a16z's First Employee on the History of a16z, Venture Capital & Fixing the Government | Scott Kupor

Scott Kupor is the director of the U. S. Office of Personnel Management (OPM), which serves as the HR and talent agency for the federal government's roughly two million civilian employees. He worked with Marc Andreessen and Ben Horowitz at Loudcloud and Opsware, which sold to Hewlett-Packard in 2007. In 2009 he became the first employee of Andreessen Horowitz, where he spent 16 and a half years as managing partner, building the firm's operations and later investing in later-stage healthcare companies. Scott explains how a16z adapted Michael Ovitz's CAA model to venture capital, how the Skype deal and a willingness to market in an industry that considered it taboo accelerated the firm, and why he had to set his ego aside as the firm grew. He also shares why he left for government, why its incentive structure is "completely screwed up," how OPM is changing performance ratings and promotion rules, and how programs like Tech Force aim to bring young talent into government. He also tells the story of the underground mine in Boyers, Pennsylvania, where federal retirement paperwork was processed by hand for decades. Show notes: https://www.davidsenra.com/episode/scott-kupor Made possible by Ramp: https://ramp.com Deel: https://deel.com/senra AppLovin: https://applovin.com/senra Chapters (00:00:00) Quitting HP mid-financial crisis to join a16z (00:01:37) His first day (00:04:00) How a16z copied Michael Ovitz's CAA playbook (00:10:18) After-hours bourbon in Marc Andreessen's office (00:13:31) The Skype deal that returned half the first fund (00:18:37) Why VCs thought marketing was beneath them (00:21:48) Swallowing his ego as a16z grew (00:27:12) Why he left a16z to run the government's HR (00:30:37) Why government is afraid to take any risk (00:33:24) Why 99.7% of federal employees get a passing grade (00:36:13) Recruiting 1,000 engineers into government (00:38:37) Only 7% of the federal workforce is under 30 (00:40:31) Why "a job for life" is the wrong pitch (00:43:09) Why the government would never have hired Big Balls (00:46:39) Why DOGE had to be a big bang (00:48:56) The underground mine with 400 million pages of paper (00:55:28) Why government has to accept some failure (00:57:14) How young people can join Learn more about your ad choices. Visit megaphone.fm/adchoices

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

• 0:02David Senra?

  Tell me what it was like starting A16Z with Ben and Mark.

• 0:06Speaker 01

  It was interesting. So let me give you the backstory if I can. So we had sold our last company to Hewlett Packard, right? So we sold in 2007 and a bunch of us had basically indentured servitude to HP for, you know, 12 to 18 months. And then the summer of '08, and remind you, right, you know your history, right? So in March of '08, basically Bear Stearns disappears, right? So it's summer of '08 and Mark and Ben are like, yeah, we're going to do this. We've been, they've been doing angel investing for a long time with their own money. And they said, look, it's, it'd be a lot more fun if we institutionalize this and lay out and raise money. We were literally having this conversation in summer of '08 and then September of '08, of course Lehman goes bankrupt like overnight and so the world seems to be coming to an end. So I go home one day to my wife, I'm like, good news, I'm going to quit my job at HP,

• 0:51Speaker 01

  which is probably the most stable job you have, and join these two guys. And we were actually living in North Carolina at the time because we had a quieter business out there and Ben and Mark had asked me to go move out to run it. So I was already, I was, you know, not in California even anymore. So it took me a long time, I hemmed and hawed on it. And these guys joke to this day, which I don't know if it's true or they just like to razz me, is had I agreed to actually join them sooner, that I would have been, you know, it would have been Andreessen Cooper Horowitz instead of Andreessen Horowitz. Now, I don't know if that's true or not, but so I, my official title was first employee, not actually co-founder of the firm. But they started, so I finally kind of Christmas, I, I still have these emails, I look back at them. Mark and Ben were like, look, you got to get off the dime, you got to figure out what you're doing. And I finally said, okay, like, I'm going to go do this.

• 1:35Speaker 01

  But it took me a long time to figure it out.

• 1:37David Senra?

  What was the job description? Where they say?

• 1:39Speaker 01

  There was no job description. This was part of the problem was that, yeah, I was like, my wife's like, what are you doing? I was like, I had no idea. So this was basically, so remember, it was just the two of them. And the job description was actually Mark and Ben said, look, we're going to invest and you need to figure out everything else we need to build a firm. And I didn't know what that was. So in the early days, it was literally like going to Costco to get, buy furniture and make sure we had food in the office and then, you know, doing things like opening bank accounts. And then we closed the first fund. And the way the funds work is, or you may know this, but for your listeners, is people, the investors sign up for what's called a commitment. They say, great, like, I'm going to commit $10 million over life of fund. And then we call the capital as we go. So it's literally called a capital call. It's what you do when you decide to invest in a company and you actually need the money so you can make the investment.

• 2:22Speaker 01

  So my very first, like, day on the job, they're like, great, we made an investment in this company, can you please call capital from our LPs to get the money? So I didn't even have an email yet, so I used my personal Gmail. So I send out this notice to like 50 different LPs. I'm like, great news, like, wire me a million dollars, basically, because we need money for this thing. And I immediately get an email back from one of our LPs, who I won't name, who's like, who the fuck are you? Why are you sending this email? And then he asks, he calls Mark and Ben, he's like, somebody's impersonating you guys, like, somebody's literally trying to shake me down for money. So, you know, I finally realized I probably should actually get an A16Z domain and set that up. So that was kind of the, that was the, you know, impetus I needed to actually get an A16Z domain to do stuff. But that's what it was. It was just like, we were figuring it out as we went.

• 3:06Speaker 01

  And these guys, obviously, look, they knew what they were doing because they were investing and they knew what their primary job was. For me, it was, you know, the whole goal was like, how do we actually create a firm? And so most of my initial days were hiring people, basically. So, you know, basic stuff, like we had to hire finance people, for example, so that, like, I wasn't doing stupid things like capital calls for people from my Gmail account. But then we always had this theory, right, which has panned out, which was, how do we build a services component to the business, right? So how do we basically create a system where we can take everything that like an entrepreneur might need and develop kind of concepts of like networks and relationships around that? So talent networks, you know, business development networks. And so a lot of the early days was hiring people who were domain experts in those areas so that we could actually start to build this team.

• 3:50Speaker 01

  And, you know, we went from three of us to probably close to 100 in the first year. And today, I think, we have like 700 people or something in the firm. So it's been a, it's evolved over time, for sure.

• 4:00David Senra?

  Was Michael Ovitz around A16Z at this time?

• 4:03Speaker 01

  He was, yeah. So Michael had been on our board actually at LoudCloud Opsware. So that's how, obviously, Mark and Ben knew him, but that's also how I got to know him. And yes, he was very, very influential, as you probably know, and I'm sure Mark told the story just about like the founding of the firm. And so he was very helpful. So I would call in him a lot and be like, look, you know, this is what we're thinking about doing. And he would kind of recount to me how they did things at CAA. But, you know, essentially what they did, which is what kind of, you know, a lot of what A16Z was built on, was kind of disaggregate the job of what back then was the agent, right? And then we basically did the same thing for what was the general partner job, right? So in the old days, and we actually pitched this in our first LP meeting, we were basically trying to institutionalize John Doerr. And so for your listeners who may not remember John Doerr, he was, you know, one of the very, very famous founders of Kleiner Perkins.

• 4:48Speaker 01

  And you go to John and he knew every salesperson, he knew every CFO, he knew every political stuff. So John was like this ultimate Uber connector for entrepreneurs. And our basic idea was, look, could we basically institutionalize that and not have every GP have to learn all those things, but could we basically effectively disaggregate that from the GP job and hire professionals who could do talent networks, who could do political networks, who could do sales and marketing, all the other things that ultimately like came to be the platform for A16Z?

• 5:16David Senra?

  Was this around Michael Ovitz's idea of the failings? Where it's like, if you, before that, it's like, you were, his, you might, like, he's, he's your agent, but really it's like, no, you have all of CAA and you essentially tap into every single resource.

• 5:29Speaker 01

  Yeah, so his, his theory, and he'll, I know, I know you're friends with him, you've had him on.

