E173: Billionaire Michael Loeb on Risk, Innovation, and Never Giving Up

So, you've said that the best thing that ever happened to you was getting fired from Time Warner at the age of 36.

Why is that?

David, I got to tell you, I never said that that was the best thing that ever happened to me.

It's everybody else has said that about me, that it was the best thing.

It was 36, and I was feeling really old until I found out that Bloomberg got fired from Solomon Brothers when he was 38.

So, he's got me beat.

And that, by the way, is a regret of mine that I didn't start early.

I do think there is an entrepreneurial gene, and I had it.

The mantra was: just don't fuck it up, right?

Just don't fuck it up.

And,

you know, if you had Time Magazine and Sports Illustrated and Money and Fortune, then all the other magazines, if you added the number two and the number three and you doubled it, it was about equal to Time Inc.

So it,

they were, you know, the, you know, the 8,000-pound gorilla in their space.

And it was, yeah, just don't screw it up.

Don't screw it up.

And I was pretty shitty at not screwing it up and

invented a lot of things.

But I lost my job.

That was especially painful for my dad because he was pretty sure that, you know, at 36, that was it for me and I'd be a ward of the state.

But

I

decided that I was going to use this opportunity to launch something I always wanted to launch, which was a redefinition of a subscription.

Right.

And at the time, you bought a subscription, and all the time you would be getting paper renewal notices that would be

entreaties of

increasing drama to try to get you renew.

And they called that in the trade a positive option.

You had to take a positive option to keep the magazine coming.

That was always from day one for me very curious.

And I asked that question about a hundred different ways.

Why do we do it that way?

Because to me, that was the business model of a product and not a service.

And I thought of the magazine as a service.

People wanted to call this automatic renewal.

That term was a little bit user unfriendly.

So we relabeled it continuous service because

who wouldn't want continuous service?

Or by contrast, who would want an interruption of service?

And what it effectively did, David, is take inertia, which was your mortal enemy, and made it your best friend.

You reportedly sold for $800 million to Time Warner, and you have an interesting story about that.

Tell me about post-acquisition.

What they wanted to do is make a statement that this is the new Time Inc., that they are going to be inventive and entrepreneurial.

And as proof, here's the guy that we cast out.

And we bought his company for a whole lot of money.

And that's proof positive that we're entrepreneurial.

And so tell us about that, Michael.

And they brought me around the world and all the convening of executives and trotted me out.

And they always had journalists interviewing me, interviewing me.

And in one of these convenings was the guy who pulled the trigger, right?

Guy who fired you.

Guy who fired me.

And he didn't make any secret of the fact that he was there.

And again, this was a lot of years later.

And he sat like fourth row, right in the center.

And

he came up to the DS afterwards, stuck out his hand.

He said, Michael, I want to thank you.

And I said, well, his name was Mike.

I said, Mike, why do you want to thank me?

He said, well, when the question came up about you getting fired from Time Inc., I'm very happy that you didn't say, and it was that motherfucker over there.

So, anyway,

so that was a comedic

and it got no stock.

You mentioned that you had a disagreeableness to you.

Michael Burke, who you referenced earlier, has similar characteristic.

Why exactly is that a good trait for an entrepreneur?

Fundamentally, entrepreneurs are unemployable, right?

I think that they are insistent.

I think they ask why.

I think they don't accept no for an answer.

I think they have no appreciation of protocol.

They're just impolite.

I mean, they're just very equipped to say, David, with all due respect, you're not just wrong.

You're like fucking wrong.

In fact, you're fucking stupid wrong.

Okay.

So

they're in a big rush and they like doing things differently.

And there's many examples of

entrepreneurs.

And I can give you a couple right now that I think are neat vignettes.

But there was

this 17-year-old kid in California, and his first name was Dick.

And everybody from the beginning, dawn of time, whenever we wanted to high jump, we would barrel roll over

the bar.

And this kid, 17 years old, went backwards, right?

And every coach said, Dick, you can't go backwards.

You can't go backwards.

And Dick said, all I know is that I'm jumping seven feet.

Nobody has ever done that before.

And that was Dick Fosbury.

And it was the Fosbury flop, right?

And he invented that.

Babe Ruth joined baseball at a time that everybody had little tiny gloves.

In fact, nobody had their own glove.

They just left it on the field and the other team would pick it up.

And the players were not nearly as mobile.

So basically, the way baseball was played is you hit down on on the ball.

You hit down on the ball.

You hope to find an opening, get to first base, hope to steal second.

Then you hope that somebody, you know, gets something in the outfield and advances you to third.

That's how the game was played.

It was ABC ball.

And

Babe Ruth, who was a big fella and was not very fast, said, well, explain this to me.

You're telling me that if I hit the ball out of the park, I can go around the bases as slow as I want.

I can just like trot around the bases if I hit it out of the park.

