Masters of Scale

Robotaxis are multiplying across American cities… But are consumers actually ready to trust them? Zoox CEO Aicha Evans joins Rapid Response to talk about the company’s strategy as an Amazon subsidiary, its intensifying rivalry with Waymo, and why a new partnership with Uber could be the key to getting autonomous rides from novelty to scale. Evans also reveals why she recruits what she calls an “invisible army of rebels” inside Zoox, and what Marie Curie and Nelson Mandela have to do with leading through uncertainty.

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In a new follow-up to his bestselling book Range, author David Epstein reveals his new contrarian take: The best thing for innovation is actually constraints. Epstein talks with host Jeff Berman about the fascinating research he did to prove out this idea, with examples from Silicon Valley, Pixar and more. 

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When Duolingo CEO Luis von Ahn sent an internal memo about AI last year, he didn't expect it to go viral — or to ignite a firestorm about the future of work. Now he joins Rapid Response to unpack what he got right, what he got wrong, and what the backlash taught him about the real limitations of AI. Von Ahn also reveals why he's made a deliberate pivot in 2026: chasing users, not revenue — and what that bet says about how big Duolingo can get before ads become inevitable. It's a candid reckoning with hype, growth, and the surprisingly complicated promise of technology in education.

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Todd Graves built Raising Cane’s Chicken Fingers into a nearly 1,000 restaurant empire worth billions. It’s well known for both its deliciously simple menu and its refreshingly friendly staff. The founder and CEO talks with host Jeff Berman about how he perfected the recipe for success, why he thinks restaurants should be wary of private equity, and much more.

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When markets drop and chaos hits, Mellody Hobson is determined to be brave. The co-CEO of Ariel Investments and former chair of Starbucks and DreamWorks joins Rapid Response to make the case that volatility isn't something to survive but to exploit. She shares the financial lessons she lives by, including a surprising admonition against making choices based on money, and why she sees women's sports as the investment opportunity of a generation. Plus, why math has no opinion, and how that changes everything.

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As The Devil Wears Prada 2 hits theaters this weekend, Rapid Response explores the enduring business lessons inside the now 20-year-old original. Host Bob Safian is joined by two insiders who built their careers in the world the film depicts: Janice Min, CEO of The Ankler, and Sarah Ball, editor-in-chief of WSJ Magazine. Together they track how publishing, fashion and power have all shifted over the past two decades — and dig into what the original got right about ambition, success, and the bosses who shape us. Plus, shocking personal stories from the magazine industry, and why Miranda Priestly's management style wouldn't survive a week in 2026.

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Allison and Stephen Ellsworth hyperscaled their healthier soda brand Poppi to a truly gigantic exit to Pepsi – nearly $2 billion – and changed an entire category. The married co-founders talk with host Jeff Berman about what it takes to juggle a growing company and family at the same time, how savvy social media strategy helped them stand out, and what happens when you decide to run a Superbowl ad ... four days before the Big Game.

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Five grand slam titles. More than a decade as the world's highest-paid female athlete. But the fiercest competition Maria Sharapova describes may be the one she's navigating now. She joins Rapid Response to talk about her second act as an investor, entrepreneur, and podcaster — and what the court never prepared her for. She gets candid about the deals she's walked away from, the candy brand she built and ultimately shuttered, and what it really takes to sit across the negotiating table from Nike.

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Reed Hastings has announced he'll leave the board at Netflix, the company he co-founded. Before that news broke, Reid and Aria sat down with Hastings on "Possible" to talk about how technology has rewritten the rules of entertainment before, but AI takes him back to his beginnings. He studied AI at Stanford in the late '80s, decades before it became the only conversation in tech. Few people have watched this moment build from as many vantage points: he's served on the boards of Microsoft, Meta, Bloomberg, and, now, Anthropic. In this episode, they talk about what AI changes in entertainment in the stories themselves, and who gets to tell them. They ask what AI can deliver for education, an area Reed has poured hundreds of millions to reform. They dig into whether the disruption coming for workers is a wages problem, a jobs problem, or something else entirely. And they ask what a two-superpower AI race means for everyone else.

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JARED ISAACMAN: We are in a great race right now. This is not like the 1960s. Success and failure are going to be measured in months, not years. And if you ask us to keep doing things the way we have for decades, when we did not have a geopolitical competitor capable of rivaling us in the high ground of space, then we are going to lose. Or we can acknowledge our shortcomings, that we’ve spread ourselves very thin over the years, and now it’s time to reconcentrate our resources back on the mission that taxpayers have entrusted us to do, which is get back to the moon, build the base, realize its potential, and master the skills so you can get to Mars in the near future.

BOB SAFIAN: That’s NASA Administrator Jared Isaacman. Just days after Artemis II splashed down in the Pacific after traveling to the moon and back, I was eager to talk with him about NASA’s plans to build a lunar base, land on Mars, and beyond. Jared shared freely about the role of private space orgs like SpaceX and Blue Origin, about how looming budget cuts could impact NASA, and about the high-stakes space race underway with China. Plus, Jared’s unlikely path from tech entrepreneur to NASA chief, and more. It’s a busy flight plan, so let’s get to liftoff. I’m Bob Safian, and this is Rapid Response.

[AD BREAK]

Jared, thanks for joining us.

ISAACMAN: It’s great to be here. I love the subject. I love talking about space, especially right after a great moon mission.

SAFIAN: I wanted to start by congratulating you on the successful Artemis II flight, a 10-day voyage farther than any humans had gone before, a stepping stone for returning to the moon. You’re still new to NASA, only a few months in. Do you still bask in the euphoria, or for you personally, is it just, all right, onto the next thing?

ISAACMAN: We’ve been incredibly busy for four months, so I don’t feel very new. We’re all running really hard right now, so there are a lot of 18- and 20-hour days because Artemis II, for as much of a great success as it was as a mission, was just the opening act in America’s return to the moon. We are in another race right now, so our goal is to get American astronauts back to the surface of the moon and build the moon base so they can stay. So we’re staying really busy.

To answer your question, yes, I was completely in awe at launch and captivated throughout the entirety of the mission itself and the recovery operation on the boat because we haven’t done this in 53 years. So we’re doing a lot of new things, a lot of skills we haven’t exercised in a while, not to mention just the overwhelming cool factor of sending humans farther into space than ever before.

SAFIAN: I did an episode with the CEO of Intuitive Machines after their private landing of Odysseus on the moon, and he talked about how so many things on the mission didn’t go as planned at every stage, which they had sort of planned for. During Artemis II, are you clued in if it’s time to go to Plan B? How much does that happen?

ISAACMAN: Of course. I am in every one of the meetings. I would say I’m a very in-the-weeds and active administrator here. So throughout the entire flight readiness review and preflight readiness review process leading up to the mission, we were tracking the issues we actually had when we put Artemis and the SLS rocket out to the pad. We had some hydrogen leak issues. We had helium flow issues in the upper stage. We actually had to bring the rocket back into the Vehicle Assembly Building and fix those problems. So I was very aware of the issues before launch.

On orbit, I was in Johnson Space Center Mission Control the whole time, so I had very close access to information. We also convene a senior leaders meeting every day just to discuss what we’re learning, because you’re always learning.

I mean, that’s why we’re undertaking these missions: to learn what we have right, learn what we could do better, roll that into the subsequent mission like Artemis III, and continue to improve until we get our astronauts back to the surface. So yes, there was a lot of learning throughout this mission, just as we would have expected.

SAFIAN: Are there any particularly meaningful moments for you, particular lessons gleaned, or unexpected things that were revealed?

ISAACMAN: I would say the biggest takeaway from my perspective is this: There absolutely were things that did not perform as expected, and that’s good. We want to learn them and get them out of the way before you’re actually landing on the moon. I will say that if we all could have sat around a table before launch and said, “What do you think we’re going to be discussing in terms of issues before we commit to the translunar injection burn?” that’s when the astronauts are not hours away from being in the water, but days away. That’s an incredibly important decision.

What we wound up talking about was substantially less severe than what we would have guessed. Of course, one of the wastewater vent lines was having issues throughout the entirety of the mission. I’ve said it many times: a toilet in the history of human spaceflight is almost a bonus capability.

I will say probably the highest-blood-pressure moment of any human spaceflight mission is reentry. That’s where there are no Plan Bs. The heat shield has to work. The parachutes have to come out and help decelerate the vehicle before it gets into the water. So you’ve got a lot of off-ramps on ascent when you’re sending the rocket into space. You have a launch escape system. When you’re on orbit, you have lots of time to talk about issues like water valves or wastewater lines. But once Orion is committed to the translunar injection, we send it out there. It was on a free-return trajectory, meaning that spacecraft and those four astronauts were coming right back around the moon, and they were going to slam into Earth’s atmosphere to decelerate the vehicle, take all its energy out, and that has to work. There’s no Plan B there.

SAFIAN: This past week, I know you were on Capitol Hill getting grilled about NASA’s budget. What part of that is your mission? Is that your personal version of a mission where you’re like, “I’m on reentry. I don’t know what’s going to happen”?

ISAACMAN: I would just say that this is absolutely part of the job. And if it’s, are my responsibilities dynamic, am I going from the launch control center to the recovery ship to talking on Capitol Hill? Absolutely. I enjoy it, to be very honest. Part of what I love doing in life, not just here at NASA, is being able to bring together a lot of people with differing views and get aligned so we can achieve incredibly challenging things, which is what we do here at NASA. Big, bold endeavors, ambitious objectives, the near impossible, as I like to say many times, and getting Capitol Hill aligned on how to do it. And of course, it’s a conversation about the budget.

But what I wanted to point out is, we are in a great race right now. This is not like the 1960s. Success and failure are going to be measured in months, not years. And if you perpetuate the status quo, if you ask us to keep doing things the way we have for decades, when we did not have a geopolitical competitor capable of rivaling us in the high ground of space, then we are going to lose. Or we can acknowledge our shortcomings, that we’ve spread ourselves very thin over the years, and now it’s time to reconcentrate our resources back on the mission that taxpayers have entrusted us to do, which is get back to the moon, build the base, realize its potential, and master the skills so you can get to Mars in the near future.

SAFIAN: And this race you’re talking about, just so we’re clear, you’re talking about competing with China, right? You’ve said nuclear power propulsion is essential for America to dominate the future space race. All of that is sort of around staying ahead of China.

ISAACMAN: In a way, competition is a good thing because it constantly forces us to think about what comes next. In that respect, programs like nuclear power and propulsion are very important because there is a race on right now to return to the moon and build a base. I want to point out, if you think of the surface area of the moon, it’s essentially the size of Africa, but where the United States and our international partners, and where the Chinese want to be, is in a portion of the moon, the South Pole, that’s essentially the size of, call it Washington, D.C., maybe a little bit bigger. And that’s because there is water ice there that we need to interact with for in situ resource manufacturing, to master the skills to make propellant. And you want to do this on the moon before you are required to do it on the surface of Mars. So it’s got the water ice, but it also has the crater ridgelines where you have access to essentially what we call the eternal light, where you can get some solar power.

Where nuclear power and propulsion comes in: President Trump’s national space policy is don’t just return to the moon for the footsteps and the flag. Build the base, build the enduring presence, master those skills, and make investments in the next giant leap capabilities. That’s where nuclear power and propulsion comes in because it is a very efficient way to move mass. Think train locomotives, not airplanes. It’s a very efficient way to move mass, whether it’s to the moon or Mars. But also, the components and capability, the reactor design, are going to be very similar to what you will use for surface power on the moon, as well as on Mars. And you’re going to need that power to make propellant on the surface.

And then the last piece I’d say is simply this: if you want to explore the outer solar system, the farther away you get from the sun, the less effective it is as a source of solar power. That’s where you’re going to need nuclear power and propulsion to explore the outer solar system.

SAFIAN: You’re an entrepreneur and a pilot. Before NASA, you founded a payments company called Shift4. You self-funded experimental flights to Earth’s orbit on SpaceX rockets. So you’ve been to space yourself. It’s not necessarily a typical path for a NASA leader. There was some controversy around your appointment. How do you look at what your role is?

ISAACMAN: First of all, I would just say I’ve lived an incredibly fortunate life, and I’ve lived the American dream. And I do think I have a debt to the nation, and that’s why I’m so honored to be able to serve under President Trump at NASA and repay my debt to the nation.

To your point, I left school at 16 to start a payments company. It became a multibillion-dollar company on the New York Stock Exchange. I started an aerospace company in 2011. It became the world’s largest private Air Force to train the Department of War. I’ve been to space twice, the first all-civilian mission to orbit and then a developmental mission where we built a new space suit and went farther into space than anyone since Apollo. Now, thankfully, the Artemis II mission eclipsed that in about 13 minutes, which was great. So I bring, I would say, an interesting collection of experience from an entrepreneur’s perspective, but with direct aerospace and certainly direct commercial space experience.

And I think that’s important right now at NASA. Again, this is not the time to be perpetuating the status quo. We absolutely won the first space race, and we pivoted there a little bit to spread thin, to do lots of little things, to try and please everyone, with a lot of externally imposed obligations and a lot of self-inflicted distractions. As a result, when you try to please everyone, you essentially please no one because you’re not able to actually undertake the kind of mission that made the headlines we all saw this past weekend.

So in this competition, I’m here to bring this expertise that, again, some of it is certainly very directly applicable to NASA and commercial spaceflight. Some of it’s entrepreneurial. And I team up with the best and brightest here at the agency, who show up to work every day wanting to change the world in air and space and get things back on track.

And that’s what we’re doing. That’s why you saw the opening act with Artemis II. You’ll see the follow-up next year, Artemis III, when we test out Orion with the lander and get really comfortable with interoperability. And then in 2028, you’ll see it again when astronauts are walking on the moon.

SAFIAN: Jared describes things in such a pragmatic, matter-of-fact way, but the goals are things that until recently would have sounded like science fiction. So how do private outfits like SpaceX and Blue Origin fit into NASA’s plan? And how much of NASA’s motivation is about the quest to find extraterrestrial life? We’ll get to that and more after the break. Stay with us.

[AD BREAK]

Before the break, NASA Administrator Jared Isaacman talked about the recent Artemis II mission and the US’s space race against China. Now he talks about NASA’s relationship to SpaceX and Blue Origin, recent signs of microbial life on Mars, and why space exploration is a worthy priority despite other earthbound needs. Let’s jump back in.

Entrepreneurs are often impatient, and I can hear in you this urgency to sort of, let’s get things moving at a pace that maybe we haven’t had. At the same time, nothing is assured in the realm of space travel, right? Will the space suits be ready in time for Artemis IV in 2028? Blue Origin’s flight on Sunday, which was meant to deliver landers to support Artemis, didn’t come off as planned. This sort of struggle between the long timelines where so much has to go right, and then the urgency of, “We’ve got to get it done. We’ve got to move forward now” — how do you think about balancing that? I know a lot of people, not just in the space world but leaders in general, have to balance this sort of near-term urgency and long-term goals. How do they work their way through it?

ISAACMAN: It’s a good question. I’d point out the urgency that I am trying to help bring to this agency is not based on my entrepreneurial or business experience. It’s actually just dusting off the playbook that NASA used in the 1960s to put Neil Armstrong and Buzz Aldrin on the moon on July 20, 1969: getting back to a lot of littles and an iterative, evolutionary process to achieve extraordinary outcomes.

What I mean by that is there was the Mercury program before there was Gemini. There was Gemini before there was Apollo. And there were a lot of Apollo missions before Apollo 11. So when people say, “This is a dramatic shakeup. We want to launch rockets in a year instead of three and a half years,” I remind people that throughout all of NASA’s designed rockets, from Mercury, Gemini, Apollo, through the space shuttle, we launched on a cadence, on average, of every three to three and a half months, not every three and a half years.

So we are just going back to the basics, what worked for NASA and how we were able to change the world on July 20, 1969. If we do it again, it’s how we’ll start changing the world again. And you saw the first proof point of this with how we undertook the Artemis II mission.

SAFIAN: One of the obvious differences from those days is the role of private space organizations: Blue Origin, SpaceX, and others. I mentioned Intuitive Machines. How much do you think about private space organizations of all kinds as collaborators, as competitors, or both? What is that relationship with NASA? What should it be?

ISAACMAN: That question comes up quite a bit. And I often remind people, when we did undertake and achieve the near impossible in the 1960s, we did not go at it alone. You had Boeing. You had McDonnell Douglas designing the Gemini spacecraft. You had Grumman build the lunar lander that took our astronauts to the surface of the moon. And many of those companies are still contributing to the Artemis program today. And yes, there are new ones as well. There’s SpaceX and Blue Origin, but they are not meant to replace the function of NASA. This is complementary.

So what I would say is NASA is at our best when we are doing what others think is impossible, what no agency or country is capable of achieving, what no company is capable of closing a business case to invest against. That’s what NASA should be doing.

And when we figure it out, and when that capability is realized to the extent that NASA can be more than one customer, then you hand it off to industry and let competitive dynamics improve the capability, like going from a chemical-propulsion launch that expended the hardware to what we see SpaceX and Blue Origin do today nearly routinely, catching the rocket itself and then reusing it. That’s how you get a better capability at lower cost. And what should NASA do? Recalibrate again to what industry is not capable of doing.

That’s why nuclear power and propulsion are so important, for building the moon base, for sending astronauts to Mars and bringing them back, and again, for exploring the outer solar system. I don’t think companies right now, when you have such immense energy demand here on Earth to fuel this AI revolution, should be spending time building nuclear reactors for a handful of one-offs in space when they could be trying to meet terrestrial demand. That’s exactly what NASA should be doing right now. And again, maybe 10 years into the future, we crack the code on this next logical form of efficient propulsion in space. You hand that off to industry and see where they take it.

SAFIAN: Because when I talk to private space companies, they talk about a future ecosystem, a whole space economy, and things going on on the moon that aren’t just NASA’s lunar base, but a lunar base for them as well. Do you see NASA’s role as helping to seed this ecosystem, or are they on their track and you’re on your track and they may not be entirely aligned?

ISAACMAN: No, I would say they’re extremely aligned. I would almost argue they might be entirely dependent on the initiatives that NASA has underway right now. We all dream, and I especially dream, of an orbital economy and even a lunar economy, because I’m very convinced that if we want our children to grow up in this sci-fi future with lots of space stations, a space hotel, and outposts on the moon and Mars someday, it cannot be perpetually funded by taxpayers. We need whatever that product, service, or capability is so that we can extract more value out of it than what we have to put into it in space or on the moon itself. Now, NASA can’t force that into existence. I can’t guarantee the economics make sense for a space hotel or for mining regolith on the moon. But what I can do is try to do everything possible to ignite that economy.

So in low-Earth orbit, we’re making available what we call these private astronaut missions to the International Space Station. PAM 5, 6, and 7 we’ve put out to industry. We’ve given companies the opportunity to monetize those seats to try to generate revenue and stimulate further demand within low-Earth orbit.

When it comes to the moon, we went from a handful of bespoke landers a year as part of the CLPS program — you talked about speaking to the Intuitive Machines CEO, and they’re certainly one of the players interested in that space — to now putting out a demand signal where we want a lander on the moon on a near-monthly cadence starting in 2027 to help build the moon base in phases. Phase one, experimentation. Phase two, semipermanent habitation. Phase three, we evolve into our near-permanent presence. So we’ve put a demand signal out for lots of landers, lots of rovers, for power, communication, surface improvement, mobility, and logistics. But all that said and done, three or four years from now, is there a market for somebody other than NASA to pay for a lander to go to the moon or a rover to be on the moon?

I don’t know if that’s the case, but we’re doing everything we can to try to stimulate that market.

SAFIAN: This week, NASA’s Mars rover discovered chemicals that could indicate microbial life. You’ve said that the chances of alien existence, I hope I’m quoting this right, are pretty high, that it’s at the heart of what your team does. Does that emphasis differ from prior NASA administrators? In other words, looking for traces of life versus advancing broad scientific knowledge, or is this just a continuation?

ISAACMAN: I would suspect — and I certainly don’t want to put words in anyone’s mouth — that almost every NASA administrator would say fundamental to what we do here at the agency is trying to answer the question, “Are we alone?” To go out and unlock the secrets of the universe.

Now, to make sure that the quote you’re referencing is in proper context, what I did say is that if NASA were able to undertake a mission to retrieve those samples that are sitting on the surface of Mars, that our rovers were able to capture, and bring them back to Earth, I would put it at greater than a 90% chance that we will be able to prove that at one point or another, there was microbial life on Mars. Now, I do believe you have to bring those samples back, and seeing is believing sometimes, for the whole scientific community to align around this point.

And that’s very interesting, right? Because we have missions now going to Europa. That’s already underway. We have a nuclear-powered octocopter that’s going to fly to Saturn’s moon Titan in 2028 that’s also searching for biosignatures. And what I love about this is, when you sit with your buddy and you’re outside and you look up at the night sky and you look at all those stars and you know there are 2 trillion galaxies out there, usually somebody comes to the position that, just based on the probabilities alone, surely there must be life out there somewhere. And I think it would be interesting if you did bring the samples back from Mars and could prove there was microbial life there, and you have missions going to Europa, and you have missions going to Titan, which is all within our solar system, let alone all the other star systems in our galaxy or the 2 trillion other galaxies, it could change that kind of late-night analysis to: What if it’s everywhere?

And I think that’s very inherent in what we do here at NASA. Now, this doesn’t mean you have the green men with the big heads walking around. This doesn’t mean it’s intelligent life or anything we imagine. But microbial life — there is probably, again, a greater than 90% chance that we would prove that if we brought those samples back from Mars.

SAFIAN: I did a stage event with a debate around where we should be investing our money in the world, and someone was arguing that we should be investing more in understanding and exploring the oceans versus space. So what makes space exploration a particularly worthy priority, with so many things going on on Earth these days? The Trump administration’s push for a budget cut for NASA could sound like a recognition that other things are more important.

ISAACMAN: The first thing I would say is that obviously I’m biased, as the NASA administrator and as an astronaut, that I think space is a great priority because we have literally only just begun. We have barely dipped our toe in the grandest ocean of all. This is humankind’s greatest adventure, and we’ve just begun. So I think it’s almost an obligation to go out there and see what we may find because, look, knowledge is power — things that could change the trajectory of humankind, whether it’s from an economic perspective because we’re mining asteroids or extracting helium-3, or simply diversifying humanity’s existence from one planet to many so that we don’t go the way of the dinosaurs someday. I can give you a million reasons why I think this is a worthwhile endeavor.

But I would also say that, thanks to what we can do at NASA in space, we can understand our oceans better. We have satellites up there, and that’s their job, to understand our oceans, not to mention our soil and our atmosphere, because we do presently only inhabit one planet and we should certainly try to understand as much about it as we can.

Now, I think for the president of the United States, Donald Trump, he loves space. He created the Space Force. He created the Artemis program in his first term. He created the Artemis Accords, of which I just signed the 63rd nation to our principles on peaceful exploration of space, the Kingdom of Jordan, onto it. And it’s under his leadership right now and his national space policy that we’re going back to the moon to stay and investing in the next giant leap.

I think the president’s budget request is telling us, NASA, that over the years you don’t always spend your resources very efficiently or effectively. That’s documented across numerous inspector general reports and GAO reports. And before you come and ask for more, I want to see more science and discovery out of the dollars you have. And I’ll tell you, the president’s budget request is greater than every other space agency in the world’s science budget combined. We have the tools, the resources, and the mandate to undertake extraordinary things here at NASA.

SAFIAN: What’s at stake right now, do you feel, not just for NASA but for space exploration at large?

ISAACMAN: I would just say it’s an extremely important domain. And I can talk to you about all that we stand to gain, again, from a scientific perspective and an economic perspective, as we continue to venture out and explore the great unknown. But I will also tell you it’s an incredibly important domain from a national security perspective.

I think literally from the beginning of humankind, the high ground has had tactical and strategic significance. I don’t think it’s lost on anyone that we have satellites up there that can do observation and communication. When I say we, I’m referring, of course, to the Space Force that owns this responsibility. But so do our adversaries, and they continue to try to challenge us in this important domain, and that can be very concerning. That’s why I am very grateful for the Space Force Guardians to be out on the hill looking out for us as we continue to venture out for peaceful purposes.

But our geopolitical rivals don’t necessarily draw the distinction between the peaceful side of space that we are responsible for at NASA and how they’ve militarized it.

SAFIAN: For me personally, part of the appeal of space travel is just the inspiration that it provides even here on Earth for things that we can maybe do that we didn’t think we could.

ISAACMAN: I couldn’t agree with you more because also inherent in everything we do at NASA, and every dollar we spend, from putting astronauts in space around the moon, to the X-planes that we fly, to the imagery we bring back from the James Webb Space Telescope or the video footage from our rovers on Mars, all of that is meant to be, beyond its scientific purpose, inspirational — to get more kids to want to dress up as astronauts for Halloween, to grow up and, again, contribute to what I think is the greatest adventure in human history.

SAFIAN: Well, thank you so much for coming on and chatting about this.

ISAACMAN: Thank you very much.

SAFIAN: Jared does embrace the adventure of space and his passion about sparking an orbital economy and eventually a lunar economy. It’s an intriguing proposition. I find myself thinking about all the quote-unquote moonshots that terrestrial businesses take on. They may not all be rocket science, but that doesn’t mean they don’t require bravery at every step of the way. And like at NASA, leaders need to be clear-eyed about what truly puts goals in jeopardy versus setbacks that are the equivalent of Artemis’ faulty bathroom. Looking to the stars can feel almost naive with so much opportunity and so much pain and suffering on our own planet, but space remains a meaningful source of inspiration and curiosity for all sorts of projects. And anything that drives us to dream bigger, it’s hard not to cheer that on. I’m Bob Safian. Thanks for listening.

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ERIC RYAN: When I told my mom I was going to do this, she’s like, “I’ve never seen you make your bed. Are you really the right person to start a cleaning products business?”

JEFF BERMAN: Well, that was a fair question from mom, but it turned out that Eric Ryan was exactly the right person to found Method, the cleaning products powerhouse. Eric scaled the company to incredible heights before selling it, but then he faced a new question. What to do next?

RYAN: I felt kind of rudderless. I was not happy, and I realized I had lost my identity as an entrepreneur, which I viewed myself since the third grade as somebody I aspired to be. And the second I decided to start my next company, I snapped out of it. And I was like, “Okay, I’ve got purpose again. I’ve got a dream.”

BERMAN: This is Masters of Scale.

[THEME MUSIC]

I’m Jeff Berman, your host. This week on the show, Eric Ryan. He’s the brilliant serial founder behind companies like Method and Olly, whose bright bold branding has probably caught your eye many times as you’ve strolled down the cleaning and vitamin aisles at your local store. Eric has successfully sold both Method and Olly, but he still has an insatiable entrepreneurial itch. In this episode, he shares his winning formula for blending artists and operators into companies capable of disrupting entire categories.

Eric, welcome to Masters of Scale.

RYAN: Thank you for having me. I’ve been such a fan of this podcast since it launched, so this is a thrill to be here.

BERMAN: Well, longtime customers, happy to be first-time conversation with you. I’d like to go back to your ad agency days. How did you end up in the world of advertising?

RYAN: When I was at high school, I read every book I could on entrepreneurship, and I knew the odds of launching something, particularly the first time and being successful were so incredibly low. And at heart, I’m a fairly risk averse person. So the idea of actually having a career first and creating that safety net, as well as hopefully useful skills that I could do as an entrepreneur was really important to me, even though I was constantly dabbling with ideas, even in college. And I went to do an internship in London and just got lucky that… I knew I wanted marketing and I was given an internship at an agency, and I absolutely just fell in love with that agency culture, working across every element of a brand from packaging design, and that agency world.

BERMAN: What did you love about it?

RYAN: I love the problem solving. When you start to work on a brand, whether it’s a something, a piece of business that that agency already won or the Don Draper fans out there, like the thrill of the pitch, I just loved. But it’s all about problem solving, reframing, finding ways to tell stories differently. And so that challenge I truly love, but then being around artists. I was always hanging out in the creative studio and with the design teams, and I have zero gifts in that area. But to be around the people who did have those gifts, I just got such a high from. And then walking grocery stores in London, to me, it was like the Super Bowl of capitalism. And I realized in that moment, I love the way brands get expressed through physical product.

BERMAN: What did you see walking through the supermarkets in London?

RYAN: I think it’s still arguably my best tactic for developing new ideas is to be in a foreign market, ideally with a creative or a couple of creatives with you so you can sketch as you go, cup of coffee in hand, incredibly jet-lagged. Nobody can bother you because you’re on a 12-hour time difference. When you walk through a foreign retail store, you just look at everything a little differently, particularly if you can’t read the language, so you have to rely a little bit more on form and graphic design. And I also think better when I’m in motion. We were just in Sicily and first thing I had was a grocery store when we landed there. I still find I get so much inspiration from being out there versus ever flipping through Instagram or anything else that just feeds you up lots of ideas. There’s just no substitute for me.

BERMAN: Yeah. I remember I was sitting with Jeff Kearl from Stance a few years ago. Jeff was saying that part of where he found product and inspiration was walking the aisles at Target or at Walmart and looking at product categories where everything looks the same and trying to envision how something could look different. So as you’re walking through these grocery stores outside of the US, is that part of what you’re doing is saying, “What’s here that isn’t in the US?”

RYAN: Yeah. For sure. I just play this little mental game of what if this was this? What if that was this? A lot of my innovation approach is really just stealing. That belief of real artist steal, but I never steal from our competition because then you’re just a hack. That’s embarrassing. I try to steal from as far away from what we’re working on as possible. So it could be stealing an idea in a museum that you could apply to a brand. And if you look at my body of work as an entrepreneur, you’ll see that through line in everything I do. So with Method, I really stole from personal care and I stole from housewares. And I mean, this is back in the, sadly now, the turn of the century in 2000 when cleaner was so ugly, of course you hit it underneath the sink, out of sight, out of mind.

So stealing from personal care, bringing great fragrances and design and something that was a product you wanted to use. And then housewares was really where I thought a lot about the industrial design. And if you look at Method, a lot of it is designed to look like a vase that’d be sitting on your countertop. So that’s always been a big part of my formula of innovating.

BERMAN: You could have stayed in agency world and ended up doing incredible work, working at phenomenal companies, but you did make the leap. How did that come to pass?

RYAN: I mean, I always knew I would. I knew that was my real love language was product and I didn’t know how long it would take me to write the business plan, launch it, or even if I had a great idea, but it took me about a year before I got the confidence that the way we were thinking about Method was worth quitting our jobs and going to do.

BERMAN: Why Method? Why this category and why this company is your first step into this world?

RYAN: So I was spending a lot of time in grocery stores and I just started looking at the cleaning aisle because it was like this giant sea of sameness. So that was a clue dig here. And then going back to my planning skillset, trying to figure out, okay, what is the big category insight or what I would call a culture shift that the category was missing? And then I realized it was lifestyle of the home, that you look at these products more than you actually use them. Dish soap has prime real estate in your kitchen. And I was like, why can’t those be objects of desire versus it’s really designed to be bought, but not to live with? And I was really into home design and decor. And so it was kind of connecting the passion of that of like, okay, well, what if we reframe this category as really part of lifestyling of the home?

And then Adam was my roommate. We lived with six guys, just dirty flat San Francisco. This is not the Martha Stewart story by any means. And my roommates called me Marvin because I didn’t like to clean. I think when I told my mom I was going to do this, she’s like, “I’ve never seen you make your bed. Are you really the right person to start a cleaning products business?” And then as Adam and I started formulating the product, we were in our 20s, he had a degree from Stanford in chemical engineering and we realized like, “Wow, cleaning is a dirty business. You pollute when you clean, use poison to make your home healthier. So if we were lucky enough to be successful, essentially our business plan was to leave pretty little bottles of poison sitting on everybody’s countertop,” which there was just no way we were going to do that.

So we realized there was a second culture shift, which was really sustainability and wellness. And so I guess I could take credit for it because nobody’s told us they’ve done it first of really combining high design and deep sustainability. And those were the two trends that that brand still today, 20 some years later, drives this growth off of.

BERMAN: Makes sense. We can kill two birds with one stone here. Was it all instinct and this honed understanding of consumer behavior from the agency and consulting world, or did you research against this as well buttressing your assessment of the opportunity?

RYAN: Yeah. No, definitely both. So I was trying to derisk it in every way that I could, but it’s still to the way I work, I try to set what is a vision and kind of back into that vision, see if I can prove it. So I do top-down and bottom-up in the way that I develop concepts. And so what I did was I wrote this concept book, I gave it to the 20 smartest people I knew across a wide range of industries. And I didn’t tell them like, “Hey, tell me if you like it,” because nobody’s going to ever step on anyone else’s dream. They’re always going to be like, “Yeah, it’s great. Good luck.” So I gave them the assignment, “Come back with three reasons why you think it’s going to fail.” So that way I empowered them to beat up my work, please.

And nobody could come back with a really tangible reason why it would fail other than it just seems odd that given you have these huge multinationals, which were the first multinationals like Unilever, Procter & Gamble, and that none of them are doing this. And that was my point of insecurity. I was like, “This seems so painfully obvious. Why is nobody else doing it?”

BERMAN: Why couldn’t P&G or Unilever at the time see the opportunity and beat you to Method?

RYAN: I think big companies where they struggle to innovate is in areas that is going to compete against their core brands, of course, right? The innovator’s dilemma. And the way I also thought about it was I couldn’t create a new brand. I really had to create a new category to be successful. When you’re building a brand, if anybody else can line, extend their way in and compete against you, you’re really going to struggle to compete against a big company unless you create a huge lead. So that’s the way I thought about it. I was like, I’m not creating a new brand. I’m creating this new category that I call premium home care. And it was premium because it was good for you, good for the planet, but yet formulas that worked, but also really the design and the fragrance. So trying to elevate the whole experience.

BERMAN: How did you and Adam go from business plan beaten up by 20 smart people, asked to give you the reasons it’ll fail to actually launching the company? What’s the inflection point that actually gets you there?

RYAN: And this is the same advice I give entrepreneurs all the time of just break it down to little bite size steps. At the beginning, you don’t have to worry about how to start a company. You just got to figure out, do I have a good idea? And that’s the process we followed and I always recommend other entrepreneurs to follow. So step one, like I said, dreamed up the concept, made sure there wasn’t a blind spot on that concept that we are missing. So that gave us some little bit more confidence. So the next step was we created the prototype products and we gave it to friends, family, asked them to use it. And when people were asking for more and coming back and us using it ourselves, we realized like, okay, we’ve got a really great product. So gave us a little bit more confidence.

Then what we did is we started going to all the local Bay Area in San Francisco upscale grocery stores, the independence where you can go in 6:00 AM, you track down a really grumpy store manager, you’ve got like 20 seconds to give him the pitch while he’s stocking a shelf. And I didn’t know how to sell a product. We just had to figure it out. And then I realized like, okay, they’re saying yes because they realize our persistence, we’re just going to keep coming back till they say yes. And then we got in about 20 stores. Adam and I would take turns hand delivering every week, put it in the shelf, writing up a little invoice and seeing how it would turn. And so each step just gave us a little bit more confidence to keep going.

BERMAN: The company was growing, but not fast enough. Method was still losing money on every bottle it made.

RYAN: These are categories of scale. And the only way this company was going to be successful was to get a national customer. So I assumed it was going to be Target and we were raising our next round. Of course, I shot off my mouth and I’m like, “Target’s going to love us. They’re about design. We’re about design. They’re guests, our customers. It could not be better, more aligned.” And the first meeting, we piggybacked off of a distributor who got us a meeting and the merchant didn’t like the name. I’m like, “You’re Target. How do you not like the name Method?” He didn’t like the size of the bottles. He didn’t like the coloring. And he looks at us, he’s like, “Guys,” he’s like, “I hate to say it, but it’s a bit of a snowball’s chance in hell.” And Adam and I are like dumb and dumber like, “So you’re saying there’s a chance?” As an entrepreneur, the road backwards of failing is always so much scarier than the road forward. So you just got to keep figuring it out.

So at the same time, I was trying to hire an industrial designer. So at this point, our first line of spray cleaners, I found this camping fuel bottle in Norway. We just kind of knocked it off, but I was a big believer that we needed industrial design, one, to be able to, going back to what I was saying of embodying the brand through product and the love of product design, but also I realized the barriers to entry were so low that if we didn’t bring in industrial design graphically, it’d be much easier to knock us off, which did start happening. So I had this list of the most famous industrial designers, and I was just going to go through down the list until someone said yes. And top of that list was Karim Rashid.

And Karim Rashid talked a lot about democratizing design and I loved his shapes. He did a lot of stuff in housewares. He was perfect. So I sent him a cold email pitching him this idea to do a hand wash for us and a dish soap. And I was like, “These are products that sit across every sink within the landscape of America and they sell for under $3 and a chance for you to really …” Because most of his stuff was quite expensive still. And shockingly, he got right back to me and agreed to take it on in the meeting. And I probably looked 12 at the time when I went in to brief him. So we then used Karim to get a meeting with the marketing team at Target because they were doing the Philippe Starck line at the time and we knew they wanted to work with Karim. So I used Karim as my carrot to get a meeting with Target marketing who then invited the merchants.

Worst thing you could ever do is go over a merchant’s head and we spent so much money on blowing out our vision for this category. Our first Karim product, which was this inverted dish soap, so you didn’t have a stapler, you just pick it up, staple it. That’s where I got the idea. So instead of flipping it over, each time you go to use it, you just squirt from the bottom. That prototype showed up in FedEx that morning and the buyer who said “snowballs chance in hell,” when it got to him and he squeezed it, he goes, “Oh my God, even I would use this.” And that was the point where it’s like, “Okay, we’re going to live to see another day here.”

BERMAN: There’s so much to love about this story, including kind of the bank shot approach of being like, “Okay, what do I know about my, no pun intended, target customer and what might get them over the hurdles that they’ve put in front of us and the idea that they want to work with an industrial designer who is now your partner on the product?” It’s a really interesting approach to give yourself a better chance than the snowball in hell.

RYAN: Definitely part of what my success has been as an entrepreneur is relying on the gifts of others where again, when we play Pictionary as a family, my kids can’t stop laughing at how bad my drawings are. And I think also the way I’ve always been attracted to being around creative and design talent, but I’m not a threat to them because I can’t do what they do, but then leveraging and being able to connect the dots has been a big part of my success.

BERMAN: Still ahead, why Eric Ryan focuses so much on building culture.

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Welcome back to Masters of Scale. You can find this conversation and much more on our YouTube channel and be sure to check out the show notes to find a link to our newsletter.

There’s this theory of organizational growth and factors of one in three, you’re one company, one person at three, at 10 and 30, 100 and 300, et cetera. And in particular, in that kind of 30 to 100 growth phase, it feels to me like it’s increasingly difficult to maintain and grow culture in the right direction because most companies literally create things called divisions.

RYAN: Right?

BERMAN: Right. I mean, it’s crazy. We’re going to intentionally separate ourselves rather than unifying ourselves, uniting ourselves. And look, below 30, everyone knows what’s happening in the company, just by nature of how you work, especially in an in-person world. Given how important culture has been for not just Method, but your companies and for you personally as a leader, how have you managed through the scaling journey, keeping the culture heading in the right direction?

RYAN: I think it goes back to advertising where I recognized that was an industry where your assets went down the elevator every day. And I was lucky enough to work for an agency like Fallon where they cared so much about the culture. I mean, the joke was if you don’t show up Saturday, don’t bother showing up Sunday. It was a hardworking culture. And at that stage of my career, I loved it, but I recognize within advertising how important culture is, and I always carry that forward with everything I do. So for me, as an entrepreneur, I have two things I care most about. It’s people and products. And I feel like if I can get the people right, which is just culture and I get the products right, generally everything else will get easier. And I also think about the products are just really a souvenir of the people.

And if you want to be one of those companies that truly leads and does things differently, you have to kind of create for yourself. And I think the best company, if you look at like Apple or Nike, the best companies create for themselves. I don’t know how you can’t lead the consumer if you aren’t the consumer. And then within CPG, that goes back to why so many of these companies can’t innovate is because they have to rely on the consumer and consumer research to be able to make decisions and derive their vision, which is always going to be a rearview mirror. And at the end of the day, I want to go to a place and work around people that really are energy giving and we’re having a lot of fun together and it shows in the work.

BERMAN: I want to ask you one other question before we get to selling Method, because you referenced your experience at Fallon where the culture was, if you don’t come in Saturday, don’t bother coming in on Sunday, Jeffrey Katzenberg’s famous line.

RYAN: Is that where they stole it from?

BERMAN: He may not have originated it. He gets attribution for it. And if we don’t give him attribution, we’ll hear about it. It sounds like you and I had similar formative experiences where we’re making a living wage, but not much more than it in the early days of our careers. And you’re putting in 80 hour weeks as a norm and 100 hour weeks are not unusual. And I’m not saying that that’s the healthiest. I’m not saying we can’t have better integration of work and life or work-life balance, but I learned so much in those years, not just from getting more reps, go back to Gladwell and 10,000 hours and all of that, but because I got to be in the room watching other people do it and usually do it incredibly well and learn from that, but also learn from where they didn’t and try to pick the things that could work for me and figure out how I shaped the things that I knew wouldn’t.

And one of my challenges and my concerns right now leading a largely remote company is how do we give our more junior people the exposure, the opportunity to learn, to grow, to mentor them, even the walk to the coffee shop after the meeting where you can debrief? And I’m just curious how you’re leading through this era having come up the way you came up and clearly invested in the success of your people.

RYAN: No, and I agree. And we were talking about earlier with my daughter at NYU and just like, I was always such a believer of the role of in-person. And we did remote Fridays at Olly, got long before COVID ever showed up just because I always thought it was important to give people one day to work from home and we were so efficient doing it. But one thing that I think people find also surprising about me is I’m very right brain, left brain. So I call it creating cultures of artists and operators. So I want to build organizations that are incredibly innovative, that are creative, but also have operating rigor because if you operate the business well, it gives you more time for the fun stuff on the creativity. And so I use this OKR system and we write these like really rigorous operating plans every year and then we go starting Jan 1, execute the crap out of this plan.

But I use it as a way also to bring everybody along with me. It was one of my criticism early as a founder. When you’re a founder, you think about your business 24/7. You’re just naturally going to be way ahead of your teams. And sometimes I would forget to communicate. I remember our CEO was like, “Eric, you’re sometimes so far ahead of us that you kind of forget to bring everybody along with you in the planning process.” I really took that to heart. And so I try to design that to bring people along with me. And I find this works so well with our junior employees. So my goal is everybody in the company understands the entire operating plan of the business and not just help shape it and mold it and things are delegated down, but truly, truly understand it. And going back to that, trying to build a cross-functional company.

So everybody in finance knows what sales is doing. Everybody in sales understands what marketing is doing. And it’s served us well as our organizations tend to be more remote to bring everybody along with us. And I’ve always been amazed at how many founders where everything’s kind of in their head and they’re a nightmare to work with because of that. And it’s allowed our more junior team members to get better learning, but also just be more empowered because then they can spot opportunities and be like, “Hey, can I take on this project or this challenge?”

BERMAN: Yeah. All right, let’s go back to Method. You decided to sell the company. Why make that choice?

RYAN: I had a family that didn’t fit into its house.

BERMAN: That’s real, by the way. We don’t talk about that enough. That’s real.

RYAN: No, totally. And when 99% of your net worth is tied up in a single asset and you ride that asset up and down and you feel every ripple, it’s hard. But I mean, the reality is we took outside capital and so that we’re going to have to provide liquidity. And this was in an era long before secondary, which has become now the norm and there’s more ways. But as founders, unfortunately, Adam and I had no way of having liquidity out of the business unless the company was sold. And we got to the stage where we were just ready to be able to buy a house for our family and have that safety net underneath us. I talk a lot about this with other founders, which is when you go through that sale process, you feel like you’re going to wake up the next morning like you won a Super Bowl and you’re going to have a parade and life is going to be great.

