happened, what have you found to help for you?

• 1:30:16Speaker 01

  I frequently suffer from that feeling, being overrun, and it's generally because I over commit. And I haven't learned after all these years how not to over commit. I forget that you commit to something now and then it gets to be really big later when everything else is getting big at the same time. But the remedy is to make a list, then prioritize and just focus on the top item of the list and get it done. And so prioritize

• 1:30:48Speaker 01

  and concentrate on that and then just

• 1:30:52Speaker 01

  ignore everything else, sometimes to your detriment because sometimes things need taking care of. But that's my way out is to concentrate on one thing.

• 1:31:00Tim Ferriss?

  What are your values or priorities that you use to rank order or to select those top items? If that makes sense, or maybe an example, because people prioritize using different means of weighting the things on a given list. I mean, you've had quite a few tremendous successes.

• 1:31:25Tim Ferriss?

  I'd just love to hear you expand on that if anything comes to mind.

• 1:31:30Speaker 01

  Well, there's two dimensions and you've heard all this because you especially have heard all this. But you know, the two of the dimensions are urgency and importance. And so things find their way onto the list by virtue of one or the other, some combination of urgency and importance. And the thing I learned a long time ago is to take the list and break it into three pieces, the stuff you must absolutely do as soon as possible. Then there's the stuff that's that you do if you get to. And then there's the stuff that you just forget that list and throw it out. So what I used to do, actually, when I was growing 3com in the very early days, like the day of founding, it was my practice to do a to do list every day. And I would, when the next day came, I would turn the page

• 1:32:14Speaker 01

  and I would transcribe all the things that were left on this list onto the new page. And

• 1:32:23Speaker 01

  Leaving things, failing to copy things that had not been done onto the new page was a big breakthrough for me. When it was, began to be okay for me to not transcribe something that had not been done, my life got a lot better. So there's, there's just some things that get on your to-do list. You just have to suffer the consequences of ignoring them.

• 1:32:46Tim Ferriss?

  That's a big deal.

• 1:32:48Speaker 01

  But playing this game between urgency and importance is a perennial problem.

• 1:32:52Tim Ferriss?

  Oh yeah, it's, I think Eisenhower used to, as I'm trying to remember, the Eisenhower matrix used to also think of things in these, these two dimensions and would try to pay attention, or block out time, schedule time to pay attention to the important but not urgent quadrant, which is prone to getting lost in the shuffle.

• 1:33:14Speaker 01

  So when I, I've had a personal assistant since the, somewhere in the seventies. And then when I came here to the University of Texas, I have an endowed chair and there's enough money in the chair for me to have an assistant. So I got an assistant, seven years ago. And I would come, and I was hoping to have a new life as a professor and find out what that's about. And I would come to work every day and my day would be full of meetings that my assistant had arranged. So after two years of this, I outplaced my assistant, found him another job, and now I don't have a personal assistant.

• 1:33:56Speaker 01

  So any appointments I make, and you'll be surprised how few appointments I have. Because my assistant would carry, you know, Bob should real, should, should meet with these people, so therefore I'm going to schedule the meeting. But I have a different evaluation criteria for should. And so I, I have many fewer meetings. So that's another way of, of

• 1:34:21Speaker 01

  Pawing through the urgent and the important is to not delegate that, but to take it upon yourself because you can take responsibility for ignoring really important things and people and so on. I have, right at the moment, I have 12,000 unread emails in my inbox.

• 1:34:38Tim Ferriss?

  That's a lot.

• 1:34:39Speaker 01

  And I, you know, the algorithm, you go and you start with the newest one.

• 1:34:43Tim Ferriss?

  Right.

• 1:34:44Speaker 01

  And you start working back, older and older and older and older and older, and you go as far as you can before you run out of time. And then the next day, there's a whole bunch of new ones have arrived. And so sometimes you never get, and that's how you accumulate 12,000 unread emails.

• 1:35:00Tim Ferriss?

  Yes, I'm unfortunately in a very similar, very similar position.

• 1:35:03Speaker 01

  Why don't you write a book on how to solve that problem?

• 1:35:07Tim Ferriss?

