Bastian Lehmann: How the Uber Deal Went Down and How a $2.65BN Deal Turned into $5BN | E1137

1. 0:00 – 1:39

   Intro

   1. BLBastian Lehmann0:00

      Here is another thing that I think people don't fully understand. We negotiated the deal so well, there was no collar on the deal. By the time the deal closed, it was almost $5 billion. (cash register dings) We had just under $100 million left in cash, and our negative gross profit margin was, I think, single digits. Two or three quarters later, we, we were profitable as a company. Most companies fail because the founders give up, and we refused to give up.

   2. HSHarry Stebbings0:23

      Ready to go? (upbeat music) Bastian, I've wanted to do this one for a long time, my friend. So first, thank you so much for joining me today.

   3. BLBastian Lehmann0:41

      Yeah. You know what? Uh, same here. I think we had some, some, some scheduling bugs, but we figured it out.

   4. HSHarry Stebbings0:46

      We figured it out-

   5. BLBastian Lehmann0:46

      (laughs)

   6. HSHarry Stebbings0:46

      ... in the end and we made it happen. I wanna go back to your childhood. I think great entrepreneurs are shaped early. Take me to your parents and your teachers. If they were to describe a young Bastian in Germany, what would they have said about you and how you were?

   7. BLBastian Lehmann1:01

      Well, first of all, y- you know, in 19- 1977, that's when I was born, 1980 in Germany, you have to understand, everything was still black and white, right? So, (laughs) you know, what, what, what... Um, wait. No. I mean, like, it was, it was sort of, it was sort of a different environment than, than we have today. But what would they say? Eh, probably a very curious child, you know. I liked to play a lot. Um, uh, I think I was always onto something. As a matter of fact, I think I was out of the house most of the time. Uh, I think as soon as I could get out of the house, I would just, I would just be somewhere. Uh, play in the forest or run around, you know. I had a group of friends. We did exhibitions and then, you know,

2. 1:39 – 6:49

   Importance of Skill vs Luck

   1. BLBastian Lehmann1:39

      that sort of stuff.

   2. HSHarry Stebbings1:39

      Can I ask you? I- I'm always struck with the question of skill versus luck in life. How do you think about the importance of skill versus luck in life?

   3. BLBastian Lehmann1:48

      I- I don't really believe in luck much, um, uh, but I also don't have a definite answer. I, I think I believe in determination and grit and, uh, and hard work.

   4. HSHarry Stebbings1:58

      I totally agree with you. I- I think the best is you make your own luck. Um, I- if we, like, isolate a point in your life that was a needle-moving moment for your career, when you reflect, what do you think the most needle-moving moment was? Was it the move to the US? Was it selling Postmates? What was that, "Ah, that was the big move"?

   5. BLBastian Lehmann2:16

      Uh, you know, definitely moving to the US, um, was, was a, was a huge part. And I think it's important to understand, I wanted to be in the US almost all my entire life. I remember very vividly, um ... This is actually a great story. So, um, what, what happened is that I was obsessed with computers, um, pretty much, uh, pretty much as long as I can remember. And I loved the idea that I can just, I can just hack things and something, you know, something co- something, something comes back f- from the screen. When we first got internet access, I, I incurred these, these bills of, like, ridiculous amounts of money. And, and I grew up, uh, in a fairly modest house and my, my, my mom had sometimes three jobs, so we didn't have a lot of money. And back then, if you- if you remember, it's a dial-up, so you pay, um, uh, you pay per minute or you pay per hour depending on your plan. And the, the closest internet provider was sort of a, sort of like a regional call, so it was not quite long distance but it was, it was quite something. And I don't ... I- I can't even tell you what I did online, to be honest, um, because back then, somebody just told you about a website, you would discover it and... Anyway, I- after a while, I decided that I could run a- a, you know, a- a BBS, like, uh, a little software that allowed other people to connect to, to connect to my computer. And obviously, that was a very boring affair because only one other person could connect to your computer, right? So you run this, this bulletin board, um, and- and you designed it and, yeah, I don't even know what you had on there. You had, you had probably photos of Claudia Schiffer. To that extent, content was available. And, and this, this person, um, his name was Annie Mello. He came online, or that was his name, and, um, we started talking. He's like, "Well, what's your setup?" And he had ... I'm like, "Well, you know, just ..." I think I had a 14.4K modem and, and, and I said like, you know, "I- I don't really know much about, about the internet or anything, and I also can't be connected to the internet because it costs a lot of money." And he said, "Why, you, you, you don't know how to surf in the internet for free?" And I'm like, "No. I- I don't know." And he said, "Well, uh, you need to get, you need to get a US calling card. You need to get a calling card from the US." 'Cause how it works, he said, in the US, they have like AT&T or they have MCI, WorldCom. For long distance calls and collect calls or calls abroad, in the US, they punch in this calling card number and a PIN code, and then they can use, uh, as, uh, uh, you know, a, a telephone booth for free or they can, they can call when they're abroad and it gets charged to their account. I'm like, "Wait a minute. I don't understand all of this." And he said, "I'm gonna come by." So a- a week later, he wanted to come by and obviously, I never, I never met this person. So he, he, he ... Uh, literally, back in the days, you just w- drove somewhere. And so he came by and- and it turns out he was like 40-something, and my mom was very, very skeptical of, of this person. She's like, "You leave the door open." And then, and- and- and she, she ... But, but this guy was a, was a complete nerd and- and he taught me literally what I had to do is I had to get a phone book from the US somehow. And then I had to call people in the US and had to tell them that I would be a, you know, service agent from MCI or from AT&T, and that there was a problem with their account, you know. I needed to verify their, uh, calling card number and their, and their, um, their- their PIN code. Thi- this is a true story. So, um, at some point, my parents were divorced and- and I think, uh, here- here's the one good thing my dad did for me. He got me a phone book as ... A phone book from San Francisco, a Pacific Bell phone book from San Francisco. And me and a friend of mine, we would hit the phone and we would call people in San Francisco and, uh, practice our American accent to sound like, uh, we're from MCI, WorldCom, or from AT&T, depending on the phone number. We would ask for their calling card number-... and I, I, at some point, after weeks of effort, someone also gave us the PIN code without, without being too, uh, suspicious. So then what we would do, we would have that calling card number and the PIN code. We would call our dial-up provider. We would... so, so you, you would call a toll-free number from, from AT&T in, uh, in Germany. You would punch in the calling card number. You would punch in the PIN code. You would then unplug the phone, plug in the modem, uh, dial the number from your internet provider, and, and, and you would surf. Um, so in, in a way, my career probably has started with embezzling, um, AT&T or MCI, uh, uh, in San Francisco.

