Auren Hoffman (00:00.206)
Okay, here we go. Hello, fellow data nerds. My guest today is Emil Michael. Emil was the chief business officer at Uber during its hyperscale period from 2013 to 2017. He's currently the CEO of DPCM Capital, and he's also a strategic advisor to a number of amazing companies, including Code Academy, GroupMe, Taser. Emil, welcome to World of DaaS.
Emil Michael (00:23.84)
Thanks for having me on. It's been a long time. Good to see you again. Thanks for having me on.
Auren Hoffman (00:27.422)
Yeah, great to see you as well. Um, now there's a narrative out there that something went wrong with tech IPOs in the last few years and the best companies were kind of slow to IPO or still having, and even strong companies like Instacart ended up going public at lower valuations, like what, what do you make of that narrative?
Emil Michael (00:48.449)
So, in the zero interest rate environment that we went through, which ended in kind of early 22, late 21, investors or VCs were complaining, well, these companies weren't going public by choice because they could get money in the private markets. And that was true. They were like, well, why would I build in public when I could build in private? And I don't have to worry about sort of the quarterly analyst expectation thing. It changed so abruptly.
that companies then couldn't go public just because the markets were closed. The world didn't want to hear about these companies and certainly didn't want to give them the multiples they had when they were private. So then you had this break and then Instacart and a few others started to come out. And I think as the multiples have come back, as you look at the S&P 500 and the NASDAQ and they've all come back, you'll start to see IPOs that were backlogged
Auren Hoffman (01:28.683)
Emil Michael (01:46.148)
for the last few years come forward now. Think Canva, think Revolut, think Stripe, these companies that have real revenue, real business models, great companies. Now they'll start to go public because they're also getting to the end of their 10-year life cycle on options, which is a big thing for employees.
Auren Hoffman (01:51.662)
Stripe. Yeah. Really great companies. Yeah.
Auren Hoffman (02:04.562)
Okay, yeah, so they have no choice. They have to go right. I guess you can kind of convert them to RSCs. Like there's ways around it, right?
Emil Michael (02:11.028)
Yes, but there's big tax bills associated. So in this last round, Stripe had to raise a lot of the money they raised, went to pay the government taxes on the RSUs. So it's not uncomplicated to deal with it. It can be dealt with, but I think you're going to see a lot of IPOs second half of the year.
Auren Hoffman (02:21.118)
Auren Hoffman (02:29.098)
Okay. Interesting. Um, okay. Wow. Okay. Yeah, that'd be great. I think that'd be great for like the world. If we started to see more of these companies out there, though, I mean, if I were in a company, if I were in a company, like the last thing I want to do is run a public company, it's just like, it's annoying and you're constantly getting sued by like, you know, some random guy who's got like $50 of stock in your, in your, in your thing, like it doesn't seem like the best thing, like I would try to stay private for as long as possible. What are like the big advantages?
Emil Michael (02:30.664)
Reddit maybe too.
Emil Michael (03:00.48)
So the big advantages of Chrome Public are, one, your employees and your investors will stop annoying you, because at some point, they want liquidity, too. They've done enough work for a long enough time. But that is something that's a real thing that founders have to deal with. The second thing is, when it comes to acquisitions, if your company is going to grow by acquisition, either because geographically,
Auren Hoffman (03:11.402)
Yep, okay, good point, yeah.
Emil Michael (03:29.172)
or you want to buy something that's an adjacent product, it's much easier to deal with a public market currency because then you have access to the capital markets and overnight you could generate cash or overnight you could issue stock. If you've been in private to private deals, they're really hard because there's no market price for them, right?
Auren Hoffman (03:37.708)
Auren Hoffman (03:45.058)
Okay, yeah, and there's a marketing thing too, like going public is like a marketing, huge marketing event for a company as well. You trust the company more in a way once it's public.
Emil Michael (03:57.664)
Sure, yeah, it's more, yeah, trust me. But I will say this, and there's so many investors out there who talk about go public, go public, go public, and it's not always the right time if you don't have product where you can fit. Look at all these really, these real estate tech companies that went public that are now really suffering due to what's happening in the macro environment, and they're kind of stuck, and employees aren't happy. They're watching the ticker every day. So there are some downsides to it that are real also. You know.
Auren Hoffman (04:26.23)
It's nice when you have a little bit more predictable revenue too, right? Now Uber just closed out a pretty amazing year. The stock was up like 120% in 2023. Can you unpack it a bit? Like what's going on with the company right now from your perspective?
Emil Michael (04:28.925)
Emil Michael (04:41.844)
I'd say that the best thing that's happened at the company in the last year and a half or so is that they've proven that they're the world leader in ride sharing and that ride sharing can deliver profits. So what was unclear before was are they going to stay the leader? Can Lyft or anyone else in these other regions get more market share consistently over time?
Auren Hoffman (04:58.859)
Emil Michael (05:12.256)
And they've proven, no, they can hold their own and there is a network effect to being the largest player in ride share in any one market. That's been proven. And number two, that you can make money on it. And Tador is credit. They have made money. So now you have a money printing machine on ride sharing. And that's where I think most of the gains have come from. UberEats, while it grew, it's still second to DoorDash. It's ahead in a few European markets and maybe Mexico.
But if you look at the market cap of Deliveroo and some of these other companies, I don't think that adds that much to the Uber story in the last year and a half, especially post pandemic slowdown for food delivery.
