Transcript

[Harry] Brad, I don't think I've ever been quite so well-prepared for a show as I am for this one. You introduced me to some incredible people. Ravi Gupta, one of my favorites. I met Bob Pittman. Wonderful. I imagine you have him coming on the show, so he's coming on. Rich Barton, many more. But thank you so much for joining me today, Brad.

[Brad] I mean, Harry, thanks for having me. As you know, I'm a huge fan. And I have to say, it's an incredible honor to be podcast number 3,300. I mean, I didn't make the first 3,000, but you know, 3,300 is not bad.

[Harry] Well, you know...

[Brad] I left Harry speechless to start.

[Harry] Yeah, yeah. Thank you for that. That really makes me feel brilliant. The truth is, I wanted to build up to it. I didn't feel ready for you yet, Brad. That's the truth.

[Brad] Wow, quick on your feet.

[Harry] The fact that I had Girly on three times already.

[Brad] Seriously.

[Harry] Listen, I want to start with some context. So talk to me, we see Altimeter today, but just in terms of some context, what was the founding aha for you with Altimeter and how did that come to be in the first place?

[Brad] I really think my thinking on this in terms of why I wanted to be an investor started in childhood. I mean, I grew up in Indiana. I was a poor kid. My dad was an engineer. Kind of got forced into entrepreneurship. He was running a factory in Indiana and an acquirer came along. He promised the men they wouldn't get laid off. Of course, the acquirer in 1978 lays everybody off. So my dad heroically tries to hire all these men and compete and mortgages. The house ends up going bankrupt. Never declares bankruptcy. Refuses to, works his whole life to pay all that money back to the banks who had loaned him the money. And I was coming of age. I was third grade through probably sixth or seventh grade. It was tragic. My dad's growing broke. So I start reading a bunch of biography to try to understand the world. I come across Buffett Munger. This is probably a middle school early high school. I would show up at school early and I started, you know, a graph paper like charting stocks because I was absolutely, you know, enthralled with this idea that people who kind of look like me, Buffett was in Omaha and seemed to live a kind of normal life like the life I lived. I would really want to understand these markets and these things called stocks and and how companies work. Perhaps in a way to help explain to me why it didn't work for my dad. Fast forward, go to law school because I said, you know, I had to get that insurance policy. I actually did a stint in politics, thought I was going to run for office. That's a whole other vector of trying to live a life of purpose and have impact on the world. But I realized I was poor, went back to business school. In law school in 1995, I had gathered all of my friends around this computer in law school library. I had just seen the Netscape browser and, you know, I gathered these my friends around. I said, this is going to change everything. And I was convinced that not all, you know, I understood markets a little bit. I understood stocks and I was convinced that there was going to be incredible value creation and technology, you know, so I set about trying to get to Silicon Valley. In fact, I hopped on a plane when I was in law school and I flew out to Silicon Valley and having no idea what this place was about and just started knocking on doors, including the old venture law group trying to get a job. But I went back to business school in business school, 1999, 2000. Internet is going crazy. I feel like I've missed it. I'm too late, but I was hell-bent on getting to Silicon Valley. But my classmate who became my wife decided that we're going to stay in Boston. And I had met these two crazy folks, one crazier than the other, David Fialkow and Joel Cutler, who were investing their own money at the time. Entrepreneurial, interesting, thinking about starting a venture capital firm. And that was really my launch into investing was starting with David and Joel, helping them do their first deal, helping them think through general catalysts. That got me into the investing universe. I became co-CEO of their first investment on the general catalyst.

[Harry] All great stories start with, and then I met David Fialkow, am I right? I do want to start on something you've said before because it's leading into your investing career. And it's you mentioned the importance of the power law. And as I said, you said this was the single most important thing. And so, you know, we kind of have to start there. So, what is the power law and why is it the single most important thing, Brad?

[Brad] I mean, we all know that in investing, returns don't follow a normal distribution. We know it's 80-20, 90-10. That's a tiny number of firms and a tiny number of deals that represent the vast majority of the gross profits that get generated in the industry. If you look back 10-20 years, average VC returns are not that compelling. In fact, they're worse than the indexes. So, to me, while we all know this, very few people actually organize their day, their life, their firm around this concept. So, it's one of these things that lots of people know, but they don't necessarily know what to do about it. And so, for us, thinking about how we spend each minute of our time, thinking about where we're focused, who are the founders we're talking to. There's this idea in venture that two people and an idea walk in your front door and you get lucky and you invest in that company and it hits it big. Nothing could be further from the truth in terms of like how we prosecute our strategy at Altimeter. And I started learning that, I would say my first decade of venture, I made a ton of mistakes, 2000-2010. I spent a tremendous amount of time on ideas that even if everything was true, we're going to be small outcomes. And the truth of the matter is it probably takes as much effort, emotional and intellectual, to start a restaurant as it does to start Google. You really need to focus on what is the biggest trend in the world, what are the markets that you're trying to invest against, and then prosecuting a strategy that allows you to take advantage of the power law instead of being on the tail where you spend an equal amount of time but don't see the returns.

[Harry] So, I'm totally with you here in terms of the market sizing. What worries me though is that I will disregard new markets or small but growing markets because I'm focused on big. We can look at data storage, we can look at data analysis, we can look at enterprise compliance, massive freaking markets. But actually, completely category creation markets and massive expansionary markets. So many of these examples from your Airbnb's and your Uber's to your Twilio's of the world and enterprise, they weren't big markets at the time. How do you factor in market creation and massive market expansion into that? It needs to be big enough.

[Brad] I think you have to be careful of co-mingling markets and what I describe as super cycles. Okay, so in my investing career, there have been three what I would describe as super cycles. The first, the internet, everybody coming online. It was very clear even by 2000 that we were going to have hundreds of millions or billions of people online. So, the question was who were going to be the biggest beneficiaries of that? And so, I would describe that period of time for me investing or me founding companies. I concluded that search, making sense out of all this chaos, and e-commerce, which was really search for products, were going to be the two biggest areas of category creation. So, seen through that lens, Airbnb, which was making sense out of all the world's long tail inventory, right? In the way that Craigslist had done for all properties that were not on booking.com, like it actually fit, it wasn't a new market at all. That was a business prosecuting a strategy in a massive super cycle with massive tailwinds. I would say the second super cycle in my career was the move from search and e-commerce to mobile and applications that sit on top of mobile. And so, what led us to Facebook in 2012 or what led us to ByteDance early was this idea that this device was going to be the principle and replacement mechanism for entertainment, for communication, for interaction. And that wasn't a market. It wasn't, you know, when I met with Yiming, I don't know, it was 2016 in our offices. It wasn't that I was looking to invest in a news feed called Toutiao in China, right? There was no TikTok. There was no idea about is there a big market for news in China? The question was, are there big tailwinds for a continuous feed in China where there was no feed? And then I would say finally, I think probably maybe the biggest super cycle yet for us. What led us to Twilio? What led us to Snowflake? It wasn't that we had a strong conviction on the data warehouse market. What we had conviction in was that all the world storage and compute was going to move into the cloud, that it would be more performant, that it would be lower cost than every company doing it for themselves. And so, I think there's a lot of talk about TAM or markets. We focus on super cycles and power law.