   6. HSHarry Stebbings6:44

      They're gonna come after you after this show. This is the retribution that they've been waiting for.

3. 6:49 – 7:57

   Impact of Parents’ Divorce

   1. HSHarry Stebbings6:49

      Can I ask, can, can I ask you a bit of a weird one? And I hope it's okay.

   2. BLBastian Lehmann6:54

      Sure.

   3. HSHarry Stebbings6:54

      You mentioned that your parents divorced.

   4. BLBastian Lehmann6:56

      Yeah.

   5. HSHarry Stebbings6:56

      How, how old were you? And did that impact you?

   6. BLBastian Lehmann6:59

      Oh, yeah, I think it impacted me tremendously. I was, I think I was six, um, and my brother must have been, like, uh, almost three. I had a pretty, um, a, a pretty perfect life up to that point, um, and, um, you know, after that it, I think it got, it got a lot more, um, you know, complicated. Um, you know, I, my mom, um, op- we wanted to be with my mom. Uh, she, she has been there for us and I... she's, she's the person I love the most, uh, in my life. And she was just a remarkably strong woman. Never talked bad about my dad, even though there were a lot of things that, that he did that would have made it easy for her, um, to discuss them with us. But she just, she just plowed on and I think she gave literally, uh, the next, you know, 18 years of her life, uh, to make sure that, to make sure that we are, um, you know, grow up to be, to be two capable, capable boys, right?

   7. HSHarry Stebbings7:55

      Mothers are the most incredible thing.

4. 7:57 – 9:25

   Source of Grit & Ambition

   1. HSHarry Stebbings7:57

      Um, can I ask, you mentioned the three jobs that you had there. Is that where you think you got your grit and steeliness and ambition from? Where do you think about the source of where you got that muster?

   2. BLBastian Lehmann8:10

      You probably gotta suffer a little bit, um, you know, to be resilient. So, uh, it, it probably has to do with that. One morning, I grew, I, I woke up and I forgot how old I was. I must have been older. So at the time when I, I must have been around 14 and my mom wasn't there. It was early in the morning and I waited for her that, that she came back and, and she told me that she had to do another job in the morning to help clean a building somewhere because we just didn't have enough money at the time. And I, and I couldn't believe it because you, you have to understand that... but when I say that we grew up modest, I'm not talking about a level that it was apparent to me every day. Things were limited, but not... I, I wouldn't walk around in feeling poor, but I, I think I didn't realize how tight things were un- un- un- un- until I, u- until we talked about that and until she told me that. I remember that, that, that I said, you know, "I, I will, I will make so much money that my mom can have whatever she wants." And, and, and, and it was incredibly important to me, um, to make sure that she has whatever she needs as soon as I could do that.

   3. HSHarry Stebbings9:19

      We have some things in common, my friend. That makes me very happy to hear. Before we dive into, you know, the, the Uber

5. 9:25 – 14:42

   Leading Postmates in Wartime Mode

   1. HSHarry Stebbings9:25

      acquisition, I spoke to Nabil before the show and I'm looking at my notes now. He said that you led a team that was in wartime mode the entire history under huge stress and that you are not a cuddly CEO. Can I ask you what was the most memorable wartime moment in the company history of most stress that you remember?

   2. BLBastian Lehmann9:48

      Oh, I think Nabil is right. There were, there were so many. Um, um, but, uh, but I want to say I enjoyed it. I, I, I, I enjoyed it tremendously because I, I really do believe that you have to measure yourself in life and, and, and I think this, this journey of running that company for 10 years, um, a- a- absolutely did that. Um, the, the wartime was defined by us being so focused and so determined to create a successful company. Uh, we, we were... you, you have to understand. I, I, I truly believe that everybody who worked at Postmates loved that company from the bottom of their heart. It, it, it was, it was a group of people you couldn't, you couldn't drive us apart with, with whatever came at us. Any VC funding a competitor, Uber, uh, threats, uh, uh, uh, rumors. We, we were so focused on our mission. We were so focused because we loved the company every single day. I, I, I woke up 10 years in a row and I, and I, every day I couldn't believe it. I'm like, "I can't believe that, that, that I get to do this and that I can be with these people." And I believe that most people felt the same.

   3. HSHarry Stebbings10:59

      Basti, what was the biggest oh-shit moment?

   4. BLBastian Lehmann11:02

      It, it was rough for a while when, when, when competitors raised bigger and bigger funding rounds. And look, we, we, we raised quite a bit of money. I think we raised around 900 million. So it... you know, by, by no means small change, but it was really scary at times when you, when you see, uh, the pace of which, uh, uh, competitors raised money, um, and, and did so very successfully.

   5. HSHarry Stebbings11:25

      Okay. For founders listening, when your competitors raise a lot of money, should they raise it too or is it just a race to the bottom then on cash? What are your lessons on when comps raise that you give to founders?

   6. BLBastian Lehmann11:38

      Well, I, I think it entirely depends on the situation. In our case, I think what happened is that we opened up this market of on-demand delivery and, and by the time competitors came along and by the time competitors had their first funding round and by the time everybody saw the potential, there was an inflection point in the market when the only thing that mattered was more capital to do more advertising. You, you have to understand that this was, I think, the largest consumer battleground for, for five to six years. Billions of dollars deployed in, in advertising, in marketing, in grabbing market share. But...And this is something that from the outside was hard to understand, but it is the reason why ultimately almost every VC firm invested in one of the players. The fundamentals of, I think, the companies, and I can, I- I- I know this for us, but I- I have some insight in the other players, they were all pretty sound. And by that, I mean there was a clear path to profitability. There was a clear understanding of unit economics, how they work, uh, where the gross margins need to be. And all- all three companies, I think, had people that could execute very well against the goals. So that is a moment in time when you should raise a lot of money.

   7. HSHarry Stebbings12:55

      Do you think that's actually the case, dude? Like, I, you know, I- I invest in the space, but, like, I think the awareness that actually they were pretty tough business models to make work. The margins were super low. The ............................ required was super high. The AOVs were too low. The labor costs were too high. I think there was a realization that they were bad business models.

   8. BLBastian Lehmann13:14

      No. I think Tony and I knew from the start that- that this is a, this is a tremendous business, uh, if you can scale it. And every market that you had at scale, uh, uh, was profitable for us. And I know that the same thing was also true for DoorDash. I think it's a, it- it is a, it is a misconception of that space in general. Look, it is a tough business. It's a lot-

   9. HSHarry Stebbings13:32

      Hmm.