And it’s like, again, nobody’s going to feel bad for anybody going through this, but it’s hard. You feel this loss of identity. You’ve got new owners with really high expectations, your team members are feeling incredibly insecure. But the hardest thing is I was like the Method man. That was my identity. And then when you no longer own that, I’m somebody who generally like a golden retriever, I wake up pretty happy most days is my default position. And it was like the first time in my life after that sale that I felt kind of rudderless. I was not happy and I realized I had lost my identity as an entrepreneur, which I viewed myself since the third grade as somebody I aspired to be. And the second I decided to start my next company, I snapped out of it. And I was like, “Okay, I’ve got purpose again. I’ve got a dream.”

BERMAN: Okay, so you’ve got the blank sheet of paper. Blank sheet of paper is a problem, but it’s also an opportunity. Where does Olly come from?

RYAN: So Olly came from a very similar story, which was Target’s always been a great relationship. And I was creating this program called Made to Matter years ago at Target. The goal was to help Target get credit for all of these natural brands that were exploding on the scene from Chobani yogurt at the time to Burt’s Bees was growing and Clif Bar. I was inviting these brands to be part of this program, but I couldn’t find a brand in the vitamin space that really connected at the time with millennial moms. So I went and walked that aisle and I was like, “This aisle is so hard to shop that people are literally stressing out trying to choose something that’s healthy for them.” And before Olly, it was a dog’s breakfast. I mean, the packaging was horrible. And so that was a clue dig here. And so I started trying to figure out, okay, what is that culture shift, that insight, how can I reframe this category?

And I was really inspired by SoulCycle. And I realized, I was like, oh, millennials view health and wellness as a lifestyle pursuit. So what if I reimagine the vitamin as a lifestyle product? And then it all just flowed. You’re like, okay, well, I’m going to steal from the beauty aisle because I want it to look like a beautiful package. We’re going to not sell ingredients like melatonin or biotin. We’re going to sell benefits like beauty and sleep. And everything just kind of flowed from there, that concept really quickly, once I figured out how to reframe it that way, and then a year later we launched it at Target as part of the Made of Matter program.

BERMAN: The lessons from Method that you applied to building Olly, what did you keep that was critical and what did you change that was critical?

RYAN: Oh, such a good question. Alex Bogusky said this to me once when I was leaving Method, he’s like, “It’ll be interesting to see what they keep after you leave and what they change.” That always really stuck with me. So every time I exit something, I pay attention to that. There’s just great learning there. So what stuck with me was really what drove our success, the importance of culture, the importance of great products, really building a cohesive experience across sales, marketing, product, culture, because I think of, again, going back to the idea of who you are and who you serve, you want that to be as small as possible. So Olly was all about this idea of healthy lifestyle. So we set up the offices in the Presidio because I was like, “Oh my God, we can be in a national park at our offices.” We had recess, we called the office Camp Olly.

And where Method, if you walked in, people would ask me, you give people a tour at Method and they’re like, “Oh, this is the design department.” I was like, “No, this is the finance department.” The entire office looked like a design department because design is what mattered. And so I brought all those same building blocks over to Olly. And I have to say it was so fun to be able to take advantage of all the mistakes we made at Method and to be able to launch this new brand with all of that learning.

BERMAN: Olly starts growing like crazy, again, an opportunity to build a scaled independent company or sell and you make the choice to sell the company. Why make the choice the second time?

RYAN: I went through a divorce and it was a really tough divorce. And I was single parenting three young kids as CEO and going through the divorce, I had protected our house to keep the kids in the house, but I gave up everything else. So everything I had created, Method was now gone. So I was starting over again, which is again, in all tragedy comes gifts. You just have to look for the gifts, and that was the greatest gift. And found myself suddenly in this situation, but she left right as I was launching Olly and drove even more kind of grit into me to ensure this thing was successful.

But at the end of, we scaled it to 100 million in four years. I definitely sold too soon, but it’s that adage of like people have said like, People have made a fortune by selling too soon. It was better too soon than too late.”

And I just felt like for me and my family, that was what I needed to do and the board and everybody was supportive. It was a 10X return. It was just an amazing outcome, but it went back to another personal situation that drove that decision for me.

BERMAN: In terms of what then came next, you twice had built brands one brand at a time, multiple product lines, but one brand at a time. You now, by my counter, working on 172 different brands, that may be a little bit of an overestimate, but it does seem like there’s almost an announcement every few months that you’re doing something else. How are you approaching this phase of the career and the different brands that you’re building and developing?

RYAN: I shifted to this more of an incubator model, which is why I’ve been involved with so many things. So I realized I can still work really, really hard, but I needed flexibility in my life. And so I can be there for every school drop off, pick up, which I just absolutely love. And so I’ve tried this incubator model where I create the concept going back to that’s what I really love is building concepts and then trying to put together the team and the talent and the capital and then take a co-founder role, be very, very hands-on, but not be the CEO. And I found I’ve had really limited success in that model. Welly is one of the success stories that came out of it, but we turned that into a joint venture with Unilever very, very early. And the team there was a team I was able to promote up.

My head of sales at Olly became our CEO at Welly. He was with me also at Method. So I’ve had the model work, but I’ve had two areas where I’ve tried the model. It did not work. I did a startup with Serena Williams and just found if I wasn’t the CEO in it running it every day, particularly with the dynamics, it was not going to work. So I made the decision just to wind it down. And then I tried my hand at … I’ve always wanted to build my own retail expression. So I launched this brand called Cast, and we built three stores in the Bay Area. Nordstrom invested two million in us, and we were on the White Lotus season two all over the cast and got really great celebrity pickup. Issa Rae got involved and everything on the brand, product market fit, the retail experience, all of it was working, but we were in a fundraising cycle path to profitability for building a four-wall multi-unit like it’s measured not in years, but decades.

And the tariffs hit, and as you know, consumer funding is a tough place to be and we just realized it was just going to be too hard to raise capital for in this environment. So my co-founder there is continuing to focus on keeping it going more on the wholesale. And I’ve pivoted back to really focused on CPG. And then I most recently joined Greycroft for launching a new $150 million consumer fund. So that’s really giving me better leverage on the venture side. And venture’s a no game when you have to be an optimist to be an entrepreneur. And so being part of an investment committee and a team, and I’ve just got wonderful partners there and just really enjoying that journey right now.

BERMAN: The paradox of the modern moment is it’s never been easier to develop and launch a brand. Everything’s kind of open source. You can find a manufacturer who will produce pretty much anything for you. And because the traditional walls have come down, you can market through the social channels and the paradoxes, it’s never been more crowded.

RYAN: Cool.

BERMAN: I mean, breaking through has never been harder. When you’re looking at an idea, especially when it’s someone pitching you and not something that you’ve been developing the same way you developed Method and Olly, what are you looking for and what tells you whether this is one of those handful that might get a yes rather than a no?

RYAN: So for me, it goes back to a lot of where my success has come from. And first of all, it’s got to be grounded into an insight. So that’s the one thing I’ll really try to understand with the founder. Do they have a really big insight that they can be in service to as they build this business? And is that insight really grounded in what you would argue is a major macro trend or culture shift? Then it becomes like, okay, are they the right team? So I try to get to a place where regardless of this team or this brand, is this idea going to be successful? Because somebody’s going to do it if it’s really well grounded. And then figuring out, okay, now is this the right team that can go execute this idea? It’s got to have a really, not only clear product proposition, but highly differentiated.

And particularly in this world of what you just said, where barriers to entry are so low on both the manufacturing side as well as the distribution side, I see so many new startups where the product is very surface level. There’s not an insight there and the product really doesn’t have a meaningful point of difference. So I kind of go back to those core tenets. And then when I think a lot about, is it a team that can put together a great artist and operator culture to succeed? But at the heart of it is like, it’s a simple thing, but does the founder give me energy? Am I going to be psyched? This is a 10-year marriage with this person, most likely. And every time I see a text from them or a call, like, am I fired up to talk to them? I’m working on a deal right now and I had breakfast with the founder last week. Regardless of the investment, this is somebody I just would love to work with. And so I think when you’re constructing a portfolio, people often underestimate how important that is.

BERMAN: Really wonderful having you. Thank you so much for being with us.

RYAN: No, my pleasure. And we’re all trying to master scale. It’s never easy. So I love the show and I’m always learning from it as well.

BERMAN: Thanks again to Eric Ryan for joining us. He shared so many incredible insights and I especially love what he said about products being a souvenir of the people who make them. I’m Jeff Berman. Thank you for listening.

The post The art of the steal appeared first on Masters of Scale.

Serial entrepreneur Eric Ryan knows what it takes to build clever companies that earn massive exits. He founded and scaled the cleaning products brand Method, vitamin brand Olly, and more. Ryan joins host Jeff Berman to reveal his winning strategy for creating bold brands that disrupt whole categories. 

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JOSH GOLDMAN: In an economy powered by AI and batteries by midcentury, we will need to mine more copper over the next 25 years than has been mined in all of human history.

RANA EL KALIOUBY: Why can’t other exploration companies take a similar approach to what KoBold is doing?

GOLDMAN: The amount of capital the industry is deploying has changed dramatically. In base metals, about $80 million used to produce a winning project. Today, it’s well over a billion dollars of failures.

EL KALIOUBY: That’s Josh Goldman, co-founder and president of KoBold Metals. They’re using AI to find the critical minerals that will shape our future, and they’re backed by some of the biggest names in tech like Jeff Bezos and Bill Gates.

These minerals are essential to electric vehicles, robotics, semiconductors and the infrastructure behind the AI economy. They’re also at the center of geopolitical competition as countries race to secure the resources that will define the next era of power and progress.

In this episode, Josh and I talk about how AI is transforming one of the oldest industries in the world, why critical minerals have become so strategically important, and whether mining can be done in a more ethical, more sustainable way that is better for people and for the planet. On Earth Day, that last question feels especially important, so let’s dig in.

I’m Rana El Kaliouby, and this is Pioneers of AI, a podcast taking you behind the scenes of the AI revolution.

[THEME MUSIC]

Thanks for joining us on Pioneers of AI. A few months ago, a common friend of ours, Chris Schroeder, texted me and said, “You gotta meet this guy.” And he was right. So shoutout to Chris. Full disclosure: I’m an investor in KoBold. I love what you guys are doing and am very proud to be an investor and support you on this journey.

GOLDMAN: Very glad to have you as one.

EL KALIOUBY: I want to start with your origin story. You have a PhD in physics, and you spent some time in private equity in oil and gas, then decided to start an AI and data company in the mining and exploration space. How did that come about?

GOLDMAN: I’ll start with my background. I studied physics because I thought it was the most interesting thing I could work on. It had the hardest problems, and I got to think about the very big, like the origin of the universe, and the very small, like atoms, the things you can’t hang your hat on as a physicist just by doing an undergraduate degree.

You don’t even reach the frontier of science. You mostly learn what happened up through about 100 years ago in an undergraduate degree. So I went on to graduate school. I actually went to the UK for a couple of years. First, I did a master’s program in applied math and theoretical physics.

EL KALIOUBY: Where was that?

GOLDMAN: Cambridge University and then Imperial College.

EL KALIOUBY: Did we overlap at Cambridge?

GOLDMAN: 2002.

EL KALIOUBY: Yes, I was there from 2000 to 2005 for my PhD. Go figure.

GOLDMAN: We were inhabiting the same place.

EL KALIOUBY: Yeah.

GOLDMAN: I had a Marshall Scholarship, so I had two years of funding there. Then I came back and did a PhD in computing, just because the science is really interesting. That’s still the case. Nobody does a PhD in the sciences for some kind of practical reason. You do it because you’re interested.

EL KALIOUBY: Right.

GOLDMAN: Throughout my career, one of the things that’s been most important to me is learning, and learning lots of things. Learning science is one of the most satisfying things. I knew I wanted to focus on science problems that were really relevant, and that led me to energy and sustainable energy.

I met my co-founder, Kurt House, as a graduate student. He had started a reading group on energy at Harvard. We did things like organize trips to power plants and coal mines.

EL KALIOUBY: Fun.

GOLDMAN: Exactly. This is what nerds do in graduate school and in adult life.

I think a deep grounding in the sciences makes you a really good thinker and a really good problem solver. So much of what we’re doing at KoBold is applying first-principles thinking to hard problems.

EL KALIOUBY: So you went on to have a career in oil and gas, and then at some point you were like, enough of that.

GOLDMAN: I wanted to get to know the incumbent energy industry. I went to McKinsey in Houston and worked with power companies, oil and gas exploration and production companies, and equipment manufacturers who make power equipment, everything from wind turbines to subsea oil field equipment and things in between.

I worked on strategy questions and then started working on private equity in oil and gas. After doing that for a short while, we decided we were going to stop working on this. We wanted to work on the energy transition. There were much better business opportunities there, and it was more compelling personally.

We thought from first principles about what we should be working on and asked, what are the raw materials the future economy needs?

EL KALIOUBY: OK. Those are?

GOLDMAN: Materials like copper and lithium. Why do we need lithium? You need lithium for batteries. If you want to make a device you can pick up and move around, whether that’s a car, a truck, a drone, a robot or an airplane, and you want a vehicle that is durable and has long range, lithium wins. It is the lightest and most electropositive metal.

We have the periodic table we have. We’re not going to invent a new element. So if we’re going to have an economy powered by battery-powered devices by midcentury, we need lithium production rates to be 10 times what they are today.

There’s a very different material profile. If you recycle an internal combustion engine car, you can’t just turn it into an EV because it’s not made out of the same materials. You need something like five kilograms of lithium in an EV. There’s no lithium at all in an internal combustion engine vehicle.

So we need new materials. Another big trend is materials like copper. If you want to move electrons around, copper is the metal of choice. Again, we have the periodic table. We’re not likely to invent a metal that is cheaper and more effective than copper.

We need this for broader electrification, but also for AI. All of these data centers need power, and we need the power transmitted to them and the data centers themselves built. All of this drives demand for copper. In an economy powered by AI and batteries by midcentury, we will need to mine more copper over the next 25 years than has been mined in all of human history.

EL KALIOUBY: Wow. That’s great.

GOLDMAN: These are incredible demand signals for things we need.

EL KALIOUBY: Right?

GOLDMAN: And so the question is, where are they going to come from? We started to work on that problem and started pulling on the threads.

EL KALIOUBY: For people who are not geologists or in the mining industry, like me, I want to paint a picture for our audience of where these resources are found. Let’s dig into that a little bit. I actually have a visual prop I want to bring up for my next question. You’ve compared mineral deposits to a bakery item.

GOLDMAN: Yes.

EL KALIOUBY: Right?

GOLDMAN: I love it.

EL KALIOUBY: All right, so tell us: What are we looking at here? We’re looking at raisin bread.

GOLDMAN: What Rana is referring to here is one of the myths about scarcity. Is there enough copper? Is there enough lithium? The vast majority of the ore deposits that contain these metals are still out there to be found.

EL KALIOUBY: How do we know this?

GOLDMAN: Because we know how these ore deposits get made, or we know enough about them to know. We know the pressures and temperatures they form at. You can determine those things by looking at the minerals themselves.

EL KALIOUBY: OK.

GOLDMAN: You need some microscopes, but these are pressures and temperatures that form deep under the Earth, thousands of meters below the surface.

EL KALIOUBY: But the?

GOLDMAN: Yet the majority of the ore deposits we’ve found are right at the surface.

EL KALIOUBY: Really close here. Literally.

GOLDMAN: Sticking out of the ground. The way to think about this is that an ore deposit is like a raisin, and the eroded surface of the Earth is like slicing off the end of a loaf of raisin bread.

EL KALIOUBY: Yep. OK.

GOLDMAN: The ore deposits are at different depths, but the surface of the Earth is an irregular cut.

EL KALIOUBY: It’s like this, exactly. If you sliced off the top, you…

GOLDMAN: You only see the raisins on the surface where you just cut.

EL KALIOUBY: OK.

GOLDMAN: But if you know the recipe, you know there are many, many more.

EL KALIOUBY: Raisins all over here. Right. Love it.

GOLDMAN: The rest of them are out there to be discovered.

Another misconception: copper and lithium are not rare earths. Rare earths are a suite of elements, mostly the lanthanides on the periodic table. People commonly think, well, rare must mean valuable. But rare earths is just a chemical name for this set of important elements.

Ore deposits themselves are all very rare, but the Earth’s crust is very, very big. So there are many out there, even though they occupy a very small fraction of the Earth’s crust.

EL KALIOUBY: Talk us through, historically, how you find and mine these ore deposits.

GOLDMAN: Before you mine it, you have to find it.

EL KALIOUBY: Yep.

GOLDMAN: Finding is the hardest part.

It’s not the case that we just know where the minerals are and it’s just a matter of digging them up. Mostly, we just don’t know where they are.

EL KALIOUBY: Yep.

GOLDMAN: Historically, the single most important method for finding ore deposits has been humans walking around looking for strange-looking rocks. Actually prospecting, walking across the surface of the Earth.

You can think of copper minerals this way: wind and water expose the rocks, and water and oxygen turn them blue and green. Think of the patina on the Statue of Liberty. In places where there’s a lot of copper, like the African copper belt, you can see the green rocks.

But then you start to deplete this inventory of deposits sticking out of the ground. Certainly for copper deposits in places already known to host copper, if you can find it sticking out of the ground, somebody probably already found it.

EL KALIOUBY: Already. Yeah.

GOLDMAN: There could be deposits that people have never looked for before that are still sticking out. Lithium, for example, people haven’t been looking for until very recently because we didn’t need big chunks of it.

But for copper deposits, what’s left to find is harder. It’s concealed somehow. It may have several layers of rock above it, potentially hundreds of meters of rock. In the case of our Mingomba project, more than 1,000 meters.

The key thing is that they’re not easy to detect with one data type. You can’t just look at a satellite image and see a bull’s-eye pattern of how the rocks have been altered by the flow of fluids. You can’t just take a bunch of soil samples over a grid and make a plot of the copper in the soil and drill the hot spots. You can’t just fly an airborne survey or gravity survey and say, here’s a red spot, I’m going to drill that.

The data is very high-dimensional, and you need a combination of signals across different data types in order to predict where an ore deposit is. That’s a hard science problem.

EL KALIOUBY: That’s one of the things I loved when I first learned about KoBold, and it’s super aligned with our investment thesis at Blue Tulip Ventures. It’s this trifecta of sensors, multimodal data, and both generative and predictive AI.

GOLDMAN: I love the way you framed that. The technology we use isn’t one black box product. There’s really no one product at all.

EL KALIOUBY: Yeah.

GOLDMAN: What we’re trying to do is make better predictions. To do that performantly, we’re collecting many terabytes a day of data, so you need to be able to interact with it.

EL KALIOUBY: Index it.

GOLDMAN: Yes.

EL KALIOUBY: Query it.

GOLDMAN: Right. Then you’ve got to be able to put it into models and combine it with other data. We use many models trained on that data.

We’ll take data like that and use a combination of historic archive data, which we can talk more about, and models trained on that data to make predictions on a given project: Where should we go next on this project? But we also use it to make predictions on other continents. Data we’ve used in Canada has helped us find the right rocks for hosting lithium deposits in Australia.

The features of ore deposits are in common. It’s the same geological process. It’s the same recipe to cook the raisin bread. When we see those processes at work in one place, the model learns how to recognize them and can identify them in new data in totally unrelated domains.

This is the whole point of the company. Anything we do doesn’t just help us execute one project. We get better models and new technologies that allow us to execute the next one. Each thing we do makes the next thing better.

EL KALIOUBY: Let’s take a short break, and we’ll be back to dive more into the sources of KoBold’s data.

EL KALIOUBY: Let’s talk about this historic data and the archives. Where do you get that data from? What does it look like? How do you digitize it?

GOLDMAN: The vast majority of data ever collected about the Earth is in the public domain, but it’s incredibly fragmentary. There are tens or hundreds of thousands of different sources. In many jurisdictions, the data of prior explorers is all public.

EL KALIOUBY: Wow. Cool.

GOLDMAN: In Quebec, in Finland and in many other places, you have to write a technical report on what you did every year. These are 100-page documents describing what you were looking for, what people had done before you, what activities you undertook and what the results were. You also have to deposit copies of the raw data with the regulator, and then that goes into the public domain.

There are hundreds of thousands of these. Sometimes an individual data set might be a folder with a dozen or so files, and it might represent one survey. These things are differently formatted, not all in the same language, and they contain all kinds of different mistakes. A lot of the data is in the text of these reports, in figures, hand-drawn maps and tables.

Since we started the company, we have been aggregating this, extracting structured data, providing tools to our teams and putting it all in a system so they can interact with it. That’s very powerful, and the latest developments in frontier models help us build on that.

EL KALIOUBY: All because it allows you to bring all this unstructured data together.

GOLDMAN: Yeah, that’s right. It allows us to work with much more of this data, much faster.

Some of the data is still on paper.

EL KALIOUBY: Wow.

GOLDMAN: In Zambia, for example, where our first major discovery is, there are historic archives that include maps that are almost 100 years old.

EL KALIOUBY: How cool is that?

GOLDMAN: It’s very cool.

EL KALIOUBY: And they’re just in some governmental office in Zambia?

GOLDMAN: The Geological Survey of Zambia has been the caretaker, so they are accessible.

EL KALIOUBY: You can go in and pull the map and look at it.

GOLDMAN: Yeah, that’s right. The staff who work there care enormously about the data. They’re the conservators of this legacy, and it is data. It’s extraordinary.

EL KALIOUBY: And it’s still relevant.

GOLDMAN: Absolutely. The rocks haven’t moved.

EL KALIOUBY: Right.

GOLDMAN: They’re still there. It’s ground truth for models trained on modern airborne geophysics and satellite imagery. But you need the ground truth. The ground truth for these maps was collected laboriously over thousands of hours of work by skilled geologists, and you could never go collect this again. It would be too hard.

So we are digitizing it. In the case of the Zambian Geological Survey, we do it publicly. You can go to gsd.gov.zm. This is part of our partnership with the government of Zambia.

We’re not doing it just for ourselves. We benefit, obviously, because we want to use the data, just as we want to use every data source in the world. But really the benefit of the data is for the people of Zambia, to stimulate investment.

EL KALIOUBY: Why can’t other exploration companies take a similar approach to what KoBold is doing? What’s so hard about it?

GOLDMAN: The amount of capital you have to deploy is enormous. On average, in base metals, about $80 million used to produce a winner, a project that worked. Today, it’s well over a billion dollars of failures.

EL KALIOUBY: Wow.

GOLDMAN: That’s for two reasons. One is that the problem is getting harder. The easy-to-find things have been found, the raisins on top.

EL KALIOUBY: The ones at the top, right.

GOLDMAN: But the second reason is that the pace of learning has been too slow.

EL KALIOUBY: You talk about mineral exploration as an information problem, and in order to tackle that, you have a chief philosopher on the team. What does a chief philosopher do, and why that role?

GOLDMAN: We do have a chief philosopher. It’s funny, I had a conversation with a journalist who reached out because he saw that a mineral company had a chief philosopher, and he was a little disappointed to learn that our chief philosopher is an epistemologist and not an ethicist.

KoBold’s ethics are also incredibly important to our business. It’s right there on the front page of the company, and we start every all-hands meeting with an ethics vignette.

EL KALIOUBY: We’re going to come back to that. But define epistemology for anybody who hasn’t heard that term before.

GOLDMAN: It’s all about thinking about knowledge. How do we know what we know? How can we reason about things we can’t see? How can we make inferences about things we can’t observe? We’ve written an epistemology of exploration.

As we think about it, the core technologies are epistemic in nature. They help us know better.

The idea at KoBold is, number one, we need hypotheses. What we’re doing when we go out in the world is deploying some capital to get some information. That information is useful if we’re testing an idea. It has to be a well-defined idea, and we need to make some predictions about what we’re going to observe.

Then we need to reconcile the results of our work with our prior understanding and use that to guide the next step. If you’re an explorer at KoBold and you’re writing a technical memo to justify an expenditure — “Josh and Kurt, I want $2.5 million” — you’ve got to get that on the record before you get an allocation.

First, you need a good hypothesis and a clear characterization of it. Second, you’ve got to have alternatives.

So you can’t just have one view of what the world is, and then the alternative is, “Well, not that.” There are many possibilities.

We enlisted the help of our chief philosopher, who has written about the nature of science: What is science? Why is it powerful? How does inquiry work? He helps us think through those kinds of problems.

EL KALIOUBY: Very cool. Let’s talk about your ethics framework. What does that look like? What are some of the ethical principles underlying the company? Give us some examples. And you open your team meetings with an ethics vignette? That’s super cool.

GOLDMAN: Great question. This is important because we want to build a great company. Part of being a great company is leading in science. Part of it is doing something good for the world, and obviously providing the raw materials we need for the future economy is really valuable.

But mining has local impact.

EL KALIOUBY: Yeah.

GOLDMAN: It’s not sufficient to say there are global benefits, therefore we accept all of these local impacts. Actually, we need to work to minimize those and to do good locally too.

KoBold’s ethics include protecting the environment, protecting the safety of our people, anti-discrimination and anti-corruption.

EL KALIOUBY: Right. In some of the geographies where you operate, that’s real.

GOLDMAN: And we’re committed to working at the highest international standards everywhere we operate. We’ve built some extraordinary operations in Zambia. Our CEO there is Mfikeyi Makayi. She’s an amazing engineer.

EL KALIOUBY: She was on the TIME AI 100 list last year, which is super awesome.

GOLDMAN: Yeah, and she has helped us build an incredible team in Zambia.

Our Zambian colleagues are fully integrated with our global company.

EL KALIOUBY: Yep.

GOLDMAN: That’s creating opportunities in the community. It’s not sufficient to hire people who live far away. We’ve got to create opportunity in close proximity as well.

There are lots of other things we can do. Managing the waste from a mine is very important, and there are ways to design a better facility to protect against harm.

You can spend a little bit more on the design of your tailings facility to make it more robust, to have something that’s going to stand up over time and have a much lower risk of failure. Those are good decisions.

One of the questions we get from prospective employees is: Great, I understand you and Kurt are really committed, but are your shareholders willing to forego a basis point of returns in order to protect the environment?

And we have a shareholder base that allows us to say yes. We’re in this together for the long term, and we’re making long-term investments in exploration and in ensuring that the benefits are shared.

EL KALIOUBY: Coming up, more on the international perspective and the implications of mineral discovery around the globe. Stay with us.

[AD BREAK]

EL KALIOUBY: The work KoBold is doing has major strategic implications, especially in the geopolitical climate we’re in today. China has built a dominant position in the critical mineral supply chain. The U.S. is arguably significantly behind. How serious is that gap, and what is KoBold’s role in all of this?

GOLDMAN: You’re right. China has been focusing on critical minerals for a long time. This isn’t an overnight thing.

Where the Chinese position is really strong is downstream. Lots of minerals, wherever they are mined, will go to China for processing: from concentrate into metal, from those metals into battery precursors, and from that into batteries and cells. That’s a huge strategic advantage, and it has been built with many decades of investment and industrial policy.

The U.S. is playing catch-up. I think, commendably, the U.S. is playing catch-up quite aggressively. There are lots of different arms of the U.S. government providing financing, both in the U.S. and in support of American-led projects abroad. We’ve gotten a lot of government support all over the world.

This is very important. One place where KoBold, and where American companies especially, can lead is in discovering new deposits.

It’s not very interesting to just go acquire a handful of assets that exist today, which are depletion businesses. That’s valuable. But where are the next-generation assets? Where are these huge growth wedges? Chinese companies are not leading in discovery.

They’re great at building low-cost processing, particularly in China. They’re great at operating around the world, and they’ve acquired a number of existing assets. But that’s much less interesting than asking where the new tier-one, low-cost assets of the future are going to be.

Even though it is causing short-term pain, for the long game, the real question is: Where are the new deposits, and what are the assets that are going to be the future low-cost tier-one assets that sit on the commodity cost curve? We’re looking for those, and we at KoBold, with the support of the U.S., are looking for them.

EL KALIOUBY: There are a number of parallel explorations happening at any one point in time, correct?

GOLDMAN: We have a portfolio of 80 or so projects around the world, and that’s constantly growing and churning. We are falsifying hypotheses and dropping projects from the portfolio. We’re getting encouraging results and then accelerating our work.

We’re exploring in the U.S., in Canada and in Australia. We have teams in all of these places undertaking active exploration and deploying technology, and then we’re working on new projects as well.

EL KALIOUBY: What is the timeline for some of these exploration projects? Are we talking years, months?

GOLDMAN: Some ideas can be tested quickly. We can generate an idea, stake a claim or form a partnership, stand up a team, deploy operations wherever we’re going, maybe fly airborne surveys, collect rock or soil samples, and drill a few holes. Sometimes we can rule out an idea in one campaign.

But if we get encouragement, we might want to keep going.

Other times we’re starting with the concept that there’s a whole district there, and we need to collect a foundational layer of information to generate more specific hypotheses and figure out where in that district the specific geological target is.

There we might be flying hyperspectral surveys, doing other airborne work, aggregating all of the historic data, doing wide-area soil or glacial till sampling, and building a detailed geological picture that will help us refine our hypotheses. A program like that might take years, and if it’s encouraging, potentially longer.

EL KALIOUBY: Some critics don’t think the U.S. should be investing in exploration and mining new sites, and instead should be investing in recycling materials or recovering them at mining waste sites.

In fact, I want to reference a study from the Colorado School of Mines that found the U.S. could meet most of its critical mineral needs by using the byproducts at domestic mines. How do you respond to that perspective?

GOLDMAN: You can’t recycle something until you have it. The problem is that if you want to make things with lithium-ion batteries, and you don’t already have enough lithium in circulation, there isn’t enough to recycle.

If we’re talking about electrification of transportation, for example, and you want to make an EV, you cannot recycle an internal combustion vehicle into an electric vehicle. There’s no lithium in that vehicle.

If you have steady-state demand, and not growing demand, then once you get enough material in circulation, recycling can supply most of it. But you’ve got to build up the circulation first.

For copper, again, the story is that demand is rising dramatically. There just isn’t enough scrap out there to supply the needs for new data centers, new power lines, new power generation and so on. So we’re going to need more of those materials.

Where there are economic incentives for recycling, much of that is already happening. It is generally cheaper to recycle copper scrap than to mine new copper, and so those things are done preferentially. It just won’t actually satisfy demand, because the metals intensity of the economy is changing. That’s one of the reasons.

EL KALIOUBY: You talked about human intelligence married with artificial intelligence. What is the secret to getting that marriage right?

GOLDMAN: A lot of experimentation. We have many, many ideas. Many of our ideas pan out, and many of them don’t. We invest more heavily in the ones that do.

Those experiments are both about which technologies are going to be really valuable and which exploration projects are the right places to deploy them. They’re also experiments in how we work together to get these systems really effective and to deliver results.

EL KALIOUBY: Josh, thank you so much for joining us on the show. This was a fascinating conversation.

GOLDMAN: Thank you so much, Rana. Really a pleasure.

EL KALIOUBY: On Pioneers, you’ve heard me talk a lot about the trifecta of sensors, data and AI, and how that can unlock new insights, especially in antiquated industries. This is exactly what KoBold is doing in the mineral exploration space, transitioning the industry from a heuristic craft into an AI-driven science.

This is more critical than ever. The global economy is going through a transition driven by electrification, AI and massive compute infrastructure.

The reality is that mining these minerals is disruptive to communities and to the planet. But there are methods to extract these resources more ethically. I invest in human-centric AI, which is why I believe in what KoBold is doing.

Thanks so much for listening. We’ll be back with a new episode next week.

The post Mining the minerals to power AI appeared first on Masters of Scale.

MAURO PORCINI: Samsung Design Open Lab is an open laboratory with a lot of experiments mixed with some commercial products. The reality is, if you let AI do everything, then your company is going to progressively look more and more like the other company, because AI is going to become more and more like a commodity. The human inputs, the interaction between the human perspective and the AI perspective, are what is going to generate something that is original.

BOB SAFIAN: That’s Mauro Porcini, president and chief design officer of Samsung. Since Mauro joined Samsung last year, I’ve been eager to talk with him about the Korean consumer tech giant, its competition with Apple, and the impact of AI on its products. This week, as part of Milan Design Week, Mauro unveiled a slew of new ideas and experiments that give a glimpse of Samsung’s future, and of what may drive the tech future for all of us. So let’s get to it. I’m Bob Safian, and this is Rapid Response.

[THEME MUSIC]

I’m Bob Safian. I’m here with Mauro Porcini, president and chief design officer at Samsung. Mauro, welcome back to Rapid Response.

PORCINI: Ciao, Bob. Hi, everybody. It’s really a pleasure to be back.

SAFIAN: You were last on the show in 2022, when you were chief design officer at PepsiCo. Last year, you moved over to Samsung as its first-ever chief design officer. So how different is the task that you’ve taken on from what you did at PepsiCo? You were the first chief design officer there also.

PORCINI: And I was the first at 3M as well. I’m saying this because the jobs are really similar, no matter the industry. I’m an industrial designer. I spent 10 years at 3M in tech, and then I made this first giant leap to go to a completely different kind of industry, in food and beverage. I had never worked in that industry. Then, one year ago, I took another giant step. It’s not just going back to the consumer tech industry, but moving to a completely different region of the world. Because designers observe people, their needs, their wants, and they try to build solutions, the methodologies we use, the approach we have, are transversal to any kind of industry. Obviously, the companies are different, the culture is different. I’m European. I worked for many years in the United States, and now I work in Korea — different worlds, but with very similar challenges.

SAFIAN: It’s probably a decade or more ago, as I recall, you took PepsiCo’s then-CEO Indra Nooyi on a trip to Seoul to study Samsung’s design. Does this feel like it’s full circle for you a little bit?

PORCINI: It is. Actually, even before that, I remember I was a student at university in the ’90s, and I was observing how Samsung was progressively transforming to become an iconic design leader in the world. So I had already been fascinated with Samsung. I hired people out of Samsung to join me, for instance, at 3M. And when I joined PepsiCo, as you just mentioned, I asked Indra if she wanted to go see some companies that were really seriously invested in design. So we took the plane and came all the way to Korea. So it is full circle.

SAFIAN: As an Italian in American business, and as a designer working with businesspeople, you’ve always been a little bit of an outsider in some ways in the communities you’re in. Now, as you get to Seoul and you’re the first non-Korean president in Samsung’s history, how much of being an outsider is good or bad? And how do you impact the culture without alienating the people who built it?

PORCINI: This idea of being suspended between different worlds — I grew up in Italy, in the north of Italy, with parents from the south, at a moment in time in Italy when the south and the north were really divided. I would go around my neighborhood, and it was clear that I did not belong there. But then when I went to the south on vacation during the summer, I for sure did not belong there either. So already then, when I was a child, I lived in this gray area, suspended between different identities. If you talk to the design world, often they’re like, “Well, but you’re a businessperson.” But then if you talk to the business world, they are totally like, “You are not one of us.” So you don’t belong there either. Often people are uncomfortable when they don’t have a specific label, when they don’t belong.

The message I want to send, especially to the new generations of people who are trying to define their identity, is that often in those gray areas, you can design your own identity and be unique and original. Already, when I moved as an Italian to the United States, there were many things that I didn’t understand. They were alien to me. They were weird to me, honestly. But you need to really analyze yourself, analyze the culture you’re facing, and understand what unique strengths you bring to the table. Here, it’s a culture that is very organized. There is this vision coming from the top, and then an army of people that can execute. If used in the right ways, it’s very powerful, because they are able to move really quickly.

Obviously, I was called to bring in a vision that adds to the one the company already had in design. So I really spent the past year trying to understand the strengths of the company and how I can bring something different. I’m still in the middle of it. I think you need to be very transparent about the fact that you will have missteps and make mistakes. But again, you also need to show as much as possible what you bring to the table.

SAFIAN: I’ve seen commentaries on LinkedIn from designers talking about your move to Samsung and kind of finding hope in it. I’m curious what that hope is referring to.

PORCINI: Look, I was surprised by those comments too. Design in corporations is somehow struggling. The design community made huge promises in the first decade of this new millennium about the power of design thinking, and then in many instances, design thinking didn’t deliver. Design thinking is important because you need a methodology, you need a process, you need tools, exactly like a painter needs a brush. But then you need the right painter. You need Picasso, because if you give that brush to Picasso, you get something. If you give that brush to my accountant or my kid, you’re going to get something different. Instead, our design community talked too much about the brush, the bristles, the material, and how to design the brush. We forgot that, at the end of the day, what really makes the difference is the thinking of the design thinkers. Do we have the right empathy? Do we read the right signals? Do we have the right intuition? To innovate, you need the tool, you need design thinking, but you also need the right people with the right mindset.

SAFIAN: I was wondering how much of the reference to hope was referring to Samsung specifically. I’m struck that PepsiCo, at least historically, was viewed as the fighter brand compared to Coca-Cola. And now you’re at Samsung, which is enormous, but in consumer tech is kind of the fighter brand to Apple.

PORCINI: Right. The parallel is really interesting. When I joined PepsiCo, and I’m doing the same thing here now at Samsung, what I’m telling my teams is: Forget the other guys. We can’t design against a competitor. That’s really the wrong approach. We need to focus on people and really understand how we can create the most extraordinary solution for them. And when I say solution, I mean the best product, the best service, the best experience, the best communication, and storytelling. If you work against a competitor, you may end up being blind to a series of opportunities that are new to the industry, are different for the industry. If you just focus on the competitor, you may do very interesting things — don’t get me wrong. There are endless cases of companies that focused on beating the competitor and did it very, very well.

But if you really want to create long-term value for your organization, you build a culture that is really human-centered, a culture that is really thinking: What is the ideal world for the people I serve?

SAFIAN: You’ve been at Samsung about a year, and you’re announcing this design manifesto for Samsung’s future this week as part of Milan Design Week. So can you give us a taste of that and how that came together?

PORCINI: The pillar of what we’re doing with design at Samsung is really making sure that designers are the voice of humanity in the organization. I identified four different territories, four categories we need to focus on. The first one is what I call live longer. Then there is live better, live loud, and live on. Longer means all those technologies, most of them wearable technologies, that we have to monitor your body and help you with your physical and mental well-being. Then there are all those technologies that are there for your safety — the safety of yourself, your loved ones, your pet, your home, your belongings. The second one, live better, is all about using technology to free up time to do what you love most. That dimension is literally about using robots and AI to increase the productivity of what you do, or ideally to do things on your behalf so that you can be free of technology and do whatever you want. With or without technology is up to you. It’s your choice.

The third dimension, live loud, is the world of creativity and self-expression. It’s about using technology to express yourself. It could go from creating content for social media all the way to, for instance, creating your start-up from the comfort of your living room using those technologies. Then the fourth dimension is what we call live on. It’s about transcending yourself and preserving memories. We are saving pictures and videos of the people we love. I have thousands and thousands of pictures and videos of my family members, and I have almost nothing of, for instance, my grandparents, especially when they were kids. So already today, when people are not with us, either because they are on another side of the world or maybe because they’re not with us in this world anymore, we can preserve their memories, their emotions, their knowledge.

But more than ever now, with AI, we can literally build digital twins of people. It will happen organically, because the more we share everything we do with AI devices and AI platforms, the more these platforms will learn about us and will be able to replicate us in some form. My parents are in their 80s. I hope they’re going to live for the next 50 years, but when they’re not with me anymore, if I have a moment of difficulty, I would love to have the possibility to ask my dad, “What would you do if you were me?” In all of this, you see that the technology is just a tool. It is at the service of humanity.

SAFIAN: When you come up with these four areas, to what extent do you start with, like, “Here are the products we have now, and we have to serve them,” versus, “Here are the questions, and how do I move the products into them?”

PORCINI: There are three horizons that we’re considering. One is the short horizon. You start from the products of today and try to advance them in an incremental way, even though, obviously, you always try to figure out if there is something breakthrough that you can implement quickly. Then there is a second horizon, where I need to figure out how I can do something that is more radical. But the area where the four categories apply the most is the long-term horizon. This is where you define the future portfolio of the company. There are products that maybe in the future won’t exist anymore, because robots will do a lot of things that other devices do today. So those devices will need to evolve, need to be redesigned. Let’s say in 10 years’ time, in a house where you have multiple kinds of robots — humanoids, utilitarian robots, and robots that are more about emotional companionship — our appliances will change. The robot will be the main interface between you and some of these appliances.

If AI is going to be in your house, how will your TV, your refrigerator, your speakers evolve? What will be their role? What will be the shape of these devices? Where will they be placed? Then you go back to today and start to influence the development of those products in that direction. This is influencing, by the way, eventually strategies of acquisitions, partnerships, or research that you can do.

SAFIAN: When you talk about having a digital twin of your parents to talk to, some people might find that like, “Ooh, that doesn’t necessarily make me comfortable.” I’m curious whether there’s any conflict within Samsung about how AI and robotics might impact the role of humanity. There must be a lot of discussion about processes and safety guardrails. How do you address all of that?

PORCINI: Look, I’m glad you are mentioning this because, essentially, when I talk about humanity, what I’m trying to push and pitch to the world — not just Samsung, but to the world in general — is the idea that we need an ethical compass. What we can control as business leaders — you, Bob, me, Mauro, all the people listening to us right now — is that we have a role here. No matter our titles, no matter what we do in life, we have a role in reminding the world that what we need is care, is love for humanity. There are designers that don’t care and there are designers that do, just as there are business leaders that don’t care and business leaders that do. It’s my responsibility, and an opportunity that I have because of the voice that I have and the platform these companies give me, to remind the world that in this conversation right now, we shouldn’t talk about AI yes, AI no, or robots yes or robots no.

They’re going to happen. We should talk about rules, policies, constraints, boundaries, yes. But even before that, we should talk about what is going to inform those policies and boundaries. And this is the love I talk about. I make the example of my parents because people can connect with that, because there is an obvious love connection between a son and a father and mother. There are a lot of conversations about the potential of AI, what AI can do or cannot do. But if we talked more about caring for each other, about loving each other, many of the problems we have — the hate that we find on social media, the conflicts that we see all around the world, the problems that we have with technology, the problems that we have with brands and companies — any kind of problem, you find the solution to that in this care for each other, in this love for each other.

This became, many years ago, a mission in life, a calling that I have. And when Samsung called me, I had always been fascinated by the world of consumer electronics. I did my thesis in the ’90s on wearable technologies. So it has always been a passion of mine. Technology is a tool, and you can drive it in one direction or the other. We should all be talking today about what the right direction is. Again, this care for people, for humanity, and making sure that technology is there in the service of people is fundamental.

SAFIAN: Mauro is both absolutely practical and totally aspirational, looking to bring love, as he puts it, into everything we do. So how does he extend that love to his team when managing in the age of AI? And what will the form factor of the future be for tech, whether wearables or otherwise? We’ll talk about that and more after the break. Stay with us.

[AD BREAK]

Before the break, Samsung’s Mauro Porcini explained why he doesn’t focus on Apple when looking to the future. Now we talk about how to transform a business in the age of AI, how form and function will shift in the tech of tomorrow, and what the tech world needs to borrow from the world of fashion, plus why experimentation is the one strategy we all need to embrace. Let’s jump back in.

SAFIAN: You now oversee a global team of, I don’t know, 1,500 designers across mobile, displays, TV, home appliances — everything. You’ve got hubs all over the world. How do you think about getting them up to speed? How do you apply the love there while also delivering the business of being more efficient and faster and all the other things that businesses have pressure to do?

PORCINI: As soon as AI started to be a thing, I remember that in my previous company, I immediately created a task force to jump on it and leverage it. At a moment when a lot of designers were pushing back like crazy on AI, we decided, no, this is an incredible opportunity. Today we’re using it extensively in so many different ways in the company, and it is really increasing productivity, meaning it’s accelerating the speed, but mostly it’s increasing the quality of what we do. I think one of the biggest values that AI brings to the table today is that it’s bringing in a very different perspective, eventually with AI biases.

SAFIAN: Yes. You could replace one bias with another if you’re not careful.

PORCINI: But what is interesting is not my perspective or AI’s perspective, but the blending between the two. This is when I talk about the interaction between human and AI. The reality is, if you let AI do everything, then your company is going to progressively look more and more like the other company, because AI is going to become more and more like a commodity. The human inputs, the interaction between the human perspective and the AI perspective, are what is going to generate something that is original, a third perspective. We live in a world that is very competitive, and obviously cost is a lever that companies have, but the quality of what you do, new ideas, and innovation are incredible levers as well.