  Yeah, I think it's, I think it's mostly running away and changing your email address. I've somewhat been convinced, and I remember I was told at one point by Robert Scoble, uh, who's known in many technology circles. He said, "I've, I've realized in analyzing my email that for every, every response I send out, I get 1.75 email in return." And so how you make that work seems to boil down to fewer responses.

• 1:35:35Speaker 01

  By the way, Scoble's a genius, so I do whatever he says. But the, but it's true, if you answer an email, you're guaranteed to get an answer to your answer, so don't answer it.

• 1:35:47Tim Ferriss?

  If you're open to it, uh, I would love to talk about challenging times. And I have no time in partic, in mind in particular, but a lot of folks, and we only have a few questions left, I'm having fun, so just, just a few questions.

• 1:36:02Speaker 01

  I'm having more fun than you are.

• 1:36:03Tim Ferriss?

  Perfect, that's, that makes me, well, this is tough, because then it, then it, then reinforces the fun that I'm having, so I'm not sure, now maybe I'm having more fun, but the, uh...

• 1:36:14Speaker 01

  No, I'm having more fun than you are.

• 1:36:17Tim Ferriss?

  Uh, it's, it's common, I think, for people listening to podcasts or reading a magazine profile to, at times, become very intimidated by...

• 1:36:30Tim Ferriss?

  Figures they consider very successful and they may assume that these people are hitting home runs every time they step up to bat. Are there any particular tough times or moments that you'd be willing to share? And furthermore, how, what helped to get back on your feet or to regain your footing?

• 1:36:50Speaker 01

  I have no trouble with this. I have many of them. You accumulate them as time passes on. And I'm fond of saying, you know, my, one of my favorite songs is New Kid in Town by the Eagles and J D Sowder. Because I've been a has been a few times. I know how to be a has been because I've had some practice. But I'm fond of saying, I may be a has been, but it's better than being a never was. But the story that comes to mind, I alluded to it earlier relating to my bitterness toward Harvard University, which I should get over with and I understand is a childish petulance or thing.

• 1:37:33Speaker 01

  But so here I am, working at MIT toward my degree at Harvard. And I submit a draft of my thesis intending to graduate in 1972, June. And my thesis advisor encouraged this thought. And the, so I went on a job talk tour and I got nine job offers. And it was easy to get job offers because I was a networking guy and networking was hot. So universities thought that if they hired me, it would be easier to get grants from ARPA. So I understand it wasn't me, it was the networking thing.

• 1:38:17Speaker 01

  But then I turned down eight of the nine offers and accepted the one at the Xerox Palo Alto Research Center, which was a hard choice. They offered me more money. I didn't have to teach, I didn't have to raise money and I could just enjoy Palo Alto. And I was a big Beach Boys fan, so I was sure that was related. And I notified my parents, whose life's dream was that their son would go to college. And here he was getting a Harvard PhD and I was inviting them to the Harvard Yard for the event. And my then-wife, may she rest in peace, resigned her job as a, at MIT as a.

• 1:38:55Speaker 01

  Administrator there and she got a job at Stanford. It was all set up. And my oral defense of my thesis was two weeks before graduation. And I went in there. And you know, you give your pitch and then you leave the room and then they talk to each other. And then you come back, they invite you back in and then they shake your hand and congratulate you on being a PhD. Only that's not what happened. I walked back in there and they told me that my thesis was deficient and I was not gonna get my PhD. Uh oh. So I called Xerox. They who had hired me on a job talk, PhD job talk. And Bob Taylor there, he rest in peace.

• 1:39:38Speaker 01

  Said, oh, why don't you come out anyway and you can finish your thesis here. Oh, wow, super. The hard call was to my parents. Which is, you know. Don't come to Harvard Yard because it's not happening. So that was a horrible, horrible, so see that's my New York accent there. Yeah. Horrible, horrible, horrible thing to happen. And that was only the 10th thing that caused me to hate Harvard. It was a pretty big one. So that was a, uh, pretty gruesome. Because everyone finds out about it and then, you know, you failed. And there's a good chance you'll never get your PhD if you fail your defense. I was, I lucked out, I invented Ethernet.

• 1:40:20Speaker 01

  And in the course of inventing Ethernet, I wrote a chapter of my thesis. That satisfied Harvard that my thesis was sufficiently novel that I could graduate. So how's that one, does that answer your question?

• 1:40:33Tim Ferriss?

