David Novak 0:04 

Welcome to How leaders lead where every week you get to listen in while I interview some of the very best leaders in the world, I break down the key learning so that by the end of the episode, you'll have something simple you can apply as you develop into a better leader. That's what this podcast is all about. Today's guest is my friend Jeff Yang, the founding partner and Managing Director of Redpoint Ventures. He's the legendary venture capitalist who's bad companies like Stripe, Netflix, Sonos and DraftKings. Just to name a few. I gotta say, Jeff really knows how to spot what ideas are gonna catch on. And in this conversation, we go into detail about what he looks for in a new idea, and the big trends he's excited about. But Jeff doesn't just assess the ideas. He assesses the people behind him, he has to decide whether an entrepreneur has what it takes to turn that idea into a thriving company. So he's become an expert at knowing exactly what traits great entrepreneurs have. And he's gotten really good at assessing whether or not someone has him. Now, that's a skill that every leader needs. Let's face it, we all have the potential to make a poor decision when we choose a person, or we choose a partner. And the consequences of that can be pretty darn painful. But Jeff, is proof positive that amazing things happen when we get it right. So if you want to know how to assess people, then you'll love this conversation with my good friend, and soon to be yours, Jeff Yang?

You know, Jeff, you and I recently played in a golf tournament, and you were paired with NBA coach of the world champion Golden State Warriors, Steve Kerr, how'd that relationship come about?

Geoff Yang 1:57 

I'd like to say it was because of us. But like all great relationships, it was because of our wives, our wives were best friends in college. And they brought us together and we started hanging out in our family started hanging out and our kids grew up together. And he's been a very close friend for a very long time. You know,

David Novak 2:14 

it was a real thrill for me to see you two together, because I love seeing my how leaders lead guests hang out. And you were out there with them at a great course having a heck of a time. And one of the things Jeff, as you well know, that Steve Kerr talks about is the importance of bringing joy to whatever you do, and and Jeff, you're one of the happiest, most joyful, guys I know, and you love what you do. Was there a seminal moment when you knew that you wanted to become an investor and focus on identifying up and coming companies?

Geoff Yang 2:46 

You know, it's funny, yeah, the advice I always give to younger people who are just starting their careers is, you know, don't walk into early and I tell them about this, you know, when they're trying to pick a major, and I tell them about this, where they're getting out of school, and I'd say, you know, surveying the landscape and get an opportunity to see what's out there be well rounded, and don't necessarily focus on being an investor early on, you know, getting some good operating experience is key. So then I look at my own career. And that's exactly what I didn't do. Since high school, I wanted to be in the venture capital business. You know, I grew up in New Jersey, and my parents were both, you know, engineers, and my mom actually started a software company in the 60s and 70s. And she had worked at IBM. And I would, I was always fascinated by technology. I was always fascinated by computing. And then a family friend had been in venture capital. And I had no idea what that was. They brought me to work one day, and I looked at all the really cool things that he was working on all these new companies that were coming up, and early on, I fixated on wow, that's really a fun thing to do. I love technology, I love how things work. I love the idea of invention. And marrying that width kind of building businesses I thought would be really cool. So I got fixated on it early, not really thinking that I would end up doing it. And when I finished college, you know, I went to go work at IBM, my mom had worked there. And they were kind of a leader in computing. And I went and learned the computer business.

David Novak 4:11 

You know, Jeff, do you talk about learning on somebody else's nickel? Was that the IBM experience for you?

Geoff Yang 4:18 

Yeah, very much. At the time. You know, IBM was one of the most well respected companies. And if you wanted to be in computing, IBM was really the top dog. And so I learned a lot about computing. But I also learned a lot about salesmanship and leadership. Because at the time, IBM was really, really a really cool company. I learned about how, you know, attitudes of I think winning companies. You know, I spent a little bit of time at Goldman Sachs and they had the same attitude. And I thought, God, it's really cool to be around companies that really believe that they should win.

David Novak 4:49 

Jeff, you've had the opportunity to work with so many different leaders and entrepreneurs over the years and you've identified a number of key characteristics that you look forward to help you determine who you're going to partner Are up with. And one of the things that you talk about is the importance of finding partners who see patterns where others see chaos, which is interesting turn of a phrase tells the story of how you put this thinking into action, or someone else you've seen someone else do that.

Geoff Yang 5:17 

The best companies are usually born, when industries are rapidly changing, when consumers change the way they do things, or businesses change the way they operate. And most people sit there and they go to, I can't understand this, this is crazy. This is chaos. And other people kind of put all the different patterns together and weave them. And so my analogy of that is, you know, someone walks along, and they they see a foot and they go, they come to us and they go, that's the best foot I've ever seen. And someone else is a trunk is the best trunk I've ever seen. And someone else comes goes this, look at this air, this the best E or C, and somebody actually goes, Wow, they're all describing an elephant. And if they put all the pieces together, I can build an elephant, right. And the best entrepreneurs have a clear vision of what that pattern is. And they look around, and it's obvious to them, but everybody else in the world is like, I don't know where the world is going, you know, and the great entrepreneurs go, I can clearly see where it's going. But it's not enough just to be able to see it, you have to be able to communicate it to others.

