 So, welcome everybody, it's really nice to see you all. Let's start with a quick introduction for someone who needs no introduction. But for those who are still curious, Peter Fenton is the longest standing GP at Genchmark and he has backed epic companies such as Twitter, Zora, Airtable and Elastic to only name a few. As such, he's also a perennial member of the Meet Us list since 2007. I'm Jeanette, I'm a founding partner of La Familia, a pan-European venture firm, picking the best founders at Seed. One of our biggest wins were Deal, Personio, Fortone, Applied and Tuition. Let's dive right in, Peter. It feels like every week something controversial is happening in this industry. You've been on the board of Twitter for nine years. What do you make of the current situation? Is this a recipe for positive transformation or for destruction? You know, it is a company, most people here I assume are on Twitter, have points of view about its future and it's a company that has always felt to me like it would outlive all of us. In an adventure career, you know, you try and get your company public and very rarely do you brush up against something that feels like Wikipedia or, you know, for that matter people have compared it to e-mail. So Twitter has this sort of inevitability feeling to it and we tried, I invested in early 2009, I know Evan's here and we did our best to build a business around it and we inherited a number of, I would say, pathologies and culture and, you know, we, I witnessed three CEOs, 15 heads of product, I could go down the list of, we shot it in every major organ and we didn't kill it and that part of that is the humility of being on a board and saying you could make a lot of mistakes and still have a company survive. And the question with Elon, which I think is ultimately a good one for us to witness in the industry, is a fundamental A-B test where how do you change culture is a big question for companies once they've gotten past that first formative stage. We always say that culture gets formed in the first, you know, two to three employees and at Twitter the culture change required, needed it to go through something cathartic and when Jack took over as CEO, you know, the change was I would say incremental and I think Jack wanted to change it fundamentally but he didn't and so with Elon coming in and saying half of you are gone, there's a completely new reality and all that, I almost think it doesn't matter as much as we like to have the great man theory, maybe not in Finland but in the United States we have the great person. I think it could be anybody that just said half of you are gone, now let's just do more stuff and see what works and we're likely to see, I think my instincts are that we're going to see major areas of opportunity and growth amidst the mistakes which people can point to but my sense is that and I have a bet with my partners, you know, in five years is Twitter going to be worth more than the NASDAQ at the close of the transaction and my strong instinct is it will be. Not because Elon is a great man but because the underlying possibilities of Twitter haven't really been manifest, you know, at last thing I'll say on this is when you invest in a company you kind of have a genotype of the company and that leads you to have a theory about the phenotype, like what when Twitter was blessed with I think a hundred billion, maybe a five hundred billion dollar genotype and our phenotype was a 30 billion dollar, didn't feel very good. You might think oh it's Twitter, no but the potential always felt in order of magnitude more than what we were manifesting. So the stories of today, the Ako Chamber of the Valley are all the mistakes that will be made but you know what Twitter should be making those mistakes and we were so guarded and defensive and closed that Elon coming in and disrupting it I think is one of those, Jeff Bezos is a large investor in our fund and we had a conversation with him about the style of leadership that Elon brains and you can point to all the things that he does that are in the what you don't do as a manager and he's sort of they're book written, there'll be books written about Elon's management style I think that a little bit like Steve Jobs you know it's not so clear you should emulate it in fact it violates many of the tenants of what people would say is good general management but the thing he gets right and I think ultimately Twitter is going to benefit from is to have radical aspirations and leaders set the horizon of the possible and I think Elon will do that for Twitter in a way that it needed and he's done that for the test law obviously SpaceX and so that line of what's full potential Twitter look like and then having radical faith and then telling the team well that's the target oftentimes if you say that you know people laugh at you and like well that's just delusions it's not visions of hallucination but I think there's there are people and Elon is one of them who say it in a way that then reimagines what's possible for those people showing up to work every day and it's a gift of his leadership and I think it's one of things that the Twitter will will benefit from and I don't know my there's a there's a there are other sides of the bet that I made in our partnership so I could be wrong but it's interesting right most founders only emphasize the upside I think he said very clearly we could go bankrupt if we don't get this right I think it's an interesting well you know it and that's part of Elon's magic where it's I don't share his value system there's a whole bunch of things that he's done that I wouldn't do but you know activating the individual sense of the possible also requires you to recognize that you're in the spine of a mountain and you could fall off either side but that you know that's what Twitter needs more of today then it's going to be okay it's all there'd been a learned helplessness inside of the company and I think by shocking the system