Daniel Gross – Finding Undiscovered Talent - [Invest Like the Best, EP.202]

My guest today is Daniel Gross. Daniel is the founder of Pioneer, an extremely unique company which he describes as a “fully remote startup generator” that helps talented people around the world figure out if their idea has legs. You can learn more about it at pioneer.app. Our wide-ranging conversation covers the art of asking great questions, the use of predictive modeling and psychometrics to identify talent, and why psychometrics are probably overrated and not that scientific. We then dive into exciting new frontiers for tech investing ranging from GPT-3 to satellites. I really enjoyed this conversation and I hope you will too. This episode of Invest like the Best is brought to you by Tegus. Tegus has built the most extensive primary information platform available for investors. With Tegus, you can learn everything you'd want to know about a company in an on-demand digital platform. Investors share their expert calls, allowing others to instantly access more than 10,000 calls on Square, Snowflake, or almost any company of interest. All you have to do is log in. Visit https://www.tegus.co/patrick to learn more. This episode of Invest Like The Best is also sponsored by Assure. Assure is changing the way investors manage private transactions. With Assure, investors can eliminate nearly all the admin cost of private investment. On top of that, they handle all the backend, legal, taxes, accounting, and compliance. All of it, with a straightforward one-time fee. Learn more and try Assure for yourself at https://www.assure.co/patrick. For more episodes go to InvestorFieldGuide.com/podcast. Sign up for the book club and new email newsletter called “Inside the Episode” at InvestorFieldGuide.com/bookclub. Follow Patrick on Twitter at @patrick_oshag Show Notes (3:15) – (First question) – His passion for Crank and Whiplash and why movies are great screeners for interviews (6:15) – Overview of Pioneer (7:56) – Defining talent (10:02) – The equivalent page rank when it comes to people (14:10) – Psychometrics and matter to him (18:13) – The importance of persistence (20:23) – The concept of insecure overachievers (22:48) – Fast twitch vs slow twitch capitalism (24:31) – Importance of memes as it relates to human behavior today (26:14) – The landscape of the type of businesses being formed (29:25) – Overview of GPT3 (33:33) - The Power of Ten Playbook (38:08) – Technologies going from a frontier to a utility (42:45) – Why something like a Starlink can’t be regulated (44:58) – Seed vs leech ratio in capital funding (49:10) – Give and Take: Why Helping Others Drives Our Success (49:15) – Dissecting Patrick’s usual closing question and good questions for screening people (52:56) – What questions help him get to the bottom of (55:58) – Kindest thing anyone has done for him Learn More For more episodes go to InvestorFieldGuide.com/podcast. Sign up for the book club and new email newsletter called “Inside the Episode” at InvestorFieldGuide.com/bookclub. Follow Patrick on Twitter at @patrick_oshag

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

• 0:00Patrick O'Shaughnessy?

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• 0:43Patrick O'Shaughnessy?

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• 1:26Patrick O'Shaughnessy?

  $300 per call, not the $1,000 or more that others charge. If you're curious about Teegus, call the top performing investment manager you can think of. They're probably already a Teegus customer and they'll point you in the right direction because customers, myself included, love Teegus. Visit tegus.co/patrick to learn more. This episode of Invest Like the Best is also sponsored by Assure. Assure is changing the way investors manage private transactions. When we recently launched our own venture fund, Positive Sum, I found out my biggest investor used Assure to manage their investment. With Assure, investors can eliminate nearly all the admin cost of private investment. On top of that, they handle all the backend, legal, taxes, accounting and compliance. When you outsource to Assure, you'll have more time to nurture your investor relationships

• 2:10Patrick O'Shaughnessy?

  and do more deals, all of it with a straightforward one-time fee. Learn more and try Assure for yourself at assure.co/patrick. That's A-S-S-U-R-E dot C-O slash Patrick.

• 2:26Patrick O'Shaughnessy?

  Hello and welcome, everyone. I'm Patrick O'Neal, and this is Invest Like the Best. This show is an open-ended exploration of markets, ideas, methods, stories, and of strategies that will help you better invest both your time and your money. You can learn more and stay up to date at investorfieldguide.com.

• 2:47Speaker 01

  Patrick O'Neal is the CEO of O'Neal Asset Management. All opinions expressed by Patrick and podcast guests are solely their own opinions and do not reflect the opinion of O'Neal Asset Management. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. Clients of O'Neal Asset Management may maintain positions in the securities discussed in this podcast.

• 3:12Patrick O'Shaughnessy?

  My guest today is Daniel Gross. Daniel is the founder of Pioneer, an extremely unique company which he describes as a fully remote startup generator that helps talented people around the world figure out if their idea has legs. You can learn more about it at pioneer.app. Our wide-ranging conversation covers the art of asking great questions, the use of predictive modeling and psychometrics to identify talent, and why psychometrics are probably overrated and not that scientific. We then dive into exciting new frontiers for tech investing ranging from GPT-3 to satellites. I really enjoyed this conversation and hope you will too.

• 3:48Patrick O'Shaughnessy?

  So Daniel, I don't think I've ever started the podcast by asking about movies, but there's two that you and I were talking about earlier that I thought would be a fun place to start. Those two are Crank, starring Jason Statham, and Whiplash, which is one of my all-time favorites. Why do you care about these two movies?

• 4:03Speaker 02

  I love those two movies. I find them very useful as a screening tactic as well. Whiplash is, to those maybe who haven't seen, is a story of a musician, a drummer in particular, with a talented coach who gets pushed a little bit too much. And I very much love that story. I very much empathize with it. The story of kind of the insecure overachiever falling almost too much in love with the vehicle of his performance. And you could cut it many ways, whether it's an inspirational or cautionary tale. But what I find interesting is there's a lot of questions you can't really ask people directly when you're talking to them in interviews or social settings. Whatever. And I find their opinion on movies to be something that lets you have that conversation in a fairly coded way. It's so interesting. I find it relaxes the conversation a little bit, even as we're talking about movies now.

• 4:46Speaker 02

  It feels much less tense than a conversation about, I don't know, the top performing stocks or something. So there's an element of play and novelty and kind of using it in the interview.

• 4:55Patrick O'Shaughnessy?

  What do you think that tests in people? So the whiplash is a great litmus test. And you could see how it would rub some people the exact wrong way and others, like you said, see themselves in it or something. What is that line that's being played with there?

• 5:09Speaker 02

  The whiplash question is actually one I have used quite a bunch in interviews. I find it separates people, I think, who have a adversarial relationship with their work to maybe an inspirational relationship with their work. And I understand if you have an adversarial relationship in most jobs, actually, I think we're both extremely lucky to have our jobs be our passions. But I think a lot of people in Silicon Valley, in particular, over time, developed very much give and take relationship with their work, where they want to do the minimum amounts possible such that they can return to life. I think that's fine for many people. I tend to very much enjoy the presence and company of just a different style of person. One who very much views the work as a way to perform, as something inspiring, as something to do more of. And there's an element of, in whiplash, almost a worshipping of achievement in that sense.

• 5:52Speaker 02

  Now, like everything, there's probably a dose response curve, like a hormone for work and anything can go too far. But I feel like it very quickly filters out someone who says, you wouldn't want to take anything too seriously to someone who says, gosh, I hate to say it, but that was great. I don't know what causes that split in people. That's, of course, a very interesting thing, assuming they are working at a job that's a creative pursuit. We can kind of construe two different styles of jobs, maybe jobs where the delta between the median and the tail is maybe 10 or 20%. So like a cab driver, best taxi driver in New York City is going to be 15% better than the median. But in a creative pursuit or in investing or software engineering, the tail is literally 10 times. John Carmack is 10 times better an engineer than myself.

