 Live from Cube Headquarters in Palo Alto, California. It's the Silicon Valley Friday Show with John Furrier. Hello everyone, welcome to the Silicon Valley Friday Show. I'm John Furrier. We're here with special guest Greg Sands. It's January 20th here in the Palo Alto offices of Silicon Valley Media Cube Studio with Greg Sands. A lot of stuff to talk about with Greg. We're going to talk about state of Silicon Valley. Okay, changes are happening. We're going to go in-depth inside the ropes of the venture capital process community. And we're going to talk about the ethics and the corruption. Is there corruption in ethics problem of Silicon Valley? Is it real? What's going on there? And also, let's talk about the unwritten rules of Silicon Valley. We're going to try to find out what's the secrets? Secrets of the VC community. And do the keys still work to those secrets? We're going to find out the unwritten rules. And obviously we'd love to talk about the mega funds versus the smaller guys. Seed versus the big Andreessen Horowitz of the worlds of Sequoia is the NEA's. You get the mega funds and you've got the small guys and they all have to work together. We're going to unpack that. And finally, Greg is going to share a story, we hope, on Hillary Clinton because he had a Hillary Clinton over his house for a big Silicon Valley fundraiser. And obviously she lost election to Donald Trump, who's being augurated this week. So we're going to get some color on that and see if Greg can share some stories or find out who was there. Then we'll know who's who. Great stuff Leonard. Good to see you. So inauguration this week, we're going to talk about that and the impact society in the world, certainly Silicon Valley will be impacted. However this goes, this huge protest is marching the women's with the cat hats that they're calling them and pussy hats is what these people calling them. So big action and Linda's got her, she's going to be marching this weekend. So there's going to be a huge dynamic in DC and it's a spectacle of epic proportions no one's ever seen. So certainly we'll be tuning into that. More M&A, a lot of consolidation. We saw HP buy a company this week with 650 million, well short of expectations of what people thought the startup would go for, a sign of a trend in the industry and the growth of the cloud is still happening. And of course, what does it all mean for startups, opportunities and for you in the Silicon Valley at market here in Palo Alto. I'm John Furrier, more of that with Greg Sands after this short break. Robert Hershivak. People obviously know you from Shark Tank but the Hershivak group has been really laser focused on cyber security. I actually helped to bring a product called Checkpoint to Canada, firewalls, URL filtering that kind of stuff. But you're also an entrepreneur, right? You've known the business, you've been in software, you've been in the tech business. You know, on Shark Tank you get a lot of pitches as entertainment meets business. On our show, we're a bubble. We don't do a lot of tech deals that we're talking because it's boring TV. Tech people love tech. Consumers love the benefit of tech. You know, no consumer opens up their iPhone and says, oh my gosh, I love the technology behind my iPhone. What's it been like doing on the Shark Tank? You know, filming is fun and hanging out is fun and it's fun to be a celebrity at first. Your head gets really big and you get a look at tables and restaurants. Who says tech has got a little pizzazz? More skin than a gray one. Today for us. In charge of his destiny. It's great. You guys are excited. Robert Rashidek. No. Easy to start. Of course. He's alumni. Grace Hopper is a community of women. It means community and supporting each other and mentorship. It's a lot of belonging in tech, which sometimes you don't feel outside. Grace Hopper means to me, it's like an opportunity to meet other women in the field and connect and really get an opportunity to see each other because it's hard sometimes being the only woman in a classroom of about 200 men, so it's good to see that. I think I'm really excited to see Cheryl Sandberg speak. Well, I read her book, so I think it'll be interesting to see what she speaks on. It's awesome to see all these companies and know that they're also looking for diversity and to get the opportunity to speak to them one-on-one, maybe get an interview, maybe get a job. All that stuff's really important. You're listening to the Silicon Valley Friday Show with John Furrier. Hey, welcome back everyone. We're here in Palo Alto for the Silicon Valley Friday Show. I'm John Furrier. My guest this week is Greg Sands, venture capitalist and managing director and founder of Costa Nova Ventures here in Palo Alto on Forestry, right downtown. Industry legend, in my opinion, has been around Silicon Valley for many years. Pillar in the community involved in a lot of philanthropy and a lot of charitable opportunities, but more importantly is investing in young stars and creating jobs, creating innovation, funding that and being a coach. It goes back to the Netscape days, that's one of the first product managers of the browser and has seen many cycles of innovations. Greg, good to see you. It's great to be here, John. Thanks for having me. Welcome to the Silicon Valley Friday Show. Look, I wanted to talk to you because you and I have had conversations about the Silicon Valley and there's so much going on and changing around Silicon Valley. You've been here for many, many years. You live in Palo Alto. You have kids in the school systems and you understand the Valley. Probably better than