Brad Feld:


063 – When Big And Small Make Great with Brad Feld

Brad Feld:


063 – When Big And Small Make Great with Brad Feld

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This week we are joined by entrepreneur, author and venture capitalist, Brad Feld. Brad is a co-founder of Techstars, a platform for startups to access funding and entrepreneurial networking, and is also the co-founder of venture capital firm, Foundry Group. Brad is the author of several books on startups as well as an entrepreneurial advice blog. He sits on the board of several technology startups and was an early investor in Fitbit, Zynga, and Harmonix.

  • How startup ecosystems have changed – and become more democratized – in the 30 years in which Brad has been active within them
  • How digitization of production, distribution, customer relationships, etc., is making strategic “moats” much more penetrable than they were before
  • How diversity of an ecosystem builds resilience but how our biases (both conscious and unconscious) make this difficult for us

Key Takeaways and Learnings

  • Those large organizations that are extracting greatest benefit from startup ecosystems are doing so not through control (typical of a hierarchy) but through engagement and feeding back learning into their own institution – creating high levels of “return on learning”
  • This large company engagement with entrepreneurs also builds loyalty, so that as startups grow they can become a positive weapon rather than a threat
  • Great innovation leaders combine continual practical skills development (getting good at your work) with endless and radical self-inquiry (embracing lifelong learning and exploration)

Resources and Links Mentioned in this Podcast

Summary

This week we are joined by entrepreneur, author and venture capitalist, Brad Feld. Brad is a co-founder of Techstars, a platform for startups to access funding and entrepreneurial networking, and is also the co-founder of venture capital firm, Foundry Group. Brad is the author of several books on startups as well as an entrepreneurial advice blog. He sits on the board of several technology startups and was an early investor in Fitbit, Zynga, and Harmonix.

Brad Feld

Brad Feld has been an early stage investor and entrepreneur since 1987. Prior to co-founding Foundry Group, he co-founded Mobius Venture Capital and, prior to that, founded Intensity Ventures. Brad is also a co-founder of Techstars. He’s written a number of books as part of the Startup Revolution series and writes the blogs Feld Thoughts and Venture Deals.

What Was Covered

  • How startup ecosystems have changed – and become more democratized – in the 30 years in which Brad has been active within them
  • How digitization of production, distribution, customer relationships, etc., is making strategic “moats” much more penetrable than they were before
  • How diversity of an ecosystem builds resilience but how our biases (both conscious and unconscious) make this difficult for us

Key Takeaways and Learnings

  • Those large organizations that are extracting greatest benefit from startup ecosystems are doing so not through control (typical of a hierarchy) but through engagement and feeding back learning into their own institution – creating high levels of “return on learning”
  • This large company engagement with entrepreneurs also builds loyalty, so that as startups grow they can become a positive weapon rather than a threat
  • Great innovation leaders combine continual practical skills development (getting good at your work) with endless and radical self-inquiry (embracing lifelong learning and exploration)

Resources and Links Mentioned in this Podcast

Welcome to the Innovation Ecosystem podcast. With me today is Brad Feld who has been an early stage investor and entrepreneur for thirty years since 1987 and prior to co-founding Foundry Group he co-founded Mobius Venture Capital and is also co-founder of Techstars eleven years ago. So, welcome to the show, Brad.

Thanks. Happy to be here, Mark.

So, you’ve been involved in startups for over thirty years. What are the biggest changes in the startup ecosystem over that period?

Well, thirty years ago the startup ecosystem was incredibly isolated. It was very hard to get information about what was going on. The gatekeepers abounded whether they were venture capitalists or bankers or people who basically were controlling different elements of the system. If you’re a first-time entrepreneur, your ability to understand how to raise money, what the ecosystem looked like, how to connect with people, that information just didn’t exist and the idea of mentorship and many, many people in different startup communities helping other entrepreneurs without necessarily having a direct financial relationship with them was non-exist. There were mentors and there were people who had one-on-one mentor-type relationships but that whole cultural norm around it was very different. And then the last comment I’d make is that there’s been this enormous democratization of entrepreneurship around the world. This notion that you need to be in a particular geography to start a company has been obliterated, the idea that you need to have a certain background or certain education or be a certain demographic at this point is nonsensical and the whole notion of company creation and entrepreneurship is available so much more widely to humans than it was thirty years ago.

