Invest Like the Best with Patrick O'Shaughnessy
· Ben Horowitz
[00:00:00] S1: I don't really think that's right. I don't think the door is going to close behind you. I think the opportunities tend to multiply when you kind of open up a new door and open up a new way of doing things. So many people who made money on crypto were people who literally didn't have much to start with. They just got into the technology early and they kind of parlayed it up. And so if you have something that grows really fast, that's actually the opportunity for somebody with a little bit of capital to make a lot of money, because it doesn't take much. You know, if you bought Bitcoin for a nickel, you did really well, and all you needed was a nickel. That's the nature of these things that go hyperbolic, and particularly if you create something. I also think the labor market stuff, people are acting as though it's very predictable when it's not at all predictable. If you look at the history of the world and automation – and this is what it is, it's a kind of like an automation technology. We've been automating things since the agricultural days. And in those days, I think 95% or 96% of all jobs in the US were agriculture. Almost all those jobs have been eliminated. And the jobs we have now, the people doing agriculture wouldn't even consider jobs. The idea that we could imagine all the jobs that are going to come, sitting here, that AI is going to enable, I think is low. I think the need for more creativity jobs is going to go way up and the need for jobs to process work for the creatives will probably go down in some ways. But I'm not even sure about that. We've had AI going – ImageNet was 2012, and then natural language stuff in BERT and all that was 2015. And then ChatGPT was 2022. And where's all the job destruction? Why hasn't it happened yet? And why are you so fucking sure it's going to happen next? And why are you so sure no jobs are going to be created? I don't think it's nearly as predictable as people are saying.
· Patrick O'Shaughnessy
[00:00:00] S0: How would you describe the nature and scope of your ambition over the next 10, 20 years?
· Ben Horowitz
[00:00:00] S1: One of the things that I learned – so I had a mentor who's a great CEO by the name of Andy Grove. And he was the CEO of Intel, and he famously did the major pivot of them out of the memory business into the microprocessor business. Maybe the greatest tech CEO we've had. And one of the things that he said that, in a way, is very obvious, but I think is also profound is – if you're the leader in the industry, then the growth of the industry is dependent on you. It's up to you to expand the market. Nobody else is going to do it. When I think about the firm, I think of it a lot in those terms. The reason America is America, and there's many narratives on this, but the factual one is we won the Industrial Revolution. We had Henry Ford, and we had Thomas Edison. We had great entrepreneurs. They built great technology. The technology lead led to military lead, led to an economic lead, led to cultural dominance. None of that was by accident. Had we not had all those inventions, had all those companies, which led to everything from winning World War II, we'd be some other thing. We wouldn't be America. So, we're there again. Like, this is the equivalent change of the Industrial Revolution in terms of how everything works – governments, societies, businesses. And we're either going to be the leader of that technology, the provider of that technology, or we're not. And if we're not, we're not going to be the economic superpower, the military superpower, the cultural influence, the standard of the world that we are now. I think that would be bad. I think America's been good for the world and good for giving people a chance, like we talked about before. And so our role in that, from a policy standpoint, from a funding standpoint, from a helping people build standpoint – to make sure that that next set of great companies comes out of America or allied nations – the core ambition is to do our part.
· Patrick O'Shaughnessy
[00:00:00] S0: I want to ask about some of the ingredients to do that well, but just as a quick sidebar on Andy Grove, his book is incredible. Like, everyone should read High Output Management. What very specifically did you learn from him? Like, what did you see him do that impacted the way that you think or behave?
· Ben Horowitz
[00:00:00] S1: I've become so overly influenced by him, it's hard to even pin it down, but I actually wrote the new foreword for it. I actually think that's the best thing I ever wrote, was the foreword to High Output Management. But the reason I wrote that foreword was, it was my favorite book, and I wrote – The Hard Thing About Hard Things was basically intended to be the updated version of it. The thing in High Output Management that he did so well that I tried to do my own version of is – the concepts of management are easy. You'd need an eighth-grade education maybe to kind of understand management. It's not like physics. It's pretty simple. But the psychological part of it is extremely difficult, particularly for a young person, to be able to do. It's super confrontational. You're having to look through the conversation you're having to the entire organization. You really have to be Confucian at times. The good of the whole supersedes the good of the individual. And all these things are complicated to do. His big influence on me was, me trying to not only absorb that, but then tell it in a more up-to-date kind of modern way. I went to visit him. He had this award on the wall, which was Manager of the Year for the Santa Clara Facility of Intel. And it was from 1992. I'm like, "Andy, you were like the biggest CEO in the world. Why did they give you the Manager of the Year Award for the Santa Clara Facility?" And he goes, "Oh, man." He's like, "You know, Santa Clara, it was the lowest quality score. It was the lowest fucking score on everything at Intel. And so I was just like, I'm going over there to talk to them. So I go over there." And he said, "I brought a roll of toilet paper and I put it under my desk. I said, 'When are you going to get this facility up to code?' And they just started in with all this bullshit. Bullshit, bullshit, bullshit, bullshit. And I fucking reached under my chair, put out the toilet paper and I said, 'Clean up your bullshit and tell me when the fuck you're going to be up to code.' And in two months, they were up to code and they were always the highest rated facility thereafter." So they gave him Manager of the Year for that.
· Patrick O'Shaughnessy
[00:00:00] S0: When did you first experience the lessons that drove his success – this confrontational, psychologically difficult aspect of management yourself? How would you encourage other people to get a taste of it? They can't just read about it, obviously.