And they go, yeah, that's right.

And so instead of hitting down on the ball, he hit up on the ball.

And Ruth, and we got to put this in context, but Ruth hit more home runs

than whole teams like in baseball.

It was transformational.

And, you know, baseball was played for an awfully long time, and he just changed the way baseball is played.

And that's entrepreneurs, right?

They're just insistent, they think differently.

And by the way,

when they succeed, they crow about it.

They're awful employees.

You really don't want to have an entrepreneur as an employee.

So I was just that guy who was not content with 4 or 5% gains every year.

It had to be 40 or 50.

And

I put that to practice at Sports Illustrated, which, by the way, got a lot of people, you know, pissed off at me.

In Japan, they say that the highest poppy gets cut first

because you want a unanimity.

And

in big, comfortable corporates, they kind of want the same thing.

So while you were at Synapse and you were growing that, you also incubated Priceline.

Tell me about the origins of Priceline.

How did that come about?

I got to step back and describe my partner in Synapse,

which it was very, very early in the curve.

A mutual friend introduced me to Jay Walker, who I thought was a genius and is a genius.

And

Jay

had some great pattern, which was, hey, I'm a uber successful entrepreneur.

I won't say if that was true or not, but I'm an uber successful multi-times entrepreneur, and you're just some schmuck who got fired from a mid-level level job at a Fortune 500 company, right?

And you want to be an entrepreneur, you're going to fall flat in your face.

And we met, we went back and forth.

Jay said, you know what?

Best thing is, I'll hire you and I'll give you 20% of the company and I'll finance everything.

And I said, you're crazy.

You're not going to hire me.

Maybe I'm going to hire you and maybe I'll finance everything.

Truth is, Synapse was bootstrapped.

We didn't need to finance much of anything.

And we kind of met in the middle.

It was a 50-50 deal.

And I learned the hard way that Jay,

like a lot of incredibly brilliant people, are not gifted necessarily when it comes to managing other people.

You figure out you're the smartest guy in the room by, you know, several lengths, and it becomes hard to, you know, work with, you know, employees.

So after a time,

it was Jay, you know what, you think of what we are going to do together.

And And Jay came up with another idea, which is this habit

every other day.

And it wasn't just an idea, it was an idea with a business plan, a 50-page business plan.

The man is prodigious when it comes to be able to churn out work.

Those things were

not particularly attractive or viable, in my opinion.

But one day it was priceline.com.

And

that to me made a whole lot of sense.

And my,

this was David in a day that if you wanted to go from New York to Boston, you had to get a travel agent, right?

You just couldn't do it yourself.

There was no self-serve option.

And Priceline was, you know, was self-serve travel.

And the name your own price

was all about the fact that there was remnant inventory in travel.

And this was a way to

monetize

those seats.

And Priceline was the very first of its kind.

Jay Walker saw it.

He was very prescient and figured out that IP had changed and is now patentable.

It used to be that it was widgets that were patentable.

And

he put all that together and came up with this incredible idea.

What Synapse contribution was that we were the funding source in the beginning.

And

we were also, by the way, the labor source because we told everybody instead of getting double the employees and

more space, at least in the beginning, we just said to everybody, you got two jobs.

And as long as it was the same pew in a different church, it it kind of worked.

And

even

when

it became apparent that the appetite for funding of Priceline

outstripped Synapsis' ability to generate cash,

and we had to go to an outside firm, outside source,

you couldn't really do that for anything internet because the internet didn't exist.

I mean, that's how advanced Jay was in his thinking to do that.

So Jay sold half of his half of Synapse to

give the next shot of capital to

Priceline,

which brought him to the public offering.

So last I checked, Priceline, now bookings, had a $165 billion market cap.

So Jay built one of the very first, actually I think the very first

and big successful internet companies back in the middle 90s, which was really very early.

You've been running a venture studio since 2006 now called lobe.nyc.

How would you describe the venture studio thesis?

If you wanted to put it in the four boxes, you would have a box labeled ideas.

You would have a box labeled entrepreneurs.

You'd have a box labeled know-how and a box labeled capital.

And if you put all those things together, there's a lot of synergies to be had.

So we self-generate ideas.

We then research those ideas, test those ideas.

And if they test out, we put a team of entrepreneurs behind them.

Now, you're going to ask me, where do I get my entrepreneurs?

Well, the answer is

they're entrepreneurs that I've recycled from other projects right so there's a sale there's an exit of some sort then you've got a team freed up they're accustomed to working with one another

when we have an idea david the very first thing we do is research it we write a white paper it goes into the freezer and when a entrepreneurial team

frees up

They get to look in the freezer, they see what's there, and they get to take their pick, and then it becomes theirs, right?

Now, we complement that with what we call shared services.

That's the know-how.

So, I went through ideas, entrepreneurs, know-how.

Know-how is

we have different groups.