[Harry] So, I love that. But my next question is, okay, we identify the super cycle, which as you mentioned that kind of being the movement of data and everything that kind of comes with that into the enterprise. You then have to pick. Just because you know the cycle, it doesn't mean you get into the great companies. And someone said to me the other day, one of the best VCs actually, they said, Harry, the outcomes are so much bigger than we could ever have anticipated in the winners. The only thing that matters is that you're in them. So, spray away, baby. Like be in everything because you can't pick.

[Brad] I honestly couldn't disagree more with that strategy. First, there are not hundreds of big outcomes. And so, if you have a diversified portfolio across hundreds of investments, you will have an index like return, which as we started off by saying, it's not very compelling in this category. Secondly, what I would say is if you look at the difference between the Sequoia round in Figma or the Durable round in Figma, it's the difference between having a hundred plus X outcome and a 2X outcome. A 2X outcome is nice, but those are not venture returns. And so, for us, I look for pattern recognition around companies that become the market leaders in super cycles. It was clear to me that Yiming could build the largest entertainment and newsfeed in China. That was a bet and it was a deliberate bet against a super cycle. It was clear to us that Booking.com, in fact, I teach a class on this at Columbia Business School. It was clear that they had less than 1% penetration of what was going to be a massive market, which was buying hotel rooms online and that that would compound for a very long period of time. And so that's the other closely related item here, Harry, which is I think if you sit back, if you're leaning back and saying, or if you're talking to all your buddies and they're like, this is the winner, this is the winner. To me, that represents a lot of momentum trend following. And the history of that venture is not particularly great. The history in venture has really inured to the benefit of first principle thinkers, who frankly, rather than waiting for the founder to show up in their office, they identify what they want to invest in and they go find them. For us, why was our mind fertile and prepared when I took a walk in a park with Mike Spicer and we talked for 70 minutes about a number of things and I had known Mike since business school. And in fact, the main idea that we were talking about the entire walk was pure storage. And at the very end of the walk, I said, Mike, what's the new thing you're working on? And he said, ah, something, but it's too early for you. I'm the CEO of it. Thinking about, you know, we're starting to recruit for a CEO, but you know, Benoit and Thierry, these engineers out of Oracle, have a whole new concept for a data architecture in the cloud. And it'll start with maybe a data warehouse, but eventually it's about rewriting the world's most important databases native for the cloud. And I said, that's what we want to do. But I couldn't have said that had we not spent a thousand hours thinking about it as public market investors and venture investors as to why we thought all data was going to move to the cloud.

[Harry] Do you worry about confirmation bias? I think I've had this before. I developed theses in my mind about how I see markets playing out in certain ways or, you know, super cycles developing in different ways. And then I find the company that aligns to my thesis and I jump on it. And actually my thesis just could be wrong. It just falls very much victim to confirmation bias. How do you think about that as a potential flaw?

[Brad] You know, we often say around here, we're anthropologists who just happen to be investors. And we spend our days challenging each other, thinking, inviting people into opine on the subject that we might have around, for example, the modern data stack. Obviously written a lot about, you know, on Twitter and Substack, et cetera, Discord. But every day we're pulling together the most interesting founders, engineers and others and study. Drinking the Kool-Aid is a recipe for disaster. But if you really have a culture of continuous learning, because there are plenty of things that we invested in where the facts change or where we were just wrong and throwing good money after bad when you were wrong is a really bad idea. I think being a public market investor is really a value add in terms of that type of culture when you're investing in venture.

[Harry] How do you know when you're wrong versus a blip? And how do you communicate that to the founders?

[Brad] Can't necessarily use all the specific names, but I would say this. The reality is we made this pre-revenue investment in Snowflake. And I remember Mike called me maybe six months after we made the investment. And he said, hey, we're not hitting the milestones we need to hit to get the next round of investing. So let's just put in a little bit more money, kind of an interim round because we'll get there. And we talked through the reasons why, et cetera. It was very clear to us that what was going on in the business had no outcome on the big bet. So that was a very easy decision. I mean that that conversation lasted a minute. Yes, we'll put more money in the business. Let's go. I would say, you know, we're an investor right now. Listen, there's been a massive dislocation in the world and there's a bunch of really bad stuff that occurred last year and a bunch of valuations that are totally not supportable. We have a software company where they misplan by 70%. An incredible group of investors around the table. But this particular group, the lack of truth-telling about what's really going on, confronting the truth. I mean, I think that's so important and having the courage. I'm not being a good friend to the founder if I'm blowing smoke up their ass in the boardroom. And then the second they walk out of the boardroom, all the investors have a different conversation. Being willing to tell the truth, as I would have wanted as a founder. Fialkow, when he was on my board, trust me, in 2000 when the world was coming undone, he talked truth. Or on September 11th, when planes ran into buildings, Rich Barton and I and David Fialkow, we talked truth. And so to me, I treated founders the way I'd want to be treated. I tell them exactly the same thing in front of them that I tell them when they're not in the room. That's the culture we have as a firm. The question of knowing when it's just a blip and when it's different, the facts in this particular software company radically changed. The facts in the world radically changed. Their products relevance in the world changed. Their performance changed. And so you have to accept that market feedback. And then you have a different question. Will you support me in the pivot of this business or not? But that's a totally new underwriting. That's a different question.

[Harry] There's also another underwriting, which is my biggest mistakes, which is are you willing to pay the new price, especially on reserves management? My biggest mistakes have not been not doing companies. And I didn't mean that arrogantly because I've missed many great companies. But it's been they came to me with the new price for the new round and I went, oh my God, no way. I'm not doubling down in this price. How do you think about price sensitivity on reserves management and capital growth?

[Brad] Let me ask you, why? Why did you deem the prices not to be fair or too high?

[Harry] They would treble three months after the last round.

[Brad] Okay, so I'm interrupting you, but okay, so they're 3x what they were three months prior. What were they relative to your target price at exit?

[Harry] They were above. They were still high.

[Brad] Okay, so listen, if somebody comes to me and they want me to invest in a company that is at a price higher than I in my own underwriting and all my research, right, assuming that things go well, I can't get to that price, then I'm not investing. That is just momentum. What has happened over the last 24 months has been a great disservice to founders and is the worst example, I think, of lack of discipline. And listen, we get caught up in it too. There is an entire body of work in behavioral economics around the Lemming effect, groupthink, etc. And boy, was this industry caught up in it over the course of the last 12 to 18 months.

[Harry] Well, listen, I spoke to Gurly before the show, obviously, you know, a mutual friend and a very close friend of yours. And he said, I want to hear Brad talk about value reshuffling. We've seen, you know, enterprise value of companies completely change and this has largely been blown through public markets and kind of multiple expectations. How does Brad think about value reshuffling with that in mind was Bill's question?