David Novak 6:13 

You also say that, you know, entrepreneurs are not created, they're compelled. What do you mean by that? And can you give me a for instance,

Geoff Yang 6:21 

the best entrepreneurs come with an idea. And they go, I have to do it, because it's as clear as day. And if I don't do it, I don't know who's gonna do it. And if someone else does it, and it's not me, it's going to drive me crazy. Reed Hastings is a good example at Netflix. I mean, he started off with this vision of mail order delivery of DVDs, but when he saw where everything was going, and he put all the patterns together about bandwidth available people's homes, giving ultimate choice, and being able to, you know, bring the world's content to everybody. I think he felt compelled to kind of change the vision of Netflix and move it to streaming, right. And he saw vision. He had the courage of his own convictions. He knew what was right. And I think he felt that if he didn't do it, you know, somebody else was going to do it. And if someone else did, it would drive him insane.

David Novak 7:13 

That's interesting, because in many respects, you know, one of the things that I've seen work with a lot of entrepreneurs is that they happen to be paranoid. Yes, okay. They can't stand the thought of somebody else doing nothing, maybe before them or whatever. Usually, paranoia is is a negative trait. But I know you see it as a positive when it comes to running a business. Talk a little bit about that.

Geoff Yang 7:36 

I find that the best entrepreneurs and the converse is the worst entrepreneurs, the worst entrepreneurs have no respect for the competition. And they feel like I don't have to worry about it. And you want to have courage of your own convictions, and you want to believe in what you're doing. But you have to have paranoia. Andy Grove had this great quote about only the Paranoid Survive, right? What you want is healthy paranoia. You want to respect the competition should never feel like the competition is stupid, or they're lazy, or they're just not going to do it. And I've seen great entrepreneurs get lapped, because they just have no respect for the competition. And so it's that nice blend between worrying about what other people see, and trying to understand what's in their head, and having the paranoia that they may have a better idea. But as long as I stick to what I understand, and you try to learn from your competition, and that's one of the biggest flaws and big companies, they're not paranoid enough, they dismiss the competition or they dismiss young upstarts at the end of the day. That's what gets them in trouble.

David Novak 8:36 

What about the optimists, where does that play into your way of thinking?

Geoff Yang 8:40 

Every great entrepreneur is an optimist, because everybody knows why things won't work. But the optimists think about what is possible versus why things will fail. And my observation is that optimists change the world, and pessimists criticize it.

David Novak 9:01 

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You know, Jeff, you're one of the best people persons I've ever met my life. So I know that people equations really important Do you as well? How do you get to know the entrepreneurs that you invest in? And what process? Do you go through to understand how they really think and operate?

Geoff Yang 10:09 

That's a really good question. And I think, for a lot of younger people who kind of come in the business, they tend to underestimate the importance of really getting to know the person kind of what makes them tick, you know, so one of the things I always like to do is, I hear the presentations, and I hear the rationales and I meet the people. And it's very important for me to see how the entrepreneur acts around the rest of his team, right? If they speak all the time, and don't let their people get in a word that tells you something about how the team interacts with each other. If I had my druthers, I would meet their kids. And I'd go play some sport with them, right, whether it's basketball, or tennis, or golf, or whatever, I just want to know how they act. And I think, if you meet their people's children, you get a pretty good idea of what their value system is. But that's usually not appropriate. And so I then very much liked to go out to dinner with them. And I try to let the entrepreneur kind of control as much of it as I can. So you know, I kind of see how they treat the waiters, I let them order the wine. And as an example, if we're going out to dinner, or having wine, and I have been in these situations where entrepreneurs will pick the most expensive bottle on the list, right? Just because they're like, hey, you know, the money guy is taking me out to dinner, right? That tells you something as well. I mean, he's not looking out for our kind of collective interests, if you will, I then try to spend a bunch of time understanding how he or she grew up, and kind of what motivates them, right. You know, I asked them, Why is this important to you? What do you want out of your life, and if they come back, and they say, all they want is, you know, they want to make a lot of money. You know, my experience, money is not really a great motivator. At the end of the day, money is what comes with success. Success doesn't come with making a lot of money. And often people will make absolutely the wrong decisions, if that's all they care about. I want people to care about the rest of their team, I want people to want to change the world. I want them to be driven on a mission. And if they happen to be able to make a lot of money, that's great. But that's not what in my experience drives the people that kind of change the world. And then the last thing I try to understand is, are they driven by a desire to win? Or are they driven by real fear failure, and I happen to personally believe that everybody likes to win, but the people who are the best and stay on top the longest with people can't stand the thought of losing. And they're driven all the time, because they're at the top, and they've got to find a way to stay at the top because they can't stand the thought of losing. And so it's really important to me to kind of go and understand who I'm kind of getting involved with, why they're doing what they're doing. But I also want it at this point in my life, particularly I want to work with somebody who wants to have partners and who will listen and well, it'll be a really fun journey with a great person.