• 5:34David Senra?

  I'm having dinner with him tonight.

• 5:35Speaker 01

  Okay. Tell Michael I said hello. I haven't seen him in a while, but, but look, he'll tell the story much better. But my recollection of the story is, look, they, they start CAA in, I think, 1975. And the whole industry was, was, which was very similar to how the venture capital industry was, you had an agent, right? So you're Robert Redford, right? And you have an agent and that agent comes to you and says, great, I'm going to help you do this, right? I'm going to help you get movie deals, I'm going to help you get book deals, radio, whatever the, whatever the stuff is, which was great. But the model was basically a one-to-one model, which was your agent to actor. What Michael did in CAA was they said, look, we're going to basically maintain the relationship context between agent and actor. But when you would go, like, show up for a pitch at CAA in like 1990, where I think they had like 90% market share, they would sit around a table and Michael would introduce

• 6:20Speaker 01

  you as Robert Redford and say, look, meet my colleague who does nothing other than radio deals. Here's my expert in radio deals, here's my expert in international, here's my expert in books. So you had this whole idea that you were surrounded, yeah, failings maybe is the right way to think about it. You have this whole firm as opposed to an individual who's responsible for your career. And we basically took the same model to the VC world. The VC world was a lot like that, was you had a one-to-one relationship with John Doerr, who was fantastic at what he did. The problem with that inherently was, number one, it just wasn't scalable. You know, at some point, John has so many board seats that you time out from a GP perspective because you can only take so many board seats on. And then two was, you had to get everybody to invest in all that same amount of relationship development work across all these domains. And that might have worked in the days John Doerr did it, when basically we invested

• 7:05Speaker 01

  in enterprise software companies, that was essentially the domain of VC. But if you believe, you know, which I do, you know, Mark's software, you know, ate the world or seen the world. As the domains grew, like, the expertise needed just continued to grow. So the fundamental theory that Mark and Ben had was, let's hire GPs who are functional domain experts in the particular areas of investing they want, and then let's surround them with this failings of somebody who, all they do all day long is manage CFO relationships or CEO relationships or VPs of engineering, somebody who all they do does government relations or business development or other stuff like that. So again, like, our pitch to an entrepreneur when they came in, we used to do the same, we called it the reverse pitch, actually, where an entrepreneur would pitch us and then we would bring the team in and we would do the reverse pitch to them to say, hey, look,

• 7:49Speaker 01

  if you work with Andreessen Horowitz, not only do you get me, Ben Horowitz, as your board member, but you get this entire table of people whose job it is day in and day out to figure out how do we institutionalize this, how to have relationships and networks that'll make you successful. So that was like the key application of like what Ovitz did to, you know, how Mark and Ben adopted it to the VC world.

• 8:08David Senra?

  I want to tell you about the presenting sponsor of this podcast, Ramp. I have been reading a lot about SpaceX lately. SpaceX is one of the most valuable businesses in the world and one of the main themes in the history of SpaceX is constantly attacking and questioning your costs. Ramp helps many of the most innovative businesses in the world do exactly that. The median company running on Ramp cuts their expenses by 5%. And one thing SpaceX has demonstrated is that a religious dedication to controlling costs can help actually increase revenue because you can pursue opportunities you couldn't otherwise. And we see that in the Ramp data, too. The median company running on Ramp also grows their revenue by 16%. So when you're running your business on Ramp and your competitors are not, you have a

• 8:51David Senra?

  massive competitive advantage that compounds over time. Ramp is the only platform designed to make your finance team faster and happier. Many of the top founders and CEOs I know run their business on Ramp. I run my business on Ramp and you should too. Go to ramp.com to learn how they can help your business save time, save money, and grow revenue. That is ramp.com. I found one of my all-time favorite quotes when I was reading the book Zero to One. The quote says, "The single most powerful pattern I have noticed is that successful people find value in unexpected places. And they do this by thinking about business from first principles instead of formulas." That is exactly what AppLovin has done with their advertising platform. AppLovin connects you with over a billion potential new customers in mobile games.

• 9:35David Senra?

  AppLovin allows you to capture undivided attention. AppLovin ads are full-screen videos that are watched for an average of 35 seconds. That is retention that blows other ad platforms out of the water. And you can launch on AppLovin in minutes. You set the goal and AppLovin achieves it. No complex setup, no expertise needed. And AppLovin scales quickly. They can put your ads in front of over a billion potential customers. Other businesses have seen immediate results, scaled to hundreds of thousands of dollars of spend per day, and increased their revenue by millions. So you want to get started quickly before all of your competitors are on AppLovin. And you can do that by going to applovin.com. That's applovin.com.

• 10:18David Senra?

  Before you left A16Z to go to government, you were there for how many years?

• 10:21Speaker 01

  Sixteen and a half years, so '09 until.

• 10:23David Senra?

  What are some of your most memorable stories from the very early days, first year, two, three years?

• 10:29Speaker 01

  Well, there were some fun ones, like we had a little bit of our Mad Men episode during the firm where in the evenings, we would go sit around and drink bourbon at the time. This was when Mark actually used to drink. I think he doesn't drink anymore.

• 10:42David Senra?

  No, he said, I think he was on this show earlier, and he said like, he thought the best day was like 12 hours of caffeine followed by six hours of alcohol or something.

• 10:51Speaker 01

  Exactly. He was great, right? Yeah, like Mark would drink a lot of coffee. He always had sushi for lunch. I don't know how well you know Mark, obviously it sounds like you don't know, but like Mark is very, Mark gets very deep in things. So like, if he gets excited about sushi, quite frankly, he'll eat sushi for like every meal for like a six month period at a time, right? So he would do that. And then, yeah, like we would sit around his office at the end of the day and drink. And I remember very distinctly because we had to buy a special ice cube maker that actually made like, you know, the square ice cubes. And our show, who's his assistant, was incredibly generous with us, but like she would basically come in at the end of the day and like make sure the ice machine was right. So that was fun and it was just, I had no idea what we're doing.

• 11:30David Senra?

  Bring me to this, okay? Mad Men style, we're working all day, now we're hanging out.

• 11:36Speaker 01

  We didn't drink during this. So Mad Men style maybe is overrated because nobody was smoking cigarettes.

• 11:40David Senra?

  But now it's nighttime.

• 11:41Speaker 01

  Now it's nighttime.

• 11:42David Senra?

  Nighttime, yes. Workday is kind of over, but we're going to keep it going and we're going to drink. What's happening?

• 11:47Speaker 01

  Yeah. In our original office, and actually in our new office too, but Mark and Ben had these very spacious offices, which was very nice. And Mark literally had like a bar, like Mark had one of the most amazing like bourbon and whiskey collections that I've ever seen. He probably still has it, although he's been generous with my birthdays over time. He sends things to me now since he's less of a drinker. I pick up most of the stuff. But yeah, we would sit around and like talk and it wasn't like there was no, it was like the one part of the day where there was no formal agenda. And sometimes we just bullshitted about whatever was going on. Sometimes we were actually talking about an investment or something in the company. But it was fun. It was like, it was a time period where you felt like, I mean, number one, for someone like me, even though I'd been around Ben and Mark already for almost 10 years, they're just like the kinds of people where if you have time to sit down with them and just shoot

• 12:31Speaker 01

  the shit like outside of work hours, like you always learn something. And so that was always fun. And it just felt like we just had this sense of camaraderie that we were trying to build something. So there was no agenda. We would sit around and sometimes it would go for 15 minutes and we'd all disappear. And sometimes we'd sit there for an hour. It never like turned like raucous, like, you know, we all had like, you know, families and kids to go home to. So it wasn't like we were like going from there to like a bar somewhere else. But it was just kind of a relaxing way to, quite frankly, end the day and have like some like fun and/or intellectual conversation about stuff we were doing.

• 13:01David Senra?

  What do you think those versions of you three back then would think about the outcome that played out over the next 16, 17 years?