Auren Hoffman (05:52.862)
And, and in the U S ride sharing market, I think Uber is like, let's say roughly 75 and Lyft has a 25%. Like, do you think like those types of things, like there, it just makes sense that there's a duopoly cause it's such high startup costs and stuff. And you think kind of like, we'll maintain a duopoly for a very long time or
Emil Michael (06:12.604)
Yeah, I think so. So the thesis that Travis and I had about ride share was that it's winner take most. And the reason is there's a network effect. So the more cars Uber has in a city, the shorter the wait times for riders, the more time per hour that a driver's got a fare in the car so they're making more money. And that network works now.
That being said, there's always room for a number two, because even from a brand standpoint, people like the Lyft brand better, or it serves one neighborhood better, or whatever. But most of the profits are gonna go to the big player. So the profits aren't gonna be split 75-25. It's probably gonna be 90 to 10, or 95 to five. Something, but I do think it's extremely hard for a third player to get in the net because of the liquidity. You have to like...
Auren Hoffman (06:54.154)
Yeah. Or 110 to negative 10 or something, right?
Emil Michael (07:06.06)
pay users to know that it exists and try it, a new brand. And that's a lot of money, like a free ride, 20, 30 bucks. And in a zero-interest rate environment, we could afford that because we raise money every couple of weeks if we wanted to. And then getting drivers, you have to go recruit drivers. Now, recruiting drivers is easier now than it was back in the day before everyone had smartphones. But it's still very expensive to get critical mass in any city for a new entrance.
Auren Hoffman (07:11.563)
Auren Hoffman (07:32.322)
In the food delivery world, like in China, where food delivery is super developed, you've got kind of two major players. How do you see those things like shaking out?
Emil Michael (07:42.972)
I think you have a similar dynamic there, because on the...
Auren Hoffman (07:45.954)
Cause you could have, I mean, there's from a restaurant standpoint, like adding a fifth food delivery place, like it's no burden. Like it's actually pretty easy. It's pretty automated to sign up. So you might as well sign up for the, so the, at least on the supply side, it's easy to, to get more restaurants, right?
Emil Michael (08:04.628)
Yes, just like it's as easy for a driver to download another app for ride sharing, right? So it has that similar dynamic. Now, especially if there's a middleware layer that takes the Uber Eats feed, the DoorDash feed, the Caviar feed, and so use a restaurant, like I could have 20 iPads. I don't care. It all comes down to one sort of thing. So you're right about that. But on the consumer side, it's just another consumer product. You got to market to a ton of people and hope they adopt it and remember to use it. And remember,
Auren Hoffman (08:08.042)
Auren Hoffman (08:21.13)
Emil Michael (08:32.788)
DoorDash's loyalty program, DashPass, is extremely effective. And so is Uber One's. So they're trying to lock in their consumers to be loyal to them and to get benefits from that. So a new entrant would have to break through that consumer relationship that those companies have.
Auren Hoffman (08:43.499)
Auren Hoffman (08:53.602)
Now you've been incredibly candid about Uber's relationship with Benchmark and how their actions around firing and suing the founder Travis Kalanick affected the trajectory of the company. What is an alternative vision of Uber look like?
Emil Michael (09:08.556)
I, you know, had almost, we're seeing it with OpenAI today, right? They're getting sued by the New York Times. They're getting regulated by all these different government entities. And it's scary. And you're an investor and you worry about what happens when I invest in this company and all these other companies are raising money to compete with us. So the fear that gripped Benchmark, and particularly Bill Girlard that time, had they played through it and said, well, this is just what...
disruptive companies go through. I think what you've seen is Uber would have been certainly far ahead of DoorDash. We were already ahead of DoorDash market share wise by a long shot in 2017 and Uber's lost that lead. We would have had Instacart in our sites as the next vertical. And if you think about how much people spend on transportation, on hot food delivery, and then on groceries, the share of wallet would have been enormous.
And you could have done something with payments because you had such a large share of wallet where you started to pull people away from their credit cards and have maybe an Uber payment system that sort of touched not only the verticals we were doing, but other businesses that were on demand as well.
Auren Hoffman (10:24.802)
So essentially you could imagine like Uber being more like in that kind of magnificent seven kind of category.
Emil Michael (10:31.08)
Yeah, I mean, no doubt it would have been three, 400 billion, two to three X where it is today, for sure.
Auren Hoffman (10:39.282)
Interesting. Now you've also been outspoken in benchmark, not only just with Uber, but just, you know, you've cited things like Nextdoor, Stitch Fix, other examples, like unpack that a bit for us.
Emil Michael (10:51.596)
I think that one of the things that gets talked about a lot amongst founders and people who start companies and grow them is your relationship with your early venture capitalists who end up owning a big stake. And if the companies hit hyper growth, well, they have a lot of paper gains in your company and they handle it different ways. The best handle it.
with sort of a long-term perspective on your success, a long-term perspective on their firm's reputation, attracting the next founder, and wanting to really shoot for the moon. There's another set of investors who say, they look at, wow, I invested 33 million in Uber, it's worth 10 billion. My 30% carer and that's three billion. You divide that by five partners, that's 600 million each. Well, let me take that off the table at all costs.
to protect that versus making that $600 million per partner $1.2 billion. So there's a fear element. And when I talk to entrepreneurs, some reason for fear. Yeah, it's sort of a loss aversion. It's an economic term. It's like, I don't want to lose that. That's a lot of money. So when you look at what John Doar did back in the first internet wave, he still holds his Google and Amazon stock.
Auren Hoffman (11:55.724)
Which is a reasonable fear to have. Yeah, yeah, yeah. Yeah.
Auren Hoffman (12:18.698)
He personally does, like he got distribution in the shares and he hasn't sold it. Holy, good for him. Wow, that's amazing.