David Novak 12:54 

Yeah, that makes so much sense. And, you know, I know you strongly believe that you should never compromise and people in running a business. And where did you develop this deep down conviction?

Geoff Yang 13:05 

Well, it's because I've gotten bitten, you know, a few times. You know, I remember doing reference checks one time on an entrepreneur and a company that we ended up investing. And I called everybody on the reference list, all the references came back really strong. I didn't go out to dinner with this person, I didn't go off the reference list all the things that I do now. And what ended up happening was the person was really shallow look really good on paper. But when it came to, you know, what was this person? What are the values of this person that I want to be in a battlefield, you know, with this person? The answer was no. And it ended up being a complete disaster. The other example I gave you about, you know, I give the entrepreneur the wine list, there was a company that we invested in and on the closing dinner, I had him order the wine, he ordered the most expensive bottle of wine, and he got blind drunk. And I'm like, this is really just not appropriate behavior. He ended up embezzling from the company, right? Yeah. Not, he didn't really embezzle. But if he falsified the financial records, you know, with the CFO? Yeah. And so, you know, a lot of the advice I have is born from bad experiences in that regard, right. And so I think about these types of teams a little bit like you're going into marriage, right? And I always say this to the entrepreneur, hey, listen, we're going to be involved, hopefully, for 510 longer years together, right? You should do your due diligence, like on doing the due diligence, and you should go off my reference list and find other people that you know, that might know me, because I'm doing that for you. And don't get upset when someone calls you and says, Hey, you know, Jeff Yang's calling and just just want to let you know, because I'm trying to get the whole picture about you. But that's the way you should feel about it too. And and I feel the same way about how we were started Redpoint you know, we wanted a culture, which was we win as a team and we're better together or, like I always said a recon team were outwardly really aggressive. inwardly really supportive. And I wanted to build a culture where you know, I got your back, you've got my back, and let's go and win together as a team.

David Novak 15:08 

You know, Jeff, you got a great philosophy. And you know, it's called the ABC philosophy for people. And when I learned about this guy's do my homework I love, you got to share this with everybody.

Geoff Yang 15:21 

It's very rare that people higher up, people hire the same or higher down, right. And so the reason I really want A's in every position, that's the first part of ABC, that's the first part of ABC. And when you're getting started, I always say, Listen, don't just get someone that fills the job, because you need someone to fill a job, just make sure the person is an A, it doesn't matter where in the company will make sure that the person's Na, because if you get a group of A's together, other A's will want to come in because A is higher A's, B's, higher B's, and C's. And once you get C's in a company, they're like cockroaches, you can't get them out. And when you get a reputation of being C's, you can't hire A's, like bees can't hire a C's for sure can't hire A's. And so I always say in the beginning, you're kind of setting the culture and you're setting the philosophy and but you're also setting the threshold, it's a little bit like building a club, if you're going to build a club, you want to start with absolutely the bell cows that everybody wants to follow. And then once you do that, then all of a sudden the best people want to come in. But if you start with B's and C's, you'll never be able to level up. And the seeds really are like cockroaches and destroy a company.

David Novak 16:34 

I want to give you a potential funding scenario where you got to make an investment. And I want to know who you'd pick to go with and invest in and why. So you got Person A is young, but is super talented, they just don't have a lot of experience. And then you've got Person B, who's a veteran with a solid track record, who do you typically go with and why

Geoff Yang 16:57 

I almost always go for raw talent, I would much rather get someone who's younger, less experienced, who's maybe doing it for the first time, but is really driven and has all the skills and will listen and wants to learn, I would much rather invest in someone with a ton of upside, that's not proven than investing in a proven bait, right? Because the B, that's where they're going to top out, it's not like a beef suddenly going to turn into an A, a young a has huge headroom. A solid B will always be a B, right. And every time I've gotten myself in trouble, it's thinking that this person is a B, maybe all of a sudden we put this person in a situation or I'll do work like an a, you know, B's kind of tend to think like these, and that's the best are going to be right. A's will always be why can I do better? Why can't we be better. And those are also the type of people you love to work with the people who are always pushing the thresholds of how good they can be, you know, the bees, anybody is satisfied with mediocrity is never going to achieve great things.

David Novak 18:00 

And one of your other learnings that I've heard you talk about is stayed lean. Fat kills. Yeah. What drives this thinking? And where have you seen fat kill? Tell us a story about that?