[Brad] Whenever Bill asks me a question, I always have to ask a clarifying question because it's usually smarter than I'm able to grok in the kind of first instance. But when you say value reshuffling, what do you mean by that?

[Harry] Essentially, we were willing to pay 30x revenues. And now we're looking at twillios of 4.5x revenue. I think it was when I last looked at it.

[Brad] I mean, as Bill well knows, and as our group chats often include in them, interest rates are to valuations, what gravity is to the apple. We can all say we don't do macro, we ignore the backdrop, but we can only say that because most investors have only been investing during a period of really low rates. So when you have low and stable rates, you've never had to think about it. But trust me, if you were investing in 1978 or 1982, you thought a lot about it. And in particular, the rate of change of rates is super impactful, particularly when we're talking about long duration, high growth assets. You have to accept that you should have had a margin of safety baked into the cake when you made the original investment. If you made the mistake and you didn't, you have to be sober today. What is the multiple that's going to get paid at exit? Everybody on my team, for example, knows that we're applying a 20% discount to the pre-COVID 10 year average. That is the exit multiple that we use. So now we have to say, let's assume everything goes right. Let's give the entrepreneur the benefit of the doubt. This is a super cycle, a company we love. We want to be investors. So let's assume all of that. But apply a rational multiple to that. Do we get a target return that's worth us writing the check? And oftentimes these 1 billion, 2 billion, 3 billion dollar software rounds that are done with very little revenue, you have to assume a tremendous amount goes right. And then you probably have to assume an absurd multiple. And everybody's counting on the greater fool. There's going to be a lot of money that gets lost in all of those rounds. And so I don't particularly care if it's full of all the great investors or anything else. We do our own work. I don't carry the bags for anybody. We do our own work. And we're going to force ourselves through that screen around valuation.

[Harry] There's a couple of points I have to pick up on. You said about the rate of change of interest rates being so important. How does the rate of change of interest rates impact our job so profoundly?

[Brad] So if you think about it, 2000, 2001, 2002, rates were at 6% or 7%. And there was a tremendous amount of value creation between 2000 and 2005, right? Because we had this massive secular tailwind in the internet. But the rate was fairly stable during this period of time and was moving, the market believed, directionally lower. When you have a period where we just went through something that is a major standard deviation event, which is going from basically 50 basis points to 400 basis points on the 10-year, it leads to a state of paralysis because our job is to predict the future. But we also have to forecast what is the multiple the world's going to be willing to pay at a point in time in the future. And so I think when people see a huge rate of change, now we have Larry Summers saying we may go to 6% or 7%. Well, your cost of capital is going up. You need to have some predictability about that cost of capital. Let me take it to its logical extreme, Harry. Let me tell you that you could earn 20% a year in a risk-free investment. How many fewer investments would you make? You would make 90% fewer investments, OK? Because the hurdle rate to that capital now gets so profoundly different. This is why interest rates do have the impact they do. It really matters. And so once you go to logical extreme, it becomes very obvious. We would all just go surf and ski and hang out. You would double your money every four years. That's a higher rate of return than the 70th percentile in venture. And it's risk-free. We spend a lot of time thinking about it, but we don't try to out forecast the best macro people in the world. What we effectively do is we look at the future strip and we say, what is the market telling us that future rates are going to be? So right now, the market's saying Fed funds rate will peak out in March of next year, something like four, four and a half percent. You know, we don't try to outsmart the market. We just say, OK, let's use that as, you know, kind of a rule of thumb. There was one period of time, October of last year, where I went on CNBC and I said, I think that the market could very well be getting it wrong. Once COVID normalizes, I expect us to go back to January 2020 levels on interest rates. And if we do that, then multiples on the NASDAQ will be down 20 to 30 percent, which means the NASDAQ will be down 20 to 30 percent. I wish I had followed that wisdom as well as I articulated it. But the reality is nobody should be surprised. And in fact, in some ways we should be celebrating. You know what what rates mean today? It means that humanity beat a global pandemic that in March of 2020 we thought might wipe out. 20 percent of the world's population. That's what this means. So I suspect that the new normal is going to look a lot like the old normal, but we have to get through this period of massive uncertainty and volatility so that you and I can underwrite to a predictable cost of capital.

[Harry] I think it was Chamath on the panel that you and Gurly and Jake Allen and Sacks did together, who said you would never be investing in this period of uncertainty with valuations being so transient and fluid because it's almost irresponsible to invest in a time when no one knows where valuations are going to rest. And then I'm like, listen to Gurly and Gurly says, no, the best investors invest continuously and you're always investing and you're always in market. And I'm going, which one of these incredibly smart people do I believe?

[Brad] I mean, well, come on, if it's Gurly versus Chamath, you know which way you got to go. I mean, just put it out there. No, they're both they're both brilliant. And here's what I would say on that. Our strategy has always been we're not going to say all or none. As a firm, we say less or more. So your aperture should be expanding and contracting based upon what you see going on in the world. So if multiples are at an all time high, like they were last October and I went on all in and CNBC, we showed the charts, et cetera. We talked about the things we were concerned about. If multiples are at an all time high, your aperture should be contracting. That doesn't mean you shouldn't do any deals, but you should be really clear that you're only doing the best deals because only the best deals will clear those valuation hurdles. At the same time, when the world's panicked, when there's blood in the streets, as Buffett says, I agree with Gurly, your aperture should be expanding. But let's be clear about where we are today. This is not a blood in the streets moment. It feels catastrophic because we have growth names that are down 40, 50, 60, 70 percent in the public markets. But look at where they are compared to where we were in January of 2020. For most of these companies, it's just getting back to the normal or slightly below normal or average valuations. That's how far in left field we were in terms of valuations, right? So don't anchor yourself to the stupidity of the last 18 months. Do a de novo underwriting based upon the facts as they exist today. So for Altimeter, we just signed a series A deal. We have a series B term sheet out. I still think that valuations are full. I think valuations in venture and CD&E are still overvalued. So we have a lot of work to do. But the secular curve around value creation and disruption, all data moving to the cloud, there will be more value created over the next 10 years than over the last 10 years. But price of entry matters.

[Harry] I want to ask a couple of questions on the back of that, which is I heard on I can't remember where it was that you distributed 6 billion last year, which was I think more than all of your venture funds combined. My biggest mistake when I look back over the last 18 months was not taking liquidity on a lot of positions that I had. Stupid. And I look back now and shoot myself. My question to you is, how do you think about when's the right time to take cash off the table and when to bluntly exit versus the newer mindset that we often see, which is I know better than my LPs when to distribute.