SAFIAN: I’m sure not all your designers necessarily feel that way. How do you get them to see it?

PORCINI: The moment you try to transform anything in a company, you have resistance. The strategy I’ve been using over the years — again, not just in AI, because we mentioned at the beginning of this conversation that I was the first-ever chief design officer in these three multinational corporations — is that my life has always been about driving transformation. What I usually do is identify what I call the co-conspirators, people in the organization who get it. With them, I build proof points. I show that actually that thing can drive real value. Then I storytell the heck out of it, internally and externally. I use my personal social media, the social media of the company, interviews, platforms like this one right now, Bob.

Then I use a lot of informal communication within the company to celebrate the new approach, to celebrate what that approach can drive, and to celebrate the people — the co-conspirators — who have been driving this. This is how, progressively, more and more people are like, “Wait a second. I didn’t see the value there. I want to be part of it.” Then you start to scale it up.

SAFIAN: Where are you now in that run at Samsung, or is it different in different places?

PORCINI: When we talk about me as a designer introducing a new approach, we are for sure at the occasional leap-of-faith stage. I had one full year to identify my co-conspirators, and we’re working on building the proof points, and things are progressing in the right direction. Milan Design Week is an example of how the company is letting me take multiple ideas that embody the new philosophy all the way to the world in public. So there is support, there is sponsorship from the top. They want to drive this evolution of design. I found my co-conspirators, and I’m landing the first projects and the first initiatives.

If you talk instead about AI, similar things, even though in some areas with AI, we’re already scaling up the use of AI in many different areas of the organization, while in other areas we are more in experimentation and trying things. But I think, once again, what is very important when you drive transformation is to be very, very clear about what your journey is going to be, and to understand that it is a journey that requires time. You need to stick to your plan, and you need to be very clear about the different steps you need to take. I’m coming here to Samsung with a very clear playbook for how to do it that worked for me in the past, and it seems that it’s working here as well.

SAFIAN: I was curious: You have the title of president. Is that something that helps the credibility, gives you more impetus within the organization to get all of this done? Or does that title represent that you’re, I don’t know, in charge of some P&L that’s different too?

PORCINI: Like any title in any company, it means that I’m positioned at a certain level in the organization, which is the highest level, close to the CEO. So it’s not about P&L, but it is about credibility. Mostly, it’s the message that Samsung is sending both to the company and employees, and then to the world, that they believe in design — the message, both internal and external.

SAFIAN: What you’re doing at Samsung in some ways are messages that you’re trying to get out much more broadly, but obviously there’s business stuff at stake for Samsung. I’m curious what you think is at stake for Samsung right now and how you and the design group plug into it.

PORCINI: Look, AI is going to change the way we interact with all the devices that surround us. In the company, we have a mobile business — mobile phones and wearables. We have the whole world of television and sound systems, and then we have the whole world of appliances. In consumer electronics, these are the three big businesses. Each of these territories is evolving and transforming through AI. I’ll give you an example: how the television is evolving in the next few years — we’re not talking about the distant future — in the next few years, it’s moving from a device where you are passively receiving content to a device that essentially is your AI companion. How is the design of this device changing? The traditional television before AI is a frameless TV, the screen as thin as possible that you see on the wall. Is that going to be the design of the AI TV, or is it going to be different because this object needs to interact with you in a different way?

Even without considering AI, in an industry where in the past 15 years everything converged toward a very uniform, homogeneous design language — the language of minimalism, very essential, inspired by the Bauhaus, the idea of form follows function, and you strip out anything that is not essential — is that the design language of the future? Why is tech like this, but then you look at fashion, architecture, automotive, lighting, furniture, and you have so many different design languages? There is so much diversity and choice reflecting human diversity. Why, in tech instead, does everything look very, very similar?

SAFIAN: So you’re saying I could have a TV that looks very different from your TV in a way that’s not really available today, but might be economically feasible for Samsung to produce for me.

PORCINI: Yeah. Look, we are all different. Your living room is different from mine. Why do we need to have TVs that all look the same? I created this new formula to direct our design work that moves from form follows function to form and function follow meaning. What does it mean? It means that I’m going to blend form and function on the basis of what is meaningful for different people. This can manifest in multiple ways. One, the most obvious, that is going to happen no matter what I or Samsung or our design team decides, is that in user interfaces, through AI, we are going to mix form and function to create an interface for you that is different from the one that I’m going to have on my phone or my TV. So AI will create a perfect interface for you, and it’s going to happen very soon in the near future.

Already there, from a design standpoint — I don’t want to go too technical — but essentially you don’t have the rigidity of a system that you need to design up front and impose on people anymore. You need to design how form and function will blend in a way that is meaningful to people, but also makes sense for your brand and helps people not be overwhelmed and confused by total freedom. So what are the right boundaries? What is the right flexibility between the freedom that you give and the art direction that you have?

SAFIAN: Because there’s a lot of discussion about what the best form factor for AI is going to be, and hardware and other things. It sounds a little bit like you’re saying there’s not going to be just one. There’s going to be different ones.

PORCINI: Good point. So I was saying one area is the user interface, which is going to be flexible by definition. The other one is the form of these devices. The more technology goes in the direction of wearability, fashion, and things that you wear — but also, we’re talking about television in the home too — the more you have technology that should be warmer, more human, more diverse, the more we need to think about more customization, or the logic of fashion. In furniture design, you buy a chair and often you have it available in different colors, materials, and finishes. The more this technology is going to be on your body, the more that logic of fashion will apply, whether it’s an earbud, eyewear, a pendant, or a pin. So even before we talk about whether it’s a pin or a pendant or an earbud or glasses, it’s before that. No matter what it’s going to be, it’s going to have different kinds of designs.

Form and function will align to what is meaningful to you. Now, to answer your question about what is going to be the right form factor, I think we’re all investigating different kinds of form factors because there are pros and cons to each of them. I think we need to start proposing them to people and see how people react, but we are literally in an experimentation phase. Any company that tells you, “Oh, I know perfectly what that is going to be,” is lying, because that’s not the history of innovation. We know very well that this is a phase of experimentation. So any company in the world working in tech right now, I’m pretty sure, is experimenting with many different kinds of form factors, and some of them are coming out and people are trying them as commercial products.

Some others are just informal concepts. We’re testing them in-house. At Milan Design Week, we are showing a variety of different form factors, from pendants to headbands that you put on your head to eyewear. But the reality is that we are showing multiple of them to say: It may be none of them. We are experimenting with multiple form factors. In the show in Milan, the goal is to communicate a vision and a philosophy that is based on two pillars. One is human centricity. It’s really elevating the quality of life, helping people live longer, better, loud, and on. The other pillar is the design language of human centricity. It’s what we call an expressive language, where form and function flex and blend to be meaningful to people. So then we show many different products, from future concepts of televisions, dressers, wearable devices, speakers, and kitchen experiences, all with AI behind them, enabling a different kind of experience.

Sometimes it’s very functional. Sometimes it’s very emotional. But there is always this blend of different approaches. Sometimes it’s very pop. You feel the K-pop culture of Korea in some of the installations. Sometimes it’s very zen. But this is exactly what we’re talking about: technology that flexes, both in intent and in its manifestation in the design language, to serve humanity. People are all different. And once again, we are in the phase of experimentation. The event is the Samsung Design Open Lab. It’s an open laboratory with a lot of experiments mixed with some commercial products that are already going in that direction, because I wanted people to feel what I felt when I came into the company.

After the first few weeks, they started to show me so many ideas, so many concepts, so many things, and I was like, “Oh my God, the world needs to see this.” Obviously, there is a lot of confidentiality, patents, and this and that, so it’s difficult to share everything we’re working on. But we figured out a way to share the energy of the experimentation, some of the concepts, some of the ideas. We don’t want anybody to focus on the specific form factor of the wearable, for instance. We want to say, look, the world is going in this direction. The most important thing is to focus on humanity. These are some examples of experiments that we’re doing, but this is really a phase of experimentation.

SAFIAN: Well, Mauro, this is great. I always love your enthusiasm and your energy about all this. Thanks for doing this today.

PORCINI: Thank you. Thank you for having me, Bob.

SAFIAN: Mauro is such a distinctive executive. He talks the language of business, but he also talks about love in a way that other business leaders just wouldn’t. What strikes me most may be the clarity of his frameworks — about how to spur change within an organization, about his pillars of product design. Despite all the uncertainty about the future with AI and with robots, he manages to create solid priorities and a compelling direction for movement. As he notes, deferring to AI needn’t be our choice. Originality is within each of us, and we all have a responsibility to shape what’s coming next. I’m Bob Safian. Thanks for listening.

The post A first look at Samsung’s blueprint to win the AI era appeared first on Masters of Scale.

AI redefining how products are both built and experienced, and Samsung is reimagining its place in the tech ecosystem. As Milan Design Week gets underway, Samsung's president and chief design officer Mauro Porcini pulls back the curtain on the company’s new design manifesto, and gets candid about their rivalry with Apple, the shift from hardware to human experience, and why a brand known for engineering dominance is now betting its future on something far harder to measure: how a product makes you feel.

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JIM FARLEY: The car business in most industrial countries is the heart and soul of the manufacturing base. It creates a lot of jobs. It has a bigger impact. For every job you create in a factory, there’s tenfold that gets created in the economy. Today, the Chinese car industry, the new vehicles sold there every year total about 29 million, but they have 50 million units of capacity. They’re now the largest exporter in the world. The production capacity in China is so large, it could basically take care of the entire North America market.

BOB SAFIAN: That’s Jim Farley, CEO of the Ford Motor Company. With the Strait of Hormuz in the spotlight and gas prices high, I wanted to talk with Jim about how the auto industry is being impacted. Jim’s answers surprised me, focusing as much on China as on the Middle East. We also talk about the challenge and responsibility of leading an iconic American brand right now. Plus, Ford’s big bet on a new vehicle platform, his dissatisfaction with some of Ford’s own products, and more. So let’s get to it. I’m Bob Safian, and this is Rapid Response.

[THEME MUSIC]

I’m Bob Safian. I’m here with Jim Farley, CEO of Ford. Jim, great to see you again.

FARLEY: Thank you so much for having me on your show. I really have been looking forward to this.

SAFIAN: You were a big supporter of Fast Company when I was the editor there and you were running Lincoln. I still have much gratitude for that. I remember coming to Detroit 12 years ago to interview Bill Ford onstage about the future of mobility. You talked about connected vehicles and autonomous vehicles. All the seeds of today were there.

FARLEY: Yes, you got it right. It’s been a long and winding road, as the Beatles would say, but things happen in fits and starts, not linearly. Automated cars are here. Advanced electric architectures are here. Software-enabled vehicles are here. The public mobility solutions, all the innovation we were thinking about, grid to car and intelligent cities, intelligent parking, a lot of that didn’t happen. But electrification sure has. From my perspective, after 40 years in the industry, we always think about these moments like we’re going to be in the fifth inning as we start the game, and we wind up realizing that there are actually four innings before that. Then there’s a lot of ball to play, so to speak, and it just takes time.

SAFIAN: The big question mark looming over everything right now is the activity around Iran and the Middle East, what happens with the Strait of Hormuz, and oil prices. You’re on the front lines of all that impact in your business.

FARLEY: Yes.

SAFIAN: What are you seeing? What are you feeling? Are there any strategic adjustments you’re making?

FARLEY: It’s been an interesting couple of weeks. It’s very asymmetric around the world. Ford is still a global company. A lot of our North America competitors have left Europe. We’re the biggest pickup truck maker in the world in Thailand and Australia — these are huge pickup markets—even China now. And we face off with Chinese companies in all these markets. Two things are happening while this war is going on. In the first quarter, the Chinese market, which is a third of all new vehicles sold on the planet, was down almost 30%. And they’re already the largest exporter in the world, far beyond the Japanese and South Koreans. Their exports are up 43% this year, and they are already No. 1. So the war is happening, and the electrification in the first quarter is happening. Of course, fuel price is way up. In places like Australia, where they get a lot of the oil through the straits, they’re out of fuel.

Most companies are asking people to stay at home. Many provinces are giving away free transportation because you just can’t get fuel. In places like the Middle East, the business has completely stopped. And that’s very important for logistics. Commodity costs have gone up—not just oil, but all commodity costs have gone up. So we have to adjust to the higher cost level. But I would say what we’ve really learned is that electric cars are very vibrant. Prices have gone up almost $10,000 in the US for electric cars, and electric cars are now up to 7% of the US industry. That’s not a small amount, with no government support. But what’s selling in EVs is more important, which is that the truly affordable EVs are more popular. Used EVs are super popular right now. So the market has changed. I like to look at the used market even more than the new market to understand what consumers’ mindset is, and they’re more interested in hybrids.

SAFIAN: Is that because of affordability right now, like everyone, people are moving to the used market first? Or do you always look at the used market more?

FARLEY: I always look at it. Why? Because it’s twice as big as the new market. It also is a better predictor of consumer behavior because the prices are all lower for used cars. So you get to see the market play out before it actually does. And it’s super instructional when our capital cycle is four or five years. We have to make these decisions way in advance of where the market goes, or even the certainty of government regulations. In our case, we have to make them against the Chinese players.

SAFIAN: Late last year, you announced some scaling back on some of your electric vehicle production. Do these changes and the surge in pump prices make you rethink any of that, or is what you’re seeing the same in the marketplace that you were reacting to?

FARLEY: Thank you for asking this question. Everything that we’ve seen with escalating fuel prices in the US is reinforcing our choices. Not because I’m the CEO of Ford and we’re always right. It’s because we moved first among all the competitors—before Toyota, before GM, before all the traditional OEMs. We were No. 2 to Tesla for three or four years in EVs. We moved really fast, but these were designed the wrong way, let’s put it that way. So they lost a lot of money, but we got to see how customers choose. And we also came out with the hybrid F-150, America’s best-selling truck. We hybridized it before Ram, and they still don’t even have a hybrid. So we got to learn, Bob, before any of our competitors, where the EV market was already going. And with the escalated fuel price, it’s only reinforced it.

We got out of our high-end EVs, but what we decided to do is double down on our affordable ones, and that is what’s selling today around the world, not just in the US. You look at Australia, you look at China, you look at Europe. All those markets are moving to a pure EV being more of a commuter-type, low-cost vehicle. That’s really where the market has already gone.

SAFIAN: You mentioned China a couple of times, and I think for folks in the US, it’s often surprising or confusing because there aren’t as many Chinese vehicles here, and there’s blockage of certain Chinese vehicles coming to the US. But you’ve had some amazing quotes—”the most humbling thing I’ve ever seen,” “an existential threat”—referring to their EV prowess. It sounds like that has not slowed down.

FARLEY: It’s sped up. You’re absolutely right. Look at it this way. I could argue that the car business in most industrial countries is the heart and soul of the manufacturing base. It creates a lot of jobs. It has a bigger impact. For every job you create in a factory, there’s tenfold that gets created in the economy. And it’s very hard to make a car. It’s tens of thousands of pieces from all over the world, and it takes heavy manufacturing and know-how. So these are really important jobs. Today, the Chinese car industry sells about 29 million new vehicles there every year, but they have 50 million units of capacity to build cars.

So their factories would be half full if they just made cars for their own market. It’s not excess capacity because they built that for a reason. They’re now the largest exporter in the world. And in fact, their production capacity in China is so large, it could basically take care of the entire North America market. Their average Chinese vehicle has $4,000 to $5,000 of subsidies, indirect and direct, from the government.

SAFIAN: I was going to ask if that’s what keeps the price down—the scale of the manufacturing they’re doing—or how much of it is the subsidies that they’re getting.

FARLEY: Both. The Western companies made a lot of money in China for a long time—not Ford, but many of our competitors. They made billions and billions. And I think the Chinese government is very practical. They said, just like solar and other industries, we want to really dominate global automotive. So we’re going to bet on this change of propulsion, electrification. And they made this bet many years ago. The thing about cars that everyone knows, but when you point it out, they’re like, oh yeah, I guess that makes sense, is that these cars have 10 cameras in them. They have sophisticated communication. They’re all connected. They’re autonomous in many ways. So these vehicles should be reviewed by the Defense Department for national security. They have sensitive PI information. They have camera images of your whole life, where you drive, including a military base, an electrical substation, all sorts of stuff.

SAFIAN: You were personally driving a Chinese EV, which someone could see as a diss to Ford-branded vehicles. But it seems like maybe that was the point—to motivate everybody to say, “You’ve got to get in this game.”

FARLEY: Xiaomi, yes, the SU7. If you’re an American and you want us to beat the Chinese in the car business, you’re all going to want to pay attention, not necessarily to Tesla. Nothing against Tesla—they’ve been doing great—but they really don’t have an updated vehicle. The best in the business for us, cost-wise and competition-wise, supply chain, manufacturing expertise, and the IP in the vehicle, was really BYD. And BYD became the highest-volume brand in China, not VW or the Western brands. Last year, Geely actually just surpassed it. If we’re smart, we’ll take the cost competitiveness of BYD and then compete with that platform in parts of the market where we know our customers really well. In this next cycle of EV customers in the US, they want pickups and utilities and all these different body styles, but they want them at $30,000, not $50,000. Like the first inning, they want them affordably.

That is the gift that China gave us: to be fearful and respectful enough of their progress that we could not organically just phone it in. We needed to do what Americans sometimes do great, which is use innovation to compete against the best in the world.

SAFIAN: For the listeners here who may not know, can you make sure you explain what the UEV project is, the Universal EV project?

FARLEY: Sure. The UEV is kind of the Model T of the modern Ford. When Henry invented the Model T, and my grandfather worked on the line then, he brought a lot of innovation. He brought the moving assembly line. Cars were not made that way. He got the best materials, but he applied them to the most affordable vehicle. The universal electric vehicle platform was developed not by Ford, but by a Skunk Works team out in California, mostly motorsports and Tesla folks whom we had hired. We said to the team, “You can do anything. We just want you to engineer the most affordable, most efficient electric vehicle on the planet, better than BYD.” And they got to work. They didn’t use the Ford system to develop the vehicle and the platform, and it turns out that wound up being a really good bet.

The UEV is three parts. There’s a large unit casting in the front and the rear, and then the center is a battery. So it’s a radical simplification of the vehicle, about 30% fewer parts. We don’t build the car all in one sequence like we have for 125 years. We actually build the front of the car separately from the rear of the car, separately from the middle of the car, and at the end we join them together. We’ve never built a car like that. To get the cost down for our customers, we needed to radically shrink the size of the battery. If we couldn’t beat BYD on cost, we might as well out-innovate them on efficiency.

So we radically engineered the vehicle for efficiency. Those are just some of the examples. People will learn more. The vehicle comes out next year. We’ll probably show it late this year. I’m really excited. It’s a platform, not just one vehicle, so there’ll be multiple vehicles off this platform. It’s kind of a Model T moment for us.

SAFIAN: You’ve always been known for your candor. You’ve talked about no more boring products, which implies at least some of Ford’s products are boring. That doesn’t necessarily have to do with the technology of it, right? Maybe it has more to do with the design, the passion.

FARLEY: I would say I believe that Ford is best naturally working on what I would call vehicles with deep passion—work, off-road, on-road passion vehicles. I have the Mustang GTD right behind me. Mustang is a passion vehicle. But a two-row crossover is kind of—I’d say Wolfgang Puck said, “There are a lot of really nice restaurants, but it’s hard to do a buffet in Vegas.” If you want to do a two-row crossover in our industry—RAV4, CR-V, whatever—you can make it that, or you can make it a Bronco Sport. I think Bronco Sport fits our brand. I don’t think the past Escape did. It’s not that it needs to be fancy or expensive or super performance-oriented. I don’t mean no boring products that way. I just think some of our products were not differentiated, so we don’t want to phone it in. We want vehicles at Ford that are truly differentiating for their customers.

SAFIAN: And if not, stop making them, which is hard to make that call sometimes when there are stakeholders who are bought into that. But sometimes you’ve got to move away.

FARLEY: Especially when you compete in the middle of the market and you don’t have a cost advantage. I really believe Ford is about to launch a number of affordable vehicles, not just the UEV platform but a number of them. You’ll see that come out in the next couple of years. I wish we could have done affordable vehicles or sedans a long time ago, but we decided not to come out with sedans in the US because we didn’t have a competitive cost base. Until our company got serious about cost and quality, we really didn’t have the right to compete. I can’t allocate capital to a Fusion or a Focus if I know I’m going to lose $4,000 a vehicle compared to a Corolla or a Civic. I need to transform my costs, go back to the mountain, figure out how we radically get the cost out of the platforms, and then we can compete. And if we do compete in those, I would say, ubiquitous segments, we better bring something new to the table.

SAFIAN: Jim’s urgency is pretty intense, but as he explains, it’s a competitive market with a lot at stake. So is being an iconic American brand an asset or a complication in the current environment? We’ll talk about that more after the break. Stay with us.

[AD BREAK]

Before the break, Ford CEO Jim Farley talked about fallout from war in the Middle East and how China is changing the auto business. Now he talks about the responsibility of leading an iconic American brand, his focus on what he calls the essential economy, and why Ford has reengaged with Formula One. Let’s jump back in.

You mentioned Ford as a brand a couple of times. Ford is a quintessential American brand, which can seem like a double-edged sword right now. Domestically, the country feels divided. Everything gets politicized, even the Super Bowl halftime show. Internationally, the US isn’t as embraced as it once was.

FARLEY: Yes.

SAFIAN: I’m curious how those realities come into your calculations.

FARLEY: We see people in America wanting authentic companies that are who they are and that have principles. Ford is a principled company. There’s a reason why we dominate the work sector. We’re 45% of the work vehicles sold in the United States. We earned our American credentials. We did not go bankrupt in 2008. Our employees did not let the company go bankrupt. And a lot of Americans do care about that. We don’t make one F-150 outside the US. Our competitors all do. They make them in Mexico and Canada, and you can’t tell. They don’t want you to find it, but you go to that windshield and you look at that VIN number and you do a search, you’ll find out.

So I think we’re proud of our American credentials. When people think of Ford, there may be a $300,000 GTD, but they know it’s the same company that makes the white F-150 for their electrician or the cop car or the first responder vehicle. And that’s a positive because they don’t associate our Americanness with politics. They associate it with jobs and our understanding of how Americans use vehicles.

SAFIAN: Ford is back in Formula One after a 22-year absence, partnering with Team Red Bull.

FARLEY: Yes.

SAFIAN: I’m curious why now, because there’s F1’s cultural growth, its move into hybrid engines and sustainable fuels. What’s the motivation?

FARLEY: We got into it for a couple of reasons. Number one, the rules were changing. They were going to 50% electric, as you said, with sustainable fuel. We like that. It’s also a sport that’s really captured the imagination of Americans, like football and other sports. It’s an indigenous sport to our company. We don’t make shampoo, we make cars. Cars get raced, and the ultimate racing is Formula One. So we like that, but we really like the tech transfer. It is predictive failure of components, which we can apply to our work vehicles. We have almost a million subscriptions now at Ford. Most of it is productivity software. Predictive failure is definitely the next wave of our commercial software productivity. We want customers to know when something’s going to fail on their Ford, and Formula One is really good at that. They have to do that. Look at our UEV team. We would not have the talent on our UEV team if we didn’t have a connection with Formula One.

SAFIAN: I know you’ve said some bracing things about the US workforce overall, that America is sort of sleepwalking into a crisis for essential blue-collar workers and that AI will hammer white-collar workers. It’s sort of this double whammy. I’m curious where you are on that right now and what you feel can be done or should be done, whether that’s in Washington, in Silicon Valley, and corporate America overall.

FARLEY: We call this sector of jobs the essential economy. Think about it: the electricians, the plumbers, the truck drivers, the emergency workers, the construction workers, all the people in our country who make our country run. But our competitors all sent work overseas, so there was not as much need in our education system for trade schools, apprenticeships, and all these things that our grandparents and parents used to do, and all those jobs got shipped overseas. Well, now we have to build data centers. Now we need emergency workers. We need plumbers and electricians, especially welders, for all these AI data centers. Ford sees this through our customers because we have a 45% share of the commercial market in the US. These are our customers. They buy our vehicles, and they all say the same thing to us: Ford, can you help me find the next generation of my team?

My average electrician is 57 years old. They’re going to be retiring soon. So we decided to get serious about this. We had a conference in Detroit last fall, and we started to find like-minded companies with similar issues. We’re now talking to them. We’re allocating serious resources to this. We’re talking to the Ad Council about starting to build awareness of how great these jobs are. My son can graduate from high school, become a technician in a Ford dealership, and make 150 grand in three years. He’s not going to get that opportunity if he goes for a four-year degree. So we need to build awareness that these are good jobs and that you can have a great life. We also need to build more infrastructure in our country—trade schools, apprentice programs. We need help from the government. We also can’t rely on the government. We have to do it ourselves.

SAFIAN: Your choices about what you’re passionate about, your leadership—it has an echo effect beyond Ford’s business itself. How much do you think about that responsibility beyond your own shareholders?

FARLEY: I say I have no right to play any role outside of being the CEO of Ford and making the company successful without progress at Ford. And that’s the most important thing. We need to continue to make breakthroughs in quality, cost, and electrification. We need to be profitable. We need to build a sustainable company. But I work for the Ford family. This is not a family that is interested in the car business because it’s an interesting business, so they’ve been in it for six generations. They are all completely committed to the industrial future of our country. And yes, I want our country to succeed long term against China and others. And I think Ford is the kind of company that actually requires a leader like that.

SAFIAN: What’s at stake for Ford right now?

FARLEY: I think what’s at stake at Ford, and our story of success, is pretty simple. I think it really reflects the future of our country, not because we are the country, but because Ford is part of the heart and soul of our industrial base. We won’t be able to defend ourselves. We won’t have jobs for future generations. We won’t be able to reduce CO2 at large scale without Ford being able to do that and impact our communities positively, not just with economic benefits but with social progress. That’s the kind of scale Ford has, the kind of impact we have on our country. The importance of our sustainment is really tied to the success of the country and even the defense of the country. And that’s what’s at stake.

SAFIAN: It sounds like a lot of pressure, the way you describe it there. Do you sleep at night? Or do you worry about it?

FARLEY: I do. I’m a problem solver. I literally love problem-solving. So yes, of course, anyone in my position loses sleep, especially when we do things we don’t want to do, like layoffs and restructuring. It’s the worst part of my job. But sometimes you have to shrink to grow, like we have at Ford. After almost six years of leadership in the position, I feel like we’re in a good spot, we’re making progress, and we really can change our country and make our country stronger and do everything we need to do for shareholders. I really believe that in my heart, or else I’m not the right leader for Ford.

SAFIAN: Well, Jim, this was great. Thanks so much for doing it.

FARLEY: Thanks so much. All the best to you, Bob, and I appreciate the time. Thanks for having me on.

SAFIAN: Jim has always been passionate, and as Ford’s CEO, that urgency is definitely front and center. I’m struck by his sense of responsibility that Ford’s mission goes beyond mobility to positively impacting community and country. Now, one could look at that cynically, that he’s wrapping Ford in the American flag to help differentiate it, but there’s a bigger-picture sensibility at play too, a holistic view of long-term impacts that many business leaders would prefer to brush aside. There’s courage in that, even if it also helps the brand. I’m Bob Safian. Thanks for listening.

The post Beating China, and the storm nobody sees appeared first on Masters of Scale.

BYRON DEETER: When you have people pushing their agenda or their pet things or trying to help, and you can just see the CEO’s head exploding in the meeting, it’s I think also important to draw a line and pull back because life is too short and these companies are running so fast.

JEFF BERMAN: Byron Deeter has spent more than two decades investing in some of the world’s most innovative companies, from Anthropic to Waymo, to Canva and Beyond.

DEETER: Don’t find things that are doing okay and go and fix them so that you go from good to great. Go find the teams in the business that’s already great and make them excellent or help them just stay excellent if they’re already there so that the slope alliance stays bigger.

BERMAN: This is Masters of Scale.

[THEME MUSIC]

I’m your host, Jeff Berman, this week on the show, Byron Deeter. After founding and exiting a pioneering company in the early days of cloud software, Byron moved on to become an iconic investor. He spent 20 years at Bessemer Venture Partners with an incredible portfolio that includes 26 companies each worth more than a billion dollars. We talked about his advice for both founders and investors in this moment of AI transformation, why CEOs need to think more like athletes and much, much more. Byron, welcome to Masters of Scale.

DEETER: Great to be here.

BERMAN: I’m thrilled to have you. You are an investor who started as an operator, so I’d like to start with your operating days. How did you become a founder?

DEETER: I fumbled my way into it. I’ve always wanted to be an entrepreneur starting from invention idea books in my elementary school days to ideating in my McKinsey days with colleagues trying to think of startup ideas. When I got my first pass at venture, I did a lot of brainstorming time on the side and found my two co-founders in that journey, diving into the early world of cloud computing over the winter break of 1999 to 2000. Walked in early January and quit my first venture job to dive in.

BERMAN: I’m not sure that everyone knows there was cloud computing in the late 1990s, early 2000s. What was the world like back then?

DEETER: So Salesforce and NetSuite had been founded within a few months of that. It was highly controversial because download speed, browser capability, et cetera, were still real bottlenecks. But my CTO, ultimately co-founder, convinced me that there was this other way to do things, but it was a big bet. And I’ll tell you, nine and a half out of 10 venture capital meetings when I went pitching threw me out essentially after the first few pages.

BERMAN: Why is that?

DEETER: They refused to accept that the cloud business model deserved to exist. This idea of forward cost and backloading revenue made no sense to most folks, and it was highly controversial for many years.

BERMAN: Where did your conviction come from in the face of all those nos?

DEETER: Customer experience first. And we were convinced that maintaining all these back versions and multiple ports to different software stacks and things was a waste of innovation and led to a lot of shelfware and misuse. And so we did believe that the answer was there, that fundamentally it was better for customers and that the business model would follow. But we went through layoffs. We went through the dotcom collapse. We had tough financing rounds. It was a tough journey.

BERMAN: The company was Trigo.

DEETER: Trigo Technologies, yes.

BERMAN: And what was the inflection point for Trigo?

DEETER: So some of those early enterprise customers who would go on stage and speak about it. I’ll remember Staples, Anne-Marie, a lot of credit, our early sponsor there, this is going back over a decade and a half. But she said, “This is real. I’ll go talk about it. I’ll tell others this is a better way and I’ll share it.” The first real customers who were hard on us, they were leaders. And once we got through their qualifications, they would go tell others that it worked. That for us was really the inflection point to transition.

BERMAN: It’s pretty unusual for a customer to call and say, “I really want to get on stage and give you a testimonial.” How did that come to happen?

DEETER: So one of the things I carry through now as an investor trying to coach our companies is it’s somewhat counterintuitive, but you actually want to seek out the hardest, smartest customers and have them beat the crap at you because others will follow. Their peers in the industry know how good they are and learn from them.

So take on the hard first and work with them as design partners go through it. Feedback’s a gift. And when you don’t get hard feedback is when you actually need to work. It was all about, we need you to make a great product and the expectation is then that you will share it. This is non-proprietary. It’s important, but not proprietary, and go talk about it.

And so setting those rules of engagement upfront. And one of the things that we ask our sales execs now across our portfolio, if you can’t get a reference out of that customer, what are the issues? And among the early contract terms, that’s something front and center because we do believe that it’s one of the lowest cost customer acquisition methods when employed correctly.

BERMAN: Did that change things for investors with you?

DEETER: It did, although often the macro will trump the micro. And so we executed well, but the market went through turmoil. And so we had one of the biggest market pullbacks of our lifetime going into that, which created some real headwinds. And fortunately, having been in venture before, I knew enough to raise early and have buffer. So we never had a true extinction level event, but we had to do some layoffs because we weren’t going to have cheap access to capital.
We had to pull back by some time. We went through gyrations. We went through customer churn at various points because of their bankruptcies and chaos. And so I think entrepreneurs need to expect to go through several cycles in your journey and you need to reserve enough flexibility, capital, et cetera, so that the macro can’t sink your ship.

BERMAN: Just to complete the Trigo journey, ultimately sold the company. How big was the company from a revenue and people perspective at the time you sold it?

DEETER: Yeah, we were up to about 50 million in running revenue. Importantly, another inflection point we brought on Tom Riley as CEO, and I stayed on the board and ran business development and partnerships and all of that, but another inflection point, he’s excellent and a long time, lifelong friend from that.

BERMAN: And why did you bring him in?

DEETER: I was 26 and we were building an enterprise business and wanted some more executive air cover. And I disclosed that upfront to our investors that at some point we’d want to bring in a CEO. It was my first time in operating role. And interestingly, I think it was the right decision for us, but I also think it’s the wrong decision for the majority of our founders.

BERMAN: Oh, say more.

DEETER: And I actually look to invest in founders who are more interested in going longer into the journey. And that’s because I think that the founder product insight is irreplaceable. And so much of these businesses today are product led that we want to back founders who are unique and differentiated there, and we want them bought in for the journey. And tapping out and hiring a replacement is hard.

It’s destabilizing and introduces risk. If they have someone identified, we’re going to do it together, then that’s okay early on, but we want to do it jointly, or if it’s the only option, and as we talk about more current days, we’ve had a lot of CEOs tap out over the last few years because it’s been really hard to be a CEO right now and that’s okay. We’ll go on it together, but we don’t want to usually start with that with plan A.

BERMAN: So it’s more, to use the overused example, Mark finding his Cheryl that you’re talking about when you’re talking about scaling up the organization and … Yeah.

DEETER: Absolutely. I think that’s where you unlock the superpowers. Design the founder role that is their best and highest use as in board meeting yesterday. We’re talking about this exact thing. As a founding CEO, you’ve got the luxury of designing your exec team. Do it however you want. What things do you enjoy doing? What are you best at?

What’s going to give you energy and what’s going to give you most impact? And then we’ll hire everyone around you. And again, there are some cases where the founder just says, “Hey, I want to run product and I don’t like this business stuff at all. Let’s go get someone, but I’d much rather do that upfront or really have some people identified than get into something and then a year later the founder’s just like, I’m out.” And then you’re taking a bunch of risk and you lose that founder magic.

BERMAN: It still takes a lot of good ego to acknowledge where you’re not strong, to bring in people who are incredibly capable of things you are not, whether you are replacing yourself as CEO or building out your leadership team. What’s the signal that you’re looking for from founders when you’re considering investing as to whether they have that trait?

DEETER: Yeah. Two things that in some ways may be at odds, but it’s intense conviction and coachability. And the way that they’re at odds is you want someone who, when they will listen, gather all the facts, take input from their team, including us, but we’re just one voice and a service provider ultimately, and then make decisive action, but also be willing to revisit it and carry it on.

And so one of the signals that I think turns us off is when tension builds, people turn inward and they try to, they force themselves to come up with the answers and they shut off communication, they shut off input, et cetera. I think the best leaders are the ones who are brilliant, who are convicted, and yet they’re reaching outbound when intensity mounts and they need more input and they seek it out. And then they make a more informed decision. And I think that’s the mark of a mature, confident leader who’s going to work through problems and wrong answers to get to the best answers.

BERMAN: Why did you decide to sell a company?

DEETER: IBM was our biggest single partner. They were the right distribution platform. And back then, hundreds of millions of dollars was real money. It was the biggest enterprise software outcome of the vintage at the time. We need to remember how much things have changed, but they paid forward value and our team felt it was the right fit. And so we were profitable. We were global. We were starting to think about an IPO.

Ironically, my first IPO as an investor, Cornerstone On Demand was actually around the same scale and they traded up to billions. And so I’ve thought back about the playbook and the decision many times, but never regret a good outcome in the sense of not just financially, but fit and team. Half that team still exists over there. Our type A executives all left pretty quickly, but the team, the product, it’s still in use years later and that’s pretty cool.

BERMAN: How long did you stay at IBM?

DEETER: One year and one day.

BERMAN: Yeah, not that anyone’s keeping track.

DEETER: I always like to over deliver. I said, “What’s the bare minimum where you will feel good about this? ” And they said, “One year.” And I said, “Okay.” And I left the day and I told them, “I’ll commit on my year. I stayed one extra day very purposefully and then jumped out.”

BERMAN: What was that one year like for you?

DEETER: Tough. IBM is a great big company and a great big company. And there were meeting after meeting after meeting that’s overlapped. I could have been meetings all day. And interestingly, I could have ignored all the meetings and no one would’ve noticed because they would’ve assumed I was in another meeting. And that was just so painful for me.

As a Type A person who’s aggressive, who wants to get there and do it, the idea of resting, investing for me was just mind-numbing. And my senior execs felt the same way. And so I loved IBM. I wanted them to be happy. I wanted this to carry through, but I needed out.

BERMAN: Okay. So one year one day hits, you walk out the door of IBM. What do you go do next?

DEETER: I went straight to Bessemer. So I’ve worked in venture before, not with Bessemer, but with another great firm, TA Associates, back when they still did venture. And we were fortunate to have a number of A tier firms around our cap table with Trigo raised some great folks. Bessemer was our anchor investor, but more importantly, the firm that I felt best about, their product, their service, their delivery. And I was fortunate to have a number of offers to go join various venture firms and hands down Bessemer was my top choice.

BERMAN: And you didn’t want to go operate again. You didn’t want to go build something all over again.

DEETER: I didn’t at that point. One of the things that was intoxicating to me about venture was the potential to be involved early stage and seed things and incubate things and yet satisfy my ADD and doing a bunch of things. I’ll confess that I’ve done much less of the incubation and creation that I thought I would because I’ve been so excited by other people’s ideas and other teams. And so I’ve only done a little bit of that in my Bessemer time. And the vast majority of what I do is find great teams that are already executing better than I could have, would have or would found and begging my way into work with them.

BERMAN: What were some of the big early lessons when you went back to venture when you went to Bessemer?

DEETER: Don’t try to be the operator. And that manifests itself in a few ways, but one of them from the investing side is don’t find things that are doing okay and go into fix them so that you go from good to great. Go find the teams in the business that’s already great and make them excellent or help them just stay excellent if they’re already there so that the slope align stays bigger. And that carries through the board interactions like Hippocratic Oath of venture, do no harm.

Stay the hell out of the way when things are working and send them customers, send them candidates, but get out of the road if they’re executing well and going. Don’t try to give product input out of cycle or sitting in a board meeting. There’s a process and a way to do it, but back great teams and let them run and then just resource them.

BERMAN: Yeah. There’s like a double-edged sword to having venture investors who’ve been operators, right? How are you framing the value that you bring with that background as an operator and now the years as an investor?

DEETER: Yeah. So I think it’s a balance, which is we have a large global firm, 20 billion capital eight offices around the world, over a hundred people in our platform team to support our companies. So we want to help. We want to engage, but the mentality and the approach is very different. Bessemer is a low bravado firm. We’re not putting our firm first. We’re not out there pushing things.

It’s all what do you want? And so my interactions with my CEOs, which are almost daily with almost every one of them, but it’s sending quick texts, it’s sending emails, it’s forward things around. It’s after hours calls and obviously structured board meetings and things, but much more of it is the quick little hits. “Hey, saw this great candidate, think they’re interesting for your VP of X role, or just met with this interesting partner, is it worth your time?”

And if it’s a trusted relationship, eight out of 10 of those is essentially no, which is eight, thanks not interesting, or, “Hey, could you buy some time or run interference or whatever?” And then two of those are like, ” Oh yeah, I want that immediately, send it over and make it happen. “But if it’s high frequency, low risk and very trusted, then it’s just it’s high velocity. And my CEOs will say, “Without a doubt, I’m on the phone within 90 minutes when needed. I’ve been woken up countless times with chaos moments and crises and I love it.”

BERMAN: There are a few things I want to tease out of this. One, critically, it’s double opt-in, which I’m so grateful to hear. It’s like you’re not just saying like, “Hey, I’m connecting with so-and-so, you’re asking …” Even if you might be pushing hard, like, I think this one’s really high value, this job candidate, this prospective client, whatever it might be, I don’t think enough people fully appreciate the value of the double opt-in.

Well, and that leads directly into the second tease out, which is time is our most valuable asset. And not everything has to be a 30-minute phone call, but that quick hit of like, “Hey, just flagging this for you, could be of interest, let me know, whatever.” That is invaluable to an operator where every minute really counts in their day.

DEETER: I have a different modality of communication for most of my CEOs. I literally have WhatsApp, Slack, Signal, text, email, FaceTime by preference. I’m not going to name it, but I could tell you which CEO I communicate with in which way. I have blocks of time for fixed things, board meetings, new company discussions, conversations like this, but half my time is interrupt driven.

And I’d say evenings and weekends are almost always interrupt driven. And so I don’t do a lot of long form things. I don’t sit down and read a book. I don’t sit down and do long duration things. Most of my interactions are prioritized kind of tier one and working through that. And for me, it’s very much the back and forth. I’m constantly seeking out experts on every topic and having the discussions and going back and forth.

And then I’ll attempt to synthesize that and then go back to the CEO or the team member and go through. And by the way, we are totally transparent with our diligence issues and concerns and we don’t dance. We’ll literally share it after the investment. Here’s the readout, here’s what we heard, here are the really red flags.

BERMAN: I was on Capitol Hill early in my career and one of my mentors said to me before I started there, most Fridays you’ll also go back to his state and a lot of your colleagues will take a three-hour lunch. And I’m just letting you know that by virtue of where you work, you can call almost anyone in the country and they’ll want to talk to you. And the number one thing most people want to talk about more than anything else is themselves and they will think you are really smart if all you do is ask them questions.

DEETER: Hallelujah to that. It’s so funny but so true.

BERMAN: I love that you’re in this position where you can call people who are true subject matter experts and give them the privilege of making you smarter on something that may well make you and your LPs a ton of money. And they feel great about being able to do that.

DEETER: Especially in these deep science fields where nuclear physicists and theorists have wanted to commercialize this technology for decades and are looking for avenues to do that. And so they want to talk. And by the way, there’s also ways for them to hopefully make a lot of money in the process by … We’ll bring people on as paid advisors in times, and certainly our consultants were paid, but most scientists, most computer scientists enter this because of love of tech and love of what could be. And more than anything, they want to see success and they want to see it happen and we’re aligned there.

BERMAN: Yeah. And I think we underestimate how much people want to help and especially when they’ve spent years acquiring subject matter knowledge and they can now deploy to someone who genuinely cares about what they’re doing. And yes, if I can make money doing it all the better, but sometimes asking is all you have to do to get what you need.

DEETER: Very right. And I think that’s great advice to the listeners that to reach out.

BERMAN: Yeah. Still ahead, Byron Deeter on his anti-portfolio and what he learns from the ones that got away.

[AD BREAK]

Welcome back to Masters of Scale. You can find this conversation and much more on our YouTube channel. And be sure to check out the link in our show notes to subscribe to our newsletter. What were some of the most important lessons from your early days at Bessemer?

DEETER: The big swings, the crimes of omission are the ones that hurt more. So it’s so easy to talk yourself out of investments. And unfortunately, just by its nature, we say no 99.9% of the time anyway, but there are so many ways things can fail. And especially the most bold entrepreneurs and the most bold visions have a lot of ways to fail spectacularly.

And I keep pushing myself to think about the what can be, what can go right, what can really work with this. And quite sincerely, the things that I regret the most are the ones that I pulled back on because I could see the big vision and just saw all the probabilities of the what can go wrong and just couldn’t quite get there. And I regret those the most.

BERMAN: And how has that informed how you’re investing in this era?

DEETER: To start with the reverse and to think back on how could the world change to accept this and what’s possible in a multi-horizon way. Great businesses often start with a line of sight to cashflow positive and controlling our own destiny. I think that’s important, but the multi-horizon view is critical. And so if you look at a business like Shopify that my partner Jeremy Levine funded or Procore or ServiceTitan or some of these vertical SaaS businesses, you could look at ServiceTitan and say, “It’s software for plumbers. How big can that be, et cetera?”

If you step back and say, “It’s actually multi-vertical. It’s actually payments relevant. It’s actually a great AI use case.” They’re at 10 billion already and sky is the limit in terms of where that can go. And then by the way, often the tiebreaker comes down to just bluntly what teams do you want to work with and where can you change the world?