• 6:33Speaker 02

  And so in those situations, I think you really want to be looking out for people that are really interested in the job. And you work as they something that they almost have to meter and goes out for themselves as opposed to something that they're careful not to do too much of, so to speak.

• 6:47Patrick O'Shaughnessy?

  You've laid like an amazing transition to one of the topics that I want to cover. It's at the end of your story, which is Pioneer, but it's a perfect excuse to talk about what you've learned from screening through talent. It'd be helpful for you to first set some context and describe what Pioneer is, what it does, and then I'm going to ask all sorts of questions about parsing through talented people.

• 7:08Speaker 02

  Pioneer is a company that I run and it's kind of a cross between the two different careers that I've had over the course of my life. I've initially started a search engine that got acquired by Apple, later on became an investor in a bunch of different startups and worked at a startup investment firm. And Pioneer is kind of the culmination of those two things. It's kind of part search engine, part venture investment firm. And what we're trying to do is we're trying to use the power of the internet to find people around the world that are potentially interested in starting companies. And we're almost trying to, through software, both qualify them and figure out if they're good or not, and also almost convince them to start companies, even create, so to speak, more founders, you know, the same way you see Peloton creating more cyclists or Strava creating more runners. I've had the pleasure over the course of my career, both through Pioneer and through others, to invest in a bunch of different companies.

• 7:53Speaker 02

  I've had the chance to meet a bunch of different founders and over the course of my time, having maybe been one, and I'm very interested in this topic. I think there's an interesting question for any asset allocator, to what extent you believe, especially at the early stage, that you want to be looking for great markets or great founders. And like everything, the truth is somewhere in between. We can accept maybe as an axiom that being able to screen people, either using software or using your own mind, is an important thing, not just for investors, of course, but for anyone looking to hire or really do anything significant in life. I find the question of talent to actually be the most important question in the world because it is, at the end of the day, required to do anything interesting.

• 8:28Patrick O'Shaughnessy?

  As somebody that's done a fair amount of predictive modeling, I know from experience that often the most important thing is defining the outcome very cleanly and very well before testing certain variables or features against that outcome. I'd love to hear how you define talent. If the idea is to search for talented people, how do you know that you've found one in some sort of modeling exercise?

• 8:49Speaker 02

  Metrics for success is a fascinating problem because at the end of the day, you're planting seeds and it'll take a decade or so for it to grow into its tree. And we have these moments at Pioneer where we're not quite sure, are we successful or not? Companies have, at the end of the day, a very short-term feedback loop to chase, which is revenue, which obviously can be abused, but I actually think is a general wonderful incentive structure for progress in society. For us, it's obviously less clear and there's kind of metrics we can look at to figure out if a person is good. You know, one thing Pioneer looks at is the fraction of folks we fund that get funded by others, which is right now around 20, 25% or so. And so follow-on funding is something you can look at, but of course, we work, or the Vision Fund has taught us that that alone isn't good enough. One thing I'm always on the lookout for with people, are they moving quickly? Are they evolving quickly?

• 9:33Speaker 02

  In my view, at the end of the day, when you're betting on a founder, especially if the market's not super clear, what you're trying to do is you're trying to predict that that particular person will have as many shots on goal as possible, because occasionally companies get formed and it's akin to someone's sticking a toothpick in the sand in Saudi Arabia and oil comes gushing out. Product market fit on day three, great, done. But more often than not, there's a tale of endurance there. And what you want is the person who's going to plunge as many toothpicks into the ground as possible, who's going to take as many shots on goal as possible. And that's why I think derivative is pretty important, because it's one thing to have energy. If you're kind of searching through random space, you could actually spend a lot of time pivoting your company before you get somewhere. But if there's a little bit of intelligence there, the kind of reinforcement learning algorithm, at the end of the day, will end up making compounding, you know, better and better decisions.

• 10:17Speaker 02

  Investors often think about the magic of compounding and how hidden that is for most people. I think it's interesting to think of compounding, not just in CAGR, but kind of in a person. And that, to me, is one of the simplest things you can try to measure on kind of a short-term, to give you a sense of whether the person, company, or project are kind of going somewhere long-term.

• 10:34Patrick O'Shaughnessy?

  One of the things, you mentioned the blending of search engine and investment fund. That's so interesting. One of the mental models here would be something like PageRank in search, right? Like Google's original competitive advantage where they base the quality of a site on like, I guess, how often it was referred to or linked to by other sites. Is there some equivalent in talent for PageRank? Is that a useful analogy for thinking about sorting through people?

• 10:58Speaker 02

  This takes us down to the very interesting world of psychometrics and all sorts of ways we can try to use to try to get a sense of whether a person is good or not. And this would be remarkably important if it was possible because we would find a way to highlight people that have been overlooked by every other possible system. One thing I'm very tickled by as Pioneer as a business model is economically incentivized to find people that have been overlooked by anyone else. That is to say, the terms that we offer folks, once our system grades them as great, are not terms that a Stanford undergrad should take or accept. Sequoia will offer them better terms, but we're very much going after these underrated assets. And so if you could find a way to figure out if these folks are good or not in software or mostly software, that would be great. The part of the issue is, though, that anytime you quantify anything in the world, you are

• 11:42Speaker 02

  taking a high-level dimensional space and you're reducing it to a lower-level dimension and you're going to lose data. Question is whether your lossy encoding technique is truly kind of MP3, where at the end of the day, you don't notice the difference? Or is it something more aggressive? Are you losing too many pixels or too many bytes along the process? In an attempt to reduce a person to a number, have you lost her the magic? And so to date, Pioneer has taken the approach of almost like a, how would you say, like a self-driving car algorithm, where we still use humans to occasionally guide the system and reinforce the data set. Nothing works better than really trying to evaluate the person based on the progress that they make. So when you do sign up, you get a score, and that score is how good you and your project is, if they're merged.

• 12:27Speaker 02

  So on the one hand, it's half-Paydrink. On the other hand, it's a little bit half-PowerScore on a bike in the sense that you can actively work to drive that score better, and you can see the feedback result. You're very eager to see that number go up week over week. Now, again, like any maximization function, people will maximize it, whether it's societally good or not. I really view founders as excellent hierarchy maximizers and terrible hierarchy selectors. So people don't really know what they're doing, but they just want to drive the score that they have week over week. And it's pretty much built like a video game in that sense, where the more progress you make on your project, the higher your score goes. And like Paydrink, there's a whole composite function of what goes into that score. It could be things like growing your revenue. It could be things like what other peers who are in pioneer... Think about the progress that you've made this particular week or myriad of other tasks.