  Well, so.

• 1:40:34Speaker 01

  There's many more.

• 1:40:35Tim Ferriss?

  No, it's very good. It's a very good, uh, first half. And the reason I say first half is that. I'd love to hear.

• 1:40:49Tim Ferriss?

  If it threw you off balance, let's just say right after the phone call with your parents and these various things, what type of state were you in and how did you, I mean, because the Ethernet came later, I don't know exactly how much later, but between then and the invention of Ethernet, let's just say in the

• 1:41:08Speaker 01

  It was a year or so?

• 1:41:09Tim Ferriss?

  Yeah, so the subsequent handful of weeks and months, if you were in a funk, and I don't want to speak for you, but how did you, what helped to get to right yourself?

• 1:41:26Speaker 01

  The Xerox Palo Alto Research Center. So when I moved there, it was heaven on earth. And I was grateful to them for accepting me even without my dissertation. And then they were helpful in being sure that I finished it. And the, but the excitement of moving, you know, a New York boy goes to California. I really was a big Beach Boys fan. What I didn't realize is how far the ocean is from Palo Alto and how cold and miserable it is when you get there. So the Beach Boys were Southern California and I didn't quite register with me. But that was, you know, moving to California was a big deal and it was fun and I enjoyed doing it. And San Francisco, as you know, is a fantastic, fantastic city.

• 1:42:08Speaker 01

  And I was moving there shortly after the, it was the Summer of Love. I moved there in 72. So it was, so that was, so it wasn't a hard, deep funk because I had all this exciting new stuff going on. Now, if Xerox had said, no, you stay in Boston and you, maybe we'll consider taking you if you ever finish your dissertation, that would have been hard to recover from.

• 1:42:31Tim Ferriss?

  Different, different scenario. So let's, you said you had lots of them. I'd love to hear one more, if you're open to it.

• 1:42:40Speaker 01

  Let's see.

• 1:42:45Tim Ferriss?

  Maybe if there is one where you really had to kind of find your way out, if anything comes to mind.

• 1:42:51Speaker 01

  So here I was, the founder, chairman, CEO of 3Com Corporation. We had raised $1.1 million of venture capital in 1980. When was that, '81? And we were burning through it.

• 1:43:10Speaker 01

  And Ethernet, which I had predicted would help this company generate revenues, was delayed in its takeoff. I was wrong. In retrospect, I was wrong by six months as to how quickly Ethernet would get picked up and when our revenues would start growing. But it did look pretty bleak at the time. Cash is going like this and the pickup is not occurring.

• 1:43:34Speaker 01

  And then we had a board meeting, and I'm chairman, and I called the board meeting together. And one of my board members says, "We've had a rump session without you, and we've concluded that we now want Bill to take over as CEO."

• 1:43:51Speaker 01

  Now, I had prepared for this moment because in the time before 3Com, I had, I lived on Sand Hill Road. I met my wife on Sand Hill Road. I founded my company on Sand Hill Road. And as you may know, Sand Hill Road is where all the VCs are.

• 1:44:09Tim Ferriss?

  Right.

• 1:44:09Speaker 01

  So I had plenty of time to meet them all. And I learned the three things, in their opinion, that cause companies to fail. One was the uncontrollable ego of the founder. Whoa, well, that was, they had me nailed. Two is a lack of focus. And three was a lack of money, which is self-serving advice. So when I came to present my business plan in 1980 to those same people, I handled those three cases preemptively upfront. One of the things I said is, "This company succeeding is more important to me than running it."

• 1:44:47Speaker 01

  It's a good line. And I believed it. And it was attractive to the investors. Sure. This notion of the founder running things, you know, is quite controversial. So here I am in the meeting where they're informing me that I'm not going to be CEO anymore. I'm gonna be chairman. I own most of the company by that time, still. But I wasn't going to be CEO. My buddy, Bill, who's a perfectly fine guy, is about to be CEO.

• 1:45:15Speaker 01

  So that was an interesting meeting. Now, what the founder is supposed to do following that meeting is slam the door behind him and storm out the door and go start another company. Or do something crazy. But I didn't do that. You didn't break your tennis racket. I did not. Exact... Oh, good observation. Yes, I did not break my tennis racket. Now, this company's success is more important to me than running it. I said that to these people, and they're now taking me up on that. And these are... This board was a board that I had tricked into being... This is a first-rate board. I had three of the top venture capitalists. Dick Cramlich and Wally Davis and...