Our growth fund is called Century Fund because it’s anchored on this idea of what are going to be the iconic companies of the next century. When the books are written, our kids talk about it, who are the companies that dented the space-time continuum? And there’s a lot of ways to make money in venture. It’s a great asset class. It’s a great time.

So when I can only do two deals a year, the tiebreaker comes down to the biggest swings and the teams I really want to work with for a decade plus. We just ran the math. Our average hold period’s like 14 years, longer even than I thought. These are long journeys if you’re doing really big things. And so the qualitative does matter too.

BERMAN: Do you all have conviction that there are going to be great companies built now that will last a century or are you more looking on a 10 to 20 year horizon for where that value will be created and you don’t worry about it beyond that?

DEETER: We don’t think tech is going away. We don’t think software is disappearing despite the current narrative. When you look at a rocket lab and space on our Frontier Tech side, or you look at Anthropic and the foundation models, or you look at a number of our vertical SaaS companies or infrastructure and MaintenX or ClickHouse or some of these, we absolutely believe these can all be $100 billion plus businesses and that they are the new foundation for the new economy.

BERMAN: One of the things that you all are known for is the anti-portfolio. Could you share a little bit about what it is and how it came to be?

DEETER: Yeah. So on our website, in addition to the portfolio, which we’re very proud of-

BERMAN: Which every venture firm has.

DEETER: Yes. But I think the portfolio needs to look good to be able to do this. But we have a page, which I’d encourage you all to go to, which is the anti-portfolio. And it’s all about those crimes of omission that I alluded to before. It’s the missed deals. It’s not the companies we invest in that fail. We have a lot of those.

We don’t want to single out entrepreneurs in that. And we want to continue to fail in that way because that means you’re taking big risks. But these are the ones that ended up being great companies that we had a front row seat and an opportunity to invest in and blew it. And those are the ones that are most important to learn from. And so for me, it’s companies like Tesla early on and Atlassian on the software side and on and on like this where massive respect for the entrepreneur belief in the vision and just couldn’t quite get there.

And we need to keep asking ourselves in those ways, what did we miss and what can we learn so we don’t make that mistake twice in a row because that hurts. And then part of the reason to keep it out there, not only to remind ourselves, but also for those 99.9% of entrepreneurs that we say no to, it’s like, we’re still rooting for you. We’re fans of tech. We love innovation.

We love that you’re doing this. And if you can’t make it onto our portfolio page, which we certainly hope you do, we actually hope you make it onto the anti-portfolio and we learn from that. So that next time on your next company, hopefully if you’re nice enough to give us another shot or for the next entrepreneur like you, we say yes that time.

BERMAN: I’d love to spend a minute on Anthropic. Could you tell the story of how you all made the decision to invest there?

DEETER: Yeah. So we were very close to CloudWave One, saw the hyperscaler market play out, which really wasn’t a venture capital game. Obviously the winners, Amazon, Microsoft, Google. There could have been a case that one of the independent challengers emerged there, but there was no one that was willing to fund the capital for those on the private markets, and we all missed it.

We didn’t want to miss that again. Our belief is that the foundation models are going to be the new hyperscalers, and we don’t do competitive investments, so we could only make one bet. And so we were very much looking for who do we think was going to pull ahead several years out? But the beta and Anthropic was that they would be one of those companies and that they had the chance to compete at the one slot, which we very much still think they do.

And credit to co-investors there, Matt Murphy at Menlo and Ravi at Lightspeed and some folks that were coming into the same round and were great collaborators and thought partners. And there’s less of that venture these days, but we would not have gotten there without the ability to actually lock arms with a syndicate there and have real discussions and I’m thrilled we did and very appreciative of Dario and Daniella and that team for being so bold to go all in and do it the right way with Ethical AI and have the enterprise vision that was very non-obvious at the time and very contrarian.

BERMAN: What gave you conviction that Anthropic could get to that number one slot?

DEETER: This was a little bit the tortoise and the hare, but very much their bet early on the enterprise side. Claude is their consumer front end. It would’ve been great if that also won, and it may still, but fundamentally the better model approach and the business mindset that they were bringing to this and the API approach and the focus early on verticals like software, as well as the team’s mindset and value system, that was a magnet for AI talent.

And right now that is the fuel, that is the lifeblood of these businesses. And it was true then, it’s still true today. If you look at the heat maps and you look at the talent maps, Dario is a magnet for the world’s best and the world’s best want to work with him and do great things. And the combination of a world-class product, the right strategy, but just the talent coming into that center of gravity, wanting to have the impact there, plotted the line that we said, “The slope is steeper, give it time and this will pass.”

The hyperscalers will need to work with them, which has played out, and that was also non-obvious at the time. And the unit economics, it was a gross margin negative, totally unproven business at the time. If you believe that they’re driving value, all the numbers will take care of themselves. Don’t get caught up in the details, which is terrifying given the size of the investment. It was one of our largest checks and now is our largest check ever, but you had to look over multi-years in a horizon of the what could be, and that was incredibly exciting.

BERMAN: How did their commitment to ethical AI inform the investment decision?

DEETER: It was a big part of it because as you think about first, the people element, the talent attraction we spoke about before, but also the geopolitical and the uncertainties around AI and the impact. And I’m going to answer it first just from the business side, which is you want to know that your customers are going to go on a journey with you, that enterprise are going to trust you.

And so there’s an ROI to it, but I’ll also say just back to the qualitative and the life’s too short and the human side of it, we want to work with great people and we want to do great things. And so our dinner with Dario closing the deal, he previewed a lot of the healthcare stuff that they’re just now releasing. And that was so cool to think about. And you read his Machine’s 11 Grace that came out after that, but also he previewed with us and the impact on humanity for this will save lives, this will change outcomes when you apply AI technology to healthcare or education or some of these fields.

And they’re deeply authentically committed to that. They’re giving away the vast majority of their economics. They’ve said that they’re doing it the right way. In some ways, like I think of Melanie and Cliff at Canva who set some of these principles. And so they’re going to do great things. They’re going to make this world a ton of money, but they’re going to make this world better, and I think that’s a cocktail for success.

We have a executive health wellness and mindfulness program that we’ve launched at Bessemer. The STRIVE acronym refers to categories, so sleep training, regimen, et cetera, around taking principles of peak performance for athletes and applying them to our CEOs. And when you think about it, these athletes are tens of millions or hundreds of millions of dollars of value impacting billions of dollars, so are our CEOs. And yet our CEOs often treat their bodies like crap.

They don’t sleep well, they don’t eat, they’re underperforming. And statistically, it’s often the same as driving drunk or running a company drunk when you’re sleep-deprived and underperforming. And we have now great science, we have great resources, we have great tools to monitor and track and supplements and all sorts of things that hasn’t been in many ways socially accepted in entrepreneurial circles.

And in fact, it’s been the opposite, this bravado around, “Oh, I barely slept last night and I’m working so hard and whatever.” And so part of this was bring into a safe space to the experts. And so we mixed it. We have a lot of pro athletes and Hall of Famers who also work with us and invest with us. And so we brought the communities together and did an event at the Niners Stadium with our CEOs and a number of NFL players and said, “Let’s talk about this and let’s go through it.”

And it was so empowering to have Arik Armstead who won the Walter Peyton Manor of the ear award, this huge human talk about his psychologist and say in a safe space like, “I need this.” When I was in a slump and to be able to talk through the mental thing, if Arik Armstead a physically unbeatable human needs this, then you, tech CEO could really benefit from it. And sleep is one of the most powerful levers.

We focused on that as one of the first things, like just doing some of the fundamentals around if you can’t sleep longer, at least sleep better. So how can you get using cold, using light, using caffeine, using stimulants. There’s all these things that are now best practices that you can do. And so you see our CEOs, we gave them all whoops and you’ll see Oura rings or Eight Sleep and all these things now that are part of it.

And I have gotten more positive feedback from this than any of the single programs we’ve launched. Bijal, our CEO of Guild Health will say she’d never run more than three miles and she wanted to work on sleep. And so it was awesome. And she shared this on LinkedIn, so I’m not breaching any trust or confidentiality, but she participated in a 10K and she has this whole sleep program.

And I’ve got notes from her team saying, thank you, Bij is so much better to work with and such a better CEO because she’s happy, she’s got inner, she’s engaged. And these are 10-year journeys and I sincerely like every CEO I work with and I want them to be better parents and better friends in addition to be selfishly being great CEOs and like this is part of it, and so it’s on our website. We’ve got a lot of the materials there.

For our CEOs, we do deeper stuff and events and things like that, but for the public, we put it out there and we’ve just pulled together the best practices in each of those categories. And then the last one I’d highlight, the emotional health, the mental health part is a really big part of this right now. A year and a half ago, I had three CEOs in the same year tap out, including one that had to go away and needed real time.

Just the stress on our operators right now is unprecedented and they need help, they need outlets, it needs to be safe, it needs to be open. And so just trying to surround them with resources to get ahead of it and to treat the mental health part as you would other executive skills is essential.

BERMAN: I mean, it also just strikes me that one, right thing to do by people you care about. Two, right thing to do by your LPs and the teams you’ve invested in. It’s better business. And three, it’s got to be competitive advantage that this is something that I’m sure the founders are talking about among themselves and saying when Bessemer invests, they really get behind you beyond as a business, they get behind you personally.

DEETER: Yeah. I hope that’s true. And I think that is starting to come true. It’s interesting. This one we actually, we didn’t start from the ROI side. We started from the pull of what our founders are wanting, but I think you’re right. And I do believe there’s a real ROI. If you make them better, we’re shareholders, it’ll carry through. And I do hope that part of just the partnership, that would be great if it also has marketing benefit.

We haven’t done a lot externally about it. We hope that people find the content, but we don’t want anyone to think that we’re trying to market them. And that’s why I was confident with the example I gave with Bijal. I know she’s posted on LinkedIn, so I feel comfortable sharing that. But this gets pretty personal. And these relationships with our CEOs are really personal if it’s trusted, if you’re in the right spot.

And we want them on that vision piece to be comfortable sharing what their goals are. And we have an outside coach with Exos, one of our partners who does a lot of stuff with the NFL and others who they share the goal with them. So they don’t need to share it with us.You’ve got an independent outside expert, but a lot of them do choose to share it with us and a WhatsApp group with folks where they go through.

So I think part of them being their best and helping them be their best is just making these available. And I do hope other venture firms will follow. This isn’t something that we want to be proprietary. We make the content available and hope other firms follow because it hasn’t been thought of as a role of support. When I was the CEO of Bessemer did everything they could, but when I finished up my company, I had 13 cavities.

I went in five years after running this thing and I brush my teeth every day, but I lived on power bars. It never occurred to me. These things are like the sugar just sitting on your teeth. So I’d have five power bars in the day because I had no time to eat and I was sleeping like crap and no one knew any better. And so we just beated ourselves up in the service of this great tech economy. And so I’m trying to help our entrepreneurs have it better.

BERMAN: We spoke earlier about the dot-com bust and what happens when winter really comes. As we sit here in the first quarter of 2026, what are you telling your portfolio companies about how to prepare, how to manage their capital, how to manage their teams for what may be a sustained bust ahead as we’ve been in a boom cycle for a minute here.

DEETER: Yeah. We are in the most volatile time, but for COVID of the last two decades and the uncertainty is through the roof. And as bullish as you are on your company and the prospects, you just can’t run out of money full stop. And so whether that means raising earlier, being a little more thoughtful on capital, et cetera, you’ve got to be balanced.

Now our entrepreneurs have huge ambitions and are going to need a ton of capital in many cases for their vision. And so that generally means raise earlier and just have buffer to weather some short-term chaos. Part of why we’ve scaled up as a firm though is also to be able to insulate a bit through the rounds. And of course, we need to be economically rational if valuations go down, like there may be a down round or it may be something, but generally we reserve in a way where we can be A, provider of capital, but we never want to do that.

Our goal isn’t to jam or do a down round. We would much rather, we get ahead of it, we raise, we’ve got the balance sheet to go for this. But I also think because these are smaller companies that can do more with less, these outcomes are playing out much faster, there will be higher skew, but great things will be created in shorter windows with more leverage.

And then you’ll know it and the downstream capital will be cheaper set up the other way at higher valuations and more readily available. And we are seeing that separation where gen one cloud companies who are not adopting are getting pounded and that capital is leaving that category and going over to the AI natives who the bet is they’re going to be the disruptors.

BERMAN: Yeah. We talked about how there are 10 person companies that will reach billion dollar valuation. Roy Bahat from Bloomberg is the first person who I heard talk about a one person billion dollar company. If I tell you that Bloomberg is reporting, that there’s a one person billion dollar company and I ask you, what is the over under on the date that that report happens? What’s the prediction?

DEETER: Well, I’m going to cheat because in some ways it happened last year when some of these founders went and said, “Hey, I’m going to start a new foundation model and could raise it north of a billion.” So I think there’s difference of financing value for an individual versus what I think you’re implying is a business that on its merits is worth that with one person team very soon would be my answer. And in my mind, I’m thinking a year and I’m holding off whether that means 13 months, whether it’s a calendar year or through to end of January, but I think it’s that soon.

BERMAN: Why don’t we call it one year and one day because you have really good history with one year and one day.

DEETER: Here we go, exactly.

BERMAN: There we go.

DEETER: And then I can take the under.

BERMAN: That’s right. Perfect. Thank you so much for being with us.

DEETER: A true pleasure.

BERMAN: Thanks again to Byron Deeter for joining us. He shared so many invaluable insights, and I think the one that will stick with me most is his anti-portfolio. It’s an important reminder that we can learn essential lessons from the actions we don’t take if we’re thoughtful enough to notice and honest enough to own it. I’m Jeff Berman. Thank you for listening.

The post Why CEOs need to think more like athletes appeared first on Masters of Scale.

Byron Deeter has spent two decades at the epicenter of tech as an investor with Bessemer Venture Partners. His portfolio includes some of the most innovative companies in the world, from Anthropic to Waymo to Canva. He talks with host Jeff Berman about his advice for both founders and investors in this moment of AI transformation, why CEOs need to think more like athletes, and more.

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RANA EL KALIOUBY: I want to try an experiment. If you know me, you know I LOVE chocolate. But I am also very aware of the food I put into my body. So this is my everyday problem: How can I satisfy my chocolate craving but eat something healthy?

I want to try an experiment: How can AI help?

So I’m going into ChatGPT, starting a new conversation, and entering this prompt:

I’m looking for a chocolate bar that has no added sugar, gluten-free, and is packed with antioxidants and maybe some protein. Can you send some options?

OK, and here are the options. So the top three choices: I know Lilly’s, but I haven’t heard of Askinosie and Pascha. They look yummy, and I can buy them right now through ChatGPT.

This kind of AI-powered shopping is called agentic commerce. And my guest today argues that this is the future. Maia Josebachvili is chief revenue officer of AI at Stripe. On this episode, she makes the case for AI chatbot shopping. We talk about the risk of commodification and how AI can bring new customers to businesses of every size.

I’m Rana El Kaliouby, and this is Pioneers of AI, a podcast taking you behind the scenes of the AI revolution.

EL KALIOUBY: Hi, Maia. Welcome to Pioneers of AI. I am so excited for our conversation.

MAIA JOSEBACHVILI: Hey, Rana. Thank you so much for having me.

EL KALIOUBY: We are going to talk about AI for most of the conversation, but before we dig in, I want to talk about you being a very accomplished skydiver. I don’t think I will ever skydive, so that sounds too terrifying. What was that first jump like?

JOSEBACHVILI: I don’t know that many people grow up saying, “I want to be a skydiver.” I certainly didn’t think that. Then I did my first tandem jump, and I landed and said, “I want to be a skydiver.” I just knew.

There’s this feeling you get when you jump out and you have, call it, 60 seconds of free fall, where the whole world goes away and all you can do is think about what you’re doing in that one moment. There’s absolutely nothing like it.

EL KALIOUBY: Do you still skydive?

JOSEBACHVILI: No, that was Maia in her 20s. Definitely not now.

EL KALIOUBY: That’s great. You then went on to become a founder, and I feel like that’s a different type of adrenaline rush. But you still have to take a leap of faith. So what has your skydiving experience taught you about being a founder?

JOSEBACHVILI: My skydiving instructor, Oli, who was probably 40 at the time and living in Vermont — and when you’re in college, 40 is very, very wise — used to always say, when I’d tell him I was scared, “Well, that’s good. It’s a sign of intelligence. I’d be very concerned if you weren’t. But what could possibly go wrong?”

There’s something very funny about asking what could possibly go wrong in a skydive. But what was helpful was that you’d actually walk through all the things that could go wrong and figure out how you would handle them. I think taking a leap of faith as a founder or a leader, or experimenting with new forms of AI, you can go through the same process, which is really to walk through what could go wrong.

At the end of the day, it’s not that bad. So go ahead and jump.

EL KALIOUBY: Go ahead and jump. I love that. So you’re now at Stripe. Your current role is chief revenue officer of AI. That is a very new title. How did that come about? What does it mean? What are your responsibilities? We’re always very curious about the new jobs that AI is creating, and I believe this is one of them.

JOSEBACHVILI: Yeah, absolutely. At Stripe, we’re creating the economic infrastructure for AI, and that means we power the world’s fastest-growing and most ambitious AI companies on their growth journeys. In fact, if you take the Forbes AI 50 and look at anyone who takes online payments, they do so with Stripe.

So part of my job is partnering with all of those companies — OpenAI, Anthropic, Cursor, Replit — and working with them on their growth journeys. We also are powering the new agentic commerce wave that you’re seeing across the board. OpenAI released Instant Checkout. Microsoft Copilot has a solution. Google has a solution. We’re powering some of the world’s largest retailers on those platforms.

EL KALIOUBY: When you say agentic commerce, what do you actually mean by that?

JOSEBACHVILI: We’re referring to AI-enabled commerce in two forms. The first is autonomous agents completing purchases on behalf of consumers, and the second is humans making purchases within AI applications such as chat interfaces. The industry generally uses the term agentic commerce to cover both, and as we partner with our customers, they do as well. So we think about agentic commerce as the whole suite.

EL KALIOUBY: Of these two scenarios, which one is more common today? Can you give us an example?

JOSEBACHVILI: Absolutely. We’re seeing a lot more pull right now on the second one, which is humans buying within chat interfaces. We’re really focused on helping everyone prepare for the agent era. So, as an example, buying a coffee table in the before times:

You would go to 10 different websites of the brands you knew. You’d go into the search and the filter and say, “I want a coffee table.” And you were very limited in the options. You could choose wood or metal, round or rectangular, and then you’d flip through and see what you could find.

EL KALIOUBY: Yep. And then you’d get your first 20 options, and then you have to click onto the next page, and so on.

JOSEBACHVILI: Exactly. Now you can take a picture of your living room, upload it to your favorite LLM surface, and say, “I’m looking for a warm, modern-vibe coffee table that fits nicely here.” What you’ll get back, if you prompt it, is a few different images of different types of coffee tables already situated in your living room that fit your aesthetic.

EL KALIOUBY: And then you click buy.

JOSEBACHVILI: Well, that’s where we’re all heading, right? A few retailers are live today, but we’re working on getting more merchants live. The vision is that Stripe will be the fastest on-ramp for brands to participate in agentic commerce.

But you can see how this is just a much more powerful shopping experience and better for the end consumer.

EL KALIOUBY: You have actually said that AI is a much bigger shift for commerce than mobile was. Why do you think so?

JOSEBACHVILI: In mobile, you still had the purchase happening in the brand environment, and consumers still had to know where they were going, right?

EL KALIOUBY: Right.

JOSEBACHVILI: What agentic commerce really brings is the ability to bring commerce to where intent is happening. People are already using these LLMs to search, and now we can bring the different options right where the consumer is. I’m really excited about it for a lot of reasons, but it also democratizes the ability for brands to get in front of consumers. We have Etsy live in ChatGPT and Microsoft Copilot.

EL KALIOUBY: That is so cool.

JOSEBACHVILI: It’s so cool. You have these local artisans who may not always be able to get in front of the consumer.

But now, if someone is searching for a Pokémon Halloween costume, that might show up and give that local craftsperson access to consumers they didn’t have before.

EL KALIOUBY: Very cool. On that topic, because AI is changing the way we discover information and find products, search engine optimization is really being reimagined, right? SEO was basically how Google surfaced products to the top. How is AI changing all that when you’re shopping inside these models?

JOSEBACHVILI: This is one of the big conversations happening right now, and brands are really thinking about how they show up where the consumer intent is. The product catalog really matters, and the nature of the product catalog really matters. How do you get this information to be really agent-legible?

EL KALIOUBY: That is a new term. What do you mean by that?

JOSEBACHVILI: You’ve got agents now trying to understand and make sense of all the different SKUs on your website, all the different SKUs in your product catalog. How do you make that really digestible for them so that when someone is searching for the warm coffee table, that shows up?

EL KALIOUBY: Right. For every product item, what is the information you have about the product, and can you make the agent access that information? That’s pretty cool.

JOSEBACHVILI: Yeah, it’s a real shift in the infrastructure that these retailers need in order to participate. And we obsess over what it takes for businesses to thrive in the agent era without giving up control.

That control is an important piece for them. We’re talking about all the benefits, but the concern we hear from a lot of merchants is that they still want to have a relationship with the customer. So something that was really important when we were designing the agentic commerce suite was how do we make sure that the merchants are still the merchant of record and they can still have the customer relationship? That’s been one of the big priorities as we’ve been building: How do we build the most merchant-friendly infrastructure so that the world’s leading brands can participate in agentic commerce?

EL KALIOUBY: We’re going to take a break. When we come back, the role of ads in our agentic future. Stay with us.

EL KALIOUBY: OpenAI announced that they are rolling out advertisements on ChatGPT, and they’ve actually said that these ads won’t influence what products you see in answer to queries. Rather, they will just allow advertisers to advertise at the bottom of the ChatGPT interface. What do you make of all of this?

JOSEBACHVILI: I think it’s a natural extension, and it’s to be expected.

EL KALIOUBY: Do you think people should be allowed to pay more to show up more in answers to queries? I personally can see a world where that is fair game, but I also worry because if I’m asking ChatGPT for advice on supplements to take, I want the answer to be impartial. So I can see the pros and cons. What about you?

JOSEBACHVILI: I’m thinking about it because I think it’s a really good question. My personal opinion is that if it is going to show up, you need to know it was influenced by ads, and I think that might be a way to get around it. I also think it is really early days, and things are going to look very different in a year or two. A lot of companies are going to experiment and see how it all plays out.

EL KALIOUBY: I’m sure that’s going to be true because things are moving so fast. We had Suresh Kumar, the CTO of Walmart, on the show, and he talked about how they’re integrated within ChatGPT. So now you can be shopping, and then Walmart products could show up. Does Stripe power all of that?

JOSEBACHVILI: We are under the hood on those cases today, in some way, shape, or form. Different integration shapes, but we’re under the hood of the Instant Checkout experiences that are live today.

EL KALIOUBY: So you power a lot of the top AI companies out there. What are some of the trends that you’re seeing?

JOSEBACHVILI: Two really major ones, and they both have to do with growth. The first is that the pace these companies are growing at is just unprecedented. We’ve indexed the top 100 AI companies on Stripe, and the ones that hit $30 million in ARR did it in about 18 months. By comparison, when we look at the SaaS companies from 2018 that got there, it took them five years. And even within that, you have Lovable getting to $100 million in eight months, Manus, the general-purpose agent, going from zero to $100 million in eight months, and Higgsfield — if they’re not on your radar — getting to $200 million in nine months.

EL KALIOUBY: What do they do?

JOSEBACHVILI: Video generation. So that’s all at the high end. But even the companies we see hitting $1 million in ARR, AI startups are scaling four times faster than their peers. AI companies are global from Day 1. Another stat: The median AI startup, when we look at the top 100, is operating in 79 countries by its second year.

EL KALIOUBY: Wow.

JOSEBACHVILI: That’s about twice the internationalization of equally promising earlier SaaS companies.

EL KALIOUBY: It’s incredible. So they’re getting to revenue much faster than traditional SaaS companies. They’re global from Day 1. And I am really curious about different monetization schemes. We’re tracking that very closely as an early-stage fund as well, and I find that very interesting.

JOSEBACHVILI: It really seems like right now this hybrid subscription-plus-overage and usage-based billing is starting to be the norm. And I’m sure when we talk again in six months, we’ll hear new things, but the rate of change is really impressive.

EL KALIOUBY: I’m thinking about some of the AI companies. How can you tell if a company is going to explode in terms of revenue and growth?

JOSEBACHVILI: The journey looks different for different companies.

But there are certain signals you can see when they’re about to pop. It might just happen at different times in their trajectory.

EL KALIOUBY: That’s interesting. So back to your providing this infrastructure: You mentioned how online retailers really want to still own the relationship with their customer. How are you enabling that, and have you gotten any pushback from some retailers? It sounds like you’re working a lot with AI companies that are at the forefront of innovation and are really reimagining what commerce looks like. But what about traditional online retailers? What’s the feedback been so far?

JOSEBACHVILI: The shift in the last seven months is pretty staggering, too. We have a customer advisory board with 20 of our largest merchants, many of them retailers. Last summer, when we were talking to them about agentic commerce, there was a lot of wait-and-see thinking. “I’m not sure.”

Fast forward, and 19 out of 20 of them had already started implementing an agentic strategy. Everyone is somewhere on the spectrum from experimentation to “I’m all in,” but everyone is jumping in.

EL KALIOUBY: So much of retail at the moment is driven by brands really investing a lot of time, effort, and money into that brand identity, right? Whether it’s a logo, the colors, or the sounds.

What does that look like in an agentic commerce world, and how do we prevent this world where everything gets commoditized? I’m buying my pair of snow boots, and it doesn’t really matter what brand it is.

JOSEBACHVILI: It’s really top of mind for us. We obsess over what it takes for businesses to thrive in the agent era without giving up control, and that means a couple things. It means they get to stay the merchant of record and control the whole post-purchase experience.

And their brand has to show up in that interface.

When we designed ACP, the agentic commerce protocol that we co-authored with OpenAI, and our agentic commerce suite, a core tenet of both was that the brand had to show up in that discovery. This is something we heard loud and clear from our merchants. Again, we’re building the most merchant-friendly infrastructure so that businesses can thrive in the agent era.

Having their brand show up and having control of the customer relationship were two of the most important tenets.

EL KALIOUBY: So let’s talk about some of the challenges, or maybe the things to look out for. I want to start with fraud in this agentic commerce world. How do we prevent fraud, and what are you doing about that?

JOSEBACHVILI: We spent decades preventing bots from buying on our websites. And now we’re saying, actually, we want the good bots. Please come and buy all the things. One of the things we’ve launched is the shared payment token. When someone is putting in their information within a chat experience, we have what we call the shared payment token, which basically wraps that credential and gives it to the merchant.

EL KALIOUBY: OK.

JOSEBACHVILI: The merchant can retain control. They are the merchant of record, and they have a relationship with the customer.

In this, we also package a risk score.

EL KALIOUBY: How risky is that buyer?

JOSEBACHVILI: Exactly.

EL KALIOUBY: But how would you come up with this risk score? What is it based on?

JOSEBACHVILI: How we built our fraud and risk models has completely changed. Historically, Stripe used specialized models. We had authorization optimization, one for fraud, one for disputes.

It worked well. But recent breakthroughs in AI have shown us that a generalized foundation model can outperform the narrow ones.

EL KALIOUBY: Interesting.

JOSEBACHVILI: We created our payments foundation model, and it’s trained on tens of billions of transactions across our network. Much like an LLM understands language, our payments foundation model understands payments.

EL KALIOUBY: That is fascinating. And then it’s able to basically flag whether this is a payment that looks OK or is fraudulent.

JOSEBACHVILI: Yeah. What we’ve seen is that as we’ve used this new payments foundation model, we’ve reduced card testing for businesses on Stripe by 80 percent over the last two years. Just by using this model, we were able to detect that class of attacks 59 percent of the time before, and 97 percent almost immediately after.

EL KALIOUBY: What are some examples of fraudulent behaviors that AI companies are experiencing?

JOSEBACHVILI: In the same way that we’re seeing new monetization models and different growth, we’re also seeing really new fraud patterns emerge with these AI companies. One example is free-trial abuse. What we see is bad actors chaining accounts together, triggering AI workflow loads, and then leaving startups with massive compute bills. In traditional SaaS, a stolen trial didn’t matter that much because there wasn’t much marginal cost. But with AI, when you have real compute costs, these can be existential for those AI startups. We’ve seen some AI companies actually be forced to turn off free trials altogether because of this. We’ve since invested in Stripe Radar, our fraud detection tool, so that we can detect and block this behavior and help AI companies let legitimate users go through while stopping the abusive ones.

EL KALIOUBY: More with Maia after a short break. Stay with us.

EL KALIOUBY: So I want to talk next about how AI is changing the way we do work. I would love for you to take us inside Stripe. One of my investment theses is that AI is shifting value creation, specifically through this idea of agentic AI and AI co-workers that get work done on your behalf. So it’s not just creating a tool that helps you be more efficient, it’s also taking on end-to-end tasks on your behalf. Does Stripe deploy some of these workflows, and how has that changed the way people work, especially the culture of the organization?

JOSEBACHVILI: I love that you mentioned culture, because one of the most important things we’ve learned is that AI adoption is as much a culture shift as it is a technology shift. What we’re seeing is that the companies that benefit most are the ones that build a habit of experimentation.

So at Stripe, we focus on making it easy for every team to safely interact with a range of models, and for those models to safely interact with our internal tools and systems.

I’ll give you a good example here. Local payment methods are really important for businesses for conversion, reach, and trust. What I mean by that is customers in Germany prefer to pay with Giropay. In Brazil, Pix dominates. In India, you have to have UPI.

So being able to offer these really matters. Historically, each new payment integration required a lot of manual engineering effort. But if you take a step back, most integrations really follow a simple pattern, which is that you have two APIs and you need to make sure they understand each other. So we fed an LLM our integration documents alongside the payment method’s documentation, and we prompted it to generate the integration code. After a few iterations, it worked end to end. We now have a new pan-European payment method whose integration was almost entirely written by an LLM. Before these tools, that would have taken us two months. This one took us two weeks, and I’m pretty sure we’re going to be able to bring it down to one to two days as those patterns standardize.

EL KALIOUBY: That’s incredible from a productivity perspective. How do you bring your organization along to allow people to build these things?

JOSEBACHVILI: I think that goes back to what you were just saying about culture. We really try to build a culture of experimentation and encouragement, celebrate all of this, and encourage people to do it. We have an internal agent builder where anyone can go in and build an agent. I was playing around this weekend with building my own agent for a couple of things. Just making it really easy for any Striper to experiment safely is a really important component of this.

EL KALIOUBY: All right, a few more questions for you. What’s one use case in AI for shopping that we haven’t seen yet that you would like to see?

JOSEBACHVILI: I am really curious about how local services will end up showing up. What I mean by that is, our puppy is sick this week — he’ll be OK, thank you — but we had to call our vet, who couldn’t see him, so we had to call a bunch of different vets. It’s not shopping in the traditional sense,

EL KALIOUBY: But still, you’re shopping for a service, right?

JOSEBACHVILI: Yeah. So how do you make that sort of discovery and booking really easy? We work with users like Jobber, which is a platform for local service providers, whether you need a plumber or something like that. It sounds so much easier to be able to go to a chat service and say, “I’m looking for a painter,” and be able to do it all within that. So I think that’s not coming tomorrow, but it could be a really interesting use case.

EL KALIOUBY: I would personally love the use case where you’re brainstorming gifts for people, and hopefully you want it to be creative. Then it surfaces who does that out there, maybe through the Etsy integration. I don’t know, maybe it exists already.

JOSEBACHVILI: I love that too. Honestly, I did all my holiday shopping through chat surfaces — not the full transaction, but the “here’s the person and here’s what they like, what do you think would be good gifts for them?” part. So as soon as we have more merchants live, I think that’s going to be a really seamless experience.

EL KALIOUBY: A lot of the way we are interacting with AI today is through a chat interface, right? There’s a little bit of voice and conversation, but it’s mostly chat. One of my investment theses is that we’re going to start to see more AI-native devices and interfaces, whether it’s glasses or maybe it’s an embedded device or a wearable or whatnot.

What does agentic commerce look like in this world, and do we even know?

JOSEBACHVILI: It is really early days. I think it’s very clear that there will be other modalities. We feel very confident about that. Exactly how those play out is still to be seen. There are a couple of startups doing different things. We see some browser buying happening, but right now the effort I’m seeing across both the AI platforms and the merchants is really on the chat-based experience.

And I think there’s still a lot to figure out there. My personal hypothesis is that we’re going to see a lot more development there in the near term. Then, as that starts to get more built out, we’ll start to see the other modalities expand.

EL KALIOUBY: So, Maia, do you still shop in person? And do you think AI is going to change the in-person shopping experience at all?

JOSEBACHVILI: I have to admit, I’m one of those people who probably stopped shopping in person as soon as the delivery experience got really good with online shopping. But my personal hypothesis is, look, some people will always love to shop in person and need to feel and touch. But we’re seeing a lot more AI startups come out where you can see an image of yourself and see what the clothes look like on you. Gemini is even starting to get really good at texture — how does fleece sit on you versus silk, which is very cool.

So I do think we’re going to see, as that technology gets better, more people opting to shop virtually in a more immersive format than what we were seeing before.

EL KALIOUBY: Very cool. I can’t wait for that. OK, final question: What’s one way AI has changed your everyday life?

JOSEBACHVILI: I have a whole new commute ritual.

EL KALIOUBY: Ooh.

JOSEBACHVILI: I alternate between Claude and Gemini and ChatGPT to compare, but my drive home is me going back and forth, batting around different ideas and getting perspectives. It’s really been some of my best thinking and workshopping time.

EL KALIOUBY: I have to say, I love that use case because driving time is not necessarily downtime, but wouldn’t it be so productive if you had a conversation with an intelligent bot in the car and asked it to take notes and brainstorm and whatnot? But I will confess:

I did that once, and I got so into it because the interface isn’t quite there yet. I actually got stopped by a cop, so I haven’t done that again. But I love the use case, and I do think it will get better. That was a few months ago, and maybe it’s gotten way better.

JOSEBACHVILI: I think it’ll keep getting better. What’s yours?

EL KALIOUBY: I consult AI often as ChatGPT, but I’m increasingly using Gemini before I need to get any work done. When I’m brainstorming ideas for the podcast, when I’m brainstorming ideas for vacations with my kids, I go to AI first, which is really interesting. That’s a fundamental behavior change.

JOSEBACHVILI: It’s a great thought partner. It’s a great thought partner.

If you haven’t tried it for furniture or decoration shopping, I also highly recommend that one. I now have burnt orange and sage green throw pillows. I’m not a designer, so I wouldn’t have thought to do that, but ChatGPT told me it would look good, and sure enough —

EL KALIOUBY: There we go. I love that. I’m going to try. Maia, thank you so much for joining us. This was great.

JOSEBACHVILI: Thanks for having me.

EL KALIOUBY: It was fascinating speaking with Maia. AI is reshaping the way we shop, and I love that it has the potential to bring new customers to small businesses.

But I’m curious what the future of agentic commerce will look like. The chatbot is a compelling form factor given how ubiquitous it is, so integrating shopping there seems like a no-brainer.

But laptops and smartphones aren’t AI-native. What will agentic commerce look like as we discover new AI-native interfaces? How will it work in glasses or wearable pins? Like Maia said, this is still early days. There’s a lot of opportunity there, and as an investor, I’m keeping tabs.

Thank you so much for listening. We’ll be back with a new episode next week for Earth Day!

The post What is agentic commerce? Stripe’s CRO of AI explains. appeared first on Masters of Scale.

SCOTT O’NEIL: Bryson DeChambeau and Jon Rahm, Joaquin Niemann — they’re my partners, my business partners. Thirty percent of our fans have never been to a golf event before. This year we’re on track, knock on wood, revenue up 85%, expenses up 3%. Listen, it’s early. It’s a 5-year-old company. NFL is probably 90 years old. MLB, 100-and-some-odd years old. NBA, 85 years old. We’re doing okay.

BOB SAFIAN: That’s Scott O’Neil, CEO of LIV Golf, the upstart league that’s enticed top players away from the PGA Tour in a quest to change the game. Scott and I first met when he was CEO of the NBA’s Philadelphia 76ers and the NHL’s New Jersey Devils. He’s a disruptor at heart, and since he moved over to LIV a year ago, he’s brought that spirit to the fore with a new LIV season underway, including a big tournament this month in Mexico City. I wanted to ask Scott about what makes LIV different, why he stepped back into the fishbowl of the sports business, and golf’s allure to top leaders from the C-suite to the White House. Scott shares stories from both the course and the VIP area, with insights about untapped opportunities, multigenerational engagement, and the special role that sports plays in culture. So let’s get to it. I’m Bob Safian, and this is Rapid Response.

[THEME MUSIC]

I’m Bob Safian. I’m here with Scott O’Neil, CEO of LIV Golf. Scott, great to see you.

O’NEIL: Bob, it’s great to see you. It’s been a minute.

SAFIAN: Always great to get together. You and I first met when you were CEO of the Philadelphia 76ers in the NBA and the New Jersey Devils of the NHL, a post with a lot of eyes on it, but also a business that was grounded in local community.

O’NEIL: Yes.

SAFIAN: Then you went to Merlin. Merlin Entertainments.

O’NEIL: Merlin Entertainments, yep.

SAFIAN: Attractions, amusement parks, Legoland, and Madame Tussauds, right?

O’NEIL: Twenty-three countries, 30,000 employees, good brands, family entertainment.

SAFIAN: Global portfolio, but less media attention, right?

O’NEIL: Yes, much less.

SAFIAN: All right, so now the past year at LIV Golf, you’re back in the spotlight. Global scale as CEO of arguably one of the most intriguing, sometimes controversial, certainly talked-about sports businesses around. Are you having fun? You and I talked about how sports business is like a fishbowl and the eyes are on you. Are you happy to be back in the fishbowl?

O’NEIL: I’ve never had this much fun in my life. Okay? I’m happy. I work with incredible people. I get to travel the world. The success, trajectory, momentum — what we’ve done in the last 14 months is almost incalculable. And it’s a huge mountain to climb. I like a challenge, and this is certainly the biggest challenge I’ve ever had. And by the way, I’m working for a wonderful chairman. His name is Yasir Al-Rumayyan. He’s also the chairman of PIF, the Public Investment Fund, the sovereign wealth fund of the Kingdom of Saudi Arabia. And that’s why I took the job.

SAFIAN: I was going to ask you that, because when LIV Golf launched, it was like a grenade.

O’NEIL: We came out hot.

SAFIAN: It’s a disruptive challenger to the PGA Tour, throwing money around to lure players, money from Saudi Arabia, which sparked these claims about sportswashing and a country trying to buy respectability. That didn’t dissuade you, though? There were things about this that were appealing?

O’NEIL: I’ve learned, after 30 years in this business, that the one thing I understand is the power and influence of what we do and why we do it. I was just in Milan with my wife, watching the gold medal hockey game — by the way, next to Mike Eruzione, if you follow hockey, the captain of the ’80 championship team, and Mark Messier, former New York Rangers captain.

SAFIAN: That’s a good crew you got there.

O’NEIL: And my wife. That was our crew. To see Jack Hughes, who we drafted five years earlier at the Devils, score the winning goal in overtime, and see a country come together — at a time when the world needs a little bit of love — what a wonderful thing.

I was in Australia. We had a record-breaking crowd, 115,000 people. It’s arguably our most successful event. The country effectively shuts down, and we celebrate golf there. And Anthony Kim — I don’t know if you know the story of Anthony Kim, but it’s pretty remarkable. He was heralded as the next Tiger Woods, hurts his Achilles, develops a drug problem, and he’s down for 12 years. He had a cardiac arrest or two. It scared him. Then he had a daughter, and he said, “I’ve got to get it back together.”

He pulls his life back together. Hadn’t picked up a club in 12 years. Comes to LIV two years ago. And in Adelaide, he wins. I will tell you, it was as close to Rocky Balboa as you’ll ever see in your life. People were crying, including me. I grabbed my sunglasses really quickly on 18. His daughter runs and jumps into his arms, and it was one of those beautiful moments where you could actually feel the energy. But that moment when he talks about getting 1% better every day, and how he understands what addicts are going through and how important resilience is — “And I hope to be an example, because I know I’m here for a bigger purpose” — that is sports. So sign me up for that all over the world. Anybody willing to invest in that, in this moment and opportunity, in a world that’s filled with divisiveness, in a world of chaos —

SAFIAN: It’s one of the things that pulls us together at a time when we —

O’NEIL: It’s the one common language we can understand. And what about golf? I would argue — I don’t come from a world of golf. I don’t come from a family of golfers. And yet golf’s the world’s most important sport. Ninety percent of Fortune 500 CEOs play golf. World leaders play golf. I was in South Africa recently, a couple weeks ago, for our event there — 100,000 fans, biggest event in the history of the country for golf. And who’s with me on Sunday? The president of the country, who is an avid golfer. We’re in Korea. We’ve got 60 chairmen of companies in a VIP room. What other environment are you pulling those people together in?

SAFIAN: When you have them together, is there a message that you’re trying to deliver to them?

O’NEIL: Oh, for sure. My message is, “I need your help.”

All the best golf since Tiger Woods has been played in the U.S. Forty-six of the top 47 events in the world historically have been played in the US. And then there’s the Open Championship in the UK. There’s a whole rest of the world out there. I want to take the best players in the world to the world and grow the game. So, man, I will say: I’ve never been challenged more, never worked harder, never traveled more, and never had more fun.

SAFIAN: So for folks who aren’t golf fans and aren’t as familiar —

O’NEIL: Yes, of course.

SAFIAN: What makes LIV different? There does seem to be an emphasis, from what I’ve seen recently, on teams versus individual players.

O’NEIL: Yes, of course.

SAFIAN: But for folks who may be familiar with PGA golf, what’s different?

O’NEIL: There are several things that are different. We have teams, so you’re assigned to a team. Most of the teams are regionally based. We have Stinger GC, a South African team. Ripper GC is an Australian team. Majesticks are a UK team. Iron Heads, a Korean team.

SAFIAN: So it’s like a Ryder Cup sort of feel to it?

O’NEIL: Yes, it is. We go to these countries, and there’s a lot of nationalism. In South Africa, I’ll tell you, on the first tee our players were crying. They’re singing the national anthem. People are screaming their names, and they were so overcome. Our Aussie team, when they go to Australia, it’s like U2 walking down the street. It is unbelievable, the love and passion. So teams are definitely a unique aspect. Now there’s a visual competition.

SAFIAN: There’s a business model to that too, right?

O’NEIL: There sure is. Because the captains — the Bryson DeChambeaus, the Phil Mickelsons, the Bubba Watsons, the Jon Rahms, the Cam Smiths, names you may know — are the captains of those teams, the stars. And they are our business partners. They have equity in those teams. And we’re actually going to market. We had so much inbound interest, we’re actually selling a couple of stakes in a couple of teams this year. I was with the New Jersey Nets as a marketing assistant in 1992, and I remember the Utah Jazz sold for $13 million. I went to work for Jeff Lurie in Philadelphia just after he bought the team for $188 million, and people thought he had lost his mind.

SAFIAN: To spend that much money.

O’NEIL: I think he just raised over $6 billion. And I think the Jazz just sold for about $2 billion. So you start to think, franchise values have worth. There’s a scarcity value. And we believe of our 13 teams — I think we’ll eventually go to 15 teams — there’ll be a really strong asset value there.

SAFIAN: So there are the events that are part of the tour.

O’NEIL: That’s right.

SAFIAN: And then there are the teams.

O’NEIL: That’s right.

SAFIAN: And the league — I don’t even know what you call the league.

O’NEIL: It’s a league. Yeah, absolutely.

SAFIAN: The league owns both, and you might sell pieces of the teams —

O’NEIL: Eventually, teams will be owned just like the NBA or just like the NFL.

SAFIAN: But the league will also stay separate as its own business.

O’NEIL: Separate, absolutely.

SAFIAN: Did you know when you came in that that’s where you were going to go?