[Brad] As long as I've been in venture, so for over 20 years, this is the debate. And here's how it goes. When the world's really hot, everybody wants to have a permanent fund and never distribute. Everything is going to grow to the moon. When the world sucks, everybody wants to sell like literally the impulse is the exact opposite, the exact opposite of what it should be. And so we just try to use a really quantitative framework as public fund investors as well. I think it forces us. Rich Barton once said to me, I showed up to a board meeting at Zillow and I opened up my model and I gave some feedback. He said, what the hell is that? And I said, it's my model. He's like, why are you building a model on the company? It was kind of a joke in the boardroom, which Gurley was in and Jay Ho was in and Maffei was in. But even though we were early series B, I was already thinking of forecasting ahead to say, if we did this, how does it show up in the numbers? So for us, when I think about distributing is, do we still have venture returns left in this over a reasonable period of time? And if the answer is we don't, we don't see a three to five X over the course of the next three to five years in that deal, then we're obliged to distribute to our LPs because that's the deal we've made with them. The most important thing is what is your deal with your LPs, making sure that you have LP alignment, talking the other night. You know, everybody wants to hold and compound things forever. You know, the number of companies you should have actually held on to, we're talking less than 20. Everybody references, well, if I held on to Apple or I had only held on to Google, I mean, we are talking about such a small subset. We distributed, part of that was locked. We could have done more, but we were following a process. But I will tell you, most of that distribution, not all, but most of that distribution was Snowflake. And the truth of the matter is, I think Snowflake will be worth a lot more in the future than it is today and even more in the future than it was then. So they're never easy decisions. But the way I feel about Snowflake, I felt about less than five companies over the entire course of my career. And so that's what made that one as difficult as it was.

[Harry] You spoke about the deal with your LPs there. I think the biggest problem that I see from speaking to LPs is managers aren't marking down their books. Either fast enough or aggressively enough. And it's causing this misalignment between publics and privates within LPs books. Which is meaning they're going, whoa, whoa, whoa, I'm not allocating anything to venture for a while because it's so out of kilter. And it's because managers aren't either doing it at all or doing it aggressively enough. How do you think about the right way for managers to think about marking down books?

[Brad] I think our policy is pretty standard with most managers, which is we don't spend a lot of time marking up our books when the NASDAQ's going up. And we don't spend a lot of time marking down our books when the NASDAQ's going down, when the facts change or new rounds intervene or down rounds occur. Obviously, we will make changes to the portfolio. But again, what's so important is I have that very clear expectation with my LPs. How do you think we ought to think about valuations? I would take everything in your portfolio that received a valuation over the last two years, over $500 million, and I'd mark it down by 50%. If I look at the average gross stock in the NASDAQ, it's down 50%. Every LP needs to assess for themselves how they carry it. So I don't think it's just a GP issue. Ultimately, I have different LPs. Some are longer duration. Some are shorter duration. Some have the denominator problem that you described because they're running an endowment model. Some don't because they're families and they want to double down. I think it's just important to talk clearly with your LPs about what your approach is. And then if you get the question, like I got, a useful heuristic, if you want to mark up and down with the NASDAQ, then just put all your exposure in a book. Hell, you can mark it every day. What's the NASDAQ up today? What's the NASDAQ down today? And mark your book accordingly. Have a score sheet. Put it up on the wall. We don't need to do that. We don't do it, but it's not hard to do.

[Harry] Can I ask, on that deal with your LPs, we've kind of touched on before, but in terms of LP alignment, you have this slight tension between fee gathering and AUM collecting, which we've seen a lot of people do over the last few years. And, Brad, me and you both know the dirty truth, which is it is a fucking lucrative game if you want to do it and do it right. And some people have, absolutely. But you will obviously see a damage to, like, multiples. So, how do you think about this misalignment between fee collection and maximizing multiples on smaller pools of capital?

[Brad] Again, you're right. It's structural. One of the ways, like if I'm an LP and I'm allocating to somebody, I need to think about their economic alignment. At Altimeter, the return to me of an incremental turn on the multiple is a lot more important and dramatically more important on an after-tax basis than return to me from fee, from management fee. I'm very well aligned with my partners that I'm going to size our funds in a way that I think balances maximizing return and building the firm. For example, our funds started off at $100 million, our first VC fund. VC6 was closer to a billion and a half. We could have raised a lot more than a billion and a half. Why did we choose a billion and a half? The space we occupy at Altimeter, which is sitting in between the best seed and investors in the world and the public markets, and really helping invest in those companies like Snowflake, like Modern Treasury, like DBT, pre-revenue and growing with them all the way to public markets. We need scale to do that. And so, how much is enough scale, but not so much as it becomes hugely dilutive or even meaningfully dilutive to our returns? Deploying a $10 billion fund or, God forbid, a $50 billion or $100 billion fund like Masa tried to do, you already know you will not generate alpha in that. You are getting the beta of the global tech industry when you're investing those dollars at best. And most likely, there'll be adverse selection because the best founders in the world don't want to be part of that portfolio. The best founders in the world want to be with the best brands and the best brands in the world aren't raising that size of fund. And so, for us, we're perfectly happy and content. If I get a call over the weekend and a company that we love needs $100 million, we can write them that check. At the same time, I can write a $10 million check like I'm doing today in a Series A investment that has enough impact on that fund to really matter.

[Harry] I think what worries me, honestly, Brad, is that I speak to many LPs and I say, why would you do that investment into this $3 billion fund when you could have done it into these great managers with a $250 million fund? The opportunity cost of your dollars and the multiples that are associated with each is starkly obvious. And they go, ah, yeah, I agree, Harry. But like, you know, I'm picking a brand name, Andreessen. It's Andreessen. I've got no incentive. I get paid a salary and I get paid a bonus. Very few LPs obviously have an upside. And so, fuck it. Why would I risk it on these two people when I could do Andreessen?

[Brad] You just answered your own question.

[Harry] Do you see the structural problem with LPs yourself?

[Brad] I won't describe it as a problem. I'll describe it as just a reality in the world. So, for example, when I got started in this business with David and Joel, sovereign wealth funds were not allocating to venture. Pension funds weren't allocating in any real way to venture. Swinson and Yale were in the vanguard of allocating to venture. So it's important for GPs to understand the world has structurally changed. I'm getting cold called from Middle East sovereigns who want to invest. This is going to mean that we have a permanent increase in the amount of capital that exists in venture capital. A permanent increase and pension funds went in. And by the way, their hurdle rate, what they need to make on that money is much lower than what MIT expected to make. Now, if you're Yale or MIT, you might say these guys are ruining the party. And to some extent they are. The industry is going from highly fragmented to much more industrial scale. Returns are going to compress. The reason I still remain so optimistic, where we started. It's a power law industry. It doesn't matter that you're in 200 deals. Hell, you don't want to be in 200 deals. The question is, is the best founder, is Mike Spicer and Bob Muglia going to do that deal with Altimeter? Or are they going to do it with a hundred billion dollar fund or a ten billion dollar fund that can't have the impact that doesn't stand in our shoes? I think the best founders in the world want to be with the best partners in the world who've proven themselves to be much more than just a commodity when it comes to money.