anyone that I know around. It's vibe, it's community, it's engine, how it works and how it's changed. So I want to get your thoughts on Silicon Valley because at a big picture, the Trump election kind of highlights a lot of sentiment that some people feel at Silicon Valley is out of touch. I've heard people say that. Certainly the Fox News crowd, looks like Silicon Valley, a bunch of crazy people. Crazy people, that's what Steve Jobs says, the crazy ones, right? The crazy ones make things happen, but also it's a culture of not just the crazy entrepreneurs that create the big C changes in value, but other entrepreneurs and it's a system here. It's kind of like a sports team, right? There's a certain offense system here. You're part of. Your thoughts on some of the big things that are happening that's going on in Silicon Valley? Well, I think first and foremost, it's an extraordinary place. I moved here in 1992 and it is now, I feel like it's my community and I'm deeply embedded with it and it's an amazing place. People are smart, they're well-intentioned, they're working really hard, they're trying to do things that they think are meaningful and mainly can contribute to society and make a difference in people's lives. And they work really hard at it and it's a thrill to be part of and it's an incredibly impressive place. Now, it is a place that has its challenges. Obviously the infrastructure around housing and transportation are totally inadequate for what this place is and what it does. And I do think that the election highlights the fact that the economy is really fragmented and it is, so I was on the other side as you point out and so personally disappointed, but it is what it is, the country voted and at this point I want the best for the country and so I hope for good governance and I hope for good policy and I think actually all Silicon Valley wants is a good steady hand and I think there are some areas of opportunity, repatriation of profits that could lead to both broader investment in ongoing technology and potentially more M&A, which would be good. I think the country has been totally sclerotic on actually good immigration policy and I don't know that either side has had it completely right and there's some areas of risk and I think trade is an area of risk. Well, I also want to talk about debunking some of the myths of Silicon Valley. Certainly the HBO series is a parody and some people think that's the way it is. I mean like Animal House, an old college movie depicts college as crazy toga parties. I mean, it's like the best or worst scenes of college kind of rolled up into one. Caddy Shex, another classic movie. A lot of these parodies kind of like overplay but they kind of get it right but don't get it right and that's kind of the way it is but I think that's something that needs to be talked about but the other thing too, more importantly, that's kind of controversial and really relevant is the election. I mean, if you look at the Trump meeting here with all the technologists out there, the big meeting in New York, Trump Tower, Tim Cook, all the top executives are there. Cheryl Sandberg was there, Mark Zuckerberg wasn't there. The people in the seating chart are almost by how many overseas dollars they have. You got Cisco was there, they got 60 billion, Apple 200 billion overseas. This is a big thing and I know that you hosted Hillary Clinton. What was it like to do that and what was the vibe in Silicon Valley? What was the big focus around that? So share some Hillary stories. Well, so first it was a real treat to have her in the house and to be with us. I think the thing that was so interesting to me is she spoke extemporaneously for 60 minutes or something and it was a policy wonk speech and for me and for the Silicon Valley audience that works really, really well, right? Somebody who's smart, serious, well-informed has a clear point of view and is a lifelong public servant. Now that same speech and that same orientation doesn't necessarily play all that well throughout the country. And I understand that and that's part of what happened. But I think there was an enthusiasm and a sense that we had the opportunity to continue to make incremental progress on some important things, including continuing to be more inclusive, embracing diversity and the like. And so I think along items like that, the election was a real shock. We had the opportunity to have Tim Kaine in our house shortly after the election. It was part of his really thank you tour for people who'd been active in the campaign. And I have to say that people were very shocked. There were a lot of everybody licking their wounds. Everybody, I think, had to a bit come together. And you know- What's the big thing about Silicon Valley that people don't understand? Because I think one of the things that I'm sensitive to is, I mean, I'm from the party of business. To me, it's all about the business landscape because I think the policies that promote innovation and promote entrepreneurship really are key. Some kind of a libertarian meets Democrat. I don't know what I am, but all I know is that I like to be, see aggressive liberal policies and conservative fiscal. But the point is that people were saying, oh, Silicon Valley, the narrative on Silicon Valley is off in my mind. What are people looking for in Silicon Valley that they saw in Hillary and that could be explained to someone on Main Street USA? Well, I think, so there are a couple of things to note. One, I think Silicon Valley was generally more engaged in 2008 than in 2016. And so I think that actually the campaign had to come to terms