#518: Katherine Boyle on Innovation and Independent Thinking

Katherine Boyle is a partner at General Catalyst, a venture capital firm that works with seed to endurance-stage founders to help build companies that can withstand the test of time. She co-leads General Catalyst’s seed platform. She focuses on early-stage investments in highly-regulated industries, including aerospace and defense, financial technology, healthcare and computational biology. In this conversation, we discuss shadow capitals, rebuilding civic institutions, government competition, true innovation, free speech, independent thinking, the socratic method, and investing in controversial ideas. ======================= Public Rec is the first to bring tailored sizing to leisurewear so that you don’t have to choose between comfort and style. They make leisurewear in waist and inseam sizes because they believe comfort starts with a better fit. And when things fit better, they look better. No tailors. No settling. No stress. Comfort and style, all in one. Check out publicrec.com/pomp and use POMP10 at checkout for 10% off your order. Step into a better fit today with Public Rec. ======================= As one of the largest and oldest Bitcoin exchanges in the world, Kraken is consistently named one of the best places to buy and sell crypto online, thanks to our excellent service, low fees, versatile funding options and rigorous security standards -- but this is only part of the story. We’ve been on the forefront of the blockchain revolution since 2011: http://www.kraken.com ======================= Coinbase Wallets are adding support for .crypto and .zil domains through their partnership with Unstoppable Domains. Unstoppable Domains provides an all-in-one solution for blockchain domains. You can send money using these new domains instead of long Bitcoin wallet addresses, while also storing your domain in Coinbase's collectibles section. Go to unstoppabledomains.com in the dapp browser to register and manage your domains. =======================

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

• 0:00Anthony Pompliano?

  What's up everyone, this is Anthony Pompliano. Most of you know me as Pomp. You're listening to the Pomp Podcast, simply the best podcast out there. Let's kick this thing off. Catherine Boyle is a partner at General Catalyst, a venture capital firm that works with seed to endurance-stage founders to help build companies that can withstand the test of time. She leads General Catalyst's seed platform. She focuses on early-stage investments in highly regulated industries, including aerospace and defense, financial technology, healthcare, and computational biology. In this conversation, we discuss shadow capitals, rebuilding civic institutions, government competition, true innovation, free speech, independent thinking, the Socratic method, and investing in controversial ideas.

• 0:44Anthony Pompliano?

  I really, really enjoyed this conversation with Catherine, and I hope you do as well. Before we get into the episode, though, I want to quickly talk about our sponsors. First up is Public Rec. They are the first to bring tailored sizing to leisure wear, so that you don't have to choose between comfort and style. They make leisure wear in waist and inseam sizes, because they believe comfort starts with a better fit. And when things fit better, they look better. Duh. No tailors, no settling, no stress. Comfort and style, all in one place. I've got a ton of Public Rec gear now, and I'm loving it. When I'm on Zoom, you know I'm in Public Rec. So check out publicrec.com/pomp and use POMP10 at checkout for 10% off your order.

• 1:30Anthony Pompliano?

  Step into a better fit today with Public Rec. Again, that's Public Rec, publicrec.com/pomp, or use the link in the description. If you want to wear comfortable ass clothes, wear Public Rec, like me, publicrec.com/pomp, use code POMP10 at checkout for 10% off your order. Next up is Kraken. They are the largest and oldest Bitcoin exchanges in the world. Kraken is consistently named one of the best places to buy and sell crypto online, thanks to our excellent service. Low fees, versatile funding options, and rigorous security standards. But that's only part of the story. Kraken has been on the forefront of the blockchain and Bitcoin revolution since 2011. They are one of the largest and oldest Bitcoin exchanges in the world.

• 2:15Anthony Pompliano?

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• 3:00Anthony Pompliano?

  First come, first served. So head on over to unstoppabledomains.com and register your domain. Your name, your company's name, a word you think might be valuable in the future, whatever. Go to unstoppabledomains.com and secure it today. All right, let's get in this episode with Catherine. I hope you enjoy this one.

• 3:18Speaker 01

  Anthony Pompliano is a partner at Morgan Creek Digital. All opinions expressed by Pomp or his guests on this podcast are solely their opinions and do not reflect the opinions of Morgan Creek Digital or Morgan Creek Capital Management. You should not treat any opinion expressed by Pomp as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. This podcast is for informational purposes only.

• 3:43Anthony Pompliano?

  All right, guys. Bang, bang. I have Catherine here with me. Thank you so much for doing this.

• 3:48Speaker 02

  Thank you so much for having me. It's great to be here.

• 3:50Anthony Pompliano?

  For sure. Let's just jump right into, I think, a topic that you've covered extensively is this idea of Silicon Valley and tech innovation leading and maybe Washington bureaucracy and political policy not necessarily being the driving force behind a lot of progress in

• 4:06Speaker 02

  Change, at least in the current state. Maybe just start off with kind of how do you view this from a framework perspective? And then, you know, why do you think that the pendulum is kind of swung in favor of technology and that sector versus the policy side? Sure. Well, this is, this is something I've been thinking about for, for a long time, which is, you know, there, there's this understanding, I think, whether you're on the left, the right, whether you follow politics at all, that government is broken. And it's a meme, but no one really talks about why. So I started digging into like, why has this happened? And a lot of the thesis or a lot of the theories that I have relate to the fact that a lot of the talent is no longer going into the bureaucracy. If you look at, you know, post-World War II, we had a, a society where everyone served.

• 4:51Speaker 02

  Public service was part of the conversation. Everyone had served in the military and that changed in 1973 with the change in conscription. And I do think that that has had a huge impact on how our elites, how people who go to college, which also became something, you know, that a lot of people did after, after the seventies, how, how they thought about public service. And what I think is happening is a lot of people are coming to Silicon Valley, who would have otherwise served their country in a different time period. And so what you're seeing in this sort of last generation of technology companies is really great people who are inspired to do something and to solve a problem, but the government just stopped solving because of stagnation in the government. And so, you know, I, I, I focus on highly regulated industries from aerospace,

• 5:35Speaker 02

  defense, financial technology, healthcare. These are areas where all of the innovation is coming from Silicon Valley and technology. It's not coming from policymakers. There hasn't been an innovative policy in any of these sectors in a very long time. If we do have legislation that is, that somehow passes despite the gridlock in Washington, none of it is really innovative and, and sometimes it gets reversed. So there's all of these questions about if we're thinking about where are we actually solving problems in society? A lot of our best and brightest talent is coming to Silicon Valley and they're building companies that, that go against what Washington is doing. And so I've referred to this as the shadow capital. When you look at what Elon Musk has done, Elon Musk has done more for climate change than most

• 6:16Speaker 02

  Countries in the world. He's done, you know, more for aerospace engineering and more for for something that was so important to the government. He's built a massive government company than, you know, than anything that has happened kind of in a government, you know, research lab or that sort of thing. And I think he's sort of the canonical example of this. If you want to fix a massive societal civic problem, it's better to do it through technology. And you can go down the list of all of the government departments that exist, whether it's, you know, Department of Education, all of the interesting initiatives that are happening in education are coming from founders. And that's what's exciting to me. But I think it's also a change in Silicon Valley culture that people are really trying to solve civic needs.

• 6:59Anthony Pompliano?

  And so why do you think Silicon Valley is kind of winning that war for talent? Is this something where it's just the mindset is different? And so people are going there? Is it maybe something where these people would have gone into the military previously? And there's been like a societal change now that's taboo. And so technology is kind of the accepted path. Just unpack it a little bit more as to like why it's happening?

• 7:20Speaker 02

  So I mean, I think those are, those are two great reasons. So I do think that there has been a change in kind of what is expected of American elites. There used to be this idea that you would give back to your country. And it didn't matter if you were, you know, very poor, raised on a farm, as a lot of people were in, you know, in the, in World War II, or if you had gone to Yale or Harvard, you were expected that kind of the idea of what it means to be a good citizen is to serve in some way. And it used to be that we served through military service. And I think that changed, that definitely shifted. And we became this, this culture that was incredibly focused on, you know, like the financialization of the culture made us incredibly focused on finance in

• 8:01Speaker 02

  many ways. And what's really interesting over the last 15 years, I would say, just looking at the data, is that the number of university students that are going into financial services after graduating, if you look at, say, the top 10 colleges, has just risen dramatically. And I do think that that is part of the reason why when people are thinking, how do we actually solve problems? Capital is incredibly cheap. And more and more people know how to code. And so if you are Someone who is truly ambitious about solving problems. And you say to yourself, I can either go to Washington and be a staffer for a low level senator and help write policy that may or may not get passed. Or I can go to Silicon Valley with my friends, build something that's controversial, that's contrarian, that's really cool. But I believe in solving this mission.