[Harry] I have to ask you about the portfolio construction side. We've talked about it and touched on it a little bit. You've spoken before about being sufficiently concentrated. What does that look like in your mind in terms of the optimal concentration? Because I think I struggle more with it. I don't think people are that good pickers. And I think diversification is more needed. And you, I think, think concentration is needed. Help me understand why sufficiently concentrated is better.

[Brad] When I think about concentration, you've got to know, again, I come out of this Buffett school and I think, as Buffett has said, diversification is a great way to preserve wealth, but a terrible way to create it. And so I think diversification in many ways is the greatest myth perpetrated on the investing public. The idea that risk mitigation is the equivalent of diversification. Anybody who lived through 2008 knows that all asset and all pricing was correlated. Hell, look at a chart on any technology company over the course of the last nine months. How much did diversification help you? And so what I want to do and what people should pay me for or choose not to pay me for, right, like they either believe or they don't believe, is can you, are you in a position, intellectually, network, conversion, etc., to generate alpha? And if you are, if I find a company where I have a level of conviction, like I did in Booking.com and Priceline 2004, Google in 2005 or Snowflake in 2014, if we find those opportunities and we re-underwrite them at every phase, mentally flexible, stay open to the idea that you're wrong. But I want maximum dollars. Again, it's my money. I'm taking my partners along for the ride. I want maximum dollars behind our best ideas. Why the hell would I put an incremental dollar in my 10th best idea or my 15th best idea when I can put more money in my best idea? At the end of the day, you've got to live with the result, right? And the result is there's batting average and there's slugging percentage. Altimeter needs to have a really high slugging percentage. When we swing hard at the ball, runners are in scoring position. How often do we hit the ball? That, to me, is what makes the grade in this business. I see a lot of venture capitalists and others. They say, oh, yeah, I was in that deal. I was in Snowflake. I was in this. I was in that. And I say, well, how much do you have in it? You know, I had $1 million in the late stage round. It's like, who cares? The gross profit dollars come from having conviction before the rest of the world does and putting sufficient money behind it. Our first fund, VC1, hell, I couldn't even raise it. I was 20 or 25% of the fund. We put over 30% of that fund in Snowflake at a point in time that the world thought we were crazy. The world didn't, you know, didn't think the cloud was pessimistic about the cloud, to be honest.

[Harry] Brad, that is a bet the fund decision. Like, you're not who you are now. If you were to do that and it went wrong, that could have been the end of altimeter. If you had lost the money, 30% to nothing, that's a tough thing.

[Brad] I would say a couple of things. Number one, never go over a structure like a cliff without first inspecting the other side. It's massively calculated. And then you prepare your mind for those moments. You know what you're going to feel like when the amygdala starts firing, when that frontal cortex says what you're doing is a mistake. So unless you've done the work, unless you built the model, unless you have the conviction, you won't be able to do it. What the outside world oftentimes perceives as tremendous amount of risk to the person who's done the work, prepared themselves. Of course, you can't eliminate risk. But often for the protagonist who's actually doing it, it feels much less risky than everybody who's perceiving it from the outside in. If Sequoia was adding money to Airbnb in the Series B or Series C, a bunch of people on the outside may say, oh, my God, that's so crazy. Look at the valuation. I can't believe they're doing that deal. It's so risky. I'm certain they didn't feel that way. I'm certain we did not feel that way in every subsequent round we co-led in Snowflake because we had done the work, prepared ourselves, had the information, had studied. We looked over the cliff. We understood what it meant for the fund. But yes, I will conclude by saying this. My goal is not to raise 50 billion dollar funds and never take any risk. And we get to have choices what we do with our days. I want to live a life that matters. I want to do shit that matters. And that means that when you believe something, you actually do something about it. You actually stand with a little conviction behind it. If we're not doing that, then we're not the firm I want us to be.

[Harry] Can I be blunt, Brad? You spoke about kind of calculating risks there. And my question to you is I spoke to Sonali before the show and she asked a brilliant question. She said, ask Brad with that element of like we all took on a more risk forward mind over the last 18 months. What are some of the biggest or most risky mistakes that you made over the last 18 months that you have learned from that maybe you haven't shared?

[Brad] You know, so our cultural North Star at Altimeter is essentialism, right? It's kind of an operating roadmap for me in life. But minimalism is to Johnny Ive. Essentialism is to life design and business design for us. So the art of doing less, better. Everybody in our firm would tell you that that's what our cultural North Star is. They'll tell you how we practice it. And so for a firm that prides itself on that, there's no doubt over the course of the last 24 months where we're all working remotely, where there's a lot of FOMO, where the cost of capital is really low, we did more than we should have. And I think most folks would raise their hand if they're being intellectually honest and say that that's the case. One manifestation for that was us doing a SPAC into grab. And so if you think about SPACs, people might say, oh, you know, Brad was chasing the latest fad. But you know, as Gurley knows, I started my career as an IPO lawyer. I've been studying IPOs for over 20 years. I helped Bill put on the direct list conference. We spent a tremendous amount of time thinking about a more efficient ways for companies in our portfolios to come public. And when we looked at the SPAC, we said, you know, if done right, this could be a third door to the public markets where you have an equity sponsor who's willing to raise their hand, write a check into the deal and help the company get public. We studied it. We thought about it. We tried to make sure that we weren't just jumping on the bandwagon. But ultimately, what you're doing when you do a SPAC or an IPO is you're committing to buying something at a price. And the biggest mistake we made with grab is we committed to that deal in April of last year. I told the teams we need to have this public by June or July because the world can change. And if the cost of capital changes, valuations will change. So we know what we're underwriting to in April. But the truth is that deal didn't get public until December. And so it was like an IPO right on the doorstep of the single biggest change in interest rates that we've had in 30 years. And multiples radically changed. Grab's a good company. It's got good management. I'm a big believer in Southeast Asia. I still think philosophically the idea of a SPAC as a third door makes sense. But the prosecution of that at a period that the world was radically changing was a problem. What's your lesson from that, though? Because that seems like a timing on pricing change that is an externality to your actions. Like you can't help that. You know, honestly, there's an opportunity cost to our time, Harry. So the essentialist in me. Johnny Ive recently, I was listening to a panel, an incredible panel. He and Tim Cook and Laureen Powell Jobs, I was listening to them talk about Steve. And Johnny said, Steve would say to us, unless we are saying no to great ideas, great ideas, not just the good ideas, not just the average ideas, but unless we are saying no to the great ideas, then we're doing too many things. To me, the practice of essentialism is kind of like my practice of yoga that I've been doing for over 20 years. It is not just a statement you put on the top of your whiteboard, but it's something that you aspire to every single day. Is this accretive to who we are as humans? Is this accretive to who we are as a firm? Is this accretive to my intellectual understanding? And if it's not, we shouldn't be doing it.

[Harry] Brad, how do you advise young people and young partners you have in your team, like you're friends with, who are looking at our books today going, fuck. How do you advise our generation who's never been through this, got high on their own supply last year and now are going shit?