   10. BLBastian Lehmann13:32

       It's a lot tougher than a SaaS company where you just press a button and then you- you go get- get a coffee and you- and you made a million dollars in revenues. We're- we're moving about bits and bites, moving things in the real world, right? You're- you're programmed people. There's a million things that can go wrong. You- you- you, all of the things that you said are right. But it's important to realize the moment in time that I'm talking about. I'm talking about the moment in time when there was enough evidence, maybe around the series B or starting going into series C, that people that had the insights and looked at the numbers, we could clearly articulate how we would get there. When we- when we started out, when Postmates started out, this thing sounded so crazy that the only people that wanted to give us money were Brian Singerman and Peter Thiel. And I think the only reason they gave us money is because nobody else said they would give us money. And Peter and Brian probably thought it's a smart thing to do.

   11. HSHarry Stebbings14:22

       Dude, you're very vocal on VCs, which I always find an entertaining take. When you get Founders Fund investing ............................

   12. BLBastian Lehmann14:28

       VCs are very vocal on- on- on founders, so I think somebody has to, uh, every once in a while, has to give some feedback.

   13. HSHarry Stebbings14:34

       (laughs) This is going to be a fun show, my friend. Uh, w- when Founders Fund invest in your series A and lead that

6. 14:42 – 15:38

   Importance of VC Brand & Leading Rounds

   1. HSHarry Stebbings14:42

      as first institutional lead, how do you weigh the importance of VC brand is my question? Does it really make a difference to company's trajectory when a tier one leads your round?

   2. BLBastian Lehmann14:51

      Back then, it meant a lot to us that we had a, that we had a- a- a known company, um, as the lead investor. Um, and I do believe that it sets up a signal. But I think a good signal can't save a bad company. And- and so it- it- it'll come down, at the end of the day, to- to your execution. Uh, a- a lot of times, uh, even the great VCs and a lot of hype c- can't really, can't really change the outcome of a company.

   3. HSHarry Stebbings15:22

      What was the hardest round to raise?

   4. BLBastian Lehmann15:24

      Every one. Ev- every single round.

   5. HSHarry Stebbings15:26

      They were all hard?

   6. BLBastian Lehmann15:29

      Maybe it's just my, maybe it's just my memory.

   7. HSHarry Stebbings15:32

      (laughs) Oh, dear. Um, talk to me, as we progress, the business matures,

7. 15:38 – 18:55

   Negotiating the Uber Acquisition

   1. HSHarry Stebbings15:38

      it gets larger. How did the Uber acquisition play out? We put it on Twitter. I got a lot of DMs being like, "I want the story." Can you just take me to the story of how it played out?

   2. BLBastian Lehmann15:49

      Dara called me, and, uh, he said, um, "Do you wanna, do you wanna discuss merging the companies?" And I said, "Yeah, let's do it."

   3. HSHarry Stebbings15:56

      Okay. So you say, "Let's do it." You guys then-

   4. BLBastian Lehmann15:58

      Fits in a tweet. That's how easy it was.

   5. HSHarry Stebbings16:00

      You- you guys then meet. Where do you meet? How does the meeting go? What are the thoughts?

   6. BLBastian Lehmann16:06

      It was during COVID. We met at, uh, if my collection is correct, I think we met at Alta Plaza Park. Uh, it's sorta, I think it's a mean point between where we both lived at the time. A year and a half earlier, there were some preliminary discussions with the, with the Uber team. So there was some familiarity. Um, uh, but ultimately, I think it wasn't the right time for either, um, for either party. We raised more money, and I think Uber had to explore, uh, more what they wanna and what they can do with Uber Eats. Uh, ultimately, they had a change in leadership on the Uber Eats side. Pierre was now in charge, and- and, um, I think Dara was very bullish, um, about Uber Eats, especially, um, because of COVID, right? Their- their- their rides business was basically nonexistent. And with DoorDash being the, clearly the market leader, um, in most of the US, but not in, uh, uh, California and certain regions that- that are very, that are very attractive, um, where we were the number one, uh, I think they- they saw the great opportunity for consolidation. Um, and- and- and the whole thing was- was very pleasant, I have to say.

   7. HSHarry Stebbings17:14

      Okay. So we have that meeting. We have that discussion. Somewhat again, like you said, "Let- let's smash this podcast," so I'm just gonna go for the questions and you can rip me-

   8. BLBastian Lehmann17:23

      Great.

   9. HSHarry Stebbings17:23

      ... if I'm going too far. Someone said that Postmates was running out of cash. This was like an emergency deal that landed super freaking well. Is that fair?

   10. BLBastian Lehmann17:34

       No. No. Uh, uh, look, I- I- I actually love, uh, uh, sort of, uh- uh, defending the legacy here a little bit. You know, sometimes when you fight giants, they're- they're- they're, you know, the war can get nasty, and the Infowars definitely part of that. So first of all, let's just look at the facts. It's very easy. Uh, Uber obviously had to file an S4 at the time that they purchased, uh, uh, uh, Postmates. And you can look it up. We had just under $100 million left in cash. And our negative gross profit margin was, I think, single digits. Two or three quarters, uh, later, we- we were profitable as a company. Positive cash flow. So, uh, we- we were in a, in a position that we didn't have to sell. As a matter of fact, we were planning to go public, and would have probably been one of the last companies to do so before, uh, uh, you know, the world ended. And, um, we had, we- we- we- we were excited about it. But when we looked at everything that was on the table...... you know, there, there, we had done the best job we could for 10 years to grow an amazing company. I think it was in- to an extent the furthest that we could've moved the company and it probably was... We believed it was best as part of something bigger because the market needed to consolidate

8. 18:55 – 22:25

   Lessons on Getting Acquired

   1. BLBastian Lehmann18:55

      at some point.

   2. HSHarry Stebbings18:56

      Why? Like, why could you not have done more, Basti? You're a steely founder. You're an ambitious guy. You're a great CEO. Was it tempting to go it alone?