It's a Swiss Army knife of capabilities that do different things.

So, back office accounting, for example, we try to have all our companies go on our back office accounting rails.

And that is because I want lingua franca.

I want to have a common definition of burn rate, fume date, you know,

gap accounting, yada, yada, yada.

I want to pay the bills on time.

I want to collect on time.

And those are skills that entrepreneurs are in short supply of.

I'm in short supply of.

I just, you know, give me a pile of bills to code, forget it.

I'll never give you any consistency.

So

we have that.

We have a research group.

We have recruiting legal.

We have

fundraising because once we stand a company up, we'll go

several innings with it, some more, some less.

The least amount we put into any one of our ideas before we went outside was $2.5 million and the most was like, you know, 40-ish.

And some we never raised any capital at all because we went right to a sale, right?

Synapse being a good example.

So,

in addition to the other shared services that I described, we have tech and we got marketing.

So, and we got everything in between.

And basically, the young, you know, these young companies, these startups, these nascent companies

borrow all that

resource.

We don't charge it out.

Our currency is success.

And we think our success rate with the ecosystem and with the incentives and our entrepreneurs, it's not as much as the West Coast playbook.

I will re-up a team

or a CEO

as long as there was a quality of bat.

Doesn't have to be a winner, just has to be a quality of bat.

Not every ball that is hit on the screws drops.

And

sometimes you did everything right and the company doesn't work.

And you don't want to penalize somebody for that.

In fact, you know, failure really is a derivative of success.

I think it makes you a better entrepreneur.

What goes on in VC DOM is they talk about two in 10 working, and if when pressed, they might get to one in 10 working.

And the problem with that is they very quickly do the triage, figure out who is going to be, in their mind, the winner.

VCs, typically,

they either went to Harvard or they went to Stanford to get their MBA, but they never ran a popsicle stand.

So they try to run the war from the Pentagon.

And unless you've been in the trench, it's really pretty hard to prosecute a war.

And as you've seen startup costs go down dramatically,

why do entrepreneurs still want to go with venture studios?

Talk to me through that evolution of capital and how you've been able to retain the top talent.

We self-generate our ideas, right?

So we start, it's our ideas, and we got a merry band and we've had enough wins on the board that, you know, people are always there looking for the next one.

So

yeah, it's a little bit differentiated from that perspective.

You generate your own ideas.

Tell me a little bit at a high level what your process is like to have such a high hit rate.

Entrepreneuring is like a process

defying thing.

And I'll tell you

a little vignette, but about 20 years ago or so,

I'm invited up to MIT.

And MIT had just started its

entrepreneurial incubation lab.

And they wanted to have me for lunch.

And at lunch, and it was me and about 20 people.

So we had this wonderful lunch, and then they handed me at the end of lunch a book, right?

A book.

And the cover of the book, the jacket said, the 24 steps

to being a successful entrepreneur, right?

The 24 steps.

And all I can think about is, oh my God, I don't check the box on step 13.

Does that mean I can't be a successful entrepreneur?

And

I said to them, you know what?

You're missing step 25.

And they go, step 25?

There's a step 25.

I said, oh, yeah, there's a step 25.

And they go, what's that?

And I said, burn this book.

Because

you can't, right, call 1-800 entrepreneur and hope to be one.

It just doesn't work that way.

And you can't convene a bunch of people at three o'clock every Wednesday and say, give me your best ideas.

It is lightning on a bottle.

And what you do is just put your shingle out and say, hey, look, anybody with a good idea, you put it in the hopper, give it to research, and they will write a white paper on it.

Sometimes they'll spend 10 minutes on it because they'll say it's just not viable, right?

Or 100 companies have tried this before, they're all dead.

With the good ones, they'll go the distance and they'll write, you know, a 20-page paper on it,

which outlines, you know,

everything you'd like to know.

The TAM,

you know, the perceived margins, how you would scale it.

Is it B2B, B2C, or B2G?

Yada, yada, yada.

So

that is kind of the the beginning of the process is

understanding the research on the marketplace.

Two of the most famous dot-com bus were Webvan and Pets.com, which later on became Instacart and Chewy in the next iteration.

How do you know when a company that's been tried many times and failed, maybe the time has come for that idea?

David, it gets to something very interesting, which is

sometimes the littlest thing like somehow has an outside, outsized difference.

Uh, I'm trying to remember, you probably do the predecessor to Facebook.

What was the name of that?

MySpace.

MySpace.

I ask this question to people all the time.

What was the difference between MySpace and Facebook?

I mean, why did Facebook win and MySpace get evaporated?

I

just don't know.

But it was something, and it was something that was probably pretty subtle, but

it was the difference between success and failure.

The

other one that's worthwhile thinking about or mentioning, and that one was a much bigger thing, is BlackBerry versus the iPhone, right?

So BlackBerry invented it.

They owned it.

They owned it.