So, I mean all of this ultimately means more competition for the incumbents, and many of our listeners are executives or leaders in large industrialized long product life-cycle regulated industries. I’m based here in Switzerland but I’m talking about the rump of the economy if you like, and as a result of this huge explosion of entrepreneurship these companies are facing a lot more competition as a result of that, correct?

Theoretically, yes. I think you have situations where there’s enormous functional disruption that results from new technologies and new companies and you see that emerge over time and we’ve seen it over and over again in the last thirty years and probably not just in the last thirty years but in all of commerce where existing incumbents get displaced because they don’t take advantage of new technologies, new distribution, mechanics, new customer dynamics, whatever. That said, that’s a pessimistic view. The optimistic view is that for large incumbents in different areas and industrial companies, almost by definition they’re going to be forced to innovate and they’re going to be living in a world where things are rapidly changing, and I think the more enlightened, larger companies actively engage around innovation rather than try to shield against it or withdraw from it. A couple of examples come from my own experience at Techstars; we have now accelerated programs with about twenty different very, very large – it’s actually probably more than that because we have several consortia – so, let’s say thirty to forty very large Fortune 1000 class companies that view what we do with them, what the accelerator programs as a component of their innovation activity. I mean these are companies like Target, Amazon with Alexa Accelerator, Barclays with a handful of FinTech accelerators that we’ve done in Europe, Metro around hospitality or hospitals like Cedars-Sinai around health care. The other thing you see many progressive large incumbents do is actively either acquire fast-growing companies or invest in them and you’re seeing this in the auto industry in spades right now, where most of the auto industry, I say most, many of the large companies have acquired technology-driven companies around autonomous vehicles and self-driving cars as a way to amplify their innovation vector, right? They theoretically could do it themselves, they could build that capability, but most large companies are just not that good at that. What they’re really good at is harvesting and scaling their market position using their market power versus creating the next new innovations, so my suggestion from an optimistic perspective for large companies is to engage aggressively with the innovation economy as part of the strategy of their business rather than try to shield against it or withdraw from it.

Yeah, and I was interested when I looked into the Kauffman Foundation where you’re on the Board of Fellows. One company that’s probably less than a mile away from me, Novartis, is participating there for the very reason that corporate venturing is a great way of accessing this ecosystem without actually disrupting the core business operations.

Very well said.

Now, going back to Techstars when you founded it eleven years ago, I’m curious, the executives from the companies that embraced Techstars, some of these thirty or forty, it was obviously a far smaller number of them back then, but what did you see in those executives in terms of how they looked to the world? How were they different from executives that potentially hadn’t embraced this, or we’re still stuck in their existing ecosystems and weren’t really exploring these new frontiers? I’m just curious about what did you see in terms of their leadership styles, for example?

Yeah, I think it’s worth segmenting the timing because in 2006 when we started Techstars we didn’t have any corporate partners and we didn’t have any vision for what that could turn into. We ran an experiment like so many startups. Techstars was a raw startup in 2006 and the idea of an accelerator program didn’t really exist, and there are a handful of people that were talking about a model around it and we ran essentially the second accelerator program in existence, and the first year we just had ten companies go through it and we tried something and we had no idea whether it was going to be good or not. And so what evolved out of that over a handful of years was, we did the same thing over and over again. We started to expand geographically from our first program in Boulder, we opened a program in Boston, we opened a program in Seattle, we opened a program in New York, and as part of that geographic expansion, we started thinking about what we were actually accomplishing in building this incredible network for entrepreneurs, and that network included mentors of the entrepreneurs, some which worked for other startups, some which worked for large companies as well as investors, and when we stepped back from that around 2011 and continued to evolve our strategy, we realized at that time that the corporate partner dynamic was a key thing that we were missing. In other words, our ability to work with large companies existed. Large companies were suddenly, in 2011, 2012, 2013, getting excited about innovation again and trying to engage with innovation, with startups and with entrepreneurship, and in the context of many of the companies that we were now funding, they were interacting with these larger companies especially in different geographies and different vertical markets, and a switch flipped for us where we realized that we could do what we were doing in partnership with these very large companies and start to have some specialization, whether it was around a vertical market or an ecosystem for a large company, or in some cases just around the geography. In Atlanta, our Techstars Atlantic program is run with Cox which is a very, very large, I think, twenty-five billion dollar business that’s family owned that’s been in Atlanta for most of their lives and views Atlanta as a key part of what they participated in and they very much embrace innovation and new company creation in Atlanta as a way of keeping the city healthy, so-

And that’s Koch, right?