   3. BLBastian Lehmann19:06

      Yeah, ab- absolutely. But, um... And, and, uh, I, I had a great belief that, that, that we could continue as a standalone company. But ultimately, (sighs) you know, I think I put the ego a little aside and, uh, and, and, and it's not... It, it's not easy. Uh, uh, I, I wanted to be CEO of a publicly traded company. I, I, I was looking forward to that because I... It would've been this, this really nice... And I think I would do a great job at it and I may get another shot at it. But, um, it, it just, it just wasn't supposed to be and I think... And I think overall... Look, y- you have to... Here's another thing that I think people don't fully understand. We negotiated the deal so well. There was no color on the deal. By the time the deal closed, it was almost $5 billion, right? So, uh, i- which is amazing. And you asked-

   4. HSHarry Stebbings19:59

      So I, I, I... Uh, it's, it's reported to be 2.65.

   5. BLBastian Lehmann20:01

      Yeah. That... Ob- obviously, that was the price, uh, that was, that was announced, but there was no color on the exchange ratio. And obviously, we benefited from the Uber share price that was, I think, in the... When we got the shares, the Uber shares were around $31. When the deal finally closed and we got approval, it was at 53, I believe, or 55. The money return to shareholders is, was almost 5 billion, and I have sold almost none of my shares. (laughs) So I'm, I'm, I'm still rooting for Uber.

   6. HSHarry Stebbings20:32

      Uber's share price today is 75.75.

   7. BLBastian Lehmann20:35

      Yeah. It's a bit down, isn't it? Yeah.

   8. HSHarry Stebbings20:37

      Wow. That is insane. How did you come to the price? When you were sitting with Dara, how does one price the asset that is Postmates at that stage? Does he throw out a number? Do you throw out a number? What does that look like?

   9. BLBastian Lehmann20:50

      Well, I think... It's probably a mix of last valuation and then you look at multiple on forward-looking revenue and, and, and sort of a mixed bag, really. And I think he came... Uh, he came out with a number that was... It was around 2.2 or something and, and, and, and we negotiated it up a little bit, but I didn't want him to push too hard because the two things that we negotiated for are no breakup, uh, uh, uh, and absolutely no way out and, uh, no color on the deal because we sort of knew that... Uh, we, we, we... That, that the street would probably appreciate, uh, the acquisition and it did. Um, so, so those elements were more important to us than pushing the price on paper to a 3 billion and maybe living with certain uncertainties.

   10. HSHarry Stebbings21:38

       Fuck me! That is... So again, um, how much of the company do you own, Basti? Like 20%?

   11. BLBastian Lehmann21:45

       I... It, it doesn't matter.

   12. HSHarry Stebbings21:46

       What did the board say?

   13. BLBastian Lehmann21:48

       I think Bryan Singerman, uh, was excited to the extent and he said, "You did it, Basti." I, I really think he said that exact same sentence and that was sort of the end of the excitement. And then that, I mean, meant a, meant a great deal coming from him. (laughs)

   14. HSHarry Stebbings22:02

       (laughs) Listen, that's as good as you're gonna get, so just embrace that.

   15. BLBastian Lehmann22:05

       I know. Yeah. I know.

   16. HSHarry Stebbings22:07

       What are your biggest lessons then to founders on how to get acquired and how to sell your company the right way?

   17. BLBastian Lehmann22:12

       I don't know if I have great advice for that.

   18. HSHarry Stebbings22:15

       (laughs)

   19. BLBastian Lehmann22:15

       I just know that most companies fail because, because the founders give up. And, and, and, and, and that's it. And we, we, we refuse to get... We

9. 22:25 – 25:02

   Dara Khosrowshahi as a Non-Founder CEO

   1. BLBastian Lehmann22:25

      refuse to give up.

   2. HSHarry Stebbings22:25

      You said before that Dar is one of the best non-founder CEOs alive. I'd love to unpack that. Why do you think that is? What makes him so good in your mind?

   3. BLBastian Lehmann22:36

      He has an ability to give the people that work for him a lot of autonomy. And, and when I started... When I started working with him and see how he works, at first, I thought that that was a weakness. Um, and, and I had this feeling like, "Man, he's not really that involved in all of these things." But, uh, boy, I, I think it's just a great way of how he leads the company and, and, and he, he is involved, but not to the extent that I was involved or that I thought people would be involved. But he rewards a, a, a, a group of people, um, with, with trust. And, uh, he, he has more than often... Uh, uh, he has more... He, he, he picked a lot of good people, um, that, that ended up working for him that executed very well. So it... That's sort of an aspect. I think he, he's also, um, calculated risk-taker. I think, um, when he took over the job, I think he had a pretty good understanding that he can probably turn the company around and what needed to get done more so than, than the street understood and would give him credit for. I think he has, um, maneuvered, uh, legislation, um, uh, uh, any sort of cultural issues in the company, external expectations very well. And, uh, before... For, for, for a non-founder CEO, he really has... I think he has made this company his. And, and you... The, the... What is remarkable is, if you have people two, three years ago that talk about it, they're like, "Ah, Dara, you know, at some point, maybe, you know, Travis comes back and this... The whole Apple thing." You know, we love these stories in, in Silicon Valley. We love it. It's, it's like... It's the stuff that movies are made of, right? But, you know, this guy just showed up at work, did his thing. You, you would have CNBC. You would have Bloomberg. They would all just talk... They would just say nothing nice about it at all. And every, every moment in time that they could mention that Uber has not been... Uh, has not exceeded their, their IPO share price was good enough for him.... this guy just keeps on executing. And now you turn on, uh, uh, uh, CNBC. You read, you read Bloomberg. "One of the best CEOs." "Incredible guy." "Unbelievable." "Give him a billion-dollar salary." "How can he have done this?" You know. "Here's a CEO that knows how to run a business." What a ... And it's, and it's sort of like, you know,

10. 25:02 – 26:30

    Postmates Brand & Acquisition

    1. BLBastian Lehmann25:02

       yeah, he did that.

    2. HSHarry Stebbings25:03

       Can I ask you, uh, again, a final one, and then we're gonna move to new company. Um, someone messaged me and said, "Basically, Dara has written off the drizzly in the Postmates acquisition. What does Bastian think?" How do you think about that? I mean, it, was that right? Does that feel good? Like, what are the thoughts?

    3. BLBastian Lehmann25:23

       So first of all, I, I, I, I couldn't care less about it because, you know, I- I'm not in charge at Uber and I don't run the company. And however, however, uh, uh, um, uh, Dara wants to run the company, it, he probably will do what's best for the company. Uh, but I- I see no signs of the Postmates acquisition, uh, being written off because the, I think the brand is very strong. Uh, it continues to be very strong in LA. Um, and unless I haven't gotten the, uh, the memo that they're, that they're shutting Postmates down, I think it, it, it continues to be, to be a great brand. Uh, maybe ultimately is smart to consolidate to one brand, but it, they, they probably know when to do, when to do that best themselves. When we discussed the merger, we, we, we sort of had this idea that you leave these brands, you start uniting the tech underneath, and then at some point, it's the same product but it sort of has a, basically a different name. And, and, and that's, that's literally, like, the, the one difference, and you, you can use these brands to maybe appeal to slightly different audiences. Um, and, uh, but if they change their mind, then that's fine. Maybe

11. 26:30 – 28:49

    Starting a Second Company

    1. BLBastian Lehmann26:30

       I can buy the domain back.