O’NEIL: Yes, absolutely. The value of teams is indisputable in sports. And most of our teams are profitable, which helps the investment thesis. But they’re profitable small businesses. The question is, do you want to create a big business? If you’re Australian and you buy our Aussie team, what could you do? Could you create a media company around them? Could you create a clothing brand around them? Could you buy a golf course? Could you create an academy? Of course. So I think there’s a real interest and understanding of how to drive value there. The teams are different. Our format — we have what they call a shotgun start. I know you’re not much of a golfer yet. Everybody starts at the same time.

SAFIAN: Right. You’re not waiting.

O’NEIL: No. The reason that’s an advantage, for those of us who’ve gone to golf events for so many years, is that you’re not sure when your guys are playing and it lasts a good 10 hours.

SAFIAN: Right.

O’NEIL: Ours, we’ve got a smaller field, 54 players, and they all go off at the same time. In 4 hours and 35 minutes, you’re done. So our hospitality is akin to Formula One. We consider ourselves the Formula One of golf — elite hospitality. Now, when I’m entertaining you, I’m not inviting you from 7 a.m. till 7 p.m. I’m saying, “From noon to 4:30, I’d love to have you come.” So it’s a little more fixed, a little more regular. Also, good, shorter TV windows.

SAFIAN: Yeah, it’s still a long TV window compared to basketball and hockey.

O’NEIL: It sure is. Absolutely.

SAFIAN: But different from the open-ended ones where you’re spinning off to other networks just to try to get the coverage.

O’NEIL: Exactly. Those are the primary differences.

SAFIAN: And I guess the teams mean that you could be interested in players who are not winning the tournament because they’re contributing to their team?

O’NEIL: Absolutely. And this team concept — people are like, “It’s crazy.” I’m like, is it crazy at the Ryder Cup? Is it crazy at the Olympics? Is it crazy in college? We are not splitting atoms here.

SAFIAN: I was curious because I had read that you talked about the relationship between LIV and the PGA Tour as being complete, not compete.

O’NEIL: Complete, not compete.

SAFIAN: Oh, complete.

O’NEIL: They’ve got the U.S. on lockdown, and they do a wonderful job. For us, I’ll take the 7.2 billion people. I’m going to take that bet. I’m going to take the 199 countries that we broadcast in outside the U.S. I’ll take that bet over time. I like the growth a lot. I like where the sponsorship market’s going. I like where the broadcast media market’s going.

SAFIAN: The rivalry — I was thinking, is it Apple and Samsung or OpenAI and Anthropic? How do you think about it?

O’NEIL: In my most cynical view, I’d say it’s like the iPhone coming in. We’re different for sure, but the same. You still talk on it, take photos, take video, maybe access the worldwide web.

SAFIAN: Although you’re more Samsung because you’re pushing global first?

O’NEIL: Absolutely. The global piece is everything. Tom McKibbin is one of the best players to come out of Northern Ireland ever. I said, “Hey, Tom, why us?” He said, “Well, the music I thought was really cool. I went to your event in the UK and absolutely fell in love with it. And my parents love the notion of me learning from Jon Rahm, one of the greatest players on the planet. I learn how to dress. I learn how to eat. I learn how to work out. I learn how to handle myself on the range. I learn how to handle myself in the media. I get to play with him.”

How about that for an education? One of the loneliest sports in the world, and now you have mentorship, now you have a role model.

SAFIAN: You said 54 players. So it’s a finite group.

O’NEIL: It’s a small field, yeah.

SAFIAN: You’ve had some players leave, you have other players who’ve renewed. How much do you personally get involved in that talent part of it? The contracts can be hundreds of millions of dollars. It’s a lot of cost.

O’NEIL: Yeah. The contracts are a little misunderstood, for whatever it’s worth. It’s like we’re acquiring your rights. So if you’re Jon Rahm and you’re sponsored by Callaway or Mercedes or Rolex, they’re paying for certain rights, which we’re acquiring. So it’s a good headline price and it’s good for the agent to talk about.

SAFIAN: I see. So the money they would have gotten for that is now going to you, and you’re selling it, and they don’t have to worry about it. They’re getting a flat fee.

O’NEIL: That’s right. Now, in Jon’s case, he has equity in the team, so he has a lot of incentive for us to keep driving revenue, which builds value in his team. So it’s a bit of a cycle. But some of the deals for guys — I don’t know. I think I read Taylor Swift made over a billion dollars on her tour. I read a couple of PGA Tour players did OK last year as well. So I never — I don’t know. I’ve been in this business so long. I’ve seen contracts high and low. What we’re looking for is stories and personalities. Bryson DeChambeau — I don’t know if these names mean anything to you —

SAFIAN: Yeah, yeah.

O’NEIL: He’s a YouTube superstar. He’s got 10 million followers. I can tell you, we can go to Singapore and kids will lose their minds. And we can go to Korea or Bedminster and it’s equally crazy fan energy.

SAFIAN: Do athletes in golf understand the business of it more than some of the athletes in other sports?

O’NEIL: Absolutely, because they’re businesses in and of themselves.

SAFIAN: Because they’ve had to run themselves as businesses?

O’NEIL: They are businesses. They are the brand. They are the business. Maybe they had a head start, because now you’re seeing everybody else catch up, but they had the head start.
I would say what we ask of our players — in South Africa, this woman ran up to me and said, “Scott.” And I was like, “Uh-oh, what happened?” And she said, “My 10-year-old daughter — Victor Perez, one of our players, came over during play, took his glove off, took a Sharpie out of his bag, signed it, and handed it to this 10-year-old girl.”

Bryson and Jon Rahm will spend 60 minutes outside of the press area signing stuff. Sixty minutes. We don’t rope the stands away from fans. We rope them through fans. Our players understand their role. They know they have to sign more. They know they have to take selfies. They know they have to engage. This notion of managing a brand, and how you think about media relationships, and how you think about relationships with players — think of what Adam Silver has done at the NBA in transforming the relationship between league and player. Well, that’s what we have. I travel with these guys. I’m with them for seven months.

SAFIAN: Instead of it being adversarial.

O’NEIL: I know their caddies, their families, their children, their wives. I know what they like. And they know the same about me.

SAFIAN: Scott is all in on LIV’s mission. He’s attacking the opportunity with the zeal reminiscent of a Silicon Valley startup. So what makes LIV the same as and different from other sports businesses? And does he feel any special pressure working for Saudi Arabia’s sovereign wealth fund? We’ll talk about that more after the break. Stay with us.

[AD BREAK]

Before the break, LIV Golf’s Scott O’Neil talked about what makes the league different from the PGA Tour. Now we talk about how golf compares with other sports businesses, his most important metrics for success, and whether a women’s LIV league is coming. Let’s jump back in.
There was a phrase you became associated with in Philadelphia: Trust the Process. Is there a Trust the Process part of what you’re doing at LIV? I know you mentioned some of the younger golfers you’re bringing in. Is there a version of that?

O’NEIL: I think there is. Also, I don’t know if you remember Madison Square Garden — we had Linsanity. I think LIV Golf is Linsanity meets Trust the Process.

SAFIAN: But Linsanity was short-lived, right?

O’NEIL: Yeah, but the —

SAFIAN: But I guess it had echoes, right? It had ripples.

O’NEIL: Yeah, echoes around the world. The way we used this was before the advent of social media as it is today, and we were putting out eight or nine videos a day, and people were coming from all over the world. We can drive personality-driven stories through social. That is real. And then Trust the Process — the essence of our Joel Embiid era was: Look, we don’t know the future, but given the information we have today, let’s make as many right decisions as we can and just keep walking forward, because we know that light at the end of the tunnel is not an oncoming train.

SAFIAN: Bryson, you mentioned, I saw him talking about attracting new fans to golf. And he said more people watch the NFL than play organized football, but for golf it’s the opposite. More people play than go to watch.

O’NEIL: I will say that 30% of our fans have never been to a golf event before. Forty percent have never picked up a club.

SAFIAN: What makes a LIV event feel different?

O’NEIL: It’s fun.

SAFIAN: It’s not stuffy, which is the way —

O’NEIL: We have walk-up songs for our players. So they walk up, it’s like, “Onto the tee now, Jon Rahm.” And Jon will have picked his walk-up song, just like you find in baseball.

SAFIAN: Can I yell at him when he’s putting, or is that still —

O’NEIL: No. People are still respectful and quiet when these guys are hitting.

SAFIAN: It’s not like shooting foul shots at all.

O’NEIL: No. We’ll have parachuters come down. We’ll have fireworks. We’ll have concerts. I don’t know if you’re in the DJ scene, but we had Dom Dolla and Fisher. We have Thomas Rhett coming to Indy this year. Big-time artists. So after play, there’s a concert. And people are like, “Why would you have a concert?” Well, what if we can attract new faces and people of different ages and genders to the sport?

SAFIAN: So it makes the experience different, but it’s also a marketing lure to pull people in?

O’NEIL: Absolutely. Sixty percent of our fans are under the age of 40. You go anywhere else, it’s like, “Shh.” Here you have parents pushing strollers. Twenty-three percent of our audience are families. You see packs of kids roaming around.

SAFIAN: How fast is all that changing? A year ago, who was coming to the events, who’s coming now, and what do you think that’s going to look like?

O’NEIL: I’ll give you a couple of stats and facts. In South Australia, where we have the event in Adelaide, growth in girls ages 12 to 18 playing golf is up 212%. The golf clubs — there are eight of them in the market — all had openings, now have waiting lists. Forty percent of the new members are 45 and under. Maybe that’s just a coincidence. I don’t think so. We were just in South Africa. Forty-five percent of the sports-watching audience in South Africa watched our event, double who watched the Masters there. We are creating a cultural experience. And we do that because we have a local tie with local athletes, and because we leverage social media in a different way. We’ve been batted around about our ratings, and I just said, “We had 5 million people watch our Australia event. Sign me up.”

SAFIAN: And the Trust the Process part is that as long as that keeps moving in the right direction, you keep moving.

O’NEIL: Yes. Revenue up 108% last year, expenses up 8%. This year we’re on track, knock on wood, revenue up 85%, expenses up 3%. So how many years are we going to stack these big gains on? But listen, it’s early. It’s a 5-year-old company. We’re building a global business, changing the tire on a moving car, because we’re changing a lot of things on the fly. But if that doesn’t pop you out of bed in the morning, it’s the wrong business.

SAFIAN: So in your job, you engage with two cohorts that I have to ask you about because other people are intrigued by them. First, I have to ask you about President Trump.

O’NEIL: Okay.

SAFIAN: He’s talked about trying to partner up LIV and the PGA Tour. He’s hosted LIV events. What’s your relationship with Trump like? Does that association help LIV?

O’NEIL: I think anytime the leader of the free world plays the sport, and I run one of the major businesses in it, I think that’s a good thing. We played a couple of his courses this year. He’s been pretty vocal about trying to help. And it’s a pretty simple formula in terms of what needs to happen, and hopefully something happens there.

SAFIAN: But having an agreement with the PGA Tour isn’t necessarily a priority or necessary for your business model to keep advancing?

O’NEIL: Maybe. History will write the story, but generally they are U.S.-focused and we are globally focused. They’re two different markets. Are there things we could, should, would do together? Of course. Should we align our global calendar? Of course. Should we maybe be on each other’s cap tables? Probably. Can we create content together? Simple and easy. It doesn’t take a rocket scientist to do this. And over time, we’ll find our way to some of that.

SAFIAN: So the other entity, which you mentioned earlier, is Saudi Arabia. LIV is owned and primarily funded by the Public Investment Fund there. Having a country as a backer — this is different. How is that different for you from reporting to public shareholders or to an investment company?

O’NEIL: I’ve worked in public companies before. I’ve worked in private equity before. I’ve worked for a league that’s technically owned by, I guess, the owners. The weight of the responsibility might be a little heavier, but it’s not too much different. PIF’s a private equity firm.

SAFIAN: They’re investing in lots of sports.

O’NEIL: Yes.

SAFIAN: F1.

O’NEIL: Newcastle.

SAFIAN: Soccer and all kinds of things. Does LIV operate as part of a portfolio? Are these things linked strategically?

O’NEIL: The leaders of those businesses and I stay in contact, touch base, and try to help each other along the way. So if that’s connecting partners, if that’s exchanging some talent —

SAFIAN: But we’re not going to see an F1 and a LIV tournament happening in the same place over the same weekend?

O’NEIL: Wouldn’t that be wonderful? Yeah, that’d be wonderful. Hopefully someday.

SAFIAN: When folks who are less familiar with Saudi Arabia look at Saudi ownership of teams, they’re like, “Ah, they don’t really care about the money.” How much of your success is based on the metrics you were talking about — the finances — versus the larger brand footprint over time?

O’NEIL: I guess there’s ROI and ROI. The return on investment is real, and we are run — they’re set up as a private equity company. So we are managed just like Blackstone and Apollo, and I’ve been in those systems. It is no different. It is hardcore. We have real KPIs. We’re measured weekly. We are managed very tightly. So don’t make any mistake about it — this is private equity. And there’s return on image, and I think that’s part of the magic of sports.

If you’re a country — I don’t want to speak specifically about Saudi, because I can’t speak for them or on their behalf. I’ll just speak about a country. There’s a reason countries bring in the World Cup. There’s a reason countries bring in the Olympics. We were in South Africa and brought in $80 million of economic impact in a weekend. So we filled hotel rooms, we filled airplanes. We also assembled the who’s who of South Africa in suites, and we do that everywhere we go. I mentioned we were in Korea — you’ve got 60 chairmen there. Now, are those 60 chairmen good candidates to build plants in different places? Maybe. Or trade agreements? Maybe. That’s not for me to say. Our job is to make sure we represent their investment in a way that makes everybody proud to be part of it and associated with LIV Golf.

SAFIAN: Comparing the golf business with where you’ve been before — basketball, hockey — now that you’re in it, what’s similar and what surprised you by being different?

O’NEIL: The business is exactly the same. There is no difference. You can move from NFL to NBA to NHL to Premier League — media contract, an arena deal or a course deal, sponsorship, premium, tickets, merchandise, the athletes being at the forefront of what we do and leading our brand. You have to manage communications. You’re in the fishbowl you mentioned.

SAFIAN: Yeah.

O’NEIL: Exactly the same. The importance of impact and what we’re doing to put more clubs in kids’ hands. The fact that we run the most environmentally friendly golf events in the world. The fact that we do quite a bit on the refugee front and have a partnership with the United Nations — all stuff that’s really important and very similar to everywhere I’ve been. Not the actual execution, but this notion that impact matters, that we don’t just have an opportunity but a responsibility to make the world a bit better.

SAFIAN: You get that community aspect.

O’NEIL: All that stuff is core. What’s different here is it’s global. Try to name three global sports leagues: F1, LIV — there aren’t too many, or any, at scale. So the global nature is fascinating. The interest by the powers of the world in this business — the leaders of the media companies of the world, the leaders of the businesses of the world, and the leaders of the governments of the world — all very interested. That’s unique and different. And then this notion of players as partners — I like that notion. In some ways, in the NBA and NHL they have a collective bargaining agreement, and they get 51% or 52% or 49%, depending on the league. But these guys — Bryson DeChambeau, Jon Rahm, Cam Smith, Joaquin Niemann — they’re my partners, my business partners.

And then the last difference would be this is year 5. NHL is, I think, over 100 years old. NFL is probably 90 years old. MLB, 100-and-some-odd years old. NBA, 85 years old. We’re 5 years old. We’re doing OK.

SAFIAN: So what’s next for LIV? Are we going to see a women’s tour coming?

O’NEIL: Maybe.

SAFIAN: Am I going to see sponsors like Polymarket and sportsbooks, which we haven’t seen yet?

O’NEIL: We’re fortunately on a sponsor roll with Rolex and HSBC and Salesforce and Qualcomm and Ping and Callaway. Big global brands, very nice, and that will continue.

In terms of women’s golf, PIF, the Public Investment Fund, and Aramco are the largest investors in women’s golf in the world, period, end of sentence. So how we integrate with LIV, or whether that’s separate and run differently, we’re not really sure. We have our hands full here and we have plenty to do.

SAFIAN: Plenty of runway still with what you’re doing.

O’NEIL: If it were my preference, I’d ask for a few more years to make sure we’re on the right track and have a strong enough foundation. The biggest change is we’re going to have owners, outside owners. And think of how challenging that might be.

SAFIAN: It’s complicated.

O’NEIL: It creates friction.

SAFIAN: Yes.

O’NEIL: And that’s OK. That’s good friction. It’s not bad friction. It’s good friction. It’s like, “OK, well, how am I building my roster? Is there a salary cap? How are we sharing revenue?” All this stuff I don’t have to deal with now.

SAFIAN: Right.

O’NEIL: And we will have to. But that’s a champagne problem. That’s a champagne problem I look forward to having. That’s probably the biggest change. And then this transformation from golf to golf and music, to golf and music and food, to golf and music and food and art, to golf and music and food and art and fashion — you’re starting to see a cultural experience come through, especially at our more advanced and more successful events. It’s been intellectually fun to think about.

SAFIAN: It’s a lot of balls in the air for you, though, and a lot of choices because you can’t do everything, right?

O’NEIL: Yeah. I think Steve Jobs said it best. He said, “I want to know what you’re saying no to. And it has to be something that you really care about.” That’s when you know you understand what your priorities are and you’re sticking to them.

SAFIAN: Is there something you said no to recently?

O’NEIL: I’m a yes person.

SAFIAN: I know you are.

O’NEIL: So it’s agonizing for me, especially when there’s so much opportunity. I’ll give you one that we’re looking at now: creating a gaming company, online and console. I know it’ll work. With the stars we have — Anthony Kim, Bryson DeChambeau, Cam Smith, Dustin Johnson, Jon Rahm — it’s a lot. That’s somebody’s attention and time. Should we do it? How about betting? We have a really small handle. They’re sizable things that I would love to do now.

SAFIAN: If you’re going to do them, you really have to have the capacity to go in and do them.

O’NEIL: Yeah. What’s the trade-off?

SAFIAN: You can’t do them all.

O’NEIL: What’s the trade-off? Because that’s the key. What am I not going to do then? That’s life, that’s priorities. By the way, that’s in marriage, that’s in raising children, and that’s in business. You’ve got to stick to what’s most important.

SAFIAN: So I’m thinking of your book, and I want to ask you: Where are your feet right now?

O’NEIL: Right here. Be where your feet are. Look, I don’t often have a problem with that. I’ve got other Achilles’ heels, but I’m often present. I take my ringer off. I don’t have a buzzer on my phone. So when I’m connected to you, I’m 100% connected.

SAFIAN: Well, I’m glad you came in to be connected with us today. Thanks, man. Thanks for doing this.

O’NEIL: I miss you, my friend. So good to see you.

SAFIAN: I’ll confess that when LIV Golf first came out, I thought, “Really? We need another golf league?” But after talking with Scott, I’m coming around. LIV is a disruptor in a sport that can use some freshening up. Whether he and his team can capitalize on the opportunities they see without overreaching or burning themselves out, it’s a fascinating situation to watch. Most of all, I cheer the way Scott talks about sports as a unifying force. The spirit of sport is cheering each other on, appreciating even those you compete against, and being open to new people and new approaches. And there’s no question our world needs more of that in business and everywhere else. I’m Bob Safian. Thanks for listening.

The post LIV Golf’s gambit to rewrite global sports appeared first on Masters of Scale.

Scott O'Neil has run NBA and NHL franchises. Now he's betting on a golf revolution. The LIV Golf CEO joins Rapid Response to reveal what it really takes to disrupt a legacy sport, the unique pressures of answering to Saudi Arabia’s sovereign wealth fund, and why golf may be the most underleveraged business in all of sports. Plus, inside the startup mindset Scott’s instilling his team, and what every leader can steal from the way LIV is chasing opportunity.

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ANNA BATESON: One of the most helpful things I was told by a rather informed board member was that even the most sophisticated engineers working at the most extraordinarily frontier level of AI don’t really know what’s going to happen in the next 12 weeks, let alone in the next 12 months. You could spend weeks doing plans for the next five years, which will become irrelevant and redundant. Rather than trying to do long-range forecasting or planning, actually think about how we set ourselves up to be ready to adapt and adjust. That’s what I try to focus on.

BOB SAFIAN: That’s Anna Bateson, CEO of Guardian Media Group, publisher of The Guardian. The Guardian has had remarkable success as a news brand growing globally when other aspirants like The Washington Post have struggled. That’s in part because of The Guardian’s unusual ownership structure under the umbrella of a 90-year-old trust that helps provide stability. But Anna has also embraced the exceedingly modern realities of speed, flexibility, and focus. I wanted to learn how The Guardian is tapping into multiple business models and into the emotional aspects of a brand to differentiate itself. And Anna did not disappoint. So let’s get into it. I’m Bob Safian, and this is Rapid Response.

[THEME MUSIC]

I’m Bob Safian. I’m here with Anna Bateson, CEO of Guardian Media Group. Anna, thanks for joining us.

BATESON: Thank you for having me.

SAFIAN: Today, The Guardian is the fifth-most-trafficked news site in the world. More than 1.4 million subscribers provide regular financial support. It’s an impressive feat for a legacy British newspaper to turn into a global brand, especially when other news outlets are struggling. I’m eager to learn your secret. Is there a single secret that underlies all of this?

BATESON: No, there’s never a single secret. I think there are a number of things that really contributed. The first is that we were very early to embrace digital and to see the opportunities of digital. And that decision, which was, I think, 30 years ago or something, took us from being the ninth-biggest national newspaper in the UK, so inherently parochial to a degree, to building audiences all around the world. The uniqueness of our ownership model, the independence that’s endowed by the Scott Trust, also allows us to think long-term, and that did allow us the opportunity to grow. It didn’t feel as though we were in a good position 10 years ago when you began to realize that, crucially, digital advertising wasn’t going to substitute for print advertising. But actually, that was the basis of our being able to build the reader revenue model.

SAFIAN: The first important thing was embracing digital. Does that make you more aggressive about embracing AI because that’s maybe the next turn in the business?

BATESON: No, I don’t think it makes us more aggressive about embracing AI. I think it means that we are genuinely a deeply digital organization. We look at AI through a particularly informed lens, a quite curious lens. We have aimed to be really cautious and thoughtful in how we endeavor to understand AI, in how we think about its application within our organization, across all aspects of the organization, and the changes it’s going to make to our audiences’ behaviors. It’s incumbent on all of us to truly understand it as a technology, and I think you can only understand it by applying it and by using it.

SAFIAN: You mentioned that The Guardian is owned by a private trust.

BATESON: Yes.

SAFIAN: So that means you don’t necessarily need to pass down all of your profit. The revenue you generate can be reinvested in the content, and you’ve kind of got a backstop in tougher times, if I’m understanding that correctly. Are there any downsides to this structure, any complications? Because you are fairly unusual to have this kind of setup.

BATESON: Yes, it is unusual. I think it’s an enormous strategic advantage for us, a really key point of differentiation. The sole purpose of the Scott Trust is to ensure that The Guardian thrives in perpetuity. So that’s an extraordinarily privileged ownership structure to be the beneficiary of. We have quite a lot of governance as a result, so that’s something that we have to navigate. But no, I think it’s an advantage for us, and it’s definitely something that our audiences understand. It’s a big motivator for them when they choose to support the journalism. They know that the money is going to fund journalism, and it isn’t going to enrich a proprietor or shareholders.

SAFIAN: And you as the CEO, you have limitations maybe that you might not otherwise have because of some of the structural things. But at the same time, you don’t have to worry about shareholders. So there’s a little bit of a trade-off there, right?

BATESON: Completely. Yes. The editor-in-chief and I report to the GMG board. She ultimately reports to the Scott Trust, which is a structural way of guaranteeing editorial independence and integrity. And the relationship is one that’s described as a happy partnership, a happy marriage. We are meant to be arm in arm. The commercial and editorial strategies and ambitions are symbiotically intertwined.

When you see the challenges of The Washington Post, I think it has never seemed more clear how significant that structural guarantee around editorial independence really is. It’s a very important thing.

SAFIAN: Most legacy news organizations depend on ad dollars, even in the digital age. The Guardian has leaned on support from readers and supporters, although The Guardian is free. How do you get people to pay for something that’s free?

BATESON: First of all, we also have advertising. Advertising is very important to us. However, you are right, we have the stability of having built this now really quite significant global supporter base. One of the things that our ownership structure enables us to do is to be open about our publishing and available to all. So when we first started to build out our reader revenue model, it was optional. You’re correct. It wasn’t forced by being gated around a paywall. It was all about unlocking the words, the routes, and the messages to explain what reader support could give us, and then to make it incredibly easy and frictionless.

We do have some paid products, so it’s not completely true that we are just entirely free. If you subscribe to our app, we ask you to pay after you’ve used it a certain amount. We have a cooking product that we ask you to pay for. But we are committed to the principle of being open and freely available on the web.

SAFIAN: I talked on the show with your counterpart at The New York Times, Meredith Kopit Levien, who is also one of a handful of legacy print leaders who have managed to thrive. And she talked a lot about lifestyle verticals. You mentioned cooking; she talked about cooking and games and other things. When you think about your business plan, do you track that similarly, or how much is your model more like a donation-based resource like Wikipedia? You’re sort of straddling those two things.

BATESON: Yes. I have nothing but admiration for The New York Times and, indeed, for Meredith, and I have nothing but admiration for Wikipedia. And you’re completely correct that I think we probably drew inspiration from both of those august institutions.

If you think about it, newspapers were the original bundle, a bundle of different verticals put together in a beautifully designed, elegantly delivered product. And we’ve always been good at cooking. We’ve always been good at cultural content. We’ve long been great at lifestyle. We’ve always had games. It’s a very important piece of a newspaper to have crosswords. So, in a sense, as you think about taking the areas that are defining of us and transitioning those into a digital world, it’s not really surprising that we end up consolidating in the same sorts of areas. Puzzles are wonderful things. They’re all about driving habit. They’re something that you want to do every day. It’s really about how you best unlock your strengths and use that to reach audiences and unlock the most value from those audiences around the world.

SAFIAN: You’re also sort of leaning into that mission of the organization, enabled, I guess, by your structure, which allows you to emulate Wikipedia, as we were talking about, and to have that loyalty be part of the appeal in supporting The Guardian.

BATESON: Whenever we do audience research, that sense of the emotional desire to support journalism is common. People believe that the mission is important. They believe in the significance of the independent ownership model. There’s a real sense of, I’m supporting something that I value, but other people value, too. Also, ultimately, it allows those people who can’t afford to pay to still be able to consume it and have access to it, which is really important in this modern world.

SAFIAN: In terms of business model, several high-profile media outlets have turned to billionaires for support: the L.A. Times, The Washington Post, Time magazine. The tone that you mentioned earlier made me think that you may not feel this benefactor model is necessarily good. I’m curious about that. The magazine where I worked as editor-in-chief, Fast Company, was owned by a single business leader who was quite supportive. But as you say, certainly The Washington Post is embroiled in questions around Jeff Bezos’ commitment and pressure.

BATESON: I’m not sure it’s for me to judge whether a benefactor model is good or bad. I think it has risks. And I think that for a long time, perhaps media organizations saw benefactors as saviors, that hope and belief that you could have benign benefactors. I just think there are moments when the personal interests of a benefactor may or may not come into conflict with those of a genuinely independent editorial organization.

SAFIAN: When The Washington Post and the L.A. Times quashed their 2024 U.S. presidential endorsements under pressure from their owners, The Guardian’s U.S. editor, Betsy Reed, went the other way and called them out in a fundraising pitch that raised something like $2 million.

BATESON: Yes.

SAFIAN: How do the editorial and business sides coordinate when it comes to generating funds? Is this something that you talk about, or does Betsy just decide, I’m going to do this?

BATESON: No, it’s very collaborative. I think it’s one of the things that is so fascinating about the reader revenue model, and we’ve obviously got to evolve our language about that because they’re much broader than readers now, is the level of collaboration that takes place between editorial and the commercial teams. In a way, it’s the logical evolution of an organization away from a very siloed sort of church-and-state model where you had editorial and you had advertising, and they didn’t really need to come into contact with one another. I think the essence of the audience funding model is that there is greater collaboration. Ultimately, Betsy would decide what she felt was the right kind of message, but it would be done in deep concert with the reader revenue side.

SAFIAN: And in that instance, when that idea came up, was there any concern like, “Oh, we don’t want to pick a fight in that way?”

BATESON: We talked about it, but in the end, it was something that we wanted to do, and I think it was the right thing to do. I think it was the right thing to do editorially, and it was the right thing to do for our supporters. It was a very emotional moment, and that translated into a lot of people, I think, coming to The Guardian and choosing to support our journalism in a way that they hadn’t before.

SAFIAN: The Guardian is known for its sort of unapologetically progressive values, and I’m curious how that impacts your business goals. Some might say it colors trust in your journalism.

BATESON: First of all, the lens that we are viewed through is interestingly different in the UK, where we have a long legacy and a longstanding understanding of our editorial position. It’s a much less entrenched view when you get into mainland Europe, into the U.S., and into the rest of the world. And actually, what I think our audiences appreciate there is very much this sense of a global perspective. So it’s less, I think, about this association with unashamed progressive values, although I think that is true for us. It’s also the fact that we have a perspective that is very different and distinctive from a U.S.-based perspective. Trump, the Iran war, tech, climate, immigration — there’s something audiences really appreciate in our ability to have a non-U.S.-rooted perspective. The capacity to contextualize or frame the story also comes from having a European perspective or a British perspective or an Australian perspective or a Canadian perspective. We can bring a broader context and a voice that is from many other places and not deeply grounded in one place.

SAFIAN: The Guardian is such a distinctive operation: its business model, its broad context, as Anna describes it, even its openness about progressive values. So how are AI chatbots impacting its work? And what does Anna really think about Jeff Bezos’ stewardship of The Washington Post? We’ll talk about that more after the break. Stay with us.

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Before the break, The Guardian’s Anna Bateson shared how its distinctive business supports distinctive content. Now she talks about how The Guardian has sidestepped the impact of AI chatbots so far and what Jeff Bezos misunderstood when he bought The Washington Post, plus the role The Guardian can play in the future of news and how she keeps the business anchored in the here and now. Let’s jump back in.

SAFIAN: Before coming to The Guardian, you worked for Google and YouTube. The transition from search to AI chatbots, things like Google’s Gemini summaries, has cut down traffic a lot for a lot of content outlets, and a lot of folks struggle with that. How are you thinking about that? Does that make you look at Google any differently?

BATESON: We have not seen declines in audience that have been reported for other media organizations. In fact, we’ve seen incredibly strong and resilient audiences, particularly in the U.S. We’ve actually just overtaken The Washington Post, so January and February for readership within the U.S., which is quite a significant moment from our perspective. So I don’t think we’re naive. There’s clearly deep disruption and change coming in the way that people are going to discover and then choose to consume the news they want to read or watch or listen to. However, we aren’t seeing that level of change yet reflected in our audience numbers.

SAFIAN: Is there anything that you’re doing? Are you blocking bots or AI companies from crawling your content? Or is this more, do you think, about the brand affinity that people have with The Guardian? Do you have a sense of why it’s not hitting you the way it’s hitting others?

BATESON: There is a piece around brand affinity and around genuinely differentiated, quality original journalism, the meaningful relationship that I think our audiences therefore have with us, which allows us to potentially be more resilient and have more direct traffic. I think it is also about how the search experience is developing. There is a different experience around hard news and serious news than there might be around softer lifestyle media and coverage.

SAFIAN: The Guardian is a founding member of a coalition called the Strategic Partnership for Uplifting Rights, or SPUR, which is intended, I guess, to design better guidelines for AI training. Can you explain what the motivation behind SPUR is and what you’ve seen so far?

BATESON: At this time, when you are facing very well-funded and very sophisticated technology organizations, we need to rise to that moment. We need to work together as an industry. So I think the first piece of it was, how can we collaborate? And it’s important that the founding members were both broadcasters and former newspapers, and they’re across the political spectrum. We then have every intention that this will broaden out and become a global coalition, defining standards and protocols that are really going to be necessary to the creation of a potential licensing market around quality journalism and content. We ought to be defining those standards and protocols rather than having them defined for us by technology businesses.

SAFIAN: We talked about your structure earlier around your business model, and I’m curious whether you think that structure gives The Guardian a certain kind of role in the media ecosystem and in how it evolves. Do you feel like you have to be a leader in a different kind of way, maybe, or that it allows you to be a leader in a different kind of way?

BATESON: Yes, I think there is a sense of responsibility. The secondary purpose of the Scott Trust is broader. If the primary purpose is ensuring the sustainability of The Guardian in perpetuity, a secondary purpose is around ensuring that liberal journalism can flourish.

SAFIAN: The leadership challenges of running any organization right now are quite intense. Are you thinking about your role within The Guardian differently? Are there particular things about how you manage the team or the planning that might be instructive?

BATESON: One of the most helpful things I was told by a rather informed board member was that even the most sophisticated engineers working in the most extraordinarily frontier-level AI don’t really know what’s going to happen in the next 12 weeks, let alone in the next 12 months. And I found that really helpful. Focus on curiosity about what’s happening, on capabilities within the organization, and on flexibility, because you could spend weeks doing plans for the next five years that will become irrelevant and redundant before you know it. Rather than trying to do longer forecasting or planning, think about how we set ourselves up, equip ourselves, and skill up to be an organization that’s ready to adapt and adjust as we’re going to need to. That’s what I try to focus on. And I think that as a leadership team, it’s incumbent on us to hang on to that humility and to continue to keep learning and be curious about what’s happening. That’s what will, I think, equip us for what’s to come.

SAFIAN: It’s a very different framework from the traditional way business works. I’m sure you still have to have plans and budgets that extend farther out, but if you really can’t see more than 12 weeks out, it’s pretty hard to plan.

BATESON: Yes. Well, it’s easy to plan, right? You just have to be able to adapt when the plan begins to veer off course. There’s a discipline and a rigor around planning, which is actually really useful, but I think it’s about being adaptable enough that when the plan begins to change, you can accommodate that.

SAFIAN: When I first came into media in the late ’90s, these organizations were making so much money, hand over fist. And I sometimes wonder whether the expectations about how much money news organizations should make are a little out of whack. We’re trying to turn them into growth businesses when they’re really more cash-flow businesses. And obviously you don’t have quite the same pressure of that because of the trust structure. But I’m curious whether you feel that way or have any thoughts about that.

BATESON: I think you are correct in your observation. There was an expectation about the kind of returns that you could get that probably is unsustainable now. But also, I think if you’re building a news organization now, you would build it in a very different way, with a very different cost structure. And that might then allow you to be a growth business and to deliver the kind of returns proportionately that perhaps they used to. So it’s both sides, isn’t it? Can you restructure yourself to adapt to a new reality? And also, can you culturally evolve sufficiently to operate in a way that will allow you to grow? That’s the thing that The New York Times has done so spectacularly well, which has allowed them not only to invest in journalism, but actually to build out a very successful set of subscription-based businesses.

SAFIAN: I guess sometimes I think that when Jeff Bezos bought The Washington Post, he didn’t really realize what he was buying and what he was getting into.

BATESON: I think that’s probably right. There were years when you thought you were going to solve the problems through technology, and actually the fact that that wasn’t going to solve the problems was masked by the enormous growth in audience and engagement that came with Trump and then, of course, COVID. You think you have the answers because you come in and you look at these businesses and you’ve been very successful elsewhere, and they’re more complicated than that. They’re complicated both because of legacy and because of the changing market.

SAFIAN: The expectations, right? I mean, listen, how much money The Washington Post makes one way or the other is not really measurable on Jeff Bezos’ P&L. His personal wealth makes it a rounding error, right?

BATESON: I suspect that. It’s less about the amount of money and more about what that kind of financial performance symbolizes about the sustainability and the health of the organization. You can live with losses, but if you feel that they are the sign of something more problematic, that then becomes the troubling thing.

SAFIAN: In some ways, I think it would make more sense for The Washington Post to be structured as a nonprofit. I know I talked to the owner at Fast Company at certain times about whether we should convert this to be a nonprofit because really that’s what its mission is about. But when you have owners who are businesspeople, they believe that that profit imperative pushes certain kinds of results and gets rid of complacency.

BATESON: I have some sympathy for that perspective. A commercial ambition and drive, as long as it’s compatible with and supportive of editorial independence, is a good thing to have. I think you’re right. You don’t want your organization to be complacent, and you don’t want people not to care about the commercial underpinnings of where they work.

SAFIAN: How do you reinforce and encourage that commercial side when that’s not the way you’re structured?

BATESON: We are held to account around financial performance and financial sustainability. Editorial impact is only really secure and sustainable if it’s attached to a business model that is also secure and sustainable. That, I think, is a message that is understood. And crucially, it’s amazing how, once you begin to see that something’s working and that it is a sign of genuine relationships with audiences who believe in what you’re doing, who see the impact of it, and who value it, the momentum you get from that is very powerful. In the end, relevance and impact are what we’re all here to deliver. And the fact that people want to support us, and that brands and advertisers want to partner with us, is indicative of us achieving what it is that we’re aiming for.

SAFIAN: Absolutely. Commercial success is a hallmark, a sign that you’re connecting, right?

BATESON: It’s validation that audiences understand that this is important, valuable, and necessary work.

SAFIAN: I hear this all the time from colleagues, that news organizations are facing so many threats, overlapping threats: technological, political, economic. And I’m curious, how bleak is the future? Or should I say, how challenging is the future? What’s at stake at this point when you look to what’s to come for news?

BATESON: I think there are perspectives from which you could see it as pretty bleak. However, at the same time, quality news has never been needed more. It’s never been valued more. You could argue that it’s being engaged with and consumed at extraordinary levels. And trusted brands that can take a long-term perspective and have the resilience that comes from a particular ownership structure, from the power of a 206-year-old brand, and from genuine relationships with audiences around the world — that’s quite a potent combination.

And if out of that we can give people some hope and some help in how they navigate a complicated world in which there are so many unknowns, then that’s a reason not to be bleak, and that’s a reason to actually feel quite optimistic. So it might slightly depend on the day that you ask me that question, but I think the fact that it matters more, and that people genuinely understand that and value it, and that our model speaks to that, as does the success at The New York Times or many other admirable organizations, speaks to there being reasons for hope.

SAFIAN: Well, Anna, I applaud that hope and that feeling, and thanks for doing this.

BATESON: It was a pleasure.

SAFIAN: As a journalist myself, I have a particular interest in how the news business operates, but you don’t need to be a newshound to gather lessons from Anna’s experience at The Guardian. She gives high praise to the unique ownership structure there, but even more important is what she calls the genuine relationship with audiences around the world. Every business needs to understand who they’re serving and how best to engage them. For all the technology brings to the modern marketplace, business ultimately requires an emotional connection. We lose sight of that at our own peril. I’m Bob Safian. Thanks for listening.

The post The Guardian’s secret weapon against media’s collapse appeared first on Masters of Scale.

AI is moving fast. But are we really keeping humans at the center? In this special live Rapid Response, recorded on stage at South by Southwest, host Bob Safian sits down with AI scientist, founder of Affectiva, investor at Blue Tulip, and host of Pioneers of AI, Dr. Rana el Kaliouby.  Rana makes the case that human-centric AI isn't just a safety guardrail; it's the key to thriving socially, economically, and emotionally. She also cuts through the noise on the buzziest AI myths, weighs in on AI in therapy and Meta Glasses, and draws a sharp line between AI founders who are truly visionary and those who are simply opportunistic. 

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MAITHRA RAGHU: I think, paradoxically, as the AIs get better, the thing no one’s talking about is that we’ll need more and more people in the loop so that we can make sure they all have the right frameworks for judgment and all of that.

RANA EL KALIOUBY: It’s kind of a big mental and emotional shift to move from research to entrepreneurship, to leave big tech and go start from scratch. What was that transition like for you?

RAGHU: I always say the motivation for starting a company is really, really important. I think it has to be quite pure in some ways. You have to leave not caring too much about the exact outcome or where it goes.

EL KALIOUBY: If you could wave a magic wand and have a personal agent that can do anything for you, what would you want it to do?

RAGHU: My goodness. Probably clone myself and be me in all of these places.

EL KALIOUBY: Maithra Raghu is the co-founder and CEO of Samaya AI. They’re building AI systems for the financial sector.

Think hedge funds and investment firms like Morgan Stanley. Their AI agents tackle complex analysis that financial professionals do every day, which raises some big questions even if you don’t work in finance. What happens when an AI agent can do your work? And when billions of dollars are on the line, how do we ensure that these AI systems are accurate?

Plus, how close are we really to seeing personal agents at scale? Today we’re digging into those questions and a lot more, so let’s get into it.

I’m Rana El Kaliouby, and this is Pioneers of AI, a podcast taking you behind the scenes of the AI revolution.

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EL KALIOUBY: Hi, Maithra. Welcome to Pioneers of AI. I’m so excited to have you on the show.

RAGHU: So excited to be here, Rana.

EL KALIOUBY: First things first, we both went to Cambridge. I guess you did your undergraduate degree there in mathematics at Trinity College. How was that experience?

RAGHU: It was extremely intense, is the truth of it. Trinity attracts all these folks who have competed in these international math competitions, these Math Olympiads, which are now in the news again because AI is making progress on them.

That’s been especially exciting for me, seeing parts of my past and parts of my present come together in this way. My story of getting into Trinity is that I was really into math in high school.

EL KALIOUBY: Did you grow up in the U.S.? You grew up all around, right?

RAGHU: I grew up all around.

The bulk of my life was split between the U.S. and the U.K. When I was in London, I discovered these math competitions pretty early on.

I got really excited about these Olympiads — the reasoning, the complexity, the abstraction involved in them, the problem-solving. If you compete internationally in an Olympiad, that just takes you straight to Trinity College in Cambridge. It pulls everybody across Europe who’s competed in these Olympiads.

Some people go on to pursue mathematics research of various kinds. Of course, many people end up in London working in financial services, especially in hedge funds and lots of different types of investment firms.

EL KALIOUBY: Before you started Samaya AI, you were a researcher at Google Brain. I’m curious about your experience there, and also what it was like to do research in industry versus research in academia.

RAGHU: Oh my goodness, yeah. I started collaborating and working with folks at Google Brain all the way back in 2015. To put that in perspective for where the AI space is right now, this was before OpenAI even existed. There was Google Brain, Facebook had just started the Facebook AI Research effort with Yann LeCun joining them, and that was basically it.

One exciting piece about being in industry at that time, and maybe a difference from academia, is that even back then you were seeing the formation of these slightly larger teams that were going after specific capabilities, specific infrastructure, or specific foundations for AI. That was maybe a little bit different from the academic approach.

That’s what really pulled me into Google Brain.

I thought, hey, look, there are all these people. They have all of this secret know-how, these intuitions about how to build and train some of these systems.

Now that I mention it, maybe that’s one thing that has actually stayed the same between back then and now. Working with this group of people and getting insights that aren’t easily written down anywhere, but come from lived experience, is something that has stayed the same in the AI field.

EL KALIOUBY: I actually think people don’t talk about that. It’s almost a bit of an oxymoron that in this age of AI, where we’re thinking about automation and everything is productivity-focused, there is still a lot of intuition in how you train these models. Talk about that a little bit more.

RAGHU: Absolutely. I think people are underestimating how much human perspective and human input are required to really enable our glorious AI future. It’s going to come up in all kinds of different ways.

One thing that’s been top of mind for me recently as I’ve seen some of these AI agents develop is that pretty soon we’re going to have AI agents running through the night. In some sense, nighttime might not be dead time in the same way that it is right now. You can imagine that, as a human, you’re going to do a handoff process with some AI agents that go do things for you and then come back to you the next morning saying, “Hey, here are all the things I found.”

Actually, this future we’re heading toward is not that different from the experience of being a machine learning researcher over the past decade, because as a machine learning researcher, you wouldn’t want to leave those GPUs unused overnight. You’d be setting stuff up for your models to train, and then the next day you’d look at the results you got.

Now that’s just going to be more accessible to everybody. We don’t have to think about the models anymore. People are going to have these agents, and these agents are going to go do things for them overnight. But coming back to your question, for those agents to do well, just like with the machine learning researcher, that handoff has to be really, really good.