• 8:47Speaker 02

  Nine times out of 10, I think the most ambitious, smartest people are going to be doing that. And so you do see this sort of kind of migration that's happened. And I actually think the social network, the film that came out in 2010 is actually one of the the kind of cultural moments where people realized, wow, like there is a reason to come out and build technology companies. And that sort of brought the normies with them. Like it used to be that all the, all the nerds and sort of the, you know, crypto weirdos were hanging out in Silicon Valley. And like now it's like, no, it's actually, you know, the normies have decided that they want to do this too. And I think that just changes the calculus. And that has also led to a massive backlash in Washington against Silicon Valley. Because when you lose your talent, when you lose your capital, and when you lose your ability to build,

• 9:31Speaker 02

  and a shadow capital emerges on the opposite coast, that makes people really frightened.

• 9:36Anthony Pompliano?

  It almost feels like by celebritizing the founders and the companies that were built, you change the narrative. And the second that that becomes kind of culturally relevant and aspirational, now all of a sudden you can bring the normies, you can bring people. And really, that's what if you look at content and kind of Hollywood, et cetera, Wall Street was in the eighties and nineties, right? Now, all of a sudden, it's kind of shifted to Silicon Valley. When you think through this, so that shifting capital, both intellectual and financial, has set up this like shadow capital of Silicon Valley. Let's unpack that a little bit in terms of what exactly do you mean when you say a shadow capital? And then what are the pros and the cons of having these types of shadow capital?

• 10:19Anthony Pompliano?

  When you look at it from a kind of managing a society or an economy?

• 10:22Speaker 02

  Sure. So I would argue there's always been shadow capitals throughout history, oftentimes in various countries. So the example that I've pointed to when I've written about this is the example of United Fruit, where if you look at Central America at the turn of the century, United Fruit was a fruit company based in New Orleans that was basically running most of Central America. It was the big industry of the time. The founder happened to live in New Orleans, or not the founder, actually the CEO, happened to live in New Orleans, and that's where he wanted to headquarter the company. And he was running the postal service of Nicaragua. And so when you think about examples like that, it's like, okay, there are companies that have run governments before. And it's

• 11:07Speaker 02

  usually, it usually has something to do with just acquisition of lands. Like, it was the largest landowner in Latin America, or sorry, not Latin America, Central America. And so it makes sense that, okay, you have a lot of capital that's going into a region throughout history, or you have one company that owns a ton of the land. That would make sense why a capital would emerge or would have just kind of a surprising amount of political cachet and political power in a certain country. But what I think is really different about Silicon Valley acting as a shadow capital is that the technology coupled with this capital issue allows individual companies to grow massive to the point where

• 11:49Speaker 02

  they can replace or supplement a department in government. So I point to the example of Uber and Lyft, which has completely changed how we think about public transport. The Department of Transportation, probably the only thing they are thinking about is why cities across America are losing extraordinary amounts of revenue to companies that can provide public services of getting around a city much better than public transport has been able to do over the last 30, 40 years, excluding the New York Metro, or Subway, or DC Metro. But in terms of actually being able to travel around cities, this is a huge problem for cities. And so the emergence of a shadow capital, I think the difference

• 12:30Speaker 02

  that we are seeing is that individual companies can grow within five to seven years and completely supplant a bureaucratic function of government, a department of government, and that makes people nervous.

• 12:44Anthony Pompliano?

  And so when that happens, is that an argument for actually we should have a really, really small government, we should outsource kind of all of these functions to private companies? Or is it actually good to have government trying to accomplish it, even if they're ineffective and and kind of bloated and bureaucratic? Because it gives the private company something to almost compete with, right? Like, it's almost to some degree, the competition breeds the innovation? Or is it just, no, actually, we're just wasting a bunch of money, time and resources, and let's just outsource all this to technology companies or to to the private industry?

• 13:16Speaker 02

  So it's it's a really good question, and I think the it's not a one-size-fits-all answer. So, you know, when you look at, so I invest a lot in defense technology. The Department of Defense has a lot of people who work in the Department of Defense who are incredibly good at their jobs, incredibly, you know, useful, like they can't be replaced by a private company. But we've done a really good job since World War II, outsourcing a lot of the, you know, a lot of the functions that that need to be done. Like, we we outsource, you know, manufacturing tanks and battleships to to five prime contractors. And so, you know, that is important, I think, from from, you know, the the types of technologies that cannot be built by government need to be built by a third party, by a commercial sector.

• 13:59Speaker 02

  And I think one of the greatest misconceptions of government when it's looking at software is that it thinks it can build software, but it actually can't. You know, and I know you know this, there's a huge difference between someone who thinks they're a software engineer that can build a simple, you know, build a simple line of code versus someone who can actually build, you know, AI at a sophisticated level where they could work at one of the best companies. So I think that's something that the government has has misunderstood widely.

• 14:24Anthony Pompliano?

  So when you start to think about kind of innovation and true innovation, is it more so that the government, through the policy decisions they make, are changing incentives, but they're not actually trying to accomplish innovation? And it's more so how do they empower, incentivize other private sector to do it? Or do we think that there's examples where the government actually has driven true innovation?

• 14:43Speaker 02

  So there's, I mean, there's definitely examples throughout history where the government has driven true innovation. And I think, you know, the government tends, I mean, I'd say the research labs, which are a very important function in government, like, do do bleeding-edge work. I mean, DARPA has done incredible work in terms of pushing the boundaries of science. And I think like, that is an important function of government. It is hard to turn those technology, you know, like the technological shifts that DARPA works on into true innovation that can be commercially used. And I think that's, that is the difference is when, when, you know, government is investing in sort of bleeding-edge science or technology, it's often not in the service of building a company or building something that can actually, you know, solve a business need in government. And so I think

• 15:27Speaker 02

  that, that's why when you actually look at how government and particularly the Department of Defense has worked with private sector, it's actually, you know, an important partnership. And so I would never say, you know, private sector should completely supplant like the way that government functions. I think as a partnership, it actually does work. But the times have changed. So a lot of the ways that government works with the commercial sector, particularly around issues of procurement, they were built for a totally different era pre-software. They were built pre-internet. And so the idea that government understands how to build a company, or how to build an important technology that can be used to solve a business need, a lot of the ways in which government thinks that it can, it

• 16:11Speaker 02

  can build is just a dated way of building. And you and I both know, like, you know, the pace at which someone can build a company in Silicon Valley, when they have the right team, when they're able to recruit the right people, when they have the capital to move forward, is so extraordinary. And it's unlike any energy and any pace that exists anywhere else in the world. Building a startup is so different than working in government, than asking for approval at a large company. And so I think that's part of the cultural problem is that, you know, if you've only ever worked in policy, you don't understand the pace at which things can be built by a motivated team with, with technology and capital.

• 16:49Anthony Pompliano?

  Is that an argument then to be made that we shouldn't have either career politicians or people who only work in government? Like, should there be some requirement before you can participate in public service, or at some point during public service, you have to go work in the private sector? And it's less about kind of corruption, or any of the really extreme examples, and it's more so just about making sure that the freshest, most innovative ideas, mindset, and kind of mental models really are being used for those that govern the population?

• 17:17Speaker 02

  No, I think one of the biggest problems is that a lot of people in government have no idea how technology works. That's actually one of our biggest problems, and could actually be a national security risk in many ways if we don't fix that problem. And so, I do think that there needs to be more people in Silicon Valley and in true innovation that understand how policy works, and vice versa, that people who are lifetime bureaucrats and people who run for office have some experience in business, and particularly in technology, so they understand the pace at which things are done, other ways to solve problems. I mean, when we talk about building a company, it really is solving a problem. And so, Washington and Silicon Valley have the exact same aims of how do we solve problems to benefit the

• 18:02Speaker 02

  most people, but they're doing it in different ways. So it actually makes perfect sense that you would do stints in both to really understand, when can you solve problems with policy, when are problems best solved by people in Washington, and vice versa, when can you solve them with technology?

• 18:18Anthony Pompliano?