No, no, Cox.

Cox. It’s not Koch Brothers, it’s the other one, OK.

Not Koch, it’s a different organization. Yeah, it’s Cox, and Cox, they own a bunch of newspapers, they own a bunch of media properties and then a bunch of other businesses, and their viewpoint was in addition to innovation being important for us, we want to make sure we’re contributing and stimulating innovation in Atlanta because we believe that long term for a city to be healthy it needs to have a vibrant startup economy, which was the premise of the book I wrote in 2012 called Startup Communities, which is that every major city in the world needs a vibrant startup community. The startup community is not the essence of the city but it’s a key component of the growth and long-term health of the city. You’d ask the thing that stimulates this is, what are the characteristics of those corporations and those executives, and I think there are characteristics across the ones that we work with, a couple things that they all have. One: a view that innovation and entrepreneurship and new company creation is important. Second: a desire to engage with it but not necessarily control it, and that’s really important. Large companies have a tendency, and their DNA is that they want to control what they’re doing, it’s what a hierarchy does and most large companies are organized as hierarchies. In the context of entrepreneurship and innovation, the best large companies or large organization engagement, whether it’s a large company or government or university, is not to try to control what’s going on with startups but to engage and participate with those startups, help amplify what they’re doing, learn from them and have that feed back into what you’re doing as a large institution, and so those executives all have that viewpoint, it’s a very collaborative approach rather than a controlling approach. And then the last is that they have a long-term view, they’re not thinking –  worry may be the wrong word – they’re not thinking about it from a month to month, quarter to quarter basis, but they’re viewing the investments that they’re making as ones that are going to pay off over a five to ten-year period, and the measurement of success is one that has a longer time aperture than most companies operate under.

So, it’s interesting, you mentioned Cox which is a family business. Some of the other companies involved in the program are public companies. How do you see this dynamic, the short-term demands from Wall Street on quarterly numbers versus a long-term sustainability associated with investing in these things? How is that tension being managed or how effectively do you think that tension is being managed as you look at the corporate world?

Yeah, I think it’s pretty easy to manage and I think most of the companies we work with manage it extremely well. The total dollar amount that they’re investing in things like a Techstars accelerator is minuscule relative to the multi billion-dollar operating businesses that they’re running, tens of billions of dollars, a hundred billion dollars of operating business that they’re running, so the actual economics don’t matter that much in the short term. They can have a profound influence in the medium to long-term because of a couple of things. One is, anyone who’s paid attention to entrepreneurship and value creation around it knows that companies that existed ten years ago when they first got started the very, very first investment might have been done at a three or four or five-million-dollar valuation and today are worth five, ten, twenty, fifty billion dollars. Those investments are incredibly valuable and the amount of cash that those investments make is transformative. The second – and there are lots of examples around that but Uber is one that lots of people think about because I think it’s still the highest valued private company. When David Cohen, who was the co-CEO of Techstars made his first investment in the seed round of Uber with a handful of other folks that invested in the seed round at Uber, I think the valuation of Uber was four million dollars, and it’s fifty billion or seventy billion or whatever the press is saying. That’s an enormous return on investment, and the magnitude of that dollar amount is significant. The second, independent of just the financial characteristics, and again it takes time, it doesn’t happen in a year or two, the second piece which is in some ways I think more important to these large companies in the financial characteristic is the information experience that they get from engaging in these companies when they’re very, very small. So, if you engage with a startup at the very beginning of the journey and you can weave, as a large company, value into that startup, you can engage culturally with the entrepreneurs, those entrepreneurs will be incredibly loyal to your large company, and as they become larger and successful as a startup they become a positive weapon for your company rather than a threat. So, this idea of disruptive innovation, if you embrace it as a large corporation, it’s very powerful, because you’re not going to get it right. The vast majority of startups are not successful but for the ones that are successful you end up in this place where you can have this mutual coexistence with them. In some cases you might invest in them or in some cases you might partner with them, in other cases you might acquire them, but in all cases, you get huge information benefit from your participation with them so it gives context on what’s going on, what’s working and what’s not working.

Yeah, I heard a corporate venture capitalist talk about the return on learning from this process.

Yeah.