Geoff Yang 18:12 

I'd say that generally, companies and younger companies do much better operating really lean because it forces you know, hard decisions, it forces hard decisions about what do I have to hire someone? Do I really need to bring this person on? Or which direction should we go in? And it's really hard because when the money's in front of you, companies tend to raise it. And I always discourage companies from raising too much money. And they always say, well, we'll protect it. We'll protect him, we won't spend recklessly. Okay. And I say that's not possible, because it's not human nature. And you know, we talked about putting a ring fence around the cash, like it's your prize pig. But people can't do it. Because once you have a lot of money in the bank account, people inside the company will always say, Well, why do we have to fire that person? Or why can't we do both directions? You know, why do we have to work that hard? Isn't that what the money is for when in fact, what you really want is you want lean hard decisions. So that success is kind of the only option. And I've seen it a lot in pretty much every company. When companies raise a ton of capital, they lose that lean hunger, and they stop making hard decisions. And you don't get rid of the non performers. And every company has non performance. It's just the nature of companies. And when you get non performers that kind of demotivates the performers and it creates a lot more fat and a lot more process versus kind of lean effective decision making. And so it happens pretty much in every company. But unfortunately I have this discussion every time and it's one of these learnings where I say this is what's going to end up happening people say it won't happen here and it ends up happening and in downturns people never cut enough. Everyone always says well I cut all the fat if I go any more muscle and I go trust me, you're not even close to muscle. And then what happens is they cut later and they go, Wow, you're right, we're better. And it's just part of life, I guess.

David Novak 20:08 

It's what's that Harry Chapin song, your life is just a circle goes round and round. It sounds like you're talking about it. We'll be back with the rest of my conversation with Jeff Yang in just a moment. But listen, you don't have to be an entrepreneur to love talking about new ideas. In fact, every leader needs to embrace the power of innovation, both at a high level, and in their day to day work as a team. That's why I love talking to Evan Spiegel, the CEO of snap and the guy who built Snapchat. In our episode of how leaders lead, he shared how we can all create a culture where big ideas develop and thrive.

Evan Spiegel 20:48 

Kindness is so important for us because in our view, that's what helps people feel comfortable being creative. And so unless you have a really supportive atmosphere, it can be hard to take risks, it can be hard to throw out a crazy idea. And so what we really want to do is have a culture where people feel comfortable being themselves because that's what drives that innovation and creativity.

David Novak 21:07 

If you want to learn the secrets of fostering innovation, then you want to listen to the whole conversation with Evan, episode three here on how leaders lead. You've invested in a lot of startups, but you're actually an entrepreneur yourself down and you founded two companies that I think are really cool. Tell us first about Rock the Bells were you teamed up with LL Cool J.

Geoff Yang 21:33 

Part of what I wanted to do is I had an urge to get involved really early on starting a company that, you know, I would be the founder of versus just advising founders. And so I was introduced to LL Cool J. And he was talking about how hip hop was the most dominant theme in popular culture, and that the origins of classic Hip Hop are really not appreciated, not brought together in a single place. And he gets he said, Imagine if you were able to do this and rock and roll and you were create the global platform for rock and roll imagine what that would be worth. While hip hop is a much bigger theme manifests itself not only in music, but film and television and books and fashion and art. And imagine if we could do that for all of hip hop. And we start with classic its origins. This would be a huge company. And I walked away from the breakfast with him. I really didn't want to like it it because you have a lot of meeting with talent and they don't really understand what it takes to build a great company. But I walked away going God this guy has a really strong vision and in many respects, he's like the perfect guy to do this. And so I went and called one of your in mind mutual friends, Chris O'Donnell, who was LL Cool J's acting partner. I said, Hey, cod, tell me about LL Cool J and he goes, Man, this guy works his butt off. And he's all about hip hop. It's kind of who he is. And so we spent a bunch of time together. And I tried to see if he was really serious about it. And I put all these gates up and all these meetings and whiteboarding. And then I asked him to write checks with me to kind of get the company started. He was there every step of the way. And we've been having a great time. And we're trying to build a global platform for hip hop and its culture. And we have a live events business. And we have a media business including Rock the Bells radio on channel 43, on Sirius XM, we have a lines of clothing, both high end collectibles, as well as you know, more volume basics that we distribute through a lot of retail partners. And we're having a great time.

David Novak 23:28 

Now, Jeff, the other company I know you founded is performance Health Sciences, which has a real noble cost. Tell us about it.

Geoff Yang 23:35 

I got involved with the US Ski Team in 2002. And then I got involved with the USOC about seven years ago. And I was always impressed by how much human performance science and sport science with the impact on our athletes. And I really love the approach of unifying training, nutrition, sleep and recovery, and all the parts of science to make the athletes perform better. But I thought you know, I'm not an Olympian going for gold medal or an NBA player going for a world championship. But I thought God, why can I use that approach to improve my life and the lives of my friends and the lives of my family to perform best as an individual and as a human being not necessarily on the field of play, but just in life. And so what we did was, you know, I looked everywhere for and I couldn't find it and finally to decide to build it. My goal is to hire the best performance team in the world combination of human performance scientists, doctors, nutritionists, trainers, sleep experts, physical therapists, and put them all together and manage the lives of people like you and me who just want to perform better and create a healthy and a long health span as opposed to lifespan, you know, lifespan is the number of years you're alive healthspan some of yours are healthy and alive and all of us want to be healthy, vibrant into the later parts of our life. And I firmly believe that if I don't die of stroke, heart disease or cancer, my odds of living to my mid to late 90s are really high and I want the quality of my life. To be really high, but in the interim, I want to perform at my best, I want to be cognitively strong, I want to be physically strong and active, I want to be metabolically high energy, I want to be emotionally happy. And I want all four of those aspects of health to be strong right now. So I perform my best, as well as in the future when you know, I'm aging, and I'm enjoying life, I don't want to just be alive, I don't want to be that person where you come to my memorial service and go, Wow, 80, great years, the last five are tough, you know, it's probably a good thing he's gone, I want you to come to my memorial service 105 And go What a tragedy got hit by bus because he was just like living life to its fullest. So that's what we're trying to do. We're trying to do it as a right now as a high end concierge service. But we're also trying to take all the learnings and put it in a software so that we can begin to automate it so that bigger tech companies with consumer brands can deliver the service through software and through technology, and that our goal in that aspect is to power those recommendations.