• 13:08Speaker 01

  When I did the math for myself and I was trying to convince my wife why in the middle of the global financial crisis, we should pick our family up from North Carolina, go back to the Bay area and do this thing. My math was like, okay, I'm pretty confident they'll raise the first fund. No idea, quite frankly, what happens after that, but my general calculus was like, worst case, these funds take a long time, you know, we'll kind of weather through the financial crisis and, you know, these guys had always been very good to me in terms of taking care of me. And I was like, look, you know, I'll find a job, I'll find another job, basically, if like this thing just doesn't pan out. That was kind of my general, general back of the uncle calculus. I never imagined we'd get to where we were and nor did I, actually, nor did I imagine we would get there as fast as we did. And I think that was the big thing. So Mark's talked about this, but in literally like the first couple of months after we

• 13:53Speaker 01

  closed the first fund, we invested in Skype. And yeah, if you remember, Skype was part of eBay, right? Skype was bought by eBay and it was like completely neglected inside of eBay. And yet amazingly, it had this incredible network effect. If you look at the numbers, like the numbers of subscribers just kept growing and growing. So we joined with Silver Lake at the time, or if you know Egon Durbin, who runs Silver Lake.

• 14:13David Senra?

  Michael Dell, I just saw him a few nights ago. He speaks very highly of him. He actually brought him up the other night.

• 14:17Speaker 01

  Exactly, yeah. And Michael Dell was, was part of that too. But it was literally like, we did essentially a buyout. Like it was like a crazy thing to do. We had just gone on the road and told all our investors we're doing early stage venture investing. And we hinted, by the way, this Skype thing was going, so like, we pretty much said it was going to happen, but we couldn't say it was going to happen because, you know, it hadn't been done yet. But so it wasn't actually a surprise for LPs, but it was clearly very different than the strategy we had laid out. And so we did this thing and immediately, of course, everybody attacks us and says, these guys are crazy, what the hell are they doing? Doing a buyout? It'll never work. And there was all kinds of stuff at the time. If you go back and read the stuff, you'll see it. There was this big IP dispute with the original founders like Yannis and Nicholas and eBay about who actually owned the fundamental underlying IP. And so a bunch of people looked at buying Skype, but nobody could get comfortable because

• 15:02Speaker 01

  they're like, gee, if we buy it, what if Yannis and Nicholas come out of the woodwork and say they own it? And so do you really own the IP? You know, Egon's genius was, let's actually figure out a way to work with these guys. So we actually, you know, our bids came together and we actually worked collaboratively with, with these guys as a way to moderate this IP question. But anyways, everyone's like, this is crazy. But the beauty of it, literally 18 months later, we sold to Microsoft for four times what we paid, like 18 months before. And so the news cycles were just unbelievable. And look, part of this business is momentum against momentum, right? It was just true of so many businesses. And so we were able to actually like raise our second fund well ahead of what we had planned doing, in part because the Skype thing just worked out so well.

• 15:45Speaker 01

  We returned, you know, literally, you know, half of our fund to our LPs within 18 months, which, you know, these days is obviously completely unheard of, and even back then was unheard of. And it just completely changed the narrative. We also had a company called Nacira, which was in the networking space. Martine Casadra, if you know Martine, is one of the partners there today. His company got sold to Cisco early on in the first fund. So we had these like very quick early wins, which basically, you know, potentially could have gone the other way, but they didn't. They went in our favor and they basically just dramatically accelerated the progress. And key to our business model, right? To do the Michael Ove's business model, we had to have enough of a fee stream to be able to hire all these other non-investing people, right? And you know, Mark's talked about this before, but like, you know, what Mark and Ben did, they were very magnanimous. The two of them didn't take, they took no salary, right?

• 16:29Speaker 01

  At the beginning of the company because they wanted to basically take, you know, as much of the fees as they could to give it to me to go hire other people, you know, to build this thing out. But, you know, we needed another, you know, in order to kind of continue that build out, the second fund gave us, you know, a, you know, stacking fee stream that allows us then to say, okay, now we can actually double down on this strategy. So it was one of these things where like, you know, we had early success. It was also 2009, right? So again, middle of the global financial crisis, you know, you know this, but like, you know, the Sequoia guys put out this, you know, RIP presentation. Have you seen this?

• 17:01David Senra?

  RIP, good times?

• 17:02Speaker 01

  RIP, good times, right? It's literally like the world's coming to an end, we're all going to die. Sounds a little bit like today, actually, not saying it. No one will ever raise any money, like put all your money under your mattress. And so like, we were this shiny gold, you know, like object in 2009, when everyone else was hunkered down and worried about their portfolio companies. So we had this enormous advantage, which is we put a shingle out and we say, hey, like we're open for business in every other venture firm and rightly so, I understand it. Like they had these enormous amount of portfolio companies that were very worried about whether they would survive or not. So, so much of like all that early momentum accrued to our benefit, which enabled us then to go raise the second fund, which gave us the funding to build out the services strategy. And that really kind of compounded in a way that I don't think we expected. Now, Mark and Ben may tell the story differently, which is, they always knew, they always knew

• 17:47Speaker 01

  it would be a success. And I'm certain, I believe that, right? I mean, these guys are entrepreneurs for a reason.

• 17:51David Senra?

  Obviously, they're entrepreneurs and be self-confident and they don't wake up like thinking they're going to lose, but they're always surprised. There's no fucking way, if you build something that, they're confident they're going to succeed, but they can never predict the degree to which they do succeed. It's funny that you say that they would tell, they might tell the story differently because one thing I love talking about Mark and it's obvious on, if you watch the episode him and I did together, is the amount of business history that's in that guy's head. It's like, I just like constantly prompting and it's like, I don't tell people, you know this, like we don't know what we're going to talk about before we talk about, there's not a list of questions. I certainly didn't tell anything to him, other than we're both psychopathically obsessed with, you know, business history, entrepreneurs and all that sort of stuff. It's impossible not to have an interesting conversation. But I'm like, damn it, I should get Mark on and I want him, like instead of telling the history of other businesses, I should get the history of A16Z from him.

• 18:36David Senra?

  Like while you're speaking.

• 18:37Speaker 01

  It's amazing, yeah. And look, as you know, look, the guy is encyclopedic on so many things, but that's the, and that's the other thing, by the way, that he and Ben both were really, really smart about, which was, and I know he talked about this on your show, but just double down on it, this concept of marketing generally in the venture business, right? So it was, it was considered verboten to market in the venture capital business. I don't know why that was and it was, I don't know, it was probably just, I think it's mostly historical reason, which was you didn't need to market because there was, in the old days, capital was scarce, right? So the source, the derivation of power for venture capital firms in like late 70s, you know, late 60s, early 70s, until like probably like close to 2000s was, money was scarce, the VCs had the money. And so therefore, if you look at the balance of power, the VCs were up here and the entrepreneurs were down here. And that was sufficient, right?

• 19:19Speaker 01

  And a lot of great firms and many of which still exist today, were incredible in that era, right? That's, you know, obviously Sequoia, you know, has been and continues to be incredible. But all the existing firms that you see there at the top of the game, like Sequoia, Excel, Greylock, even Benchmark, right? Which was a spin out of Merrill Pickard. All these guys lived in that era, right? Where nobody marketed, I believe, just in part because they didn't have to market. Like you went to them because they had the money, you needed the money. That was what the marketing was. When we came along board, look, we didn't know anything and we didn't know anybody. And so part of like what Mark and Ben rightly said was just like, we came out of the enterprise software business and we know like in the enterprise software business, just because you have a good product, nobody gives a shit if you don't actually tell them what it is. Right. And so they're like, look, we got to go tell people who we are, what we stand

• 20:03Speaker 01

  for. And so we did, we told the story, which is look, we're going to do things differently. We're going to build this whole services part of our business and we're going to market on that basis because what we didn't have to market on was we didn't have the like the long history of a track record in the business. Right. So to this day, right, if you go to Sequoia, who's an amazing, you know, player in the space, if you go to their conference rooms, you'll see Cisco in the, you know, a poster of Cisco and Apple and, you know, Google and all these other things. Like we had none of that. Right. We had, Mark and Ben had done their own, you know, angel investing. And of course, the two of them had had success as entrepreneurs, but like, we couldn't compete against that. So what they rightly did was they said, look, if we can't compete on what people are competing on today, we have to change the rules of the road and go compete on something else.