You had to go in there and get all those details right, make sure the model was well set to train. Similarly, people are going to have to make sure their agents are well enabled to succeed, and that’s something we’re really underestimating. In a world of AI agents, I don’t think you get that productivity and positive impact unless you also have people guiding them on how to succeed.

EL KALIOUBY: Yeah, I remember those days. You don’t want to run the training iteration during the day, because then you’re just sitting idle, right?

RAGHU: Yes.

EL KALIOUBY: So overnight runs were super smart. But to your point about setting it up for success, you don’t want to go home, be asleep, and then an hour in the code runs into something and just stalls or stops, right?

RAGHU: Yes, exactly. It’s going to be similar for the agents if they have that amount of time. We’re going to see the AIs get better at decision-making, planning, reasoning, and all of those things. But putting that within the right framework, the right context for that decision-making, is still going to be heavily driven by humans.

I think, paradoxically, as the AIs get better, the thing no one’s talking about is that we’ll need more and more humans, more and more people in the loop so that we can make sure they all have the right frameworks for judgment and all of that. There’s going to be an element of that that’s not easily scalable, and there is going to be a heavy human touch in those pieces.

That’s really the future I see us heading toward.

EL KALIOUBY: Hold that thought because I want to come back to it. I think it’s a very important one and a very relevant one, and I think it’s top of mind for a lot of people. But you left Google Brain to co-found Samaya AI, and as I think of my own experience leaving research and starting a company, it’s kind of a big mental and emotional shift to move from research to entrepreneurship, to leave big tech and go start from scratch.

What was that transition like for you? And also, what was the impetus for the transition?

RAGHU: I always say the motivation for starting a company is really, really important. I think it has to be quite pure in some ways. You have to leave not caring too much about the exact outcome or where it goes, but driven by this desire to bring something to the world, and hopefully by the positive impact you see in bringing that thing to life.

That was definitely the driving force for me. I’d had 10 years as an AI researcher at that point. I had this beautiful body of work. I’d been fortunate to collaborate with a number of the leading figures in the field, some of whom went on to become some of Samaya’s first angel investors.

It was a very satisfying period, and I think the thing that really drove me was exactly that desire to go zero to one, to bring something to life that didn’t exist yet. What I saw was that, over this past decade of AI research, AI had not really been ready to be used in the real world the way it is today.

People had tried in various ways, but it was either too brittle, or you had to make it very focused on one specific thing, or it worked better within a larger ecosystem of some kind. It wasn’t in a place where it could really stand on its own. Finally, with the emergence of large language models, which we saw early — I think the world saw it in late 2022 when ChatGPT came out and everyone started paying attention, but sitting where I was in Google Brain, you started seeing the pieces come together in 2019 and 2020 or so.

From that point on, I could see the potential of finally having this AI that was general-purpose enough, generalizable enough, that you could put it out into the real world and have it drive impact for people.

EL KALIOUBY: Very cool. What’s behind the name?

RAGHU: Samaya actually means time, or moment in time. I really like the name. It has a history in Sanskrit, which is an ancient language in India, and I’m Indian. Most of all, the goal with starting Samaya — the impact that we wanted to see in the world — is giving people back their time and driving them to that moment in time that is a moment of insight as they go about their day-to-day. In our case, that’s a lot of these investment decision-making use cases.

EL KALIOUBY: In a minute, why ChatGPT won’t cut it when it comes to making big investment decisions. Plus, we go behind the scenes of Samaya and see what it takes to build an AI system that can model real-world messiness.

EL KALIOUBY: Samaya has garnered a lot of attention, so I’ll name some of your awesome investors. That includes former Google CEO Eric Schmidt, Yann LeCun, and Mark Cuban, who we’ve had on the show. You also announced recently a new investment from NVentures — that’s NVIDIA’s venture arm — as well as Databricks Ventures. So, congratulations. That’s a huge accomplishment. How did that all come about?

RAGHU: The unifying theme between the investors was our clear north star of seeing both these AI capabilities and our vision for how we would take that and really translate it into meaningful value in the investment decision-making space.

How that influenced what we wanted to focus on in terms of our AI work, and the use cases we were able to support, was something that I think was very inspiring for investors. From the inception of the company, we saw both the development of these fundamental AI capabilities, but we also saw the work it would take to take some of those capabilities and translate them into practice.

You see all these benchmarks, but these benchmarks are often quite stylized evaluation settings, and progress on benchmarks does not translate to progress in the real world.

EL KALIOUBY: Can you give us an example? Because I think the average person is looking at how AI is passing all these benchmarks and not realizing that oftentimes it does not translate to the messy real world.

RAGHU: Let me give you an example from Samaya. We work on investment decision-making. There are some benchmarks out there to try to test the capabilities of AI in the financial domain. What these benchmarks look like is the following:

There’s a very specific question that has a very specific numerical answer, and you can look at that question and the numerical answer the AI gives you and decide whether it’s right or wrong. That’s the benchmark.

That is not at all representative of the real world. In the real world, somebody is asking some very complicated, ill-formed question. There are many variations of what “right” would look like. Some things are more right than others. It’s not just about a specific number, yes or no.

What we did — and this is a project that we call Criteria Eval — is we actually created an evaluation rubric that you would use to evaluate different types of answers, and then grade based on how many different things they touched in the rubric. That’s one example of the messiness seeping in, and there are many more examples like that.

EL KALIOUBY: Can you give us an example of what this looks like at one of your customers or users?

RAGHU: Take the financial market. It’s a market because people have opposite views of what might happen. Now imagine two users with something like ChatGPT, and two users give ChatGPT a relatively similar prompt.

Then ChatGPT is going to give these two users a relatively similar response. But what we need to do is personalize the AI so much that it’s able to give opposite responses to different people based on the context, frameworks, and views that the people are providing to the AIs.

EL KALIOUBY: What’s an example of an instruction? Are you asking the agent to go do research on a specific investment, or are you asking it to actually go execute on it? How agentic — what does agentic mean in this context?

RAGHU: I’d say it’s adjacent to the decision-making. It’s not doing the end execution all by itself just yet, and I think having people in the loop is still very important.

One example is evaluating a thesis. One of our users, an investor, might come in with a particular thesis, a view of the world, of the market.

That thesis might also be tied into specific firmwide context and frameworks, as well as their exact portfolio. They might want the agent to go do research on their thesis, understand the implications for their portfolio, cross-reference that with the broader firm context, and come back to them with key takeaways.

That could include things they should change a position on, or potentially new opportunities they could pursue that are in line with everything they’ve shared.

EL KALIOUBY: The analogy I’m creating in my mind is that, in the same way that vibe coding democratized access to building apps and websites and whatnot, are you, in a way, democratizing access to financial information, databases, or manipulating and visualizing data?

RAGHU: Vibe coding didn’t democratize access to codebases; it democratized access to coding itself. You could say something similar here. I wouldn’t say Samaya democratizes access to information necessarily.

We certainly make it easier. We put it all together within a firm’s context. But I think some of the reasoning and analysis on that information does become more accessible. This has also been a guiding principle for us: we really want to see AI that up-levels humans, that lets us do things that are innovative.

It’s not just a productivity game. You can approach things completely differently, and that’s what we’re seeing a little bit, too. Now that people can put all of these content sources and data in — things that weren’t even possible before — maybe some structured data, along with broader views of the market and very specialized perspectives, then that becomes something innovative. That becomes something you couldn’t do before.

EL KALIOUBY: Yeah, I love that point of view. One of the considerations when you’re making investments is also the geopolitics of the world, right?

How do you incorporate this into your models?

RAGHU: That’s actually one place where I think Samaya has been especially valuable to all of our users and clients because, like I said before, when you look at financial services, often you have this choice between zooming out and zooming in. But that’s still not perfect for decision-making.

It’s a mechanism that we as humans have put together because we need some way to navigate what we have to do. Samaya really lets you connect that thread between the zoomed-out and zoomed-in views. That’s so important, especially in a situation where there’s so much geopolitical change.

There’s also this wave of AI and how disruptive it’s being. There are these broad themes going on, and they’re affecting everything at the very zoomed-in level, too. You need to be able to understand the connection between both of those.

One thing we’ve been working on internally — it’s a project we have called Causal World Models, and we posted some things about it in a research preview — is getting the AI to do some of this cause-and-effect reasoning, taking people from macro to micro, tracing through millions of sources, but doing that in a way that’s very sensitive to the cause-and-effect pieces, fully attributable, and giving people that ability to connect the macro and the micro.

EL KALIOUBY: Can you give an example? Say I’m a hedge fund manager and I’m trying to make an investment decision. What kind of questions can I ask Samaya’s AI, and how does that causal world model come into play?

RAGHU: There are so many open questions right now on AI and software, for example. You might ask this broad question: We have this huge disruptive wave of AI. We have the SaaS apocalypse on the other side. Help me work through and understand where the places are that we see huge disruption and huge change.

Where are places where things are just much more reactionary in terms of the market? Where are maybe new categories that are coming up that we should pay attention to?

That’s an incredibly hard question because what you’re doing is taking this high-level theme on AI and translating it down to the very specific entities being impacted, then categorizing those in different ways and doing that cause-and-effect reasoning.

You need to be able to show your work when you come back. You need to be able to say, “This is the prediction, but this is also why, and here’s my chain of reasoning, my cause-and-effect reasoning, that connects me all the way back up to that macro theme.”

EL KALIOUBY: It sounds like your approach is very focused on these smaller models as opposed to a general-purpose model that can do everything, and you’ve built these models specifically for the financial services sector. Can you talk about that decision? Why not use a general-purpose model?

RAGHU: Absolutely. First, we’re all about systems over models. If you look at every AI advance that’s happened out there in the real world, it’s always systems of some kind. I always like to bring up self-driving cars as a meaningful reference point.

Computer vision predates large language models, and self-driving started even earlier. Now we have them out in the real world. I actually took a Waymo in today. But that’s a system — not a single model by itself. It’s all these components. So, always systems over models.

As part of that system, when you’re trying to go from the library to the office — when you’re trying to embed in people’s day-to-day work — there are all these other AI components that need to be built out to do that translation very effectively.

That’s where some of these smaller language models that we’ve trained specifically for the domain, and for various different types of tasks, come in. For certain types of accuracy and precision issues that we see larger models trip up on again and again, and that are very domain-specific, it’s very powerful to have all of that.

EL KALIOUBY: I love the approach of thinking about it as a system of technologies and components that all need to work together effectively and productively.

EL KALIOUBY: If you’re listening to all of this and thinking, wow, Samaya’s AI system does a lot of the same things as a junior financial analyst, you’re not wrong. But after a break, Maithra shares why she thinks AI is actually good for job growth.

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EL KALIOUBY: I want to zoom out a bit and talk about what this means for jobs. I’ll make it quite personal in two ways. One is we’ve been using this chief of staff AI agent, and we have a couple of junior analysts on our team. I’m already noticing how this is causing us to rethink what our junior team members ought to be focused on, right?

The second personal anecdote is that my son is a junior in high school, and he is quite interested in, or exploring, potentially studying economics/finance in college. But I don’t know — will these jobs exist anymore? Will it look very different? I’m curious about your thoughts on how this is changing the jobs landscape.

RAGHU: I’ll share some maybe bad news and good news, in that order. I think there’s more good news than people talk about, so I’d like to spend a bit more time on that.

A bit of bad news is that it’s true, this is going to be disruptive. It is going to have us rethink a lot. Some roles are going to be transformed quite substantially. We’re going to have to rethink what we do. Some tasks may end up fully automated. So there is a wave of disruption that’s coming toward us, and we have to acknowledge that.

But the good news, again, that I see fewer people thinking about is this: I deeply believe that, especially as these agents get more capable, you are going to have to have more humans working with them just to deal with how much output they’re going to be producing. The AI doesn’t need to sleep. The AI is constantly going to be working. That’s great. But then you need humans in the loop to put in perspectives, frameworks, the broader universe in which whatever decision-making is happening, all of that.

With long-horizon agents running overnight, who is going to be shepherding them? There’s a whole set of jobs around these high-agency shepherds, maybe, that we don’t even see yet. And there’s going to be a lot of that to come.

Secondly, I’ll say that sometimes when you have this wave of technological disruption, you see the places where it’s clear productivity gains or clear cost optimization much earlier than you see the things that are deeply innovative and are going to up-level all of us — make things possible that we wouldn’t have even done before.

EL KALIOUBY: Do you have favorite examples?

RAGHU: I’ll take one from the investment landscape. Financial services is a huge industry, of course. Within that industry, Samaya is laser-focused on investment decision-making, which we think is at the heart of the industry. The company’s mission is taking people from information to conviction.

We’re super focused on that decision-making piece, partially because we think that’s a place where you can drive innovation, where you can really enable things that weren’t possible before. A super simple example is publics and privates.

There’s a whole ecosystem around public companies, and there’s an ecosystem around private companies. Those ecosystems have changed and transformed in various ways. They now influence each other way more. Often, different strategies were used for each of them.

Is there a way to bring some of these together and, in that process, create new opportunities for people to invest in mixes of these? That’s a simple one, but it would be very meaningful.

It would be meaningful for more people to have access on the private side, for professional investors to gain confidence that they have a really good understanding of both of these areas and the factors that influence them, and for new types of investment mechanisms and products to suddenly become available to people that could touch both of these.

EL KALIOUBY: Very cool. You also talk about personal agents. When do you think those will become mainstream?

RAGHU: I think this year. I think this year is going to be the year of real personal agents — maybe with some things happening on the model side, some stuff where you’re seeing more involved translation, especially on some of these enterprise use cases. But if I trace back the history of agents, to put it in context a little bit:

The term agent became very popular in 2024 or so. I don’t think we had real agents until about late last year. From 2024 through 2025, what we had were more workflows, not agents. The difference between a workflow and an agent is that a workflow is very hard-coded.

It might be multiple steps, but it’s a very specific set of steps. There isn’t actually any agency happening in that execution process. Late last year — I think Claude Code was an early beginning of this — and since then, the capabilities of these systems have developed.

Now we have a little bit more real agency. You give the AI the relevant information and inputs, and it is able to go away and make decisions as it goes through that execution loop.

EL KALIOUBY: It knows the desired end result, and it can backtrack what it needs to do, right?

RAGHU: Exactly. It’s real agency for the first time.

EL KALIOUBY: If you could wave a magic wand and have a personal agent that can do anything for you, what would you want it to do?

RAGHU: My goodness. Probably clone myself and be me in all of these places — come in as me, assess the situation the way that I would, and then be able to take the appropriate actions or produce the appropriate outputs.

EL KALIOUBY: Have you experimented with creating a digital twin of yourself? I’ve tried doing a video digital twin, and also feeding a model with all of my blog posts and my book and my interviews. It’s not there yet at all. I would not send my digital twin to speak on my behalf anywhere.

I don’t trust it at all. But I’m curious if you have experimented with some of these.

RAGHU: I have done some experimentation. Probably closer to what you’ve done — I’ve tried to connect it to things I’ve written. I like audio a lot, so I like speaking to it, because I think if you can really speak to it instead of typing, you can be much more descriptive.

You can give it more information about where you’re coming from. That’s been really powerful. But I’ve noticed two things. If the thing I’m trying to do is scoped enough and it has very good inputs — if I tell it, “This is something I’m trying to put together. These are a few different draft versions. Here’s what I think is missing. Help me put this together” — if I give very specific inputs, it can do a reasonable job.

But when I don’t give it precise inputs and I try to get it to produce an output, it produces something that is not like me, and I need to correct it in a bunch of ways.

What I’ve learned is that for very scoped things, it’s fine. But for something more open-ended, you can’t hill-climb from it.

EL KALIOUBY: OK, so I’d like to do a quick rapid-fire. I’m going to throw out an assumption about AI, and you tell me if it’s myth or reality. Humans in the loop slow down progress.

RAGHU: Myth.

EL KALIOUBY: OK.

RAGHU: The feedback is really helpful. How is the AI going to get better if humans can’t give any feedback, steer it, or correct it in any way?

EL KALIOUBY: That’s great. I think I agree with that one. Large models always win.

RAGHU: Myth. I think there are some things they’re very good at, so I don’t want to take that away. But in other places that we’ve lived and seen as we’ve built out some of these agents, I think the smaller, focused models can really, really drive value.

EL KALIOUBY: Chat interfaces are dated.

RAGHU: Reality. I think that’s coming.

EL KALIOUBY: Interesting. Cool. And then for our younger audience: economics/finance majors are obsolete.

RAGHU: Myth. There’s a lot of human judgment and human taste that will still be a key piece of that field in the future.

EL KALIOUBY: That’s awesome. Last question: What does it mean to thrive in the age of AI?

RAGHU: Energy and experimentation. We’re in a time of disruptive change. That’s true. So let’s face that with energy. Let’s also face it with experimentation. Go out there, see what’s possible, see what we can create, and see what’s out there.

I think that will 100 percent leave behind some of those old inhibitions. Embrace the new, embrace it with energy, don’t be afraid to experiment, and I think it will lead you to exciting things.

EL KALIOUBY: I love that. That is awesome. What a great way to end our conversation. Maithra, thank you for joining us on the show. This was great.

RAGHU: Thank you so much, Rana. This was fantastic.

EL KALIOUBY: It was great talking to Maithra about how to build an AI system that can make sense of our messy world.

An AI agent for the financial industry is incredibly complex. Think about all of the contextual information that Samaya’s agents need to digest and then pull together to make a recommendation. But at the end of the day, there are judgment calls that need to be made, and this is where humans will stay in the loop.

I’ve said it before on the show: AI is disrupting the labor market, but it won’t destroy it. Yes, some jobs will become obsolete because they will be automated, but there will be a whole new class of jobs to manage AI output. We’re already seeing those kinds of jobs grow.

That’s it for this week — thank you for joining us. We’ll be back in your feeds with a new episode next week.

The post How AI is reshaping Wall Street appeared first on Masters of Scale.

DAVID KO: People will ask me at times, “What is it like to be the CEO of Calm? Do you meditate all day?” And I tell them, “Honestly, no. I am the most stressed-out CEO you will ever meet.” And the reason I say that is because every second of every day, someone is turning to us for help.

BOB SAFIAN: That’s David Ko of mental health and wellness app Calm, who just announced he’s stepping down as CEO. Today, David talks with me about this moment of transition, the mental health burdens of the workplace, and how to tell the difference between stress that builds you up and stress that burns you out. It’s a surprisingly upbeat conversation about some serious stuff, and there’s a lot to learn and apply. So let’s get to it. I’m Bob Safian, and this is Rapid Response.

[THEME MUSIC]

I’m Bob Safian. I’m here with David Ko, who has run mental health and wellness platform Calm as CEO since 2022. David, thanks for joining us.

KO: Bob, thanks for having me. I’m really looking forward to today’s discussion.

SAFIAN: The big news here is that you’ve just announced you’ve stepped down as CEO. You’re becoming a senior adviser to the board. I have to say, I was surprised by this turn of events. How did this come about?

KO: I’m glad we’re starting with this.

SAFIAN: Going right at the elephant in the room.

KO: Bob, thank you for the question. I made the decision to leave because, as I took a step back, I saw that Calm is a brand today that, for those who don’t know, has had more than 180 million downloads of the product and is growing in more than 190 countries and seven different languages. We’ve really made strides in health outcomes. That’s where we’re going with Calm Health.

But at the same time, what’s become abundantly clear to me is that we’re in the midst of something so much bigger. It’s bigger because what we’re finding is that everything is much more interconnected than it was before. What I mean by that is there’s a reliance on employers, payers, providers, apps like ourselves, other apps being developed at lightning speed with AI, and real policy at both the federal and state level. So it’s really not just about one individual or one company. It’s more about how you create a movement.

For me, it felt like the right time to take a step back, zoom out, and really see if I could impact things at a larger scale. I don’t have all the answers on how I’m going to do it, because you’re catching me literally right after the announcement. But on a personal note, I feel more interconnected to Calm and Calm’s mission than ever before. I just wanted to try to do it at a scale that I think can really move this forward on a global basis.

SAFIAN: Calm’s business, as well as your book and your podcast, Recharge, focus a lot on managing stress. I’m curious how your stress is with this change, or in the Ko vernacular, how’s your battery?

KO: I’ve got to tell you, my battery today is great because, when I think about my own battery like my phone battery, I would tell you I feel fully charged. And I’m not just saying that.
I got a good night’s sleep last night. For me, the day always starts well when it’s not about the quantity of sleep. I don’t know if it’s the same for you, Bob, but it’s really about the quality of sleep I got. I’ve really focused on that. For me, it’s been nonnegotiable.

SAFIAN: And this change isn’t weighing on your head?

KO: It weighs on me. Like everything else, anytime you go through change, especially a life change, it’s going to weigh on you. But I just felt it was the right time, and I’m really looking forward to trying to do something that’s more focused on the mission and outcomes.

SAFIAN: During your tenure, Calm has grown its footprint, as you say, to 180 million app downloads and millions of Americans reached through health insurers. You’ve partnered on botanical beverages and sleep earbuds, and you helped pioneer so-called “calmtainment,” bringing celebrity voices into the app, right? Matthew McConaughey.

KO: That’s right.

SAFIAN: LeBron James, Harry Styles. Are there things about your time at Calm that you’re particularly proud of, that you look back on most strongly?

KO: Absolutely.  A couple of things. I think the conversation around mental health is the most approachable it’s ever been. Not in all countries, Bob, as we know, but here in the U.S., it’s probably the most approachable it’s ever been because people, like you just mentioned, are willing to talk about it.

I’m also very proud when I take a step back. I have two daughters, and they both use the app of their own accord. For someone who’s been in technology for so long, we don’t always have that opportunity where our kids, family, or friends get to use the things that we build. And I love the fact that they get to use it.

For myself, the brand was there before I got here, and I just helped continue to steward and shepherd that brand. We’ve really focused on the outcomes perspective, now covering almost 48 million lives across multiple payer partners that we didn’t have four years ago. I wanted to prove that it could actually resonate in health care, and we’re well on our way there.

SAFIAN: A lot of our listeners are business leaders, and sometimes I feel like they don’t always take mental health and wellness seriously. There’s this phrase, wellness-washing.

KO: Absolutely.

SAFIAN: I’m curious how much you see that, how much that’s going on, and whether maybe it doesn’t matter. It can be wellness-washing as long as it’s progress.

KO: I’ll give you a report we did just last year, and it really starts at the top for so many of us. We can have great HR teams, but if it’s not embraced at the leadership level, things can get muted or become just another benefit. So we went out and spoke to more than 250 C-suite executives.
What was really fascinating is that CEOs need this. They need the details and the numbers. We went out there and asked them, “How are you doing?” More than 80% of them said, “I’m good. We’re good.” When you ask that question again, because as you know, you have to ask C-suite executives the same question twice, they said, “Actually, I’m pretty stressed out.” More than 47% of them said, “I’m pretty stressed.” When we correlated even further, 28% said, “I actually feel I’m under major stress at this very moment.” And then when we pushed them even harder, almost 50% of them said, “I’m thinking of stepping down.”

What was really interesting was that, as we pressed further, we asked them, “Are you sharing this with your employees? Do they understand how stressed you are?” Many of them said no. They didn’t feel safe yet having these conversations in a more public format.

So when you ask me how CEOs are feeling and whether they believe in mental health, many of them do. In reports and studies we’ve done, it’s clear. It’s just that right now many of them, too, are feeling the stress.

SAFIAN: How much effort did it take for you to keep the Calm workplace calm? Just because you’re helping people with their mental state doesn’t mean your team is under any less pressure to grow and build and do.

KO: One hundred percent, Bob.  People will ask me at times, “What is it like to be the CEO of Calm? Do you meditate all day? Do you just sit there and meditate all day?” And I tell them, “Honestly, no. I am the most stressed-out CEO you will ever meet,” and it catches them by surprise.

The reason I say that is because every second of every day, someone is turning to us for help. And I feel that pressure, that wherever they are in the world or whatever moment they’re in, they’re asking us for help, whether it’s 30 seconds, five seconds, or 10 minutes. They’re looking to us for some type of help in the moment. It could be prevention or intervention. So I feel that pressure.
When you ask about a company that’s small and punches above its weight, we feel that pressure. I feel that pressure. I know my employees feel it. But I do try to practice what I preach. And the biggest thing I do is try to be very vulnerable in front of them. I don’t view vulnerability as a weakness. So I tell them when I’m feeling stressed. I tell them when things aren’t going well. I’m super transparent, and I wasn’t always that way because I used to view it as a weakness. Today, I view it as a strength.

SAFIAN: For some businesses, the cost of mental stress can be hard for them to measure, or they don’t have the facilities to do that. How much did you hear that in trying to get resources committed to it?

KO: I hear it all the time. It starts with CFOs. It starts with CHROs. We talk about the ROI, and now a lot of CFOs are getting involved and want to see the returns of all these different programs. A lot of times, you have to just look at the raw facts of what’s happening within your own organization. Do you see higher absenteeism? Do you see employees quitting at an accelerated rate? What is actually at the root of that? So much of what we’re finding is that stress and burnout are rampant in organizations today. The organizations that start to address them head-on and understand, “OK, it’s not just a benefit,” it’s really got to be incorporated within the company and adopted, we see those metrics start to go down.

SAFIAN: For all of us these days, things feel very burdened. War with Iran, tariffs, AI disruption, and economic uncertainty. People feel isolated. How much of Calm’s growth, and this whole category’s growth, has been because the world is getting worse?

KO: I was asked this question during our last election, and I was asked this during the holidays. I would say holiday stress is absolutely real. Election stress is real. In some organizations, financial stress will be at the top of the list. In some organizations, we’ll see they’re much more attuned to what’s happening from a global perspective. And we haven’t even spoken about AI yet, which I appreciate, but that, too, is causing a lot of stress in the workplace. So when you put all this together, all organizations will have some form of stress.

Stress is your body’s natural reaction to pressure, and that, in small doses, can actually be quite healthy. It can help build resilience. It can help bring the team closer together. Now, when this becomes chronic, that’s when you start to see burnout. And burnout, to me, is when you can think about it like a marathon. Stress is more like short sprints, and you can handle that. Burnout is like a marathon you don’t even want to start. When you start to reach that stage, you really have a problem, and we want to be more preventative there rather than just trying to intervene at that stage.

SAFIAN: There are folks who are so concerned about overall mental health decline, and I don’t know whether this is part of your motivation either, but they see meditation and wellness practices like Calm as just a Band-Aid for these bigger, more powerful structural drivers.

KO: Sure.

SAFIAN: How do you think about that?

KO: I think people aren’t thinking about it the right way. Here’s how I would think about it.
If you truly want to effect change in health care, it’s got to be on two fronts. So often when we talk about health care, we talk about intervention. At the point when someone has a problem, we figure out how to intervene, but we don’t really help in the preventative stage. How do you prevent the problem from ever occurring?

So I do think there are things that Calm really helps with, or companies like Calm and other apps that are out there help with, in the preventative stage. But those companies also need health care because it has the clinical programs with proven outcomes that show ROI. People just aren’t utilizing them, and that’s where the system needs to work together.

SAFIAN: I know that Calm’s biggest competitor, Headspace, has leaned into virtual therapy with licensed professionals. That’s not something Calm has done in the same way. Is that something that might be changing? The idea that self-guided tools are more effective than therapy can be appealing, but it might also be criticized.

KO: Look, many companies do this in different ways. When you have self-guided tools, that’s one part of the equation. But actually, in Calm Health, we integrate with a lot of the payer and provider therapists that are out there today. Many of the payers out there today have their own provider networks. So we work with them to get you the right care within their own networks. What we’re trying to do here is not add more complexity to the system. We’re trying to add simplicity to a system that I think is overly complex at times and can sometimes give you too much choice. It’s really hard. Sometimes you just need to narrow that.

I’m not saying what our competitors are doing is wrong. I think everyone just has a different model. For me, the model isn’t about trying to add more people into the system. It’s really about trying to leverage who’s there and think about it from a more simplified standpoint, so people actually use those resources that are there.

SAFIAN: I wanted to ask you about the recent jury verdict that found that Meta and YouTube were negligent for their social media platforms in spurring social media addiction. How much is social media to blame for our wellness woes?

KO: It’s a complicated question.

We’ve seen that young children today can have addictive tendencies. I’ve seen it within Calm itself where, during COVID, for example, a large part of our user base grew among young adults. We had a lot of schools and universities reach out to us about working with them going forward. We’ve now started working with a lot of universities and middle schools, for example. Many of them were reaching out because they are finding that mental health isn’t something that turns on when you’re 17, 18, or 19, or when you’re an adult. It actually starts at a much younger age. Can it all be attributed to social media? Maybe. Are there other factors at play? Yes, for many.

I don’t think it’s a black-and-white answer, but I do think it is part of the problem. I think many people are trying to think through, “How do we solve the problem?” For me, it’s a recognition that education plus policy, as I zoom out myself, need to get more involved, and we need mental health programs. I’ll give you an example.

The link between mental health and physical health, everyone now sees that. Everyone says, “Yes, if you have mental health issues, you’re going to have physical health issues. If you have physical health issues, you’re going to have mental health issues.” Well, guess what? In school today, we have P.E. classes. We don’t have anything around mental health in many of the schools that are out there today. I’m not saying we should have it every day, but should we at least start to educate our youth and have more conversations about mental health at an earlier age? I believe we should, but it’s still in a very nascent stage today.

SAFIAN: David may be leaving Calm’s corner office, but he’s still clearly passionate about the mission of mental well-being. So do we need to unshackle from our phones in order to have more calm, even though Calm itself lives on our phone? We’ll talk about that and more after the break. Stay with us.

[AD BREAK]

Before the break, Calm’s David Ko talked about stepping down as CEO and his goals for what’s next. Now we talk about the role of smartphones in our mental health, the pros and cons of AI, plus some practical tools that David swears by for getting through a punishing day. Let’s jump back in.

There’s always been a paradox at the heart of Calm: You’re asking people to pick up their phones to get relief from what that phone is doing to them. Is that a contradiction you wrestled with?

KO: Absolutely.

It’s not lost on me that I’ll go out there, Bob, and tell people, “Don’t let the phone be the last thing you look at before you go to bed.” This goes back to our conversation about quality sleep at the beginning. But then I’m asking people to turn Calm on.

It’s nuanced. What I’m asking folks is this: Do things that you know may not cause you stress or anxiety right before you go to bed.

For example, if opening that work email stresses you out, it does for me. When I send a work email late at night or see a work email late at night, my quality of sleep falls dramatically because I’m thinking about it. And the first thing I reach for when I wake up is my phone to see if that individual responded or how that turned out. Today, the last thing I do is not send an email, and the first thing I do is not pick up my phone.

So what we’re asking is a little more nuanced: Use products or services, because we know technology is going to be around you, that may not cause you stress or anxiety right before you go to bed.

SAFIAN: You mentioned AI earlier, and I want to come back to it. What is AI doing to people’s mental health? I know you’ve talked about human-centered AI, which is a phrase that can feel like a buzzword to people. How is it changing us? Do we know yet?

KO: I think it’s evolving. Two years ago, at the explosion of AI, we were all asking the question, “When will AI replace us?” Many of us were having that conversation, and that was another thing causing stress and a lot of anxiety. Now I think the conversation is, “How can AI support us?” And I think it’s a conversation that’s going to continue to evolve.

SAFIAN: A lot of people have been gravitating to AI chatbots for mental and emotional issues, which is something you’ve resisted, at least so far, at Calm. Do you think that’ll be changing?

KO: I think we’re going to continue to evolve with where the market takes us. I’ve used different chatbots on a personal note. I’ve spent a lot of time on this. I think it’s something people are going to turn to because there’s a real access issue out there today.

Look, we don’t have enough therapists or coaches who can help us. Sometimes, when you need someone to turn to, they’re not available. So if this can help from an access perspective, and it’s done in the right way, I think that is still under interpretation.

SAFIAN: That’s still the question, right? Because people are using ChatGPT as if it’s a tailored mental health app, which it’s not, right? But it’s appealing to them. It’s providing something for them.

KO: It’s providing comfort, and for many folks, it’s immediate when they need it. Again, that goes back to the access issue. People aren’t always available, and they will turn to technology. There’s an affordability issue there as well. Let’s not gloss over the fact that there’s a real cost to this too.
Where it could be helpful is that today, a lot of times, there are people in therapy who might not necessarily need therapy, for example. They’re in what we call the green. For folks who are in the yellow, our job is to figure out how we keep them there or get them to green. And folks in the red obviously need to get to yellow, and so forth. For folks who are in the green, using an app like Calm or other services that are out there is probably good enough, and you may not need to speak to anyone. Folks in the yellow probably do need to speak to somebody, but they can also do that through more of a hybrid approach, between apps that are out there today plus talking to someone. And folks in the red probably need to speak to someone immediately.

Right now, the system can be a mush of everyone being in every lane. So we want to make sure the efficacy is there, and we want to make sure the advice you’re getting is the right kind of advice, that there is clinical advice out there. That’s why so many health care companies today are HIPAA- and HITRUST-compliant. That’s not just because those are fancy names around data privacy and how your data is being used and what it’s being used for. There’s a real difference between consumer apps and what is HITRUST and what is within HIPAA.

SAFIAN: The pause you’ve had around AI bots at Calm, you mentioned data. Is some of that due to trust issues around mental health data? Because it’s personal stuff: sleep patterns, anxiety levels, emotional states, and all of that.

KO: It’s really personal.  Look, I don’t think there’s a company out there that is not going to leverage AI going forward, but you have to be intentional and thoughtful.

I think if you’re a start-up with not many users and potentially nothing to lose, you may take more liberties. But when you’re a company like ours that has so many millions of users who trust and turn to you today, I think we have a real obligation not to be flippant in that conversation. That’s where I continue to say AI can help us scale, but humans are the ones who are really going to give it meaning going forward.

SAFIAN: If you’re up for it, I’d love to do a quick rapid-fire round, ask you some questions, maybe get some tips from you. Is that good?

KO: Fire away.

SAFIAN: Alright.  Apart from downloading the Calm app, what’s one thing we can do with our phones to improve our mental health?

KO: Put it away when we have dinner conversations. One thing I do, not every dinner but at least multiple times a week when I’m with the family, is put that phone away and try to be present. So if there were one thing you could do, it would be to put that phone away and be present with the people around you.

SAFIAN: Alright. What’s the best way to de-stress during a long day when you don’t have much free time?

KO: Three Ws. This is what I do when I’m literally back to back.

I will look out the window if I’m in a meeting, just to reset a little bit, because sometimes you don’t have any time. You’ve got three seconds. What are you going to do in three seconds? One thing you can do, Bob, is look out the window. Two, I can grab a glass of water. That probably takes about 20 seconds. Or I could take a quick walk, which may be a couple of minutes, even if it’s just around the office. So if you don’t have any time, look out the window, shortest amount of time; go grab a glass of water, probably the second shortest amount of time; and the third is just take a quick lap around whatever floor it may be, your office, or your conference room.

SAFIAN: And that’ll be enough?

KO: That’s enough. It’s enough to reset, and sometimes you just need these little microbreaks throughout the day.

People often think you’ve got to do these 10- to 15-minute meditations, ring the bell, light the incense. No. You don’t have to do any of that. You can take these little microbreaks. Breathing is a form of meditation. You might just have to take a deep breath, hold it, breathe in, breathe out. Sometimes that’s all it takes.

SAFIAN: What’s one way business leaders could encourage employees to take an appropriate mental health break?

KO: Have them talk about what they do. Make it OK to even have the conversation. So often I’ll hear people say, “Take care of your mental health.” OK, how do you take care of your mental health as a leader? I think if you can be a little vulnerable and talk about how you take care of yourself, then you make it OK for others to take care of themselves. That’s why I so often say it starts at the top. You can’t put all the onus on your HR leaders to do it. You also have to support them in this conversation.

SAFIAN: You alluded to this earlier, but I wanted to ask specifically: What’s the difference between good stress and bad stress?

KO: I think Dr. Aditi Nerurkar, who was in my book and is a really good friend, said, “Good stress is eustress.” It can bring you closer together. We all have stress in our lives, but it’s in small doses. Bad stress is when we go into distress, and that’s when we can start to fall. Too much of it, again, can lead to burnout. It’s when we find ourselves spiraling.

I’ve been to many companies, and they’ll say, “How do we just eliminate stress from the workplace?” And I’m like, “I don’t know, but if you figure it out, you should tell me.”
We’re going to have stress. It’s always going to be there. It’s really about how you handle that stress and how we have more good-stress moments than bad-stress moments.

SAFIAN: Right. Some stress in the workplace is not bad. It actually drives creativity, urgency, and outcomes, right?

KO: Teamwork. It drives teamwork. It hits purpose. It hits the mission. It’s good. It’s when we start to feel like we have back-to-back-to-back stress moments, when there’s not an understanding of the why behind the stress.

I go to a lot of companies today and ask, “Why are you stressed?” They say, “I have all these things.” And we as leaders sometimes just keep adding to their pile of things to do. If we did one thing as leaders and said, “OK, we’re going to add something to your pile, but we’re going to take something away,” that would help. A lot of times, all we do is add, and that just adds to stress. That’s when it leads to distress over good stress.

SAFIAN: Good stress adds to our meaning, makes our work more meaningful, and bad stress —

KO: More purposeful. That’s right.

SAFIAN: Is Gen Z the most stressed generation ever? That’s something people talk about. And connected to that, is it unfair for older executives to be exasperated by younger employees pleading for accommodations?

KO: I think the question is very fair. Without naming the company, I’ll talk you through a real-life scenario.

I went to a company and spoke with a leadership team, and one of the leaders, an older gentleman, said, “Is our younger generation too soft?” While I really appreciated the question, I appreciated it because he felt safe in that room to ask it, and that’s on his mind. I asked him a question right back.

I said, “When you were younger and in the workplace, same as our Gen Z generation today, did you have a laptop or desktop?” And he said, “I had a big desktop.” I said, “Great. And did you have a phone that could be with you 24/7?” He said, “No.” And I said, “So you didn’t take your work home with you. You couldn’t physically carry that desktop home with you.” He said, “No, ridiculous.” I said, “Great. Well, guess what? Many of our youth today bring their work home with them, and there’s an expectation of 24/7.”

We just have to understand that technology has shifted the mindset of how we expect people to respond and how we expect people to work going forward. So their asks of us are different as well. Both sides need to recognize that things have shifted, but I also think they’re dealing with more complexity than ever before.

SAFIAN: Finally, how much of you leaving the CEO role is about you personally finding more calm, more balance?

KO: I don’t know if I’m going to find more calm or balance. I think I’m going to continue to throw myself into more stressful situations.

SAFIAN: Because that’s just you?

KO: No. I think it’s just the problem.  I think the problem is so large. What I’ve found is that you can have some of the best-intentioned companies out there today, but this market is so fragmented and so diverse. Meaning this: My parents live in Korea today. We don’t have conversations about mental health in Korea. It is still very taboo. It is still seen as a sign of weakness. Now, are the conversations starting? Yes. Would I love to go there and accelerate that conversation to where we are in the U.S.? Absolutely. So there are different conversations happening from a global perspective. For myself, I just think this problem is not going to get smaller. It’s going to get larger.
I think technology, too, is going to accelerate it. I think we have to figure out how we start to really work together going forward. And I just want to continue to be part of the solution and not part of the problem.

SAFIAN: Well, David, I want to say that I really appreciate you coming on this show, particularly at this moment amid this change, and having this conversation. I really appreciate it. Thank you.

KO: Thank you, Bob.

SAFIAN: For someone who just left a CEO post without a clear next step, David is remarkably centered. But true to form, he’s using this moment to be transparent and open, to make mental health a conversation rather than a taboo topic.

I keep coming back to his parsing of good stress and bad stress. Good stress comes in modest doses and builds resilience, drives purpose, and pulls a team together. Bad stress is more continual and leads to burnout. The challenge these days is that external pressures like political uncertainty and AI are constant. So what can we do? If the world isn’t changing, then we need to build in pauses for our teams and for ourselves to maintain balance in an environment pushing us to the edge. As David says, taking a break isn’t weakness. It’s how you keep moving. I’m Bob Safian. Thanks for listening.

The post The “most stressed” wellness CEO appeared first on Masters of Scale.

What does it take to lead a meditation company without finding a moment’s peace? David Ko spent years as CEO of Calm, one of the world's most recognized mental health and wellness apps, helping millions manage stress. Now he's stepping down. Ko unpacks why he made the call, what the relentless pressure of the C-suite really does to a person, and how to draw the line between the kind of stress that sharpens you and the kind that quietly breaks you down.

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BOB SAFIAN: Hi everyone. Bob here. Today’s episode is a special live recording from the stage at South by Southwest in Austin, Texas, featuring Dr. Rana el Kaliouby. Rana is a repeat guest on the show, an AI scientist, founder of Affectiva, investor at Blue Tulip, and host of the wonderful podcast Pioneers of AI. In this keynote conversation, we discuss how to keep AI human-centric, not only as a safeguard, but also to help us thrive socially, economically, and emotionally. We also play a game parsing fact from fiction on some of the buzziest AI myths, and we debate the merits and pitfalls of everything from AI therapy to Meta glasses, to which AI founders are opportunistic versus truly visionary. So let’s get to it. 

[THEME MUSIC]

I’m Bob Safian, and this is Rapid Response. 

Put your hands together for AI scientist, entrepreneur, investor, podcast host, and my good friend, Dr. Rana el Kaliouby. Isn’t this fun?

DR. RANA EL KALIOUBY: It’s so fun.

SAFIAN: All right. So we’re going to talk today about controversies and opportunities in this moment of change. What’s real, maybe what’s not as quite as real, what’s myth, and how to stay human-centric in all of that. I want to start with you, Rana, with your background, because your journey to this world of AI wasn’t exactly predestined. I think the first picture we have here is of you as a kid with your family.

EL KALIOUBY: Oh God.

SAFIAN: Rana, you grew up in Egypt and Kuwait. Yeah, you’re like, “Oh, look at me.” That’s Rana right in the middle there. Your father was quite strict and traditional. Your mother was one of the first female computer scientists in the Middle East. It sounds like it was a dynamic household. Out of that, how did you find yourself studying machine learning?

EL KALIOUBY: Yeah, I would say we grew up in a very tech forward household. So my parents, my dad, as you said, is pretty strict, but he taught COBOL programming in the 1970s. It’s an obsolete programming language. Oh, some people recognize it. And my mom was one of the very first female programmers to sign up to take this class in Cairo, Egypt in the ’70s. So that’s how they met. Then we moved to Kuwait. And my earliest memories of my childhood with my two younger sisters was sitting around an Atari video console, video gaming console, I guess. Any Atari… Space invaders, anybody? Ooh, okay, great. And for me, technology brought our family together. And so I think that’s been a common thread throughout my career. How can we build technology that brings people together versus isolate us or pull us apart?

SAFIAN: Your studies took you from Egypt to London to then MIT, where you co-founded your company, Affectiva. And this is a journey that you capture in your book, Girl Decoded. I think we have a cover of the book. From the start, you were focused on the emotional context of AI, on being human-centric. Affectiva used machine learning, I hope I describe this the right way, to read people’s emotional states and sort of analyze nonverbal cues and things like that, sort of focusing on EQ as much as IQ. And I’m curious, given that background, when you look at what’s happening in the AI world today, how prevalent is that emphasis? Do the major players take EQ as seriously as they should?

EL KALIOUBY: The answer is no. But let me kind of unpack that. We’ve made a ton of progress in AI on the IQ front, on the cognitive abilities and the cognitive intelligence of machines. But to get to true artificial general intelligence, AGI, we absolutely need these technologies to have both emotional and social intelligence. And this is where I believe that the industry as a whole is really lagging, and it’s the next frontier to figure out this EQ. We need to marry the IQ and the EQ of machines. And if we look at human intelligence, of course your IQ matters, but your EQ matters arguably even more. People who have higher emotional intelligence are better leaders, they’re better managers, they’re better partners, they’re better friends. And I believe the same to be true for technology. And also, if you kind of consider how humans communicate, only 7% of how we communicate is the actual choice of words we use.