Now, obviously, the counter position for companies that don’t embrace this, some of them have gone out of the business, right? There are some high-profile examples that get disrupted out and I guess we’re seeing some of this playing out. Well, we’ve seen Toys R Us recently file for Chapter 11, I mean that’s a company that probably hasn’t handled the interaction with the innovation world particularly effectively, for example?

Yes. Toys R Us is a good current example because there was a moment in time where Amazon was relatively small and Toys R Us was very big and today obviously Toys R Us’s business has been completely gutted by Amazon, and so in 2000 or 2001, Toys R Us could have looked at Amazon and said, ‘Whatever, you know, it doesn’t really matter.’ A contrasting company, that’s a large company like Toys R Us, is Walmart which is aggressively embracing this. They’ve done several very large acquisitions of digital companies including Jet and they’re putting enormous energy from an innovation perspective into competing with Amazon, but if you step back from that and think about industrialization and capitalism going back a hundred years, this is not new. There’s a magnificent book that’s one of the canonical business books by Jim Collins called-

Good to Great, yeah.

Right? I read Good to Great when it came out. I think everybody should read every one of Jim Collins books when they come out because he’s an extremely thorough researcher and contemporary thinker, very disciplined about what he does, but when you reflect – I don’t know how long Good to Great came out, fifteen, twenty years ago, let’s say something like that – if you look at the companies in Good to Great today that are profiled I think something like a third to half of them are out of business.

Yeah, yeah.

Right? And that’s really instructive. It’s that you can build a great business that has very durable long -term characteristics that can still get disrupted significantly by innovation and a change in the way things work, and the notion that the world that we’re in right now is changing faster than ever, that startups have been democratized so they’re affecting economies worldwide and they’re not just affecting economies in certain geographies, that the ability for anybody anywhere in the world to start a company and have it scale up dramatically, that the amount of content of a company is becoming more and more digitized whether you want to talk about it as information content, or the way the supply chain is constructed, or the way you interact with your customers, or just the knowledge that you have about your customers, all of that stuff is profoundly different than even twenty years ago, how business was conducted, and for the companies that are not aggressively engaging with the startups that are doing all that change, I think they have a lot of struggle in front of them, a lot of risk.

Yeah. I know you’re a fan of Charlie Munger and this concept of ‘moats’ which has basically been at the heart of their investment strategy for however many years, sixty years, him and Warren Buffett. I get what you’re saying is that moats are being drained or being narrowed far more quickly now than has been, it’s part of an ongoing process but it seems to be at a different pace today.

Well, here’s a good metaphor and I would say, I might want to comment on Charlie Munger. I wish I knew him, I wish I had had a chance to spend time with him, it’s not in my orbit. I read almost everything he’s written over the years whether there are papers or things that get collected. I have a copy of Poor Charlie’s Almanack-

Isn’t it a great book?

A fantastic book. I think he’s one of the best business philosophers ever and the brilliance of so much of his philosophy is that it doesn’t just apply to business, it scales up broadly across how one lives one’s life and thinks about things. To link back to the moat metaphor, when somebody says ‘moat’, I think that they quickly think of a castle with a thing around the castle, an oval or a circle that’s wide and deep and full of water.

Yeah.

So, that’s pretty effective. And the wider and deeper that moat is and the more water, the harder and it is for somebody to get across the moat. That’s the metaphor. But what if humans could fly? And what if you could just walk up to the side of the moat and all of a sudden you just flew over it? The moat’s completely useless. And that’s what’s happening all the time to the moats that get created, is that the metaphor of your defensibility or whatever your functional defensibility as a company is, it’s just unable to defend in any way shape or form the thing that you’re now being attacked by. Or another one is, you’ve got a castle and you’re surrounded by a moat and you feel like that’s defensibility because people can’t come to you and can’t get to you but they have to engage with you. What if all of a sudden nobody really cares? Like, you’re out there in the middle of nowhere, you’ve got your nice moat, you’ve got your nice castle but nobody ever wants to show up for anything? It’s this notion that the metaphor is a good metaphor, but disruption can fundamentally change the way people go after it.

Yeah. So, you’re an investor in different types of companies than Munger but how do you think about your investments in this VUCA world that we’re living in?