  Yeah, one of the kind of tangential issues to this that I've been thinking a lot about, and I don't have the answer yet, right, is if you think of kind of power structure, and also centralization versus decentralization, the legacy world was centralized entities, and the government had the kind of superior power over them, right? They could go, they could put a founder, leadership, in jail, they could shut down servers, they could kind of, you know, if they really didn't like what somebody was doing, they could obviously, or they felt it was threatening, they had a kind of, you know, a response to that. And so the first question is just like, you know, who's actually more powerful today? Silicon Valley or Washington? And I think it's almost like based on topic. You may get a different answer there, which scares some people and other people just think it's kind of the

• 19:01Anthony Pompliano?

  the foregone conclusion. But then two, it leads into this kind of second order effect. Well, if that ends up being this case, one of the defense mechanisms may be more decentralization, because it actually serves as this ability to to prevent some of those responses. And so how do you think through, you know, the power structure, like maybe who is more powerful in certain situations? And then just centralization versus decentralization, if that's important at all, or how you see that playing out?

• 19:26Speaker 02

  Yeah, I mean, it's a, I think it's one of the most important questions of our time. And it's also really hard to pinpoint sort of, you know, how do we quantify power? Because what I think is is very interesting is there's, I almost call it establishment versus anti-establishment. And, you know, Washington is definitely, you know, governments are part of traditional establishments, but there's other parts of those establishments. There's, you know, the fourth estate, which is the media. There's institutions like the Roman Catholic Church. There's institutions, you know, that that exist far beyond just governmental authorities, but they are establishment authorities. They're university systems. Harvard University is part of the establishment. And then I would actually argue that a lot of companies, no matter what their size are, are anti-establishment in how they are founded and how they think about solving problems.

• 20:11Speaker 02

  And, you know, the vast majority of startups start up as an anti-establishment cry against one of these elite institutions. Like, how do we fix something that the establishment hasn't been able to do? In terms of who's more powerful, what I what I think I see happening is that a lot of the power has shifted on specific issues. And if you're trying to solve a specific, say, policy issue, say, you're trying to solve upskilling of the American workforce. You know, companies like Guild Education and Lambda School are doing that in extraordinary ways. And they're doing it to solve a specific policy problem that government was supposed to solve, but just hasn't gotten around to solving or hasn't figured out a way to solve it effectively. And so, you know, those companies, I would say, are they more powerful than the Department of Education?

• 20:52Speaker 02

  Like, likely no, but they're actually effective in a way that the Department of Education is not being effective. You know, when you when you look at, say, You know, the New York Times versus Substack. I would say like Substack has emerged as one of the most important companies in that it is aggregating extraordinary thinkers and allowing them to to build their own followings and and and and make money in a way that they weren't able to make money when they worked in traditional press. You know, is is one company more powerful than, say, a company that's been around 100 years that that is sort of seen as like the the establishment newspaper of America? You know, at three years, at three years in, probably not, but at the same time, it is so important to to what is happening in in the country and it and it and it's actually making people nervous of how quickly it's moving.

• 21:37Speaker 02

  And so power, like, like, it's hard to say something is more powerful, given that a lot of these institutions have have been entrenched in society. But the fact that there are companies that have been around for only a few years that are solving problems more effectively and becoming so important in our daily life. That that shows that technology can move faster and it's a perfect example of sort of this shadow capital mentality, which is that people who are motivated to solve a specific problem can solve it much quicker outside of the institutions than inside them.

• 22:08Anthony Pompliano?

  One aspect of this that I think people may not understand is like, there's a technology argument to be made, right? If I write certain amount of code in a certain way and you don't, then I may have an advantage from from a pure technology kind of capability functionality standpoint. But what seems to be the even bigger moat is actually the kind of knowledge of Silicon Valley, the experience and just the years and years and years of doing this. And so for, you know, a kind of direct example of Substack, Substack taking a platform approach, rather than saying, we're just going to go build an anti-establishment media company in a traditional sense. Is very different than what the New York Times and other kind of legacy companies have have done.

• 22:47Anthony Pompliano?

  Now, there may be coexistence of those two models, but as we know from the Silicon Valley kind of playbook, the platform play can be much more scalable, can be much faster growing. It's much harder to kind of compete with. And if you get, you know, some level of network effect, whether it's a true network effect or something that looks like it, it's just really, really hard to unseat that. And so is it, when we talk about technology, is it more the playbook than the actual technology itself? Or is it, no, there's actually technology in like some of these companies and governments, they just can't write the code and build the functionality that's needed to actually kind of compete in a free market?

• 23:19Speaker 02

  You know, I think you're touching on something really important because I actually think it's mindset. And it's understanding the culture. So I moved to Silicon Valley in 2014. I was a reporter at the Washington Post before that. And I had lived around the world and when I moved to California, I joked that it was the worst culture shock that I'd ever had in my life. It felt like I was in a totally different planet. And you know, some people take to that. I completely took to it. I was like, I finally met the culture that I want to be a part of. But it was, it took a while to learn. It took a while to learn the cultural cues. It took a while to understand. Oh, you don't have to ask for permission. Oh, there's no, there's no governing authority here. Oh, people don't really care

• 24:01Speaker 02

  where you went to school or how, you know, like who your parents are. No, people don't ask those things. There's other things that are very important in Silicon Valley that establish status. But the things that establish status on the East Coast do not matter. And that was really surprising to me. And I think that that is part of the overall playbook that that maybe is misunderstood when you've kind of lived in a culture that is very hierarchical. And I think it takes people a while to understand that, which is why, you know, when I, you know, people make, one of the companies that I work very close with, Anduril Industries, you know, the founder is Palmer Lucky and he wears Hawaiian shirts to meetings with generals. And what's great is the DOG loves it. You know, I've never met anyone who hates that, but it's like, there's sort of this like, wow, like these, you know,

• 24:46Speaker 02

  there's a dress code difference. There's a difference in how people, you know, present themselves for very important meetings. And so my view is that people need to kind of learn about how various cultures work in order to work with them, be effective. You know, if you're, if you're running a sales team at a company, you know, the culture of your customer and you, and you fit that culture. And I think both Silicon Valley, if they're selling to government, has to figure that out. But government, you know, really needs to start figuring out how Silicon Valley works and really understand the culture that it's interacting with.

• 25:17Anthony Pompliano?

  Yeah, it's a great point about mindset versus national technology itself. Let's talk a little bit about Andro because I think that's probably one of the best examples of a company that very obviously is a private organization that is doing something that historically has been considered kind of a public work, right, and sort of defense technology. Palmer obviously was the founder of what eventually became Oculus and had a huge exit to Facebook and now has gone into the defense sector. And so maybe just walk through like, why is now the time for a private company to go and do this? Is it just a technology advantage? Is it a speed advantage? Is it actually anti-establishment and so therefore they can do things the government can't do? Like, why is it now kind of the advantageous time to go pursue this?

• 26:03Speaker 02

  Yeah, I mean, now is definitely the time, but I can tell you, I wish we did it sooner. So when I was really, you know, researching this space, spending a lot of time with defense companies, what was shocking to me is that we have five prime defense contractors that get over 40% of the contracts awarded by government, not just by DOD. Five companies that are completely funded by government and they were all, they were all founded either, you know, 100 years ago and became like the dominant contractors after World War II. So these are entrenched legacy companies that were built for a completely different time. They were built to build battleships. Like, they are hardware companies that were incredibly necessary, that are part of American

• 26:45Speaker 02

  history and very important, but they're also massive, massive companies that still to this day get more contracts. And, and what's interesting is that I was looking back, you know, at the fall of the Berlin Wall after communism, there was a view that these companies were not going to be as important and that new companies would be able to emerge. And there was a huge fear that spending cuts, particularly after the end of the Cold War, were going, was going to lead to these companies not succeeding. And so what they did, which was the smart business thing to do, is they acquired companies and particularly acquired, you know, companies that have contracts already. So not innovative companies, like what happens in Silicon Valley, they, they acquired companies for contracts. And something like 50,000 companies that were in the space over 15 years left the defense industry. And by left meaning consolidated with these massive, massive institutions which became

• 27:30Speaker 02

  holding companies. And when that is your mechanism of growth, where you're just consolidating contracts, you don't need to do innovation. And so we've had thirty years where these prime contractors have not been innovating, and that's the same thirty years where the internet emerged. Like, like, what an extraordinary thing to have happen. We're now we're at near peer status with Russia and China, our two adversaries, where thirty years ago, Russia was, you know, Russia was coming out of the Soviet Union, and China was not nearly as much of the powerhouse that it is today. And so when you look at the fact that we had this technological advantage, you know, we had this incredible capital advantage in many ways, too, and in sort of world leader advantage that, that,