• 1:46:00Speaker 01

  Oh darn. A third guy, whose name I can remember in a few minutes. So I had handpicked this board. I had recruited him carefully. So what... Can I disagree with them? Especially after I told them that it was more important I be successful. And that was the meeting in which they said, "We'd like you to be head of sales and marketing because we need somebody to get out there and tell people about the product. And you see... You know how to do that, so go do that." And plus, I knew that Bill was a sales and marketing expert, so he was going to be able to help me. So I accepted that. It took me about a week to stop being sort of rejected and depressed and wondering, you know, whether I was going to leave or not and slam the door. And I didn't slam the door, so I suddenly started being head of sales and marketing.

• 1:46:46Speaker 01

  Walked Marlene around the building to try to convince her to be a salesperson and found a recruiter to recruit the sales for us and quickly learned how to sell.

• 1:46:59Tim Ferriss?

  What time of day was that board meeting, do you remember? Was it in the afternoon, late, early evening?

• 1:47:05Speaker 01

  Wouldn't be at night, no, it was during the day.

• 1:47:08Tim Ferriss?

  What did you do after leaving that board meeting? What did the rest of the day look like, if you remember, for you?

• 1:47:19Speaker 01

  I'm sure I had to explain it to my wife, Robin, when I got home, but I don't remember that.

• 1:47:28Tim Ferriss?

  Was there anything that... What advice would you give to... It doesn't necessarily have to be founders, I mean, it could be anyone who receives news that they are no longer going to be X or be with person Y, or it could be any number of situations, but who faces... who ends up facing news like that. What would your advice to them be?

• 1:47:54Speaker 01

  So, to realize this fact, that it is very difficult to be self-aware. Self-awareness is hard stuff. And you see it on the campus of the University of Texas. If those people had mirrors, they wouldn't look like that. They don't see how the world views them. So, in my role, I couldn't figure out what Bill knew that I didn't know that would make him qualified to be CEO, but not me. I couldn't see the deficiency. But my board could see it. And the board's job is to be sure that the CEO is the right person. So, they were doing their job, and I had recruited them to do that job.

• 1:48:36Speaker 01

  So, I wasn't seeing something that the board saw. And that Bill... And by the way, that judgment was vindicated. Bill did fabulously in that job.

• 1:48:47Tim Ferriss?

  What did they see... What deficiency did they see that you didn't see?

• 1:48:52Speaker 01

  I think it's a temperament thing. So Bill is a airtight to-do kind of person. Does things, writes things down, does them very strong. He's also a big delegator. Back to a fault. We, the rest of us used to joke, we would have these meetings and everyone would end up with action items except Bill. And so then it became our objective to get something on his to-do list. And probably, by the way, if you've got something on his to-do list, it got done. So that was his temperament, sort of a disciplined, more so than me.

• 1:49:30Speaker 01

  And, uh, yeah, the, the first operations meeting, the next week, every Monday, we had an ops meeting where the team, and I had run that meeting for two or three years. And this was the first time Bill was gonna run the meeting. And, uh, he had a yellow pad and a pen or pencil, I forget which. And he was writing as we had the meeting. So I got curious, because this is part of, I gotta figure out what this guy knows that I don't know. So I got up and walked around behind him, which, if you're chairman of the board and founder of the company and you own most of it, you're allowed to do that. But otherwise, I would not do that.

• 1:50:13Speaker 01

  And I went behind him and I looked at what he was writing on his pad. And he had, he was doodling. And what he had written a hundred times was D N T. Okay. So after the meeting, I took him aside and said, Bill, I, you know, I'm curious, what does D N T mean? And he said, and this was a big learning, uh, Bob, I find, I talk too much. And, uh, the way I keep myself from talking is I write, do not talk. Wow. Now, everyone thinks that I'm writing down what they're saying, which means what they're saying is important. So that's why I write anything.

• 1:50:55Speaker 01

  But the thing I most need to know is to be reminded to keep my mouth shut because these people are, you know, be responsible for running the company. So that was a big learning. That's sort of the beginning of, um... One of my secret weapons, something that I'm very, very good at. And I sort of learned it a lot that day, and it's listening. And I think it's the secret to most success, is just listening. Bill taught me that. He was listening to what those people were saying. He wasn't planning his little speech.

