Daniel Gross (How to scale entrepreneurship and applied innovation and bring it to the world)
In this episode of The Judgment Call Podcast Daniel Gross and I talk about:
- What attracted Daniel to starting companies in the first place?
- What makes (scalable) software special for entrepreneurs?
- What are the incentives in Open Source software ecosystem?
- Is religion a major driver for entrepreneurship? What are the drivers for starting a company and where does this unending optimism come from?
- How can ‘gamification’ help us learn?
- How can we institute measurements for long-term consumer satisfaction?
- How ‘Youtube style learning’ will change the future of the next generation.
- What benefits pioneer.app offers to successful applicants?
- How Pioneer can help curate a body of knowledge in entrepreneurship.
- Is entrepreneurship an algorithm?
- Are the BIG 5 personality traits predictive in a founder success?
- Daniel’s views on the ‘Big stagnation’.
- Daniel’s tips for the best places to start a company.
Daniel Gross is an entrepreneur and thinker and futurist who started out with Cue (a search engine). He later worked for Apple and joined Y Combinator as a partner. Daniel is also an angel investor and runs his own (remote) distributed accelerator /incubator called pioneer.app (funded by Stripe and Marc Andreessen).
You can reach Daniel on Twitter.
Torsten Jacobi: Here with me is Daniel Gross, he’s an entrepreneur, a thinker, futurist who actually started out with a company called Q. Later on, he worked for Apple on a lot of AI projects. He also joined Y Combinator as a partner and now runs his own accelerator slash incubator called Pioneer. As a first question, you can probably, I expect that. I want to ask you, what is an unusual thing you did early on in your life?
Daniel Gross: Yes, serving me some of my own medicine. It’s interesting and you’re going to tell by the halting nature of my answer that I actually don’t have a canned answer for this. So maybe that’s good for you, it’s slightly less efficient for the listener. Look, I did a bunch of things. I was fairly commercial from an early age. So I was definitely the kid who bought the, I bought the value pack candy and I resold it on the school bus. I would, I think pretty unusual. I mean, I didn’t attend quite a bit of high school. I spent most of it just at home with the internet really. And you know, the principal of the school was nice enough to let me do that as long as I passed test, which I did pretty well. I was very into kind of blowing things up as I think a lot of kids are, I don’t know how unusual that is, but you know, rockets and explosives were a shared passion of mine, probably a little bit too much. I think this is somewhat genetic. My grandparents used to say that my dad occasionally would make the house levitate with his chemistry experiments. So there seems to be a history of failed rocketry in my family. But those are a couple of things that I did. I think the main thing that really shaped me that I did early on in life, I don’t get full credit for, which is I started coding pretty early in life mostly because my father was a computer scientist and taught software engineering, and he just surrounded me with computers that had a C++ compiler on them, a C compiler on them, but didn’t have internet. And you know, at some point, there’s like not that much you can do in the machine if you have no internet. And so I looked at the code pretty early. And that’s, I mean, that’s really the real answer. And so, you know, I’m still kind of learning how to be an adult, but I have been working as a software engineer, gosh, for, you know, as a bad software engineer for 20 years now because I got started very young.
Torsten Jacobi: Yeah. I mean, I asked you this question just as a background, because you mentioned that’s one of your favorite interview questions, and you kind of relax the interview we a little bit and create a different atmosphere, kind of like Peter Thielts. And I didn’t know actually that’s his favorite question. What is something unusual that you’ve done where you feel like you’re different than the mainstream? That’s actually my pre interview question before the podcast, we kind of skipped that. But I use that one as well. One thing that I always ask when I have entrepreneurs on the show, and there’s a lot of them here, when was that that moment when you felt like you are an entrepreneur, you’re slightly different, so to speak. We still in this industrial age, I know modern Israel is quite different, but there’s a lot more entrepreneurship. But we still this industrial age where you’re going to have a career, you’re going to choose a major, you’re going to go on a certain career path. Entrepreneurship is you have to break out of the system sooner or later. And sometimes it’s a conscious decision. Sometimes you feel like you just can’t keep up with what people expect from you. How was that experience for you? Did you really want to become an entrepreneur when you were, say, 16?
Daniel Gross: You know, I didn’t. And I still don’t really feel like I can fully embrace that word because I’m still learning what it means in particular. I definitely remember having a bit of an existential crisis as a teenager, not knowing exactly what I would do. Everyone else seemed to know what they would do, and Israel is an interesting country because everyone ends up going into the military, or at least all men do. And so that starts to really form your kind of thinking and expectations of what you want to do in life. And obviously all teenage boys want to be fighter pilots because they saw a top gun. But you start really thinking kind of where you want to be and what you want to do. And I remember thinking, gosh, really, I like writing software, but I don’t know what I want to do. And I think I really lapsed into starting companies and helping people start companies kind of blindly. It was not out of a directed, I was not one of those people that always wanted to start something. I am somewhat wary of those people that have a mission to start something, if only because, you know, as I think anyone who started something knows, it’s actually not that much fun in the early days. And so I think that speaks to someone that, I don’t know, there may be something else going on. I may be interested in, you know, especially now startups are so popular, starting startup because that’s what everyone does, as opposed to truly doing it, you know, out of some other need. I kind of realized actually only a few weeks ago, I think I end up working on early stage businesses both starting my own and others because my real obsession is not even software engineering, it is ideas. I have been brought up in the kind of California and culture where, you know, much more than having money, having interesting ideas is the ultimate currency and the ultimate luxury. And you know, every kind of culture has its own different ones. You walk around Miami and it’s obviously the Greenland, Burkini’s and, you know, you go to New York and New York is very much about having art and opulence and apartments and new financial, clear financial success. And I don’t know, you go to Brazil and it’s about being a good soccer player in California’s culture, the Bay Area’s culture, it’s very much about ideas. And so to me, that stage of early, you know, business creation involves a lot of ideating. And so I think ultimately, you know, entrepreneurship is a term I don’t quite, for me, I don’t understand, but certainly working with ideas is something I consider myself, you know, basically I consider my job almost.
