 I'm delighted to introduce our next session on why investors need to think beyond measurable competencies when evaluating investment opportunities. Tony Chan is the CEO of the Q-Ball Group, a Boston-based venture firm and a serial entrepreneur. He's also a New York Times best-selling author and a longtime contributor to the Harvard Business Review. Please join me in welcoming him to MIT. Thanks David and good afternoon everyone. Hope you guys are energized. Hope you guys are a little energized. Thank you. I'm honored to be here, address you all. It's amazing, the group that put this on, David, Mark, and Preeti and Isabel, I mean with a snowstorm and everything, I just congratulate all of you for putting on an amazing gathering. So, just get this going, AVFX, you click the forward button. There you go. Thank you. So, you know, you guys heard a lot about different types of game changers and that's a lot about what entrepreneurship and venture investing is about, about finding those people that are truly game changers. Here are just a few. Cheryl Sandberg, John Wooden, one of the most famed coaches in NCAA basketball, Tony Shea, CEO of Zappos, Charlie Munger, Warren Buffett's longtime partner and vice chairman of Berkshire Hathaway, Neri Oxman, MIT Media Lab Superstar, Architect, and Designer, Henry McCants, I'm fortunate enough to have as a mentor and chairman of my own advisory board, 45-year chairman emeritus of one of the most famed venture groups, Greylock Partners. Herbie Hancock, 14-time Grammy winner, jazz legend, needs no introduction. Sona Sota Mayor, U.S. Supreme Court Justice, the Dalai Lama, and our own Dalai Lama, Mr. Tom Brady. So, what do all these people have in common? Obviously, they are good people. They are all excellent in their craft, in their sport, in their skill, in their captainship, their leadership, their artisanship. They are all amazing in terms of excellence and competency. But over three years, my colleagues and I decided to embark on what we thought would be the most important endeavor ever for our firm, to understand what it is we mean when we say good people. We all say we want to be around good people. He's good people. She's good people. But what does it really mean? How do you actually bring definition to such an amorphous word? Goodness for us after reviewing and spending three years, not just with those 10 individuals you saw at the beginning, but 90 others, over a three-year documentary effort, and now what's leading up to a book project. I think some of you were able to get an early galley copy, and if not, we have only a couple dozen more that we can give out over the break. But it was a study over 100 people to study what is most common amongst those that we respect and admire the most. And there are two things, really. Goodness has to be something as Kat alluded to this morning, where leaders commit to go beyond competency. We have a lot of schools like Sloan, like the One Down the River, where we teach a lot about leadership of competency, but the question is, do we do enough about leadership of character and values? One of my close friends who runs Asia's most successful private equity group said the number one correlation to any time they have failed on investment was actually not about the wrong idea, but around moral failure. Nothing more. And what does it mean when someone has goodness of character and values? It means something much more than just integrity. It means something much more than a test when you are presented with an issue where you may do wrong. Someone drops a $100 bill, do you pick it up? Well, of course you do, and you give it to them, not pocket it. But do you do goodness whenever you have the opportunity to? Do you do goodness in such a way where you help others become the fullest versions of who they can be? Okay, I'll say that again. Do you do goodness in terms of helping others become the fullest versions of who they are and why they are? In other words, we are in the business of finding leaders who do not seek followers. We are in the business of leaders who produce other leaders. And how do they do this? There's five common components that people have done. First, right purpose. Every great leader has a vision, but it's something that goes so far beyond just a plaque on a wall. A right purpose is a story. It's the poetry. You feel it when you walk in to someone's office or environment. You feel their soul. You feel their heart. The right language, as an extension of that, they have a culture that's infused with language. And what we found was no matter what that culture was, it always fell into three buckets. Their language fell into components of truth, compassion, or wholeness. You need a baseline of integrity. You need that compassion to commit to helping others become the fullest version of themselves. And wholeness is what John Wooden, that UCLA coach has said. Wholeness is defining success such that you have the self-satisfaction of being at peace, because