    2. HSHarry Stebbings26:31

       So then we have the earn-out and, you know, the kind of progressing through that. Bluntly, you then have, you know, a good amount of money and you're thinking about what to do next. Talk to me about the decision-making process there, Basti. You could've done anything. You could stay at Uber, you could be a big-time exec, you could do nothing. What was the decision-making process?

    3. BLBastian Lehmann26:52

       Well, I tried to do nothing. Um, and, and, but, but if you have a, a family, then, you know, even y- y- i- it's e- it's hard to find time to do nothing because, uh, you know, you, you, you obviously get roped into all sort of activities and soon you discover that it, that it's great fun. Um, so, so for a while, I, I was, I was just, I was just enjoying that. But you, you, if, if your mind keeps wondering, um, about things that, that could be done and ideas that, that you could work on, I love building products and I love, I love running teams and I love being in a room full of engineers and, and, and working on ideas and see things come to life. And so I, I, I try to do the investing thing and, you know, I do some investments, but it, it, it, it does not derive me the same, the same amount of, of, uh, amount of joy than, than actively building something.

    4. HSHarry Stebbings27:47

       Okay. Um, now you start a second company then. What are the single biggest pros? If we start on positives, what are the biggest pros of being a second-time founder, Basti?

    5. BLBastian Lehmann27:58

       So if, if you're a second-time founder that has returned capital, I think you have a, a- obviously a set of pros that it, it's very easy to raise money. You can select the people that you wanna work with on your next company. It is fairly, it is fairly easy to assemble a team. Because you have done certain things, you don't know how to be successful again, but you, you, you know how to run a lot of, a lot of the processes and a lot of the red tape and a lot of the things that would really consume you the first time around. I- i- and now y- y- you, you know how to do these things. And so, so y- y- you can be, you can be, you can be fairly efficient, uh, in, in, in getting started.

    6. HSHarry Stebbings28:43

       Totally agree with you there in terms of often it is not knowing what to do, right? It's knowing what not to do.

    7. BLBastian Lehmann28:48

       Right.

    8. HSHarry Stebbings28:48

       The mistakes

12. 28:49 – 34:02

    Selecting VCs & Raising Money

    1. HSHarry Stebbings28:49

       that one normally makes. You said about selecting the VCs and having the ability to. With the ability to select, how do you select the VCs you work with?

    2. BLBastian Lehmann28:58

       I think you, everybody has ... If you ran a company for 10 years, you have met people that you maybe always wish you would've worked with. And, um, for me personally, Marc, uh, Marc Andreessen was, is one of my heroes. This is a guy whose software I grew up with, whose, whose, whose, whose, uh, whose browser arguably changed how we access information. I pitched him four times or five times, the entire firm, uh, uh, with Postmates. They were smart enough to say no. But it, it, it, it was, it was, it was amazing to, to, to, um, um, to, to, to be able to just, to just reach out and, and, and I think there was a mutual feeling from his side. He, he, he, he was excited, um, to work with me as well.

    3. HSHarry Stebbings29:41

       How did that round come together? You ping him and you're like, "Hey, I'm starting something new. Can I come meet you?"

    4. BLBastian Lehmann29:46

       He pinged me actually because a friend told him that I was working on something and, and he called me and, and I said, "I don't, I don't even know if that idea is good." And he said, uh, he said, "Okay." Like, "W- w- uh, y- are you, do you wanna do it again?" And I said, "Yes." He's like, "Well, then I'm, I'm sure you'll figure something out." Uh, and, and that was the, that was the extent of the fundraise.

    5. HSHarry Stebbings30:06

       (laughs) And so who did the price? Who did the negotiation? Like, how does that work?

    6. BLBastian Lehmann30:12

       We didn't negotiate on, on, on, on, on the terms much. We just discussed what we believe to be reasonable for a cold start series A at a, at a price that ... and that's it, really.

    7. HSHarry Stebbings30:23

       Uh, w- what did you have in terms of company at that point?

    8. BLBastian Lehmann30:27

       Three co-founders. Um, uh, an idea that we've been a, a, a, a problem space that we've been looking at.

    9. HSHarry Stebbings30:35

       Did you worry that it was too much too soon? Like, you know, one of the challenges is it's too easy to raise money and then you have the luxury of not being thrifty, being able to spend on whatever you want. Were you concerned about having too much too soon?

    10. BLBastian Lehmann30:47

        Yeah. I, I, I still am. And, and, and, and, and, but only to the extent that I'm concerned about any of these things.... up to the point where I know that the new company is a success, right? So, I, I don't think there's any set of circumstances that will necessarily, um, uh, uh, dictate that outcome. If you have too little, you're worried that you, maybe you should've raised more. If you raise money, you may be worried that you have too much and do you detect complacency somewhere?

    11. HSHarry Stebbings31:18

        Uh, it, it's always one where a lot of people say, "Oh, raise whatever you can and you just put it in a separate bank account on a rainy day." And I always find founders spend rainy day funds when it's not raining. (laughs)

    12. BLBastian Lehmann31:29

        We, we sort of raised an amount that would allow us to do, uh, basically like three or four startups in one, right? So, if you think about it, something that Mark and I often talk about is, if, if you run a company, you, you, you wanna test a, a set of hypotheses, uh, that, that's your job as a CEO, right? And you, and you, and you wanna run down that list and, and, um, if, if you find that, uh, some of them work, you sort of wanna increase the velocity and, and, and really get to the, the, uh, the point where you know if this thing works or not. And I think the idea behind, behind TipTop is that we like the space but, uh, and, and this is the team's opinion as well, but we, we'll, we, we will explore it to the extent that if we believe that we have a tiger by the tail and that we see this thing moving in the direction that we like, we will continue testing hypotheses or we will, we will move to a different space. And that would be, that would be no problem, uh, uh, not for the team, not for myself, um, and I don't think for anybody who invested, right? The, the idea is that, that, that we'll figure something out.