I mean, listen, I came into the business at exactly this time. I mean, I graduated from business school in May of 2000. David and Joel were starting GC and I was running our first investment. So this pattern recognition comes from a painful exercise. I saw my dad go through it and my first trade at Altimeter was November 1st, 2008. Literally into the teeth of that crisis. And remember, November and December were wipeouts. The market bottomed in March of 2009. And so the advice I give to them is if you don't have a stomach for it, find a different thing to do. This was never meant to be a get-rich-quick scheme. The people who thrive in this business, Mike Moritz is great in this business because he has incredible curiosity and passion for understanding the world around him. And he expresses that finding in his investments. Same with Bill Gurley, same with Brad Gerstner, same with jam and ball on my team. When I look for recruiting, Paul Reeder, who's my mentor and incredible investor, he said to me early in my career, he said, it's harder to pick people than it is to pick stocks. And he's like, I'm taking a chance on you because you have plausible alpha. He said, the road is littered with guys and gals who went to Harvard Business School who never made a nickel in this business. But you're a lawyer, you've run three companies, you've got this network, you're a contrarian, you see the world a little different, you were charting stocks when you were in high school. Like, there's a chance you have a little alpha. The truth of the matter is most of the people you know, Harry, they're not great. They don't have alpha. And like, we're gonna flush that out real quick. I've lived through two of these downturns and I've watched people get flushed out. I've told you, I've watched you. You have alpha. You came up with this hack, 20 VC. I'm going to figure out how to get Brad Gersner and Mike Moritz and Bill Gurley and all their friends to talk to me. And I'm going to build the most potent top of funnel in the world. I'm going to bolt on this great business model underneath it called Venture Capital. That's a hack. That's alpha. Okay, I asked everybody that we're going to hire, I asked them this question. Tell me how you've made money. You know the number of people who went to Harvard Business School and worked at Goldman Sachs who can't answer that question? They've never had to make fucking money. I'll tell you, you asked me that question. The first answer I'll give you is in the sixth grade. I had my mom drop me off at the gas station. I bought candy. I took it to my locker and I sold candy out of my locker at a 2x markup. That's how I first made money. So I've spent my life figuring out hacks on stuff like this. And if somebody doesn't have that grip, they can't answer that question. That's a disqualifier.

[Harry] What's the best answer you've had to that question?

[Brad] I'm trying to think through the current list that I have. But honestly, Harry, I don't even really care about the answer to the question. What I care about is they have an answer. When you don't have an answer to that question, you know who has a lot of hustles? Jason Calacanis. And by the way, respect. And some people will say, oh, that's a liability. You know, he's always hustling you. He's always selling you. He's always doing this. But when I look at somebody and I say, how the hell did they get here? You and I were talking about. How did Carl Eschenbach go from being a wrestler in Pennsylvania to an incredible venture capitalist at Sequoia? That intrigues me. Having the curiosity, understanding those biographies, I think, is important.

[Harry] Do you worry that hustle can get in the way of loyalty and discipline? Like, if you're so intent on, like you said, that money-making, that hustle, that drive, then do they maintain the discipline when times are crazy? Do they maintain the loyalty to you, Brad and Altimeter, when someone says, hey, there's a shiny new toy over here?

[Brad] I would say a couple of things. Number one, having figured out a way that you personally can build alpha is a condition required, though not sufficient. First, I know plenty of people have a good hustle, but they're actually not great thinkers. I know plenty of people have good hustle who don't have great discernment. So all I'm saying is when you're looking at recruiting somebody, is it plausible that they have alpha that makes them different from everybody else in the world? Number two, what I would say is, listen, my philosophy about people who work at Altimeter is that this place is not indentured servitude. You're all free agents. I say to everybody who comes to work here, you may work here a year or you may work here the rest of your career. The only thing I really care about is that it's an incredible experience for you and an incredible experience for us. I've had three analysts, including my first analyst, Dennis Hong, who agreed to come work for me. He said, listen, I want to work there three years. I want you to help me get into Harvard Business School and I want to learn everything I can so I can start my own fund. And I said, deal. And we kept that deal. Went to Harvard Business School, he dropped out and he started his own fund and I'm an LP from day one in his own fund. And so, to have former employees who I feel that way about, Ram, James, who've all gone on to start their own funds, I don't view that as a breach of loyalty. I view that as an example of the strength of the type of people that we attract.

[Harry] What have been the biggest hiring mistakes you've made? I've made mistakes around logos. They worked at Xfirm before, they must be brilliant. In terms of hiring mistakes over the years, are there any that stand out to you?

[Brad] Rather than focus on individual people, what I'll talk about is structure. There are a lot of ways to make money in this business, there are a lot of ways to lose money in this business. I think you have to be very clear about what is your North Star? Who are you? What is your strategy? How do you differentiate? And then build an organization that reflects that strategy, right? So for me, I want to be an analyst. I want to sit at the head of the table. I want to be chief thinker. You know, I'm not some CEO who has MDs reporting to me, who have VPs reporting to them, who have associates, who have analysts reporting to them. That structure to me is hell. I would want nothing to do with that. I don't want to spend a day of my life working in that structure. We have an incredibly flat organization. We have 13 or 14 analysts, we all call ourselves analysts, where we study. That's what we do. We study, we try to find things that are consistent with that thinking. I would say that during the period of COVID, because we were all virtual, we had a little bit more layering because it was just harder organizationally. And that was a huge liability for us. I didn't like it. We've since said everybody has to be back in the office, got rid of the layers because the layers don't work. At the end of the day, the principal source of both maximum fun for us and maximum results for us is prosecuting a strategy that's very flat. So I would say most organizations that are growing, whose fund size increases, they feel like I got to have a certain number of partners because they do two or three deals a year and I want to have this much money, so I have this many partners. The vast majority of organizations, okay, and I'm talking from Facebook and Twitter, all the way down to GPs. They would be well served to be much smaller, to be essentialists in the people that they have because it's very likely that your bottom 20 or 30 or 40% of your organization is dilutive, not accretive to your results.

[Harry] But it justifies AUM because LPs go, but your team is so small.

[Brad] Listen, I hear from LPs every day. The number one thing they worry about is how possibly can you guys do the stuff that you do with the size team that you have. Relative to all of our peers, we're way smaller. And I said, ultimately, you have to decide what you want. We prosecute our strategy as SEAL Team 6. Go talk to all the entrepreneurs we partnered with. It's not like I do a deal and then I throw you into a consulting group who may help you with your HR or may help you with your marketing. They get me, they get Jiamin, they get Pauline, they get Gwen, they get this team. We are one team.They get all of us and we bust ass for them. That is a huge differentiator. And you know, so I don't think you have to have a larger organization to justify increased AUM. I suppose if you want to go raise a hundred billion dollars, then fine. Do like SoftBank did and hire 50 people over a course of a year. We saw that turned out. But for us, no problem at all. We could manage twice as much money as we're managing today with the exact same team because this game is about picking the right ideas, making good decisions, thinking clearly, having conviction. It's not about your umpteenth analyst who's doing the umpteenth deal because their buddy over at XYZ firm is doing said deal. That is a recipe to mediocrity.