with why that was and how to try to galvanize it. And so there, I wouldn't say that there was a huge, that Silicon Valley came together in a new way around the Clinton campaign and around 2016. But I think that the thing that's missing, and I wrote a piece that was in TechCrunch about 18 months ago called The Real Silicon Valley. And it really, I think highlights this idea that, by the way, HBO Silicon Valley is hilarious and it's funny and there are current rules of truth in it. And at the same time, the vast majority of the people here really care about what they're doing, really thinks it makes a difference. And so there are, my partner, Neil Okiogrosso, sometimes says there are two Silicon Valleys. And there is one that is fast and loose and that is trying to make a buck and that is flashy. And there are some extreme examples of it and frankly, I'm embarrassed by them. And then there are a bunch of people that are serious, substantive, smart, hardworking, care deeply about their community, care deeply about the world and are trying to make things that they care about using real complicated, hard technology. And that's where I live, that's where we live. That's where you focus on. And yeah, and I think it's actually a much bigger part of the ecosystem than the all hat, no cattle, flashy thing that gets represented in the public media and in HBO Silicon Valley. I mean, the bad stuff, I mean, there's always bad actors but in the past it was always eradicated through kind of a community protocol, if you will. There's always been that unwritten rule of Silicon Valley. What are some of those unwritten rules of Silicon Valley that people should note to themselves? I mean, obviously, fast and loose and lie and cheat your way to make a few couple million bucks. We've seen that, I've seen that many times and people flee the jurisdiction, move to Seattle or Nevada or go back East. People come in and out, take some cash out. I'm not sure that's an extreme example but what are some of the unwritten rules that you see? Actually, let me answer a slightly different question because there's been this theme out there that Silicon Valley has a corruption problem or a morality problem. And I think it's actually, it is false. So Silicon Valley is made up of human beings and human beings have a corruption problem and a morality problem. I think they are actually no worse here. And Wall Street. That's right. Or. So, you know, Wall Street isn't here. Atlantic City. Enron wasn't here. Worldcom wasn't here. You know, in the scheme of things, the, you know, the Theranos example from all that I can tell and read is, look, it is a terrible thing. It is a tiny company in the scheme of things and it is a company that did not withstand the scrutiny of serious venture capitalists. All the serious venture capitalists turned it down. And so I think actually there are examples, Theranos being foremost among them, but they're few and far between. And I think the idea that Silicon Valley fundamentally has an issue with morality is wrong. Now, I do think there's another one. Silicon Valley has an issue with the intensity of it and the pace of it and the challenge of it creating mental health problems for founders and CEOs who have incredibly high expectations of themselves and of the people around them. And I think to me that's a real thing. And it's something that Brad Feld and others have done a great job of bringing to the fore. Ben Horowitz with his, you know, book The Hard Thing About Hard Things has talked about those kinds of challenges. And I think that's, you know, that's a real and systemic challenge that I'm really glad that we're talking about. My phone's buzzing off of how people love this commentary because I think you bring up a lot of things that people are just kind of talking about on some medium posts here and there, but for the most part, mental health. I mean, look it, I'm a case in point. I mean, I can thrive and survive, but you know, you can burn out. I mean, not that I'm burning out, but I mean, it's Silicon Valley accepts people of diverse backgrounds. And that's really been a key part of Silicon Valley. But you got to be able to run at a high stress level. I mean, this is, you know, it is a high stress level and you got to be, figure out how to take care of yourself. Leonard, we got to take care of ourselves. We do a hundred events last year. I dropped dead on the cube, but I swear that's going to happen. No, seriously, this is important. I mean, mental health is a lot of pressure. I see so many founders. Really, they have no coaches. And I think this is becoming a new role for venture capitalists, not just grind, you know, carrot in the stick, you know, pounding the entrepreneurs. This is a new kind of protocol developing around nurturing, I don't want to say cuddling or nurturing, cuddling is a bad word, but, you know, coaching founders because it's lonely at the top. It is really lonely at the top. And I think it is a great venture capitalist and there are many great venture capitalists and many who aren't, but there are many great venture capitalists who can be extraordinary coaches to these kinds of founders. And I think it's also worth understanding that when there's money attached, it's also a little different. And so the idea of building an independent board or finding an external coach is one that, and it can be a professional coach or it can be somebody who's been in the CEO role before, is incredibly important because people need a place to pull off steam and they need a sounding board. Bill Campbell was a great example, you know, God speed to him, he passed