it activates a part of the organism that was that had laid fallow speaking of culture which I mentioned earlier jumping from one bomb to the next FTX what do we make of that as an industry you know it's it's such a tragic story I think the you start with a sense of me at least compassion some people start with shame and judgment and that's suitable here too but you know what happened was the runaway train and I think if you look at Enron or other situations where people get into this kind of trouble it's funny you look at the pathological behaviors very rarely does someone start out as a sociopath fully developed and I'm not saying SPF's a sociopath but you know you get involved in the market you take risk you get validated you take more risk and then it compounds towards insanity along that road now it happened relatively quickly with SPF and Ron it took took a while but those people were there and also is probably the closest there and I think I'm on may be an even better example not to say that there aren't parallels with the personality type there where they're with the highest parallels are as in governance and I think when we look at FTX and we look at what happened with SPF you say well where is the board and the oh there was no board and where are the and you know we were involved with a couple of companies that were sort of gain notoriety in the last generation we work in Uber and served on the board about those companies and I think we had personality types that brought governance into the foreground usually governance is in the background it's like a shared space of trust that you have that we're not doing this for me or for you or doing it for the common shareholders purpose the purpose of the business and in the case of both we work and I think Uber it's now well documented governance became front and center where we were in conflict with our with our entrepreneur which is sacrilege for us because they're the reason we exist so to go into and those both those cases were highly stressed well documented now I don't think that happened with SPF and I'm not sure it happened at their nose and so you know in in in many ways you know if you don't subscribe to free will and most of us don't you know the system that SPF had created gave them the outcome and and so I think as fiduciary's you know we can say is the system does it carry the integrity of what we want to do to be there for the founder we're all parents we just I have five young children you have a few yourself and there's there's something you learn in parenting which is false empowerment and I've done it like I've not like this is really no it's not like wrecking six billion dollars but it might be sitting up all night with an iPad and so am I to blame when my child is you use the iPad all night I kind of am because I didn't set the boundaries that he didn't in these aren't fun conversations they're not the easy path in a relationship but if we don't represent that in our industry for these companies then it's not that we know we let we let that individual that we let us be a next SPF down and we let the fiduciary responsibility that we have down and it's and it's a tough thing to work on because you know we talked a little bit about the great founders you know how different is Elon from SPF or or from from Elizabeth Holmes and one of the one of the stories that people struggle with in this era is well that person's good or bad get rid of my view is get rid of the labels of good and bad they don't they're not they're not honest and dishonest people they're human beings and we all are fallible in many ways and that fine line between and I think it's finer than I we're willing to admit projecting a future inviting people into a shared hallucination which is most startups versus telling a lie and you know I think the first lie for many of these people is the relatively easy and then it compounds and the next thing you know you're so far down that path and this happens in geopolitical systems that happens in companies and of course it happens in individuals that at the end of that path it's sort of unrecognizable relative to where it started so I think some of the narrative today that SPF was a bullshit artist he was a fraud it's like it's not so easy and in all of us we have those aspects particularly entrepreneurs one of you crossed the line and I've been there I've been there raising money where we're you know we're telling the downstream investor we you're telling them a story and that story has a lot of risk associated with it which you tend to suppress and now the governance thing the systematic governance thing I think is in a very it's an acute common thread causal I think you know with with what happened at Theranos and what happened at FTX but versions of this are going on at most companies which is like you know all the board governance it's all that boring stuff but but that dance is important but I think it's an interesting question right what makes for a great board because you mentioned previously that boys are just very ineffective and I would agree with that like what would make for a really good board meeting all through the life cycle of a company yeah I just I had a the pleasure of sitting on a Docker board meeting when I got here last night for five hours or actually three hours but felt like seven hours and that that Docker such an interesting story now maybe if you aren't developers you don't know Docker if you're a developer you have it on your desktop there's 15 million people of Docker to me the story of a great board is told through a company story so Docker had a gilded board we you know we had represented you know from all the major firms and Docker 1.0 was a total disaster we wrecked about 300 million of investor capital we set records for like you know ineffectiveness negligence all those things and surprising that I didn't get fired but okay but but that to me was was a board in dysfunction where there were a lot of