[Harry] I totally agree. Essentialism is a core strain of your mindset in life. You also have the childhood that you mentioned earlier. How do you think about all of these combining to your, your relationship to money today? What is your relationship to money today, do you think?

[Brad] Wow, this is deep. And I've done a lot of reflection on this. If you would have told me I have, was going to have what I have, let's say when I was 20, and then you would have said, describe to me the house you're going to live in, the car you're going to drive, the life that you're going to live. I would have described to you a life totally different than the life I'm living. From as early as I can remember, sixth grade, I was like, I have to make a million dollars by the time I'm 30. It was a dragon in my life because it destroyed our lives. When my dad went broke, destroyed his health, his marriage. So when you grow up in that, like that is a real dragon. That's a beast you have to slay. Fortunately, because Fialkow and Cutler gave me a shot, I was able with NLG to slay that beast right at 30. And shortly thereafter, Bajel Samaya and I, Bajel's now running Lightspeed. We co-founded my second company or our second company together called Open List. And we sold that. Another little base hit, double. And I'll tell you, when I had a few million bucks, I was like, good to go. Like I had slayed the dragon because I didn't come from a life of accoutrement. Remember, when I started Altimeter, I started with less than five million bucks. I couldn't even convince my friends from HBS to contemplate being my partner in this thing. They're like, dude, you're embarrassing yourself. Go back to par. You know, so to me, I slayed the dragon around money. My life and priorities totally shifted. Now my priority is to raise two sons that have humility, understand the burden of having things, and to know what it feels like to climb up the mountain rather than being dropped out a helicopter on top of the mountain.

[Harry] Is it difficult giving them the perspective, I mean this respectfully, given you do have a lot of money and you've earned it and it's very well earned, but they are brought up in a different life than you had. Is it difficult providing that perspective to them as a parent?

[Brad] It is the most difficult, and I've discussed this with lots and lots of people on the topic. And here's what I've concluded from wisdom from whether it's, you know, from Buffett to Reeder is it's not what you say to your kids. Like you can say, oh, be humble, and then you go into your 18,000 square foot home. It's not what you say, it's what you do. It's the life you live. It's how they see you treating others. It's the choices that they see you making. I ended up, you know, saying that my life is different. I live in a small house. In fact, I had a founder of a Decacorn, you know, who had visited other investors' homes and he came over to my house and he was so floored by it. He said, can I take a video of this? We're sitting around the fire in the back, you know, fire pit in the backyard. He said, I've got to show this to my wife. She won't believe that you live here. And so for me, my children know that we could afford a much different home, but they know that we choose to live there. And now my son says to me, Dad, I love that we live here because I'm not embarrassed to bring any of my friends here. Like, I love this house. I think there's something that we're doing right. But yeah, I think it's about how you live your life every day. And listen, I have plenty of friends who live in big homes. And that's awesome, too. Like, we all have agency. We all have choice. I'm not trying to say I've denied myself all the life's privileges. I certainly have not. But I do think that, you know, there's a lot of wisdom in Buffett living in the home that he lives in and, you know, living the life he does. So I don't have as many cashmere sweaters as Chamath, but I do enjoy having a good time.

[Harry] Can I ask, I think ego often comes with money. How do you think about your own ego and ego management? It's so easy, you know, you're top of the industry. Everyone will praise you. Everyone will tell you how brilliant you are. You think you're freaking great, naturally. It's a human response. How do you think about ego management and how would you advise me on that?

[Brad] First, the number of people in life who surround themselves with sycophantic others who are their yes people. Tell them what they want to hear, afraid of speaking truth. It's almost everybody at a certain level because you can afford to do that. You can fire the people who say mean things to you and or disagreeable things to you and you surround yourself with people who all agree with you. Listen, it starts with I have three siblings and an 86 year old mother and we have a culture in our family of speaking truth. My sister calls me fancy pants because I don't come back and visit her enough. Siblings, dear friendships, you know, you talk to some folks, you know, Lexi Reese, who's a dear friend. I mean, I get out of line on something or I, you know, I'm going to hear from Lexi and she's going to remind me of my priorities. And so having friends in your life who remind you of those priorities and then children, my kids, the things that you think are important, your kids probably won't. And I have kids now, we do a service, a family service trip every year with Give Power, an incredible organization that uses solar microgrids to light up schools and health clinics around the world. And it was early in our kids. I don't know how old they were, probably four. Our oldest was four. Michelle and I were in Hawaii at the four seasons. It was spring break. We paid an absurd amount for this room or whatever we were staying in. Everything was perfectly curated. It's perfectly fun. And I said, this can't be the end of our story. We didn't work this hard to have this be the life that our kids are going to live because it's like dropping them out of a helicopter on top of the mountain. And so I said, we get three or four vacations a year. How about we as a family, we take one of those vacations and we go to a service trip. Fortunately, I found some incredible people around Give Power. We partnered with them. We came up with this idea where we fund the capital projects, a microgrid from Nepal to Tanzania to Colombia. And then our family goes and lives in the village for the final week or two weeks or three weeks of the project. And I've been able to take a lot of friends on these treks with us. You know, and again, now my kids say it's one of their favorite things they do all year long. Again, if you do this once, it's maybe a gimmick. If you do it twice, it may be a curiosity. But if you really thread this stuff into your life, it becomes your values. We're doing another trip over Thanksgiving. And would I like to spend that with my family or friends or other things or in some fancy? Yeah, there's part of me that wants to be on some fancy boat or doing something. But I know how important this will be in the final reflection.

[Harry] Money, it does change the relationships you have with family and with friends. The perception that they have of you changes, I find. I always find they want something from you now. There's always a reason why they want the dinner. And it changes so many of your relationships. Have you found that? And how do you think about retaining purity of relationship when you know that a lot of people actually now want something from you?