• 1:51:25Tim Ferriss?

  Right.

• 1:51:25Speaker 01

  You know how you sit there and you plan your speech while this other idiot is talking? And they're done, you forget what they said, and then you just say what you were planning to say?

• 1:51:33Tim Ferriss?

  Right.

• 1:51:34Speaker 01

  A real character defect.

• 1:51:36Tim Ferriss?

  D N T.

• 1:51:37Speaker 01

  D N T, do not talk. So then, so I got used to this idea of being the... Actually, that's why I didn't storm out the door. If they had just made Bill CEO, period, I might have stormed out the door. But they gave me a job. They said, now we want you to be head of sales and marketing. So that was the... I think that's what saved me from doing something stupid and believing.

• 1:51:57Tim Ferriss?

  Also, an approach that you used a lot later in offering people alternatives. Say, you can either leave the company or take this other role in which we think you're going to prosper.

• 1:52:07Speaker 01

  Right.

• 1:52:09Speaker 01

  Anyway, so those are two, we've now touched on two negative events, but there are many, many others.

• 1:52:17Tim Ferriss?

  No, that's, that's a great, that's a really fantastic example with a lot of

• 1:52:27Tim Ferriss?

  learning consequently or subsequent to that.

• 1:52:30Speaker 01

  Well, having given you two low points in my life, of which there are many others, let me give you a high point.

• 1:52:36Tim Ferriss?

  All right.

• 1:52:37Speaker 01

  In a couple of decades ago, I was informed that I was going to be given the National Medal of Technology. And my parents were still alive. And I brought them with me to the White House. They went into the White House, which is really fantastic. And I got this medal, George Bush, and I put it around my mother's neck. And I have, I have this picture of my dad. And these are very simple people. They went to college.

• 1:53:14Speaker 01

  I don't think they liked George Bush, I don't know. But it was the culmination of the American dream. That's the phrase I use, culmination of the American dream. Because these, these folks had their whole life wanted their kid to go to college and make something of himself. And here I was getting the... So I consider this my mom's Medal of Technology that she... So that was a big high point.

• 1:53:39Tim Ferriss?

  That's a big high point.

• 1:53:40Speaker 01

  So by the way, on the... You may know there is some hostility between scientists and engineers.

• 1:53:45Tim Ferriss?

  Yeah.

• 1:53:46Speaker 01

  It's a false dichotomy, really. And this was a... I'm a medal... I'm a member of the National Academy of Engineering, not the National Academy of Sciences. That sets up this episode. In the bus, going to the culmination of the American dream, I'm sitting next to a man who's about to receive the National Academy of Science, the National Medal of Science. And I start saying to him, "This is so cool." And the party last night was great. And now we're gonna see the White House. And my parents is there and everything. Isn't that great? And this guy says to me,

• 1:54:27Speaker 01

  "It is pretty nice, but it's not as good as Stockholm."

• 1:54:36Tim Ferriss?

  Oh my god, what a comment.

• 1:54:38Speaker 01

  I didn't punch him out.

• 1:54:40Tim Ferriss?

  Yeah, I mean now, just for people who might not make the association, that's a Nobel Prize reference?

• 1:54:47Speaker 01

  That's right, that's where you get the... So he was telling me that he had received the Nobel Prize. And that was sort of a notch above the prizes we were getting that day.

• 1:54:57Tim Ferriss?

  Wow.

• 1:54:58Speaker 01

  That's called raining on somebody's parade.

• 1:55:01Tim Ferriss?

  That's a dick response, just to... Maybe it's the Long Island coming out, wow. How a bus ride. What a wonderful, what a wonderful day that must have been. How did your, how did your parents respond?

• 1:55:13Speaker 01

  Well, they walked around like this. You know, looking at everything, the portraits on the walls. And the, the military guys, there's a lot of beautiful, uniformed military people there. My parents were very impressed and befriended them. So they, they hung out with the military. My father lost an eye when he was a kid, so he wasn't able to serve with his three brothers in the Pacific during the World War II.