93% is nonverbal. It’s facial expressions, vocal intonations, gestures, body posture. And all of that technology is completely oblivious too. If you think about AI today, it’s mostly focused on what you’re saying, not how you’re saying it and what’s the context around it. So I believe this is going to be the next frontier of AI. AI ought to communicate with us the same way we communicate with each other, through conversation, perception, and empathy. But I also believe strongly that we only build what we measure for. And all of the benchmarks in AI today, they’re very IQ focused. So I guess my call to action to the audience here and whoever’s tuning in and listening to this, we need benchmarks around the EQ of AI.

SAFIAN: And when you talk to your colleagues who are at some of these places, the hyperscalers and whatnot, and you raise this issue, are they like, “Yeah, yes, I agree?” Or are they like, “Yeah, yeah, yeah, but I don’t really buy it.”

EL KALIOUBY: I think there’s recognition that this is important, but I think it’s also a function of who’s designing these technologies. I mean, I’ll give one example. If you look at all the leading humanoid robotics companies, the robots are pretty impressive. They can unload your dishwasher and fold your laundry and, I don’t know, organize your living room. But I wouldn’t want any of these robots in my home. They’re big and scary, and they don’t really know how to interact with humans. So the teams building these things are really, kind of really obsessed about the functionality and they’re not really thinking about, “Okay, when this thing goes out into the real world, how’s it going to live with us?”

SAFIAN: Well, the next visual I have has a little bit about your life. It’s a picture, you’re a mom with two kids. Here you are with your two kids. And you were telling me that each of their approaches to AI are very different, that your son is kind of super enthusiastic and he’s using all the new tools and he’s doing everything. And your daughter is a little bit sort of the opposite direction like, “IRL, I want to unplug a little bit.” It almost sounds like your family dining table is like a microcosm of the discussions we’re having in society at large.

EL KALIOUBY: It really is. This picture is from a number of years ago, so they’re a bit older now. My son is 17. He’s very AI forward. He’s actually my teacher in many ways. Even though I spend every day in the AI space, he’s always surfacing new tools. His latest project is using AI workflows to translate the diaries of Egyptian workmen from the 1930s who worked at the Giza Pyramids, and they wrote these diaries handwritten in Arabic with a lot of images and whatnot, and he’s using AI to translate them. And he’s actually running into obstacles because he’s pushing what the AI can do, which is really awesome and cool.

I love that he’s using it to advance knowledge and combine history and archival research and AI. So that’s Adam. My daughter, Jenna, is a food anthropologist. She just graduated in the spring from Harvard, and she does not use AI at all. And the project she’s working on is bringing, she calls it a cultural salon/cafe. So they bring young people, you don’t have to be young, they bring people to this space and they host book talks and poetry readings and embossing workshops and whatnot.

SAFIAN: Sounds old-fashioned.

EL KALIOUBY: But they’re packed every night and it basically tells you people are really longing for this in real life human connection. And so-

SAFIAN: Yeah, there’s a reason we’re all gathered here in this room.

EL KALIOUBY: Exactly, exactly. We’re not doing this over Zoom.

SAFIAN: Yeah.

EL KALIOUBY: And so I think both realities are true. We need to both at the same time lean into AI. I keep pushing her to at least try ChatGPT or something. And then at the same time, I think we should really nurture our human connection as well.

SAFIAN: I mean, I was curious, you exited Affectiva in 2021. You’re an investor now, as I mentioned at Blue Tulip. But you’re also the host of this podcast, Pioneers of AI. Are these tools, between the investing and the podcast that you’re using to try to shape where AI goes from here? What is your goal in that?

EL KALIOUBY: Yeah. So Affectiva was my baby. It was literally my third child. It really was a big part of what I did and my identity. And so when I sold it in 2021, I spent a lot of time thinking about, what do I want to do next? And I kept coming back to this idea/question that we absolutely need to build a future of AI that is human-centric, that prioritizes how these technologies are going to affect our everyday lives and our relationships. And I mean, I believe that AI has massive economic opportunity. It really does. And at the same time, it has this opportunity to unlock human potential. So my point of view is that AI should not replace our abilities. It should really amplify and augment what we can do. And ideally, we can harness AI and use it to solve really meaningful problems facing society today.

So that’s kind of my thesis around that. And then I was like, “Okay, how do I shape that? How do I become a real player in that space, given my background too?” And I landed on three things. So one is investing. So kind of backing founders who are building these generational category defining human-centric AI companies. Two is storytelling, amplifying the voices of AI that maybe you may not have heard from. There’s a very small set of companies that dominate the AI headlines, in my opinion, but there’s a lot of innovators and thinkers and creators in the AI space. And I want to make sure that we are a platform to tell their stories and give them, be a door opener too. And the third one is a convener, which is why I like to do these things. I love bringing people together with disparate backgrounds and perspectives and just seeing what magic unfolds.

SAFIAN: You use this phrase about sort of humanizing technology before it dehumanizes us. And in the dialogue today about AI, I always wonder about for the practitioners, and you were one of the seminal ones, how much responsibility you feel like you have for what the future of this technology ends up being, and how deep is that conversation in that community as opposed to giving lip service to it, but I just got to get ahead of the company next to me?

EL KALIOUBY: I feel a very strong responsibility. And I would actually argue we all in this room have a responsibility as well because we get to vote with our feet which AI tools we’re using every day. Who’s getting the $20 a month subscription from all of us? And I think asking questions around, does this company care about the ethics of the technology? How is it being built? Are they thinking about bias, both data and algorithmic bias? Are they thinking about trust and security and privacy? Are they thinking about the use cases of this technology? Where should it be deployed and where should it really not be deployed? I think these are big questions that we all should be asking of the tools we’re using. And as an investor, there’s a set of questions. We have a rubric that we ask founders, and if the founders have not at all thought about it, if they’re not open, then we’re not investing in them.

SAFIAN: Yeah. I thought maybe we’d do something very human and we’d play a game, if that’s okay with you.

EL KALIOUBY: Okay. All right.

SAFIAN: So because there’s so much noise surrounding AI right now and so many myths, it’s sort of hard to know what to pay attention to. I think we all feel that. So this game is called fact or fiction, and I’m going to share a few video clips, some of which come from Pioneers of AI, the podcast, and each of them lead to a myth surrounding AI today. And I’ll be eager for your take about whether it’s mostly fact, mostly fiction, or somewhere in between. Are you ready? Okay.

EL KALIOUBY: Let’s do it.

SAFIAN: So let’s play the first clip.

AUDIO: Are we in an AI bubble?  Of course. We’re certainly seeing lots of evidence of bubble-like behavior.

The excitement that the hyperscalers had kind of got away from them a little bit and it’s starting to face reality.

It has the world wondering if we’re about to see a big pop of the AI bubble.

Whenever this bubble pops, there’s going to be tens, if not hundreds of billions of dollars that will literally be incinerated.

SAFIAN: So Rana, of course, the first myth, we’re in an AI bubble. Is this fact or fiction?

EL KALIOUBY: I think actually it’s mostly fiction. So I believe there are signs, there are signs of potentially a bubble. For example, there are a lot of companies raising, the frothy valuation problem, there are a lot of companies raising hundreds of millions of dollars at billion dollar valuations, but they’re pre-product, they’re pre-revenue, that’s a red flag. And there are also some concerns around the circular money machine. You look at these handful of companies, they’re all investing in each other. They’re all buying chips from each other and then-

SAFIAN: NVIDIA gives money to OpenAI. OpenAI uses that money to buy chips from NVIDIA.

EL KALIOUBY: Exactly. You kind of wonder what is the net new value creation here? But the world I’m in every day, the ecosystem of founders building real products that are going to be transforming real industries and companies that are really trying to figure out how to bring AI to be more productive, this is real. And it’s very early days. So that’s where I focus my energy. And I think we’re in the very early days of massive, massive economic opportunities.

SAFIAN: And so I mean, a lot of those clips we saw were from investors. Maybe the investment marketplace, there might be some bubble in, which might be cautionary for all of us because we all have money in these companies now. But in the long run, you think the technology itself, we maybe are even undervaluing?

EL KALIOUBY: I think so, yeah. The technology itself, it’s very early days and the use, the applications of the technology is very early days. We spend a lot of our time, our thesis is basically AI is transforming every industry and vertical, but we focus on three in particular. One is how AI is driving this health span revolution. So think about sensors, data, AI, and how that can advance healthcare in every aspect of it. The other is the future of work. So how can we employ and deploy AI, whether it’s physical AI or AI coworkers and agentic AI to transform businesses and especially antiquated industries. Often they’re very boring and unsexy, but there are lots of opportunities there. And the last is sustainable living. How can we use AI to apply that to planet health, whether it’s food innovation, rethinking manufacturing, climate, energy?

SAFIAN: All right.

EL KALIOUBY: Yeah.

SAFIAN: All right. So are you ready for another myth?

EL KALIOUBY: Okay.

SAFIAN: All right. This next video is from the Pioneers of AI show. So let’s see the next one.

VINOD KHOSLA: Somewhere in the early 2040s, we will get a billion bipedal robots. They will do more work than all of humanity does today. Now, people are terrified that these jobs will get displaced and they should be.

SAFIAN: Okay. Such a happy thought from Vinod Khosla there, legendary tech investors. So the myth here is that the robots are taking over. So how real is that?

EL KALIOUBY: I mean, Vinod’s legendary, and he’s obviously been super successful. I think he was one of the first investors in OpenAI, actually. But I kind of disagree with his point of view a little bit. I don’t think robots are taking over in the sci-fi movie kind of Terminator kind of way. I do think robots are going to take over a lot of jobs, often like repetitive, mundane, even dangerous jobs. We’re looking at a company that’s using them, they’re building humanoid robots for ship welding.

SAFIAN: Ship welding.

EL KALIOUBY: Yes.

SAFIAN: Yeah.

EL KALIOUBY: And it’s a very dangerous job as it turns out, and there’s not enough humans who even want to do it. That’s a perfect job for a robot to take on. So I think there’s going to be a lot of that. But again, if you take a human-centric angle to that, we want the robots to take over the tasks that we as humans probably don’t want to do. And yes, that will mean we’ll have to think about what we want to do and what does that look like?

SAFIAN: But it doesn’t necessarily mean that we should be threatened by these robots.

EL KALIOUBY: I don’t think so.

SAFIAN: All right. Well, that’s reassuring. All right. Let’s try the next myth. Can we play, this is another Pioneers of AI video? Let’s play that one.

MARK CUBAN: People don’t realize that IP gets more valuable in an AI world because if a foundational model is not trained on that IP, it’s behind. And trying to make decisions about whether or not you publish the work you do because you want the accolades, that’s the exact wrong way to do things now. Maybe you don’t want to patent it because the minute you publish it, every model is training on it.

SAFIAN: All right. So our good friend, Mark Cuban. So basically the myth is that AI is bad for creators. Mark is kind of arguing that it’s not. It’s good for creators. Where are you on this?

EL KALIOUBY: I don’t think AI is inherently bad for creators. I think AI is reshaping the creator economy. When I put my positive hat on, AI is also democratizing access to creation. I have zero graphic skills. I can create videos and content, and I think it lowers the barrier to content creation, but that also, I think at the same time means that there’s going to be a premium on human originality and human perspective and lived experiences. And how do you encapsulate all of that because AI is not going to, that’s not going to be a differentiating factor.

SAFIAN: I mean, it’s almost sort of the definition of progress in some ways. The floor goes up, but that doesn’t mean the ceiling doesn’t go up also, which is where I guess the best creators will end up.

EL KALIOUBY: Yeah, I love that. I love that.

SAFIAN: All right. We have two more myths. Let’s play the next video also from Pioneers of AI.

ARIANNA HUFFINGTON: Humans will never be more intelligent than AI, which is an incredible opportunity to realize that we are not defined by our IQ. Let AI be more intelligent than humans and let humans be wiser than AI.

EL KALIOUBY: I love Arianna. She’s just so cool.

SAFIAN: So the myth here, and Arianna Huffington is talking about it there, AI is on course to outsmart humanity, which she thinks is a good thing.

EL KALIOUBY: It’s okay, yeah. I agree with Arianna. Her point of view is basically, yeah, let AI be smarter than us, but let us kind of, she uses this term like AI can be the GPS of our soul. How can we use-

SAFIAN: The GPS of our soul.

EL KALIOUBY: Yes.

SAFIAN: Wow.

EL KALIOUBY: Yeah. Basically, we are in this moment of time where we can use AI to double down on what makes us uniquely human and tap into our intuition and this kind of wisdom and intelligence that AI doesn’t have. And I really like that. So my book’s called Girl Decoded, and it was very much about how to bring emotional intelligence into machines. And I learned a lot from that whole journey about my own emotions, but I keep wondering, my next book should be called Girl Embodied. And it should be about our intuitive intelligence, like our body intelligence. When you get goosebumps, that’s a signal. When you have this gut feeling, we’re so disconnected from that type of intelligence, but it’s true intelligence. And I think our opportunity as humans in this age of AI is to really double down on that.

SAFIAN: Because in the tech world, because we can measure other things, you were alluding to this before about IQ, because we can measure this, this becomes the definition of intelligence. As you sort of look at it, you’re like, “Well, maybe not really.”

EL KALIOUBY: There is a different form of intelligence that technology has no access to right now that we’ve lost access to as well because we’re always rushed. We’re in this world where we’re glued to our screens. I don’t think we’re in touch. I’ll speak for myself. I don’t think I’m always in touch with that kind of intuitive intelligence. It’s not easy for me to access it unless I spend a lot of time meditating. So anyway, I’m on a journey to tap into that intelligence. I think it’s really important.

SAFIAN: But it sounds a little bit like for all of us in some ways, as AI takes on more of the intelligence that maybe culturally we have emphasized that we all should be working a little harder to tap that other piece of intelligence.

EL KALIOUBY: The inner kind of wisdom. Yeah.

SAFIAN: All right. One more myth. This is a constellation of random headlines chosen recently from TechCrunch of new AI startups. And there is something in common about all of these folks. They’re all men.

EL KALIOUBY: Yeah.

SAFIAN: Yeah. I mean, you and I were having a conversation at one point and you kept pulling these up and you were kind of animated. And I guess, so the myth here is, is AI a boys club? And is it? Is that a fact? Is that fiction?

EL KALIOUBY: That one is not a myth. That one is like… There’s no mostly about it. Yes, I think AI today is a boys club and I think diversity is not a very popular conversation topic these days, but I think it’s so important because AI is creating incredible economic opportunity. And if women are left out because they’re not founding these companies because they’re not getting the funding, we’re going to look back five years from now or a decade from now, and we’re going to have widened the economic gap like crazy. So this is something that really concerns me. It’s why, again, three out of my four investments out of Blue Tulip Ventures are women CEOs. I don’t just invest in women, but I really try to seek these women founders and support them, if not by a check, but in other ways as well.

SAFIAN: Because they’re not getting the opportunity that they should and that they need to.

EL KALIOUBY: Oh, thank you.

SAFIAN: Rana is so logical in how she describes the impacts of AI across all kinds of areas, even ones that are emotional. So what kind of role does being human-centric play in AI safety? And what human skills should we prioritize in an AI world? We’ll talk about that and more after the break. Stay with us. 

[AD BREAK]

Before the break, AI pioneer Rana el Kaliouby parsed the facts and the fiction in today’s reigning AI myths. Now, Rana takes questions from the South by Southwest audience about the key skills needed in an AI world, whether Meta glasses will be the tech form factor of the future and the role of AI therapy and AI companions. Plus, will we all have a digital twin and more? Let’s jump back in.

Because you’re focused on the human-centric part of this, you really wanted a lot of this session to come from the humans in this room. So actually, I have some questions that I’m going to read to you. This is a question from anonymous. Anonymous, thank you for your question. Which human skills will become more valuable in an AI-driven world and how should individuals start developing them today?

EL KALIOUBY: Ooh. I think collaboration. Whether you’re collaborating with humans or machines, that’s going to be really important. I think communication is going to be really key as well. I think we’re actually all increasingly attuned to stuff that’s written by AI. We can probably all discern that. And so I think being a great communicator and an original communicator is really key. And then I still think we’ll need a lot of critical thinking and creativity. Yeah.

SAFIAN: Here’s a question from Sophia out there. She asked whether you use Meta glasses or what AI native devices are you looking at?

EL KALIOUBY: So we have Meta glasses at home. We have a couple. I don’t use mine. Adam, my son uses his a lot. We will literally be walking down a street together and I think I’m talking to him, but he’s got his glasses on. He’s listening to music and he uses it. I mean, it’s still very early days for these glasses. I would say they’re not really AI native yet, but I was at their annual event last week and they were kind of unveiling the visual intelligence capabilities that they will add to that. More broadly though-

SAFIAN: Yeah. Do you think those are the kinds of devices that we’re going to be interacting with AI through?

EL KALIOUBY: Yeah, I think this is one of our investment thesis. We are using AI on pre-AI devices right now. A smartphone is not an AI-native device. And so we are on the lookout for founders who are building these AI-native devices from the ground up, so hardware and software. And our thesis there is that it has to be perceptual, it has to be conversational, it has to have empathy, it has to have context, it has to have memory, it has to be ambient.

SAFIAN: Yeah. I don’t know what that is yet.

EL KALIOUBY: Yeah, we don’t. Yeah. And a lot of the big AI labs are investing a lot of money trying to build something. And I don’t know if it’s going to be, is it going to be glasses? Is it going to be a wearable pin?

SAFIAN: Because everyone wants to own the next phone. That’s what it is because it’s so much money, but we don’t really know what that is.

EL KALIOUBY: Exactly. There’s a lot of-

SAFIAN: Or if it’s just going to still be our phone.

EL KALIOUBY: Yeah. There’s a lot of experimentation on what the form factor will look like.

SAFIAN: Yeah, yeah.

EL KALIOUBY: Yeah, so we’ll see.

SAFIAN: So there are a handful of questions that are around a particular theme about world models. What is a world model and how is it different from a large language model? The world sounds very generic to some people.

EL KALIOUBY: Yeah. There’s been an evolution actually in these foundation models. They started off being very language focused, think ChatGPT. And then they became more multimodal, so now they can deal with images and video. They can both ingest images and video and generate images and video and voice. So they’ve become multimodal, but they’re still not rooted in the real world. And to unlock physical AI, so AI that is, like robotics is one example, or an AI native device is another example of a physical AI, to unlock that, you need AI that understands how the real world works, the physics of it. It has spatial capabilities. So that’s what a world model is. It’s the equivalent of a large language model, but kind of rooted in the real world, in physics.

SAFIAN: So instead of feeding it the data, whatever, scraping all the information that’s on the internet, it has to be in a room like this and get all of the signals from all of the things that are in this room right now.

EL KALIOUBY: Correct. And actually, you know how this-

SAFIAN: That sounds like a lot more information it needs.

EL KALIOUBY: It’s a lot more information. It’s a lot more complex. You know how with the large language models, there’s these companies that train the bots, basically train these AI models. They generate a lot of text and they red team the text and whatnot. We’re starting to see companies that are doing the same, but in the real world. So you literally strap on a camera and you’re paid to walk around your house or your work or the streets and all of the data you’re capturing then becomes input data to these world models. So it’s-

SAFIAN: I’m like one of those cars gathering information for Google Maps. Is that what-

EL KALIOUBY: Exactly, exactly. But now it’s like people in their kitchen washing the dishes. That’s all incredible training data for a robot that will eventually do this job.

SAFIAN: All right. Let’s go to the next question. The next question is, oh, this is interesting. This is from Caroline about what your opinion is about using AI for therapy. I mean, there is this discussion about AI therapy, AI companions to replace human relationships. What is our emotional relationship to AI? What would be healthy about that?

EL KALIOUBY: I think there is a room for AI to be a therapist, to be kind of a supportive companion, but I feel very strongly that it should not take the role of an actual human. Yeah, thank you. Yes, I feel very strongly about that. But there is a value proposition in having something that you can, when you’re up at 2:00 in the morning and you really want to run something, you’re ruminating on an idea and you’re really struggling, that could be very supportive. But I think there needs to be human oversight and human in the loop. And there are unfortunately very, very few guardrails being built in these models that protect us when we’re using these models and not…

You’ve probably unfortunately seen a lot of very sad news where young people are using these ChatGPTs and other AI technologies and they end up harming themselves. So I think that is something we don’t talk about often. A good friend of mine, Eric Cohen, I’ll give him a plug, he’s building AI safety guidelines and measures so that, again, we need a benchmark for that. We need to be able… Every time we release a model, we should really test it against these safety guardrails to see if it passes or not.

SAFIAN: I mean, I was having a conversation with someone about this and I was like, so at some point you have your AI bot with ChatGPT, but sometimes it’s going to be like you’re going to have a shopping bot that you have a relationship with at Walmart or whatever. But you could end up having a conversation with that bot that’s about your emotional state. It’s like, is Walmart going to train its bot to worry about whether… Do you know what I mean? Because you can ask that bot anything.

EL KALIOUBY: Anything, correct. There has to be these guardrails and these roles that are well-defined for these bots.

SAFIAN: And between here and there, are we going to continually have inadvertently like, “Oh, sorry, my bad. I didn’t realize people were using my app for that or my bot for that.”

EL KALIOUBY: That’s why I think anybody deploying AI should really be testing against these AI safety guidelines. Now, this is a whole different question than should we have AI friends and AI partners. And a lot of people feel lonely. And to have something that is there for you 24/7, is very patient, there’s something to be set for that, but it does say something about us as humans.

SAFIAN: Yeah. All right. I’m going to go to a little bit more business-y question here. This is from Krika. I hope I’m pronouncing your name right. Current skillsets are disappearing faster than new skills are emerging. So what should a human-centric organization do to help their employees keep up? I mean, these tools, new tools, new models, they seem like they’re coming out every day. How is anyone expected to keep up with it all?

EL KALIOUBY: Yeah. I would say organizations should really encourage their team members to lean in and try these new tools. Even if it’s not going to be perfect, even if there’s going to be mistakes and hiccups, I think it’s important to lean in. So at our fund, we’re a very small team. We just implemented a chief of staff AI agent. We just named it Blu, B-L-U. And this thing, it does a lot of research on our behalf. It kind of updates our CRM. It does all these auto tasks that, again, you don’t necessarily want to be spending a lot of time on it, but I think it’s made me think about, “Ooh, what are we doing with our junior team members?” And I think young people or all these junior roles are going to be redefined and they’re going to have to incorporate AI in what they do. I think we’re all going to have to incorporate AI in what we’re doing if we haven’t already.

SAFIAN: I mean, I had discussions with two CEOs over the last week. One, Julie Sweet, the CEO of Accenture, the other Matthew Prince, the CEO of Cloudflare. And they both sort of said the same thing, which is the people at the very top of their organization get it and are using AI. And at the same time, they’re eagerly hiring young people out of school in bigger numbers than are expected because those folks are AI native. But the group in the middle, they’re really kind of worried about.

EL KALIOUBY: Well, I think the reality is all of our workflows are changing. And so you have to be really open to reimagining what these workflows look like. And it’s going to be a human AI collaboration. So one of the interviews we did for Pioneers of AI was with Evan Ratliff, who has a podcast called, a pod series called Shell Game. And he started a company with two co-founders, Kyle and Megan, and they’re both AI agents. He’s the silent co-founder, and Kyle is the CEO, and Megan is the CMO. And that was fascinating. I interviewed both Evan and also Kyle, he’s a very tech bro CEO.

I interviewed the AI on Zoom, and Kyle was like, “Yeah, I’m a rise and hustle and grind, whatever, blah, blah, blah.” And then he was like, “But on the weekends, I love hiking.” I’m like, “Kyle, you don’t even have legs.” And he was like, “Well, I live vicariously through other CEOs.” But it was fascinating. And I think we are going to… And Kyle shows up to investor meetings. They will literally send Kyle to meet with investors. And I wonder if that’s going to be our world.

SAFIAN: Wow. That’s an intense future though. I mean, I wonder, you and I both, we host podcasts. Our colleague, Reid Hoffman also hosts a podcast, but he’s created this avatar of himself using AI. We could create avatars of ourselves. We don’t even need to be here. We could have our AI version. Is that something to aspire to?

EL KALIOUBY: Well, again, I think about it as augmentation. I don’t want my digital twin, which I have, but I don’t like her because she doesn’t have my smile and she doesn’t have my energy, so we’re working on it. But I wouldn’t want her to be here because I love this, but could she go to China and speak in Mandarin? Amazing. That would be awesome. So I have her speaking-

SAFIAN: Your Mandarin is not that sharp.

EL KALIOUBY: I have zero Mandarin, unfortunately. So I think that’s an opportunity. Where can it augment what I can’t do? Now, there’s a whole bunch of questions around IP and what if it answers a question not in the same way I would? How do I trust this digital twin to be out in the real world on my behalf? We’re not there yet.

SAFIAN: We’re running out of time, but let me get one question here from Hector who asks, what pattern separates the founders who are building something that will matter in five years from those riding a hype cycle?

EL KALIOUBY: Yeah, because I’ve been in this space for over 25 years. I can separate signal from noise and there’s so much noise. Every company we get pitched by is an AI company. And within three questions I’m able to tell, are they really building something that is defensible? And defensibility has taken on, I think, a new kind of depth in this world of AI because you can be defensible today. And literally by the next version of Anthropic’s release or Gemini’s release or whatever, you’re obsolete as a company and as a technology. And so we really dig into how defensible is this technology not right now, but in the next year, in the next five years? Five years is too long actually to predict, but-

SAFIAN: You can’t see that far.

EL KALIOUBY: Yeah. But defensibility is a real thing. And also, how complex is the problem you’re solving really? And again, back to the IP, what kind of IP or moats do you have around what you’re building? And we spend a lot of time poking that.

SAFIAN: So as we wrap up, for those in the room, what can they do to help build a human-centric future? I mean, how much should we engage with AI like your son does? How much do we safeguard like your daughter does? And how much do we just have to roll with the tides and deal with whatever comes our way?

EL KALIOUBY: I would say lean in. I think it’s important that we are all adept and be playful about it. I think there’s a curiosity and a play mindset that we can bring to the table where we’re experimenting and kind of pushing the boundaries of what is possible. But I also feel strongly that collectively we need to be vocal about, yeah, there ought to be guardrails in these models. There ought to be benchmarks around effects on the environment. We’ve had several conversations on Pioneers of AI where we’ve hosted people who care about that and are trying to solve, build benchmarks where we can really get a sense of, okay, how bad are these… Every time you ask ChatGPT for an idea for what you want to have for dinner, what is the effect on the environment? So I think we just need to be vocal about what is… We need to ask for more transparency around how these models are built, how they’re validated, where they’re being used. It is moving very fast.

SAFIAN: Yeah. I mean, I guess that’s part of what the appeal of this technology is, that to keep human, we have to use these tools to be able to be human-centric. Well, Rana, as always, it’s great to talk. Be sure to subscribe to Pioneers of AI and Rapid Response.

EL KALIOUBY: And Rapid Response.

SAFIAN: Yes. And finally, a warm thank you for Rana el Kaliouby Talking with Rana, you can’t help but think about what’s our role in shaping the future of technology. It’s easy to bemoan the state of the AI industry or critique the hyperscalers, but building new technology is a human endeavor and it’s not too late to take agency over what we build. As Rana says, we can vote with our feet, choosing what AI we use and pay for and what ways we use it. There’s no reason to abdicate responsibility because what comes next is very much up in the air. Thanks to the team at South by Southwest for inviting us on stage and thanks to all those who brought their human selves into the room to join us. I’m Bob Safian. Thanks for listening. 

The post Humanize AI before it dehumanizes us appeared first on Masters of Scale.

MATT ABRAHAMS: You should start pitches and presentations like an action movie. There’s something there right away. A lot of people have long preambles. You need to get yourself into the audience’s perspective. This is a fundamental tenet.

JEFF BERMAN: Matt Abrahams knows what it takes to win over a crowd, close a deal, and inspire a team. It’s not enough to have a great product or terrific idea. You need to be a brilliant communicator as well.

ABRAHAMS: Neuroscience has taught us emotion gets into our brains differently than information, gets in faster, stays longer, motivates behavior. So do I want people excited or concerned? Do I want them to have FOMO, fear of missing out, or be validated or just be confident? Think about that emotion.

[THEME MUSIC]

BERMAN: This is Masters of Scale. I’m Jeff Berman, your host. Today on the show, communication expert Matt Abrahams. He teaches at Stanford’s Business School and has a brilliant podcast called Think Fast, Talk Smart. Whether it’s preparing for a big speech, a one-on-one investor pitch or anything in between, Matt has science-backed strategies to help you succeed. We talk about how to overcome anxiety about public speaking, how to nail a job interview, and much, much more. Matt, welcome to Masters of Scale.

ABRAHAMS: I’m thrilled to be here, Jeff. Thank you.

BERMAN: We’re thrilled to have you. I just want to start by asking you, how do you describe what you do?

ABRAHAMS: So fundamentally, I’m somebody who’s really passionate about communication, and really what I think I do is I help people to hone and develop their communication skills. And a lot of that is really just asking people to turn habits into choices. Most people communicate out of habit, and my job, I think, is to expose them to different opportunities, tools, and techniques, and then ask them to consider in their situations they find themselves in to try a different technique out.

BERMAN: What led you to choose to really specialize in this and to teach others how to be great at this?

ABRAHAMS: The teaching bug, I think, is just inside of me inherently. I’ve always loved teaching. I’ve had lots of opportunities to teach. After graduate school, I worked in the corporate world for a while. I had to pay off some loans, and I just saw the impact that good communication could have on somebody’s career in a company’s trajectory, and how bad communication got in the way. And so when the opportunity presented itself to do some teaching in this, actually here at Stanford through their continuing studies program, I fell in love with it, and I saw the impact it had. And I really enjoyed learning from my students and have never turned back.

BERMAN: I started my career as a public defender, not the obvious place to start for what I do now. And I’ll never forget, we had one lawyer who was quite experienced, and doing this for decades, who told us that they went into the restroom and threw up every single day before court. And it really just struck me as that you’ve got literally decades of experience and you’re still showing up with that level of nerve. As you work with people on communication, particularly on public communication, how common is this, this nervousness? And what do you help people understand that they can do to be less nervous to walk in with more confidence in these rooms?

ABRAHAMS: So anxiety around communication looms large. We have some evidence that suggests up to 85% of people feel anxiety. And quite frankly, I think the other 15% are lying. Those of us who study it have found it in every culture we’ve studied. We find it develops around the same time around when kids become early teenagers is when it really becomes more prominent and stays that way. So we believe it’s part of the human condition. There’s an evolutionary explanation for it. Your relative status in a group matters a lot. Not today, and I’m not telling you who drives the fanciest car and has the most social media likes. But when we were a species hanging out in groups of 150 people during our early evolution, your relative status meant everything. And it meant access to resources like food, reproduction. And if you did anything that jeopardized that, it could have quite a significant impact.

So it’s wired into us. Now that doesn’t mean that we can’t learn to manage it. I spend a lot of my time helping people learn to manage anxiety. And you can do it both by focusing on the symptoms and the sources, but it is ubiquitous and it is something we have to work at. But over time, we can manage it. I don’t think we can ever truly overcome it, as your example shows. Having anxiety tells us that what we’re doing is important, gives us energy, helps us focus, but we have to manage it so it doesn’t manage us.

BERMAN: Are there truths about managing anxiety that apply to 90 percent of the population, or is it really specific to the individual?

ABRAHAMS: Everybody is different in terms of what their triggers might be or where the sources are, but there are some things you can do that seem to work for most people. I’ll give you a few examples. Deep belly breathing really can help. It slows down your autonomic nervous system. It slows down your breath rate. It lowers your breathing so that your voice sounds more normal. So breathwork seems to be really important. And what’s key is the exhalation. It’s not the inhale, it’s the exhale. So I like to joke that the rule of thumb or rule of lung is you want your exhale to be twice as long as your inhale. And if you do a few of those breaths, just two or three, you’ll actually really feel different and better.

The other thing that gets a lot of people is shakiness. That’s adrenaline. Adrenaline’s role is to move us from threat to safety. So if you move with purpose, you can give that adrenaline a place to go. So if you’re standing up in front of a room, step towards the audience with a welcoming gesture. If you’re sitting like this, lean forward, gesture broadly, that gives the shakiness a place to go. And for most people, those two things alone can help many of the symptoms abate. A lot of people just get inside themselves when they get nervous, they get very still. And then somehow magically, they expect to be able to go from silence to brilliance. But if you watch athletes, actors, dancers, there’s always movement. There’s always warming up that goes on.

So my anxiety management plan, and I encourage all of my students and everybody that I coach to develop their own unique plan. I do three things. First, I take some deep belly breaths. Second, I do my best to interact with somebody to have a conversation. It gets me focused. If it’s somebody who’s part of the audience, even better because I realize these are normal human beings who want to learn something from me rather than judges who are there to evaluate. And then I say tongue twisters. Tongue twisters, I know it sounds silly, but what it does is it warms up my voice and you can’t say a tongue twister right and not be in the present moment. Nobody ever sees me do this, but it’s a way that I warm up. In fact, before we started today, I excused myself and did a few tongue twisters to get myself ready.

BERMAN: Do you have a favorite one?

ABRAHAMS: I do. But I’ll only share it with you if you do it with me.

BERMAN: I’ll do it with you. Sure.

ABRAHAMS: Okay. Now the reason I like this one is it’s short and if you say it wrong, you say a dirty word.

BERMAN: Okay.

ABRAHAMS: All right. I slit a sheet.

BERMAN: I slit a sheet.

ABRAHAMS: A sheet I slit.

BERMAN: A sheet I slit.

ABRAHAMS: And on that slitted sheet I sit.

BERMAN: And on that slitted sheet I sit.

ABRAHAMS: See where the naughty word comes?

BERMAN: Right at the end.

ABRAHAMS: Yeah, exactly.

BERMAN: You want to slip an H in there.

ABRAHAMS: That’s exactly right. And I’ll do that three times and it gets me present, focused, and it warms me up.

BERMAN: Amazing.

ABRAHAMS: I like to say there are only three ways to get good at communication: repetition, reflection, and feedback.

BERMAN: And repetition.

ABRAHAMS: Yeah. Yeah, exactly. You got to do it a couple times. So nobody ever got good at speaking by thinking about it. You have to do it. That’s where Toastmasters, taking classes, those things really help. You have to reflect. Most people are just so glad to be done with it. They move on. There’s that definition of insanity doing the same thing over and over again. Every night before I go to bed, I spend one minute writing down one thing that went well in my communication and one thing that didn’t each day. And on Sunday, I spend five minutes going back and reflecting and I make a plan to address an issue each week. I’m not saying I’m a great communicator. I am certainly a better communicator because I do that reflection. And then you have to get feedback. We are not the best judges of our communication. I make my MBA students digitally record themselves and they watch. It’s painful.

BERMAN: It’s the worst.

ABRAHAMS: But they learn so much. I tell everybody it’s like going to the dentist. We don’t like going, but we’re really glad we’ve been. And not only do they watch it and listen once, they then watch it without sound and then they listen without video. So they’re seeing the different channels and that actually highlights more of what they’re working on.

BERMAN: Given how central communication is to everything, to relationship building, to presentations, why don’t we spend more time teaching this, especially starting early? Why isn’t this more core to our curricula?

ABRAHAMS: So I’m heartened, at least here in the United States, that we’re seeing a bit more of that. I look at what my kids went through and I have a young nephew and what he’s going through, much different than what you and I went through. We’re of the same vintage. So I think there is a recognition that communication is important. Coordination of activity is important. I think part of it is that we just do it naturally. And most people by the age of one are communicating in some way, and we just feel like it’s just something we do. But when you think about the impact communication can have, it becomes very clear that it’s something we should study and look at.

When I talk to people who’ve graduated from our MBA program, one of the things they will say is either they’re so thankful they took communication training because they see how valuable it is in their work life, or they really wish they would’ve taken more. So it’s one of these things where we take it for granted, but then when we get exposed to it, we really see the value that it brings.

BERMAN: Yeah. And my rabbi, Rabbi Sharon Brous wrote a book a couple of years ago called The Amen Effect. It’s a beautiful book. But there’s a little anecdote in the book about going to the grocery store and going to the self-checkout. And looking up and seeing a person working at a cash register and switching, going over and having that moment of human interaction, and it completely changing her day as a consequence. As you’re engaging with college students, what are you asking them to do, encouraging them to do in their daily lives where they can practice being better communicators and in the process, perhaps build more community, build more civility, more connection?

ABRAHAMS: So a few things. One, I ask them just to observe others’ communication and see what is it that people are doing. We can be so internal-focused that we don’t see that that person pauses before they speak and that gives a little extra space for the other person to complete their thought. Or like my mother-in-law would do, she was a black belt in small talk and she would just say, “Tell me more.” And just noticing the subtle little things that people do to encourage communication or shut down communication. So part of it is observation. The other part is really helping people listen better. Most of us are not good listeners. So really teaching listening skills, which force people to be more present and connective and then paraphrasing skills. So it’s not enough just to get your point across, but when you hear somebody else’s point, demonstrate that you heard that point.

So giving them tools and techniques and then encouraging them to practice and then come back and reflect and report out. And it’s amazing where students will say, “I learned so much more from this person I was getting to know because I listened and I paraphrased and I gave the other person the confidence to say more.” So it’s helping them, scaffolding them to a point where they can feel more connected and comfortable doing those things.

BERMAN: Still ahead, more with Matt Abrahams on how to craft the perfect pitch.

[AD BREAK]

Welcome back to Masters of Scale. You can find this conversation and much more on our YouTube channel, and be sure to check out the link in our show notes to subscribe to our newsletter. I wanted to run Matt through a set of scenarios you might be facing and see how we can get better at communicating in each one of them. We started with pitching a new start-up concept. When someone’s taking an idea out to market and raising money for the first time or trying to persuade an advisor to come on, what are the mistakes that you most commonly see and where are the opportunities to get better that are just the lowest hanging fruit to coach people up on?

ABRAHAMS: So you and I both know Guy Kawasaki. So the first mistake people make is they take too long. I love his jet fighter versus a big Boeing analogy. It takes a long time for a big plane to take off. You need to take off quickly. You’ve got to get to the punch first. I like to tell people you should start pitches and presentations like an action movie. There’s something there right away. A lot of people have long preambles. You need to get yourself into the audience’s perspective. This is a fundamental tenet. I host a podcast, Think Fast, Talk Smart, all about communication. The number one bit of advice across hundreds of guests is always know your audience. A lot of people craft a pitch and that same pitch they give everywhere, you have to adjust and adapt. What’s relevant and salient to the people you’re talking to.

You also need to focus on benefits and salience, not features and functions. Many people get so immersed in what’s going on. My mother has a saying, I think, everybody should live by. It applies to pitches. “Tell the time, don’t build the clock.” Many people say much more than they need to. Get to the punchline more quickly. And then finally, show, don’t tell. Show what this means. Don’t just tell us all the different features and functions. What does this look like? If you can demonstrate it, demonstrate it, but help us in our mind see what it is. If you can do those things, you will engage people more.

And then there’s one thing that I’d love to get your opinion on. When I see pitches, a lot of people put their bios and their experience upfront. I’m not a big fan of that. I want people to tell me what the idea is, what the value is, and then let me know who you are versus who you are upfront. I don’t know if you have an opinion on that. Everybody I talk to thinks the bio company slide needs to go in a different place.

BERMAN: Well, there’s a fundamental tension for me in a lot of these conversations that are pitch conversations ultimately, because yes, jet fighter, get to it, be adept. By the way, as a way to get a meeting, I often say, “Look, can we please set 30 minutes or an hour? But if in 5 or 10 minutes you don’t think this is going to be valuable for you, kick me out. And I will, with a smile, shake your hand and give you 45, 50 minutes back in your day.” Because if in 5 minutes we’re not in it, it’s probably not going to happen anyway, most likely. But the tension for me, and I learned this… My first job in the private sector was at MySpace of all places. And ultimately, I was overseeing the sales function and I hired an absolutely incredible sales leader, a guy named Andy Weedland, who I went out on a sales call with. And we sat down and he didn’t pull up a deck and he didn’t start by saying what we’re here to talk about.

He started by asking them how they were doing and what was keeping them up at night and got them talking about their problems and five, six, seven minutes in, he completely adjusted the conversation to speak to what their needs are. And so that tension is often you walk in the room and you don’t know your audience as well as you should. So how do you get them in conversation so you can learn what you’re actually wanting to be speaking to?

ABRAHAMS: I think you ask questions. You do your homework, you do your cyber stalking, you’re checking out their LinkedIn profiles, you’re looking at their blog posts and Substacks, but you come in inquisitive. I think curiosity is the best place to come in most communication, especially in pitching situations. You reflect what you’re hearing, that’s where paraphrasing comes in and you’re watching for nonverbals and you’re trying to see how they are responding and reacting.

Nonverbals are not always the most accurate, but paying attention can be very helpful. And then start down a path and test and check and see if this is of value to them. One of the things you said that I really want to emphasize is setting expectations at the beginning of the meeting when you said, “Hey, if we’re not connecting in 10 minutes.” Most people don’t do a good job of expectation setting leading up to meetings and events. I’ll give you an example.

I think the single best expectation-setting tool for communication that we seldom use is the calendar invite. We all send invites out with URLs. You can do so much in a calendar invite to set expectations. I challenge you the next time you schedule a meeting, don’t put the word meeting in the title. It forces you to make it something that’s more active and engaging. Put your expectations, your goals, maybe even your behaviors that you want people to have or the tools you intend to use in the meeting in the invite. So people come in ready to go. I put in every invite I have for every meeting I run, either a question that we’re going to start discussing or a challenge that I want us to address.

Most people start meetings by reviewing the previous meeting, which I think is ludicrous. Most people don’t like going to meetings. So I’m going to start this meeting by reminding you about the previous meeting you didn’t want to be in. Let’s do something active to get engaged and then if we have to talk about the previous meeting. So expectation setting is critical. In the moment, determining who your audience is and what you can do to help them is critical, but it involves listening and being silent. And many of us, because we’re excited, we’re nervous, that’s hard for us to do.

BERMAN: To your point, most of us hate meetings. They’re a time suck. It feels like I only need to be here for 5 or 10 minutes, but we’ve set it for half an hour, an hour. Especially focusing on an internal meeting, what makes for a great meeting?

ABRAHAMS: I think a good meeting is where people feel that value has been provided to them and that they’ve had an opportunity to contribute and be heard. And that boils down to a lot of the pre-work that has to be done. Do you actually need the meeting? Meetings are often band-aids for bigger problems. When I come in and do some of my consulting work, one of the first things I’ll do is a communication audit, and I look for the number of meetings that people have and how many people and who are those people in those meetings. And it’s often a canary in the cold mine for a bigger, more challenging issue. So crafting purposeful meetings that have a clear goal. If there’s not a need for a meeting, don’t do it. Meetings don’t have to be 30 minutes and 60 minutes. They can be 17 minutes. Take meetings outside, walk.

There is lots of evidence that there are ways to be more productive in meetings. So really being value-driven, having expectations, maybe even seeding some ideas with people to contribute. So if I have a big meeting coming up, I might come to you and say, “I know you’re really passionate about this. I’d love to make sure you bring up the points you’re concerned with.” Giving people permission to contribute. So there’s a lot of work that goes into a meeting before it happens. I actually think facilitation, leading meetings, moderating panels, anytime you’re facilitating others communicating what you’re doing right now, I think it’s the hardest communication skill because you have to manage so much simultaneously.

BERMAN: Why is it so hard?

ABRAHAMS: Well, in this case, it’s just you and me, but imagine a meeting where there are multiple opinions. I’ve got time, I’ve got goals, I’ve got to make sure that this connects to something else. There’s a lot going on that I have to navigate through and make people feel psychologically safe, make sure people are contributing. I should be paraphrasing and connecting. There’s just a lot going on at the same time, and that’s why many people find it very difficult. So a good meeting is a meeting that’s well thought through and that people feel like they have presence and are getting value from it.

Some of the biggest mistakes people make is they don’t plan, they don’t listen, they don’t connect the dots of what they’re trying to accomplish to what has been accomplished, what needs to be accomplished. And they schedule too many meetings or spend too much time in the meeting. So really, if you are mindful of the experience and plan it, you can actually have people excited to come to meetings.