cooks in the kitchen I think there was a big cut sort of a committee mindset lack of clear vision and the worst thing that a board can do I think you know there's the Hippocratic oath do no harm in this case we you know the board came with lots of ideas and the company I think engaged with them and we weren't firm in the governance side but the thing which I would tell you that that a great board has and that board didn't have is radical faith in the company when you most need it when you least need radical faith is when things are going well and in Docker 1.0 went from the hottest company in Silicon Valley to a total disaster and we lost most of our investors the core board members just left and I refused to leave because when we commit and this is the nature of venture it's an existential commitment it's like founding a company it's in a way like having a child and in my book you can't unparent a child and you can't unfound a company so one of the most important attributes when you're selecting a director I think is will they treat you with that kind of unconditional love and radical faith when you least feel like it's deserved and and this is true in parenting when you most need to love your kids that's when they're the least lovable so if you have a director that doesn't manifest that you're just injecting risk into your company because when when when shit goes wrong and it inevitably goes wrong then the true colors show up which is like well they weren't really here to back me they were here to make a quick buck or they were here because they had a different idea for the business and so I think the pre like a ground condition for a great director is radical faith in the and by the way belief in you more than you have in yourself and it's one of the things I've tried to do in the venture business and I've been we've all been to the board mean you're like oh I made a terrible mistake what have I done but there's this great lesson in happiness where people are much happier when they have fewer choices but they're even happier if they've made a choice and they feel like they have no way out like they have to make it work so when you've made a commitment said like this is like being a parent I can't un-parent this child I can't unfound this company no that's a big kindergarten question right yeah and so in terms of flourishing of a board blasting I'll say on that is that I had one of my CEO said to me none of you responded to the pre read and you didn't put comments on that and I said I don't want to have the meeting before the meeting in a great board there's something that happens collective effervescence I don't have a word to describe it but when a group of minds come together fully present and they're talking about your business in a way that opens up your horizons around what you might not be seeing so I think of a successful board meetings from the director says or the CEO says me after the board meeting actually don't like this because it all that was a really useful board meeting I'm like oh you know better than it was useless and we just showed up because everything's working but when it's useful there's some revelation that comes out of the dynamic the dialectic there wasn't possible in individual one-on-ones and I would say that happens one in a hundred board meetings for most of us and but it's it's incumbent on the CEO to create the conditions that let people have a dialectic in their board meeting most board meetings I've experienced our slide decks presentations updates so at all my board meetings now I said none of that stuff everything should be a pre read and if we can have 80% of the meeting be a conversation now a lot of CEO say I don't want to have a conversation with that group of bozos which is the average board okay then curate your board but sorry that was the most controversial advice you've been giving your founders in this crisis I think everybody has been sharing that get 24 months of runway type advice but what is an advice that might be really insightful that you've shared that others may not be aware of navigating this crisis yeah the controversial question I wonder you know what becomes non-conventional becomes conventional very quickly I would say six months ago I said the economy is going through a cancer not a flu because I think inflation is more like cancer it takes it metastasizes and we've been exposed I got in the venture business in 1999 and we had a flu the internet bubble and we had a flu in 2008 and we had a flu around COVID I mean a terrible analogy but this is cancer so what I what I suggested is that you know the way to think about it pathologically is that the problem will start to compound and get worse as opposed to be acute and localized and so my theory in the spring and I was pretty non-conventional at that point is that 2023 is going to be a 20 to 30% down in the S&P and probably another 30 to 40% down in the NASDAQ and nobody wanted to hear that and well look our numbers are good we don't see any of this stuff I'm like you know we know what inflation is like and you could be healthy and have terminal cancel you could I've been doctors say have it but I feel fine that's what we were like in the spring now we're starting to show the pathologies and and I think Q4 has been evidence of that Q3 numbers were mixed it was like half the companies missed their numbers I think in Q4 it's going to be more like two-thirds and so so the controversial advice I guess I'm saying now that's not conventional wisdom conventional wisdom is don't raise money for two years don't run out of capital cut aggressively cut now in a way by the way Elon by cutting half of Twitter in seven days this is the controversial advice which I'll get to in a second set the pace because you know I mean conversations like a week before that when I was talking to people about making cuts they're like well we don't want to go first and 10% will do performance reviews and that was the people thought