But I think what the difference was is BlackBerry thought of this, thought of what they had as a communications device.

And what Steve Jobs thought is, I am taking a computer and putting it in everybody's pocket.

And

I wonder about those things all the time.

And it's

entrepreneurial success is very fragile.

And sometimes, you know, which gets back to you can't program it.

You can't say at, you know, three o'clock on Wednesday afternoon, we're going to ideate.

You know, it

is a very it's like a souffle it just requires the you know the right temperature the right eggs the right this right that to make a good souffle and so um i wished i

i wished i was smarter about it all um because um

sometimes i think you know that winners uh don't turn out to be winners and um or what i would predict is a winner and the reverse is true sometimes we're working on something and it's the little engine that could.

And, you know, I say, you mean

that's still around?

That didn't die yet?

That's amazing.

And it just grows and grows and then it takes off.

It's interesting, but you find, I find a lot that with a company,

it's not up and to the right for sure.

but it will spend a lot of time not doing much of anything and then all of a sudden go vertical.

By the way, if you look at Apple, right?

Apple for the longest time, for like 10 years, maybe even more, had a $5 billion market cap.

And then a couple of inventions just made it go straight up.

And it's been straight up ever since.

When you have these companies that are kind of middling and then shoot up and straight to the right, is it like an iceberg where something's growing underneath it and you can't see it?

Or is it just almost probabilistic if you stay alive for a long enough time, you get some flash in the pan and suddenly you're off to the races?

I would describe it a little bit differently than that.

I'd say that it's not just staying alive.

It's like continuing to try new things, you know, new combinations of things, new thinking about things.

Like maybe this isn't a B2C business.

Maybe this is a B2G as in government business.

Maybe our price point shouldn't be $100.

Maybe it should be $10.

But, you know, just saying that is one thing.

Then you got to re-engineer the business model so that you can actually make money on 10.

So

I think it's the constant rethinking of the business model.

And sometimes, David, I have

I swapped out teams, you know, a team that was successful in a prior business and is working on something and,

you know, it just is not successful.

You swap out a team and sometimes it just clicks.

Like somebody saw something.

Rumors are really hard to squash.

And a lot of times,

you know, a rumor is this can't work.

We tried it.

Right.

And well, you know,

you tried it on Tuesday and not Monday, right?

You tried it during the day and not the night.

People in teams being what they are, they put things in the we tried it, it doesn't work box, and they tend not to look at that box again,

which

a new team is just going to start from,

you know, I don't know a thing I want to learn.

I like to say a four-year-old and the greatest first principle thinkers on the planet have one thing in common.

They ask the question, why?

And after they get an answer, they ask another why until you get to the physics of why something doesn't work or works.

And then you could actually have a good answer to whether, does this defy the laws of physics?

Is it just too expensive given these factors?

And you have a whole understanding of the entire system behind why something works some way versus just this mimetic repetition of why something might not work.

You're 100% right.

And as you say that, I reflect on synapse, which kind of brings us back to the top of the conversation, which

I said, I don't get this catch and release program for subscriptions.

We work really hard to find somebody, and they finally subscribe, and then we send them renewal notices.

And if they don't respond to us, they unsubscribe automatically.

Makes no sense to me.

And

I kept on asking, why do we do it that way?

And I kept on getting an answer, and the answers didn't make sense.

And then finally, out of exasperation, exasperation, the answer I got is, this is just the way it's always been done.

Right.

And by the way, when you get that as an answer, you know you've won.

You know there's something there.

Because, you know, it's all about what Robert Frost said, which is it's about the road less traveled.

And in the case of the entrepreneur, the road not traveled whatsoever.

There's always that fear of the unknown and the fear of something that's never been tried before, something that has been tried before and rumor.

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Where has it doesn't work, but you step back and it doesn't make sense.

It never made sense to me that we'd have the catch and release program for subscriptions, right?

It always made sense to me that it would continue

as part of what we would call a negative option, right?

You had to opt out as opposed to opt in.

And I intuitively knew that

when you flipped the script, you would find that there'd be a huge lift in lifetime value.

And indeed, there was.

And that was what allowed Synapse to kind of eat the world.

We really did become

a huge company pretty quickly.

When we last chatted, you mentioned that it's all about the people, but you also said something paradoxical that the company almost always pivots.

So how do you line up the idea with the market, with the people?

And how do you line all those things up to build a large company at that early stage david and this is an advantage we have you got to make it safe you got to make it safe and when you're dealing with vc money and outside money and you showed them a business plan okay

and

whenever you remeet with you know the board uh made up of you know that VC,

they always ask the question, well, three months ago you said this and now you say this, right?

And you're off plan.

And so you learn about the sanctity of a plan.

And so the temptation is to try to get back on plan, to adhere to the plan.

And you also get the sense that if you don't adhere to the plan, you're done, right?