[Brad] What I would say is you mentioned a few people at the start of the show, Bob or Rich or others who've been Fialkow like brothers for 20 years. I can't do anything for them. I can't give them anything. My buddies from high school will be the first to call me up and call me out on something. Hey, I saw you on CNBC. You look like an idiot. Fix your hair. Do this, do that. So I think it's about the choice of the people that you surround yourself with. I don't have a lot of people in life who I feel like are hangers on, looking for something, perhaps because I just don't do that. Right? I don't have the 400 foot yacht in San Tropez. So maybe that, you know, like hanging out with me is eating a cheeseburger at Bucks and sitting in my backyard around a fire. And maybe the people who would be more inclined to hang out with hangers on aren't as intrigued by that. But maybe I'll leave you with this because I do think it's related to it, but not something you asked specifically. A lot of my friends say, Brad, you know, you kind of live in your life at warp speed. You know, you're trying to pack all this in like, what's this all about? You know, and I mentioned I lost my dad when I was young. I lost my best friend when I was young. And I honestly, if a young person comes to me for advice or my own kids, this is the most important thing. We are all just passing through like this life is really, really short and as humans were programmed not to think about mortality. It's actually a survival instinct. But I think that that leads to really bad decision-making because people tend to meander their way through life. They don't have the intentionality and then, you know, lots of studies of people on their deathbed is all the regrets they have. And so I would say that losing my dad early losing my best friend early. I made a commitment at their funerals, like I'm not wasting it. I'm going to love big. I'm going to be intentional about how I spend each day. And I was recently reminded about this. Lorraine was talking on this panel with Johnny Ive and she said, you know, she goes, I'm not sure why Steve always had the sense, but he always had the sense that he had to get it done now because life was short. Lynn Miranda talking about in Hamilton. Why did Hamilton write like he was running out of time? The Federalist Papers. I mean, all younger people, particularly the ones you reference, would be well served by thinking about what is the eulogy values they want to live by. What do you want people to say about you when Harry Stebbings calls them? And I certainly don't want them to say, oh, he amassed the most money or he had the biggest firm or he has the most AUM, right? I actually want to live a life of purpose that matters, of impact. I want to show that to my kids. I want my kids to live that life. I think it's a recipe for happiness. And I actually think it's a recipe for having a much more interesting life, a much more authentic and enriched network. And I think it allows for great success in the business.

[Harry] I'm so pleased you answered that. That was Jiamin's question. I want to move into a quick fire. I say a short statement, you give me your thoughts. Does that sound okay?

[Brad] Whoa, you're not going to use the list I posted on Twitter, are you? Oh, no, no, no. This is much better. Mine are better than quick fire than yours. Do you know, Brad, I've done 3,000 of these. I know, you're rubbing it in. I'm guest 3,301.

[Harry] I love you the most. What's your favorite book and why, Brad?

[Brad] For me, one of the most impactful books was Snowball about Buffett, realizing that compounding is one of the greatest forces in the world. Start with a really small snowball on a really long hill. And I'm talking about compounding in love, compounding in impact, compounding in invention, compounding in investing. Figure that out in life and just get started and compound your way along the way.

[Harry] Are SPACs done? How do you evaluate the next few years for SPACs?

[Brad] Listen, I don't think SPACs need to exist in the world. They're a mechanism by which companies come public. They have forced more innovation in the traditional bank IPO. They have forced more innovation in the direct list market. And what I really care about, what I'm trying to solve for, is making sure that entrepreneurs and founders of iconic businesses have a fair and easy step into the public markets. It shouldn't be so Byzantine. And we want to be partners to them because remember, some of the greatest venture returns in the history of venture capital occurred in the public markets. Booking.com price line from $1 billion to $100 billion. Go through the list. Those are venture returns in plain sight.

[Harry] Best investment advice you've ever received.

[Brad] Buffett, marry somebody you love. If you have a harem of a 100, you don't get to know any of them very well. Apply that same logic to your portfolio.

[Harry] What is the most common investment mistake you see people make?

[Brad] I think the behavioral dynamics, the behavioral psychology around groupthink is super powerful. People love to follow others into deals because others did deals. It is very hard to resist. I would say young analyst associates, partners in Silicon Valley are filled with FOMO, follow too many others rather than doing their own work.

[Harry] What's the biggest investment mistake that you've made personally?

[Brad] Not writing a bigger check into ByteDance.

[Harry] What is so special about Burning Man for you, Brad?

[Brad] We can make a whole show on this. Maybe we should get rich and Bob will do a whole show on this. Now listen, there's this view in the world that Burning Man is, you know, some hedonistic exercise of drugs and orgies and whatnot. And that's fine because it just means there's a lot of self-selection. Not everybody's going to go and not everybody should go. For me, its core value is no judgment. Truly going to a place where you suspend judgment about what you see, the things going on around you, the people, etc. You see the art of the possible. It is a great open source experiment in humanity. It's an open source festival of 75,000 people that could not possibly exist the way it does if it had a CEO or a head developer or architect who tried to micromanage what that event looked like. Not only do I see great friends, not only do I have fun and I'm not saying crazy shit doesn't happen, it does. But for me, I think it embodies a real spirit that we could bring into our daily lives, which is suspend judgment or people are quick to get to judgment about people or the way they do things. Have an open mind and realize that that open design can lead to a lot of really incredible creativity.

[Harry] Penultimate one, what's your biggest insecurity today, Brad?

[Brad] Number one, I'm terrified that I will do a bad job as a dad and that my kids will grow up being entitled and not living to their full potential and I will have deprived them of that really arduous but beautiful journey up the side of the mountain. And I would say related to that is this idea that whenever I die, whether it's tomorrow or 40 years from now, that I'll have regrets. If there's one thing that I feel great about, the intentionality that I'm living every day with, I'm doing exactly what I want to do with the people that I want to be doing it with and that freedom, right, the freedom that comes from the economic freedom, which is a total privilege and not a lot of people have, give me the opportunity to have the impact and that's the challenge I put in front of myself, I put in front of our team, our organizations, in front of my friends. We live at one of the most privileged times in the history of humanity. I think capitalism is an incredible force for good but it doesn't just happen. Like we've gotta fucking show up and we've gotta leverage all of this goodness, the technology, the resources, et cetera, and the system that we've been lucky enough to be a part of and we've gotta drive the goodness. And so my regret will be if I get to whatever the end point is and feel like I didn't use my voice, use my platform, use my network to achieve that.

[Harry] Final one, this is episode 7850, 10 years time, Brad. Okay, me and you are sitting down again. What does Altimeter look like then?

[Brad] Well, I think it's gonna be a lot more of the same. We may be five or 10 people bigger. The incredible partners and young people around here will have even more responsibility doing all the things that we do today. I mean, in the fullness of time, I wanna see Altimeter have an incredible generational transfer. They're gonna end up owning most of the place. My money, I'm gonna ultimately give away. We've started fast down that journey. But to me, I will have done my job if the Altimeter 10 years from now looks very recognizable. Culturally, its values around impact, around radical candor, around intellectual honesty, thought leadership, partnership first. If all of that is still pervasive here, and I think if we were a 500 person organization and look like the Blackstone of venture capital, I think we probably would have failed in that journey. That's not our North Star. It's not where we're headed. Other people may do it. They may make a lot more money than us. They'll certainly end up on the covers of magazines and whatnot. But knowing who we are and prosecuting that strategy and having a lot of fun along the way, if I don't do that, shame on me.

[Harry] Brad, I've loved this. I can't thank you enough. This has been so much fun. Shows like this are why I love doing what I do. So thank you so much for joining me today, my friend.

[Brad] Thank you for bringing to all of us what you do. I started by saying I love biographies. You give us biographies every day. It helps everybody learn. And that in and of itself is an incredible cheat for young people to be able to listen to these things and maybe get up the learning curve a little bit faster.Thanks for having me, Harry.

[Harry] I told you, one of the most humble, genuine, and authentic dudes. I so much love for Brad. If you want to see more from him, of course, you can find him on Twitter at AltCap. Likewise, I always love to see you behind the scenes. You can see us on 20VC.com.