Torsten Jacobi: Yeah. You know, a lot of people associate entrepreneurship, this desire to change the world, to develop a paradigm and then kind of roll it out into the world and convince everyone, oh, by the way, I was right and I prove you right. It’s almost like a, you know, Machiavellian, I want to, I want to, there’s an ego part of it. I want to show you that I’m good and I’m better than what you, what you then, you know, it’s like a, the father that never accepted you when you think of Obama’s story. It’s a way to break out of your mold and show everyone how much better you are than you’re successful, right? That’s part of it. One part of it is that you actually develop within a new paradigm, um, how the world could work and then you roll it out through the use of technology and obviously software developers are in this fortunate place right now that they can just do whatever they do, some more genius, some less genius, um, and can roll it out into a company that kind of has a technology layer will develop a life on its own. If you’re a philosopher and you have an idea how the world should work, you have new philosophy, you neither have the tools to roll this out, there is, um, obviously books and there’s ways to influence people, but you don’t have this layer that you can just, um, as bundle put into an ecosystem and then it takes off from GitHub. So I always feel, uh, software developers are kind of, and it’s interesting the way you describe that. I feel like software developers are kind of accidental entrepreneurs in the last 20 years because this technology really is, um, is scaling the last 20 to 30 years.
Daniel Gross: Yeah, I mean, I think you bring up a very interesting point and, uh, which is, um, software in particular is kind of the perfect abstraction, uh, the best abstraction man has, has really ever seen in terms of, uh, you know, uh, it has a couple of very interesting things going for it, um, that are really unique when compared to other technologies and advances. One is everyone, basically everyone has the tools to contribute. This is very different from same biology where not everyone has a wet lab at home or a microscope at home. And I mean, you think back to even older technologies like the printing press or literally like writing with parchment, not everyone had that. And with software, pretty much everyone has now in their pocket, something very capable that they can contribute in. So that’s one is universal access to is, um, you can, unlike ideas in philosophy, um, and unlike things in biology, you can, you know, very much containerized software. You can put out a small idea, someone can build on top of it, someone can build on top of that. So that’s another very unique thing. The third thing is, um, you know, distribution is basically free and global. So if I were to start like a hotel chain or a railroad, like I could become maybe, you know, king of my own town, but here you see folks who are 23, 24 years old running these businesses that have global distribution systems that would make, you know, the Vanderbilt’s and the Rockefellers incredibly jealous person selling to Hong Kong, Macau, Mexico, um, in one fell swoop. So, um, that’s maybe the third interesting property. The fourth, I find truly fascinating in particular about the open source community, um, is a lot of people working on this purely out of and coordinating in massive numbers. Um, and I don’t truly understand how or why, but out of some other mechanic that’s not financial. Meaning we know we have this thing called capitalism and capitalism is cool because it gets people to organize together to build products that they, that then, you know, advance the world. Um, and that serves as a pretty good organizing software for, you know, for men. But there’s going on in the open source world is not really capitalism. And yet it manages to organize hundreds of thousands of people in very effective ways, like Unix, the entire reason we’re talking today is only possible because of open source software. Um, and I think it has to do with some of the other three properties we outlined about how universal it is and how much everyone can contribute and build on top of other kind of ideas as like sediments, um, you know, in kind of a fine limestone Iraq. But, um, this to me deserves further study because, um, if you could figure out how to organize a company the same way open source is organized, you could employ millions of people, um, you know, in a fairly cost efficient manner, but someone that, you know, um, digressing from our point, but I think very interesting.
Torsten Jacobi: Yeah. I think open source, from my point of view, is kind of like, like acting, right? You have this big platform where say Hollywood or the industry or now YouTube where a certain number of people make a lot of money, but access is relatively difficult and access is mostly by attention. So when you get more attention, you get into a distribution where you make a ton of money. But most people who are in acting and writing, they make a little bit of money, but it’s really not that much. It’s, it’s, it’s really at the lower end. And I think software development is a bit the same. There’s a lot of developers, especially in non develop countries, we don’t make a ton of money, but open source is the ability to get into Hollywood. You know, if you do something useful there, um, you will be discovered maybe by other companies. I know that, um, I personally have done this, um, I screen GitHub projects for the developers and then I emailed them and say, oh, you’re interested in working for me. That was my, my easiest way to recruit. And I think a ton of other companies do that too. Plus you get all the attention. So even if you don’t get a job out of it, or you do get the satisfaction of seeing other people use it, but also giving your feedback on that. Um, elaborating on this, give me an idea how much you think religion plays a role in entrepreneurship and the way we, we, we transport this belief system. And I, I, I heard you say on another podcast, it was really interesting that none of the religions have ever really been proven, right? It’s, it’s, it’s approved to still out there. So it’s just the belief system. How much do you feel the self fulfilling prophecy is also true in entrepreneurship?