You're not going to be one of the anointed few that gets to,

you know, more capital and gets to, you know, live again.

So

that's not feeling safe, right?

You got to feel safe.

You got to feel trusted and safe, as in, go with your gut.

You're here because you got a great instinct, right?

And you're here because you're indefatigable, right?

You're not going to quit.

That's why you're here.

And this is not about my idea.

It's about your idea and running with it.

And I trust you, right?

I trust your judgment.

I trust your strength and your power and your preserve.

I trust all that stuff.

And that's

not not what you typically get in a VC universe because they just can't pivot because they don't have the time to pivot, right?

You don't have, you're on the clock.

You don't have time.

You got to execute the play.

And sometimes

with the best of intention, you kind of diagram the play, but the play is not working.

It's a broken play.

So what do you do?

What Einstein said, insanity is doing something over and over again and expecting a different result.

And you do see that all the time.

That VCs just say, get out there.

You say, you know what?

I'm trying.

It's just not working.

And it's like, you know what?

You're just, you know, you're just, you're just frail.

Okay.

Go out and try harder.

And the entrepreneur will know, they'll have an instinct that this ain't gonna, it's just not gonna work.

And you do have to pivot.

You do have to do something different.

And

there's not a whole lot of tolerance of that

in VCDM.

And so I think one of the keys are you got to feel, you got to feel safe and supported, right?

Like, you know, talk to me.

Talk to me.

The only thing I demand is equality at bat.

It's not success or failure.

So, you know, you're trying hard.

And what's neat is I do get entrepreneurs.

My people on my team, they'll come to me and they'll say, Michael, you know what?

This just, this dog ain't hunting.

You know, this might be a single.

I'm not a singles hitter.

Get some young, one of your youngsters and let them sink the teeth into this and get one victory.

And then, you know, they'll get, they can throw off the training wheels the next time and go for something bigger.

But

it's the entrepreneurs who know first.

And if you have that environment of support and trust

and faith, faith that, you know, you're, you're thinking clearly, face

safe that

you have researched things well, that you're trying really hard,

you know, and by the way, you know, come to me for advice all the time.

We'll talk it through.

But,

you know, that

feeling that you can do that and nobody's going to be, you know, won't be a punitive experience is, I think, very important.

so that's one of the things we do i'm very curious on that so a serial a successful serial entrepreneur comes to you launches a company let's say they see it could only be a 10 or 20 million dollar revenue business at scale and they want to bring you want they want you to bring in a new ceo new partner tell me a little bit about how you structure something like that if one of my ceos were to come to me and say that

um

then um you know they got equity in the old company and they keep that equity uh And then if they say,

you know, look, let me see what's in the freezer.

I want to try a new idea.

Then they get to do that.

I mean, you know, yes.

So it's all with regard, respect, appreciation.

I actually,

you know, I actually do thank them and I am appreciative of them coming to me with that.

Coming to me.

It takes a lot of courage.

Yeah, it takes a lot of courage.

And it takes a lot of courage.

And I appreciate their ambition, right?

They don't want a $10 million company.

They want a billion-dollar company.

I want that too.

And those entrepreneurs that end up going to the freezer, picking out another idea that you guys have researched,

what's the base case there?

Do they end up more successful than the people that stick with their businesses?

To be statistical about it, I need to have like, you know, 500 use cases.

I just don't have that.

But do you get excited about that use case?

And does that mean that, you know, I get very excited.

I get very excited about

sitting down

with a team

when we're sinking our teeth into a new idea, a new company, when we have some early market evidence

of success or failure.

And

we're doing the diagnostics.

And you know what?

One thing that's very exciting is if you look at something and it looks grim, right?

You're looking at all the pieces and you're saying, Oh my god, this just ain't going to get to the promised land.

But then you say, Okay,

I'm going to,

I got an idea, I'm turning it upside down, I got an idea, right?

And so, one idea can reinvent an entire business.

And what is the what does that sound like?

Well, it sounds like

you know, um,

saying,

Okay,

I'm redefining what,

you know, how we are going to get paid, right?

So the product market fit, right now, the product market fit is not a problem with the market and it's not a problem with the product.

It's a problem with the fit, right?

So I'm trying to fit myself into,

you know, Lululemons when I really should be wearing a jacket instead.

So you say, okay, you know what?

We're not going to make Lululemons.

We're going to make jackets.

My brainstorm is: if we look at our customer, look at our production, we look at everything, we are better equipped to do that.

And the margins are higher and everything else.

So you change kind of the field of play.

It's stuff like that that gets kind of exciting.

But I do have an exciting job.

I get to work with people half my age and twice as smart.

And

it's never been a more exciting and trying time.

You mentioned before how you can build a company with a lot less people and a lot less resource, and it's getting more and more compressed.

And

AI, of course, has an enormous impact with all that stuff.

And so

it's a fascinating time.