• 13:11Speaker 02

  And our goal, our goal is to really shove more and more into this infinite portrait of what progress and accompanying an individual look like, such that at the end of the day, we're fully able to quantify it. So I actually view the resolution that we're currently using to understand someone to be fairly low. You know, maybe it's a 16 bit bitmap and at some point, there's going to be a whole 4K edition of Pioneer, where there's thousands of different metrics you can pump into the system, Twitter followers that you have. And I don't know, YouTube views on your video and revenue growth this particular month, revenue growth benchmarked against other companies, analysis of the way your company interacts over Slack, as much as we can get to really not just quantify who's good and who's not, but also motivate people to get better. I think if we're able to build a reliable metric for day to day progress,

• 13:56Speaker 02

  it will not only be a great service for creating more startups, but I think it'll be a great thing for productivity. You don't prove what you don't measure. And I think part of the issue is, by the way, not just for Pioneer, but I think for anyone working on something early stage or an investor is it's not really clear at the end of the day, what separates a good day from a bad day. There's no score. And we know that in markets and industries where there is a score, people do improve and markets are efficient. So for example, in sales, it's very clear what a good day is, it's very clear what a bad day is. And people are motivated to improve, can measure who's great and who's not. And if there's someone junior on the team who's really good, they're rewarded based on the merits of their work. In sports, this is extremely clear as well, a good day and a bad day. It's not really clear if you're an investor, what a good day or bad day is. It's not really clear if you're an early stage startup, what a good day or bad day is. I mean, even for a software engineer, it's not really clear what a good day or bad day is.

• 14:42Patrick O'Shaughnessy?

  I'm curious to what degree still psychometrics, and maybe you can define what that term means. What are some examples of psychometrics? What things you found maybe that matter or are at least interesting to you, having explored all those avenues?

• 14:56Speaker 02

  Yeah, psychometrics is a very interesting topic. At a high level, it is the attempt to use various mechanics, mostly self-assessment mechanisms, to get a sense of the individual and to be able to bucket them into different categories. This, again, I think could be very easily used for evil, but for the most part, I think stands to be a force for good, because it allows you to screen people without necessarily being subjected to the person's Gender, race, language restriction, whatever. Over the course of a couple of decades, centuries, a bunch of different psychometric techniques have been discussed. Myers-Briggs is a tremendously popular one that, in my personal, very humble opinion, is horribly inaccurate and doesn't regress to anything really material. The Big Five Aspect Scale is currently viewed as the popular psychometric toolkit or framework.

• 15:38Speaker 02

  But I should mention before we go any further that psychometrics, I think in general, there's two interesting things to observe about them, about the whole concept of them. First is that, once someone is exposed to the concept of psychometrics, there's a period of infatuation where they tend to overuse it and assume that it is the decoder ring for life. It does try to take a very high dimensional space, one of the highest dimensions we kind of know, which is the individual, and reduce it. And so you get really excited because you think, gosh, the Big Five Aspect Scale, I now understand everything. And over time, as you use it, it's funny, my sister's a psychologist. And I remember I first came to her many years ago, wild eyed about the Big Five. She said, I forgot, I think she called it something like the Big Five Halo. And she said, call me in a year, it'll fade a little bit. And she was very right. Someone listening here, I think you can do quite a bit of researching in Google

• 16:23Speaker 02

  and maybe we'll send around some links after this. But you should realize at the end of the day that there's a modest level of efficacy here. And then the second thing is why it is not more kind of efficient? And why the science here isn't better, I think is a very interesting reason. Like epidemiology, I think, before the coronavirus, there were no free market stressors that were really applied to the validity of psychometrics. And in my humble opinion, if there are no free market stressors, the science is false. So I think we're realizing a lot of epidemiology and modeling kind of viruses, just those people don't know what they're talking about. Now, I don't blame them because capitalism, I find, is this gravity that grounds things,

• 17:08Speaker 02

  that pulls them back down to reality as opposed to the ether of space and ideas. A counterpoint here would be weather forecasting. We know its limitations very accurately. That is because it is grounded in the free market. So psychometrics, with the exception of the military, maybe air traffic control, which happens to use IQ tests, and two, three other organizations. Not really grounded in reality, which is one of the reasons why I think Pioneer has been able to make remarkable progress in the field. Not because we're that good, but because it's very nascent days, because for the most part, the effect sizes in the world of psychometrics and the big five are extremely light. The biggest effect size that people are excited about, it is true that I think the R squared of IQ to earnings is like point six or something,

• 17:51Speaker 02

  but you're still not explaining a huge amount of variance at that point. But that is the most celebrated effect size. So I think we should be careful when trying to use this. The final thing I should say is I think a lot of these things are useful because of the language that they give people. And it is useful, I think, after you meet someone or if you're in your team and you're working and you're trying to discuss someone after the interview. It is useful to have common vernacular and taxonomy about how you describe someone. To that extent, Myers-Briggs may be helpful if you all kind of agree on that language. It doesn't matter that the actual test of Myers-Briggs is valid or not. One reason, by the way, why a lot of these tests are just wrong is they're based on self-assessment. And self-assessment is such a crazy thing.

• 18:35Speaker 02

  We're going to ask the person to evaluate themselves at one point in time. Call me at eight o'clock in the morning after a cup of coffee and I'll give you a very different assessment from two o'clock in the morning about myself.

• 18:45Patrick O'Shaughnessy?

  It seems like the quality of persistence becomes incredibly important in all this, especially when you're measuring literal progress in the variety of different ways, whether that's revenue or some other thing further upstream from revenue inside of a person's project or company. Do you think that persistence is, obviously you need some natural aptitude and probably some curiosity, but do you think ultimately persistence might be the most simple way of talking about all this?

• 19:09Speaker 02

  Persistence, power or energy are words we frequently use. And I think that's important because you need to ensure the person's going to take many shots on goal. It's just your sense of how formidable they are to you. This may be a question you can ask yourself that kind of reflects that on them. I think Paul Graham originally, Y Combinator originally said that was one thing he looked for in founders is he wants to walk away from the meeting feeling a little bit afraid. The other thing going on, I think with persistence or energy is the person is very interested in improving on a particular dimension in their company or what have you because. They're performing at the end of the day for someone in particular. And I think that can give someone a very elongated sense of endurance or persistence. Often you'll meet founders who really look up to other founders or other leaders.

• 19:54Speaker 02

  If they get stuck in the right feedback loop, they will find themselves very much performing for that individual in a way that's constructive for society. There's also a destructive mechanism of this where people spend a lot of time on Twitter trying to get Elon to favorite one of their tweets and dopamine hit from that becomes a thing that they chase. But that's, in my opinion, kind of not that useful for the world, obviously. Like I mentioned, founders are very bad at selecting hierarchies to maximize and very good at maximizing whatever game that they're in. And maximizing status, I think, is a useless hierarchy because it's infinite. Capital is a great one to maximize precisely because it's scarce. And so you could meet a founder who's going to spend all day trying to get any of your previous guests to retweet their tweet, and that will be their entire game in life that when they wake up in the morning, that's who they're performing for, and that's really what they're trying to do.

• 20:39Speaker 02

  But I find the best founders do the company, the revenue, as the vehicle through which they're performing. And obviously, I think that's much more healthy because for someone to click like on your tweet, it requires far less effort than parting with something of scarce value, like giving you money for your product.

• 20:56Patrick O'Shaughnessy?

  You mentioned earlier a term, and this is my last question on personality side. You mentioned the term that I think our friend Graham was the first one to introduce me to, which is insecure overachiever. Everything you just said makes me think of insecurity and how that gets filled. Do you think in your experience with all these different pioneers that insecurity is a good thing or a bad thing?