David Novak 26:00 

So in many respects, you're almost going to become the Walmart in the health industry, because you know, Sam Walton says, I'm going to make you know, every day Americans, give them the opportunity to have every day value in what they buy. And you're gonna do that and health service that's outstanding, you know, you'll scale it.

Geoff Yang 26:17 

Well, I'm trying I you know, the observation, and especially coming out of COVID is that everybody's kind of all of a sudden realizing how important their health is. And health and wellness is a major theme kind of going on out in the world. And you can see it everywhere, from you know, wearables to you know, different supplements to people kind of trying to eat healthier in a lot of the big cities, all the way to even an alcohol beverages, their marketing is low calorie, low ABV, you know, feel better about yourself, and all that kind of stuff. And I think this is right in that trend. And interestingly, the science hasn't really been applied to the general population, as much as it should be. There's a lot of innovation of science and marrying kind of technology and wearables as well as in a kind of human physiology,

David Novak 27:02 

you've had so many successful investments. And I'd like to get into your head on the process that you go into when you make an investment, just by a couple of quick examples, clip out examples. Tell us why you got behind MySpace,

Geoff Yang 27:17 

I got behind MySpace, because I was really intrigued by the idea that people were kind of creating their own content in these profiles, and they were communicating with each other, and they're creating this community. And the thing was virally growing? Well, you know, like crazy. And I looked at every other content company out there, where professionals were creating content, you had to spend money to create content that other people look at, well, in MySpace, your whole community was creating content, and they were engaging with each other. And the engagement and the content was being created by the network. I thought it was an incredible business model. It was one of these things which would grow like a virus, you know, the virality of the social networks was just extraordinary. And when we invested in it, they came to us and they said, We want to be the MTV of the internet. And I showed it to somebody at MTV, a good friend of mine who was in charge of product at MTV. And he came back and he said, Man, I looked at it, it looks, it looks dirty, it's a little grungy looks like someone did it out of their garage, and I thought he was gonna hate it. Because it's perfect. This is exactly what people will want. And they had this thing where there was a guy named Tom Anderson, who was your first friend on MySpace, and it looked like it was Tom Anderson's thing that he just did in his garage, when in fact, there were a bunch of engineers and stuff around it. And I loved it. So generally, you asked, What do I look at it as an investment? There's the age old question, which is more important people are markets. And I would say half the people would probably say markets, half the people will probably say people, but it turns out, they're kind of the same. Because my logic has always been, if you have great people, a lousy market, it doesn't really matter how well you execute, it's not going to be successful. It's like throwing a great party, not inviting anybody. But if you have a huge market, great people will find their way to the huge market. And so I tend to be more of a markets person. If something can be a really big market. That tends to be what I'm really interested in, but but you need a few A's to kind of go after it. And an interesting story was, you know, we invested MySpace and one of my partners had got been introduced to Facebook, and they said, Hey, we should really talk to Facebook. There's this young guy, Mark Zuckerberg, who started this thing, Facebook, and I'm like, I don't even no one's going to succeed. Why don't we want to write you know, it turns out, it turns out that probably would have been a good decision.

David Novak 29:43 

You know, Jeff, you've had so many successes, but I'm curious. What would be your darkest day in business? And how did you come back from it?

Geoff Yang 29:52 

Boy, I've had a lot of dark days, but I would say it was a period of time when the internet bubble burst. That was a really, really hard time. And unfortunately, you could kind of see it coming. And I remember the first thing we started doing when valuations are really over inflating in the 2000 period was we started pulling away from pure internet models because the valuations were so high and it just felt like it wasn't sustainable. And we kind of retrenched into internet infrastructure. And my logic was always, hey, if we're in the infrastructure, we'll be safe. And I remember having lunch with a mutual friend of ours, Dave Dorman. And he was running BT concert at the time. And he was talking about building out the fourth backbone network. And he said, I'm not really sure why the world needs a fourth backbone network. But you know what the public markets are given me the capital to do it, I should build out the network. But I think there's a lot of extra capacity is going to be out there. And I remember leaving that lunch going, Oh, my God, we've been talking ourselves into the fact that internet infrastructure is a safe place to be. And it really isn't, we're about to get hit. And so what we did was, we went encouraged all of our companies to raise a lot of money, because valuations still really high. And to start preparing for this winter that was coming. And when the bubble burst, it burst in a very big way. And there was a buyer stripe for over two years. And unfortunately, companies just can't survive little to no revenue for over two years. And that was a really hard time. Because, you know, we had to do a lot of layoffs and company shutdowns. And, you know, I remember having the discussion about who should cut once cut deep and conserve the cash and making the come out the other end. And companies just couldn't do it. They just weren't built for that way. So that period was really hard.