And what's really fascinating is,

you know, the big companies, the big 100-year-old companies with 10,000 people are just going to have a devil of a time making that

transformation.

And so, it, I think,

kind of like an old analogy:

the world belongs to the little mammals that can burrow, you know, and stay out of

harm's way when the comet came down, or I guess it was a meteorite that came down 66 million years ago.

When, by the way, when you think about dinosaurs, dinosaurs are totally cool, okay?

Dinosaurs, they were

they were

you know the tippy top right

of the platogram and for 200 million years they ruled right it was claws and teeth and muscle and uh strength and size

and then

that could have ruled for another 200 million years and then you know, the meteorite came down and

things that can go out underground

were the things that ruled the day.

And here we are.

But, you know, intellect was not one of the things that we needed back then.

Right.

So

it's kind of interesting when there is a meteorite-like event that changes all the rules.

And all of a sudden, the definition of success kind of changes.

Yeah.

Do you see the construction of teams evolving in terms of smaller teams that are able to scale more rapidly?

And if so, how are you incorporating that into your business?

We've always started in the very beginning with small teams, and we added to those teams.

And now I think we're going to still have small teams.

We're just going to add a little more slowly.

So

I think that

these are very interesting times to be an entrepreneur.

They're trying at the same time because capital formation is a little bit more arduous than it was a couple of years ago, but that too shall change.

We're addicted to invention in this country, and we should be.

That's where the intellectual property is, and that's where the

value formation comes from.

There's all sorts of this Silicon Valley folklore in terms of entrepreneurs need to start the idea or else they're not entrepreneurs.

They need to risk everything or else they're not entrepreneurs.

Do you see a class of people that are naturally just really good at execution but may not

want to or have the idea they say that right but they also say in the same breath that the biggest determination of success is previous success right so they want they want that multiple-time entrepreneur and statistics bear that out so that multiple time entrepreneur you know, is not going to be driving a Volvo with 400,000 miles on it.

The thing about an entrepreneur is

they come out of the womb hungry.

They're just hungry and they're irrepressible.

And so I don't think they need the motivation of starvation

to be successful.

And

I think it's categorically true that

multi-times entrepreneurs

have a greater probability of success than first-time entrepreneurs.

And I don't think anybody in VCDEM would disagree disagree with that one.

So that runs contrary to the notion of they got to be starving.

And I will just tell you that,

you know, entrepreneur is just, they're just hungry,

irrepressible.

And

they don't need to.

be first-timers and

be living on wonton soup and peanut butter in order for them to

have that desire.

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I also think starving is a relative term.

If all of your

friends started billion-dollar companies and you're in that peer group and you sold a company for $70 million, your ego might be as starving as somebody that's 24-year-old that's just coming out of college.

How do we explain Michael Jordan?

Right?

How do we explain the last dance?

I mean, that guy was ferocious, right?

You know, he wasn't, oh, I won one championship.

That's good enough.

I mean, just a ferocity.

Look at Tom Brady, 45 years old, winning a Super Bowl.

You know, would you bet on Tom Brady or some rookie?

This is why entrepreneurs are a species onto themselves because they just,

they have that fire, they got that desire, they got that need.

And what they say about them is true, that the money is just a way of keeping score.

It's not,

you know, it's not the it of it, right?

The it of it is inventing something.

The it of it is having some other entrepreneur, have some other smart person look at a company, look at an idea and say, damn, I wished I had that one, right?

That could have been mine.

That was an idea that I should have had and I didn't.

And the son of a bitch, he stole it from me without stealing it from me, but he invented the company I should have invented.

That was mine.

That's,

you know, high praise.

And that's what we all live for.

You're in your late 60s.

You're reportedly worth a couple billion dollars.

What still drives you today versus earlier in your career?

Do I look like I'm in the late 60s?

Reportedly.

Reportedly.

Reportedly.

They lie.

So what drives me?

No,

it's those very tenets, which is

I just want to win.

I just want to win.

I want to make a difference, you know, and I want to win.

There is nothing more satisfying than coming up with an idea, planting a seed, and seeing a mighty oak grow.

And I will say something else, which is...

You do the happy dance with a victory for about five minutes.

And when you have a loss, you suffer that for five decades it like never goes away it's you want to have the five minutes and you really want to avoid the you know the 50 years so it's you know I don't know what to call it David except it's a disease it's a disease and it's like shingles it just keeps coming back you know you uh and there's no there's no you know no amount of

you know, inoculation will prevent you from having your shingles.

So lucky to to live in this country because this country has spawned more than its share.

I did a little analysis a few years ago.

Directionally still holds, which was the top 25

tech-centric companies as measured by market cap.

And of those 25, 19 were American.

So we're 4% of the world's population, 76%

of the Teslas, the Netflix, the Microsoft, the Facebooks,

the Nvidia's, etc.