Well, we invest very early. At Foundry Group, my partners and I, typically, we don’t have to be the first investors in a company but we’re investing in companies before they’ve raised five million dollars and they tend to be small companies, five people to maybe twenty-five or thirty people. A lot of what we do over the life of the company is work with them to both involve their product strategy so that the product strategy continues to be aggressively ahead of whatever their competition is and is tangential or fundamentally disruptive to the market they’re playing in. We recognize that that’s continually changing. You don’t build a thing that’s static and get it right in the second year and then ten years later it’s the same thing. If you happen to land on something that’s an incredibly powerful position, you build very aggressively on it, but you still have to widen it, you have to expand it, and a phrase I think a lot about is the surface area of the business. If your business is two dimensional by definition your surface area is going to be x times y, you know, length times width, it’s two dimensional. If it’s three dimensional, you can expand your surface area at a geometric pace relative to expanding your surface area if it’s two dimensional.

So, can you give an example for listeners on that?

Yeah, sure. We’re investors in a company called Rover. Rover is a marketplace aimed at dogs, so it’s a marketplace for dog sitters and dog walkers, and that marketplace you may say, ‘How many people care about it? If anybody has a dog they probably care more about their dog – I know people who care more about their dog than their children – and it turns out that only about 10% of the market for dog sitting is captured by existing incumbent kennels and dog sitting businesses and things like that. 90% is what’s called a ‘shadow market’, where people literally figure out some other way to get their dog taken care of when they go on vacation or they have to leave for the day, or they need somebody to watch a dog they ask a friend, they ask a neighbor, they leave the dog in the house alone for too long, they stick the dog in the backyard and hope that everything’s OK, none of these things feel good but they’re what happens. So, Rover built a very large business in the US around what we call on-demand dog sitting, and on-demand dog sitting, a reservation based dog sitting, is using the marketplace to match up dog sitters with people who have dogs. Here’s a dimension that surprised us that we didn’t expect; a lot of people want part-time dogs. If I’m a college kid and I am in college and I have a dog growing up, I don’t want a dog all the time but maybe I want a dog one weekend a month for three days. So, all of a sudden I become part of the sitter side of the equation; once a month I want to sit a dog. In addition, the dimensions grow very quickly. People take care of the dogs at their house but a lot of people, or if I have a dog I give it to somebody to dog sit at their house but maybe I want them to dog sit at my house with the dog, so, that’s another dimension that we can grow. And there’s a third dimension which is on the sort of same day phenomenon where I need somebody to come over to my house to let my dog out once or twice a day because I’m at work and I need somebody to let my dog out. That extends very quickly into the notion of dog walking and it’s both, it’s reservation based dog walking which is to say, ‘I need somebody come walk my dog every day at four o’clock in the afternoon because my dog needs to go to the bathroom and I’m still at work’ to on-demand dog walking which is, ‘I need somebody to come walk my dog right now because I had to leave the house or I’m out of the house for four hours and I thought I’d be back in time and now I’m not.’ So, you could build a business on one dimension which is this marketplace where you’re getting essentially 90% of the market is available not to the incumbents, right? So, if you looked at the 100%, we’ve got 10% that we’re going after incumbents, 90% is not being serviced, and then you immediately start saying, ‘Well, what are the other dimensions of this business that provides more value to both sides of the marketplace?’ The dog sitter and the dog walkers. So, that’s an example, and you know, you dig deep into the strategy for that and you say, ‘Twenty years from now, how is this going to work?’ and try to configure a business that can evolve both geographically, the dog walking business where I live in Boulder, Colorado is very different from the dog walking business in New York City, as is the dog sitting business. In Boulder, or where I am, thirty minutes from the downtown core, versus somebody who lives in Manhattan that might live in a building, by the way, that might be big enough to hold everybody in Boulder, I think all of Boulder fits in a building or two in Manhattan. So, as a company, thinking about all these different spectrums and being able to quickly fulfill product, experiment in the different segments, and then when you have it right, scale it up very, very fast is key, and that’s something that very large companies have a very difficult time doing.

So, I’d like to switch a little bit because I know we’re short on time to talk about diversity and I’m not talking about the gender diversity that’s in the media at the moment relating to Uber, for example, but I’m more interested in cognitive diversity and making the connection with Charlie Munger’s multidisciplinary thinking, looking at the world from multiple angles, different mental models. How important is that do you think, as you put, your work on the board of Kauffman, for instance, you’ve got a very diverse range of activities and people? I’m just curious about how do you think about diversity from an innovation and an investment perspective?