away, was a coach. And all he did is call it as he saw it. He was basically not confrontational, very supportive. We're here with Greg Sands, Managing Director at Coastano Adventures here in the Silicon Valley Friday show. We're going to talk more about, you know, some of the things happening, you know, the landscaping, you look at Andreessen Horowitz has now kind of vertically integrated Silicon Valley, kind of a stack and bring everything in-house. Some have more of a distributed approach, but the one constant we'll talk about on our next segment is Silicon Valley has always been kind of a team sport. At least my observation, I've heard that term many times. And, but it's also got this Hollywood flair thing going on. So to your point about some of the extreme examples of, there's a lot of money around, there's a lot of cash flowing in Silicon Valley. We'll be right back with more with Greg Sands after the short break. This is Silicon Valley Friday show. Since the dawn of the cloud, the cube has been there. Connecting with executives, practitioners, entrepreneurs, thought leaders. But you're not a thought leader anymore. You're a futurist. That's the new trend. The futurist is the buzzword. No, I'm not. I'm very much living in the past. I don't like the future. I don't think much of the present. John Cleese. There's a lot of people out there who have no idea what they're doing, but they have absolutely no idea that they have no idea what they're doing. And those are the ones with the confidence of stupidity who finish up in power. That's why the planet doesn't work. Knowledgeable, insightful, and a true gentleman. And the guy at the counter recognized me and said, are you listening? Yes, I'm tweeting away. I'm tweeting, I'm tweeting away. He has got rude that way. F***ing keyboard. John Cleese joins theCUBE alumni. Welcome, John. You got any phone calls you need to answer? Hold on, let me check. You're listening to the Silicon Valley Friday Show with John Furrier. Okay, we're back here with Greg Sand from Silicon Valley Friday Hour here as well. Been an executive, been a product manager at Netscape, way back in the day. Seen many cycles. Greg, you're also involved in a lot of philanthropy here in Silicon Valley. I know just to put a plug in, I know for the folks may or may not know, but you're very humble, you're not out there and standing as a venture capitalist. Some do that. I've seen some examples of that. But you're also involved in a lot of philanthropy at Stanford, entrepreneurs, and some things. Your wife, Sarah, is super involved, brilliant, and she's awesome. You guys do a lot of work in the community. What are some of the things you're working on now? I know I mentioned the soccer team that you do at Stanford because Carolina are always watching that. Great stuff going on. What are you working on now? Well, so I've been fortunate to be involved with both the separate endowment of the Stanford Athletics Department for 18 years now, which is exciting to be part of the world's greatest athletics department, and also the Stanford Business School. So those are two places where I've been involved. Several friends and I co-founded a microenterprise program in East Palo Alto that was in 1993 and was on the board of that for 10 years. It is now part of the Renaissance Entrepreneurship Center, which serves the underserved entrepreneurs throughout the Bay Area. It's an institution whose headquarters is in Southamarket, but serves up in Marin City and Hunter's Point in East Palo Alto. So a gateway for entrepreneurs to get support and funding for ideas. That's correct. And so we hosted, brought a bunch of people and hosted a table at their annual event just two months ago, and it is stunning to me to see entrepreneurs who don't have the same access to education, to financial resources, but incredibly empowering. So there was an entrepreneur from Hunter's Point who said, you know, I basically, I could start a company or I could go to jail, and I decided I was gonna start a company, and I basically bought myself a mop and a bucket, and I went through the program, and I honestly, and I just started cleaning offices, and I now employ people from my community, and I take teenagers off the street, and I give them a job, and there's nothing better in the world than seeing a story like that. And also you got the other side on more of the higher end, Stanford. I mean, when I moved out here in 1999, I was blown away, and it's gotten so much better campus, the business school's got a new building. It's just a great university. I mean, it's just got all the elements of great, great place. It's beautiful, what is perfect, and the people there are pretty smart. Of course, I got to ask you about Cal because they're the enemy. So honestly, I was not, I went to business school there, I was not a Stanford undergrad, and I may feel differently had I been a Stanford undergrad, but honestly, I think Cal is a national treasure. The public universities in our country, you know, Cal, University of Michigan, University of Texas, University of Virginia are national treasures, and I want them to be great. I want them to be great every day. There's always that rivalry between Cal's computer science program and Stanford, which is great. I mean, entrepreneurship's both thriving in both places. Yeah, at that level, to me, there isn't competition. Everybody wins. This is not a zero-sum game. They can both be great. We want them both to be great. The world is better if they're both great. The country is better if they're both great. One of the things that's happening in the business and in the