Daniel Gross: Well, get to that in a minute. I did, I really liked your idea though, that basically the reason open source works is it’s, it’s, it’s a much healthier Twitter feed is I think what you’re saying in the sense that it rewards at the end of the day, like, you know, human is trying to figure out, uh, you know, what the system will reward and what will get them attention from other humans. And then Instagram, it is vanity in Los Angeles. It is, you know, recording your quick, uh, I don’t know, whatever actors do, um, their quick take your photos and an open source, interestingly, it is doing productive work. I think that is really interesting. Um, religion, I think, look, yeah, I mean, I think that’s like a, you know, infinitely layered question of religion seems to, I mean, it is a topic I know for certain. But it is way too nuanced and complex for me to properly reason about, um, I think it is incredibly deep. Maybe the only thing I can say with confidence is that dismissing it aside as something that is just wrong and false without truly thinking deeply about it is probably wrong. Um, um, you know, there is something, I love that question though. I, I, I mean, what is, yeah, this concept of a self fulfilling prophecy or a belief, I think, um, I’d look, if you look at it this way, rationally speaking, starting a company from a statistical standpoint is a stupid idea because you have 99.9% of failures, especially if you look at it an expected value basis. And yet people keep on doing it over and over and over again. It’s literally like there is a cliff and there’s a long line of people lined up at the cliff and they’re not even trying to, you know, get wings or something. They’re just jumping off the cliff and you look down at the cliff and there’s just bodies everywhere. And you can ask the people on the, um, that are on the line to jump, why are you doing this? Clearly it doesn’t work. And they say, well, uh, you know, 5,000 years ago someone did jump and they managed to fly. And I think that could be me. Um, that’s basically what the companies are now it, it, what’s nice in economics is that, you know, obviously death of a corporation does not mean death of a person, but um, um, uh, I think this happens quite a bit, uh, and, and, and so to some extent it is a little bit of a, of a similar to a religious mission in that sense. Um, I think that, that, you know, what fuels people to start businesses and kind of truly impacting the self fulfilling prophecy, I think would require us to inspect, you know, why someone’s doing what they’re doing. And it seems to me that, you know, just like the body has, you know, different fuels, uh, for living, you know, glucose and fat, um, the fuels for motivation to starting a business are different in different people and different people on different days. Uh, and there’s like six or seven of them, you know, there’s the people that started out of as a desire for financial independence because they don’t want to have to rely on anyone for food, shelter, water, sex, that type of thing. There’s the people started business out of, you know, a desire, proclivity to get kind of power. Um, there’s people that started out of, you know, real intellectual curiosity, often by the way, these are the worst businesses, but, um, uh, sometimes they’re the best, you know, but like Steve Wozniak, I think did not really want to make the largest computer company in the world. He just wanted to make some, something that was cool. Um, you know, just real intellectual curiosity. The fourth, I think that comes to mind is sometimes people start businesses out of just wanting to get approval from the scene to your point about GitHub. They just like are like, wow, you know, like other people have these cool tech businesses. I need to have one too, because I want to break into the scene. Often these people, I somewhat feel a little bit of, of this in myself, there’s an in out group thing going where, you know, you’re not born and raised in Silicon Valley and you very much want to break in because you feel like where you are now is the out group and you want to get into the in group. Um, it’d be interesting to see, of course, how that morphs. Um, so I guess what I’m trying to say is, you know, and I’m sure there’s a bunch of more of these kind of underlying motivational fuels for people. And, um, that is ultimately the reason why people are starting businesses. Uh, and maybe the final thing I would say is you quote JFK, um, I think JFK said something like, you know, the, the, the true, um, the true motivations behind any, uh, source of decision are hidden often and most to the decider himself. Uh, and so I think exactly the founder often, and I speak for myself here, I don’t know why I started another company in reality. I think that is the most mature answer I could give you. It probably my friends could give you a much better answer than I could. Um, but I think that’s a bit of what’s going on. Um, and so I, you know, figure, you may, I mean, of course, one wonders why does any of this matter? I do think it is helpful when interviewing any source of talent, you know, be it a founder or just people you’re hiring, you kind of ask yourself the question as they’re sitting across from you, you know, what exactly is fueling them? Which one of these people are, um, are they? And that’s just helpful because if I know what type of fuel I’m putting into the engine, I can predict the performance of the, of the vessel much more. So I think it is an interesting question.
Torsten Jacobi: I know I’m eating you with some really deep questions here, but I know, I know you can take it. You have a lot of creative ideas about those topics. I know you influenced by Jordan Peterson too, but a lot of this conversation hasn’t really been talked about for reasons that are a little beyond my understanding right now, to be honest, I grew up in Germany, which is supposedly a very religious country, just churches everywhere. But the actual, when the intellectual discussion about religion and the participation is extremely low, especially in the last 100 years, and Germany has this idea of being comfortable but very pessimistic about the future. And that doesn’t really why with what I read out of the old or New Testament, which is definitely a much more positive self fulfilling prophecy, which is, if we tried to build it as sooner or later, we will get there and fully agree that you’re starting to start a stupid idea when you think of it in the numbers game. But if you hit it big, then, you know, we, we talked to the general who survived the war, the people who are successful founders, we are not really talking to all the others because they don’t really want to talk about it, or if they do, they probably do something completely different and have kind of left the field. So we obviously have this good view there, but that’s the only way to progress, right? It’s not a safe bet, but it’s, it’s something that eventually is an invisible hand, but gets everyone something useful, because otherwise the starter wouldn’t be around anymore if it doesn’t do something useful. So I want to lead you to maybe a slightly easier question. I know you’ve been referring a couple of times to things are a game and that you want to gamify a lot of the experiences in your latest startup. Is that something you read out of Piaget? Where does this come from? And do you think that’s something that’s just like a hype or is that something that’s long term trend?