you have done the best to which you are capable. You have a sense of wholeness. Right questions. How do these people find other good people? We all want good people. Well, it turns out in many business schools, in many venture capital firms, we often fail to train ourselves to ask the right questions to find really good people. We ask questions that are biased towards leadership of competency. We look at the resume traits. Or we ask questions such as, what is your greatest weakness? Well, there's only three answers. Oh, I worked too hard. Well, some people say I'm a little too detail-oriented. Now, my parents sometimes say, Tony, that I can have better work-life balance. These questions and answers are meaningless. They give you zero information. And yet, we don't try to think about when someone comes in and presents to a partnership or to you or when you're trying to evaluate any potential valuable relationship, did you feel this person was an energy giver or an energy taker? Would you actually like to go to a conference like this with them? What would happen if you got stuck in a snowstorm with them? Would you want to kill yourself, or would you actually enjoy it with them? I mean, do we ask questions like that? Do we see who their friends are? What do we do to really get a sense of their goodness? And write mentorship. All of you as entrepreneurs know that mentorship is critical. My own career has been infused with just so many great mentors of which I am so grateful. But yet, when I see in so many early growth companies and established companies, mentorship today has become a check-the-box procedure. You can have a mentorship program, but no productivity from it. What do I mean? People put mentorship programs in all the time without the foundation of an authentic relationship. You cannot have any mentorship without the baseline of some chemistry. It's like any relationship out there. And then write balance. Great leaders allocate their time and resources towards balancing difficult decisions every day. So what are some of these tensions that make pursuing goodness so hard? Because you say all of that is obvious. Well, if it's obvious, why is it so hard? And why do those 10 people that we presented and the 90 others that we found do this better than other people? It's because they have an ability, a capacity to intuit what is the right balance, pragmatism versus idealism. We all have this idealistic vision of what we want to do, but yet we're graduating from school. We've got to pay off debt. We have to actually have a job. How do you find that right balance point? Vulnerability versus conviction. It is perhaps the greatest definition of entrepreneurship. Walking that tightrope between vulnerability and conviction. On one hand, a leader of any entrepreneurial organization has to state with conviction his or her vision, but yet goes home often feeling lonely, feeling vulnerable, feeling unsure. How do you find the balance so that you can espouse what you want to do with confidence but have the authenticity and that baseline of truth to expose your vulnerability that will make you more endeared and believable to your colleagues? Ideosyncrasy and connectivity. Innovation is almost by definition idiosyncratic. So how do you balance that with the need to have a level of connectivity and commercial ability with customers and your employees? Grit versus acceptance. How do you know when to keep fighting it out versus just folding in? Who are the people that left at that halftime of that Super Bowl? Idiots. And perhaps most difficult, short-termism versus long-termism or what we call the marathon versus the sprint. You know, in almost any venture, it's a long-term journey. We know this, but yet almost everything we do is geared towards a light switch solution. You strive to be public so you can have quarterly earnings, quarterly results. And I've been part of that process and hated it and want now nothing more to stay away from being public. Or a quick-fad diet, Botox, plastic surgery, or how about this, issue resolution? You have a difficult issue and you try to resolve it by text or email as opposed to walking next door and having a face-to-face meeting. We have short-term thinking, but yet we have long-term opportunities and long-term problems. And it's because of that, that at my firm, Q-Ball, that I found it about eight years ago, I decided that investing is very, very hard. Especially hard if you have no experience doing it. But how can you gain some advantage doing investing? We fundamentally believe that you can put in a built-in structural advantage by having a perpetual, permanent, evergreen fund. What does that mean? Imagine adventure investing was more along the lines of having a Berkshire Hathaway of investing. Where your capital never expired, where you honestly had a long-term view. At our firm, we look to invest in things that we might want to and believe we can hold on to forever. Our capital has no expiry date