• 20:44Speaker 01

  And so they created this category was, okay, the new venture capital firm is going to be not just capital, but it's going to be capital plus plus, right? It's going to be plus this whole network of people whose job it is to help the entrepreneur.

• 20:56David Senra?

  It's in service of the entrepreneur.

• 20:57Speaker 01

  That's exactly right. And so, and so that was a huge, major, major difference, you know, that they did, which also played out really well. And we got a lot of shit from all the other VCs on Sand Hill that are like, look, it's, you know, for boat into market and all this other stuff. We would, I remember, because I was talking about all of our LPs every day and they're like, oh, so and so, you know, we heard, we heard this from, you know, one of your competitors. And it was always, look, these guys talk a big game and they, you know, tell people stuff before they've done it. And we're like, you know, we're doing.

• 21:25David Senra?

  Sounds like an entrepreneur to me.

• 21:26Speaker 01

  Yeah, we're doing exactly what any entrepreneur would do, which is like, we were trying to create a category. You have to tell the category, you have to actually tell your narrative. And, and look, we had to deliver on it at the end of the day, which we did. It was just such a unique way to approach the business, not just the foundations of the business model, but the idea that we were going to actually create a marketing strategy around that, that, you know, enabled, you know, the firm to kind of grow at a pace that I don't think anybody's ever anticipated.

• 21:48David Senra?

  So it sounds like at the beginning, you were much more operational.

• 21:51Speaker 01

  Yes.

• 21:52David Senra?

  As your tenure continues, did you switch over to investing or you always were operations?

• 21:56Speaker 01

  Like I did. Yeah. So I remember when I first came, I was like, you know, what do you want me to do? And they're like, well, we're going to invest and you're going to do everything else. And I have to admit, like, you know, my ego for a little while was kind of hurt. I was like, okay, well, why can't I, why can't I also invest? Right? When I came to realize particularly what they were at the time that were doing early stage investing was, I'm not a deep technologist like these guys are. And so much of that game, I believe, is your ability to actually understand the technology at a way more granular level. So we sit in pitches all day long. And if you don't understand databases, for example, you can hear 10 pitches about database companies. And unless you have that depth of knowledge, the honest answer is you have no fucking clue like which one is the right one to invest in. And so I ultimately assuaged my ego by saying, okay, look, like, that's

• 22:39Speaker 01

  not my strength, basically. And so I need to focus on the stuff that I think I can do. What happened over time was, we changed the nature of the firms. This is another thing that I heard Ben talking about this on another podcast not too long ago, which was, we started with a centralized firm, right? So everything reported to me, we grew that for about 10 years till about 500 people or something. So all of those like operating functions reported to me, even like the investors essentially reported to me. Mark and Ben didn't really have any direct reports. What they realized over time, which was brilliant, was you can't scale a venture firm in that fashion. So there were two reasons. One was, they said, look, like, we can't have 20 people sitting around when we're doing software in the world. And we've got crypto and healthcare and bio and, you know,

• 23:22Speaker 01

  American dynamism and all these other things going on. You have to specialize. And so we started a process 10 years into the firm, we basically decentralized the firm. And we said, look, like, we're going to have smaller investing teams that are going to be domain specific. So we're going to have a crypto fund that Chris Dixon runs. And we're going to have an American dynamism fund that David Uhlovich runs. And we're going to have PI infrastructure that this guy Martine runs and on and on. And then we said, look, in order to do that right, the needs of the entrepreneurs are different. So all of these like answer layer operating services we built, they all also need to feather in into these different verticals that we can do the things that are appropriate for the entrepreneurs. So like what a gaming entrepreneur needs in terms of business development support is totally different than what a life sciences entrepreneur needs. And so we went through this process of basically, you know, disaggregating everything into

• 24:07Speaker 01

  these structures. And we just kept a few things centralized that made sense. Like, so legal and finance, right? Core compliance functions. Look, you don't necessarily want people doing those separately on their own. Let's keep those centralized. You know, investor relations, right? From an LP's perspective, their views look like, I want to interact with Andreessen Horowitz as a firm. I don't want to have to like, build completely independent relationships. So we kept a few things centralized. And so what that did for me, which admittedly, I will say, and you know, Mark and Ben know this, I fought initially because when you go from owning everything, right? You go from owning everything, you're like, wait a second, I all of a sudden feel like my domain got a lot smaller. In fact, actually, Ben, I heard him talk about this on a podcast. He said exactly what I felt, which is true, is like, anytime you do a reorder in a company, you know, you always get a lot of hurt feelings, right? Because by definition, somebody in a reorder has fewer things than they used to have. Basically, that's just the nature

• 24:51Speaker 01

  of it. And it took me a while before, again, this was another one where my ego got hurt. I was like, wait a second, like, I thought I was doing a pretty damn good job, like managing these things. And Mark and Ben, to their credit, like, look, we're not saying you're not doing a good job. We're saying like, the needs of the business have changed. The needs of the business demand that we do this. And so let's go find other ways in which you can add value to the business. And so that was kind of when I finally got an opportunity to start doing some investing. And what I recognized again was, look, I can't do early stage tech investing because I'm just not a domain expert. And so we started a later stage fund. We call it later stage venture, for lack of a more creative word. And we started that in 2019. We brought in a guy named David George from GA, General Atlantic, who'd been doing this, who was great. And so I basically started working with David and kind of carved out more of like doing stuff on the healthcare side.

• 25:35Speaker 01

  So by the time I left for government, I had about 15 companies that I had invested in, about 10 of which that I was sitting on the board of, but doing stuff where the evaluation of the company was more about the operational successes and kind of the opportunity for the company from like one to infinity as opposed to the zero to the one side of investing, which I just didn't feel like I had the right skill set to do.

• 25:56David Senra?

  Deal is how the best founders turn the world into their talent pool. I've been studying how history's greatest founders operate for a decade. And one thing they all have in common is they understand that recruiting and hiring, the very best talent is your most important priority. A players recognize other A players, which is why top companies like Ramp, Shopify, 11 Labs, Uber and DoorDash all use Deal. Many of the top founders I know have personally invested in Deal after using their product. And what they discovered is that Deal is the best company in the world at building infrastructure for global hiring. Deal will help your business hire, pay and manage any worker anywhere in the world. So you can retain the best talent anywhere and spend the rest of your time focusing on what you do best, delivering value to your customers. The founder of 11

• 26:38David Senra?

  Labs has a great description of the value Deal can give your company. He said, "We built 11 Labs to break down language and communication barriers. With Deal enabling us to hire and support exceptional talent anywhere, we can accelerate our innovation and bring more voices, stories and ideas to every corner of the world." Deal is trusted by over 40,000 companies and growing fast. Learn how they can help your business by going to deal.com/cenra. That is deal.com/cenra. So you just mentioned it, then you decide to leave after 16, 17 years and you're, you take a hard turn.

• 27:15Speaker 01

  You think so?

• 27:16David Senra?

  I sure do think so. Into government. Why?

• 27:19Speaker 01

  Yeah. My wife asked me that a lot too. So look.

• 27:23David Senra?

  This seems to be a reoccurring theme with your wife questioning your decision.