• 1:55:43Speaker 01

  Yeah, both my mother and father had a tragedy in their life that prevented them from going to college, which I think is why they had a special reason that I should go to college. And their attitude to the military, very supportive and positive to the military because three of my father's brothers had served in World War II. So that was part of their reaction was to look at these beautiful military. You know, the White House picks these beautiful specimens of fit and handsome and or beautiful or whatever the right adjective is. So they hung around them, I remember that vividly. And the military, they're short. My mother's five two and my father was five nine.

• 1:56:26Speaker 01

  So they're little tiny people and they were being escorted around by these huge Marines from the various rooms of the White House. I remember that. Anyway, it was a culmination of the American dream.

• 1:56:41Tim Ferriss?

  Let's tie up here. I would say, I'll ask you two last questions. One is, any parting thoughts, suggestions, asks of the audience, to people listening to this and watching this? Anything at all? Could be a question, a suggestion, a request, and then where people can find you online, say hello, learn what you're up to, and so on. So any parting thoughts or comments, questions, asks of any type?

• 1:57:14Speaker 01

  Well, I'm a big believer in the American dream and I think we need to keep it alive. And that's, and it's at issue every day as to whether the dream of freedom and achievement, capitalism, Anand, you know, that whole thing.

• 1:57:37Speaker 01

  I believe in it and I think people should respect it and pursue it. So starting companies is sort of the ultimate version of that. I mean, that's the plumbing of free enterprise is starting companies to solve human problems. And so that's why I spend my time helping people start companies.

• 1:57:56Tim Ferriss?

  That last modifier on the starting companies too is important, to solve human problems or to solve problems. That's, I think that's a really...

• 1:58:07Tim Ferriss?

  It's a really critical piece to underscore.

• 1:58:10Speaker 01

  Well, I think it gets underscored too much.

• 1:58:13Tim Ferriss?

  You do?

• 1:58:14Speaker 01

  Yes.

• 1:58:15Tim Ferriss?

  All right. Please say more.

• 1:58:16Speaker 01

  There's a kind of snobbery that, or virtue signaling.

• 1:58:22Tim Ferriss?

  Okay.

• 1:58:22Speaker 01

  That goes on.

• 1:58:23Tim Ferriss?

  Right. The explicit proclamation.

• 1:58:26Speaker 01

  So what's booming in my field, which is the, my current field, which is the care and feeding of the startup ecosystem in Texas, or in the US, or Austin, whichever. There are these things called impact or social entrepreneurship. And I hasten to explain that, oh, that must mean what I do is antisocial entrepreneurship. And you, you guys solve human problems, whereas what do we do? We do it, we do that. We're doing it, we're money-grubbing for-profit people.

• 1:59:03Tim Ferriss?

  Right.

• 1:59:04Speaker 01

  Yeah. So I don't respond well to that insult. I don't think profit is a four-letter word. I'm right about that, too.

• 1:59:10Tim Ferriss?

  No, I don't mean to apply that either. I just think that there are companies, let's just say you could never make an announcement or wear it as a badge of honor, as words on your sleeve or anything like that. The only point I was trying to make is that I don't think for-profit is at all a four-letter word, and I think it's often absolutely, if not always, essential to create something that is self-sustaining, that can scale and serve the greatest number of people, or have the greatest impact. But that a capable engineer, entrepreneur, certainly doesn't have to be an engineer, who wants to build a company, can choose many forms that company can, can take, the product or service that can produce.

• 1:59:55Tim Ferriss?

  And...

• 1:59:57Speaker 01

  So at the beginning of your company, you can declare its motto is "Do no evil."

• 2:00:03Tim Ferriss?

  Yeah, that's a tricky one. That's a tricky one.

• 2:00:06Speaker 01

  You know, it's a little odd. It's almost like protesting too much. That we're gonna do no evil. Whatever we is, is not evil.

• 2:00:17Tim Ferriss?

  But suffice to say, the American dream, the importance of that, and the, the part of the fuel for that, at least in the sense of the free enterprise that supports much of it being building companies. That's important.