Yeah, it’s extraordinarily important not just from an investment perspective but across a whole range of innovations, startup communities and I think society in general. In Startup Communities, the book that I wrote in 2012, and the subtitle of it is Building an Entrepreneurial Ecosystem in Your City, so the subtitle sort of tells what the goal of the book is. I come up with four principles that I refer to as the Boulder Thesis that I think every startup community has to do to be successful, and the third principle is be inclusive, so, just that simple phrase, and today we’re now talking about diversity and inclusiveness as a category of things that we need to pay attention to both in business and society as a whole, and for me being inclusive is across every dimension. It’s across gender, race, ethnicity, sexual preference, sexual identity, physical characteristics but also nonphysical characteristics, educational background, economic background, frame of reference, political ideology, cultural background, all of these things matter and the important thing about a startup community is the more that you can create diversity across all of these dimensions, and I think this is true not just for startup communities but for society as a whole, the healthier and more resilient your entity, whatever the entity is. Part of that dynamic is a really difficult one for humans and it’s really difficult for two reasons. One is our bias and the other is unconscious bias which are different things. Bias is that I have a bias against something. Unconscious bias is I have a bias against something but I’m not aware that I have a bias against it. All of us have unconscious biases. Oftentimes, when we are confronted with an unconscious bias, we feel offended by it because we’re not conscious that we’re observing this bias, and diversity and this notion of diversity inclusion across all of these dimensions is really important so, hot-button ones, when you talk about gender or race, which by the way we have profound issues around both gender and race in the US and I think in many countries around the world. That’s a starting point to your question, is you dig in deeper into this idea. If I have a perspective, or if I’ve got a certain educational background, or if I come from a certain country, or if I grew up in a certain type of household, what are your unconscious biases against me and how do they impact you in your engagement model with me? And trying to be more inclusive while recognizing that as human beings we’re always going to have unconscious bias, that doesn’t go away, but if you can surface the unconscious bias in this context, identify it, and try to modify your behavior so that the unconscious biases you have are not inhibiting your engagement with other people, over time the unconscious bias goes away. You may have others, you know, we’re humans, we’re bags of chemicals, we have this issue, but as institutions, the more we can get these things surfaced and eliminated the more powerful as institutions we can be.

Yeah, and that’s what I found powerful, and I agree with you, it wouldn’t surprise you but I look at the world of large corporations, many of them are monocultures, right? They just don’t have that diversity, not just gender diversity, but they don’t have that cognitive diversity and they get into trouble as a result of that. But I’m also curious, if I look at the Kauffman organization it emphasizes self-reflection, peer learning, mentoring and a curriculum, and I don’t know what’s in the curriculum but those first three things in many respects are designed to actually surface some of these unconscious biases anyway?

Very much and I think it comes from Kauffman Fellows which is a very, very powerful program. In addition, if you look at the people going through Kauffman Fellows, they’re very diverse on many dimensions. They’re from all over the world, they have a lot of gender diversity, they have a lot of racial and ethnic diversity, they have a lot of diversity in the backgrounds and experiences of the people coming to the table, so you start from a position of having a diverse pool and then you work on yourself with your peers. That’s extremely powerful. Jerry Colonna at an organization called Reboot, it’s Reboot.io, Jerry, I think is the best CEO coach in the world and he’s built an organization that, in addition to one-on-one CEO coaching, also runs a number of boot camps that are very powerful. Jerry’s Reboot promise, their thesis is that you have to combine two things to be an awesome CEO and I’d say that’s a proxy for being an awesome founder, an awesome executive. The two things that you have to combine are practical skills development, so you have to get good at your work but that’s not anywhere near sufficient. You have to do that in conjunction with radical self-inquiry, and this idea of radical self-inquiry is at the core. You have to know and understand yourself in the context of the work that you’re doing and that is a lifelong journey, that does not end, we don’t figure ourselves out, and if I look at people who I have great respect for, Charlie Munger, would be an example of someone who I would characterize as lifelong learner, unambiguously. He’s constantly exploring and thinking hard about himself and his relationship to other things, that notion of endless radical self-inquiry along with the absorption of practical skills development. You get better at things by doing them, you don’t get better at things by thinking about them, or about talking about them.