• 27:26Speaker 01

  My wife is, my wife is way smarter than I am. And her job is mostly, yes, to question like, what, what the hell am I doing? So the historical reason was, I had literally done policy stuff, starting in, literally in high school, actually. I worked for a group back in high school that used to do healthcare policy research. So we were trying to figure out, like, we were doing like breast cancer screening stuff, right? You know, like, what do the economics look like? And then when I went to Stanford, I worked for a professor, this guy named Alan Garber, who's actually now the president of Harvard, doing stuff around prostate cancer, right? Which is, okay, like, does it make sense to screen large populations of men for prostate cancer? And I won't go into details, but it turns out there's these weird nuances of prostate cancer. The basic answer is, most men die with some form of prostate cancer, very few men die of prostate cancer. And

• 28:10Speaker 01

  so screening broad populations can be problematic because you will catch a lot of stuff that never would have actually had held outcomes. Anyway, so I'd been doing that. And then when I, when I went to Stanford through law school, I actually worked for another guy who, his name is in the news today, guy named Jay Bhattacharya, who now runs the NIH, if you follow that. Jay was a researcher at Stanford. I was his grunt. I used to do like modeling for him for this policy group that worked on. So I always had these like interest in policy. And then whatever, life kind of intervened and I ended up obviously going in a different path and going to the private sector. But at some point in my bucket list, I always thought I'd do policy stuff. The reason now was really a couple of things. One was just from a personal perspective, like, it was the right time in my life to

• 28:52Speaker 01

  do this. So my kids were all out of the house at this point in time. Mark and Ben were incredibly gracious and said, hey, look, if this is what you want to do, like, we're happy to support it. You know, you know, they were, they enabled me to kind of transition my stuff off and, you know, gave me the freedom to do that. And obviously I've been very lucky just financially along the way to have the means to be able to kind of take a break from the business. And then the second thing was, look, I really believe that what I had learned in venture capital might have some applicability to what I would do in government. So the job I have is this, I run this group called the Office of Personnel Management. Essentially, you could think of us as, we are the HR slash talent agency for the 2 million civilian federal employees. So we are responsible for like, making sure we have the right people coming into government and then all the policies that govern talent essentially in, in government.

• 29:35David Senra?

  And why did you think those, they were skills transferable from your previous job to this one now?

• 29:39Speaker 01

  Because what I learned, particularly, you know, through all the stuff I've done with working for Mark and Ben and companies and managing people, is something very simple, which will sound like so obvious, but I think it's really true, which is, look, organizations are pretty simple. It doesn't matter if you're a government organization or a private organization or a not-for-profit. They're all the same, which is all an organization is, it's a collection of people who are just lined around a similar set of objectives. Like, it's no more complicated than that. The question is, like, do you have the right set of objectives? Do you have the right people? And then do you have a set of incentives that track to those objectives? So that when people do the things you want them to do, they get rewarded and recognized? And you can then kind of do 10 more graded objectives? Or when they don't do that, do you have a mechanism to either correct that behavior and or remove them to the organization? And so when I looked at that, I was like, okay, I'm going to come to government and

• 30:24Speaker 01

  it's a totally different set of objectives, which I agree. But the fundamental question is like, do we have the right people? And do we have the right incentive structure to actually enforce the behavior we want? And the short answer, particularly on the latter side, is like, the incentive structure is completely screwed up from my perspective.

• 30:37David Senra?

  Before you move on, let's describe this. Why is the incentive structure completely screwed up from your perspective?

• 30:43Speaker 01

  So a couple of things. Number one is,

• 30:48Speaker 01

  It is incredibly like legal regulatory compliance related culture, basically. And so everything that happens basically in government is for fear of doing something wrong, we do the same thing we've been doing the same, you know, all along. So the idea of innovation, any kind of innovation is very much difficult to do because the better thing to do is keep doing what you're doing, don't take risk. You know, when I first came in, one of my, you know, reports said, look, our job is to keep you out of the news, basically. And I was like, well, okay, well, tell me more about that. And they said, well, we don't want you to get hauled in front of Congress for doing something that they don't want you to do. We don't want you to get a report from the GAO, which is basically like this compliance organization. We don't want the inspector general, you know, doing stuff. I was like, okay.

• 31:30David Senra?

  Okay, so then let me just sit in there and do nothing.

• 31:31Speaker 01

  That's easy. Yeah, like it's pretty easy how to solve that, right? Which is, okay, like we will just do nothing, right? It's exactly right. And that's what I said. It's like, that's not your job. Like, your job is to help us figure out, like, what can we do that's good? And yes, if we have a good reason for doing something and we screw it up, like, I'm fine getting hauled in front of some congressional committee and explaining that to them. Obviously, if we're, if we're, our process was crappy, that's, we gotta fix that. But what it means is basically, it does not allow for any innovation, right? So, look, I come from, as you know, we come from this crazy world of venture capital where we take like obscene amounts of risk, which is fine because you've got like upside that potentially is uncapped, right? If you find Coinbase in 2012, as Chris Dixon and Mark did, you know, if it works, right, it can, you know, generate 300, 500 times your money, right? And like, that's a good thing to happen and that can cover a lot of mistakes.

• 32:16Speaker 01

  We don't have that in government, but instead what they've had is basically the answer is like, take zero risk, but that also means therefore like no consideration of upside potential for anything. And so part of the incentive structure that I think we have to put in place and we're trying to put in place is, I've been using this term permissioned risk, which is deliberately different from the permissionless risk that I think exists in Silicon Valley, which is, we gotta have this conversation and we gotta be willing to let people take some risk and that risk needs to be appropriately sized for the organization. So if you're in Department of War and the risk is people die, okay, like, maybe we ought to have a really like low tolerance for that. But, look, what I do and what most people in government do is not life or death, right? So, yes, like, we wanna get people their social security checks, we wanna get people their IRS refunds, like, if it happens, you know, plus or minus a day or two from when we expect it, like, you know, most cases, nobody's gonna die.

• 33:01Speaker 01

  But if we could actually like automate a system and figure out, like, how do you make it dead simple for people to get their social security checks or their retirement checks or anything like that, that has massive upside potential, but the incentive system has never allowed that. So, that's part of number one, like, that's part of the reason why the system's screwed up, is like, there is zero, zero opportunity for innovation. As a result, therefore, you have slow and plodding and not great customer service from a lot of these organizations.

• 33:24David Senra?

  Well, not yet. If there's zero possibility for any kind of innovation, like, what kind of talent are you gonna attract?

• 33:29Speaker 01

  Yeah, so here's the other side of this, right? Which is, then you have a performance management system that's also screwed up. So, I'll give you a story, I think you and I may have talked this a long time ago when we first met. Everybody gets ranked generally one through five at the end of the year in terms of their employee rating. Some organizations have a four-point rating, but say one through five, one is the worst, like, you definitely like should not be here, five is like you're knocking the cover off the ball. And three means, hey, like, you know what? Like, you're good, you're doing what we asked you to do, that's all fine, and, and every organization quite frankly needs a lot of people like that. Historically, in government, 99.7% of people are three or above, meaning literally 0.3% fall below expectations. Now, in a population of 2 million people.

• 34:10David Senra?

  Is that even possible?

• 34:11Speaker 01

  It's not even mathematically possible, it's not. So, you have one problem, which is, we don't do anything on low-end accountability in the government. We're, we're, I'll tell you about how we're gonna change this in a minute, but, so, that's a serious problem to your point, which is, look, how do I attract and retain great people when I'm sitting here, you know, busting my ass and you're like dialing it in, everyone knows you suck, but like, nobody actually wants to do anything about it? Like, that's a terrible place for high-performing people to be.

• 34:33David Senra?

  So leave.

• 34:34Speaker 01

  Yes, exactly. And then on the other end, so, four and five, right, those are the top ratings, mean, not just you're doing your stuff, but like you're extraordinary or you're outstanding, you're doing great stuff. In the senior, just giving an example, in like the most senior side of the government, which is like 7,000 people that are like senior executives, something like 90% of people get ranked a four or a five, meaning like literally everybody's awesome.

• 34:56David Senra?

  And in an organization of 7,000 people.

• 34:58Speaker 01

  Yeah, it's not, again, it's not possible, right? What it means is like we've game the system, and as a result, again, if I'm a high performer, like, you know, I wanna be a high performer and there ought to be smaller numbers of people who are performers, and by the way, I gotta just portionally get money for that. So when you have a system where 90% of the people get ranked at the top of the class, that means the bonuses make no sense, right? I give you a thousand bucks and it has no incentive value, it has no retentive value. Instead, like, we should have a system where, which was what we're doing, is we've put a rule in place, which is, no more than 40% of the population can be at that top ranking, and 60-plus percent of the compensation pool needs to go to those 40% of the people. Now, personally, I'd like to do even more extreme than that, but like, we've gotta crawl before we walk and run on this stuff. But like, if you wanna attract great people, you have to hold people accountable on the

• 35:43Speaker 01

  bottom end, and you have to allow for differentiation. And the third thing you have, by the way, just you're, you got me on my soapbox, is almost every promotion opportunity in government is gated by tenure. So, you have to be in the job for a certain period of time, typically at least a one year minimum, before I can even consider you for, for a promotion. Now, again, like, if I'm gonna hire some person who's awesome in software development and they knock the cover off the ball and within six months, like, they demonstrate that they, they're, they're better than I thought.