• 21:14Speaker 02

  I definitely think it removes the foundation from the building and it creates a bit more of a shaky atmosphere. I think it can create a lot of energy in someone precisely because like a molecule searching for a covalent bond, they're going to be looking for someone else to perform for because they have that sense of insecurity and they don't know where they sit in a hierarchy. And they will need to find a way to validate their position, be it in a dinner party or online or with their company. And so that, I think, is often what creates, what propels a lot of that energy. Look, I say this as someone who's slightly insecure myself and think I've gotten a little bit better at this as I've aged. I actually was commenting to our friend Graham that I think one thing that one transition- That one goes through, you know, in life, certainly that I've observed recently is by developing,

• 21:58Speaker 02

  in some cases, a family, in my particular case, very small set of very close relationships. Some of that insecurity does tend to go away because what kind of happens is you find your place in your world and you find a hierarchy that you feel like you can sit in comfortably, regardless of the actions that you take. But often, I actually think this is one of the hidden reasons why immigration works. It is because you take a person out of a hierarchy from one country voluntarily, and you shove them into a new hierarchy where they have no idea where they stand. I think that creates a lot of insecurity. You speak to anyone who came to San Francisco, who immigrated here, could be from Wisconsin, could be from India, it doesn't matter, and they have no friends. And so they kind of don't know where they sit in the world because they're in a brand new place. In many ways, I think the story of immigration is the story of someone who's fairly insecure, trying to secure their place in the hierarchy.

• 22:42Speaker 02

  And I think that can create greatness. That feedback loop can cut both ways. You can spend a lot of time, as I mentioned earlier, maximizing stupid things. I think the interesting question here, the interesting question is whether you would wish that thing on your children. Because I think there's something about the whiplash story, the insecure overachiever story, which is very good for society, very thrilling for the individual. But there are definitely are ups and downs. I actually, although I feel somewhat blessed to have this dynamic myself, I feel like it gives me a level of immersion and flow that I couldn't access, I think, if I was just more confident in my place in the world. I do wonder if that's something, it occasionally does cause discomfort.

• 23:21Patrick O'Shaughnessy?

  You mentioned capital is sort of an interesting thing to be optimizing around because of its inherent scarcity. Can you walk us through this concept? You have a fast twitch versus slow twitch capitalism?

• 23:31Speaker 02

  It's funny, I speak to a lot of people who are trying to figure out what career to take, especially kind of people on the younger side in life, who are trying to figure out if they go into investing or operating a company or working at a company. I feel like there's so much capital sloshing around. There's a lot of seed funds being created. I mean, I think the only thing that would be more common than starting a seed fund is downloading TikTok. There's a lot of people stepping into venture that, in my personal opinion, I don't think will actually be happy as venture managers because venture is kind of this form of slow twitch capitalism where The amount of time it takes for you to get the reward and the amount we were talking earlier about early ways of figuring out if you're making progress or not is very unclear in venture, what you're doing for a very long time and it takes a while to figure

• 24:16Speaker 02

  out if you're decent or not. There's a lot of people I'm noticing that are mistaking activity for progress. And the way you see this is writing a lot of investments into a lot of different companies, I think in many ways to fill a void inside themselves to just get a sense that they're advancing in the world. But of course, as we know, you know, small checks into a lot of different companies doesn't really create for a great result. You want to be in an enduring position on the cap table in a small set of companies is far better. Concentration is a goal. It is not a risk. I think that's because these are people that would be much better suited to kind of fast-watched capitalism, which is, I think, a company where there's things changing every day. There's revenue to be chasing, deals to be had, progress to be made. As opposed to slow twitch, metabolism could be your other metaphor here, which just takes longer and I think you have to

• 25:01Speaker 02

  be slightly more self-assured to do it.

• 25:03Patrick O'Shaughnessy?

  You mentioned memes, fascinating topic and a huge driver of human behavior. What is your thinking here on their importance? They tend to be funny things online, but the funny things we see demonstrate how much a lot of what we do is just copying other people. What's your thinking on memes?

• 25:19Speaker 02

  It's very important, I think, to understand in the world for any type of asset allocator or someone running a business, because I think it helps explain a lot of human behavior. I think dissecting them is very interesting. And I think for every particular meme, you may want to think about what is the kind of hole in the world that this thing is filling? And why is it possible? Even something as, why has matcha become popular? Something I've been thinking about lately. What whole void in the world is the matcha latte filling? It's interesting to think about because this wasn't as much as a fad 10 years ago and now it's certainly an explosive meme. And I think a lot of it, interestingly, is a byproduct of Instagram. I think Instagram, once Instagram got popular, it created a shortage in the world of colorful experiences that were purchasable, you know, at a fairly

• 26:04Speaker 02

  low rate. What is something I can buy that's colorful that will pop in the Instagram filter? And I think as a result, you started to see a lot of dynamic contrasts and colors, purple drinks, green drinks, orange drinks. The matcha latte kind of filled that void. When you walk around the street and you see people order their matcha latte, you kind of realize what they're actually doing is they're somewhat following this meme, I think, which wouldn't have gotten popular without Instagram. So being able to dissect these things and kind of understand, I think, the underlying systems behind why humans do really anything, I find super useful. I feel like sometimes I'm walking around the world with this little heads up display when I'm able to think this way and really understand the reason behind the reason.

• 26:46Patrick O'Shaughnessy?

  With all of this as background and backdrop, so we've got sort of the discussion around pioneer and urging people to become entrepreneurs, maybe even convincing ones that wouldn't have otherwise to do so, and also this trend of lots of capital in the system, you know, lots of seed funds or really just lots of risk-seeking capital with rates so low and I guess easier probably to get funded as an entrepreneur than ever before. With those two things in mind, what are you seeing that's interesting as themes in the kinds of businesses being founded today? What is sort of the frontier, if you will, of companies being formed?

• 27:21Speaker 02

  Yeah. What I'll say before I get in is what I find so interesting is how rapidly this scene evolves. Founders are these migrant species, kind of a wildebeest moving from savanna to savanna for whatever market is more interesting. And one of the reasons why I think the study of memetics is so important is that can kind of help you predict where things are going to go to. One thing that's quite popular now is there's a lot of people working on various chat aggregation services. Matrix is an open source chat ecosystem. As part of the ecosystem, there's all sorts of people that have built adapters, things that let you slurp in kind of WhatsApp, Signal, whatever messaging service you use to this kind of federated service. And that's opened the door for, I think, half a dozen or so startups that are kind of experimenting with bringing back AIM and ICQ. So that's one

• 28:04Speaker 02

  fairly active field. The other one that's kind of adjacent that's pretty active now has been interesting to watch. Enterprise, RPA, robotic process automation, which was certainly kind of a celebrated category of 2018 and 19 fade away and replacement for search. Another thing that's kind of become fairly popular recently is the whole ecosystem around Robinhood. Obviously, everyone kind of becomes a trader now, but there's a lot of people building the picks and shovels for this. Bloomberg for Robin Hood or various trading apps to help people trade better. It kind of remains unclear whether what you really want to be building in this world is a Bloomberg or Reddit, so to speak. What matters more, whether it's community or tooling, but that's a pretty active scene. The most rampant scene of activity, which really goes to speak to how startups get created,

• 28:46Speaker 02

  is founders solving their own anecdotal problems, is there are a ton, a ton of people working on various forms of socializing online, really trying to solve the Zoom conundrum, so to speak, which is to say, why is it that meeting over Zoom is not as good as in the real world and how can we make it different and better? A lot of what I would say horseless carriages in this world, in the sense that what they are, are people very much trying to recreate the real world on the internet instead of being internet first. I think it's very interesting, if you look at pretty much any technology, the car is the obviously the famous one with horseless carriage metaphor, pretty much any technology goes through kind of the real world variant of it. We can kind of think of, I don't know, pen and paper, the first kind of digital form of it, the word processor, and then the kind of fully online variant of it, which would be Google Docs.