• 28:12Speaker 02

  you know, before the fall of communism, we didn't have. When you think about kind of what happened in the defense industry at that time, it's actually a sad story. And so, you know, come to 2017, where you have extraordinary founders, a second time founder, and then a team that is spinning out of Palantir, which really understands the government playbook, looking at these macro trends and saying, how do we, how do we squander this technological opportunity? And how do we make sure that AI and software become the focus of our Defense Department? And what's great is that this was something that was recognized as a huge security risk in the Department of Defense. So, former Secretary of State Ash Carter, Carter, under the Obama administration, he was really

• 28:55Speaker 02

  focused on building up the defense base, really understood that Silicon Valley needed to work with the DOD. And so he put, you know, mechanisms in place to allow for companies to work closer together. But it really wasn't until companies like Anduril came about and started kind of explaining how Silicon Valley works to the DOD, that we're now seeing this, what I would call like a defense renaissance, where there's a number of companies that are able to work with the Department of Defense, get large production contracts, and provide cutting-edge software to the Department of Defense in a way that just has never happened. So, I'm really excited about this sector. I think that things have dramatically shifted. But it took a long time to get there.

• 29:36Speaker 02

  And it's actually, you know, in some ways, it's a huge security risk if we don't continue to support companies that are supporting the Department of Defense.

• 29:45Anthony Pompliano?

  You mentioned Ash Carter. When I worked at Facebook, I think it was in 2014. He came to Facebook and myself and a number of other veterans met with him while he was there. And one of the pieces of feedback basically was, look, you know, it's great that you're here. It's great that you have recognized Facebook as kind of a leader in the technology sector. It's great that you want to meet with the veterans here, but there's only one engineer in the room, right? Because just naturally, a lot of the veterans didn't go into kind of software engineering. And so it was, hey, those are the people you want to go talk to, right? If you really want to solve kind of complex problems, they're some of the smartest people that work at this business, but also that they can come up with solutions that non-technical people just won't be able to do. And so it was really interesting to kind of see his open-mindedness to just finding, hey, how do we solve our problems?

• 30:27Anthony Pompliano?

  Let's go find the smartest people within our country and, you know, use them to our advantage. One of the things that came out of a recent conversation with Anduril on Clubhouse was this idea of we've gone from a game of shooting to a game of information, right? And you kind of hinted at it a little bit earlier. Talk a little bit just about how the private sector can empower the government? Or should we actually be saying to the private sector, hey, we are going to empower you to actually go out and do the work itself? So is it more so the private sector kind of provides tools and services to the government, but the government is ultimately the one that's overseeing this? And kind of the defense efforts are, you know, kind of going through that US government filter?

• 31:11Anthony Pompliano?

  Or is this more a thing where similar to if you look at SpaceX, we say, no, we are going to mandate you, the private business, to go and basically carry out what was previously a public sector type service and do it as a private company? We'll give you funding, we'll kind of work with you, but ultimately you're going to go and carry it out. How do you see that? And are there risks in just handing it over to the private company without having the public sector kind of oversight?

• 31:36Speaker 02

  Yeah, so I think there will always be public sector oversight and that's something that I think is misunderstood. Like when people talk about autonomous systems, you know, humans are still making decisions and there's a reason for that and they will always make decisions. Like there needs to be an accountability mechanism and I think like that's something that's widely understood within the Department of Defense and within the companies supporting them. But this issue that you brought up of, you know, the bombs got bigger and now they're smaller, I think is really, really important for people to understand. And it's probably one of the greatest stories in human history that we just don't talk about. We don't talk about this narrative. Up until the atomic bomb, up until 1945, the bombs and the weapons that were produced by humans got bigger and

• 32:18Speaker 02

  caused more destruction. Like it was, you know, there was just this, we had spears and then we had guns and then we had bombs and it was just, it was causing more destruction. It was one person making a decision that affected many. And that changed with information technology. That changed because precision and the idea of we actually want to preserve people's lives. We want to reduce civilian casualty and there are ways to do it with information and with technology. That defense can actually mean defense. It can mean deterrence through strength. That actually is a relatively new phenomena. And what's amazing about artificial intelligence, what's amazing about what we've been able to do with information is that it should be the future of warfare. The future of warfare should not be civilian casualty.

• 33:03Speaker 02

  And so when you come at defense technology through that mission, this is a very important mission that we need to support because of that, that we need to be able to not only protect troops on the ground, but maybe we don't need to have as many troops on the ground because we can use information in order to solve the problems that defense has always been trying to solve. That to me is a very, very noble mission and it's something that is very much ingrained in every defense company that I work with or know in Silicon Valley as to what they are doing. And so when we talk about it in that lens, you know, that is also what the Department of Defense and people who, you know, anyone in the military is thinking about. And so of course, there's going to always be a partnership. These private companies, but I would say these private companies know this and they

• 33:46Speaker 02

  they want to support government, but there is this understanding across, across the military, across people who are engineers in these companies, that this is the mission that they are working on. And I think that that is, you know, there's, there's a narrative in the media that people don't want to work on defense, people don't want to be associated with it. And when I think people really sit down and see sort of this arc of human history, that actually, things are getting less violent, things are getting safer for people, we're having less wars, even though the media sometimes makes it seem like we're having more wars. Like this is an extraordinary feat of human progress and people really want to be working on those problems to ensure that people across the world feel safer and can live more productive human lives. So I think it's a very important mission.

• 34:29Speaker 02

  I think it's something where people who understand how technology is built and the arc of technology are really motivated by it and as, as are the people who are in the military today.

• 34:40Anthony Pompliano?

  Yeah, it is almost one of the most patriotic things that somebody could go do, which you know, somehow has become taboo as well, but I think we'll have a resurgence there. I mentioned Clubhouse, where you had this conversation with Anduril. I know you've got a show, I think you just call it Big Ideas, which is a very creative way.

• 34:58Speaker 02

  Sort of a lofty title.

• 35:01Anthony Pompliano?

  Hey, come, come pay attention and listen to the people who talk about big ideas. I love it. What is kind of drop in audio? How are you looking that from either investor seed or as a user? Kind of why use that platform other, over other platforms or there's specific advantages to it? Just talk a little bit about Clubhouse and kind of the audio functionality that, that you seem to have found some success with.

• 35:23Speaker 02

  Yeah, you know, it's really funny. I mean, I was just reading that Clubhouse, I think this week is turning a year old. I'm going to be very, I'm going to give a very personal story of why I love Clubhouse here, but hopefully your listeners will find it amusing. So my husband and I just had our first child three months ago and I found out that I was expecting like the same day that I joined Clubhouse, which I think, and of course, the pandemic also happened, so I'm like stuck. In my house, you know, like my, my husband's getting sick of listening to me talk, who am I going to talk to? Um, and, and so I just like, kind of just started hanging out on Clubhouse. And, you know, when, like, I, I wasn't drinking, obviously, because, you know, like, there's like, not many ways you can

• 36:04Speaker 02

  spend time during a pandemic if you're, you know, not able to socialize, not able to have fun or anything. So I've just on Clubhouse all the time. Uh, and I also like, wasn't able to sleep very well. So I was on Clubhouse like late at night, talking to people. Um, and what's amazing about Clubhouse that I think people, at least who haven't gone through this experience of being pregnant in a pandemic and having a child is it's hands free. Like, this is the thing that I, I've shared with Paul and others. Like, it is amazing to me that I could be like holding my baby, which with a newborn, if anyone's had one, it's like, you're constantly with your baby and you can be on Clubhouse. Like, i- it's incredible. Whereas you can't be texting, you can't be, you know, like on Zoom calls with people, like face to face and different things. But I just, so for me,

• 36:44Speaker 02

  uh, this is, it has nothing to do with the actual, like, beauty of the product. I could say a lot more about why I love this product from like an actual, like, investor perspective. But from my personal experience of Clubhouse, it's just been the most extraordinary product market fit. Because, uh, you know, there was this great piece in The Atlantic by a friend of mine named Sophie Gilbert, who wrote about uh, the isolation of being in a pandemic, but also the isolation of being a new mother in pandemic, where you can feel like you're not part of society, where you're just in your home. And what has been amazing for me about Clubhouse is that, like, all my friends are on it. Uh, the conversations that are happening, I've made new friends, it's been glorious, and I don't feel isolated. And so the gift that I think Paul and Rohan have given to society during a pandemic is that

• 37:25Speaker 02

  people who otherwise would have had extreme isolation are now able to, to make friends, they're able to have real conversations. And there is some magic about seeing people live, listening, uh, where it is past the time for me in a way that I think the pandemic would have been much more painful. Um, and I've heard that from other users, like, like, I don't want, like, I don't want this to go away. Like, I, I love the, the idea of, you know, finishing dinner and getting on Clubhouse and having an amazing conversation with people around the world. Um, so I think it, I, I think it's revolutionary. I've enjoyed it. It's been great for my own personal life. Uh, but, but I'm, I'm hoping, you know, as we come out of the pandemic, that, that people will still um, be using it constantly. And I think that the beauty of the product, of course, that's going to happen.