• 36:10David Senra?

  They're especially stuck in purgatory for six months.

• 36:13Speaker 01

  Yeah, and then, by the way, if you promote them, they have to wait another 12 months, right? So, we're eliminating, we're eliminating stuff like that. So these are all policy changes we're making, which is, we're gonna eliminate, it's called time integrate is the, is the name for it, but like, what we want is a merit-based culture, where you come in and we level you appropriately for what you can do. So, one of the programs we have is called Tech Force, just so you're aware, which is basically, we're trying to build this elite core, you and I talked about this. This is a lead core of like, we're trying to bring in 1,000 software engineers, AI experts, data scientists, to serve to your terms of government. We're hiring them at what's called the GS14 level, which is, is pretty high, that's like the second highest individual contributor level in government. And we're hiring that way because we are actually giving them assessments that technically analyze their skillset, right? So they come in and they have to do like an actual test by a third party, that is a

• 36:58Speaker 01

  code development test. Never before has the government done this, right? Instead, I would give you a questionnaire and you would self-rate your skills, right? You would say, I'm a really good software.

• 37:08David Senra?

  It's one through five, turns out I'm a five.

• 37:10Speaker 01

  You're a five, right? You know this language, you know that language, like, and again, like, it's, it's just, it's crazy and there's a whole historical reason for it, which is, like, there was this lawsuit about disparate impact on these exams, but, but the point is, like, if we have a merit-based culture, we will bring people in at the right level, we will promote them at the right pace, and then I believe they will wanna stay because they will feel like they're actually able to do what they wanna do. Right now, until the changes we've made, like historically, we've had a system where, like, it's very hard for you to get, break, break out of the pack, basically, and that's just not amenable to having a high-performance culture.

• 37:39David Senra?

  In the most simplest description that you can muster, explain why you felt it was, like, what is the main problem as you see it, that you felt the need to, again, change your entire life, move again across the country and dedicate two, three, four years of your life to doing this?

• 37:58Speaker 01

  Yeah.

• 37:59David Senra?

  Is it the demographic problem? Is that we just don't, like, it doesn't matter, it's not a political thing, but if you care deeply about America.

• 38:05Speaker 01

  Yeah.

• 38:06David Senra?

  You want the most talented people.

• 38:07Speaker 01

  Yes.

• 38:08David Senra?

  In the government.

• 38:09Speaker 01

  Yeah, so, three things that motivated me, which we're trying to do. One is, do we have the right talent, do we have the right people in the right seats? This is where, again, again.

• 38:17David Senra?

  And there's clearly no.

• 38:19Speaker 01

  So.

• 38:20David Senra?

  And you can't say this, but.

• 38:21Speaker 01

  Yeah, look, let me say this, because I wanna be fair. There's a lot of, there are a lot of very good people in the federal government. So like, I, I think, and I'm gonna come back to this, I think a lot of this is a systems incentive problem versus necessarily a talent problem. Now, there is a talent problem, which, which you and I talked about a little bit, which is, we suck at getting early career people in the government.

• 38:37David Senra?

  Explain the demographics of who's working in the government right now, because this is a wild state.

• 38:40Speaker 01

  Yeah, so, today, 7%, that's seven, of the federal workforce is under the age of 30, okay? So just so your listeners have a comparison, if you look at the total US workforce, 23% of the total US workforce is under the age of 30, okay? So, by a factor of three to one or more, the federal government is way under-indexed on early career people, okay? If you go to the other side, 44% of our population is over the age of 50.

• 39:05David Senra?

  And the government workforce.

• 39:07Speaker 01

  In government, sorry, so 44% in government is over the age of 50, that compares with about 33% in the total US workforce. So we are three to one under-indexed, and then we are 11 percentage points over-indexed in the over-50 category in federal government. So, you know, we've talked about this, but look, I'm a small government guy, I, I won't presuppose your, your ideological views, but.

• 39:25David Senra?

  You're the son of, son of a Cuban immigrant.

• 39:27Speaker 01

  Okay, so you're, you're more, more small government than the big government, okay? So that explains a lot. Like, if we did nothing else, half of our workforce will retire over the next five or 10 years and we are stuck with nobody to actually do the work, right? So like, we need something more than zero people to actually work in the federal government. So, thing number one that motivated me is like, can we solve that problem? And I think you solve that problem in two ways. One is, we actually have to go tell a story about why it's interesting to go to government. So, we've been talking about this, but one of the things I'm doing after I go here is, we're starting on a college tour, which we have never done at OPM. We've never gone out to colleges or where, where the actually young people are and said, let's go find you, let's tell you what's compelling, let's actually create programs around this, and so we're, we're gonna do that, and, you know, you know, you may not

• 40:11Speaker 01

  have seen this, but I do these stupid social media things on, you know, Instagram and WhatsApp and stuff like that, because like, I've hired younger people who actually understand, how do we get a message to people who act, who are, who get this stuff, right?

• 40:24David Senra?

  And your message is what? We need young?

• 40:26Speaker 01

  Here's my message.

• 40:27David Senra?

  Technically talented people to just?

• 40:28Speaker 01

  Not just technically talented.

• 40:29David Senra?

  Do a two-year stint.

• 40:30Speaker 01

  Yeah, exactly.

• 40:31David Senra?

  Because I think somebody was saying, like, when you first came in, oh, you're like, you're kinda screwing things up because our pitch here is like, you have a job for life.

• 40:38Speaker 01

  Yeah.

• 40:39David Senra?

  And you're like, yeah, but young people don't think that way.

• 40:40Speaker 01

  Yeah, so I had a manager who like told me that, they're like, you guys suck because our whole pitch to people has come here and you have lifetime employment. And, and I told her this, I'm like, look, that is the worst pitch I've ever heard. Like, there's not a single person under the age of 30 today who is thinking about lifetime employment, and if they are, by the way, you know, I hate to say this, but like, that's not the kind of person we want, because that's not the kind of like self-motivated, driven person that we want in the government. So, my pitch to people is, look. Come here, do something, you know, not just as good for your country, that's fine, but like do something that's actually good for yourself, which is come spend two or three years to work on like some of the most complex hardest problems there are out there, right? If you're interested in space, like go work at NASA, what like Jared Iceman NASA is doing is fucking awesome and like you should be part of that. Or if you want energy stuff, go to Department of Energy, there's all kinds of cool like

• 41:25Speaker 01

  supercomputer stuff and all kinds of things. Work on these hard problems. And then after that, quite frankly, if you want to go to the private sector, that's amazing. Like let's help you go to the private sector. So this tech force program I mentioned, in addition to these two-year stints, we've partnered with 40 private companies, right? So all the names you would know, right? You know, Alphabet and Meta and BetaBricks and all these guys. And what they're doing during the two years is they're going to do training and career development for these folks in this program. And at the end of the two years, we're going to do like a massive job fair. And if we've done our job right in the government, we have trained these folks so well that I want, you know, every private company to be fawning over these people. It's a little bit like, you know, you were mentioning, right? In Israel and the IDF, right? They have this cyber core where it's the best, the brightest kids coming out of high school go to the cyber core.

• 42:08Speaker 01

  And when they come out, every like venture capital firm is falling all over themselves to fund these guys. Every like cyber company wants to hire them. Like that's the kind of thing like we want for the federal government. And if people love being in government, great, God bless them, they can stay in government. But like, we don't need to ask people to make like 30, 40-year commitments.

• 42:23David Senra?

  I think your appealing to interest is way smarter than saying, hey, here's the government, you're a citizen, come try to do something good for the government. That will get a, some percentage of people, but it's like, you're going to get a lot more. If it's like, no, this is actually good for you and your country at the same time. That's align the intentives. And look what could happen, like this is where your starting point is when you come in, this is what we can do, this is what you'll learn during this, and this is what happens after.