Daniel Gross: I very much enjoy Piaget’s work. Mostly got exposed to him out of my sister, who’s a much better student study of the mind than me, she’s a psychologist professor, very much made me the specimen in her manifestation of Piaget experiments at age six or so. So that was my first exposure to that. But I must say, I must say before one word to really give me any type of intellectual credit. My interest in games, I think, so maybe at some deep subterranean level, it’s a PHA thing, but I think it’s more that I just grew up playing a lot of video games. And I do think the video game is an abstract concept, if we were to just kind of imagine we’re describing it to like an alien that arrived on the planet, what is the idea behind the video game? I think very abstractly, we got this thing, this console, this computer, and we need to really keep the person in perfect flow and attention for as long as possible. We need to make the most engaging thing possible, and they say, well, how’s that different from a movie? You told me that’s what a movie is. And I say, yeah, yeah, yeah, but in a game, they can move things around, they can press buttons. And so if I give you a bunch of buttons to keep you engaged for as long as possible, that is the fitness function for a computer game at the end of the day. And that’s a really beautiful fitness function, in my opinion. Obviously, some games are too good at it, people playing too many games all the time, because it forces you to now build the perfect software. Like Gmail, the purpose of Gmail is to write email messages, it is not to keep you in flow. And in general, software does just the bare minimum, just what it needs to do. Not much more, that’s how capitalism works. So Gmail is very good for sending email messages, but it is not entertaining and fun. With games, there is no utilitarian purpose other than keeping you engaged. And so as a result, they’re extremely entertaining and fun, that is their job. And so you start, if you really study a game carefully, you learn a lot of very interesting things. I think some subtle and some not, so the clear things are obviously the reward mechanics and the game mechanics and basically creating false care cities and currencies and then giving them to you in jewels, gold, whatever these virtual things are, and dosing them to you at the proper times. There’s slot machine mechanics so that you don’t feel like the mind doesn’t actually know, but it predicts it might get something. And you can spend a lot of time calibrating those and good game designers spend a lot of time calibrating those, there’s all of that. And that, by the way, I regret to say, and I would love if anyone knows, just like a good book dissecting that, do not know of it, really the only way, and I’m still a student in this world, the only way I learn is occasionally by playing games. But more importantly, just by speaking to game designers, and we now build a lot of this stuff into Pioneer, so we kind of have a sense of what works and what doesn’t. Games also teach you a much more subtle thing, though, about software that I really think we ought to remember. No video game will work at like 10 FPS. The response time on video games is tremendous, especially if you play some of the old video games, like if you play Starcraft, that thing is blazing fast. It is blazing fast. And we have gotten lazy today, in my opinion, in software. And we make things that are really slow, I mean, multiple seconds. No one would tolerate in Starcraft a 1,000 millisecond delay, let alone a 6,000 millisecond delay. It operates at 10 to 20 MS. And you may say, well, who cares? You just told me that Gmail’s job is to send an email, so who cares if it takes one second or five seconds? I’d say every single study we’ve run on, say, search engines or games themselves or any other app shows that engagement and satisfaction go up if things are faster and more fluid and smoother. And so I think it’s important to realize that we are at very much a local maximum in terms of software development today. And in fact, we’ve gotten worse if you look at the response time. The Apple II had better overall response time than my MacBook Pro, just in terms of how long the human has to wait for the machine. And I really think we need to go back. I really feel like I believe it was the Roman Empire who just lost the art of making cement for a couple hundred years, and then they remembered how to do it again. I think we forgot how to do it. And games are an old relic we can hang on to just in terms of how fast and how efficient they are. So I think there’s a lot to be inspired on it and going back to the original point, because the game is at the end of the day a vehicle to command your attention in the most compelling way possible. And so as a result, it’s kind of evolved in, I think, very interesting mechanics.
Torsten Jacobi: Yeah. I think you mentioned that in another podcast as well. So listen to a couple of those. I find it fascinating. That’s the reason why I ask that is you got to be careful what you measure. Once you measure it, you can make it a game to achieve and a better level. I kind of like the leaderboards that you use at Pioneer. And I thought that’s a really good idea because there’s a lot of stuff out there that we can’t really quantify. But this way that we find kind of a random measurement where we have to start somewhere and then create a game around it to optimize for this, it definitely has a huge impact on the human mind because suddenly it’s something that’s visible, we can show off to friends as a social reputation value, kind of like Twitter works. The only problem that immediately came up in the light bulb that was flashing in my mind is what Twitter has done, it kind of has this cheap AI that’s kind of creating propaganda, like customized propaganda for everyone. There’s a lot of topics and Twitter might not be the only one. There’s a lot of companies who created these ecosystems of super customized experience, which is something we wanted in software. But what happened is they skewed the perception of reality so much that people have gone crazy. And we’ve developed a lot of short term incentives to be crazy, like as more crazy you are, as better you do on Twitter, as more crazy you are, as better you do with your friends because most of your friends, you don’t see them anymore, they’re kind of virtually and more followers. So what I’m trying to say is there’s a long term trend and there’s short term trends where we have to be very careful what we do with the subject, so to speak. We have this knowledge of psychology, we have these kind of billing but subjects, but they don’t really know what’s going on with them. Don’t you see it as a danger?
Daniel Gross: Yeah, I mean, yeah, I totally agree. Look, I think the common view, perhaps the correct view is that if you look at Twitter or Facebook or indeed the entire social, kind of broad social networking world, it is not making humans happy in the long term. And so that’s an issue. I think there are two subtle, there’s by the way, two important subtleties that I think are important to take into account. One is for the Western world, I definitely think we need to come up with better mechanics in terms of what we incentivize and what we show because it is clear that it’s just not making humans happy. And the reason it’s, for the most part, capitalism does try to make things that make humans happy, but it’s flawed. It’s flawed, of course, because the fitness function to your point that measures on is fairly short term and not long term. I mean, we’re not the first to flag this, this has been written about by economists. And all sorts of mechanics have tried to come up in the past about ways of measuring long term impact and happiness, but this is always the tension. And I think, obviously, public markets increase this tension, I’m very focused on kind of short termism. And so as a result, they optimize short term metrics at the cost of long term dissatisfaction. For all the rage on social networks, by the way, I think you should direct, I think the society ought to direct just as much rage at Mondelez, which is making chocolates and candy that are going to her sheep, what have you, that are very satisfying in the short term, but are making society extremely obese and unhappy in the long term. By the way, costing society a lot of money. At the end of the day, the candy manufacturers ought to subsidize the health insurance companies because they are effectively serving into one another. No one’s angry at them, of course, because we all have fun memories from our childhood about the Hershey bar. But I think it’s the same exact evil and the same exact poison. The second point I should mention is one not often talked about the first one is extremely common and popular. So yeah, I mean, I think you have to come up with ways to measure consumer satisfaction in the long term. And then I think everything else will write itself. The second thing though is, in my opinion, quite important. If you are growing up in a world where the physical world around you is desolate and extremely uninteresting or extremely violent or just extremely, just not great, it’s quite likely that even with the hormesis or negative effects of social networks, it’s positive for you to engage in, like, oh, you’re going to tell me, yes, Instagram, and it makes me feel FOMO that I don’t, you know, that that girl doesn’t look like that model. And I say, yeah, but if you’re growing up in rural Africa and it’s either Instagram or, like, you know, Kalashnikov’s, I say look at Instagram. More precisely, the product I’m very excited about here is YouTube. YouTube, especially if you look at, just like watch all the, there’s all of these YouTube channels about basically young Richard Feynman’s, you know, Jordan Peterson’s for science and technology. And these are people, you know, talking about laminar flow, talking about rocketry. And YouTube is so interesting. As a result of basically being a free, equalized platform, mostly rewarding eyeballs, the people who float to the top are the most compelling communicators. And sometimes you see people, by the way, who are, like, devoutly religious and their weekend job is being a pastor at the church. It’s that same crisp communication skill you develop when you speak to an audience all the time. There’s going to be a generation of children in Africa who just, instead of getting educated by, you know, the local people about witchcraft, are watching these YouTube videos about laminar flow from someone who speaks, you know, as eloquently as Barack Obama. And that, I think, is one of the most important effects in the world, just in terms of upleveling, you know, African mobility. And when I say Africa, I also mean India, I mean any developing nation. And that’s really important. And I wouldn’t want us, you know, as we sit here in our developed countries, you know, in the comfort of air conditioning and, you know, ice water, to, you know, to think that we ought to shut all these services down because they’re making our cousins or children unhappy. Because it is, I think, probably pretty life changing as someone who grew up from a developed nation, but still, you know, in the middle of an Intifada war and explosions all the time. The internet is a place of solace and refuge if you’re not, if you don’t have that kind of privilege that, you know, I guess you enjoy here in California. So I wouldn’t want to miss out on that effect. I really believe that, you know, the first upleveling of kind of African intellect, Indian intellect was due to obviously putting iodine and salt. This was a big deal, just in terms of upleveling IQ rates. And I think the next level of it that I’m extremely excited about is just, just imagine we are like literally shoveling YouTube into the eyeballs of three billion, you know, Indian, African, Vietnamese kids who are just going to come out communicating better than someone who went to Oxford. I think that’ll be super exciting.