Stripe was going to do a 10% performance review cut which isn't really a cut and they went away but they doubled that so the Steve Jobs came to Yahoo I talked to an executive as a Yahoo in the middle of their failed turnaround and he said you know when I came to Apple I had to we're gonna run out of money we're gonna go bankrupt so I had to cut I think it was a third of the employees and so so we we didn't have a good way to make the cut because I hadn't really been there and I didn't I didn't know that most of the people so I just I just looked at the people who were there before I got fired and I said we're not gonna get rid of them and then we're gonna get rid of like randomly get rid of half of the other people and he said I overthought it what I should have done is just taken this is gonna sound reckless but I think this is the advice that I give it and is reckless so that should have just taken a random number generator and spread it through my employee registry and then if you got the unlucky number you're fired and he said that that would have been an easier way to do it because you don't and then John Donohue show this advice with me about eBay when he turned eBay and he did turn eBay around great people in a broken system are gonna be broken in terms of their contributions so when you're making the cuts cutting 10 20 30% in a way if it's random it'll hurt a little less if you're the employee that gets tagged but don't overthink it and okay you have your bottom performers and you have people who are deeply loyal okay I get that maybe you're extraordinary performers and they're visible but if they're making file you know those cuts I think have to just be made in a way that's quick and decisive and and don't don't overthink it as much as that sounds cruel and I don't think you do it without compassion the other thing which is important I think if you're gonna make a cut you're messaging to the people that are leaving with your severance and the words you're sharing but what you're really doing the customer when you're letting someone go as the employee that stays so they're they're seeing how you're treating those people as a proxy for your values and if you if you treat them carelessly and with negligence and all that you're bankrupt you know because the people of the company they're left are not gonna trust you and they shouldn't so you know at the human side of it if you don't really internalize that and you just make it in a you know cold business decision I think you could lose the culture's essential human core I'd love to shift perspectives for just for the last couple of minutes and this is more for advice for fellow VCs in the audience you said something recently that actually makes me think we're kind of to two people like parallel universes where we put a few philosophers or artists you talked about a poem being most similar to the authenticity you're seeking in a poem being very similar to what you're seeking in entrepreneurs or companies at the early stages and I actually use a similar analogy in the past where I said like artists are a lot like you know similar to entrepreneurs and that when you look at an early stage company is a little bit like looking at a Picasso drawing right there's no paint the bird doesn't look like a bird but they're kind of the early innings of a new language can you maybe elaborate on what you where you get this poetic kind of authenticity moment with founders when you first meet them yeah part of it is I'll lose the audience but poetry unlike prose I think expands our perception of the universe because of its breaking from the norms of discourse and in a great poem and I'm a huge I love Wallace Stevens poems or Borges poems I mean we all have our favorite poets but when you read that poem it slows down time it expands your understanding of the universe in a way that changes it it doesn't it's not like why just read another point of view and so when a great company when a great founder comes in I felt this about Evan I felt this about Travis and and even when in his own way as I presented the series A when I was at Excel it has that once you've seen it you can't unsee it feeling and you know it changes your eyes in a way that it's arresting it stops like and it's so funny I've done this job 25 years the people that have been like the manifestation of a great poem I remember every part of the meeting the first time I meet Evan Spiegel I remember the smell of the coffee we were yet so and I think one of things about times that it's experienced in your memory differently because you kind of many tracks and this is the neurologist you know description of why this time slowed down during an accident well time doesn't actually slow down but you're recording more information so there's something about a great entrepreneur that I taste for investors where the slowing down of time the expansion of awareness and then and then it's density of truth that you feel in reflection on those moments is rare what's crazy about our business is I can spend unfortunately three years four years and never feel that way but I got to invest I got fond I have partners I feel like I got to be productive and you know I remember meeting Nikola it's so rare and it's weird because usually you know about three minutes in it's and this is sort of weird in the sense of okay well you have to do diligence you have to ask good questions but when you hear about like okay trading cards fantasy play on the blockchain and then Nikola expresses it in a way that's so pure you just sit there and think oh okay well that probably won't happen again for the five years I should enjoy this moment and so amazing Peter I certainly enjoyed this moment very much I think so did everyone I could continue this conversation for hours and hopefully we get to do so afterwards for coffee but thank you guys all for listening and thank you Peter for these incredibly valuable insights especially in times like these thank you