    13. HSHarry Stebbings32:27

        Where is the conviction bar on where you are with TipTop? Is it like 50% proven? 30%? 70%?

    14. BLBastian Lehmann32:35

        It's, it's a very good idea. We're very convinced of that. Um, it is, it is a very slick product. We're very convinced of that. We are trying to understand the market size and impact that we can have with our energy. We're, we're, we're, we're, we're not sure where that, where that is yet. Um, so, so that's, that's sort of where we're at.

    15. HSHarry Stebbings33:01

        How do you determine when to cut something and move on? I- is there a defining metric? Like, if we don't have X number of users by X date, we kill it.

    16. BLBastian Lehmann33:10

        You can do it that way. And, and I'm sure there, there are people, uh, uh, uh, that are like that, um, uh, you know. Who do I know who's extremely smart and would run a company like this? Patrick and John Collison. I think they're like the perfect example. I'm, I'm sure they have a metric. And, and, and, uh, I admire them and, and, and they're, uh, we're, uh, very fortunate to call them friends. The, the most important thing to realize is that it doesn't matter. We tend to take everything way too seriously. Like, uh, uh, we, "Oh, if, if I fail, the, the world will think..." Nobody cares. Uh, uh, uh, uh, it takes a minute for everybody to get over it, right? So, uh, something else will happen. Elon will tweet something and that's what we care about, the minute after somebody just thought about you. So, it, it, it, it really doesn't matter. It like, there, there is no right or wrong way. There is nobody who knows the master plan. And, and it

13. 34:02 – 39:30

    Starting a Company with Financial Security

    1. BLBastian Lehmann34:02

       really does not matter.

    2. HSHarry Stebbings34:03

       Can I ask you, I think one challenging or interesting element is financial position changes with your second company if the first one's successful. You, you know, you no longer need it financially to work. How does starting a company rich change your mindset, approach, ambition the second time around? What's different in that way?

    3. BLBastian Lehmann34:24

       Well, that is a fair question. I had, I had very little when I started Postmates and we put it all on that thing, right? And, and that may have to do a little bit with like, we, uh, uh, w- w- we felt like we had to push that little carriage up for, up the mountain for 10 years, right? And at any moment, there weren't, there was not a moment in time when we were convinced that, that we've made it. So, but we had the ultimate energy because, because this, be- because we felt that, we felt that this is what, what had to, had to get done. But at least 50% of that was also a, a chip that we had on our shoulder that we wanted to prove that we can do this. And that is something that all the money in the world, I think, uh, uh, can't compensate for, right? It, it, it, that's why people strive for greatness, that's why people strive to do certain things because there, there, there is a desire to, to do something.

    4. HSHarry Stebbings35:18

       But how does starting a company the second time differ when you're starting it rich?

    5. BLBastian Lehmann35:24

       Well, I don't, I don't need a salary, so I don't pay myself a salary. Um, I think, I think that's, that's, that sort of comes in handy.

    6. HSHarry Stebbings35:31

       Are you more courageous in the bets that you take because you're not worried about the downside? Are you more fast-moving because you're like, "Fuck it"?

    7. BLBastian Lehmann35:38

       I think we as a company have now been very focused to not have, uh, uh, to not have any sort of external, um, uh, uh, uh, things sort of i- influence our decision-making. Uh, we, we try to be very humble. We try to be nimble. We try to move very fast. We try write a lot of code, uh, assess problems, and, and, and we, we try to do that not sort of with any, with any confidence or with any, out the assumption that we're better off, uh, uh, uh, because of, uh, anything that happened before.

    8. HSHarry Stebbings36:09

       I totally get you. Can I just... When... I'm, I'm sorry for jumping around. When, when the money does land, does it land in one go? Do you get like-

    9. BLBastian Lehmann36:17

       (laughs)

    10. HSHarry Stebbings36:18

        No, I mean, seriously. Do you just get like a notification like here is like, you know, X million dollars and you're like, "Wow, that's great"? Or does it come in drip feeds? How long does it take? Like just how does it work?

    11. BLBastian Lehmann36:29

        What's really interesting is that you think it's this moment, but, but it's sort of, it's, it almost take, the whole thing almost takes a year. So you like, you sign a deal and then of course, you know, DOJ, in our case, the DOJ had a few questions and, and, uh, they, they submitted, uh, a request and, and we had to answer that. And, and then the, then you get the go and then the deal closes and then-There is a company called Shareworks that- that- that- that deals with the transition of shares between- between two parties. And- and they, uh, take custody, uh, you get access to it. And, (laughs) and then, uh, some- th- there's a clawback. Uh, uh, uh, in our case it was a- it was- there was no clawback, I believe, um, uh, a- a- a company-wide clawback. But we just had a- a- a small amount of ch- uh, shares that would- that did vest after, like, three months or something, so just, uh, after- after a transition period. But yeah, at some point, you- your bank calls you and says, like, "Yeah, we got your shares. Do- do you wanna see," (laughs) "your- do you wanna see your bank account?" I guess that's what they ask you, yeah.

    12. HSHarry Stebbings37:36

        How did you feel in that moment?

    13. BLBastian Lehmann37:38

        So that- that is the- the bizarre thing is that you have a year- you- you prepare for that moment for a year, right? It's not like winning the lottery and you're like, "And there it is," right? It's sort of like we knew we had sold the company a year earlier, right? So you're- you- in your- in your- in your mind, you probably go over that moment then many times, right? But I was- I was so focused at that moment in time, was the transition of the company, right? So you have to understand, up until the Department of Justice cleared the thing, there was a fair chance that w- this would've not been possible. So we- there was no moment in time when we celebrated, when we- after we signed the paper, because we had to run the company as a standalone company for, I believe, eight- eight, nine months. So we had to hit our quarterly goals. We- we- we did not wanted to have a scenario where we lose market share because now we're thinking that we're selling the company. You're not allowed to share information to begin with. So you run these things as- as- as- as very separate businesses. So it is ve- it- it's very anti-climatic, I would say. There is- I wish there would've been a moment. And on top of that, it was COVID. So the one thing that I'm extremely sad about is that I did not ever get to celebrate with our 2,000 employees at a party in a room and- and- and have a blast. And- and I think that was a very strange feeling. We- we all- everyone walked away, sort of, in with masks and, uh, uh, you know, five feet distant. Uh, a- a very strange- a very strange end to, like, a 10-year sort of almost church-like, uh, uh, uh, uh, community a- and- and being in the office for 18 hours most days, including the weekends, like, it was very strange.