Torsten Jacobi: Yeah. I like the way how you look at this, that I fully agree with. It’s a godsend for the developing nations out there. And I actually have this theory that most of our teachers will end up being remote and they will most likely be in the developing nations teaching kids five to 18, most of their knowledge. And then they go, they go from there, irrespective of that, but I know you’re accelerator. That’s really interesting. I would call it an experiment and I hope you can, you can tell us more how it actually works. You, it’s fully remote, you never get to see people from what I understood, and you are able to, after certain qualifications that I haven’t found out how it works to be honest, you get certain services for free or potentially you get an equity investment. Can you help me find out how this actually works?
Daniel Gross: And it’s great feedback for us that it’s not crisp and clear. It’s not crisp and clear, you know, because we’re evolving and constantly in response to customer feedback, we need to really hone in on our messaging and I’ll explain it to you now. It is actually much more simple than the website tries to make it out to be. I think we’re trying to say too much too quickly on our website, which is probably a failure of the leader of the company who’s speaking to you right now. So in a nutshell, the big idea behind Pioneer is this. There’s a lot of people who have projects, then they’re wondering if they can turn that into a company or how to turn that into a company. Basically, they want to be successful, they don’t really know how. And Pioneer is really meant as almost like a Strava or a video game in many ways to help you figure out what to focus on in order to take your GitHub project and turn it into a real company. You come to the website, you fill in an application, and then you basically try and make consistent progress over your project week over week. And the more progress you make, the higher your score goes. Your score is a composite of like a bunch of things. Everything from the revenue you’d be getting on strike to what other people in the community think about what you’re doing. It’s kind of like a crowdsourcing Reddit model. So they have the ability to give you points. And you basically try to stack up as much points as you can over the course of two weeks. If you do well, you become a pioneer. And in exchange for 1% equity in your company, we basically form your company on the spot. We make you a Delaware C Corp. We put you in this thing called Pioneer Camp, which is like a miniature version of Y Combinator. And then it’s a compressed version in many ways. And then we have a demo day, which is basically a live stream done over the internet that investors watch. And then it basically ends up becoming a way to raise money. And so it is kind of, I think, the perfect thing for someone who is just not quite sure but would like to turn their day into a company. And the way you advance in it is extremely structured and oriented. What I’m hoping to improve on, basically what I’d like to do is I’d like to scale startup. When you start a company, you make a lot of different mistakes. And right now, the way people fix those mistakes or not make them is they get advice from a bunch of people. And that’s like a super hand me down mechanic. It’s like an oral code on how to run the machine. The Talmud is to the Old Testament, I feel, or the oral part of the Old Testament that nobody really knows anymore. Right literally, and as you know, the Talmud was actually not written down for a very long time, actually, until, well, that’s a whole other story, but so Pioneer puts that into software. So it’s really clear what you work on. You go to the website and you kind of tell the system where you are, and you’ll get goals. And if you do well, you end up getting these cool things called challenges, which is basically, you know, we’ll tell you, look, if you can get, you’re right now at like, say, $1,000 with MRR, if you can get to $1,300 in the next two weeks, you’ll become a Pioneer. So it’s just like very in a very structured fashion tells you what you need to do to advance. And look, it’s not meant to be, you know, like it’s not a startup oracle that’s going to tell once you have, tell you once you have like product market fit, who to hire and what to do. It’s really meant for people that are kind of just getting started. And the experiment, the hypothesis is if we can like scale startup advice and software by basically building a structured curriculum around it almost, I think we can create and generate many more founders. And that to me is what I’d really like to do. Like if you could have that be on my tombstone that, you know, Daniel has left this earth, but as a result, there’s like a thousand more founders of great companies. That’d be really great, because I think right now societal progress is actually bottlenecked on the number of extraordinarily productive people that we have, meaning I don’t think we’re bottlenecked on ideas, I don’t think we’re bottlenecked on energy yet. I don’t think we’re bottlenecked on like the amount of coal, gold or dollars that we have. I think we’re bottlenecked on the number of extraordinarily productive people that go on to do things. And the largest graveyard or the largest, how would you say, like goldmine of these people is folks who edit themselves out of starting something because they don’t know how or they think it’s not for them or whatever. And I think we ought to have many more startups. Like I think the world could stand to have instead of basically five large tech companies, I think there could be a whole archipelago of a thousand smaller, you know, $10 billion companies instead of $5 trillion companies, five single trillion companies.