• 29:31Speaker 02

  You could think of an encyclopedia to Britannic Online to Wikipedia, same effect. And it feels like a lot of the video conferencing 2.0 stuff is still stuck in the encyclopedia era. No one's really figured out the Wikipedia of that, which I think will look incredibly different from the way it is to interact in the real world. Those are some interesting categories going on. There's another one that started fairly recently, maybe in the past two or three weeks, which is there's a lot of people trying to use GPT-3 to build various companies.

• 29:57Patrick O'Shaughnessy?

  Can we spend some time on that last one? We're recording this, I don't know when it was announced or released, but fairly recent over the last couple of weeks. Could you describe what GPT-3 is? It is equal parts thrilling, interesting, maybe scary. Describe where it came from, what it is, and then we will talk about building companies on top of it.

• 30:15Speaker 02

  We can use the tools we discussed earlier to view the lens of GPT-3, which is to say, I do think it is a meme. In all honesty, if you haven't heard of GPT-3, I'd be very curious to talk to you because that must mean you're in a very different orbit than mine because that's all my world sees. So at the end of the day, GPT-3 is a machine learning model that's been developed by OpenAI. That's achieved a remarkable advance in the field of natural language understanding. From writing essays to summarizing text to doing question answering, GPT-3 is not quite like a human, but it's surprisingly close. One simple metaphor for someone to beat it, it's kind of just assume that GPT-3 has ADD. And it's able to understand text of very shallow depth. So it can produce and understand things like tweets or maybe a paragraph or two. If you ask GPT-3 to kind of understand something of any deeper knowledge,

• 31:00Speaker 02

  it tends to really go off the rails in interesting ways, but it really goes off the rails. It can do things at shallow depth, much like images require kind of shallow depth of attention. Beyond that, I think it still fails. I think it is extremely interesting to think about, and we'll talk about business applications for GPT-3 in a moment, but it is extremely interesting to ponder. If one assumes that GPT-3 is overhyped, why exactly it is overhyped? What is causing this level of hype and insanity? And one simple explanation is, I do think, much like the matcha lattes were providing a product in a shortage of colorfulness in the world, GPT-3 is providing technological advance in a world that's short of it. We've yet to see something kind of big and new in the world of technology, maybe since the iPhone. And this is kind of close to it.

• 31:43Speaker 02

  A computer that can write text that resembles a human is kind of close to it. And so as a result, people are quite excited about it. The other thing going on with GPT-3 is, especially if you kind of look online, it's very easy for people to experiment with. OpenAI didn't, you know, just release kind of a research paper that no one could use. They actually released a nice little website where you could kind of toy with the model and speak to it. And the results it produces, I would say maybe six times out of 10 are bad. But the four times out of 10, you cherry pick and you post on Twitter and you get reaction from people. It's almost a tool of creativity in that sense. And that really created a tremendous amount of hype and excitement around it. I think it's a good thing for the world, by the way. Regardless of whether the product is underhyped or overhyped, the hype will lead to capital

• 32:25Speaker 02

  Investment will lead to more people working on this. And I can tell you, as someone who ran kind of search and machine learning at Apple for quite some time, there were real problems in that space that if we solve could unlock tremendous amounts of societal and economic progress. So I really hope kind of more people focus and spend their time on it. I think a very interesting question is, to the extent to which you would want to build a real business on top of GPT three and exactly how. So, you know, example businesses have been, there's some interesting demos you can see online of someone typing in a bunch of words, like, give me an interface with a table with two buttons at the bottom I can click on. And GPT three can produce not just English language, but also programming language. So it's able to produce that interface. And that's very kind of exciting as a demo, actually.

• 33:06Speaker 02

  I think the interesting question is, will this be kind of a disruptive innovation, one that startups will be able to take advantage of? Or is this such an obvious thing that it will be a sustaining innovation for the large companies? You could imagine someone kind of creating a, say, a Shopify clone, where you just have to mutter, set up a website for me, you know, that looks a particular way and it just automatically happens versus kind of Shopify just doing that. That is, I think, the first way in which I'd kind of wonder whether these startups using GPT three are good or not. The second, more interesting question is, will there just be tons of GPT three nows? There's various numbers online you could read about how much money this thing took to create. It's all in the ballpark of single-digit millions. And you can envision pretty much every large company under the sun maybe training their own similar model now.

• 33:49Speaker 02

  So very rapidly evolving landscape, certainly a lot of people working on it. Remains unclear whether this is going to be the type of thing that's going to be like, say, mobile banking, which is very much a sustaining innovation for the big guys versus a huge disruptive innovation like Uber or Instacart coming out of mobile.

• 34:05Patrick O'Shaughnessy?

  On the sort of the opposite end of the complexity spectrum is a great post that you've put up called the Power of Ten Playbook, which I think is a nice little ode to not thinking too big too soon and a great way to get started on a project, which my experience in COVID so far, I'm curious if it's yours as well. It's like almost everyone I know is trying something new as a side project, as maybe even a new career. They have extra time, they're not commuting, whatever the reasons are. And I love this little playbook. Could you describe why you wrote it and sort of what you mean by it?

• 34:35Speaker 02

  2020 is going to be a very interesting year in hindsight because we've run this kind of great A B test of what the world looks like if we kind of turn everyone into dropouts. And if you're in university, literally, or I mean, even if you're attending Zoom school, you're kind of a dropout. You don't really have to go anywhere. So classes are not being taught significantly to can startup activity, I think, super interesting, hopefully good. That blog post that I wrote is kind of a just an attempt of mine to distill, or maybe simplify, the steps that one might take in starting a company. So we kind of touched on this earlier, but broadly speaking, you can kind of imagine the world getting split into two. Jobs that have very clear set of next steps, working in the military, or working at Starbucks, or working as a manager in a large company, clear jobs, and then you've got opaque jobs. And I think starting a company is an incredibly opaque

• 35:19Speaker 02

  job. It's very unclear what to do next. It's very unclear if you're starting a business, how it's going to become Stripe, or how it's going to become Airbnb. That seems like an unfathomable goal. In all honesty, even getting to like, I don't know, $100,000 in revenue feels like an unfathomable goal. So I think it's very important to break these things down into bite sized steps. And that post was really just an attempt to do that. It seems very hard and very unachievable to run a marathon, but it also seems very achievable to run 200 meters. And a good running program will kind of give you the step by step way to get there so that, you know, at some point, if you really want to, you find yourself running a marathon, and you find your company doing tens of millions of dollars in revenue. And it really starts with just trying to get a small set of people, initially just 10, which I think is a very achievable goal, a group of 10 people that

• 36:02Speaker 02

  are avidly using your product. This is important for two reasons. One is it'll enable you to run the process of discovery around what's wrong in your product and what's right. I have not yet to see a case where, without consulting anyone in the world, someone creates something, and it's instantly successful overnight. Maybe Bitcoin is the only example of this. No consultation, just put it out there and it works. The one thing you'll get out of it is 10 people, you'll be able to refine what you're building, and you'll be able to search the space of kind of product improvement in hopefully good way. The second thing that's very important, that's an underrated reason, is You'll find yourself becoming more motivated to work on the product if it's 10 people ideally that you respect because you'll want to be able to serve them in an interesting way. We often find at Pioneer that that alone is the catalyzing feedback loop to getting