world is integration of things. Old things are now being integrated. We saw hyperconverges and storage, HP just bought SimpliVity in business school in Stanford. You see integrated engineering, business school programs, entrepreneurship's integrated with this. The cell phones are now integrated with the computer. That's called the iPhone. What's this venture capital analog to integration? I mean, we see Mark Andreessen doing with Andreessen Horowitz. In my opinion, I call it the Silicon Valley stack. He basically, as an entrepreneur, said, hey, I'm going to do it my way, and I'm going to take all the elements of the distributed Silicon Valley and put it into one stack, own it all, cradle to grave, and not play with anyone else. So is that true? Or am I overstating myself? I think that the, so, by the way, people love that model. Some don't, some do. Yeah, I think people have different points of view on it, but they clearly have, look, it's a firm that's not quite 10 years old. They've done an extraordinary job, and they've done a, and it's their, you know, Ben and Mark, who I work closely with, at Netscape are extraordinary people, and they've built a terrific firm. Our former CEO, Jim Barksdale, who had all of his Louisiana aphorisms, used to say, there are two ways to make money in the world, bundling and unbundling. And basically, Silicon Valley, just like all of these other trends, they go through these periods where they stratify horizontally, and then they integrate vertically, and then they stratify horizontally again, right? And so you think mainframe vertically integrated, then you have the wind-tell system that stratifies everything horizontally, and then you have things, you know, basically reintegrating, right, into cloud stacks. And so those trends are cyclical in their nature. So I do think Andreessen Horowitz forced the hand of a bunch of the traditional firms, and I think for any firm, to me, the question is, how do you have a clear strategy and line up the set of resources to support that? So for us, we are an early-stage investor, series A and C, we invest in companies that change how the world does business, and we have aligned a set of resources, which is... Well, you're a small firm, but you guys are very focused. We're very focused, we're a boutique. You're not a mega-fun like Andreessen. Not at all, but we have two operating partners, Jim Wilson in sales, Martino Lauchenko in marketing, to help product-oriented teams do initial market entry and scale faster and more efficiently. And so it is tightly constructed around that, and I think... I like your model for the folks watching. If you're an entrepreneur, you should contact Greg. He's a great, great entrepreneur-friendly value add, not a value-subtract VC, so I'll give you a quick plug on that. So you guys do a great job, and I endorse you guys 100% and would validate that. But the thing back to the trends of the mega trends is that Andreessen Horowitz, by the way, we had Alan Cohen on who's with Illumio. He's a COO there. He's been twice funded in Nesira, and then him. He thought I was kind of crapping on Andreessen Horowitz. I was actually giving him a compliment when I said that they're doing it their way. And it's interesting because you worked with Ben in market Netscape, and then Opsware was their next venture. These guys are entrepreneur, battle-tested entrepreneurs, both good and bad. They've been... They've seen the... They have fought the wars, man. They have fought the wars, absolutely. They've seen the ugly, either, and Ben Horowitz's book is phenomenal, but these guys are purest founders. So they just said, hey, I'm going to build a founder-friendly mega fund. So here's the question to you. If you were a limited partner, the folks at Harvard and Downman, right in the big fat checks, and in comes Mark Andreessen and Ben Horowitz, you know, the scuttle butt early on was they were people weren't sure if they were going to be good venture capitalists. Now they're kicking ass. So begs the question, how do you get into the business? You know, I mean, they might have had an easy time because they're celebrities, but still, even those guys at that level of pedigree had some challenges during the fundraising process. Yeah, but not that many. I mean, and I would say, of course, knowing them the way that I know them, there wasn't a question as to whether or not they would be great and they would give it their all and they would think from first principles about what to do and how to do it. There's a totally separate question, I think, in general around mega funds and whether mega funds are either where you want to be as an entrepreneur, given their specific and unique requirements, right? Meaning, you know, so. The question, can they endure the, get the exits to support their model? That's the big question. Look, anytime you've, for anyone who has a billion dollar fund, the idea that you have to return four or $5 billion, it's just hard to do. NEA is raising a $3 billion fund, which was announced yesterday. You know, so they're gonna have to return, yes. Really, we gotta get on that news. That's right. So they're gonna have to, you know, return nine to $12 billion out of that. It's just a very hard thing to do. It's really hard. And when, you know, we go back to the earlier conversation. If you say, is there something about Silicon Valley that puts undue pressure upon entrepreneurs? And there are times where that pressure to say, oh no, the billion dollar outcome isn't enough. It's got to be a $5 billion outcome. Go, go, go. Is one of those sources of pressure? Well, this is my point about