Torsten Jacobi: That’s extremely laudable. And then the only thing I can add is say, how can I help? I think this is exactly true. And I was just talking to Peter Porter’s a couple of days ago. And what we’ve been talking about is there isn’t a lot of, to our knowledge, you might be incorporating this, there isn’t a curriculum of entrepreneurship, there is bits and pieces all over the internet. There’s a lot of stuff on the internet, some of it is outdated, some of this doesn’t really apply to software, some doesn’t apply to biotech. So just the way you can learn about entrepreneurship isn’t very structured. And of course, there is a lot of theoretical knowledge that’s there’s professors who teach entrepreneurship. But what actually you need as an entrepreneur that’s relevant to you. It’s not an easy education. So I think it’s extremely laudable what you do. And the other thing that Peter mentioned, I’m not really enough, not an expert in accelerators at all. Do I care so much about entrepreneurship? I always felt why Combinator is optimizing for odd variables. So it’s the demo day. You just build as much as you can for demo day. You don’t really, even if you have customers already paying customers, they kind of fall by the wayside because there’s more money for you potentially to raise some demo day. That seems odd to me. Maybe again, I’m not an expert. I just see this from the outside. There seems to be a certain dynamic that wants this accelerator program as why Combinator has done gets a certain motion. It takes away what the individuality of the startup and you’ve become this number at demo day. Maybe that’s just my take on it.
Daniel Gross: It’s interesting. You’re making me, your earlier point I think connects about this as systems grow. I think you start a thing, the product’s pretty good, and then when you start growing pretty much any company or thing, humans become metrics and numbers, and then you just try to optimize those numbers, and I think, no, broadly speaking, this kind of works. This is why when you call an Uber, you can get into a car. Why when you turn on the faucet, water comes out, these are all organizations optimizing numbers, but I think it is, if left unchecked, sometimes when a product reaches large scale, the quality can go down, you know.
I feel it’s more like an art, and I feel like I’m more inspired by artists sometimes than by actually CEOs or people who spent their whole life in business. Maybe that’s just me. It’s just like a weird kid, but I feel you can’t, it’s not an algorithm. Yeah, and I always enjoyed the distinction of say art and algorithm in just in terms of are you going to be able to numerically quantify the ingredients of success, or is it just way too messy and complicated and inherently unmeasurable? That is where art, you know, I think art can really be meaning like Jackson Pollock, like there is some type of function somewhere in the perfect world that could quantify what that is and how to create that, the right brain cells firing, but it’s just way too messy and complicated, say versus, you know, a fairly simple, you know, triangle equation at the other, you know, extreme. So I think you’re right, I mean, I think what makes, the more I look at what makes for good founders, especially when you think of the composite, the good founder plus the good company, there’s so many moving variables there that attempting to callously just point people at simple metrics, I don’t think works. And I do think you have to think, you know, pretty deeply about it and, you know, trying to square that difference, you know, is obviously kind of what we’re trying to do with Pioneer. And I think even if we fail, I’ll feel a little bit, I’ll feel, I mean, I’ll feel bad, but we’ll feel, we’ll know that we’ll have produced, I think, a pretty significant just advancement in the way people think about this and in just research on this topic. I kind of, you know, obviously we’re mere small kittens here, but I think it is helpful actually to have that view as a founder of a company because, you know, it gives you a sense that of a broader mission. It’s kind of like when Elon started Tesla or I think SpaceX, the goal of SpaceX was to just expand NASA’s budget and fail. So, you know, I think it is a funny thing to tell yourself. One thing that’s really related to this accelerator and the metrics, I know you studied the Big Five, the psychometrics, do you still use them as a predictive measure? So people go through personality tests before you join the program and then you use them as a predictive measure. That would be our first question and the second is, would that be something that you can do just of the LinkedIn profile? So instead of just waiting for founders to contact you, why don’t you just crawl LinkedIn, run through the same algorithm and basically reach out to people say, oh, by the way, we have $100,000 for you, here’s what you should do. Yeah. So to your first question, yes, as an optional thing you can do in Pioneer is, and we give you your results. So it’s actually like a good product. I think it is the, I mean, I’m obviously biased. I think it is the freest in the sense that it is the only free, good psychometric test you can take for yourself. You know, you can make the fake profile, fake name, whatever, and just take it, enjoy it, and it’s on us. And we do a little bit of what you said, a bit of this outbound work too. I would consider all that stuff to be still research project for us. And I think the actual accuracy of even the most cutting edge psychometrics used by, say, even the Marines, the military, the Israeli military, even that is still pretty questionable, in my opinion. We started threads on getting much better at it. I wouldn’t say we have anything to tell the world about quite yet, but I think even the big five, and I would consider myself fairly steeped in all the literature or much of the literature on that, is going to be viewed 10 years from now as the equivalent of watching a Chris Nolan epic movie like Inception through television from the 1940s. You know what I mean? It’s just super low resolution. And bear in mind, these are self assessment surveys. So you give me the same self assessment survey at 5 a.m. before I have a cup of coffee at 10 a.m. and at 2 p.m. You’re going to get different answers. So I’m pretty… But you collect a lot of data points. So I feel like if the margin of error within 2 a.m. and 8 a.m., if that’s not taken care of in the test, then the test is maybe too short, or it’s not the perfect test. So if you have enough data, and maybe you should take it twice. I mean, maybe there’s a couple of points to this. So I was talking to Mike Saray, who used to be in Navy SEAL, who is retired now. And we talked about skills and talents, and he’s like, skills is worthless. Forget about this. You know, complexity just needs talent because talent can work with the different battlefield. And the battlefield is now the war on talent and the war in your own organization. It doesn’t have to do anything with the real war anymore, fortunately. And he said, to identify talent, there is a framework you can make people go through and pretty much any organization. And he doubted that it would be something you can basically read of in LinkedIn crawler. But he said there is a framework of certain tests, psychology tests, that you can institute anywhere you want an accelerator in your own organization, and you will be able to optimize for talent. And you basically never have to recruit for skills again, which is kind of what the accelerator problem is, right? You don’t really need the skills because you can even just go to LinkedIn. What you need is the people who will accelerate way beyond their initial base point level where they are now. That’s what