• 36:47Speaker 02

  something going. It's not even revenue. It's just getting the attention of 10 people that like what you're building. Once you go to 10, you can try to go to 100, which is kind of the next step. And once you go to 100, you can try to get to maybe $1,000 in recurring revenue. What I find so hopefully compelling about this concept is it's extremely inexcusable to say, "I can't get 10 users." I mean, everyone's got to be able to find 10 people. The internet has billions of them. The attempt was really to distill kind of this unknown, fairly opaque thing to a simple set of goals that I think anyone can use to kind of get started in starting an online business that hopefully goes somewhere. It's worth mentioning that I feel like a lot of founders forget that everything big starts small. The reason people forget this is there's media teams responsible for making sure you forget this. The first thing you do after the company's successful is you hire folks in kind of comms

• 37:31Speaker 02

  and marketing and they'll do an excellent job of rewriting your origin story so that it sounds like from the moment you were six, you were working on whatever it is, Microsoft or Amazon.com or Facebook. And this was your life's vision to connect people, whatever, whatever, whatever. I find it very strengthening to go look at early variants of websites of Amazon.com. You can watch some of the interviews with Mark Zuckerberg from 2005 where he says, "There's no reason Facebook should expand beyond the scope of Harvard." Even SpaceX with all of its might. SpaceX with all of its might was originally conceived, as I believe, the Green Mars Oasis Project, which I'll describe to you, it sounds like something you do when you're in LA. The idea was, "Hey, let's go buy some Russian rockets, launch them into Mars. We'll just get a photo of a green plant on Mars and then we'll shut down the company."

• 38:16Speaker 02

  That's it. It's a giant photo stunt, which at the end of the day is slightly ambitious, but is not the ambition of, "We're going to create interplanetary travel, the largest private space company in the world, and migrate the entire human populace to another planet." That was not the goal. The goal was, "Let's get a nice photo on Mars." So you've got to remember, you know, everything big starts small and that post was really meant to help distill that for people and give them a bit of a framework there.

• 38:41Patrick O'Shaughnessy?

  One of the interesting transitions happening, you and I were chatting about TikTok a little bit, is indicative of this trend, and I think you've written about it elsewhere too, which is the notion of technologies kind of starting at a frontier, becoming what we call technology, but then eventually becoming a utility. Most people don't think of today's utilities as yesterday's technologies, but they were. Can you talk about that general transition, that general life cycle of a piece of technology, a railroad or something else, and how it relates to some of the giant, what we still call technology companies of today, maybe with TikTok as an example?

• 39:12Speaker 02

  I enjoy reading a lot of old news. I find that, at the end of the day, the world moves in cycles, and the tricky thing is the length of the cycle seems to be just ever so slightly longer than the length of the human lifespan. So it seems really new and novel to us, but it's exactly what people went through in prior times. And we don't read old news, because I don't know why, new news seems more important. I find old news is a great decoder ring to life. In particular, you can read quite a bit about just the terminology used to describe the Vanderbilt Railroad Empire, the Rockefeller Oil Empire, very much as technology. Obviously, cars were considered technology, roads were considered technology. I mean, if you go back far enough, maps are considered as technology. So technology, I think, is really just our way of saying the new thing. And there's a lot of businesses, and I feel like what kind of what we're watching now, if we look

• 39:55Speaker 02

  at the fights going on, you know, with Twitter, adding various tags around Trump's tweets, or what's about to happen to TikTok, is what we call technology businesses today, a lot of them, especially the consumer-facing ones, are effectively media businesses. They're media businesses, just like CNN is. When something moves from this era of being, say, a frontier technology, at some point it was cars, at some point it was social networking, to a utility, to something that's very popular, first of all, the wording around it, I think, needs to change, although this lags. So you'd really, again, want to think about Facebook and Twitter as media businesses, with all the upsides and downsides to it. We'll talk about how this folds into TikTok in a minute. But second, I think this means that they're going to have all the pros and cons of what a utility is. And if you think about, say,

• 40:37Speaker 02

  PG&E or any other type of utility, the cons are, for the most part, aggressively regulated. It is nationalized, or at least federalized or mandated statewide. The pros are, it's usually that regulatory lock-in creates kind of a mode of sorts. You can't start another PG&E tomorrow. And I think over time, we'll probably evolve into a world where it'll be hard to start something that has the shape of Facebook, if they really manage to get the kind of regulatory lock-in the regulators, and weirdly, Facebook want. So they're kind of pro and cons both ways. But we are in this kind of interesting interstitial era where I think the world thinks that these media businesses are technology businesses, are in kind of that middling phase you described, where they are in fact total utilities.

• 41:19Speaker 02

  One distillation of this is, I think, what's going to happen to TikTok, which is tremendously popular. There's actually a tremendous amount of US dollars invested in the entity, but as I understand it, it is a Chinese entity, and it's kind of rapidly unfolding. But there are quite a few parties that are working on transitioning TikTok into an American entity, because the United States has banned TikTok, at least in the military. India has banned it across its entire country. On the one hand, I feel like I speak to a lot of people that say, that's crazy, what's happening, we're banning websites. On the other hand, if you think of TikTok as a utility, the United States is not going to let a Chinese entity run its power grid, it's not going to let a Chinese entity run 5G chips, certainly. So it's not going to let a Chinese entity run one of the kind of largest media companies. At the end of the day, either the thing will get totally banned in the United States, which

• 42:02Speaker 02

  I highly doubt, or it'll have to split off and become somewhat of an American entity. And you know, I think weirdly, this is a, everyone thinks this is bad for, you know, the capital kind of stack in the company, but it's of course always a great thing. One of the greatest things that ever happened to any other previous technology monopoly is they get some type of lock-in by the regulator, be it banks in the, say, 18th, 19th century, or oil in the early 20s. So that to me is a very interesting lens to view tech right now. And I think the asset allocator, of course, wants to think about, how do I avoid the utilities? And how do I find the things that are either a frontier market or kind of a commercial market right now? And I think there's a lot of interesting activity in everything from satellites and space, I think, remain mystifyingly unregulated.

• 42:45Speaker 02

  I think there is, will be a huge war, you know, in the years to come, between Starlink and GEO, just about the airwaves. But I think right now it's total open season, and to me, by the way, this is astonishing. It is astonishing that Elon is going to be able to, with Starlink, effectively provide internet to the world in a way that is almost impossible to regulate. And no one's really thinking about it that way. But when you think about it, he's going to put internet in the air. There's no towers you have to manage, there's no cable you have to lay, it's literally going to be in the air. So that's a great example, I think, of an underrated frontier market.

• 43:17Patrick O'Shaughnessy?

  Why in that specific example, why can't it be regulated? And also, what do you think it enables? Is that the equivalent of whatever it always talks about around like platform shifts that create, you know, the introduction of the iPhone or something that creates an enormous opportunity to build stuff on top of? In your mind, does something like Starlink represent that sort of platform shift? Assuming it's not regulated out of existence or something?

• 43:40Speaker 02

  Two questions there. In terms of why it can't be regulated, I mean, I think it can be regulated by convenience. Great Firewall in China is an interesting example of this. Yes, technically you can bypass the Great Firewall. It's not hermetic. In many ways, you don't. And so that gives a huge edge to obviously Chinese companies. And so I think you could do similar things with Starlink where, for example, you could ban the sale of, say, receivers in a particular country. And yeah, people will still smuggle them in, but the convenience factor matters much more. It's hard to regulate iridium. It's hard to regulate something that is just in the air. In terms of it being disruptive, yeah. One of the most interesting questions I find right now in disruptions, we can of course think of consumptive ways they'll disrupt the industry, but non-consumption is always the most interesting form of disruption. This is the Clinton Christianson framework, obviously.