    14. HSHarry Stebbings39:24

        That is strange. It's- i- i- it's sad in many ways, so I'm sorry that you didn't get that chance to share it, 'cause it's,

14. 39:30 – 45:48

    VC & Value Add

    1. HSHarry Stebbings39:30

       um, it's a special moment. I- I do have to ask, as we said, you're very vocal about venture investors. Um, as a venture investor, I agree with some and disagree with others. You've said before that 99% of VCs are idiots, Basti. (laughs) How do you find the 1% that are not, and do you really think that?

    2. BLBastian Lehmann39:49

       Well, I don't- I- is it something I tweeted? 'Cause we- we all tweet a lot. And, um, the- I would probably today say that 99% are sheep.

    3. HSHarry Stebbings39:59

       Why do you think they're sheep?

    4. BLBastian Lehmann40:02

       Be- be- because, I mean, uh, uh, b- tha- that's probably enough to be somewhat successful, right? It's like it- it- it- th- th- the views are- th- there is a mass sort of, uh, uh, uh, thinking, uh, uh, and it's very self-informed and there's very few people that understand where things should go and- and where the opportunities lie. And there is the majority of all people are just echo chambers of whatever that is, and- and there is a great desire, uh, uh, uh, in most VCs that I know, bumping- bump around the edges too much and just do that thing and just, you know, uh, follow that path and- and- and- an- an- and that's what it is. Uh, i- i- it is very un- it- you- you are- wha- what- whatever is the creed of the moment and- and- and whatever you wanna discuss in regards to that, it's rough to sometimes, uh, uh, uh, you know, be a little different and- and- and try to- and try to, uh, convince people.

    5. HSHarry Stebbings41:09

       Listen, I think it's the same with LPs. You know, I, uh, I- I quite often will say to LPs, you know, "You get paid for the courageous bets that you take, not the safe decisions that you make." Um, and I think it's very much the same in venture, by the way. This is a business of anomalies, and so I completely agree with you. I think one of the interesting elements is venture value add. A lot of founders say, "Oh, I'm thinking about this VC or that VC 'cause they bring this and this and this." How do you think about venture value add? And you've said before the best VCs in the world are humble enough to realize that they're not going to change the outcome. How do you advise founders on venture value add?

    6. BLBastian Lehmann41:49

       Well, first of all, I- I think that statement is- is completely correct and, uh, and- and- and- and it- it is- it is my fundamental belief. The greatest VCs that I have met are the people that- that know this. Uh, when I- when- when the company was- was bought, when the deal got closed, I remember having coffee with Bryan Zingerman, and we both lived in Noe Valley at the time, so ... And I was curious, I'm like, "Hey, how is it being a VC? What's- how do you do it at Founders Fund? Do you think I could do it?" And I think he said something, he said, "I don't know if you can do it, but I don't think you can do it, and I don't think you would be good at it." And I'm like- and w- w- I'm like- I'm like, "W- why do you think that?" He's like, "Well, you care too much, like, you're an operator. You wanna- you believe that you can change things, and you can do that when you're running your company. But you would look at in y- when you're an investor, you have to realize that there is nothing you can do." It doesn't matter. So at Founders Fund, they- they obviously believe in this very deeply. We just saw this, um, uh, um, um, obviously with- with Keys leaving there and- and being somewhere else, they- they- they- th- the- the belief is that there is very little you can do to actually move the needle other than writing the check. And then, h- in the best case, you stay out of the way, and that's why they-... belief that board seats are, you know, all the downside and very little upside, you know? It is- it is ... All of it is sort of rooted in this belief that, why would you be the guy that knows best how to do something and push these founders to do a certain thing? I believe the best VCs in the world believe that. I- I do not believe that- that- that Mark loses a sleepless night over what I'm working on. A- a- and also, I- I believe that he may not even care. And that is totally okay with me because, you know, that- that is the job of the people running the company. And the investments that I have made, when I give someone a check, then (claps hands) I- I try to stay out of it because I think, uh, Bryan Zikmund is also one of the most intelligent people I know and I think he- he is right.

    7. HSHarry Stebbings43:55

       You said a- another thing, final one on fundraising. But you said when you feel like you have to convince someone to really work hard on your space, or to convince someone, walk away. Why is that? Why- why is having to educate your investor a bad thing?

    8. BLBastian Lehmann44:11

       Now, I'm a- I'm a little jaded here, so but ... But one is allowed to be- to be jaded or influenced by, um, um, one own experience, but I ... Even though I try to, uh, uh, separate these things a lot. I- I- I do f- I do believe that there is unlimited amount of capital out there and I believe that it is easier and it's better and it's better worth your time by focusing on the people that initially believe in that than- than trying to ride two or three rounds with the same VC firm and spend, uh, two hours going into unit economics, uh, where the outcome of any of these meetings will evidently be that they pried down the unit economics neatly and then invest in your competitor. So, I think it is very important to understand when a VC is trying to understand your business or when a VC is trying to understand y- y- your business in- in- in- in- in- in the- to the extent of also another business at the same time. And so oftentimes, when you spend a lot of time and you feel like every meeting, you have to- you have to really dig- dig incredibly deep. A- again, if- if- if you are a VC that needs that much conviction, regardless of the check size, um, a- already- already a red flag.

    9. HSHarry Stebbings45:28

       And I find it will only get worse from there.

    10. BLBastian Lehmann45:30

        It will only get worse because good luck with the next board meeting and the subsequent board meeting and not hitting a number and not- and not- and losing a percent market share or uh, uh, uh, you know. It- the- it- it- I've- I've- we had all types of investors in the company, and, um,

15. 45:48 – 48:11

    Running Board Meetings

    1. BLBastian Lehmann45:48

       it's not fun.

    2. HSHarry Stebbings45:49

       Did you enjoy board meetings?