• 38:09Anthony Pompliano?

  Yeah, and it feels almost like in some weird way, when the pandemic hit, everyone rushed to Zoom and other kind of audio video. They tried to replicate all of the benefits or what they thought were benefits of in person. And now what I think people have kind of gotten zoomed out, right? Now they're like, wait a minute, actually, this is way better if I don't have to be on video. If I can just still have the same conversation to some degree, whether it's hands free, I could be outside walking. You know, there's all kinds of different things I can do. There is some benefit to understand that these virtual experiences, they don't have to be direct replications of the in-person experience. And actually, in some cases, they may be better in the virtual world when they're not directly replicating the real world. And it sounds like that's your experience with the with the product.

• 38:49Speaker 02

  Absolutely. And what's interesting is one of my co-hosts for Big Ideas, Antonio Garcia Martinez, has this amazing thesis that he's written about, about how we're moving to an oral tradition as a society, that actually a lot of our products, even Twitter, that they're that they're, even though they seem like text-based products, they're actually much more of an oral tradition and how people remember things and and kind of how they speak and how how memory actually plays tricks on us in terms of how information flows. And what's really interesting about that is that, you know, Clubhouse is an oral platform. It is this ephemeral oral platform where stories are being passed down and conversations are happening. It's very different than how things worked, you know, when we were writing long emails and that sort of thing and kind of living that sort of society. So I I do think that it's perfect for the times we are living in.

• 39:34Speaker 02

  I actually think people want more of an ephemeral platform as well. I love that it's not recorded, the element of surprise, but also the idea that you can say things that otherwise you'd be. Now, podcasts are great, but as I'm sure you know better than anyone else, people are more guarded on podcasts than they are when they think that they are not being recorded. And so I think that that's part of the magic as well, and I I hope that magic stays.

• 39:55Anthony Pompliano?

  It almost feels like on a podcast, in many cases, people feel like they're presenting, right? There's some preparation, they think about what they want to say, they know it's recorded, they know that it will be viewed, it'll kind of exist forever. And therefore, there's less exploration and there's much more just like, here's what I think, here's what I feel about a certain topic or issue. With Clubhouse and other types of audio platforms that aren't recorded. The exploration, I think that's part of the magic that I've noticed is just people get on and they're like, well, you know, I don't know what I think about that. Well, how do you think about it? And there's more of this kind of learning that happens. And people are less afraid to, maybe not sound stupid, but to go through that exploration process, you know, somewhat in public or semi-public with whoever's in the room.

• 40:38Anthony Pompliano?

  And so that to me just feels like naturally, that's the magic that you, I and others that we know, enjoying private conversation and it's now just kind of with a bigger group of people in a virtual experience, right?

• 40:49Speaker 02

  Yeah, yeah, absolutely. And I do think there's also this element of delight that doesn't, I mean, the other platforms are so robust and seasoned in many ways that they know exactly what you want to listen to based on your tastes and based on your past history. And that actually has made it harder to discover new things. And so what I love about Clubhouse is the things that I have seen are things I never would search for, never think to search for, sometimes don't even know exist. But a curious person can can learn a lot from listening to people whom they would never interact with. And so that's also been one of the things that I've loved is, you know, listening to the shoot your shot ladies talk about things that, you know, my old self like would never, never know about.

• 41:31Speaker 02

  It's been great. Like, you know, it's hard, it's hard to peel your ears away.

• 41:36Anthony Pompliano?

  I love it. You previously were a reporter at the Washington Post. What's your take? It seems like the public narrative is Silicon Valley versus the world, right? Or Silicon Valley versus the press. And it feels like there's platforms like Clubhouse, there's platforms like Substack, Twitter even, where people now can go direct, they can tell their story. They don't necessarily need to go through that same power structure historically, where they would need the press to be the amplification of the message. At the same time, given that you worked at the Washington Post, I'm assuming, but correct me if I'm wrong, that you believe in journalism and the importance of journalism and kind of holding those in power and influence accountable. So just how do you view this? Is there a

• 42:19Anthony Pompliano?

  framework you use? You know, what is kind of true? What is just frankly, a public narrative that's overblown between like media, Silicon Valley and going direct versus the traditional power structure?

• 42:31Speaker 02

  So the media versus tech story, I actually think is part of a much broader story that the press is missing. And I've told a lot of my reporter friends this, and part of it is because this is what's happening to them. They see an attack on them, and so they're writing it. But I actually think it's part of this broader devolution of institutions that we've been talking about. And, you know, the elite press is one of those major institutions that is devolving. And it is part of this lack of institutional trust. We, you know, if you look at Pew Research Forum and a number of, you know, incredible studies that have come out in the last few years, it's very clear that Americans and broadly people across the world just no longer trust elite institutions. And this is true, this is the same motivation

• 43:14Speaker 02

  that led to Brexit. It's the same motivation that led to Donald Trump being elected to the White House. Like, all of these factors kind of come together in this idea that a lot of people do not trust the elite institutions that were built in the 20th century or just before. And so, yes, The New York Times and The Washington Post actually fit that model. You know, elite media has the same problems, the same sort of trends we're talking about in terms of bifurcation of society, where some people have completely different experiences coming out of elite universities than does the rest of the country. And so, there is sort of this, you know, hesitation to trust these institutions now. I also think there's a broader issue of transparency. There was this, you know, view that the internet and

• 43:57Speaker 02

  transparency was going to lead to kind of greater communication from these elite institutions to the people. And what has happened is that there's greater skepticism, and that's sort of a natural consequence of transparency. And so, when you kind of add up all of these factors, I think there's just a need for new institutions. And that's sort of the underlying thing that I think is happening in media. We've had one iteration of that, and from 2010 to 2014, when I was at The Washington Post, there were a lot of people spinning off companies using cheap venture capital in order to build companies. And we've now seen the results of that kind of wave of company building by seasoned veterans in media, and most of them have failed. And I think the new kind of architecture that we are seeing is the Substack architecture.

• 44:40Speaker 02

  Which is you are either going to work for an elite institution and be part of the establishment company. The middle has has completely bottomed out. There's, you know, even the Miami Herald, which was an amazing paper when I was growing up, is no longer, you know, a paper that that people look to as sort of a voice of reason or sort of, you know, something that they're subscribing to. So even like the great papers that existed 30 years ago no longer exist in the same iterations. And and what I think is happening is that anyone who is talented, that has a following on Twitter that can build, build for themselves, is going to Substack and they're building their own platform. And you're a perfect example of this, where you've built an incredible media platform through podcasts and through newsletters. And I think that more

• 45:24Speaker 02

  and more people are going to see that's possible and they're going to do it.

• 45:27Anthony Pompliano?