• 44:24Speaker 02

  Non-consumption are new use cases that we couldn't have thought of before that just really change everything. And I don't exactly understand what the non-consumption just around satellite, super cheap satellite launch will be, but it feels like there's a lot of interesting things there. If you could launch satellites, I believe in iridium satellite launches, maybe $50 million or so. And with Starship, I think a SpaceX satellite launch is maybe $50,000. So it's very interesting to think of what goes up in space and how that whole thing unfolds if it's that cheap to launch things. Satellites, internet satellites feel like the most obvious use case initially, but certainly not long term. I imagine weird stuff will come out of it. Would have been hard, I think, to predict Uber when the mobile phone came out. Very easy to think of order a taxi on your phone, not kind of increase the TAM of the

• 45:09Speaker 02

  market like Uber did. And I wonder what that will be for satellites. And I think there's a different question, which is for someone allocating capital to it, what is the payback period and to what extent is this kind of something that should be kind of infrastructure investment versus venture capital investment? That's a whole other question, but I very much believe that the kind of next decade, we can think of the 2020 to 2030, that will be the decade of Starlink of satellites in a space.

• 45:31Patrick O'Shaughnessy?

  One final question on the ecosystem in which you operate and then my traditional closing question. So first, the final question on the venture ecosystem. You mentioned the amount of capital sloshing about down there. Say a little bit about this notion you have of a seed versus leech ratio in the venture world and how you see that evolving.

• 45:49Speaker 02

  First question we must ask ourselves is, is the venture game a game of, is it a picker's game or is it an access game? That's kind of the first question. Of course, the answer is, as you go across the cap table, you kind of see it shift. It's maybe an inverse U-shaped curve. So you can imagine, very early on, it's a picker's game, meaning, for example, with Pioneer, extremely early, we can kind of pick whoever we want. Very late stage in the cap table, it's also a picker's game. I mean, obviously, the company's public, for the most part, hedge funds are kind of in the game of picking, not in the game of access. But at the A and the B, it is very much a game of access. You know, the good companies are known, and the main question is, can you get into the company? And I think if you're kind of investor, you have to realize where you're playing, and you have to develop different competencies based on where you're going to play. And I think

• 46:31Speaker 02

  if you are going to play in the access game, it is very interesting to think of, in my head, the way it's distilled, this kind of your seed-leech ratio in the venture world. Anyone who kind of grew up with BitTorrent would recognize, there used to be all these BitTorrent communities, and BitTorrent is somewhat similar to venture, where access is constrained, in the sense that all of these communities, there's a limited amount of a certain resource, the latest TV episode that you want to watch, and all these communities would have a seed-leech ratio that they would assign to you, based on how much you're contributing to the network. That is to say, how much you're allowing other people to upload your copy of that TV show, versus how much you're leeching, how much you're taking away from the network. And I find this kind of an interesting way to view

• 47:12Speaker 02

  relationships in general. And I think it's very important to, you know, in venture, to kind of think about it this way, because you are going to want to have good relationships, because you need to get invited to the party in order to win. You want to be that person that is voluntarily kind of given access, because there's a scarce resource. I've been thinking a lot lately about kind of what a good seed-to-leech ratio is. And, you know, a very simple way of quantifying this is, you can kind of think of friends, people you interact with, and kind of think of the number of interactions you have with them, where don't want anything from you, or they're kind of giving you something, or they're kind of just positive, there's nothing there that they're leeching from, versus the number of interactions where they're actually leeching something through you, where they want something from you.

• 47:55Speaker 02

  And it's very much my goal as an individual to not have to have a lot of interactions where I have a very high leech ratio, or I always want something from someone, because I don't think those are fun. You kind of think of in the back of your mind, the people who have a bad ratio there. I feel like I see this a lot in the venture world, where every interaction I have with a person, they always want something from me behind the scenes. It leads to very un genuine, unfun conversations, in my opinion. If you kind of think of this conversation that we're having now, there's nothing we really want for each other. We're just trying to kind of have a good time. And I think that's what creates flow. And I think if you want to engineer success for yourself, you know, in this market, I think the place I try to be is very much to not have interactions where I really want things from people, for the most part. This doesn't work, I mean, to the extreme. At the end of the day, if you work at a

• 48:39Speaker 02

  company, you obviously occasionally you have, you need things from people. So that's a bit of a different dynamic. But you can think of friends as the tail end of this. Friends are people where you almost never have interactions where you're leeching from them. It's always you're seeding. There's no goal. You don't really want anything from them. And so I very much strive to try to be that person, kind of in all interactions. The other way of distilling this in your mind is kind of thinking, scroll kind of your WhatsApp, or your iMessage, or whatever. Who are the people that you're almost always invited to the party? And what are the properties of those people? I wonder this a lot, because at least this insecure overachievers attempt to be a good actor in the world and kind of have a sense that I stand in, in a decent spot, you know, in mankind's hierarchy, I would like to know that I would be that person.

• 49:22Speaker 02

  I know I'm certainly not always there, but I'm striving to be. So I kind of find this concept of just making sure you have a good kind of seed to leech ratio with people to be an important one in that sense.

• 49:31Patrick O'Shaughnessy?

  It's a fascinating way to look at so many different things. Maybe not public markets, as you said so much, where you can get what you want if you're willing to pay the market price. But every other kind of investing and relationships, this seems like a great concept. It reminds me of, I think it's Adam Grant's book, Give and Take, a wonderful closing concept. My closing question for everybody is to ask for the kindest thing that anyone's ever done for you.

• 49:53Speaker 02

  By the way, it's worth thinking, dissecting for a moment, why this question is so good and why it works. I think for any interview question, I think it's worth wondering that. I think, in my view, as you ask it, there's two things going on. One is it's novel. Most people don't ask this. Two is use the word kindness, and that kind of relaxes the environment a little bit.

• 50:12Patrick O'Shaughnessy?

  I've never thought about the question itself. And before you answer it, I'm just curious if there are other questions that have a similar quality, or other qualities that you find good or helpful. I guess I'm basically just asking you, what are some good questions?

• 50:25Speaker 02

  I mean, this is the secret to life. I will share one, which is, how do you think this conversation's going?

• 50:31Patrick O'Shaughnessy?

  I love that question. I think it was you that introduced me to it, maybe a year ago, or something like that. And I've used it constantly ever since. And the reason I love it is because it is so hard to hide from. You have to say something that's interesting, or like has some weight to it. It's very hard to just say, it's going okay. You just don't say that. You either say it's going great and describe why. You say it's not going great and feel the need to like really defend that opinion by being very specific, which is why I love that question. I'm curious if you like it for the same reason or for a different reason.

• 51:06Speaker 02

  I think there's a lot of fun things going on with that question. I mean, it does kind of make you smile and laugh. And that is, I think, the most important thing it does. It breaks the fourth wall on the interview, which I think is your only goal in the interviews, break the fourth wall. There's this ethereal quality to it, which is, what you're kind of saying is, look at us and the game that we're in. Isn't this kind of silly? I think that very much relaxes, especially a candidate who's probably nervous. Second is, yeah, I mean, obviously, it causes the person to kind of introspect, and in kind of a new way they haven't done before. The third is, my way of thinking of your third point, it is impossible to not have an answer about it. It's got to be a cached answer. I mean, it's an experience you just went through. One mistake I think a lot of people make in interviews is they ask questions for people that are novel and surprising, that

• 51:51Speaker 02

  the person feels like they have to be performative in their answer. The old Peter Thiel question about what's an area in which you disagree with the world. When a person asks you that, I think the one flaw in that question, I mean, now it's become too popular, but the one flaw in that question is, there's a performative aspect to the answer, so you don't really get a genuine sense of the person. Whereas, how do you think this interview's going? How do you think this conversation's going? It doesn't sound too intellectual, and I think that's very important. If you really want to clot what makes the human genuine. This is the other reason why tying this back to our initial kind of debate around films. That's a very easy thing to kind of get a sense of the person. You know, what are some films that you like? Because it's disarming.