Emil Michael (12:21.044)
Yeah, yeah, yeah. Yeah, good, right. Eric Schmidt, like all these people who believed in the vision and the venture capitalists, Vinod Khosla does the same thing. Mike Maritz does the same thing. Some of the best venture capitalists in my view, they're in it for the long, long term, and they don't have the loss aversion fear that Benchmark has demonstrated to have in a bunch of different scenarios.
Auren Hoffman (12:49.11)
But like, let's say you're in a fund that had Uber, you got the $600 million gain or whatever you got there. Like why then, I mean, you just got like, why would you have the loss of version in the next company in that fund? Like you would seem like it would. You would then let the other ones ride once you get the 600 million, right? 600 million is enough to pay for enough private jets for a while. Right.
Emil Michael (13:12.296)
That's why I think it's a character. It's a It's a and there are some ego elements to write your if you I remember Girlie told me that he thought next door should be worth 50 billion dollars today. It's worth 600 million dollars and it's got 500 million of cash on the balance sheet. And so there is some pride in like well
Auren Hoffman (13:35.042)
Whoa, hold on unpack. Next door has 500 million in cash on the balance sheet and it's worth only 600 million. So the whole company's worth a hundred million dollars. I had no idea. Wow. Okay. So that's a weird, that's a weird public company actually. Yeah.
Emil Michael (13:43.403)
Yeah, look at the ticker, kind, K-I-N-D. They have big network effects, they just haven't figured out how to monetize it, their cost structure's expensive, and had some issues with how community members are, well my point was, you were like, okay, so you made 600 million on Uber, why are you sort of not letting it ride on next door with the founder who invented the thing? It's because they look at each of them separately, and if you're,
basis is I'm loss averse and I think these things should be worth more than they are. Well let me just pop the founder and see what the next guy or gal can do. It's a sickness.
Auren Hoffman (14:25.342)
Yep. Well, I mean, if things aren't going well, then that kind of makes sense. I mean, it makes more sense at least, right? And when things aren't going well.
Emil Michael (14:36.724)
Yeah, but Nextdoor was worth three or four billion when that happened.
Auren Hoffman (14:40.626)
Yeah, yeah. Okay. Right. Got it. So it, so it maybe, maybe it didn't make, maybe it didn't work. It's hard. It's always hard to know what the, what the other history is that that's out there. And then founders, I mean, there are some founders that like art do get tired. And sometimes they don't always realize that. And so, you know, and they, they may, you know, it's, it's an all consuming thing. And sometimes they do need to take a break or a step back. That's not always good for the company. Like when Bill Gates stepped back, it wasn't, it wasn't necessarily good for Microsoft.
that he stepped back, but it might have been good for him personally to step back to, right?
Emil Michael (15:15.828)
Yeah, I mean, you know, they integrate, if you look at the fan companies, um, Bezos stepped back after a lot of their 30 years, uh, you know, a long time. Steve Jobs obviously didn't, you know, intentionally step back. Um, Reed Hastings is still at Netflix. Um, Zuckerberg still. So if your company's winning, it tends to give you energy, but yes, you're right. Are there a category?
Auren Hoffman (15:23.895)
Auren Hoffman (15:29.249)
Auren Hoffman (15:32.972)
Auren Hoffman (15:36.522)
Yeah. Yeah, that's true. Right. I mean, it would be like if you imagine like the CEO of Nvidia stepping, like he's just amazing, right? Like, you know, he's kind of willed this company to success. And maybe at this point, it doesn't matter. They're just such a great company. Like another person could run it. But I mean, certainly you would imagine the stock would take a pretty big hit if he stepped down.
Emil Michael (15:58.556)
Yeah. But yes, I know Eric Wu from Opendoor, he's moving on to next thing. He built a multi-billion dollar company. So it happens and I think when it happens naturally and you've groomed successors, I think Tim Cook has obviously been a successful successor to Steve Jobs so it can be done. Yeah.
Auren Hoffman (16:15.486)
Yep. And you've done an incredible job. Yep. What wouldn't, um, now that you're advising many founders and, um, when they're like raising money and you're, and they're picking VCs, like what advice do you give them?
Emil Michael (16:33.174)
Well, so there's two different pieces to that. There's advice to how do you raise money in this environment. And then, yeah.
Auren Hoffman (16:38.07)
No, but let's say they have multiple offers and, you know, they're all roughly equal. Like, they have a choice between the types of, you know, venture capitalists.
Emil Michael (16:47.188)
Well, I'd say this, that the venture capitalists themselves as a person or as a firm matter less in the later rounds. Because in the later rounds, as you get growth investors, they're much more ROI oriented. They may or may not want a board seat, but the governance of the company has been sort of set more or less and they're adding on some matters. Early on, it matters a lot.
Auren Hoffman (16:58.975)
Auren Hoffman (17:11.531)
Emil Michael (17:16.248)
And I think there's a balance of some entrepreneurs think VCs are going to help more than they are. The reality is VCs, you know, all promote what they can do to help. And they often do in some ways, but that help is very short term, right? They're like, oh, we can help you recruit. We can help you introduce you to some potential enterprise customers. You know, there's three or four things they can do and then they do them and that's it. So I wouldn't, oh, I tell them not to overvalue that. I tell them to overvalue the person who.
Auren Hoffman (17:33.599)
Emil Michael (17:46.148)
is going to be sitting in your boardroom, who may not be able to help you in your operations by giving you advice or whatever, but is going to be a partner with you in thinking through the strategy of the business. In the future, it's not going to stab you in the front or the back. But they'll have an honest conversation. Maybe they'll say, hey, you look tired. Are you enjoying this job anymore? They're going to be a partner you can trust.