Yeah, and equally, this is the message that we echo throughout our podcast series so it’s great for you to articulate it so clearly, and I would also say, it’s a little bit off-piste here but I think I picked up your post about the quarterly reviews that you do with your wife which I’ll include in the show notes, if that’s OK-

Yeah, sure.

But it’s a very, very powerful way of analyzing the nature of the relationship and how the evolution is going so thank you for that because that really has been impactful for me. So, just beginning to wrap this up. I sent you three questions and I do apologize, I sent them to you at the last minute. Did you have a chance-

I haven’t looked at them

OK, I think this won’t be a problem.  OK. So, first question: what have you changed your mind about recently, Brad?

What have I changed my mind about recently? I used to think that I had to physically be somewhere to really accomplish something, and in the last few years I changed my mind about that and I spend most of my time now not traveling. I do travel some still and there are moments where I do, but I really came to the place where the physical interaction with other people was, in some specific cases, important was not a generalizable truth for me.

And does that still work with new investments or with new relationships?

Yeah, some of my most successful investments, I never met with the founders before I made the investment. Fitbit is a good example of this. I literally never met with Eric and James before I invested. I had done video conference calls with them, I’d interacted with them but I’d never physically been in the same space and over the life of that company and being on the board of that company, I was at the company a number of times over the years but very, very rarely relative to both the magnitude of the investment that we made in the magnitude of the outcome.

Interesting, because I know you spend a lot of time in Alaska as well which is probably about as far as you can get off the grid as you can get in North America.

And it’s useful to know that I separate off the grid from not physically with, so we’re not physically together and I’d like to think that if I had flown to you and we’d sat face to face for thirty minutes and maybe we’d even had a thirty minute warm up beforehand, I don’t think that this outcome would have been materially different, and I will tell you that it’s a lot better in my life not to have flown to you but to be able to do this this way, and it probably means that you and I get to engage because if I had to fly to you to do this I probably would have said no.

Yeah, absolutely.

Scale that, that simple example across ten thousand things a year and that’s a change in the way that I live and operate.

Love it. Great, great. Secondly, have you got a personal work habit or practice that you can share with all our listeners that has helped to make you more effective?

I try to run every single day. I blog probably twenty out of thirty, thirty-one days a month, so I probably don’t make every single day, but between my blogging and my working and books, and when I say write I don’t mean emails and I don’t mean memos, I mean sitting down and concentrating on a thought and writing. The inverse of that is true as well, I try to read somewhere between seventy-five and one hundred books a year, and the books that I’m reading are not business books. Some of them get in the mix because I get a lot in the mail, some of my friends write books and every now and then there’s something I want to read, but I try to read very promiscuously across a wide range of things. I personally love science-fiction so I have to force myself to read stuff that’s not science-fiction because by default that’s all I’d read but I try to read a bunch of different things. I also try to read things that are not mainstream, I try to just read stuff that is random. The other habit which has evolved, and I think it came out the last election cycle in the US. I like to joke, I joke that Trump ruined Twitter for me but really it was the election cycle ruined Twitter for me. I was very, very active, engagingly active on Twitter and others and I think this may be something that also links to the first question in terms of a habit that I changed but also a realization is, the amount of cognitive load of engaging that way was actually starting to really impact me physiologically and psychologically, and it wasn’t that it wasn’t useful and it wasn’t interesting but that it was not healthy across the way that I thought and processed things and so many other dimensions. So, really my engagement with Twitter and Facebook and other social media maybe has changed pretty radically where I’m still broadcasting, I still put out information and I’ll occasionally engage with certain things but my consumption of it very broadly has diminished significantly.

Yeah, and just going back, that writing, how much of that is a vehicle for self-reflection?

It’s a vehicle for working out my thoughts in a more rigorous way. I think that conversations like this are interesting and I think human beings have lots of conversations whether it’s in a meeting, or this kind of engagement or over a meal, or with a group of friends, you learn from that and there are cognitive feedback loops from that. It’s hugely different from sitting down and having to write something cogent about a thought you had, and it could be a single thought like what comes out on a blog post or it could be two hundred pages like what comes out in a book, so it’s a pretty broad range. The process of thinking and codifying your thoughts are very, very different and that’s why I take email and memos out of that mix because those are mostly communication vehicles to others about a thing you’re doing, or a thing you’re interacting with, or a set of decisions you’re trying to drive to versus you sitting and trying to work out an idea yourself.