and no need for liquidity. Instead, we believe in long-term compounding and value accumulation through the simple thing of building businesses. It's not all altruistic. In my view, it's a smart way of investing. There's the power of compounding. I put up Charlie Munger and Buffett and I've been fortuitous to be mentored by some of their closest, closest prodigies over the years. Now, the power of compounding. Would you rather have 10 to 12% every single year or 45, 100, 200% over three years? Well, you're all at MIT, do the math. You are much better off having continuous long-term compounding in almost any scenario. It also prevents deal leakage and tax inefficiency. Every time you sell a company, why would you start a venture company to sell to an early growth company, sell to a private equity company, sell to a bio company to sell to another company? Every single time, you're losing value through the leakage. And ultimately and most importantly for us, it gives alignment with the entrepreneur. We want to optimize every single asset for what that asset is and what that entrepreneur wants to do, not an arbitrary, fun life. And that makes us in search of something else. A lot of talk about in search of unicorns. Well, we don't believe unicorns are necessarily real and we would prefer to be in search of sea turtles. So we are in a quest for sea turtles that have long lives, are majestic and are actually real. So, how does that translate? I'm pretty certain that we're the only venture firm that started as a nail salon. In 2015, Sarah Mace-Linier, an award-winning journalist from the New York Times did a stunning 14-page expose on the deplorable conditions of nail salons through New York City. 10,000 points of presence were women, largely women, are working and human trafficked, poor, poor environmental conditions of toxicity. Well, it turns out that seven years before that article, we had decided after being in a world of big data, after being in a fortune company and starting two businesses, that clearly if you've done those things, they all fit with doing a nail salon. And that was a joke. Okay, we are at MIT. That was a dig. Starting a VC firm with a nail salon, what did that mean? Well, we wanted to try to reimagine experience and what if we had a real long-term view to disrupt a 65,000-unit industry that's worth $10 billion, but what if we wanted to do it with great purpose? This is really a story where compassion and purpose is not necessarily at odds with massive value creation. What if we created a nail salon where the iconography there of a bottle could be as identifiable, as cherished, and iconic as the swish on a Nike sneaker? What if we were able to elevate the entire experience where clean is the culture and the language was about fashion? What if we were fortunate enough to use our biology backgrounds and study to create a clean lab where we use ultrasonic debris removal and autoclaving and the highest standards of technology to ensure sanitization, sterilization that is unmatched? What if we actually used real science to create polishes that are actually toxic-free and that actually told the story of color? And what if that story of color and the dialogue of color happened around a fashion runway as opposed to just pick a color against the wall? And what if we had this model of ready-set shine that went to something more? What if we had a purpose, a real purpose that was infused around self-love and self-inspiration where you actually understand, just as you are disrupting any other business like a Starbucks, that Starbucks is not about a coffee place and we're not about a nail salon. We're actually a place where you go for a moment of self-inspiration, self-expression. It's a moment of a mini-lux, a mini-respite for you. And what if that carried out as we re-imagined what it could mean to be having a mania, pedia, oval, squoval around it? You actually did something right for the employees. What if it was possible to use venture capital to treat an industry that's been seen as vocational, mundane, and prosaic, to infuse it with design, tech-enabled retail, and big data so that we can employ 500 women that will be 1,000 women and give them a real career path? And what if this was all consistent with the objective and purpose of venture capital? Obviously, on one side in venture capital, you must deliver long-term value. Well, we are very lucky. We could have never imagined in starting our first nail salon back in Newton that we would have units that could do over $1,000 per square foot greater than an Eman Marcus, attract tens of millions of dollars behind this venture. And what if it reminded us that the real purpose why everyone is here today is to really realize the full potential of human capital, to really be in the business of passing on goodness, to create leaders who create other leaders no matter where they come from in industries as prosaic and mundane as a nail salon? Thank you, everyone. Pass on the goodness.