• 2:00:34Speaker 01

  Well, I like making a list of companies, you know, General Motors, Google, Apple, Procter and Gamble. I put it on this big screen and I ask my students which ones are the startups? And they pick the obvious ones, Microsoft, Apple. They can remember them being startups. They say, "Well, General Electric was a startup. Edison founded that company to solve a human problem years ago. It's just an old startup." And IBM is a hundred-year-old startup. They're all startups. And that's how the free enterprise system works. You create companies to solve problems. You find a need and you fill it. And that's... So I claim, so there's a billion...

• 2:01:17Speaker 01

  There are billions of people who use my invention to have access to the Internet. I think that's a good thing. I think connecting people together stimulates prosperity and democracy and all those good things. But I did it in a for-profit, venture-backed, Silicon Valley, went-public kind of way. And I... So it annoys me a little when the virtual signaling comes from the social entrepreneurs who claim that they're the ones solving human problems and not all the other companies who feed everybody and fly them around the world and build their houses. And that doesn't count.

• 2:01:55Tim Ferriss?

  Yeah.

• 2:01:56Speaker 01

  So excuse me for being a little annoyed at that.

• 2:01:58Tim Ferriss?

  You can be annoyed. Perfectly, perfectly valid response, I think, to many things. Well, for those people listening and watching who would love to learn more about what you're up to and your thinking and to perhaps say hello on the web, where are good places to find you?

• 2:02:23Speaker 01

  So I tweet a lot. And I'm @BobMetcalfe with an E. The E is all-important. I probably tweet 10 or 20 times a day. And I can control my number of followers. I figured this out. When I wanted to go up, I tweet about startups. And when I wanted to go down, I tweet about politics. So I have 22,000 followers. And I'm curating my echo chamber. So I block people every day. Anyone annoys me a little bit, I just block them. And so I'm staying there at around 22,000 now.

• 2:03:05Speaker 01

  But if I wanted to go up, I know how to do that. Virtuous signal, how you do it is virtue signaling.

• 2:03:13Tim Ferriss?

  Well, you may have heard to call after this podcast. I'm sure many people will visit. Well, Bob, thank you so much for taking the time today. This was really fun for me. I really enjoyed the conversation.

• 2:03:23Speaker 01

  Thank you very much.

• 2:03:24Tim Ferriss?

  And for everybody who is listening, for everybody who is watching, everything we talked about, the books, the organizations, and much more will be in the show notes, as well as Bob's Twitter account way up at the top. So if you'd like to dig further into these resources, you can just go to tim.blog/podcast to find the links in show notes on this episode as well as every other. And until next time, thank you for listening and thank you for watching. Thanks, Bob.

• 2:03:53Speaker 01

  Thanks.

• 2:03:57Tim Ferriss?

  Hey, guys, this is Tim again. Just a few more things before you take off. Number one, this is Five Bullet Friday. Do you want to get a short email from me? Would you enjoy getting a short email from me every Friday that provides a little morsel of fun before the weekend? And Five Bullet Friday is a very short email where I share the coolest things I've found or that I've been pondering over the week. That could include favorite new albums that I've discovered. It could include gizmos and gadgets and all sorts of weird shit that I've somehow dug up in the world of the esoteric, as I do. It could include favorite articles that I've read and that I've shared with my close friends, for instance. And it's very short.

• 2:04:40Tim Ferriss?

  It's just a little tiny bite of goodness before we head off for the weekend. So if you want to receive that, check it out. Just go to fourhourworkweek.com. That's fourhourworkweek.com, all spelled out, and just drop in your email and you will get the very next one. And if you sign up, I hope you enjoy it. This episode is brought to you by Peloton. And I'd heard about Peloton over and over again, but I ended up getting a Peloton bike and the whole system after I saw my buddy Kevin Rose. I've known him forever, some of you know. And he showed up at my gate at my house a while back and he looked fantastic. And I asked him, I said, "Dude, you look great. What the hell have you been up to?" Because he's always doing a weird diet or another, but it only lasts like a week or

• 2:05:25Tim Ferriss?

  two. So he always regresses to the mean after like 75 beers. And he said, "I've been doing Peloton five days a week." Now that caught my attention because Kevin does nothing five days a week. And you know I love you, Kevin. But it really piqued my curiosity, ended up getting a system, and it's become an integral part of my week. I love it and I really didn't expect to love it at all because I find cycling really boring usually. But Peloton is an indoor cycling bike that brings live studio classes right into your home. You don't have to worry about fitting classes into your schedule or making it to a studio with some type of commute, et cetera. New classes are added every day and this includes options led by elite New York City instructors in your own living room.

