00:37:08 · Scott Nolan, Ty Morse
And this was statistically true if you look at public companies. Then you look at two baskets, founder run, non founder run, the founder run, have done much better historically. And yeah, then there was the VC version of let's focus on the great companies and put all our energy and time there and not be too obsessed with helping a struggling company barely make it. And so that's played out as well and was known throughout the twenty tens, even today as as the power law, where the best companies are worth much more than all the others put together. [00:37:43] S1: Yeah. The way I think about it is basically the founder is kind of the keeper of the soul of the company. And if you pull the soul out, you're not gonna have the same... Like, mission disappears [00:37:53] S0: Mhmm. [00:37:54] S1: Honestly. If you think about, like, Uber pre... You know, while Travis was running it, it was a completely different company than the one that exists today. I also find it a little bit interesting when you have that situation where Travis does leave or he or he has to leave, where there's almost like a loss of story Yep. Almost.
00:37:54 · Ty Morse, Scott Nolan
[00:37:54] S1: Honestly. If you think about, like, Uber pre... You know, while Travis was running it, it was a completely different company than the one that exists today. I also find it a little bit interesting when you have that situation where Travis does leave or he or he has to leave, where there's almost like a loss of story Yep. Almost. [00:38:12] S0: Yeah. You could say there's, like... Some people refer to NPCs, but you could have, like, an NPC company where it's just this standard thing that's doing its bureaucratic motions, and what's really driving it? What's making sure that this is achieving the mission that it set out to do? And who's really gonna hold it accountable and ask the really hard questions and make the really unpopular choices that put it back on the right track when it gets off track. I think only someone who knows the whole history, who's really willing to sacrifice a lot before it's all proven, clearly has that motivation. And so the best bet is just let the founder run it and try and work with great companies from the VC perspective. [00:38:53] S1: What was the most unintuitive thing that you learned from Peter?
00:38:53 · Ty Morse, Scott Nolan
[00:38:53] S1: What was the most unintuitive thing that you learned from Peter? [00:38:56] S0: Probably coming from the business consulting world, which I'd done right before Founders Fund and been in that world, that world thinks pretty differently than I would say Peter would think. And so oftentimes, it's a lot of conventional frameworks, more conventional, straightforward, linear thinking to arrive at at hopefully the right answer. Yeah. More linear thinking, I would say, in that world, which can result in more conventional answers and more conventional ways of doing things that are often first principle. But I think the big difference with what I first saw at Founders Fund was that it wasn't this linear thinking approach. It was often very abstracted. And so you would often ask questions that were not obvious. I think it went back a lot more actually to asking the right questions than just following the breadcrumbs of, okay. Let's dig into this more. Let's dig into this more. Okay. We don't have much of an insight there. Let's go over here, and let's let's try and figure something out there. But it was taking a step back and and and trying to figure out, okay. How do we look at this from a totally different angle and try and realize something that could surface one problem or company or solution above the others? And which of these angles do we think is actually correct. And sometimes it would involve multiple layers of abstraction to generate new insights. [00:40:33] S1: Do you have an example of that?
00:40:34 · Scott Nolan
[00:40:34] S0: One company we invested in, probably in my first or second year there, was a cancer therapeutics company. And this cancer therapeutics company was really focused on a slightly different or not articulated theory of cancer, which was that ultimately most cancers were really driven by stem cells. And you just had to really focus on the stem cells and how to differentiate them from the rest and how to specifically try and target those cancer cells. And would say, Okay. And maybe by today, people realize this, and it's not unconventional. But fifteen years ago, it was not popular. And this company was uniquely focused on that and figuring out, Okay, how do we go after those? How do we develop targets for those? And you might say, Okay, let's spend a lot of time looking into the mouse studies, which we did, and let's spend a lot of time looking into the biology of this. But, you know, I think I think the the conclusion was, yes, this all looks good, but we Founders Fund don't have any really special insight into biology more than, you know, people in academia do. They know much more than we do. And so these mouse studies can look good to us. Mouse has been... Cancer has been cured many times in mice before. What's different about this? We can try and figure that out and decode that and come up with a really high conviction answer on why that's the case. But then there's this other layer of, Okay, how do we know that this stem cell theory is correct? And I think at the time, was there was, like, one insight of... At the same time, there had been a very pro stem cell argument in the scientific and and government community about how these were actually useful for many things, which they were. And so there's the conclusion that, hey, maybe this is a really underexplored area because it's maybe unpopular to say that stem cells are involved in cancer because we're supposed to be looking at only positive things about stem cells. This was maybe yeah. And then that company ended up succeeding from a business perspective, and then many of their targets that they developed are now in cancer therapeutics that are coming to market. So it turned out to be correct. So I think that's one example in the biotech space. I think if we go back to the example of SpaceX, at the time, the launch market was not a huge market. It was single digit billions.
00:43:04 · Scott Nolan
And, yeah, I guess this was another example of the abstraction kind of going to a social political level and saying, what things maybe for the first time could be done well by a private company as opposed to a government organization. And so space launch had historically always been done by the government or government contractors. And a lot of people accepted that that was just the way that the industry had always been and would always be and that maybe it could never be highly commercial and it would always need to be subsidized by the government. And we were never gonna get a ton of growth in space launch. It was just a nation state capability that you had to have. And maybe I think the the thinking or the different questioning was around, yeah, is this true? And is it generally the case that, private companies can do things better? And if so, how far does that that span? And so SpaceX has has proven that one.
00:44:03 · Ty Morse
[00:44:03] S1: I think one of the least understood things is it's very important to ask the right questions. And I think prior to SpaceX, people were not asking the right questions as to how to get mass to orbit. And Elon was... From what I can tell the first person, it basically just optimized for this one key variable, which is how do you get mass to orbit instead of, you know, what does the US government want us to do. And then with that, he basically just went all in on this idea of just lowering launch costs with the understanding that, hopefully, there was gonna be a market afterwards. Mhmm. And it seems that, you know, with what he's done recently, it's effectively just scaling his own network of satellites because he's able to fill his own supply. How did you figure out what the right question to ask was for in, like, key KPI to think about when you were starting General Matter?