  One of the things that I've seen it for sure and kind of this idea of going direct is what was old becomes new again, in some weird way, which now all of a sudden, all of these PR people are hitting me up and they're like, hey, we want to pitch you this story, right? With the idea that I'm probably going to be more friendly to a startup than let's say, the traditional press. And so it really makes you question, like, for somebody in my seat who's built the big audience and has the ability to go direct, like, do you want to just replicate the whole media, right? And the kind of the media approach of like, okay, I'm going to report the latest fundraising round, or I'm going to report, you know, on whatever the partnership is. And where I came out on it was just like, no, that's not what I want, right? And what is more important

• 46:10Anthony Pompliano?

  to me is the exploration of the ideas and kind of my personal opinion and kind of what I'm doing. And what I found is that it actually attracts a very, very different type of audience, right? The people who would listen to this podcast, or who'd read the content that I put out, is really different than the people who are attracted to just the latest fundraising kind of announcements. And so it ultimately brings up this idea of when you intersect exploration of ideas direct to an audience and kind of this idea of a free speech, right? Where there's ideas that we want to talk about that maybe might be taboo to the mainstream press, or actually maybe are overblown, or questions that we want to ask. Not because we necessarily are conspiracy theorists or extremists or kind of any of the

• 46:55Anthony Pompliano?

  labels that you'd put on it, but simply because we're trying to understand and, you know, are fearful that if you end up labeling certain questions as out of bounds, things you cannot ask, things you cannot talk about, it ends up getting closer and closer to a kind of monolithic, almost religious thought processes, right? And you don't get the progress. And so how do you see that playing out, right? And maybe Substack's a good place to kind of have the conversation around where you've got a lot of what I'll call independent thinkers, people who write, you know, their own ideas, they've moved to Substack from these large publications. And you already see the kind of groundswell of backlash of, you know, Substack, you cannot have these people use your platform, they're sharing kind of scary ideas or dangerous ideas.

• 47:39Anthony Pompliano?

  But that almost feels like that's antithetical to free speech. And so just how do you view this? And where are we going with it?

• 47:47Speaker 02

  You know, I mean, to, I mean, the short answer to your question is, I would argue that it is antithetical to free speech. But the, the interesting thing that I think a lot of people have forgotten and haven't lived through and just, or maybe don't know, is that, you know, the culture of media that we used to have was far more akin to Substack than it is to the very unique newspaper culture that we've had since the 1950s. And that was a function of business model. That was a function of every major, you know, the consolidation of newspapers, advertisers wanted neutral platforms. So like, you know, large companies like Macy's and GM did not want to advertise in pamphlets anymore. They wanted to advertise in papers that had a

• 48:29Speaker 02

  neutral voice. And so the product of media actually fit advertising. And that's why it evolved so that it's not just complete opinion. It's, it was, we need to have this sort of neutral voice. And anyone who's worked in reporting knows that the way that you report a story is you have a lead and then you have a nut graph and you're supposed to put the most important information in the funnel on the first five inches. And we measure how long the story is in inches because it was, you know, produced on a paper, not the internet. It's like, that is such a backwards way of thinking about things since the emergence of the internet. And so So that, that to me is what I think people are missing is that a lot of our media culture was there because we were delivering a paper every day.

• 49:09Speaker 02

  Uh, and we were delivering it and it was completely funded, not just by subscribers, but by advertisers. And so when the business model shifted, of course, advertising, advertising is still important. But when the business model shifted as it has, and particularly something like Substack, where people are paying for content, the idea that, you know, that it has to be completely neutral and, and the way that you're reporting, I, I actually think people don't necessarily want neutral. Uh, people have sort of given up on the idea that humans can be neutral in their reporting or in the way that they cover narratives. And, and, you know, for a long time, I'd say like most of history, we were in a pamphlet culture where people understood that it was like, no one's ever going to be neutral. Everyone's always going to kind of have their underlying, um, you know, beliefs in what they're writing.

• 49:53Speaker 02

  And so I don't think it's necessarily a bad thing that the culture is moving in a direction where people are open about what they believe. Um, I think for a while we were sort of, you know, LARPing that we're all unbiased. Um, and trying really hard, like, you know, when I was a reporter, I, I very much tried to, you know, stay to the facts, uh, like write straight stories. The sad part about that was I couldn't make any money doing that. And, and even within, you know, like I was never going to, to raise through the ranks, being a straight reporter. And I think that's also one of the fundamental problems in media is since the emergence of Twitter, if you really want to make a voice for yourself, if you really want to convince your employer that they need to pay you more or that they need to give you a better beat, you have to show that you have a following.

• 50:36Speaker 02

  And who's going to have a following just tweeting headlines all day without any sort of opinion on Twitter? So I think the, the media culture has completely shifted. It's not necessarily a bad thing, but I think we have to own up to the fact that, you know, great reporters are going to have biases and preferences. And if they're writing in a voice that people like, they should be able to monetize that voice in an independent way, uh, and if they want to, if they want to stay at the big papers, great. Uh, but the big papers are also starting to go that direction as well, just because of Twitter and sort of the function of what technology forces them to do.

• 51:07Anthony Pompliano?

  It is so funny to hear you say this. The extreme example is, you know, I always say, how can you be unbiased if you've never written a negative story about something, or you've never written a positive story about something, right? If all of your coverage is slanted in one direction, it's impossible to be an unbiased person. By the way, none of us are unbiased, right? It is okay to have bias. Just say what your bias is and then just state your opinion and people will kind of follow suit if they so desire and, you know, really put the impetus on people not to just live in an echo chamber, but go seek out those dissenting opinions, which obviously is difficult, but I think it definitely changes it. And the other thing too, is it seems to have become in some weird way, especially in more vertical specific, like financial media, et cetera,

• 51:51Anthony Pompliano?

  for any sort of criticism of those institutions, right? It almost feels like if I'm under attack, I don't want to also put under attack those like me. And so I've even gone as far as to say, you know, around like, let's say, the stimulus packages and the Federal Reserve. If you look at a lot of the coverage across mainstream media, it's almost as if the financial media has become a mouthpiece for the state. They just regurgitate those same talking points and some of it may be business product. You're trying to kind of conform to that and make sure that they don't upset advertisers. But there's just not a lot of independent thinking going on. And that doesn't mean that independent thinking against talking points makes the independent thinkers correct and the talking points wrong. It just means that there's no kind of criticism. There's no kind of critical thinking going on, which obviously is dangerous for our society as a whole.

• 52:35Anthony Pompliano?

  Continuing on this in terms of your experience as a Washington Post reporter, you have talked a lot about this idea that great companies follow a lot of the same ingredients of a great story. Just expand on that. What do you mean when you say great companies are similar to great stories?

• 52:50Speaker 02

  Yeah, so I, you know, I'm an early stage investor. So I often meet founders at the idea stage. Sometimes they have nothing built. And, you know, I think a lot of people on the outside, when they look at venture capital, they think that you have to be a financial genius, that you're looking at spreadsheets all day, that you're, you know, really, you know, thinking through that that element of business building, which is very important, especially at the later stages. But early stage investing is this Very unique combination of what I say is reason and revelation. Like you're looking for secrets, you're looking for things that somehow these amazing founders know that you don't. And you're trying to also make a reasonable argument as to why they are going to build a game changing company.

• 53:34Speaker 02

  And so what's interesting about that is that that's all narrative. That's all storytelling. A founder will come in, I used to say founder came into the office, a founder will meet on Zoom. You know, and, and we'll tell you a story in 30 minutes. And the, the indicator of whether you're going to invest is, is this story exceptional? Is this person the right protagonist to, to, to build this exceptional thing? Are they going to be able, I mean, one of the things I often say is I look for people who have posses. People who have just a group of people who follow them wherever they go. Because whatever they are doing in their daily life is so extraordinary, whatever they are saying is so. You know, they're so good at evangelizing a mission that people will follow them.

• 54:19Speaker 02

  And I think that is sort of the, the key to early stage company building. You have to find people who have extraordinary views of where the future is going. They are committed to those views, so they're almost maniacal in many ways about how committed they are to those views where. You, you look at them and you say like, okay, you, you've clearly had to defend. This contrarian thesis in front of others before, and that's why you're so committed to it. So there's a lot of characteristics that I look for, and I'd say that's very similar to what you look for in a great story when you're reporting. You're looking for something people haven't heard before. You're looking for an interesting protagonist who can carry the story. I know, you know, some investors say that it's a lot like movie making, you know, I think it's like reporting a news story or a feature story.

• 55:03Speaker 02

  You're looking for that person who's just extraordinary, has an interesting spark. And they've told you something that you find to be, you know, something you've never heard before. And then the, the key question on the reason element is, is it plausible? Like, is this actually a plausible thing? You know, sometimes people will say things, and I'm not, not founders necessarily, but it's like, you know. Like, it actually has to be something that can be achievable, but that's when you then decide. Like, is this someone who I, you know, want to support on a 10, 20 year journey? Which is, is very similar. That, that's the difference is that you're not, as a reporter, you're not with someone for 10, 20 years. But I, but I love, that's the part I love the most is that you're actually making a huge commitment of your, of your capital and your time to work with a person as they achieve

• 55:48Speaker 02

  an extraordinary mission.

• 55:49Anthony Pompliano?