Auren Hoffman (18:02.316)
Auren Hoffman (18:08.082)
Yeah, yeah. How do you know? I mean, obviously, if they have a long history of X, you know, you might know that. But how would you if you if you if there was a cool 34 year old, you know, V.C., like, how would you know that?
Emil Michael (18:22.988)
I mean, you better do your reference checking. Entrepreneurs don't do enough reference checking. Entrepreneurs tend to be a little overly focused on the valuation and check size and the reputation of the firm, where they should be looking at the reputation of the partner first, the firm second, and reference checks third. Valuation, of course, matters, but it's a combo of those things.
Auren Hoffman (18:26.721)
Emil Michael (18:52.964)
And there's so much money out there now. It used to be that you went to Kleiner, Sequoia, or Benchmark. There's a lot more options nowadays. So the reputational value of those three being so far above everyone else has changed, of course, the Benchers is doing fantastic. You know, Eli Gill, you know, there's so many great venture companies, there's a lot more options nowadays.
Auren Hoffman (19:15.158)
Now in this world where we have higher interest rates and stuff like that, it's potentially harder to raise money, harder to hyperscale. How does that change the types of businesses? Well, we'll see.
Emil Michael (19:29.344)
So it's a lot harder to build a marketplace business because marketplaces tend to have to be subsidized on both sides. Like you have to get drivers in, in our case, and riders in the other case. It's very expensive.
Auren Hoffman (19:43.959)
And that's true even probably for B2B marketplaces, you think?
Emil Michael (19:47.068)
Yes, yeah, because any marketplace doesn't exist without liquidity. Liquidity means there's enough buyers and sellers at any time so the marketplace works. You go there to transact, even in a B2B marketplace. To attract enough on both sides at the same time, you have to do unnatural things to get them there at the same time.
Auren Hoffman (19:52.289)
Auren Hoffman (20:06.558)
And in building the marketplace, like, is the demand more important or the supply more important in the early days?
Emil Michael (20:14.316)
typically supplies the most important because by definition If you look at Airbnb, there was there's a whole set of consumers who want to stay in places when they travel That market exists you may have to convince them to move their preference from a hotel to a home But it's that's a lot easier than to convince someone to rent on a bedroom in their own home for the first time Right. Yeah same thing in
Auren Hoffman (20:24.426)
Yeah, right. You know, you know, that's a market that exists, right?
Auren Hoffman (20:36.682)
Right, take pictures of everything and do all that stuff. Okay, yeah.
Emil Michael (20:43.332)
Food delivery you're like, okay if food deliveries may be a little different because they were used to delivering food Right that grub hub. They made their own delivery guy now you go into them and say hey We'll bring the delivery guy. We'll just wire you money every month. All you got to do is cook. That's pretty good proposition
Auren Hoffman (20:48.759)
Auren Hoffman (20:58.494)
Yeah. That's probably pretty easy. Yeah. Okay. That makes sense. When you and I met, we met in 2012. You're the CEO of Cloud. I was one of the investors and I just love Cloud. I love the idea. I love the team. Like what would a Cloud in 2024 look like?
Emil Michael (21:19.372)
Yeah, so I was COO, Joe Fernandez was CEO. And the idea still matters today, Oren, right? Remember that the core of that idea was to make a measurement system so you knew who to listen to about what subject and who was credible, right? This person had a 90 something on this topic because they were credible on this topic. Imagine if social media had evolved where you looked at your Twitter, your X feed.
And you knew who was credible versus who wasn't on a particular topic. It'd be so awesome. And I think Elon will actually get us there somewhere. I read on the other day that he was thinking and saying, I'm going to put the number of community notes someone, a tweeter has had on their profile. So, you know how many times they've been dinged for, for not being accurate. But the world still needs that. I just don't, the problem with, with cloud is we didn't know how to make money with it.
Auren Hoffman (21:53.002)
Yeah. That'd be, that'd be so awesome.
Auren Hoffman (22:07.938)
Auren Hoffman (22:18.698)
Yeah, yeah, yeah.
Emil Michael (22:19.112)
Right? Like we were, we were like saying to brands, hey, this person has a great cloud score in, you know, potato chips, you should want to sponsor them to promote your potato chips. It just wasn't a big enough idea to really make money. But the product itself, the world needs it. Just I'm not sure how to make money from it.
Auren Hoffman (22:33.419)
Auren Hoffman (22:39.946)
Okay. Yeah, that's true of a lot of great things. Like somebody, we need the product, but it's not always clear. Like how you, how you profit from that, from that thing. Um, no, now that we're like entering this, like more AI era, like how do you think the tech landscape is going to change?
Emil Michael (22:42.278)
Emil Michael (23:00.596)
You know, I've been through a lot of cycles, right? So I try to think, okay, how is this the same as the few disruptive cycles we've had, mobile, you know, smartphone and app store, internet, you know, internet and just web generally in the early 2000s, social media in between. I feel like my current opinion is that the gains of AI are gonna...
in your to the big tech companies. And I consider opening a big tech company now. They're, them, DeepMind, maybe Anthropic, are really gonna be the centers of this tech and are gonna be where all the gains are. Startups are gonna move around outside of them and make applications for customer service or all kinds of things where it's so obvious how AI can do a better job than what's done today.
And is it going to be disruptive to old world white collar industries? Of course. So then where do the gains go? The gains go to the software who owns the software or the apps. They go, you know, it's probably the bigger tech companies and hopefully startups find a way to add value around these LLMs and algorithms so that there's a new ecosystem of startups, you know, opening. I started an app store the other day. Let's see in a few months, what turns out of that could build a moat in a new, you know, off that.