David Novak 31:38 

How did you come back from that, Jeff?

Geoff Yang 31:40 

I remember in the q4 of oh three, you know, I was on the board of I think Ask Jeeves at the time and I was involved with a bunch of other internet companies. And I could kind of see the market turning, it was remarkable, it kind of felt like things were really starting to pick up. And we had been in a buyers strike since 2001. And I remember saying at a partner's meeting, Mike, I really think the markets, you know, coming back, we should lean in. Rather than look for reasons not to do things, let's look for reasons to do things. And the interesting thing was, it was really hard to get people to change their behavior, right? Because you get into this culture of every time you stuck your head out the window, you know, the prior couple years, the window would slam on your neck, and it'd be really painful. And then all of a sudden, it got to a point where everybody started culturally, the norm was all the things that could go wrong. And I remember saying, Okay, let's all lean in and start being positive on things. And it was almost impossible to get the culture change, right. And so one of my learnings out of that was, when things are riding high, it's really hard to get people to stop writing checks. And when things are really at their deepest, darkest times, when things are really starting to look up, it's really hard to get people to lean forward and write checks. And so you know, I look at kind of where we are right now. And it sure feels like the world is changing. And I think for a lot of firms, it's going to be really hard to develop a culture of people because they brought in these young people who all they do is source and write checks. And they built the muscle of how to write checks when right now that the thing to do is not to write checks and to kind of rationalize your portfolio. And I think it's going to be a difficult time for a lot of firms.

David Novak 33:18 

You know, John Weinberg used to be on our board. He says trees don't grow to the sky, you know, and right now we're seeing all these tech stocks and growth companies that are really having a very challenging time raising capital. When do you see us coming out of this period? Jeff?

Geoff Yang 33:32 

Well, you know, I think the good news, David, is that the fundamentals are still really great. You know, when I look at kind of the fundamentals of how the world is changing through the use of technology, both consumer and enterprise, I still think it's one of the greatest growth sectors for at least another decade, right. And so I think we're still in the early innings of it, you know, I think we're getting a valuation reset, for example, enterprise SaaS company has been valued at 100 times, you know, forward revenue. That was great. But that really isn't sustainable over the long term. But I do think it's reasonable. If you look back on historical valuations being valued at one times your growth rate, you know, from a PE standpoint, so a PEG ratio PE to growth of one, I think is still really possible. And that would cause a valuation reset, which are still really attractive, and still highly valued. And still, we're going to build great companies, but I think people need to reset what success is from a valuation standpoint, but that should be okay. I think the companies will be fine. They've been to many companies that have been started and we'll have a weeding out period. I think it's not going to be anything near like the internet bubble, where the vast majority of companies went out of business and a few came out of it really strong. I think, you know, it wouldn't be unusual if half the companies that were started would go out of business, but that's still a much higher percentage than then we did coming out of the internet bubble and it's probably healthy over the long term. It's like a forest fire but I love where Our industry the tailwinds the industry has for the next decade, and I'm still very positive about

David Novak 35:04 

it. You know, Jeff, you spent a lot of time in China. What's your observation on what it takes to lead in China versus the US?

Geoff Yang 35:12 

When I first started working on investments in China, I will say that culturally, I think the Chinese are some of the best entrepreneurs did I think it's in their blood, you know, commerce, and competition. It's just incredible. A Chinese entrepreneurial team will outwork pretty much any other team in the world. I mean, you've got Chinese entrepreneurial teams, Israeli entrepreneurial teams, and then we've lost a little bit of that in Silicon Valley. But you know, I would put those three cultures as people who are really clever, determined, and very capable with a lot of skills. And so you know, originally when I went over there, it was a lot of state owned enterprises going private. And then all of a sudden, the young entrepreneurs kind of started showing up. And then we had version two and version three, almost in one generation new three generations of entrepreneurs in China, it was a little bit easier, because they had a big partner in the government, right. And the government had very clear, strategic 10 year goals about what the strategic technologies are, and they still put that out there. And they support the hell out of the companies that are in that space. So the entrepreneurs there work really hard, the very capital efficient, and they're extremely driven. And it's hard to think that over the long term, a lot of those companies won't be you know, the US is toughest competitors.

David Novak 36:35 

You know, Jeff, this been a great time for me, I want to have some more fun with a lightning round of questions. Now. Are you ready for this? Okay. Okay, here we go. Three words others would use to describe you.

Geoff Yang 36:48 

I hope they say curious, I hope they say empathetic. And I'm pretty sure that say grateful.

David Novak 36:56 

If you could be one person for a day besides yourself, who would it be and why?

Geoff Yang 37:00 

Boy, it'd be really fun to be Steph Curry. I've never seen anybody with that much talent. With that much confidence and that much humility all wrapped in one. It's an amazing thing to say.

David Novak 37:11 

What's your biggest pet peeve?