• 42:45Speaker 01

  That's exactly right. And then while you're here, which comes to the second point is, look, I have to create a high-performance culture for people like that to succeed, right? So if I can convince young, aggressive, like career-minded people to come to government, they can't come to the environment that I walked into, which is you have to sit in a job for a year before I consider you promotion, or I can't hire you at a GS14 level because you haven't experienced. I'll tell you the story, which is somebody was reminding me of today. So if you follow the DOGE stuff, right, there's a guy named Big Balls. Have you ever heard of Big Balls?

• 43:15David Senra?

  I've heard of Big Balls. I don't know anything else but his name.

• 43:19Speaker 01

  It's very, it's very hard to say it on air, but anyways, as I mentioned to somebody I talked this morning, he actually has a name, his name is Ed. So apologies to his mom that basically Big Balls has become his name. He joined the government, he joined DOGE, he joined Elon's team. I think he was 19 years old, he went to Northwestern, and I think he dropped out as a sophomore, okay? And he's one of like the most brilliant software developers around, basically. And he's like, look, I got motivated by Elon and I want to do this stuff. And he's still there, by the way, he works for Joe Gebbia now as part of this national design studio, which is like redesigning all of the like web sites for the government. Anyway, so when I, I saw this article come out a few months after he joined, this was in the height of the DOGE stuff, when of course everyone was, you know, thinking the world had come to an end. And there was a quote from a government employee that said, we would never hire, he didn't say Big Balls, he said Ed.

• 44:02Speaker 01

  He said, we would never hire Ed in government because he didn't have a college degree and he didn't have five years of work experience. And when I saw that, like literally, like I wanted to pull my fucking hair out. Because I was like, this is exactly the problem, right? This guy's awesome, we should hire him because he actually has the skills to help us. And literally every job description in government, almost all of them have like a college degree requirement. Well, in my mind, like that is a proxy for skill that may be indicative of something, but may not, right? Like the fact that Ed didn't have a college degree had no bearing on his software engineering skill set, but it would have been used to basically kept him out of a job because he would not have qualified, or we would have hired him at like this low level where we would have paid him like $40,000 a year, which he never would do, of course. He would go to Silicon Valley and get paid like 10 times that, right?

• 44:47Speaker 01

  So part of this is like, if we're going to get great people, we have to be able to actually have them walk into a culture that actually believes in performance, that believes in accountability, that allows them to progress the organization, that pays them at the level that's appropriate for them. Look, we're never going to like pay what Silicon Valley does, and that's fine, and that's okay. But we ought to at least level people appropriately so that like Ed should not come in at this GS5, which is like the most entry level for government. He should come in at a GS14 or 15, which are the highest levels, because his merit shows that he's capable of performing at that level. But the system as it existed would not have allowed that to happen. So this is what we've been doing from a policy perspective, is to fix all that stuff and say like, merit matters, take a test, take an assessment, and everything else, quite frankly, you know, like we shouldn't worry about.

• 45:31David Senra?

  So Big Balls kind of gives you the blueprint where he says, I'm super talented.

• 45:36Speaker 01

  Yes.

• 45:37David Senra?

  Dropout, maybe never, wouldn't qualify for the set of requirements in federal government, but I heard this person I admire tell a compelling story.

• 45:45Speaker 01

  Exactly, right.

• 45:46David Senra?

  You came in before, during, after DOGE, like what was?

• 45:49Speaker 01

  Yeah, so I came in with, basically, I got interviewed and I came in with the DOGE guys, so it was obviously Elon, but of course there was guys like Steve Davis was kind of the day-to-day person running it. And I had the opportunity to spend a bunch of time with them pre-inauguration, so kind of, you know, end of, I got nominated like first week of December or something, and so kind of December and first January lead to inauguration. Then what happens is they tell you, okay, like until you get through your nomination process, you basically have to be persona non grata and like stop communicating with folks because otherwise it can like foul your nomination process. So we had developed a bunch of plans and ideas for what we would do once like the administration turned over, but I wasn't there day one to be able to actually execute those things.

• 46:30David Senra?

  But you're observing a lot of what was going on.

• 46:31Speaker 01

  That's exactly right. And then we're executing it literally out of my office. So it turns out like my office was like the like ground central for, ground zero for like everything was happening.

• 46:40David Senra?

  Regardless of controversy over anything that happened there, I'm not even interested in that, I'm interested, is there any ideas that you saw coming out of that, that you thought were good and valuable, should be spread further?

• 46:51Speaker 01

  Yeah, here's, here's my, here's my view overall on it, is part of the issue is, just to give you a sense of the numbers, right? So there were roughly 2.3 million federal civilian employees on day one when President Trump took office. Today, we're just about 2 million. So we've reduced by close to 300,000 people, the size of federal government, which puts the federal government at the lowest level it's been as a percentage of the workforce since like 1960. And you literally have to go back to like Clinton Gore before you have anywhere even close to that. The numbers that President has is much higher, but still like that's the last time he had any serious effort. So part of it is, look, the entire apparatus of government travels in one direction only, which is budgets get, just get bigger every year.

• 47:33Speaker 01

  Every time an agency wants to do something new, they go back to Congress and they say, great, you want to do that thing? Give us more headcount to do it. So like that's been the path of like travel basically for the last, I don't know, 50 years probably, or something like that. So the way I think about what Elon did was like Elon had to come in and to change, to like change the direction of a 2.3 million person like oil tanker, you can't do gradual incremental stuff, like you have to have a big bang approach, right? Now, people can argue and debate about his tactics and it's, it's fair, I think there's, you know, there's fair arguments to have on both sides, but like the idea that you had to have someone come in with a mission and actually try to like do some serious change, like I don't think there's any argument that you could ever make the change that we did without effectively like a big bang strategy.

• 48:16Speaker 01

  Look, he got a lot of shit for it, lots of people got a lot of shit for it, and you know, look, history will, will, will write the story about that one. What we're trying to do now, like what I came in was, I was like, great, all, they did all this work, now we have to institutionalize this. That's kind of how I think about my role, which is, okay, like Elon, Steve Davis, all these guys did amazing job of like breaking glass, basically, and saying like, this is how things are going to be. Now we have to like do the long-term institutionalization of it, which means we have to now go through and say, great, what are you actually working on? Tell me the 20 things you're working on, like which ones are really important? Which ones should we not be doing? We never take stuff off the plate in government, we just keep adding.

• 48:51David Senra?

  This like inertia.

• 48:53Speaker 01

  It is.

• 48:54David Senra?

  Is insane.

• 48:55Speaker 01

  It's crazy.

• 48:56David Senra?

  The, the story of, you oversee retirement benefits overall, right? And we were on the phone the other day, and you told me the story, I just could not believe. There was like, do you understand, like we were talking about the fact that, hey, you know what, America is full of like dynamic, really smart, high-agency young people that don't even know this is a path and it's an opportunity, and maybe we should like just shine a light on this and maybe beneficial, regardless of what you think, like you want to, if you have the choice between a better functioning government or not, of course you're going to choose that. And it has to do with the people that are in it, like in any organization. But then you're like, do you know about the mine full of 4 million pages of documents?

• 49:33Speaker 01

  400 million.

• 49:34David Senra?

  400 million. And I'm like, Scott, what the hell are you talking about? Can you tell the story?

• 49:40Speaker 01

  This is great, this is a great story. So, and, and credit to Elon, right? Because Elon made this story a real one. So we OPM manage retirement, so roughly 100,000 to 200,000 people retired for a year from government. And when you retire, there's a whole process, right? You have to fill out a bunch of paperwork, it has to go to your HR department who has to confirm it. One of the like literally crazy problems, by the way, in government is we do not have the canonical history of your government service until you literally decide to retire. So most people to this day are in government for 30-plus years, they go to different agencies over time. Each of those agencies has different HR systems, has different payroll systems. And so I cannot look at, you know, David's record and say, hey, you spent five years here and you spent this.