Right.

So

here is where these companies get invented.

And,

you know, the question is why?

I don't really have an answer to that.

Capital formation is one, but I think forgiveness when it comes to failure.

There's other countries around the world where,

you know, if you're if you're fail, you're done.

That stink, that stain will follow you around everywhere, but not in this country.

We kind of wear it as a badge of honor, right?

And, you know, it's part of your narrative.

Part of the narrative.

And also when you get a group of entrepreneurs together and, you know, we get a, you know, a drink in us or two,

then we sit around the campfire and we say, I, you know, I.

I don't know what I was thinking with that one.

I mean, you know, at the time, I thought I was so clever and then I put it in the marketplace.

What an idiot.

Right.

I really thought that would work.

What a dummy.

And I spent oodles of millions doing that.

So shame on me.

We spoke in the beginning of the interview how your parents came from the depression area.

And when you were fired at 36, they were a little bit worried about you.

Did the fuel and the source of your motivation fundamentally change before and after synapse, before and after Priceline to today?

Or does it still feel like the same type of motivation?

No, it feels like the same.

I'll tell you one thing that I no longer have, which is,

you know, don't get me wrong, I worry all the time, but

you,

you know, you had the patina of fear in the very beginning because one false move and you're like done, you're bankrupt.

And in the beginning, where you had about nothing and you're betting it all, betting all of it, right, on the come line.

And

if it comes up, you know, red, not black, you're just done.

That's a fear that, you know, I no longer have.

It's more calculated than that.

It still,

don't get me wrong, hurts like hell when it doesn't work.

And

I still...

have a lot of anxiety about all that.

I think that's part and parcel of all this.

But

it's not as present as it used to be.

When I first met you, you told a story about this friend that calls you every six months telling you from the beach

and telling you to retire and go enjoy yourself.

Is there some middle line where you could be half in and vacation, or is it truly in or out?

And

why is there no middle line?

I don't know.

I was hoping that you were a therapist.

You're not a therapist, are you?

I have a master's in psychology, but doctor,

not a clinician.

Yes, I do have that friend, and I'll tell you that parable

kind of right now, which is he does call me twice a year.

He does

he used to try to have this conceit where, you know, he got me to pick up a landline phone, but now he doesn't even bother with that.

But I get a phone call from him twice a year.

And,

you know, I see who is calling and I say, hey, Stu.

And he says, hey, dumb fuck.

I see you're still working.

And I say, yes, Stu.

And he says, and Stu had a number.

The number was 200 million.

When he got to 200 million, that was enough.

And dumb fuck, guess what I'm doing now?

And I said, I don't know, Stu.

He said, I'm drinking a cup of coffee.

Where am I drinking the cup of coffee?

I said, gee, I don't know, Stu.

I said, it can't be, it can't be in your vineyard in Tuscany because it's, you know, not that type of year.

It can't be in your, you know, castle in Aspen because, you know, it's no longer, you know, snowing.

Probably too cold for, you know, your

mansion in Connecticut.

You must be in Palm Beach.

And he goes, bingo, dumb fuck.

What am I doing?

And I said, I don't know, Stu.

He said, well, I told you I had a cup of coffee.

I'm nursing my cup of coffee.

I'm standing on the beach, my beach, looking at my waves, at my house in Palm Beach.

And he said, well, what's next?

I said, I don't know, Stu.

He said, I don't know either.

I don't know if I get a massage.

I don't know if I play around the golf.

You know, I got, you know, the trophy wife.

I don't know if I do that.

But I said, Stu, too much information, right?

So anyway, that's the conversation I have with the guy.

Love him.

He's brilliant.

But I'm just not that guy.

And just not that guy.

I don't know why.

You're the psychology.

On the brighter side, you have this compulsion of this entrepreneur shingles, as you call it, which has led you to be a billionaire and to be very successful.

How has that changed how people treat you every day?

And how did people treat you before and after?

Right.

I, you know, might have something to do with the fact that I make them call me czar.

No, I'm kidding about that.

So, um, you know,

I don't feel like I'm treated any differently.

My wife still says, you know, I'm dumb from time to time, actually, more than time to time.

Uh, but

I don't, if there's reverence around here, I don't, um, I don't feel it.

I, by the way, encourage

discourse, um,

disagreement, as in different point of views.

How about that?

Um, I um think that's uh very, I think that's very healthy, and I do encourage that.

And nobody

loses points for

thinking that an idea I had is not a very good idea.

In fact, the research department does that routinely.

You know, they kind of say, Michael, you know, did you really suggest this?

Because what were you thinking about this one?

This is pretty dumb.

But

I don't,

gee, I don't, maybe I'm being naive, but I don't sense that.

I don't encourage that.

I don't,

I

kind of like, I appreciate hard work, good thinking.

Um, I don't need sycophants around me.