Geoff Yang 37:13 

People who are unreliable?

David Novak 37:15 

How would you come up with the phrase no one wants to catch a falling knife.

Geoff Yang 37:21 

I must have heard it from somebody. But it usually relates the fact that the people who go out at the earliest phases of a downturn end up getting their nose punched. And you know, you can wait till the market turns.

David Novak 37:35 

What's your lowest round of golf and where

Geoff Yang 37:38 

I think I had a 73 at a golf course that I don't even remember the name of it. It was so easy,

David Novak 37:44 

no matter how many holes in ones in, which is the one you're most proud of? I'm assuming you had more than one.

Geoff Yang 37:49 

I've had seven, seven. Yes. I'm very lucky. My first was in Japan. And it was a pretty short hole and I could see it go in. And in Japan. Many of the caddies are women, and they don't speak English. And my caddy was jumping up and down screaming all the while and follow up. That was great.

David Novak 38:09 

That's great. And Jeff, this isn't a lightning round question. But I understand your picture. Well, I remember it was mistakenly shown on national TV as being Andrew Yang, presidential candidate in 2020. Tell us about it and how you handle it.

Geoff Yang 38:24 

Well, I was in a partner's meeting. And all of a sudden, my phone started vibrating and just going crazy. And people were reacting the fact that CNBC and putting up the latest fundraising for Democratic presidential candidates had my picture under Andrew Yang's name. And you know, Twitter started kind of going crazy. And I remember in the meeting, I was kind of just joking around. And I took the picture, and I put it up. And I said, this is Jeff Yang, and I am not running for president. And all of a sudden, the next thing you know, the thing starts going viral. And in the next couple hours, they were like 60,000 or 100,000, reposts. And then I'd start getting emails and calls from reporters wanting me to comment, and I'm like, There's no comment. I mean, it was an intern made a mistake on the picture. It's no big deal. It was kind of a joke. And I'm not trying to make any political statement by saying I'm not running for President because I'm not running for president. Anyway. And I thought it died down. And then Stephen Colbert had Andrew Yang on his show. And he put my picture up and they start talking about me, and I'm on the West Coast and it's a Monday night and all of a sudden, my phone starts going crazy, again, from people on the East Coast saying you're on cold air. And what is going on?

David Novak 39:44 

is funny. Quickly, a couple more questions or give us three to four quick bits of advice you'd give aspiring entrepreneurs.

Geoff Yang 39:51 

Okay. The first is nobody needs to start a company. A lot of people right now feel like oh, I've got to start my company or they think it's really cool to start a company The best entrepreneurs have an idea. And they're compelled to start it because they're like, if I don't do it, nobody else will. So the first is get an idea that you're really compelled to do. And if you really are compelled to do it, just go do it. The second is find some really, really smart people to partner with, because they'll make you better. And a lot of people focus on Well, I don't want to split the pie with whatever, you know, that's absolutely the wrong way to think about you get the best people and you do it together. And the third is, do all your homework, but at the end of the day, believe in yourself. And what that means is, you know, before you actually take the dive to start the company and raise the money and ask people to leave their jobs, do all the homework you can do to kind of believe whether or not you should do it, and then go do it. And there's that period of time, where you have to will the company into existence, because until you do, everyone tells you it won't work. And then once it becomes obvious everybody turns to and goes, I knew it. I knew this was a great idea. And the fact is, if you knew it was a great idea, then why didn't you do it, and you got to just willed it into existence. And you keep telling the story. And over and over again, I can't tell you how many times I've told the story about performance health funds is a Rock the Bells, I mean, 1000s of times, but I tell the story, and I exude my passion, people come join. And then all of a sudden a thing starts breathing and it develops a life of its own and get some momentum. And now people go well, yeah, that's pretty obvious. I'm like, well, it wasn't obvious until it got willed. Right. And so this wheeling into existence, you gotta be prepared to do it. Because you know, if you have any doubt, at the end of the day, once you started, you can't quit midway, you can't quit while the airplane is running down. You know, the runway trying to get lift off.

David Novak 41:44 

Jeff, I know that it's not all about work for you. And we actually met on a golf course. And you were on the USGA board, and you served as a rules official, what was the most challenging or famous ruling that you ever had to make?

Geoff Yang 41:58 

When you're a rules official, you don't want to have any rulings of note, basically disappear into the abyss. But I remember one time, I was at Augusta, and Justin Rose was in the final group on Friday. And he was right up there on the leaderboard. And he wants a ruling, a very simple ruling on, you know, taking relief from a sprinkler head. And his caddy waved me over and I can see the cameras and I'm like, I don't want to come. And he's like, yeah, so I go out. And, you know, he describes what he's trying to do and why he's worried about the sprinkler head. And I'm thinking this guy's not going to break his wrist while I'm there. And I'm going to end up on SportsCenter being the guy who broke his wrist any any takes a drop, and its consequences drop, and he hits a tight makes the position that you know, I think he's in the final group on Sunday. And all my friends are saying, Oh, my God, you gave him, you know, the relief that he's going to win the tournament over? And I'm like, No, I didn't, I gave him four inches of relief. So I wouldn't break it. But luckily, I've had no rulings of consequence. And I want to keep it that way.