Auren Hoffman (24:28.43)
If you're like, I don't know, outsourced customer service company and you have, you know, you've called center people overseas and, you know, you work for like Marriott or something or whatever, like certainly a lot of those questions could be answered with AI. But
Like I kind of wonder who benefits like, is it Mariano who benefits? Is it the open source company benefits because they can replace their people with AI? Is it is it some new tech company who benefits like who? Who who gets the benefit there?
Emil Michael (25:05.832)
Well, certainly Marriott would only do it if it were cheaper and better for its customers, right? So let's say they get some benefit, right, for sure. The disrupted Indian call center agent does not get a benefit, right? They lose an opportunity. Hopefully they could have some, you know, find some other opportunity, but that's a clear trade right there. Is there a middleman or woman, you know, who builds the infrastructure?
Auren Hoffman (25:12.882)
Yep, yep. So they get benefited for sure. Yeah.
Auren Hoffman (25:22.335)
Emil Michael (25:35.84)
that allows Fidelity in their call center or Marriott in their call center to use their own data without getting sucked into the LLM to like be very tailored in how they answer. Yeah, maybe there's a software provider that sits there. And then there's the OpenAI, DeepMind, Xanthrope, this is the world who you need their combination of compute tech, LLM, and machine learning to supplement that. So those are the three.
Auren Hoffman (25:45.311)
Emil Michael (26:05.032)
I just hope there's that middle winner. There are these companies that could sit in the middle and do something specific for Marriott, and it's not just all drawn into the vortex.
Auren Hoffman (26:16.158)
One of the things I think about you is I think of you as like a master recruiter and very good at kind of talent spotting, especially very young people, people in their early 20s and talent spotting on those people. And those are people who don't really have a lot in their background. So there's something about whether it's the interview or something in their background that you've been able to spot. Like, what are some of the, you don't have to tell me your deepest secrets here, but what are some of like the secret ways, either like the
positives or potentially the negatives of weeding out people that you look for with these kind of younger, talented people.
Emil Michael (26:52.732)
Yeah, it's one of my favorite things to do. And frankly, one of the things I'm most proud of, Orin, is the teams I've built. And I'll tell you, there's two things I did. One, I was relentless on meeting people and interviewing them. I did, even when I didn't have enough roles, I did three interviews a day, every work day, five days a week for four years when I was at Uber. So that's 15 interviews a week. That's, you know, call it 750 interviews a year times four.
I mean, they interviewed 3000 people in four years. And my team was 300. So I got some pattern recognition. I did my 10,000 hours of how to do this. And the concepts I'm looking for people are can they walk the line between humility and confidence? Everyone wants to work with smart people, so with confident people, but people who are humble are not arrogant. So they're humble enough to get better.
Auren Hoffman (27:24.827)
Wow, yeah. Yeah.
Auren Hoffman (27:31.788)
Auren Hoffman (27:51.628)
Emil Michael (27:51.936)
That line, you can find that in a lot of people because that's who they are, whether they went to Harvard.
Auren Hoffman (27:57.514)
And is there a certain questions that bring it out or certain things in the background or?
Emil Michael (28:02.268)
Yeah, obviously you have to try to get through sort of the platitudinal questions to find this out. Right, it's often it's, you know, tell me about how you got a project done that was really impactful to your company that your boss said no to at first. So they had to have the confidence to push through a no. And then tell me when you really messed up.
Auren Hoffman (28:22.924)
Emil Michael (28:31.024)
and how you dealt with it, right? Whether in your personal life, your professional life, those are the kind of questions to see like, can they go when they're confident about something and can they learn and how quickly they learn, how they learn, how they grapple with failure, right? The second thing which is as important is self-awareness. Are they aware of what they're good at, what they're not good at, what they wanna get good at?
Emil Michael (29:01.344)
And I could take any self-aware person and make them better by definition. And so the question that, that the, the platitudinal question that I wanted to ask is like, what are your greatest weaknesses? I work too hard. I'm too dedicated, blah, blah. Right. So that's a pretty red flag when I hear that at first, sometimes they give people a second chance to say, okay, hold on. I want a actual, when you look, when you looked at your past performance review from your last employer.
Auren Hoffman (29:16.695)
Emil Michael (29:31.112)
What was their number one thing that they wrote was a fault of yours? Right. And then start your boss is never going to write you work too hard. So I'm trying to get underneath what their actual issues are. And the faster I get them there and the more honest, the more I know they're self-aware. Um, um, and then the third thing is, um, beyond self-awareness and beyond sort of walking this line between confidence and humility, um, do they have a hunger? And you could have a hunger at any age.
Auren Hoffman (29:34.945)
Emil Michael (29:59.828)
Right? Do they have a hunger for... It could be the product, it could be the people, but it could be that learning just draw up broad learning. But I don't want someone who wants a job if you're at a startup, because those things aren't jobs. Those things are mission. Those things are missions. At some point you have job seekers.
Auren Hoffman (30:15.775)
Auren Hoffman (30:19.586)
How do you, how do you suss that out? Like how do you?
Emil Michael (30:26.096)
Auren Hoffman (30:26.678)
You just tell them like, this is going to be crazy out. Like you just tell them up front and you know, like.
Emil Michael (30:29.136)
No, no, no. I tell them, I tell them, you know, why are you here? There's 15 other companies you could join. Why this one? And, you know, why? And then, and then again, you get the answers. Like you're a fast growing company, you're gonna change the world. You're like, okay, but why do you find this interesting relative to, you know, three other things that I point out are really interesting. And look, these aren't easy, but I've done these,
Auren Hoffman (30:36.926)
Yeah. Okay. Try to really understand like why they are passionate about it. Okay.