Um, and I know people who do, but I just, you know, I just don't need that.

I um

I have, you know, I got I got triplets and again, they routinely say, Dad, what, what, Dad, what are you doing?

I mean, that's like, you know, that's like you're a nincum poop.

So,

no, I don't,

I guess they probably do, but

outside of stockbrokers, right?

Wealth managers.

Exactly.

Not too many people treat me differently.

You have a lot of really interesting things going on in business, politics.

What would you like our audience to know about you, about low.nyc, or anything else you'd like to share?

Well,

number one,

you know, you got a great idea, send it to me.

I promise not to steal it.

By the way, everybody's petrified of that, and they really shouldn't be.

And they put the idea away in their pocket.

And these days,

the half-life of an idea is like six minutes, right?

Because the world is changing so fast.

I mean, just go back six months ago, nine months ago, look at the actors in AI, and a lot of them are totally different.

If a listener has a great idea, I'm open to listen to your great idea.

I will take it seriously.

I'll give you advice.

I'll give you my honest opinion about these things.

And

the only thing I request is that folks appreciate that

I'm very fallible.

I make

bad calls all the time.

But I will share with you an opinion.

If it's something that I know something about, if it's something I don't know anything about, like don't talk to me about a biotech company, I won't be helpful, or a new chip, I won't be helpful.

But

if it's in one of my spaces, and we got a pretty broad palette of things that we're involved in, I'll

try to be helpful.

You have your strike zone, the companies that you've built.

What's your hit rate?

I think we're at least 50%.

And part of it, David, is

when do you count and how do you account?

If we have

a research paper, white paper done, and I put a team of two or three people on it and spend a few hundred thousand dollars chasing it down, and they come back after six months and say, you know, there's nothing here, I don't count that as a failure.

Maybe I should, but I don't count that as a failure.

And I know you also partner with VCs.

Your wife doesn't let you invest every dollar in your own companies.

What kind of VC partners are you looking for?

A lot of times, where a VC,

a lot of times, they're pattern thinkers and a,

you know, in a different

field of play.

It was a different football team in a different field, and they ran this play, and it worked.

And they just think that it can always work in every circumstance.

And

sometimes that drives a company into a very bad way.

And I've, I've certainly seen that a good time, a good deal deal before.

No one is immune to this memetic copying.

Richard Dawkins popularized this term in 1976 where we copy these patterns.

The craziest example of that was Elizabeth Holm with Theranos.

She literally started

dressing like Steve Jobs.

And I think even Rupert Murdoch, biggest investment he's ever made was in Theranos.

I know that we're both really focused also on the New York City mayoral race.

So tell me about that, TLDR, what's going on in the New York City mayoral race and specifically the primary?

Yeah, so thank you for that.

So

primaries have an outside importance because you can get the fringes

who tend to vote in big numbers and the mainstream just assumes that everything is going to be adjudicated in the general election.

So we have in New York Cuomo, who is the guy I'm supporting.

I think he's certainly very competent and certainly really understands the job.

And I think that's desperately needed.

The number two guy is, you know, has a lot of vitriol.

As a resident of New York City, and, of course, famously, AOC won her seat against a 10-time incumbent because of this primary voting.

You have the same thing in San Francisco that used to happen as well.

Andrew Cuomo's opponent is literally part of the Democratic Socialist Party, which

it's not a label people put on him.

It's a label he puts on himself.

Right.

And he wants

minimum wage to go up to $30.

Now, I believe everybody should have a living wage, but you got to think of the consequence of

our various service providers, our restaurants and just about everything else

when you have that.

You know, of course, about Uncharted, and

we have about 2,500 entrepreneurs in our little tribe, and about

a quarter of them, about 700, 800, convene at our

summer summit at my house in the Hamptons for a day.

A lot of content, good food, yada, yada.

But the whole mission behind Uncharted was

to say to entrepreneurs, you know what?

As a group, we're smart enough, connected enough, rich enough, have enough good ideas that we could self-determine, we can self-fund,

we don't have to be totally dependent on outside capital.

How about generating our own capital and coming up with our own ideas and do that as something of a collective?

So I am trying to put all that together, have a, if you will, a pitch club.

It's going to be called Uncharted Pitches.

And I'm seeking quite a few members.

And

they will have a small membership fee for the year.

But the other obligation is that they got to put $10,000 a year to work.

And I hope to show them hundreds of companies.

You were kind enough to take Jessica and I in your magnificent Hamptons place as

straight up from the show, billions.

It was the home used there.

So if anyone's wondering how you, how 700 people in a single home come out to Unchartered.

And Michael, this has been an incredible masterclass on how to found multiple billion-dollar companies.

Thanks for taking your time.

Thank you, David.

Appreciate that.

And

thank you, all the listeners, for

and my sympathies for you to wade through all this tedium.

But I do appreciate it.

Thanks for listening to my conversation.

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