  I, I think you've described it previously, the three things that I put in my notes were, what make a great company and a great story, universal appeal, imperfect protagonist, and then an important mission that must be accomplished, right, or achieved. And to me, it's, it's a very interesting thing when you are really embodying in those three points, many of what most venture capitalists who have had any level of success would identify in terms of founder market fit, right? The ability to storytell, not because it helps you raise capital, but it helps you sign partnership deals and recruit employees and kind of do all the things that are necessary for an actual company building. But you also highlighted a very interesting idea. You said in 30 minutes, someone can tell the story and you can start to really understand, you know, yes or no, right, to some degree.

• 56:34Anthony Pompliano?

  And there's always diligence and all of that, but it reminds me a lot of Warren Buffett, right? Who, who would say, hey, I know whether I'm going to do a multi-billion dollar deal in the first couple of minutes of a phone call. Right? And, and so it, it really does feel like the details matter, but what matters much more is who the person is and kind of the story that they're telling. And it sounds like a lot of the, the underwriting that you're doing in a pitch is, is frankly on that.

• 56:58Speaker 02

  Yeah, no, and, and I actually think early stage investing is much more of an art than a science. I, I tell people, I listen to a lot more of how I'm feeling than what I'm hearing. And, you know, if you listen to that, like, I actually think the feeling is probably a better, you know, some people call it gut check. The feeling of, of what you feel like in a meeting with someone is exactly what's going to happen with a candidate. It's exactly what's going to happen with a customer and a sales pitch. It's what's going to happen when a person is talking to the media. It's what's going to happen when, when, when the founder is interacting with anyone. That feeling is something that you have to look for. And it, it, you know, no one, it, it, it's, it's not like traditional. Investing in that regard because there aren't numbers to go off of.

• 57:41Speaker 02

  There's only a story to go off of when you're investing at the seed stage or and sometimes at the Series A stage too, the way markets are like there, there aren't that many things on the rational side of investing to look at. And so you do have all of these factors of, you know, is, does, does what the founder, is what the founder saying, you know, it could be an extraordinary business? And, and I hate even saying like that you need to look at the business element of this because when you look at someone like Elon Musk, what he was saying in, in the early 2000s about building rockets, like it was crazy. It was, it was, it was testing the limits of science. And so even if you said, is that a good business? It was fundamentally not a good business because it had government as a customer and it didn't even make sense from like a scientific perspective

• 58:26Speaker 02

  to most of the leading experts. It was just a person who was so convinced that they could push the, the boundaries and the, and the limitations of humanity. And so that's the other thing that I, that I really like to stress is that there are some people who are so extraordinary, extraordinary that even if they are saying things that don't rationally compute, sometimes, like sometimes they work and sometimes they build the most extraordinary companies. And so, um, you know, that's why I think I take some meetings that are seen to be a little fringe or I invest in things that oftentimes are, are not sort of traditional, um, you know, areas of venture capital because I, I do believe in those types of people and it really is a question of believing in those people.

• 59:05Anthony Pompliano?

  Yeah. And so as you kind of think through this, uh, and you just highlighted it right there, which is a lot of times what you'll end up doing is you end up investing in things that, uh, don't seem to be, uh, a good business. Uh, they may even be somewhat controversial when you first invest in them. How do you separate? Like, what is the process you personally go through or things that you do, uh, being able to, uh, understand, hey, I need to think independently here. I need to be open minded about things that may seem crazy, uh, controversial or, or kind of outside of the norm, uh, but also making sure that you don't end up, you know, investing in Q and on. And, uh, next thing you know, you're like in the extremist views of, of the deep, dark, uh, depths of the internet. Like, like how, how do you basically, you know, not follow the herd,

• 59:49Anthony Pompliano?

  but at the same time, always be able to gut check, uh, on that rational aspect of like, is there something here, uh, from an investment standpoint?

• 59:56Speaker 02

  Yeah, so I'm a huge believer in the Socratic method. You know, I've been a student of political philosophy for my entire life. And I believe that like, like just rabid questioning of people actually leads to truth. And so, you know, if someone can come in and have a beautiful pitch and they could say something that sounds great. But if they can't go three layers deep, if they can't interact with the questions, if they can't be pushed on their theses and their beliefs in a way that is believable to me, then that that doesn't meet my bar. I think that the people who have thought deeply about something controversial, they are not just saying something controversial, they actually have metrics and history to back them up.

• 1:00:38Speaker 02

  And what's amazing to me about, I think, the best founders is a lot of them are also extraordinary historians. They know everything about the industry and why it doesn't work the way they want it to. They know everything about the customers who they're going to go after, even if they haven't had interactions with those customers yet. I mean, it's it's an encyclopedic knowledge about how they are building the story that can't be faked. And so if someone is saying something, you know, and I use defense as a good example of this. If someone is saying that they're going to change the Department of Defense, but they don't know anything about how procurement works. And you start asking them questions about it and they don't know, they're probably not going to be as good of a founder in that sector

• 1:01:19Speaker 02

  as someone who says, here's what is wrong, here's why it's wrong, and here's how I'm going to change it in the step by step process. And so when you're, you know, meeting with early stage founders, those are the things that I look for. And I think it's important to to explain, like, you don't have to have all the answers. And I think the best founders know that they don't have all the answers. They're going to have to pressure test a lot of their theses in the wild. But but they understand kind of the consequences of their choices and they understand why they believe the things that they do and can express them very well. And if a founder can do that, I mean, that is that is a huge indicator, in my opinion, of whether someone is going to be able to recruit well, whether they're going to be able to build a company at the earliest of stages.

• 1:02:02Speaker 02

  And more importantly, whether they're going to be able to kind of weather the, you know, ups and downs of building a company.

• 1:02:10Anthony Pompliano?

  What you're really talking about is you're investing in people, right? And, and I think that there's a lot of folks who say they invest in people. There's a lot of people who will say they invest in products and then some that will invest in markets. And it might take from kind of what I know about you in our conversation today is it's kind of people and markets are the two things that really you're focused on. How do you think about the individual in terms of are there specific things that you're looking for outside of just their, their depth of an understanding in a specific industry? Are there, you know, if you ask Chris Saka, he would say, hey, I'm looking for people who have previously worked blue collar jobs. And so there's some element of like, you know, being down to earth or to understanding hard work.

• 1:02:53Anthony Pompliano?

  There's other people who have, you know, whatever their kind of thing is. Is there something that you really latch on to look for, or maybe specific questions that you use when evaluating an opportunity? That kind of get at specific things that people may not think about when, when investing?

• 1:03:08Speaker 02

  Yeah, you know, I, I used to say that I look for, and I've sort of changed my views on this, but I used to say that I, I look for people who have narratives that don't necessarily make sense. And I think the, the thing where I've realized that I'm wrong there is there's a lot of people who have kind of normal, normal narratives. Like they, they had, they grew up in a normal home and they went to a normal school and they worked a normal job and they built an amazing company. And it's like, how do they do that? And so I, I've, I've sort of moved my, okay, I'm looking only at the story and only at the facts to what are the traits that can come up even in a 30 minute conversation? And the thing that I'm really looking for are, you know, people who are very confident going against the grain, people who just have backbones of steel.

• 1:03:51Speaker 02

  And part of the reason why I think this is so important, and this is, I think, a new phenomena that maybe didn't exist 10 years ago. But if you are building a company that is going to be a massive success, you are going to have a massive target on your back from the very beginning of it looking successful. The minute that it seems as though your company is doing well, people are going to be coming out of the woodwork to try to destroy you. And so the character required to be a founder of a company to stay true to you. Your beliefs is extraordinary and you have to look for signs earlier in life of when someone has stood up to authority, when someone has, you know, done, taken the hard path. Like, what is the hard thing that you've done?

• 1:04:33Speaker 02

  And even if it's, you know, I dropped out of school to take care of my mother or I, you know, I moved to a new country to, and didn't know any of the languages. You know, like, like, there has to be something where people looked at you in your past and said, what are you doing with your life? Like, what are you throwing away? Why are you taking this, this risk? Because the pressure is so extraordinary for any early-stage founder and any founder right now. So those are the things I'm looking for. But I think I used to say, you know, I'm looking for someone who has sort of that, oh, I dropped out of college or I did something that is so clearly something that was not normal. And I actually say now, dropping out of college is seen as like, pretty normal if you want to be a founder. So actually, maybe the opposite of like, staying in college when you shouldn't.