David Novak 43:04 

You know, Jeff, you're a master at identifying patterns and trends, and how do you go about it? And what do you think will emerge in the next five years, and that's what we all want to know. Now, we're gonna get behind your idea in a hurry.

Geoff Yang 43:17 

I really obviously believe in this health and wellness. And I believe that, you know, technology has a real role in health and medicine, not only with records, not only with delivery of medical, but also kind of preventative stuff for general health and wellness, and all the wearables that not only monitor your progress, monitor, things that kind of are going wrong, I think we'll have blood monitors, you know, in the next few years, that we'll be able to tell you ahead of time, before you get into a problem. And not just after you have a problem, you know, that type of thing. I really believe in the finance industry, and personal finance and industrial finance is going to undergo a complete revolution. And that's a combination of kind of using technology as well as blockchain that will disintermediate and make businesses more efficient, and make information more secure, make transactions kind of easier to do. Obviously, you know, everything on the enterprise and what's happening with cloud computing, the use of data and data analytics, and an artificial intelligence is going to really change consumer experiences as well as, you know, business efficiency. I'm not worried that it's going to put a lot of people out of business, because I think people are really clever, and there's a lot of ingenuity out there. And people are going to be able to use it as a tool to make life better for others. So I think there's a lot of potential out there.

David Novak 44:36 

Good stuff, and I'm going to wrap this up in a totally different direction here. Tell us about your family and this holiday cards you right? It's amazing. I'm in a lot of people right holiday cards, but I have to tell you, yours is the best I've ever read. What goes into this. How do you do this?

Geoff Yang 44:53 

You're very kind. I started writing our holiday letter because I did it for me. And I did it really as a record of kind of what's happened in the in the prior year. And I try to make it, you know, kind of humorous, but everything in there is completely accurate. And I know it's accurate when I show it to my kids, and I don't have my kids edit it. But I've always said, if you want to write a rebuttal, you can write a rebuttal. And I actually just sit down in one sitting, I just write the whole thing. And I tried to summarize the year and I make notes throughout the year of kind of funny things that have happened. And I know it's on the mark, when one kid says That's so unfair, and the other two kids go, are you kidding? You do that all the time, right? I do a lot of taking a logical thing and taking it to the extreme. I remember when my youngest son was first born is a really big kid. And I took his first 28 days of life. And what it did is I straightline extrapolated how big he would be and how much he would weigh when he was 13. And I came to the I came to the conclusion that he had be as tall as the Empire State Building, and have the weight of 13 Nimitz class care. So that's my goal. My goal is to have a lot of fun with it. But more than anything, it's my goals to kind of chronicle our family's life in the past year. And at some point, I'm going to put them all together and put up on a board kind of a 30 or 40 year history of our family.

David Novak 46:16 

Well, I look forward to get it and you have a wonderful family for sure. Thank you, Jeff, thank you so much for taking the time to be with me today. I really appreciate it's been fun catching up with you.

Geoff Yang 46:26 

Thanks, David, you're the best.

David Novak 46:37 

Let me tell you something, Jeff isn't just your ordinary leader. He just gave us a cheat sheet for a successful business, from the idea to the team, to the kind of leader who can pull it all together. And it all starts with getting the right people on board. Great people don't just contribute great ideas and do great work. They also hire more great people. It's funny how that happens. So it's pretty clear to see if you want to be a great leader, you've got to get really good at assessing how good people really are. For too many leaders don't give that process the time or attention it really deserves. Let's make sure that you're not one of this week. Ask yourself, Does your current hiring and interview process allow you to assess all the key qualities you really need from hiring your team members? Do you really get to know who you're hiring? Do you really dig deep into how they think and what makes them tick? Brainstorm a few ways you can get a fuller sense of how your candidates respond outside of the traditional job interview situation. For Jeff, a simple meal together showed him a whole new dimension of someone's personality and behavior. And it was the deciding factor in whether he ultimately made the decision to invest in that person's company. It's so so important to get your hiring right. Take time this week to improve your process. And I know that you'll get more and more a level talent knocking on your door. So do you want to know how leaders lead? What we learned today is the great leaders know how to assess people. Coming up next on how leaders lead is get this legendary Hall of Fame quarterback and now incredible businessman, Peyton Manning,

Peyton Manning 48:28 

I couldn't out throw anybody. I certainly couldn't outrun anybody. If you ever watch me play I had a coach told me once that I couldn't run out of site in a week. That was a nice thing to say. But I thought I could at least out prepare him. And I've tried to kind of take that same approach, you know, in this second chapter working, trying to learn trying to ask questions, but trying to also have an identity and figure out what my role was.

David Novak 48:54 

So be sure to come back again next week to hear our entire conversation. Thanks again for tuning in to another episode of how leaders lead where every Thursday you get to listen in while I interview some of the very best leaders in the world. I make it a point to give you something simple on each episode that you can apply to your business so that you will become the best leader you can be