BERMAN: Yeah. You said earlier that repetition is one of the core elements of effective communication. And I think for so many leaders, they get tired of hearing themselves say the same thing over and over again. And I’ll never forget Jeff Weiner said, “Until I start hearing my team say it back to me, I know I haven’t said it enough.” But there is that tension of like, “I know you all have heard me say this 37 times and I feel like I should acknowledge that, but I don’t want to acknowledge that.” How do you help leaders get better at this piece of it?

ABRAHAMS: So part of it is calling it out. Part of your job as a leader is to repeat and the goal is to get alignment. So repetition is in service of something and reminding yourself of that. That said, there are lots of ways to repeat things without saying the same thing. You can give examples, you can use analogies, you can tell stories. So find different vehicles to communicate the same message.

BERMAN: I want to set up another scenario-

ABRAHAMS: Sure.

BERMAN: … where communication can be complicated and ask for both sides of it. It’s a job interview.

ABRAHAMS: Yes.

BERMAN: From both the candidate and from the hiring side, again, what are the most common mistakes and what are the most coachable opportunities?

ABRAHAMS: Let me start with just the methodology I recommend people follow. When you go into a job interview, prior to getting there, obviously you should do your work and research on the organization and the role. Come up with themes that you want to make sure you get across. Maybe one of my themes is that I have deep expertise in this. With each theme you come up with, come up with support of that theme. A support might be a story you tell, maybe it’s a testimonial, you won an award or your boss said something. Maybe it’s some data, you saved X amount of money over this amount of time. So you have different types of support for your themes. So when I’m in the interview and you ask me a question, I think to myself, that’s a great opportunity for me to pull in this theme. And because I have the support already there, I’m just assembling my answer.
If you go to a fancy restaurant, they don’t make every meal from scratch. They have things prepared and they assemble it quickly. If you can do that, that means you’re more present and connected in the interview because I don’t have to sit there and figure out everything from scratch. I’m a huge fan of structure, structures and frameworks. They’re great ways to structure answers. One of my favorites is what I call ADD for adding value. Answer the question, give a detailed example, describe the relevance. So if you ask me a question, I’ll answer it. I’ll give you an example and I’ll describe the relevance. In doing so, I have just made it easier for you, the interviewer, to see the value I can bring, to see that I can think quickly on my feet. And I give you an example that’s concrete.

For giggles, imagine you’re interviewing me to be a teacher of strategic communication at Stanford’s Business School. So you’re interviewing me for the job I have, because at least that way I might have some qualifications. What might be a reasonable question you ask?

BERMAN: Why should we not hire you?

ABRAHAMS: Why should we not hire you?

BERMAN: Why should we not hire you?

ABRAHAMS: One of the things that I have a tendency to do is to over-index on applied information. And some of our students would benefit from more theoretical approaches. For example, when I teach crisis management, I’m teaching very specific messaging techniques, not the theories as much. So if you are looking for somebody who is theoretically oriented, I’m not that candidate. But if you want your students leaving knowing how to communicate and having practiced it, then I’m the person you should hire. Answer, detailed example, describe the relevance. So I didn’t know the question you were going to ask, but I knew exactly how I was going to answer it. And that makes life easier for me.

BERMAN: What’s the question I should have asked you in that mock job interview?

ABRAHAMS: That’s the question. That’s actually it.

BERMAN: That’s the question?

ABRAHAMS: That’s it. So I always recommend that somebody have a question because they always say, “Do you have any questions for me?” And a lot of people say, “No, no.” And there’s no way. You have lots of questions. So I will always ask, “What’s the question I should have asked?” Or I say, “What do you wish you would have known when you were interviewing? Or what’s the question you would have asked?” And in my own life when I’ve done that, I have received such great insight. And when I’ve been on the receiving end of that as a hiring manager, it showed me that this is somebody who really wants to understand the inner workings and the details, which made a mark on me. As an interviewer, my job is to figure out not just if you’re the best candidate, but are you a good fit? So I am giving you space to share information with me.

And I’m asking follow-up questions because that lets me really see your depth of thought. And the last bonus or bit of advice I’ll give is leverage AI. LLMs can be really helpful. Not to help you create answers, that’s not what I’m looking for, but to help you get questions to practice. All athletes do a lot of drills. All musicians do a lot of scales. We can do the same thing. Go to your favorite LLM, say, “I am interviewing for this role in this company. Generate five questions for me.” As those questions come up, practice answering them. That’s how you get better at it.

BERMAN: We’ve been focused more on small group communication. I want to go back to bigger stages. You’re standing in front of a room of hundreds or even thousands of people. If it is the National Association of Realtors, you probably have a pretty good idea of your audience and you can speak to your audience. But often, leaders are speaking before much more diverse groups of folks. What do people not get right in those rooms and what’s coachable there?

ABRAHAMS: There’s several things I could say. First and foremost, have a clear goal. Understand what you’re trying to do. To me, a goal has three parts, information, emotion, and action. What information do you want to get across? And based on what you know about your audience, what’s the best way to do that? What’s the feeling? A lot of us don’t think about feeling. We just want to get through the information, but we’ve known for millennia, thousands of years, that emotion matters. Neuroscience has taught us emotion gets into our brains differently than information. Gets in faster, stays longer, motivates behavior. So do I want people excited or concerned? Do I want them to have FOMO, fear of missing out, or be validated or just be confident? Think about that emotion. And then is there an action? Most communication, especially for leaders up in front of big groups, involves action. What is it? Is it clear? And is it measurable?

I coach a lot of entrepreneurs and during their pitches, they’ll say things like, “I want your support.” What does that mean? Do you want a check? Do you want a social media like? Be specific. So having a clear goal helps you focus. That’s the number one place I think people make a mistake. They aren’t clear. Or the person who wrote their presentation was clear, but they weren’t clear because a lot of leaders don’t write their own content and that can be a problem. If you’re not writing your own content, you need to be very closely aligned with the people who are, and they need to understand your process.

The other thing that people do is they don’t practice. Think about a standup comedian. How many times does a standup comedian work on their routine? I coach some of the most senior leaders here in this valley and they’ll say, “I got it.” I say, “Oh, how much did you practice?” “I read the slides last night.” You need to live it. You need to speak it out. I don’t know about you, but in my mind, I’m amazingly eloquent. When I open up my mouth, I’m not always as lucky. So getting that practice in and practice in the environment where you move around the stage, you feel the lights, you hear the sound of your voice through the speakers.

BERMAN: One of the paradoxes of the modern moment is it has never been easier to reach people because there are more platforms and they’re open platforms. But it’s never been more difficult to build a real audience because it’s so crowded and AI is only making that more complicated by the day. Whatever you may think of his politics, it has been said of Zohran Mamdani that he is just as good in a 30-second social media hit as he is in a 3-minute cable news appearance, as he is in a 30-minute speech, as he is in a 3-hour podcast. He’s kind of mastered each of those media. When you’re working with leaders who now have to appear in many different formats on these wildly different platforms, how do you help them get good across the board?

ABRAHAMS: I think you take a step back and you really think about what do you stand for? What’s important for you? What are your key values? And you start from there. And so essentially what I’m saying is you have to be authentic and you have to be true to yourself. You then have to think about how the message plays best on the different channels and platforms. And you might have a really good stump speech or a really good position statement or pitch at five minutes. It’s not just about truncating it to fit the 30-second TikTok. It’s what’s the core essence of that or a piece of that core essence? And how can I say that in the best way? So helping people understand that it’s not just message, but channel all coming from an authentic place, and then it boils down to practice. You have to practice for the different modalities.

People think if I can do a 30-minute presentation, I can do it in 5. Not at all. It’s very different. And so you have to get that experience and you have to practice it. And you’re right, if you don’t, people question. It feels disingenuous. And I think younger people have an advantage over those of us who are older and that they’re used to managing personas in different modalities, much more so than I am. I barely can do it in front of somebody, let alone on technology.

BERMAN: So what are you saying to leaders who do need to be on platforms where it is just wildly uncomfortable for them to get there?

ABRAHAMS: Whenever I ask anybody to do something they’re uncomfortable with, I ask them to think about another time they did something they were uncomfortable with and what helped them do that. And it could be everything from the first road race somebody ran to the first time they had to let somebody go during a reduction in force. Helping people understand that, one, you can do it. And then helping scaffold the different pieces. So if I’m trying… And I am learning how to be on TikTok myself, which is wildly disturbing to my kids. They do not want me there.

But the point is that you need to understand what’s expected on that channel, what works, and then figure out how you can connect to it. You have your own freedom on ramps to these different channels. I help people try to figure out where’s the best place to start? Is it that you’re really good at being funny or you’re really good at asking questions? So let’s lean into that when you move to a different platform or a different way. So let’s find a strength that will play well in that platform, but first you have to be encouraged.

BERMAN: Matt, you referenced… Where was I going? I just fully lost my train of thought. It’s quite all right. Forgive me.

ABRAHAMS: No worries.

BERMAN: Surreal. Let me go in a different direction.

ABRAHAMS: We can talk about blanking out.

BERMAN: Let’s talk about blanking out because I just blanked out. I had exactly where I wanted to go with my next question. I lost it. What do we do in those moments?

ABRAHAMS: When you blank out, a great thing to do is to do what you do when you lose your phone or your keys. Go back to go forward. Repeat yourself. Say what you just said before. Most of us can remember that. And that often gives us enough to get on track. If not, find a way in conversation to distract your audience. So I teach the same class very often. I can’t remember, did I say this in this class? Did I say that yesterday? So I’ll lose my train of thought. So what I’ll do is I’ll just pause. And if you ever hear me say this, it means I’ve forgotten what I need to say. I will say, let’s pause and think about how what we’ve just discussed impacts your life. And what my students do is they think about that, and that gives me that fraction of a second.

So can you leverage a question? Can you get somebody responding or doing something to buy that time for yourself? I call it a back pocket question. You should have something you can pull out. So when you blank out, repeat yourself. If that doesn’t get you back on track, ask some other peripheral question that you’ve thought about. Just like you asked me earlier, you could simply say, “What’s something I should be asking you?”

BERMAN: Yeah.

ABRAHAMS: And that’s something I can respond to and that gives you time to think.

BERMAN: Yeah. What have we not talked about that we should have talked about here?

ABRAHAMS: I alluded to listening a little bit earlier, but listening really is critical in all communication. And listening means we actually have to slow down. I have a colleague who jokingly says, I hope it’s jokingly that listening is that thing I have to do before I get to speak. So when I teach listening, I teach a few things. I learned this from a colleague of mine. His name is Collins Dobbs. Pace, space, grace.

BERMAN: Pace, space, grace.

ABRAHAMS: It’s a way to ace your listening. So you have to slow things down.

BERMAN: Yeah.

ABRAHAMS: Listening is one of the only skills where we actually have to slow down to take advantage of it. So you have to slow your pace down. You have to give yourself space. For me, as I get older, everything’s loud and I can’t hear. I have to move to a space that I can. But more importantly, I have to give mental space. I have to stop all the chatter and focus. And then grace. Grace to give yourself permission, not just to listen to the words, but how those words are said, where those words are said. That can give you a lot of insight. I’ll tell you a quick story. I came out of a meeting with a colleague and my colleague said, “How do you think the meeting went?” And I immediately heard feedback. So I gave all the constructive feedback because the meeting didn’t go well.

What he really wanted was not feedback. He wanted support in that moment. I didn’t recognize he came out the back door, not the front door with me. He was talking quietly. He was looking down. He was sending me all these signals that I was not listening to. So pace, space, grace helps you listen better. And then the single best tool, I’ve said this, I’ve mentioned this before, paraphrasing. When you listen to paraphrase, you have to listen more deeply. You listen for the bottom line, not the top line.

So if we give ourselves a little pace, space, grace and we listen to paraphrase, we learn to listen better. Now I have to be very candid with you. My wife thinks I’m a fraud when I talk about listening because she thinks I need a lot of practice, but we are all working on it.

BERMAN: We’re all working on it and you’re still married. So-

ABRAHAMS: As far as I know.

BERMAN: … you’ve done something right here. You referenced earlier that often if someone’s not agreeing with a speaker, that speaker doesn’t feel like they’ve been heard.

ABRAHAMS: Yes.

BERMAN: We’re in a moment in this country where we really struggle to hear each other and to make each other feel heard. And it feels like there is so much more that divides us than unites us. I reject that perspective.

ABRAHAMS: I agree. And the research suggests that too.

BERMAN: It feels like to build back, we have to start local. We have to start one-on-one and then in small groups and in communities, what have you. But as you observe this, what do you wish we were doing differently so that we could connect more and find those things that unite us more than divide us?

ABRAHAMS: Stepping back and looking and listening to different perspectives. I really applaud my wife. She does this better than I do. She will look at multiple news sources from different parts of the political spectrum for a particular topic. And that gives her perspective that I don’t necessarily always have. So taking that step back and appreciating that there are different perspectives and hearing those different perspectives. It’s trite and cliche to say we’re all living in our own little bubbles, but it’s true and we need to peer out and see. And leading within inquiry and curiosity, I think are the ways to really get that going.

When you come in, guns blazing, here’s my position, this is what’s going to happen, that’s off-putting. That puts somebody on the defensive. But if I come in with curiosity, help me understand that. What perspective do you hold? That invites at least conversation. And again, understanding that we don’t always have to agree and we can appreciate somebody else’s perspective. That lays the groundwork for the kinds of conversations you’re hoping for and I’m hoping for.

BERMAN: I love that. What a great place to wrap. Thank you for being with us.

ABRAHAMS: Thank you so much. I enjoyed the conversation.

BERMAN: Thanks again to my friend Matt Abrahams for joining us. His brilliant podcast is Think Fast, Talk Smart, and his book is Think Faster, Talk Smarter. I’m Jeff Berman. Thank you for listening.

The post How to think faster and talk smarter appeared first on Masters of Scale.

Matt Abrahams knows what it takes to win over a crowd, close a deal, or inspire a team. The renowned communication expert and Stanford business school lecturer shares his science-backed strategies for overcoming public speaking anxiety and more. 

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MATTHEW PRINCE: Google is the hero of the last 30 years of the internet. They financed the entire thing. The problem is that AI breaks that. 18 months ago, it was 20 times harder to get traffic from Google than it was 10 years ago. Now it’s 50 times harder. It’s 3,500 times harder to get traffic from OpenAI than the Google of old. 65,000 times harder to get traffic from Anthropic. Why did Sam and Elon start OpenAI? Because they were terrified that Google was going to run away with the whole game. Everything started effectively as a counterweight to Google, and that’s the puzzle.

BOB SAFIAN: That’s Cloudflare CEO, Matthew Prince, speaking to me live on stage at South by Southwest in Austin, Texas in mid-March. Cloudflare helps facilitate more than 20% of all online traffic, which gives Matthew a unique perspective about how AI is changing the internet and the motivations of the major tech platforms. He also shares his real-time experience on the front lines of cyber war with Iran. This is Matthew’s second appearance on the show, and he doesn’t disappoint. So let’s get to it. I’m Bob Safian, and this is Rapid Response.

So please join me in welcoming Matthew Prince, CEO and a co-founder of Cloudflare. Yes.

PRINCE: These look very official.

SAFIAN: Very official. This is a very official gathering. We’re very official, folks. You were on my show six months ago. And since that time, so much has changed. You talked about how the number of new websites has grown dramatically.

PRINCE: After plateauing for a really long time, actually declining for a little bit, we’re now seeing the fastest creation of new websites that has happened in the entire history of the web.

SAFIAN: The amount of bot traffic has gone from about 20% of all traffic to trending to 50% by 2027 and growing.

PRINCE: Now we think it’ll be over half of internet traffic is generated by bots.

SAFIAN: And the business model of the future is unclear. You gave this example about how even Walmart, Amazon, and Target have wildly different business models, right? Wildly different approaches.

PRINCE: Walmart has said, “Agents are welcome, come one, come all.” Amazon is literally suing companies, and it was just successful in a motion against Perplexity saying you are not an agent allowed to shop on amazon.com – two of the smartest retailers in the world have wildly divergent strategies. It’s so rare that that happens, and I think it just shows how uncertain everyone is about what the future’s going to look like.

SAFIAN: To add to all of this, we now have a conflict in the Middle East.

PRINCE: Really?

SAFIAN: Yeah. Well, I wanted to ask you about this because I remember when you talked to me, you said, and I’m going to quote this, “Cloudflare goes to war every day with Iranian hackers, Russian hackers, and North Koreans.” Now, what is the status of that now with the conflict going on?

PRINCE: Yeah, so it was interesting, sometimes we see things and we can’t explain them. But on February 27th, the attacks coming out of Iran, so from Iran targeting the West, increased 7X off baseline. So there’s always sort of background, and then on February 27th, a massive spike. Why? We’re not sure. Did they get advanced warning that on the 28th, the U.S. was going to start bombing? Was it just coincidence? What was going on? We’re not sure, but we did see that massive spike. Usually in kinetic conflict, so what we saw Russia, Ukraine, we saw Israel, Hamas, cyber proceeds and then stays elevated through the entire time of when there’s a physical war going on. And then often lasts slightly after whenever peace is declared. In this case, it was different. So we saw a massive spike on the 27th, and on the 28th, it dropped down to less than 10% of baseline, so –

SAFIAN: Less than 10% of what it had been before.

PRINCE: What it had been before. We think that what had happened was that the U.S. and Israeli strikes were so effective at disrupting command and control inside of Iran, that even the hackers were sort of like, “We’re not sure what to do.” Now that’s coming back. We’ve seen a dramatic uptick in Iranian attacks. Stryker, a big, big Michigan-based corporation got completely compromised, it looks like by Iranians. I think you’re going to see a lot more of that because it is one of the things when you have these asymmetric conflicts where you have a very powerful nation taking on a much weaker nation. Cyber is one of the ways that they can strike back. I also think that we’ll see a lot of other nation states that don’t necessarily want to get blamed for cyber attacks. Russia is the largest offender of this.

Russia is extremely vulnerable to cyber attacks themselves. And so I would’ve predicted that after the Russia-Ukraine conflict starts in February of 2022, that we would’ve seen a massive uptick in the number of Russian cyber attacks that happened. That has not largely happened nearly as much. There have been some, but it’s not the wave that we thought, but part of the reason we think, and again, speculation, but part of the reason we think is because Russia itself is so vulnerable to attack that if they directly attack the U.S.–

SAFIAN: They would be attacked back.

PRINCE: We would come back at them and would shut down their entire power industrial base, a lot of different things. And so there’s sort of a mutually assured destruction concept to cyber. Russian attacks really ticked up when Israel and Hamas took off, and Russia was doing a lot to try and disguise their cyber attacks as if they were coming from Hamas or Iran. And so I would imagine that we’re going to see a lot more Russian attacks that will be trying again to look like Iran.

SAFIAN: And the efforts to sort of degrade Iran’s capabilities, that doesn’t necessarily extend to cyber in the same way it does to other things. Or we don’t know.

PRINCE: One of the internal debates at Cloudflare right now is the Iranian internet is shut off. And the question is, did they do that to themselves? Because that’s what they have historically done. They want to block it. It’s a way to quell protests.  Or did the U.S. do that to them, or Israel? Because typically in a, again, kinetic conflict, the first thing that you do is you try to disable the communication systems of whoever you’re about to bomb. And so that would be very normal. But on the other hand, the state department went through extensive efforts to try and get things like Starlink and other things into Iran, it’s not clear entirely whether Iran shut down the internet themselves or if the U.S. and Israel shut it down.

The evidence that they did it to themselves is that there is still from some cellular networks and specifically from some SIM cards, we see access and what that traffic is accessing is things that you would imagine elites inside of Iran trying to access. So a lot of cryptocurrency exchanges, because if you’re trying to get assets out, that’s one of the ways that you would do it. A lot of social media and news trying to see what is going on in the world, that leans in the favor of they did it to themselves, and they’ve basically whitelisted a certain set of elites.  What leans against it is the U.S. is really good and the Israelis are very good at cyber.

SAFIAN: One of the discussions about AI is for hackers, you want your AI to be better than their AI because they’re using one and you’re – is that a factor in this engagement or not as much yet?

PRINCE: No, AI is making everyone more efficient, and that includes hackers. So that the time from when a hacker gains access to a system to how much damage they can do has compressed massively. So that if in the past it might have taken days from, you get access to one system, how do you get access to the whole company? Now it’s taking hours or minutes in order to do that. There was a tool made by a company called Salesloft called Drift. It got compromised by some Russian hackers, and it gave the Russian hackers access to the vast majority of Salesforce clients. It was not nearly as harmful as possible because the hacker didn’t understand Salesforce. And so they were spending several days just trying – I mean, not a lot of people understand Salesforce. But they –

SAFIAN: Sometimes even the people at Salesforce.

PRINCE: Even the people. How do we have so many Salesforce administrators? It doesn’t make any sense. But this was an attack that happened six months ago. I think what you would see today is that AI would allow them to get much smarter–

SAFIAN: To get up to speed that much faster.

PRINCE: That much faster and do that much more harm. That’s the bad news. The good news is at the end of the day, who wins in the AI race is whoever has the most data. We can talk about chips, we can talk about researchers, those things will become commodities more and more over time. The thing that will differentiate is whoever has the most data, and the good guys have more data than the bad guys. At some level, we would’ve never described ourselves this way, but at some level, Cloudflare has always been an AI company where we take – I mean, the reason we have a free service is because all of that is information that we can feed into machine learning algorithms to look for what the new security threats are. In the same way that we all, three and a half years ago, ChatGPT comes out and we’re like, “Whoa, that’s amazing.”

Internally, we’d had those machine learning systems that were in finding things that we already knew about and identifying them more quickly. But about three and a half years ago was the first time where our system started to identify threats that no human had identified before. And so I think that there’s going to be a bunch of horror stories around AI. There’s going to be families that send their life savings to some gang members.

SAFIAN: Yeah. I mean, AI phishing data is bad. Yeah.

PRINCE: But I think the macro trend is that actually the internet is going to get – and cyber is going to get a lot better because of AI, even though you’re going to have a whole bunch of headlines that are going to sound very scary.

SAFIAN: Since the last time we talked, you’ve become much more vocal about AI layoffs. I will say that I’ve had other conversations with folks who are sort of like, “Some of the layoffs you see, it’s really just businesses using AI as an excuse.” You see this as more transformational.

PRINCE: Everybody should just be super honest with themselves about which camp they’re in. And there are two camps. Right now there is a camp, it’s like if we were – on this floor, there are a bunch of screws, if we were in the business of screwing screws into floors, up until about six months ago, we were doing it by hand, and we were really good at it. And we hired some of the best hand screwdrivers in the world. And then again, there was talk for the last three years that, “Oh, this new technology is coming, and we’re going to have automatic electric screwdrivers, and everyone’s going to be so much more productive.” And they’re like, “Yeah, we tried it. It doesn’t work that well.”

But somewhere around November and anyone who’s paying attention felt it, the screwdrivers got really good and the electric screwdrivers became incredibly effective. And we now have people in one camp that are literally a hundred times more productive than they were before. They put down entire floors in a day when it used to take a month. That’s one camp.

We have another camp who’s like, “Yes, yes, but I prefer my manual screwdriver.”

SAFIAN: I’m so used to it. It’s always worked well for me.

PRINCE: And you told me that if I came here and I used my manual screwdriver, that I would have a job forever.” And I believed it when I said that. But I can’t have a world where one employee is a hundred times as productive as the other. People are like, “Are you losing sleep over Iran?” I’m like, “I probably should be, but I’m not.” “Are you losing sleep over other things?” What I’m losing sleep over right now is that we have a bunch of our team that’s using electric screwdrivers, we still have a bunch of our team that thinks that their job is to use manual screwdrivers and they’re complaining that, “Oh, the electric screwdrivers make mistakes or they do various things,” but they’re missing the point.

And my job has to be: how do I get those folks that are really good with manual screwdrivers to come along? And what’s scary for them because it tends to be, it’s not the super senior people, it’s not the super junior people, it’s the people in the middle who said, “You told me this is the game. I’ve been playing this game really, really well. I’ve been doing that. How dare you change the rules on me? And if you do change the rules and I adopt them, how do I have any advantage over the intern?”

SAFIAN: Right, “Am I going to be good with the electric screwdriver? I don’t know.”

PRINCE: I don’t know. And everything that I was good at was, I was really good with the manual screwdriver. And that’s a super scary thing for people who are sort of in the middle of their career. And what I am deeply worried about, and this isn’t a Cloudflare thing, this is an industry-wide thing. It’s not even a tech thing.

SAFIAN: Yeah, I was going to ask you, is this just – I mean, I know it applies to software and coding, but if you’re in another business?

PRINCE: Legal. It’s a funny thing because everyone expects machines to be perfect. These are not perfect machines. These are fallible machines, but it’s effectively like you have a hundred times the number of employees and they make mistakes, but it’s great, they can check each other and they take a whole bunch of work that was pretty dredgerous, writing comments on code, in finance, copying information from one spreadsheet to another, and legal, summarizing a bunch of documents. I mean, those are all things that humans did, we don’t need that anymore. That doesn’t mean we need fewer humans. Cloudflare will have more employees, we will continue to grow the number of employees at about the same rate that we have. But what I’m deeply worried about is how do I get the folks who are just worshiping their manual screwdriver to realize that the world –

SAFIAN: And if I’m someone who – I’m using an electric screwdriver sometimes, but not for everything in my job.

PRINCE: It’s totally fine. And there’s a time and a place. Be honest. If you think that your job is to convince people that electric screwdrivers are bad, you’re a dinosaur. And what I’m deeply afraid of is I think that there’s a generation of people who are between the ages of about 25 and 40, who there’s a real risk they’re going to get completely left behind. It’s also terrifying for society. Let’s imagine you’ve got – unemployment rate spikes for people in that age group. That’s the people who are going to start to become more politically active, the populism we’ve seen today could get even worse and even crazier. And again, I think a huge part of my job is: how do I convince people the ship has sailed? We are not debating whether electric screwdrivers are better than manual.

SAFIAN: And it’s not a question, you’re saying, I’m in favor of electric. It just, it is. It’s the reality.

PRINCE: It’s not just us. It’s every single company. And so what we saw out of Oracle, what we saw out of Atlassian, what we saw at Block, everyone is going to do it. And even the companies that are growing like crazy, and they might turn around and hire a whole bunch of new people. We’re hiring over 1,111 interns. It’s a number that means something to us. But why? We’re pairing each of the interns with a more senior member of our team, because usually the mentorship goes from senior to junior. We think it’s going to be completely different this year, where we think that our team needs to learn from the people who are sort of the natives at electric screwdrivers in order to understand it.

We had an outage last year that was really bad. It was basically because a configuration file went out that was malformed. So what’s the solution to that? Well, we now have an employee effectively that doesn’t need to sleep, doesn’t need to eat, doesn’t take breaks, and whose information biases are completely uncorrelated with the rest of our team. And they can check every single configuration change before it goes out, not to change it or even, but to flag it like this, “Hey, this might be a problem.”

SAFIAN: And this employee is—

PRINCE: AI, is an agent, right? And again, we’re not going to hire someone to do that. You couldn’t. And they would inherently have biases and all kinds of things. It’s the perfect use case for this. And everyone’s going to implement it. And by the way, the internet, the cloud, all these things are going to become massively more reliable because we can have something that just checks everything. And there was a 14-day debate internally about whether or not we should do this. What the? Of course we should do that.

SAFIAN: Matthew is not one to mince his words, which I love from the Iran cyber war to electric screwdrivers, he doesn’t hold back. So how much does he trust the big AI companies and how much control do the rest of us have in shaping our tech future? We’ll talk about that more after the break. Stay with us.

[AD BREAK]

Before the break, Cloudflare’s Matthew Prince talked about cyber war in Iran and how AI impacts have shifted in just the last few months. Now we talk about whether the big AI companies are motivated to operate in the larger public interest and how changes in the internet create both challenges and opportunities for industries from media to small business. Let’s jump back in.

When we talked last time, the news that we were talking about was a new tool that Cloudflare had out about helping to block AI bots from crawling content sites if they didn’t want it. In that conversation, you said you sort of believed that the AI companies were trying to do the right thing. Has that perspective moved at all? I mean, we’ve seen a lot of differentiation lately between Anthropic and OpenAI and how they’re dealing with the government. Do you feel like anything has moved in that?

PRINCE: I think I’m more convinced that that’s the case. 80% of the AI companies use us and so we know them really well. All the big ones use us, and they’re not stupid and they understand that they are part of an ecosystem and they have to behave inside that ecosystem and they’re going to act rationally. And so in the case of media, if you were just giving media away for free, of course they’re going to take it. It’s not the right answer for everyone. For Cloudflare, we don’t want to block AI crawlers from crawling our knowledge base. We want the AI systems to be able to know how to use Cloudflare. So we don’t block them, we welcome them. But if your business is selling ads or selling subscriptions, you might say, “Hey, unless you compensate me, you don’t get my stuff.” And that’s rational. And so we’re just providing the tools to do that.

What we have seen having now that is that the deals that people are getting, whether it’s DotDash Meredith or Conde Nast or other big media companies have gotten significantly better. 

Now, there’s still a lot that’s there. And the real challenge is, it’s sort of like a superhero movie where the hero of the last movie becomes the villain of the next. Google is the hero of the last 30 years of the internet. They financed the entire thing. They built a search engine and then they needed to create content in order to make the search engine valuable. So they built the monetization engine that powered the entire internet. And the business model of the internet was generate content, drive traffic, and then sell things, subscriptions or ads. That’s been the business model of the internet. The problem is that AI breaks that. It doesn’t work that way.

And so at some level, there has to be a value exchange. It could be monetary, but it could just be ego. A lot of times you create something, you put Google Analytics on it just because you’re just like, “Wow, look how many people are reading it.” But that’s gone way, way, way down because they’re not reading it directly. They’re reading the –

SAFIAN: They’re reading the summary. The AI summary.

PRINCE: –the CliffsNotes version of it and so even if you’re all–

SAFIAN: Which we’ve all become addicted to.

PRINCE: Yeah, and so it has gone – 18 months ago, it was 20 times harder to get traffic from Google than it was 10 years ago. Now in 18 months, now it’s 50 times harder. And that’s the good news. It’s 3,500 times harder to get traffic from OpenAI than from the Google of old. It’s 65,000 times harder to get traffic from Anthropic than Google.  That’s changing. And so the value exchange needs to change. Now, I think it’s going to get fixed, but who’s the problem today? The problem is Google because Google believes that they have a God-given right to be able to take all of your content and then they would send you back traffic, but they stop sending you back traffic.

Why did Sam and Elon start OpenAI? Because they were terrified that Google was going to run away with the whole game. And so everything started effectively as a counterweight to Google. And so when you go to OpenAI, when you go to Anthropic and you say, “You should pay for content,” they’re like, “We will as soon as Google does.” And that’s the puzzle. That’s the trick. If I’m Sundar and I’m running Google, the smartest thing they could do is actually go and make a market because they have the most money. They have a profitable business–

SAFIAN: But it’s a cost that has never been part of their business model, right?

PRINCE: Totally. But in the future, AI companies are going to look more like Netflix than some university research lab. The thing that’s going to differentiate them, and you all intuitively know this, we see how the underlying model is a commodity. So what differentiates commodity? At the end of the day, it’s going to be who has access to unique data.

So if I’m Sundar, my strategy is to go out and say, “I’m going to do semi-exclusive.” You can’t do exclusive because there’ll be antitrust problems, but semi-exclusive deals with all of the most important content in the world, and that will lock them into being the winner going forward. What they’re doing now is they just have unique access. How much more of the internet does Google see than Microsoft Bing? For every one page that Bing sees, Google sees five. And when you look at those four pages that Bing isn’t seeing, there’s some of the most valuable content, especially for AI. It’s things like health, data, academic data, a lot of specific local information. Those are the things that are the most valuable for AI. OpenAI knows how important this is, so they are the second best, but for every 3.5 pages Google sees, OpenAI only sees one. So Google has this massive advantage. And when people were saying, “How did Gemini catch up?” And we can debate whether it’s better or worse, whatever.

SAFIAN: But it’s back to your point about data. It’s about data and–

PRINCE: All about data. And I think what the problem is, if we either don’t find a way to bring Google down and say that in the new world, you have to compete on the same level as everyone else or bring everybody else up, which actually is kind of interesting because I actually think that the AI companies, what they would pay to support journalists is actually not anything close to what they would pay to catch Google. And so maybe the answer to this, maybe the first move is to say, “Hey, OpenAI, you want to see those three pages that Google sees every time you only see one, here’s what it costs. And by the way, we’re going to distribute that out to the content creators.”

SAFIAN: But you have to create a marketplace for that–

PRINCE: Yeah. But then if you game theory that out, what happens? Well, all of a sudden, when content providers are like, “Wait, so why are we giving this all for free to Google?” Then Google starts to get restricted and maybe we actually get to a place – I am super optimistic in the media space that we might be on the golden age of content creation. And that what will get rewarded in the future is actually much better. The business model of, generate content, drive traffic, sell ads, I would argue maybe has led to a lot of the problems the world has today because what generates traffic?

SAFIAN: It’s whatever sharpest, spicy.

PRINCE: Whoever generates the biggest cortisol response, generates the most traffic. AI doesn’t care about that because all AI cares about is the facts. They want all the facts. And so there’s amazing things that journalists have that are incredible resources that the AI companies would pay a fortune for. Imagine you don’t just get the article, but you get all the journalist notes that were behind it. Now, and there are things you have to do around protecting sources and that stuff, but you can imagine a world in which you do that, that all of a sudden is this treasure trove that really does start to advance towards a media future the AI companies want to pay for. They have a mathematical model of human knowledge.

They also then know what the gaps are in human knowledge. They want to fill the gaps. It turns out I want to read the stories about people filling the gaps. I don’t want to read yet another story about what crazy thing happened in Washington DC yesterday. I want to read the, “Wow, I didn’t know that,” that kind of amazing – that’s what we all light up for. And that’s the thing that’s going to get rewarded.

My wife and I bought a small local newspaper in our hometown, it’s in Park City, Utah. We bought it because it was dying, and we think local news is important. What we did not appreciate was it actually might be that local news is a thing that is the most valuable going forward. We might make more this year off licensing our stories to AI companies than we do off digital media, digital advertising. Why? Because Park City, Utah is a place some of you go on vacation, when you go on vacation, you might want to ask your AI, “What’s the hot new restaurant in Park City, Utah?” And if you don’t have the Park Record, then you don’t know the answer to that.

SAFIAN: So it’s more valuable information, but to a smaller group of people.

PRINCE: Maybe to a smaller group of people, but–

SAFIAN: But it doesn’t matter because it’s valuable.

PRINCE: It’s valuable. And so I think that it’s those things. I would love it if the New York Times started reviewing hotel rooms. Is it better to stay in Room 1427 or 1429 in the Marriott Marquis? And that would actually be super valuable information. Those sorts of little hyper local things are way more interesting than just telling the same story with a slightly different bent. The thing that’s just terribly unfair to the New York Times that I keep saying, if you don’t license the New York Times as an AI company, just license the Wall Street Journal and then have your AI rewrite it as if it’s a New York liberal and you got the New York Times, right? Unfair, but there’s some version of that.

And it’s the reason why Reddit, the public numbers, Reddit got seven times, for the same number of tokens, seven times the amount that the New York Times did. Why? Because if you don’t have Reddit, you don’t have Reddit. There’s no substitute. Whereas there’s lots of substitutes for that. I think the media of the future is how do I create information and knowledge that there isn’t a substitute for?

SAFIAN: So I want to ask you a little bit about the value of brand. For you, how important is the brand of Cloudflare? I mean, you’ve been talking about the most important internet company that you never heard of, it’s like a backhanded compliment. But for you, how do you think about what the brand–

PRINCE: We schedule outages from time to time just so that people appreciate how much we — it’s funny, we have an outage, our stock goes up. It’s like, “That’s really weird.”

SAFIAN: But seriously though, how do you think about what the brand of Cloudflare should be and how important is that in the value that you have in the future?

PRINCE: So first of all, let’s talk about what brands are. Brands are just shortcuts for humans to understand value and quality, right? You buy Nike shoes and you have an expectation of what the value and quality is. If I say, “What’s it like to walk into a Walmart?” We all know exactly what that experience is like because we’ve all had it and the brand stands for that. What’s interesting is I’m not sure any of those things matter in a world of agentic commerce. What a brand is going to be radically different. And someone has to invent it because if we don’t invent what that is, then the agents are all going to be this massive force of consolidation, if you–

SAFIAN: Because all they’re going to do is go to whatever – they don’t care about the brand.

PRINCE: They’re going to go to whatever they think they’re going to be able to get whatever you want done in the most efficient way that will tend towards bigger consolidated plays. And so I’m actually optimistic about media. I am terrified for small business. Why do you shop at the small business you shop at? It is typically because it’s either physically convenient for you or because you have some emotional connection to them. Your agent doesn’t give a shit about either of those things.

I think the most interesting question in the next five years is what’s the future business model of the internet? I think that a sub-question of that is what is a brand in a world of agentic commerce? Let’s imagine that you could aggregate, here are all the things that people bought, here’s how many of them were returned, here’s the customer service response rate, packaged up into some cryptographically verifiable thing where an agent can come in and say, “Hey, I’ve never heard of this brand before, but I can see the customers are super happy shopping from it,” and then it rewards that.

If we don’t have that, again, I worry that what we’re headed towards is a world where we’re actually going to crush small businesses. We’re trying to work with the Visas and PayPals and Shopify’s and everyone else in order to say, “How do we get all this signal back in order to be able to identify that?”

For Cloudflare, I mean, we don’t think about our – we’re terrible. We don’t put billboards up. We’re terrible at all of those things. We’re throwing a party tonight and then no one even invited me, so that’s how bad we are at branding. What I tend to think about more is that we’re fundamentally in the business of trust and what we ask people to do is kind of crazy. It’s like, “Route all of your traffic through us and trust us. We’ll handle it all.”

So we have to just be very much aligned on how do we make sure that we live up to our mission? And our mission is to help build a better internet. There are so many times, someone will come in and say, “If you just did X, we’ll give you a hundred million dollars.” Why didn’t we ever get in the advertising business? It could have been huge. Just think cookies, we could have sold it. But at the end of the day –

SAFIAN: It doesn’t make for a better internet.

PRINCE: It doesn’t help build a better internet.

SAFIAN: We’re just about out of time, Matthew, but we’ve talked about a lot of things that maybe might make people a little nervous about the future. That’s what I want to ask you, if you are optimistic.

PRINCE: But the future’s going to be so much better. I guarantee you–

SAFIAN: So what is the opportunity that people aren’t seeing? What makes you optimistic?

PRINCE: You as an individual on your own can build something that will completely change the world and generate generational wealth for you. The ability for a small team to do just absolutely heroic things, it’s never been possible before. There is a world in which we only have one or two AI companies, where journalists, academics, researchers get crushed or go work for one of those big AI companies, which is I’m sure The Black Mirror version of it. But there’s another version where we create a world where anyone can start an AI company, where we make the resources as easy as possible, where everyone can start to create content. And what wins isn’t who pisses people off the most, but who wins is who furthers human knowledge.

If I were the AI companies, I’d be starting the Academy Awards of Content. They should give an award every single year for who advances knowledge the most, and they can measure it mathematically in different fields. And just celebrate that. And we can create a world where we actually then make it so that if you are a great entrepreneur and you build a better mousetrap, that everyone can find you and you can be successful and that you don’t get crushed because somebody’s got a bigger marketing budget than you are because you can actually demonstrate truthfully, not by some advertising shortcut, but truthfully that your product is better. That’s the world we should be building towards.

And I don’t know how to do it, but I think just articulating that we want lots of AI companies, we want lots of content creators, we want lots of businesses large and small competing in a fair market. And that’s what we should be playing for and asking ourselves what we are doing technologically, what we’re doing from a policy perspective, what we’re doing from a regulatory perspective, what we’re doing as consumers is it, are we moving towards that future or away from that future?

The next five years, we’re going to figure out what the future business model of the internet is, and all of you have the opportunity to create that. Imagine how amazing that is. It’s going to completely change. And you don’t ever see systems as big and complicated as that have these massive disruptive changes.

And so again, if you think your job is to argue for manual screwdrivers, you’re not going to have fun over the next 20 years of your life. It’s going to be hard. If on the other hand, you’re like, “Listen, I’m going to be open, I’m going to be curious. I’m going to try these things and I’m going to say that’s the direction of the future, but let’s make it as optimistic and positive as possible.” Again, I am 100% confident that tomorrow’s going to be better than yesterday.

SAFIAN: Well, Matthew, thank you so much.

PRINCE: Thank you.

SAFIAN: I learned something new every time I talk to Matthew about what’s going on behind the scenes in the tech world. I don’t always agree with all of his predictions. The future of journalism that he sees doesn’t quite fit my ideal, but he’s always thought-provoking. One clear takeaway, echoed by my chats with other CEOs, is the changing nature of the workplace. Executives believe that electric screwdrivers are taking over and they’re making decisions with that assumption in mind. Even for those of us who never used a manual screwdriver and who aren’t even trying to screw in screws, the expectations are shifting. Will that be good or bad? As Matthew acknowledges, that in part depends on how we respond. One thing seems pretty certain to me though, it’s going to be a bumpy ride for everyone. I’m Bob Safian. Thanks for listening.

The post The internet is breaking. So what’s next? appeared first on Masters of Scale.

AI bots are on track to outnumber humans online by 2027. No one has a better line of sight into that shift than Matthew Prince — his company, Cloudflare, routes more than 20% of all internet traffic. Speaking live from SXSW, Prince reveals how AI is rewriting the economics of the web, how tech giants are scrambling to respond, and what it means for anyone running an online business. Plus, what it's like to be on the frontlines of Iranian cyberwarfare, and why Prince made the unexpected move to buy a local Utah newspaper.

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Synthetic voiceover of Reid Hoffman used in this episode was produced by Respeecher with full consent and permission.

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Gary Vaynerchuk of VaynerMedia has produced more than a dozen Super Bowl ads for brands. In 2026, his hilarious "Will Shat" spot for Kellogg's Raisin Bran features actor William Shatner with a fiber-forward message. He talked with Jeff Berman about the bold ad, how marketing is changing, big brands' delayed embrace of social media, and more.

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Eric Yuan saw frustrated customers and wanted to make the product he worked on better – but couldn’t convince his bosses. So he struck out on his own and founded a competitor: Zoom. Yuan talks with host Jeff Berman about building Zoom into a massive player, how it handled 30x growth when the Covid pandemic hit, how he led the company through a painful round of layoffs, and more.

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TV host, producer, author, and UN Goodwill Ambassador Padma Lakshmi joins Rapid Response with candid advice for business leaders on speaking out, showing courage, and staying true to themselves, particularly amid the Trump Administration’s violent immigration crackdown. A passionate voice at the intersection of food, culture, and identity, Lakshmi shares how she’s shaking up food media with her new series America’s Culinary Cup, and offers a refreshingly human take on modern work life, including why she chooses to take zoom meetings from the comfort of her own bed. 

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On this episode of Possible, Reid Hoffman and Aria Finger sit down with Amjad Masad, founder and CEO of Replit, to explore how AI is fundamentally changing who gets to build software and what that means for work, creativity, and human agency. Masad traces his journey from growing up in Jordan teaching himself to code and connects it to his love of video games which helped inspire him to build a platform that turns natural language into working software. The conversation spans everything from why gaming mindsets make better builders, to how CEOs are rediscovering hands-on creation, to why “vibe coding” is the next form of literacy and why computational thinking is more important than syntax mastery. The conversation also digs into the future of AI agents, long-running autonomous workflows, and what it means to design environments for machines rather than humans. They also confront harder questions about jobs, fear, regulation, and society’s responsibility during a cognitive industrial revolution. The episode ultimately reframes AI not as a replacement for human creativity, but as a force that can return people to a more entrepreneurial, expressive, and meaningful way of life. 

For more info on the podcast and transcripts of all the episodes, visit https://www.possible.fm/podcast/

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