Final question: what’s your most significant failure or let’s use the word low and what have you learned from it and how have you applied that learning?

Well, my most significant business failure was a company called Interliant which I co-founded in 1996. We raised as a private company about sixty million dollars. We went public in 1999. In 2000, was worth over two, almost three billion dollars.

Sorry, three billion dollars?

Three billion dollars, yeah, and 2003 it went bankrupt. It was one of the first web hosting companies. It, along with one other company, essentially were the first application service providers, which was the precursor to software as a service and we built a business very, very fast through acquisition that grew to about two hundred million dollars top-line and it was just extraordinary, I mean, we were incredible at losing five million dollars a month, and no matter what we did we could lose five million dollars a month and the thing that caused us to go bankrupt was we made a very bad decision on a fundraiser, we raised a hundred and sixty million dollars of debt in three days in 2000. Morgan Stanley, sorry, Merrill Lynch – I should be careful who I name here – Merrill Lynch promoted about thirty deals like this and I believe twenty-nine of them went bankrupt.

Jesus.

It was just excruciating to be involved in that incredible ramp up and then this very rapid collapse. None of the founders, there were four of us, none of us took any money out of the company so we had a massive, massive gain on paper, never took any money out of company because our paper value was directly linked to a private equity firm that was our primary investor and they never sold a share of stock, so we were unable to sell a share of stock until they sold a share stock and they never sold it. So, from a business perspective, I think that was my biggest failure. I would say that I’ve had many, many, many along the way that have contributed to how I think about things and I view, now, the arc of an entrepreneur as one of endless numbers of experiments with lots of failures and the key is to have the failure be ones that are contained and that you can move past, and the experiments succeed, you aggressively go after them and so this idea that failure is encouraged or embraced, I think failure sucks and I think people hate to fail, but that failure is a necessary part of the creation of really magnificent and significant things and the issue is to understand that it’s part of a process. On the personal failure side, I’ve had so many and I think it comes back to the radical self-inquiry, and I’ve been very, very public about my own struggles with mental health, I’ve talked about being depressed and I’ll talk one more step on that is, for many years I talked about a third major depressive episode when I was forty-seven about four years ago, and I talked about how I’d really only had three major depressive episodes as an adult, one in my mid-twenties, one in mid-thirties, one in my mid-forties, and radical self-inquiry, continuing to dig into it, spending time with my therapist who I see on a bi-monthly basis, I like to say I get an hour on Planet Brad with this guy that I pay money to who has to sit there and listen to me about whatever I want then keep it completely confidential. I had this view that I actually have had serious depressive episodes almost every year in Q4, typically between Thanksgiving and the end of the year but sometimes stretching back into earlier. I justified it, I described to people as my classic boom and bust cycle, I’d get exhausted, I’d wear myself out through the course of the year and I’d just sort of crash. I’m Jewish, I’d talk about how I’m not really interested in Christmas and don’t like Christmas, and I had this rationalization around my behavior, but when I actually looked at objectively, I was depressed, and it was because of how I managed my time and my physiology throughout the course of a year, and I don’t view that depression as a failure but I view my learning around that as a critical positive in the notion of radical self-inquiry which is, ‘Oh. I need to think about this way that I behave around this time a year differently and I need to take care of myself differently to, as a human, be effective.’ I can certainly be happier or whatever the right adjective you want to put against it is but if I didn’t do the radical self-inquiry I wouldn’t have ever got to that point. I would have just continued to live my life until the day I died and said, ‘Yeah, I’m just a grumpy Jewish kid around Christmas time.’

Great example. Brad, really very grateful for your time today. Where can people get in touch with you? I want to include everything in the show notes.

Yeah, so-

LinkedIn?

The best way to get in touch with me is email Brad@feld.com I try to respond to everything. My responses tend to be short and my request to anybody that sends me a note is just start with the punchline. Don’t give me a big set up because I get a lot of emails but I’ll try to respond. I’m on LinkedIn of course and Twitter, I’m @bfeld. I do check the stuff I get through LinkedIn on a daily basis and try to respond to anything that feels like I can constructively respond to, so those are the best ways to find me.

Great. Well, really appreciate your time. Thanks. Such short notice in responding to those questions live, I’m sure there’s a lot in here that our guests and audience will find interesting. Many thanks for your time.

Mark, thank you.

Have a good day. Bye.

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