• 52:30Patrick O'Shaughnessy?

  Are there any other questions for you that are on like your personal Mount Rushmore of questions that you think you'll find use for forever? Like I do the kindness question, and then we'll come back to that question.

• 52:40Speaker 02

  There is one question that Pioneer asks that's been for us the most revealing question, period. We collect a lot of these qualitative questions in addition to kind of the quantitative data and try and see like which question is predictive. And probably the most predictive one we have is what is something weird or unusual you built or did early on in life? I find it so astonishing in how polar it is. Someone will tell you about, I accidentally got my high school teacher fired. And then someone will say something incredibly bland. I did a 10 mile hike. To me, it really explains people. And again, it's worth thinking about why that question works. I'm asking you for something factual. I'm not asking you to think or be highfalutin with your hoity-toity intellectual concepts. So something factual, something simple, you can give me an earnest answer. It shouldn't take too long to think of.

• 53:24Speaker 02

  And yeah, it really kind of gives me a sense of who you are.

• 53:28Patrick O'Shaughnessy?

  To kind of round out the idea, we're talking about interviews mostly, or I guess maybe references would be at another category. The reason that all these questions are interesting is what? You're trying to get at some underlying substrate of the person, their attitude. Why are these so interesting to you as questions?

• 53:44Speaker 02

  I'm trying to understand ideally even better than you completely understand why you're doing what you're doing. I don't think I'm any brilliant person. I actually think other people could understand about me, why I do what I do better than I can. One of the greatest lies is when people tell you why they did certain things. I'll speak for myself. You were to ask me, why exactly did you leave Apple when you did? Or why did you sell your company? I don't know that I could give you the real answer. What I'm going to do is I'm going to give you an intellectualized answer I thought about that I think you'd be interested in hearing. It's so funny when you talk to people about, why did you leave job X and go to job Y? I felt I wasn't learning enough. Do you really have like a daily learning number that you put next to every dire entry? And the learning number was low. So you let, is that really why you left? Or was it something deeper?

• 54:29Speaker 02

  Is what happened that, I don't know, you bumped into someone at the barbecue and they mentioned their salary and your salary was lower. And then for three months, this was in your head that your salary wasn't what it was supposed to be. And at some point, the email came in from the recruiter and inspiration struck. Or was it that you had some conversation with your wife and went down some rabbit hole and you realized in the conversation that you just really don't like your boss? The stated reason for things with humans is almost never the real reason. And it's often a third party, ideally people much smarter than me, I hope, that can figure out what it is. And in an interview, what I'm trying to figure out is if it's a founder that we're meeting or whether it's someone we're hiring to work at Pioneer, I'm trying to figure out, why are you doing this and what's driving you?

• 55:12Speaker 02

  And I find ways to get there are asking simple questions that the person can answer without needing to perform. The person is working against you when they start performing. By the way, another tactic I'll occasionally use is I tell people, especially now of resume where there's a bit more of a disconnect, I tell people upfront, please stop performing and just be yourself with me and I will try to do the same with you. Very simple other thing I highly recommend doing on this front. Repeat the same question over and over again until you get the answer. I think a lot of people walk into interviews and they have this rubric of questions they would need to ask. Maybe their boss gave it to them and they ask the question, they get the answer and then they move on. There was literally no entropy exchange.

• 55:55Speaker 02

  Like the question was, what is your biggest weakness? The answer was, I work too hard. And then you moved on. You might as well have not had a conversation. That's what a draining conversation is, in my opinion. It's that you are eating up oxygen without any novelty in it. I very much try to not have those, partially because I'm trying to understand the person, partially because nobody wants to be bored.

• 56:16Patrick O'Shaughnessy?

  I have a friend who says society and its trimmings are only three days deep. Meaning if you're kind of by yourself in the wilderness or something for three days, it all sorts of falls away. And I like this version of it, which is the truth is only three answers away, or three questions away, rather. It's a neat concept. I'm forced now to return to my actual question. I do love, I've never explained this before, but since we're talking about questions, I do love asking it just because it makes me happy at the end of interviews. It's not more complicated than that. And I think that orienting and priming people around some act of kindness is a great way to close. So I'm curious for your answer to the kindest thing that anyone's ever done for you.

• 56:51Speaker 02

  Okay, so a bit of a recency bias, but something that's been on my mind almost every single day. A couple of weekends ago, I drove my car to the middle of nowhere in California. It was pretty warm, parked the car in the side of the road. I don't really pay attention to where I parked it. I locked the door, put my keys in my pocket and I go out for a run. And I come back to the car 12 miles, 12, 14 miles later, pretty dehydrated. Didn't bring any water with me. It's maybe 95 degrees. And I'm pretty excited to get into the car, turn on the air conditioning, drink some water and get back home. I then discovered that the car had sunk into the ground a little bit. It's kind of very thin sand. I turn on the car and start the engine and hit the gas and dig a great ditch for myself.

• 57:33Speaker 02

  Situation becomes a little bit more alarming when I realize the car has almost no fuel left. Literally in the middle of nowhere in California, I really treated myself here. And I thought I was screwed, but it only took maybe, I don't know, 10, 12 minutes till someone's driving by on the road. And they drive by and then they pass me and then they turn around. Lo and behold, over the course of the next 30, 40 minutes or so, three people stopped their car, kind of turned around and helped me tow my car out of the sand. And to me, this was like so simple, but so momentous for me. I truly had begun thinking, oh, this is basically it. I'm stuck here and you know, I'm going to make camp here for the next three days. But the fact that people went out of their way to help me, here's the interesting thing that I find in it.

• 58:15Speaker 02

  Now every time I'm driving on, you know, any type of road, in particular if it's desolate, and I see someone stuck, I have a real proclivity to try to help them because I was helped. And I think that small effect in many ways describes the magic of Silicon Valley. Someone took a bet on me when I was 18 years old. And you kind of see now in my career, I'm trying to take other bets on people. So there's a real pay it forward element, I think, happens to when you shower someone with an excessive amount of. With a surprising amount, we should say, of effort when they feel like they don't deserve it. So I don't know if it's the most kind thing people have done to me, but that's a pretty big one.

• 58:50Patrick O'Shaughnessy?

  I love it. So many of the answers come down to the same thing you said earlier around seed and leach, that fundamentally, they're all seeding activities. It's a great place to close. Every time we talk, I feel like I take away 15 fun devices, new bits of learning, new ideas. You're always full of them. And so I've loved to have finally been able to do this on the record. I'm sure it will be the first of several. Thanks for your time.

• 59:14Speaker 02

  Thank you so much. I enjoyed it as well.

• 59:17Patrick O'Shaughnessy?

  If you enjoyed this episode, you can sign up for a new email newsletter sent out each week called Inside the Episode. Each week, I condense that week's episode to my favorite big ideas, quotations, and more. I've been recommending books to members of this email list for years, and will keep doing so in this weekly email. You can sign up at investorfieldguide.com/bookclub.