• 2:06:09Tim Ferriss?

  You can even livestream studio classes taught by the world's best instructors or find your own favorite class on demand. And in fact, Kevin and I rarely do live classes and you can compete with your friends, which is also fun. Kevin, I'm coming after you. But we usually just use classes on demand. I really like Matt Wilpers and his high intensity training sessions that are shorter, like 20 minutes. And I think Kevin's favorite is Alex and everyone seems to have their favorite instructor or you can select by music, duration, and so on. Each Peloton bike includes a 22-inch HD touchscreen, performance tracking metrics. I think that, along with the real-time leaderboard, are the main reasons that this caught my

• 2:06:52Tim Ferriss?

  attention when cycling never had caught my attention before. It's really pretty stunning what they've done with the user interface to keep your attention. The belt drive is quiet and it's smaller than you would expect, so it can fit in a living room or an office. I actually have it in a large closet. Believe it or not, and it fits with no problem. So Peloton is offering all of you guys, listeners of the Tim Ferriss Show, a special offer, and it is actually special. Visit OnePeloton, that's O-N-E-P-E-L-O-T-O-N, onepeloton.com and enter the code TIM, all caps, T-I-M, at checkout to receive $100 off accessories with your Peloton bike purchase. Now, you might say, meh, accessories?

• 2:07:35Tim Ferriss?

  Wait, I don't need fancy towels or whatever other supplemental bits and pieces. No, the shoes you need. You need the clip-in shoes, and those are in the accessory category. So this $100 off is a very legit $100 off. So if you want to get in your workouts, if you want a convenient and really entertaining way to do high-intensity interval training or anything else, or you just want to get a fantastic gift for someone, check out Peloton. OnePeloton.com and enter the code TIM. Again, that's O-N-E-P-E-L-O-T-O-N.com and enter the code TIM at checkout to receive $100 off any accessories, including the shoes that you will want to get. Check it out.

• 2:08:20Tim Ferriss?

  OnePeloton.com, code TIM. This episode is brought to you by WeWork. I love WeWork. I haven't had an office in many, many, many, many, many years, since 2000 or so, when I had my last real job, I suppose, in quotation marks. But when I moved from San Francisco to Austin not long ago, I decided, you know what? I'm tired of working at home. I'm tired of working in coffee shops. So one of the very first things I did was to get a space at WeWork. I could not be happier with this change in my life. WeWork is a global network of workspaces where companies and people grow together. The idea is really simple. You focus on your business, and WeWork takes care of all the rest, including front-desk

• 2:09:03Tim Ferriss?

  service, utilities, refreshments, and more. I also often have to ship from Amazon and elsewhere to my office at WeWork. Here in Austin, I've been completely blown away by the members-only events, special offers, and perhaps the best cold brew coffee on tap that I've ever had. It's been amazing. It's been a real, real change in my life and improved my quality of life. And there are also dog-friendly WeWork locations all over the place. How fun is that? WeWork caters to everyone from entrepreneurs and freelancers to startups and even large enterprises, including GE, Salesforce, Microsoft, Mastercard, Samsung, Spotify, Pinterest, and Red Bull, among many others.

• 2:09:46Tim Ferriss?

  In fact, more than 10% of Fortune 500 companies currently use WeWork, and it's a rapidly growing group. In other words, it's not just solar printers and the ground level startups that use WeWork, but everything from that to the big companies who are seeing very huge benefits as well. WeWork believes that creating spaces where people can connect and create meaning together, right? After all, if you are someone who has built a business modeled on the principles of Four Hour Workweek or elsewhere, it can be a lonely road sometimes. Even though you're digitally connected, it can feel very, very isolating. So in these spaces, you can connect with real humans, and all the while, use space more efficiently and cost-effectively,

• 2:10:29Tim Ferriss?

  which makes you and your business better equipped to face the challenges of today and tomorrow. WeWork now has more than 200 locations, so you can find great spots all over the world. So head over to we.co/tim. That's we.co, C-O. We.co/tim to become a part of the global WeWork community. At the very least, I encourage you to check out pictures of some of the locations around the world. There are some incredible spots. So check it out, we.co/tim.