the teamwork. NEA is a great example. They're a great firm. Again, I like those guys, but you know, they're so busy trying to get that $3 billion exited out. So they're not going to really be there for the entrepreneur. I'm not saying they are, but in general, they just don't have enough cycle times to nurture the young up and coming. So they're more of a growth fund. They've probably got a lot of cash put to work. So they have to put big money out there. So that changes the landscape. And emphasizes the early stage piece big time. That's right. Again, without casting aspersions on any one firm, I think when you have a billion dollars, it's very hard for the Cedar Series A investments that are two or three or four or $5 million to look like they're going to move the needle. And therefore the question of whether you get the time and attention of that group in the same way that you would as a dedicated early stage fund. To me, that's an example just to take the point. The $3 billion fund is necessarily a one size fits all. And I do think that there is much more, as Silicon Valley has gotten bigger and more competitive, it is specializing. And that is an inexorable trend and it is continuing to specialize. Yes, we're with Greg Sands here, Managing Director of Cusino Adventures here in the Silicon Valley Friday. I should talk about Silicon Valley and the impact and kind of exposing to the curtain to the VC dynamics here. And it's important because you have different approaches and entrepreneurs, the biggest decision that you can make is to choose who you take money from. That ultimately will set the trajectory and I think it's super valuable to get your insight and reaction. So here's something you'd like to get your reaction to. Okay, I'm an entrepreneur. I need to make a big bet. I'm gonna spill my life out on the line here and start a company. Hopefully you're single, don't have married kids like me. But it's hard picking that venture partner. What's the criteria? What's the criteria for that entrepreneur to look at? For having a true value-added early stage investor, what's the criteria for the look forward? Yeah, I think the, and so by the way, it's interesting. I was insulated from fundraising when I was at my former firm, Sutter Hill, which is Evergreen Fund. I now have the experience which any entrepreneur has of being out trying to sell your story and I have much more empathy as a result. And I think what comes in the end, what you're looking for is what I would recommend to an entrepreneur is one, pick up both a person and a firm that you like and that you trust. You want them to understand your business. You want your business to fit into their business model. Making an exception for you. Give an example. Well, so let's just take the, so if you have a seed investment in a $1.5 billion fund, not likely to get that much time and attention. On the other hand, if you say, hey, you need $10 million and you come to Costa Noah and we are willing to stretch to write a $10 million check. That's big for you guys. But it's big for us and therefore puts us in uncomfortable territory. And the question of, do we have the reserves to support it over time? That's actually not healthy for either side, right? So I think you have to understand the firm, their business model, what they focus on and whether it fits into the core of their expertise. And also to just throw out there that entrepreneurs also need to, to your point, if you stretch a $10 million check, that's not your model. You're in the one to five range, seems like what we've talked about in the past. Yeah, two to six, yeah. Two to six, depending on the opportunity, but walk around money for the entrepreneur to just get started. Start tinkering, build something. You guys are heavily involved. That requires feeding up to the next level. So now your job is to business model is to schmooze NEA and everyone else to write the big fat checks. So you're kind of growing the crops, if you will. Well, I think our job is to help the, I mean, literally the, so there was a book, a novel written 10 years ago called the first 20 million is always the hardest. I'll call it the first 10 million. In revenue, or raising, or both. In this case, I think of revenue, right? So getting to five or $10 million in ARR, our job is to partner with the entrepreneur and to help them get to the point where they've got four or $5 million in ARR, they've got healthy unit economics, lifetime value to customer acquisition costs, and they're growing quickly. And they've done that on a stable foundation with a clear customer focus and a reference base. And when that happens, raising the next round isn't hard. If you have that. If you have that. And so, so when, you know, one of the things that belongs on that list is, hey, what's the value add of your firm? And I think to me, the thing that I'd say is, one, you do want a value added partner, but first make sure they do no harm. You know, it is, you know, I don't know if I can say this on the air, but the no asshole rule applies because a venture capitalist is an executive who you can never fire as long as the company exists. Right? So one, no asshole. You get a vet amount. That's right. Two, understand the areas of expertise and value add. And three, reference like crazy. Do not take anybody's money until you've done at least five references with entrepreneurs that they've worked with. How do you spot an asshole in the process? Because sometimes they're good at hiding, you know, and given the schmooze and next thing you know, you're got to deal with someone. What do they look? What's the attributes