• 50:23Speaker 01

  Literally, part of the retirement process is we have to create that record. Now, we're changing that, by the way. One of the other big projects I'm going to come back to the mine is we are consolidating the entire HR IT system in government from 120 different systems into a single system. And we're going to go from spending $2 billion a year to $40 million a year. We're literally going to save 95% by actually getting to a single system. And we will now have like the record of David Senra that you can look at every day and see all the stuff. So anyways, you want to retire, what you did prior to last year was you literally filled out paperwork, you put a fucking stamp on it, you mailed it by mail to your HR department, okay? They did their stuff, they put a stamp on it, they mailed it to a payroll department, which is different, by the way, in the federal government from the HR department, payroll is a totally separate thing.

• 51:08Speaker 01

  And then they, the final piece is they mail it literally to an underground mine in Boyers, Pennsylvania. Now, nobody probably here has ever heard of Boyers, Pennsylvania. It actually happens to be in Butler County, which is where, you know, the President's assassination attempt in July, I guess of '24 was. It's what you would expect, like, you know, rural, middle America looks like. The federal government happens to be actually one of the largest employers out there. So people go to work every day in an underground mine that used to be an actual working limestone mine. It was since turned into basically a storage facility. But you can't get in there without going through massive security. You can go down in the mine and there are literally people driving golf carts around in with limestone balls. And so it shows up here and then literally we have individuals, 800 people in my retirement service organization who take that paper, they read the paper, they make a bunch of

• 51:53Speaker 01

  manual calculations and then they give you a retirement check. That process historically takes anywhere from three months at the low end to 12 plus months to do, partly because we go back and forth. And if you forgot to sign your paper, I literally will snail mail it back to you, ask you to sign it, and that will introduce another one month delay in the process because like literally like it's sitting there waiting for you. So Elon identified this and rightly so. He's like, this is insane. He teamed up with a guy named Joe Jebbia. Jeb Joe is a co-founder of Airbnb who's now running this national design studio. And they started this project at OPM before I got there and then I picked it up, which is how do we automate this process? Today, we've fully automated the process. So now you never actually send a piece of paper.

• 52:36Speaker 01

  In fact, we declared last day of paper in the mine on June 30th. So we will never receive another piece of incoming paper into the mine. Everything's online, which it should be in the year 2026, which is this is not rocket science, right? Like you should be able to fill out an online application for your retirement. And as a result, we can reduce the processing time today, just with the first iteration of this by more than 50%. My goal is like, we're going to be able to reduce this like by 90%. Our commitment is if you give us an application that's electronic, it's healthy, within 15 days, like you should literally have like a full retirement check. It should not be any harder than that. So we're doing that now. We have 400 existing million existing pieces of paper from all the people who retired prior to last year, basically, who call us up sometimes and they say, hey, my spouse

• 53:21Speaker 01

  died or my child needs to be added to my insurance, whatever those stuff. So literally, if you call our call center today, we send what we call a runner. This is actually a job classification of the mine who goes into the mine, pulls a file out of a electronic file cabinet. Sorry, not electronic, I'm going to actual virtual physical file cabinet, some of which date to like the 1950s. It's a great, I'll show you some pictures now. And they bring it to the person who adjudicates it. And then when they're done, they literally return the thing back to its thing. Like we are now, we've just purchased two massive like digitization machines. I don't know what you call them, like literally like scanners that like take up an entire room. It's like a mainframe computer. And you know, from this day forward now, every single one of those 400 million pieces of paper is going to be digitized, which will allow us number one to at some point

• 54:06Speaker 01

  in time, actually literally shut down the storage component of the mine, but also just dramatically change the nature of what we're doing in terms of servicing people. Like our service is not good for people in part because like we haven't given the people there, they don't have the stuff at their fingertips to resolve problems. They literally have to wait for somebody to deliver a piece of a file for them from a file cabinet. Like it's insane. There are problems like this all over the government. They're so obvious we should fix them, but like this comes back to what we talked about about risk. I didn't like discover this and Elon, to his credit, didn't discover this. You can go back literally to the 1970s and 1980s, you will see articles written about how fucking ridiculous this mine is. Nobody has ever tried to solve this because God forbid, some congressional person is going to say, oh, you screwed it up or you didn't do this, do that. And I was like, look, this is ridiculous.

• 54:48Speaker 01

  We have to fix this, but the incentive structure is so aligned against fixing these things. It's way better to have a shitty service for people and not like risk rocking the boat than it is to actually try to convert these things into like a modern day experience. Like this is the fundamental like incentive problem that we have to solve.

• 55:04David Senra?

  Which ties to your main mission, which is like, if you don't change this incentive structure, you're not going to be able to recruit

• 55:10Speaker 01

  Yes.

• 55:11David Senra?

  High quality talented people. And if we keep, let's play this out 10 years from now. Okay, it might not matter to you that what 44% of the workforce, whatever the number is, is 50 or over.

• 55:19Speaker 01

  Yeah.

• 55:20David Senra?

  Well, it's going to matter when they're all gone.

• 55:21Speaker 01

  Yes.

• 55:22David Senra?

  And we have nobody to replace them.

• 55:23Speaker 01

  Yes, that's exactly right. Yeah. So look, everything ties together, right? If I'm going to, I gotta go tell people a good story to get them here. When they get here, I actually have to have an environment they're excited to do. And if they're excited to do it, then we will actually get modernization because they won't be trapped in the system of not actually trying new things. Like, and look, we have to accept the fact that we're going to screw some stuff up. Like again, and you know, Mark always, always, you know, gets excited about some place like, you know, there's a whole meme in Silicon Valley, right? That Silicon Valley like loves failure, right? Like nothing can be farther than food. Nobody fucking likes failure, but what Silicon Valley does recognize is look, if we're going to innovate, we're not going to get it right all the time. And again, like, okay, if we're talking about life and death for people, we should be pretty careful we get it right all the time. But if I can like make the retirement experience 10 times better and there's some risk that's

• 56:08Speaker 01

  reasonable that I fuck it up, quite frankly, and it doesn't work, like we got to incent people to take that risk. Like it's crazy that we're not doing that, but like historically, nobody has been willing to do that because, you know, whatever, the person who was in my seat wanted some other political job coming out of this. And therefore if they got a bad, you know, congressional hearing that would stop it. Like I told the president this when he interviewed me in December, after he like asked me why he thought I was qualified for the job. And I was like, look, I'll tell you the other reason why I think I'm qualified is there's not some other job I'm trying to get out of this. Like I've been incredibly blessed, incredibly lucky in my private life. I didn't come to this job because like I'm, I'm competing for some other either private sector job or public sector job. So it's like, look, I don't really care. Like I'm going to do what I think is the right thing.

• 56:50Speaker 01

  And then if I get in trouble, like, you know, I'm either going to fight if I screwed up or if it turns out like I did something stupid, that's fine. Like fire me, I'm okay with that. But like, there are so many people who are in these jobs because it is a stepping stone to something else that it prevents them from being willing to take that appropriate like level of risk to try to get stuff done. And to me, like, that just makes no sense. Like, and this is why we have kind of stasis for so long.

• 57:14David Senra?

  All right. So let's say somebody's listening to this right now. They want to help, they're young, they want to do a few year stint. Where do they go? How do they get in touch with you?

• 57:22Speaker 01

  We have a whole website, believe it or not, earlycareers.gov. That's one place they can go. We're about to be on like 40 different college campuses. If they're there, they can show up and see us. They can follow me on X. I'm just at S Cooper. OPM is at USOPM, like any of those places, but literally like send me a DM if you're interested. Like I guarantee you, like we will figure out a way to make something work.

• 57:48David Senra?

  I love how much you're on this. Thanks for taking the time to talk to us guys.

• 57:51Speaker 01

  Thanks, David. Appreciate it. Yeah.

• 57:52David Senra?

  All right. I hope you enjoyed this episode. Please remember to subscribe wherever you're listening and leave a review. And make sure you listen to my other podcast founders. For almost a decade, I've obsessively read over 400 biographies of history's greatest entrepreneurs, searching for ideas that you can use in your work. Most of the guests you hear on this show first found me through founders.