Emil Michael (30:58.868)
So many times that body language matters the I do the first 30 minutes to say this person isn't right And then what's remaining I spend two hours deciding it is right. So in that two hours is where I kind of Wind and find what these people are made of and the team I built man It was it was one proudest thing that then they're doing such great things now There was the happiest team at uber like, you know, we had all these culture sort of
Auren Hoffman (31:05.484)
Auren Hoffman (31:09.791)
Emil Michael (31:26.58)
boogie man about them, not this team. This team was highly motivated, happy, and really reminiscent now about the work they did on my team there.
Auren Hoffman (31:27.313)
Auren Hoffman (31:38.018)
One of the things with these questions is they're hard questions and they're kind of hard to come up with answers right off the cuff. Even for ones that you kind of like, if you haven't thought about ahead of time, my greatest, your big weaknesses or something like that. Like it would take me some time to think about it first and really kind of dwell on it. Like, could you just give that interview like in written form to someone and say, hey, come back to me in five days with, with like, do you have to do it live?
Emil Michael (32:05.64)
You gotta do it live, you know why? Because if I'm sitting there in front of you or I'm on a Zoom with you and I'm saying, well, you know, we all have, and I'm doing the mock interview now, we all have things we're not good at. And I only want people on my team who kind of know what they're good at and what they're trying to get better at because then I can help them. And then frankly, I'll tell you what I'm not good at and you can help me. So you tell me, Aron.
What are the things you're working on the hardest right now in your life and your career to get better at? If you can't come up with an answer to that, an honest answer, that's like honest, because I want honesty. If you said, you know what, I'm not a good product person, I'm a great deal person, and I know to get a better deal person, I better be a product, but I want some honesty, and that honesty is very, very attractive.
Auren Hoffman (32:41.194)
Auren Hoffman (33:00.746)
Now, if we're talking like the ultimate hire, a founder kind of hiring for a number two, should that founder be looking for someone who compliments their strengths or someone who can make up for their weaknesses?
Emil Michael (33:21.292)
That's a good question. I would.
Auren Hoffman (33:24.374)
Because we've seen success in both and failures in both, right?
Emil Michael (33:26.933)
I, yeah, right, right. It's so funny from the outside, I'll just use Zubra as an example, people assumed I complimented Travis's strengths. That was the assumption. We were sort of the same mind. You know, let's go for broke. Let's, you know, win at all costs. I don't know. Similar values, let's say.
Auren Hoffman (33:43.391)
Auren Hoffman (33:51.126)
We had similar values, let's say, right? Yeah.
Emil Michael (33:54.764)
Actually, while we did have overlap, we were quite different in our skills. And I think he recognized that. He was hiring for someone who was complementary to his skills, which meant I added things that he didn't like to do or wasn't good at, as opposed to reinforcing the things that he was good at. And that was sort of a little bit of the untold story. I went to law school as a lawyer. I was way more cautious.
You know, I was, I'm much more of a people person and wanted to be out there, you know, recruiting and meeting people and he was much more wanting to be with the engineers and the product folks. And so we just had different things and it worked really well. I just, you know, hopefully we could have kind of continued doing it. But that was some magic that we had that allowed us to do what we did in four years.
Auren Hoffman (34:25.035)
Auren Hoffman (34:48.138)
Okay, interesting. Um, how like, obviously we've seen like startups you've seen, you've now seen 20, 30 years of startups now. Um, how has the tenure of founders changed over time?
Emil Michael (35:05.164)
You know, it seems to have gotten lower. And I wonder sometimes if there's sort of a couple of knock-on things that are happening, one longer Tai PO and because of that, there's been these secondary liquidity things that have happened for founders and for some employees, which was never the case in the early 2000s.
Like you just couldn't take money off the table.
Auren Hoffman (35:35.174)
Even when we, when, when we sold live ramp in 2014, if I had done a significant secondary, I probably wouldn't have sold. Um, right. So it's just like, if someone just said, Hey, here's a bunch of money, you know, you could take care of your kids and stuff like that. I probably would have kept going.
Emil Michael (35:43.144)
Emil Michael (35:47.449)
Emil Michael (35:51.008)
Right, so, but conversely, yeah, right. So it's that the introduction of the ability to get liquidity before, like in the secondary thing has changed the dynamic quite a bit. It either makes someone like you saying, well, I don't wanna sell, I could keep going now. Or the opposite is like, hi, I've gotten some liquidity. I'll hire a president and they'll become CEO and I'll do this. But it's definitely changed dynamics. I will say this, I never took a.
Auren Hoffman (36:09.414)
Oh yeah, then I'm gonna go on my yacht and not worry about the company or something like that. Yeah, yeah.
Emil Michael (36:20.352)
dime out of Tell Me Networks, my first company. I never took a dime out of cloud, now a dime out of Uber, just because I was from that old school. And I was like, I just lived below my means. I wasn't married at the time, so I could like live on a mattress. And yeah, right. But I would say, had I been in a situation that was different, I might've been like, hey, I gotta take some money off the table here. And I don't know what that would have done to my psychology.
Auren Hoffman (36:33.61)
Yep. Yeah, that's nice. Yeah, exactly. Yeah.