of an asshole in your mind? I need to look at some signals. I mean, I'm trying to get a mental model. So the obvious ones is, you know, people who, you know, are lying and cheating, Well, no, I think lying and cheating is not, is, yeah, that's an easy exclusion, right? I think the, so people who act like know-it-alls during diligence usually act like know-it-alls in board meetings. So that's one, right? People who like to tell people what to do during diligence usually like to tell people what to do in board meetings. And to me, it's wonderful to have a great debate and to have boards where people have very different ideas. So, you know, at Return Path, I was on a board where we have Brad Feld, Fred Wilson, Scott Petrie, who was the founder of Postini, and Jeff Epstein, who was CFO of Oracle, and there are different points of view. On the other hand, that whole group understands that management runs the company. So they can get the feedback and then- So it's a good board, good board. It's a good board. Management synthesizes it and takes responsibility for what happens next. I mean, I always say to the entrepreneurs, interview your VC. You should interview them, not the other way around. You should do, to your point, do the due diligence the other way. References, references, references. Got it. So great stuff here on Inside the Ropes and the VC world. Let's talk about what's going on in the industry. I mean, I'll see there's two major trends going on, the societal changes, social impact with AI, autonomous vehicles you're seeing, all kinds of new morality and societal questions around grocking the impact of something, outside of the policy base, net neutrality is important. And then on the landscape side, you see the big whales, the HP buying, companies start-ups, IBM, Oracle, Amazon's killing it in the cloud. And now new entrepreneurial environments emerging with cloud. And Aussie Mobile's been around for a long time, 10 years, with the iPhone this year. Your thoughts on the landscape, the cycle we're in, where are we? Well, I think, so I'd separate technology trends from macroeconomic trends because they're completely different cycles. And they're just superimposed on one another. And the technology trends are really interesting. I mean, the role that AI plays is, I mean, it is gonna be transformational. It is already transformational. The thing that's interesting is, for I think most of the public, it feels like a new thing that just happened. But what has really happened is it's proliferation of sensors and data, the rebuilding of the data stack so that you can manage and handle all that data, the creation of the compute capabilities in the cloud. And that combination is actually what has unleashed AI because, as you well know, for the most part, better data trumps better algorithms. And so- Love that quote. It's awesome. I agree, 100%. And the, but it is for sure going to transform trillions of dollars of the economy, sector by sector, function by function. And it's very interesting. There are a set of policy questions and a set of questions about how we manage the economy in a time where automation is gonna affect a broader set of jobs and white-collar jobs. And those ones, they're tough questions and they're important for our society to address. I don't think, I don't know the answers yet and I don't know if anybody else- Well, they're all first-time problems. And I think this is to your point about having high-quality individuals in the community vetting and working together because it's going to be a community problem. I mean, it's everyone's society, it's everyone's problem. On the more specific tech landscape, obviously the data center, which we used sold into in funded companies, storage networking, all that stuff is moving to the cloud. So essentially I had Doug Gorleon two shows ago and he was a call-in guest. He goes, John, I spent my entire career building boxes to be sold into the data center. So I spent my entire business working life building products that no one wants to buy anymore. And 34,000 people showed up at Amazon re-invent and their whole purpose was not to buy hardware. And I'm like, so his hardware. So he's like, you know, he's at a risk to after Cisco. So he's a Cisco guy. But his point was is that that's industries are going to be crumbling. It's fascinating. I mean, it's an incredible transformation and I think you go back and it must have been seven or eight years ago when I was president of the Western Association of Venture Capitalists. I hosted a panel, put together and hosted a panel with your prior guest, Steve Lucas, when he was running Forrest.com with Tom Stockey now at Facebook, but who was working on what is now Google Cloud at the time. And Adam Salipsky, who's now running Tableau, but at the time was at AWS. And it was not yet clear who the winners were. That was the DevOps pioneers back then. That's right. And it was fascinating to see that at that time already you could look at it and say, it's not IBM. It's not HP. It's not AT&T. It isn't Accenture. It isn't any of the big systems vendors. It's fascinating that those are the early leaders. Now, then it's also fascinating that even within that group, Amazon has completely run away with it. And both Microsoft Azure and Google Cloud are trying hard to catch up. Microsoft's got a great comeback. Absolutely. Both of them have the ability to says Google have the chops to make it in the cloud. Diane Greene's bringing the enterprise playbook over there, but can she assimilate in the culture? What's your reaction to that? Because I was, I'm trying to figure that out