you want to be part of, right? Yeah. I think that’s right. And, you know, in reality, we have found for us watching people’s performance in Pioneer and just watching their score move as much more predictive over as much more predictive power over any sort of test, both tests that we were able. And it goes back to your point about GitHub, like if you can, meaning if I only get one point in time of a person, you know, we could kind of construct things. And I think there’s a lot of interesting things we can do, not just with LinkedIn, but also all sorts of other emissions a person creates, you know, on the Internet. But if you could get multiple points over, say, a two week period, that will be much better than any type of test, you know, and we say, well, okay, that’s not that counterintuitive. That’s pretty obvious. I guess it’s the shape of information of kind of predictive power that you get is not linear, meaning like, if you could give me even just four data points instead of one, I am 10 times more likely to classify the person correctly. So I think the best thing to do for any type of talent picker, be it someone looking to invest in companies or someone looking to hire people, if you can, is you just very much, you don’t, doesn’t have to be a long period of time, you know, for pioneers, two weeks, it could be even three days, but you need to be in tight contact with them for, I think, two, three, four, five days, and then everything else kind of flows from there. And certainly the landscape tests, you know, greatly expands, if you can spend multiple time, you know, multiple hours with them together, this won’t fix the problem you would kind of positive, which is how do you figure out who to reach out to. But you know, I’ll say one final thing, by the way, I mentioned my psychologist sister. I called her and she’s older than me and I called her a couple of years ago and I first started getting into the big five and I said, wow, this is really the utensil of life. Like I don’t understand why you could just apply this everywhere. You could apply this to predict what people will buy, you build a company out of that, you could build this into a dating app, you could build this into a personalization experiences for like Netflix and she says, Trump campaigns, right? Yeah, totally. Yeah. Cambridge Analytica. And she says, yeah, call me in like a year. And I called her back a year later and she’s like, yeah, how’s the big five going? And I said, well, you know, it’s like, it’s interesting, it creates conversation, but it’s not really that accurate in social sciences when, you know, when they get really excited about something having predictive power IQ, IQ and earnings, the biggest like predictive power relationship you have, even that’s 0.6, 0.7, which still doesn’t explain almost half the variance. So, and she says, yeah, you can get caught in this big five halo, where you think it’s the utensil for everything and you kind of realize it’s actually not that good. It has one very obvious value, which is it gives people language and a way to describe who they are, who the other person is. I think that is quite useful. And I think even Myers breaks, which is basically no accuracy whatsoever, it’s still helpful because it gives people taxonomy and language that is shared. And that’s probably quite important for just proper exchange of information. Yeah, like software eats the world, I think software needs to eat some social sciences. And I think that we can can make this or in the life sciences that would be very useful for them. I think because everyone just kind of starts from scratch and with the software layers underneath if they are correct and if they are working life for pretty much everyone in these industries and sciences would be much easier for my part of you. Hopefully that’s coming. I have a couple of quick questions for you. If you can just answer them with like one sentence, but you can obviously say more if you like the first one really easy for someone, someone like you know, I’m just kidding. It’s a tough one. Do we live in simulation? Yes. Okay, that’s it. You sure? What is the percentage range? How sure are you? Yeah, I’m 70% confident that intelligence does not end with the peak of intelligence does not end with the Homo sapien. How about that? Okay, that’s a really good one. Will there be a singularity in 2045? I have no clue. Yeah, that I don’t know. I’m bad with the AGI stuff because I’m too close to it. That’s allowed. Great question. I’ll skip that one then. How many of your investments pitched you with a Hollywood style trailer? The initial pitch extremely few, certainly for like later rounds, maybe 10% still very small though. You mentioned that and I fully agree. That’s really a way to send out from the crowd. If you can pull that off, that’s wonderful, create a narrative, spin some optics around. It’s fantastic. I thought that’s a great idea. More people should do that. What do you think of Patrick Collinson? I think he’s managed to produce a nice Irish internet business. The words in his tweets are extremely overcomplicated. That would be my main source of feedback to him is I would like to see him tweet a little bit more drunkenly and a little bit more in kind of a liberated fashion because my thesaurus is not that large. Interesting. Do you think the big stagnation is real in a Peter Fields topic at Weinstein? I think every generation needs a moral panic and if the great stagnation is our moral panic, I say we’re living in wonderful times because you know what? Our parents had nuclear warheads as their great moral panic. I suspect in reality, it’s like when you go scuba diving and you experience warm layers and cold layers intermittently as you go down. It’s just thermal layering of the ocean. I imagine society goes through periods and certainly if you go back in history, look at the dark ages, we basically stopped doing anything for like 1,000 years or so and then suddenly got very interesting again and now it’s gotten super interesting with technology. I suspect there will be a natural ebb and flow, but on the whole, I’m extremely optimistic that things will continue to improve. What do you think self driving cars will finally happen or we keep pushing it out, fully self driving car, we keep pushing it out every other year for another two years? Certainly our grandchildren will have self driving cars. I think the main question is if we and our children will, I suspect the answer is yes with maybe 90%, 80% confidence. Going back to psychology. What did your personality test, the big five, what did it tell you, what are your traits? You must have taken it, right? Yeah. I mean, at this point, I probably can’t really properly take them because I’ve taken all of them too many times. It’s like staring at a Rorschach puzzle for days on end. I don’t know how helpful it is, but for me, it was helpful to both confirm kind of things that were obvious to me. I do have an unfortunate habit of being slightly addicted to ideas, so scoring on openness commensurate with that. I tend to not be very agreeable in private. I didn’t really learn anything new, but it was nice to have words, and this goes back to my point, it was nice to have words to embody what I believed. Yes, it’s definitely for an entrepreneur, highly predictive, right? I mean, you’re the expert in this, I’m just asking for a friend. Yes, I think in general, most of the literature on entrepreneurship and BFAS is, well, there actually isn’t any good literature. They have all this literature on patents and BFAS because it’s the database they have, but I can tell you, as someone who’s degenerated many patents, it has nothing really to do with intellect or entrepreneurship. It’s just what happens when you work at a large