Auren Hoffman (36:46.398)
Yeah, I guess it could be good or it could be bad. Like I remember, like I had just had my second kid when we got the offer. Um, and so, you know, you're kind of thinking in a very different mind that you just, you know, you just had your second kid, right? So as you know, right after you have a second kid, you're like, Oh, I'm, I got a supply, I have to help them. But I got to think about their future and stuff like that. Uh, but yeah, if I was, if I was single, um, I probably wouldn't have sold either. Right. There's probably a lot of reasons that could have happened there. Okay. That yeah, that's really interesting.
Emil Michael (36:48.585)
Emil Michael (36:57.845)
Emil Michael (37:05.824)
Yeah, life's changing. I want more time. Yeah. Right.
Auren Hoffman (37:14.65)
Okay, a couple of our closing questions. What is a conspiracy theory that you believe?
Emil Michael (37:24.387)
Conspiracy theory that I believe.
Um, I do...
Emil Michael (37:35.109)
I believe, that's a so interesting question. You should have sent me that in writing so I could have responded to your writing. I'm sorry, I'm sorry. Inspiracy thing, oh, okay, sorry. I didn't highlight it, I guess. I do believe that, sadly, higher education has been infiltrated by a non-capitalist.
Auren Hoffman (37:41.956)
I did, by the way, yeah.
Emil Michael (38:02.416)
ideology, which I deeply worry about because I think it takes away from a marketplace of ideas. And I went to Harvard and it was the best thing that ever happened to me to be exposed to so many different ideas and then I got chowed down and it was just like truly like a place of debate. And I feel like college kids today, especially in the elite institutions.
Auren Hoffman (38:25.452)
Emil Michael (38:32.08)
are not getting that same rigor that was available decades ago. And that was intentional by the faculties and the administrators and the admissions officers and so on.
Auren Hoffman (38:46.134)
And why do you think it like has happened and persists? Like, you obviously you have these donors that are important. You have other folks that are other kinds of stakeholders that are important. Like, the general person is not like anti-capitalist or something in America, right?
Emil Michael (39:02.912)
I think institutional capture is a real thing, whether it's the media. And you can say, okay, you have one part of the media is institutionally captured by one party, one philosophy, and the rest of it's the other. But lots of institutions have been captured kind of unknowingly from the ground. It's just sort of happened. And we look back and we're like, what the hell happened? How did we get here? And I think we've had that moment in the last few months for higher education.
Auren Hoffman (39:31.607)
Emil Michael (39:31.82)
where you're like, what happened? How did we get here? And I think it's because of the tactics used by some of these folks to shout people down, to cheat. When I was there at Harvard, you had a professorship that was called 7525 Political Affiliation. I just saw a survey now, it's 98 to two. So if the professors...
Auren Hoffman (39:56.462)
Emil Michael (39:58.372)
are teaching students that way. Where are you hearing the other side? Where, right?
Auren Hoffman (40:02.378)
Right. And even within the 98, it's probably moved to, you know, a lot more anti-capitalist or something. Right. Yeah.
Emil Michael (40:06.516)
Yeah, the overton windows. Yeah, yeah. Yeah, and anti-capital, I believe, and I don't want to get too philosophical on you, but capitalism and democracy are tied together because you can't, if you don't have capitalism, well then you have to smoosh people's choices down, right? But, but, but any case, I think that conspiracy theory, you could call it, is something I now believe it been more than I did before the last few months.
Auren Hoffman (40:34.902)
But personally, what was the experience like you were you're, you know, you're kind of played in a movie or kind of a mini series or something like that by actor or something like that? Like, how did that experience, you know, at least it was a really good looking actor, right?
Emil Michael (40:49.141)
Emil Michael (40:53.772)
Yeah. Um, it was cool, you know, in that he was good looking and younger. Um, I, you know, I think the character came off as a little more subservient than, than you know me, like, you know, I'm a doer. Uh, and he did some stuff I didn't do at the end, which made me seem, you know, like not a good person, but it was pretty interesting. I wish the producers had talked to us.
Auren Hoffman (41:00.445)
Auren Hoffman (41:10.754)
Emil Michael (41:24.104)
You know, uh slander and libel said he didn't want to talk to us. So this was the bill girly Mike isaac story. It wasn't the travis callan and camille michael story. So it so in convert so consequently 50,000 people saw the finale. So it was a very it just didn't it wasn't interesting people didn't watch it Because it wasn't multi-dimensional
Auren Hoffman (41:30.302)
Yeah, yeah, yep, yep.
Auren Hoffman (41:45.65)
Oh, only 50,000 people. Uh, okay. Yeah, it really did. I watched it. Um, and I, and I really, you're right. It just didn't. Well, I mean, I was much more in me. I knew all the players and stuff like that. And it didn't feel like it could have. I think it could have had even just if you made it just fiction, um, it could have been a better story. Yeah. Better story. Yeah.
Emil Michael (41:49.76)
Emil Michael (41:56.659)
Emil Michael (42:04.18)
Yeah, that would have been better as fiction. Yeah, yeah, it would have been. Yeah, I mean, they missed the whole China piece, these meetings with Tim Cook and Eddie Q. I was in there with Travis. They were way more interesting than that. The me and Larry Page and David Drummond and Travis meetings were like fascinating. There was some so much cooler stuff that happened. And it was multi-dimensional and Travis wasn't a chest beating person like they made it out to be. I mean, so.
Auren Hoffman (42:15.796)
Auren Hoffman (42:23.575)
Auren Hoffman (42:29.346)
Emil Michael (42:31.952)
I think the truth was more interesting and because it wasn't truth they just should have made it fiction it would have been more interesting. Right, pure fiction as opposed to somewhere in the middle.
Auren Hoffman (42:39.683)
Totally. Yeah. All right. Last question, we're going to ask all of our guests, what conventional wisdom or advice do you think is bad advice?