• 1:05:17Speaker 02

  But, but I'm looking for, you know, when did you go against your family? When did you go against your culture? When did you go against society? And when, when were the repercussions, but you stayed strong because of it? Because throughout a 10, 20-year journey of building a company, there's going to be just a lot of people trying to pull you down. And you just have to be a strong person who doesn't listen to them and doesn't care.

• 1:05:38Anthony Pompliano?

  This really gets at one of the things that I've noticed over the last, maybe two to four years, is there's been such great democratization of information for early-stage startups, both from a fundraising standpoint, a company-building standpoint. And so every once in a while, I'll come across somebody and they will literally say every single thing that is the right thing, but it just feels like they read the YC blog posts, right? And they're doing what somebody told them to do, rather than it be the authentic thing that they're supposed to do. And so, you know, it's one of these things where it's nearly impossible in some situations to bifurcate those two things. But it does feel like that is one of the risks, is that there were certain things

• 1:06:19Anthony Pompliano?

  that were signaled for investors previously, that, hey, this person has a higher probability of being successful. But when somebody then goes and writes a blog post about it and, you know, 100,000 people read it and they all start repeating the same thing or doing the same thing, you've really got to kind of sift through and get it, who is this person? Rather than what are they saying or kind of what the actions are that they're taking?

• 1:06:37Speaker 02

  Absolutely.

• 1:06:39Anthony Pompliano?

  Yeah. Before I let you go, I always ask everyone the same three questions. And then you'll get to ask me one to finish up. The first is, what is the most important book that you've ever read?

• 1:06:49Speaker 02

  So I love books, but I'd say that the book that's had the greatest impact on me is Plato's Republic. And it's funny, so little known story, my father was a Jesuit priest for 10 years before leaving the order and becoming a doctor, but he always said that he missed the Jesuits greatly. And of course, the Jesuits when he was born were very into Greek philosophy. And he introduced me to Plato's Republic when I was about 13 years old. Of course, I did not understand it at all and studied it throughout life, studied it throughout college and continuously go back to it as a book that I think explains the world better than any other book that exists.

• 1:07:32Speaker 02

  But I had it in my life at a very, very early stage and political philosophy, and particularly the Socratic method was a huge part of my upbringing and just how I approached the world. So if you haven't read Plato's Republic, even though it is a slog, I recommend it because I think there's more truth in that book than probably any truth, any other book.

• 1:07:53Anthony Pompliano?

  That is a fantastic suggestion. No one's suggested that one yet. Second question comes from our friends over at Eight Sleep. I used to sleep like five or six hours and frankly, thought that was normal. And then I got this eight sleep and now I sleep like eight or nine, sleep on this ice cube of other thermo-regulated bed and feel like my life has changed drastically. I know you have a newborn, but how is your sleep scheduled these days? And how has that changed over time?

• 1:08:23Speaker 02

  I was like salivating when I heard five or six hours of sleep. My gosh, that sounds amazing. Yeah, I'd love to have that happen. You know, this is like such a funny time. I love the eight sleep people. Sleep is so important. I've always been obsessed with sleep. I've always been a firm believer in getting, you know, I can sleep anywhere. Like, you know, I've always been a firm believer that sleep is important. I'm glad to see the resurgence of people focusing on it from a science perspective. In terms of like my sleep patterns right now, I'm just hoping one day like that I'm able to sleep through the night again. I'm sure new parents all feel this way where you're You're just like, it's never going to go back to normal. I've heard it does. But I'm also, you know, the other thing I'm excited about is, you know,

• 1:09:05Speaker 02

  establishing a sleep habit is probably the most important thing you could do for yourself. And so to look on the bright side of being up every few hours. The exciting thing is when you have a child, then you can establish healthy patterns for that child. And so I'm really excited. You know, I used to be a night owl. I am a night owl. Really reestablishing that pattern because now I'm looking after another human life and I want them to have healthier sleep patterns. That's the thing I'm looking forward to most, and hopefully that will keep me honest about making sure I get enough sleep so that so that he does as well.

• 1:09:35Anthony Pompliano?

  That's a great way of looking at it. I always joke that whenever I ask somebody about sleep, it's kind of like a CrossFit. If they have a young child, that's the first thing that anyone will say, right? They're like, I got a young kid, so bear with me. Third, third question, or last question you get to ask me one is aliens. Are you a believer or a non believer?

• 1:09:53Speaker 02

  Of course. And I don't know what iteration they are in. I think we're all going to be surprised. I'm hoping that, I mean, I'm assuming that there will be some information about this in our lifetimes. I think we'll all be surprised as to, to, you know, what form factor it is, but I think, you know, the vast majority of people who have studied this are of the belief that like, yes, of course, like, and, and, you know, how they'll interact with us. I'm looking forward to seeing it, but I also don't know how I'm going to react and how I'm going to take in the actual information when it actually happens.

• 1:10:30Anthony Pompliano?

  Yeah, I, the only thing that recently thought made me think, hey, maybe this might be happening faster than we thought was, I don't know if you saw the cephalopod that passed a, like an intelligence test geared towards like a young child. And I was like, you know, look, I don't know the details, whatever, but the fact that everyone always thinks of aliens is like this, like foreign concept way out in space. And then all of a sudden, if it just came out like, no, listen, like actually there's intelligent life in the ocean that, you know, all of you idiots all thought was just some stupid animal is smarter than our children. Like, I think all of a sudden people start to really question, you know, the, what is an alien, right? And kind of how do we think about that? So you get to ask me one question to finish up. What, what one question you have for me?

• 1:11:10Speaker 02

  Yeah. So I, you know, I am a firm believer in public service, but I've never served in the military. I've never, you know, served my country and you have. I'd love to hear the, the major lesson that you've taken away from that.

• 1:11:23Anthony Pompliano?

  Uh, yeah, it's pretty simple. We're all gonna die, which is somewhat of a morbid takeaway. But I think that the, the big thing was, um, I went when I was, uh, joined the military when I was 17 years old, but, uh, at 20 was deployed to Iraq and, um, you know, was there at a time where we were, um, as a country engaged in heavy combat, uh, and to basically battlefields, uh, and, you know, there was the lucky situation of all of the guys that I went with came back, uh, alive, uh, but also some of the people that we were there with did not. And so what you end up realizing is like, you learn this lesson at 20 of if we're all gonna die, I better enjoy it while I'm here. And so what it really kind of taught me was, uh, to kind of not worry so much

• 1:12:07Anthony Pompliano?

  about all of the frivolous things that maybe I would have worried about in, you know, life that, uh, had I not had that lesson. But also too, is, uh, really, what are you gonna do while you're here? Right? And, and to have that kind of conversation with yourself or that thought process at 20, I think most people might have that when they're, you know, 40, 45, 50, maybe even literally on their deathbed. Uh, but it was a pretty kind of life-changing experience, uh, because what it forced me to really say to myself is like, what is, what are you pursuing? And, you know, ultimately I came to this conclusion of like happiness and not in the like, you know, uh, kind of enlightened, I meditate for an hour every day and, and that to me is happiness, but just more so, uh, when faced with decisions throughout the day or, or kind of the years, uh, I just choose to do the things that I want to do. Right? It's kind of, it just removes a

• 1:12:51Anthony Pompliano?

  lot of the bullshit frankly. And, uh, I, I think that that's probably been one of the, the great guiding lights and it all comes from that experience. So, so pretty cool to have that at such a young age.

• 1:13:00Speaker 02

  Yeah, that's amazing. And to have purpose at such, such a young age too. I think that's a lot of what young people are, are missing today. They're, they're searching for purpose and, and to have that gift, uh, even if it's delivered in a hard way, but, uh, that gift of purpose given to you at a young age is, is truly amazing.

• 1:13:14Anthony Pompliano?

  Absolutely. Catherine, listen, thank you so much for taking the time to do this. Where can we send people to, uh, find you on the internet and, uh, find some of your writing? Or if anyone wants to reach out with, uh, investment opportunities?

• 1:13:24Speaker 02

  Certainly. So I write at boil.substack.com. I'm at Catherine, uh, on Clubhouse and my, my Twitter is, uh, at KTM Boyle. So I'd be excited to meet people at any of those places.

• 1:13:36Anthony Pompliano?

  Awesome. Well, listen, thank you so much for, uh, for doing this. We'll definitely have to do it again in the future.

• 1:13:40Speaker 02

  Absolutely. Thanks so much.