because we're at the cloud show coming up. They got the Google Cloud. I think she's a great executive. Obviously ran VMware knows the enterprise. But does that playbook come into Larry's world? Larry Page, Larry Page is very academic. And it's like a mini Stanford over there at Google. Yeah. So I have no insight into the internal politics of that and whether she can get things done in that environment. I do know. So just like you and I spent a lot of time on the soccer side lines, Diane and I spent a bunch of time on the soccer side lines with our older kids. And she's a tremendous executive. She's incredibly thoughtful. She's very driven and she knows what she's doing. So I think it's frankly good for the venture ecosystem and the entrepreneurial ecosystem for Google Cloud and Azure to be serious and legitimate competitors. And it is, this is an industry that's generally thrived on heterogeneity. Yeah. I think she's a great job. By the way, we've covered in the Google conference here in studio, we're trying to get space but it's pretty much sold out Azure same thing. As we go to reinvent as you know, four straight years covering that like a blanket at Silicon angle to cube. But you mentioned the impact of Silicon Valley. I think that's the big one. Do you think the Seattle things going on? Because Seattle is not Silicon Valley. I mean, we do a Seattle show up there someday with Microsoft and Amazon but there's a huge cloud power base update with Amazon. You mentioned Tableau in Seattle and Microsoft. Impact your world at all. I mean, VCs don't mind jumping on a flight to Seattle. Yeah. I mean, certainly we're happy to get on a plane. We've got cluster of companies in Boulder. We got a cluster in Manhattan. We go up to Seattle with some regularity. I think, you know, interestingly, Microsoft, which is of course the original Seattle company didn't create startups in quite the same way. It's alumni didn't in quite the same way. But now when you add in the Amazon ecosystem and Tableau, I think you end up in a different place. And my expectation is that it'll be a terrific startup and entrepreneur. Have you had Bill Gates over your house? I have not had Bill Gates over at my house. Yeah, a lot of story. So you had just folks, this is Greg Sands the Managing Director, cost of no adventures here on the Silicon Valley Friday show. Earlier we were talking about Hillary Clinton. You had her over your house. Tell us a story. I mean, give us some insight. Like, did she trip? Did she stumble? Was she on the, did she have a good time? What was, what, what happened? Was there any surprises? Good, good or bad or interesting to talk about? Well, I'm sure you're not gonna say the bad stuff. No, no, I mean, by the way, she was great. She did trip. And the whole team around her were great. To me, the interesting thing was when Secret Service came in a few days before to validate, you know, the first time they came in, which was a couple of weeks before they looked around and they said, okay, we like it because every room has two exits. We gotta think about if something happens, how we get her out and the like. So seeing your own house through their eyes is particularly interesting. But to me, the best anecdote is that I was trying to get a workout in just to kind of clear my head right before the event started. And in the hours leading up to it. And so I was literally in the downstairs in the basement working out in my own downward dog position. And that's when the bomb sniffing dogs came in. And so the bomb sniffing dog found by underbelly, shall we say, as I was sitting there trying to focus. And it turns out, as you would, so the bomb sniffing dog. The dog whirls all over you, right? Exactly, exactly. I'll just say I was surprised. But as it turns out, the bomb sniffing dogs are actually Santa Clara County. They don't put those on the plane. They're not part of Secret Service. And so- They outsourced the dogs. They outsourced the dogs. So you've got this whole consortium of security personnel. And- Was Tim Cook there? Tim Cook was not there. Tim Cook was not there. Who were some of the people over there? Can you share some? Was that too much breach of privacy? Well, I don't know that I want to breach their privacy, you know, honestly. So, by the way, I think people's political opinions- I did drive by a few times. Yeah, look, it was wonderful. And there were a lot of people from the business community there, and- Greg lives right down the street from me, so I drive on Hamilton. That's right, absolutely. And they are perfectly, you know, so I'm fine with people expressing their political beliefs, but I don't want to express their political beliefs. So I'll leave it at that. That's cool. I'm sure everyone's there. Yeah, everyone's there. I mean, Mark Zuckerberg's going to run for president, rumor has it. So maybe he can walk down the street to your house. Well, as we know, there are many Silicon Valley executives who are rumored to be thinking about running for office. And- Peter Thiel, governor. I mean, mayor of San Francisco against Karishwisher. I heard a rumor there. He's going to go head-to-head with Karishwisher. That is a battle I would pay to see. Great, I'd take Karishwisher any day. Greg, great. Thanks for coming on the Silicon Valley Friday Show. Great to see you and congratulations on all your success. And thanks for sharing your insight and reaction to some of the trends of Silicon Valley. My pleasure. Very happy to do it. The Silicon Valley Friday Show, Pella Welto in our studios here at the Cubes headquarters, SiliconANGLE Media. I'm John Furrier. Thanks for watching.