Emil Michael (42:48.444)
Oh man, this is an easy one. The, this whole management philosophy of like, all you have to do is hire great people and then leave them alone to do their work. It's total fiction. The best leaders I know hire great people and help them get better at doing their work by being in the details. And there is no, yes, yes.
Auren Hoffman (43:12.01)
Yeah. They're essentially kind of micromanagers in a way, right? Yeah.
Emil Michael (43:17.068)
They're micromanagers until they don't have to be, but that's just not how it works. I mean, could you imagine just saying, hey, look, I had this idea for Uber Eats, just go do it. You're like, what? You don't know. You're the inventor. You're sitting in the room, you're drawing the boxes and figuring out how this works. You're in the details and you're looking at the data to see what's happening and what's not working. That's what the real winners have done. Every CEO I've met, whether it's...
Auren Hoffman (43:32.753)
Emil Michael (43:45.672)
you know, Brian Chesky or the Stripe guys, they're in the details. That doesn't mean they don't empower their people, but they're never far away from the details, right?
Auren Hoffman (43:55.71)
Yeah, it's interesting because like it is that advice is kind of coming from the venture capitalist perspective. The venture capitalist is in some ways they're betting on somebody, they're giving them a bunch of money and then they're kind of they're off, right? And they're maybe giving some high level advice and they're off. They're not and they're precisely not in the details at all. They don't know really what's going on and they're hoping it works out and in many cases it does. Whereas
Emil Michael (44:09.941)
Emil Michael (44:23.804)
Yeah, but I'm not talking about that relationship. The venture capital founder relationship is the way you describe it. I'm talking about the founder relationship to their team. The conventional way, yeah. Yeah, yeah, right, exactly, yeah, yeah. Yeah.
Auren Hoffman (44:25.665)
Auren Hoffman (44:30.314)
Right, right. But I'm saying like the person who gives that advice often is the venture capitalist, right? Because they come from that perspective. Yeah. All right. This has been amazing. By the way, I love, we've had a great conversation. It's been awesome. Thank you, Emil Michael for joining us. The world with DAS. By the way, I follow you at Emil Michael on Twitter. I encourage our listeners to get you there. This has been a ton of fun.
Emil Michael (44:51.296)
It's been so much fun. Thanks for having me, Arn. Alright.
Auren Hoffman (44:53.322)
Yeah. Awesome. All right. This is great.
Emil Michael was the Chief Business Officer at $UBER during its hyperscale period from 2013 to 2017. He’s currently the CEO of DPCM Capital, and he’s also a strategic advisor to a number of amazing companies, including Codecademy, GroupMe and Taser.
On this episode of World of DaaS, Auren and Emil cover everything from tech IPOs and Uber's stock performance to the future of AI, the relationship between Uber and Benchmark Capital, and more.
Emil shares insights into the reasons behind the delay in tech IPOs, the profitability of ridesharing companies, and the future for Uber and Lyft as they expand their food delivery businesses and explore new verticals. He also discusses the impact of higher interest rates on startups and the nuances of launching and operating marketplace businesses.
Emil and Auren also have a candid conversation about Uber’s relationship with Benchmark Capital and how it affected the trajectory of the company– Emil thinks Uber could have been 2 or 3 times as large as it is now. He offers key advice for founders on choosing your VCs and keeping execs and the board in alignment.
To close out, Emil also shares some counterintuitive management advice and insights from conducting over 3,000 interviews at Uber.
Editing and post-production work for this episode was provided by The Podcast Consultant (https://thepodcastconsultant.com)
Austen Allred is the founder and CEO of the Bloom Institute of Technology (formerly known as Lambda School), a coding bootcamp that’s helped thousands of students get a job in tech.
In this episode, Auren and Austen dive deep on the business model of higher education. The discussion kicks off with an exploration of Income Share Agreements (ISAs) and how BloomTech has used them as an alternative to student loans. Austen shares insights on the financial incentives and regulatory pressures that have prevented more schools from embracing ISAs, and how the current student loan regime works.
Auren and Austen discuss different funding models at public and private universities, the decline of apprenticeship, and the structural factors that have caused the cost of education to skyrocket in the last few decades. Austen sheds light on questionable practices of for-profit colleges and the intriguing dynamics of universities acquiring coding bootcamps.
As the conversation unfolds, Austen shares insights on how being an investor makes him a better CEO and even delves into intriguing conspiracy theories. The episode wraps up with Austen debunking common management advice and offering unconventional perspectives on micromanagement and employee satisfaction.
Ben Horowitz is the cofounder and CEO of Andreessen Horowitz, the most influential venture capital firm of the last 20 years. Ben and Andreessen Horowitz (also known as a16z) have invested in some of the biggest companies out there, including AirBnb, Coinbase, Facebook, Instacart, GitHub and Oculus.
Prior to his VC career, Ben founded Opsware/Loudcloud, which was acquired by Hewlett-Packard for $1.6 billion. He’s also the author of the bestselling books 'The Hard Thing About Hard Things' and ‘What You Do Is Who You Are.’
In this episode of World of DaaS, Auren and Ben discuss data moats, AI vs software, and the nuances of the modern VC. Ben starts by exploring whether AI will eat the world like software has, and who the winners and losers of the AI revolution might be.
They also explore one of Ben’s best-known management concepts: wartime to peacetime CEOs, and how every CEO should be thinking about strategy and adaptability during broader tech headwinds. Ben's offers a candid perspective on how to build the right culture and what sets Andreessen Horowitz apart in the venture capital world.