company. Apple starts putting your name on patents, so I think that number one patent haven on the planet is San Jose. There’s nothing special about San Jose, but that’s where Apple’s patent office is. Yes, but in general, you want to look for openness, low agreeability, and conscientiousness. That’s the trinity the research will tell you to focus on. What I have left is, so what’s next, what’s your next moonshot? I know Pioneer will definitely help you. What do you want to do next? What really excites you? Well, I think for me, my issue, my big failing is I am extremely interested in ideas and French ideas and creating them and supporting them. There’s every day in my mind, there’s a different possible moonshot. I think what’s been nice for me, and I hope many other people can achieve, is I’ve been blessed with a job that basically demands that of its leader, meaning all I do all day is work with people trying to figure out what their moonshot should be. In that sense, I think I can continue coasting on this for an extremely long period of time. I do think there are more big things I hope to see improved on in our lifetime. The big thing that’s been on my mind lately that I’m hopeful we can improve on is just energy. We are still not even a Kardashian type one civilization, just in terms of the amount of energy every person has available to them. It’s quite sad because obviously the solution is extremely clear and it was discovered 80 years ago, we just have to remember how to use it, but I’ve known media plans to start a nuclear reactor. I just think it’s something that would be very important is for everyone on the planet to have 10 times more free energy available to them. You do have one of your pioneers has a fusion concept, right? We have a fusion reactor and then we have the ultra high density deterium folks. That’s what I was saying earlier, this type of product to me, although I think it’ll work and I think it’ll stand to be a great financial return, also happens to be what my mind would orient to is just supporting all the different people with different ideas, nuclear just being one example of it. I wonder, and I introduced you as a futurist because I feel like you think about these trends a lot. What do you think is an entrepreneur, not necessarily for pioneer, but if you and you’re very young yourself, but say you’re 18, what kind of field is really promising right now? Where would you take another look at just dismissing it really quickly? I think there’s two ways to skin that cat. There’s many ways. I should mention I don’t understand other worlds that are probably even more ripe for innovation than my own because they’re less likely to be picked over. There’s probably a lot in the world of biology, I just don’t understand it, so I won’t comment on that. I will say this, in the world of technology, we can split it into two, hard and soft. In the software world, what I would probably do is, if I was 18, I would try to find the most out of pocket industry that’s least tech connected and work there for one to two years. So I’m talking, work at a farming company, work at someone that does insurance on horses, the some fringe industry. I spend a year or two working there and then I would build a software business around it. Literally that is the, if you want to write code and become rich, that will work. It will actually work. I don’t know if you’ll be a $100 billion company, but you will definitely be a billion dollar company if you pay a touched industry and just build software around it. And there are like a thousand of these right now available. I think by the, you know, 20, 30 years from now, I don’t know that they’ll be that much. So this is truly like the era of oil barons on the internet and you just need to go to Saudi Arabia. That’s a really tough recipe for a first time entrepreneur, if I may, that’s exactly what I did. I installed enterprise software for the procurement cycle in the German manufacturing industry, like auto manufacturers. They didn’t, I mean, they were touched by software, obviously, but they weren’t touched by this kind of software. And what eventually worked, you know, the lifetime that we see as assigned to you is short, right, is a year or two. And we eventually signed up time and events. But in between the sales cycle of like a year or two years, I mean, I like your horse wrench example way better, but the potential for being really frustrated because everyone is like 15 years behind or 30 years behind or 50 years behind, that’s really tough for a first time entrepreneur. I fully understand your rationale there. That’s a short fire bet, but it’s really depressing. Yeah, I mean, I think you can try to be a bit more specific about your search functions. For example, you may want to go after an industry that has just a bunch of small businesses as opposed to, you know, a bunch of giants like Demo Benz, like actually the equine business here in the US is actually pretty fractal in that sense, you know, and the veterinary care, you know, business in general, I think it’s pretty interesting to look at, it doesn’t go down in a recession, everyone needs to take care of their pets, that type of thing. So anyway, so that’s one for the hard tech stuff, there’s a lot of big things one could do. I think the interesting, you know, everything from space elevators to rockets and flying cars. You know, I think the main question there is, I would not get, I see a lot of people get caught in a loop where they decide they want to work, they want to be Elon. And you know, I grew up, the generation I grew up in is want to be Steve Jobs. And for all the issues with that, the benefit of want to be Steve Jobs is it was much more approachable and tactical. He ultimately was building a, you know, he was building software, hardware, but like mostly software. And so it’s very tractable to be Steve Jobs, you can make an iPhone app and feel like you’re Steve Jobs. Feeling like being like Elon is a bit tricky, trickier, because, you know, obviously the ideas are much more bombastic, and I see a lot of founders getting stuck in this loop where they’re unsatisfied with anything that doesn’t feel like Elon. And you just got to remember that all these big things started out really small. You know, Tesla, as I mentioned, or sorry, SpaceX, as I mentioned, was going to be some Hollywood stunt to try and blow up NASA’s budget, it wasn’t going to be the largest private space company on the planet. And Tesla wasn’t even run by Elon to begin with. If you look at the early material, he was just an investor in it, and he was going to be yet another kind of electric car company, but they were just going to try to retrofit Lotus cars with batteries that they got from laptops. So like, if you go after the fully formed startups, you’re never going to end up actually starting something. If there’s a hard science area you’re excited about, I would just try and figure out what’s the really simple thing that you can build, that you can put on the internet, that people will clap at. So that would be, and by the way, the final thing I would say is not everyone has to start a company at 18. In fact, many people shouldn’t, and, you know, working at another company for just one year, I think will teach you so much, and now I tell you, for everyone who worked for me when I was 18, 19, I apologize quite a bit, because I had no clue what I was doing, and if I had just worked, you know, I’d say Apple one to two years before, I would have been able to be much smarter. The questions were excellent. That was awesome. Thanks, David. I’m surprised you gave me so much time. That was awesome. Thank you for doing this. I’ve done many of these podcasts, and your questions were definitely top decile. Thank you so much. Awesome. Thank you.