    3. BLBastian Lehmann45:51

       I was not really good at first at running board meetings, um-

    4. HSHarry Stebbings45:56

       Why? Why- why not? What did you-

    5. BLBastian Lehmann45:58

       ... I- I- I mean, look, I- I- it- I grew up running this company and I don't mean like in a sense of from a- from a young buck to like a teenager, but I think as- as a- as a business man. When- when I started the company versus 11 years later, I- I grew up as a person and I obviously honed my skills. So the first couple of board meetings I think were ... I- I didn't have the head space to even think about the- the board really, so I was- I was so focused into the- into the daily operations of the company. It was hard for me to have even predictions or sort of do-do-do-do-do even focus on explaining things to someone else. And after a while when we'd gotten external investors that were not just Scott Bannister who was- who was the first on the board and Bryan, sort of I had to learn that part of that ultimately is also to align the board and- and- and- and to make sure that the- that it's not just in your head but that you communicate it to the board. So what I found- what I found to be a very good strategy is to actually have the board meeting and non-board meeting and do a dinner the night before with a presentation sent out a week but at least a few days ahead of time. At the board dinner you discuss any sort of tension that there may be hitting your numbers or beating them or fundraising or updates or whatever it is, competition, so that- so that you can- so that you can then have a board meeting that is very short, very focused on- on just the few things that people commented on in the week leading up to the board meeting with the board deck that you provided. And it also gives everybody this- this feeling that, oh, we just sat together last night, right? So- so a lot of- a lot of anxiety is out of the room, you know, people got to, uh, be used to the quirks again that they may have forgotten about, 'cause, you know, I love people and we're all different, right? So and- and- and- and- and it ... That- that worked very well for me towards the end.

    6. HSHarry Stebbings48:03

       (laughs) I- I love that and I really like that separation between the board dinner and the actual board meeting and actually segmenting the content in that way. Um,

16. 48:11 – 52:31

    Hot Takes on Inference Computers

    1. HSHarry Stebbings48:11

       I do have to go for some hot takes, Basti. It'd be wrong for me not to. And, you know, as- as you said, VCs are sheep. Uh-

    2. BLBastian Lehmann48:17

       What could it be?

    3. HSHarry Stebbings48:18

       What could it be, eh? Uh, why- why don't we talk about direct to consumer (laughs) ? Uh, why- why don't we talk about AI? And you teased me with having some controversial hot takes, but you didn't actually go into them. And so you said inference computers and that was it.

    4. BLBastian Lehmann48:36

       Yeah.

    5. HSHarry Stebbings48:36

       What's your hot- what's your hot take on inference computers?

    6. BLBastian Lehmann48:39

       Oh, I'll- I'll ... Uh, I think there were three, uh, sort of areas that I wrote down. I think personal AI, um, I think is- is another one.

    7. HSHarry Stebbings48:48

       Cost of LLMs.

    8. BLBastian Lehmann48:49

       Yeah, great. Obviously, AI or machine learning has opened this- this- this- this great new, um, sort of paradigm and way of thinking and e- honestly has- has- has given tech a- a much needed boost, um, and- and- and enthusiasm which I think is fantastic. I believe that, um ...One of the overlooked areas of, um, of, of the current state of A- AI and, uh, the large language models that we're using is that they're still very expensive. And as a result of that, uh, they're dramatically more expensive than a Google search. And as a result of that, we don't really have any great killer apps beyond the chatbot. And, and, and anything you build on LLMs is, is, is very expensive because the compute is very expensive. And obviously there's, even on, on the compute that's available, a shortage of that compute, right? So now most of that goes into training these models, which is, which is done in the cloud and which is done on, on, on large GPUs, and it's a fantastic use, use case for that. I think when it comes to AI and personal AI, we may be at a moment in time where there is, there is an opportunity for a new computer, a new type of computer that we may see in every home. Um, a computer that runs your own personal AI on a chip that does not have to be as powerful as the most powerful NVIDIA chips. As a matter of fact, it could be a chip just designed for inference and, and, and, and just designed for, for doing that very specific work. And that computer is, is not a computer with a screen. It won't be a computer that, that, that you sort of even necessarily interact with, but it, it, it will be a, a piece that other devices could interact with and that powers a, a large language model if you want to, hopefully an open source one. And, and that will behave like a platform that has your personal weights, your personal preferences, that is connected to the world in the way that you want to.

    9. HSHarry Stebbings50:48

       Why would you need an, uh, a computer separate in the home for that? Surely the, the preferences, the data would be stored in a cloud provider, very much like having an OpenAI account that has your personalizations and preferences baked into that.

    10. BLBastian Lehmann51:01

        No, actually not, uh, for two reasons. First of all, you want the, you want the, uh, inference to happen as closest to the source of data as possible. And I like to argue that once a model is trained, inference w- then will... You get all the signals from your house, from your life, and in that moment is actually when inference is, is the most powerful. You, if you have data in the cloud and you need to computing on that data, sure. But, but not if it's, not if it's, not if it's data that is maybe to do around your home. Inference is very powerful the closer it is to the source of data, uh, given that w- you, if you think about a personal assistant, the personal assistant needs a lot of information about you and inputs. That's why you would see that at home. It also is the only way right now to do it cost-effectively. I- if you have personalized weights, if you have personalized numbers, your LLM in the cloud will cost a lot of money and it, and, and it can't even do things real-time right now for you because of the cost. You can run it at home, and the only cost is your electricity. That's another reason that I believe that this is, uh... The... In, in a weird world, uh, uh, I talked to a, a few founders about this, uh, uh, over the last couple of weeks. Uh, a lot of folks are convinced that this is sort of when you had these huge timeshare mainframe and you had to go into them and you, you have to pay per minute and you had to pay per use and the, the thing came back. And then Apple came and, and, and did the Apple 1 and you had a board that you can hack against at home and that allowed you to do your own thing. So, uh, I may be wrong, but

17. 52:31 – 56:24

    Future of Phones & Vision Pro

    1. BLBastian Lehmann52:31

       I, I think there is something here.

    2. HSHarry Stebbings52:32

       Is Apple not best placed, if you think about being closest to the source as being fundamental, is Apple's monopoly on hardware and phone usage and device not putting them best place to run these models locally on device?

    3. BLBastian Lehmann52:46

       A couple of more hot takes that m- most people will not agree with, and I'm happy to be wrong. I think the phone is dead. That's the first problem that, that will, that will, that will, that will happen very soon. I believe that AI happened too fast and Apple is caught in sort of the inventor's dilemma here. Uh, I'm sure that they could eventually put an additional chip in an iPhone that does inference and, and, and, and allows you to run these models more efficiently. But I, I, I doubt that it will be interesting enough for the group of people that I have in mind and, and, and that, that want to tinker with, with the technology, so.

    4. HSHarry Stebbings53:21

       Why is the phone dead?

    5. BLBastian Lehmann53:22

       (laughs) I think it had a good run, man. But, but I think we, I think we have to call it, we have to call it what it is. It's, it, it... You know, it, it, it... I... Look at us.

    6. HSHarry Stebbings53:33

       What replaces this?

    7. BLBastian Lehmann53:33

       This is, this... I mean, ultimately, uh, uh, uh, we will find a way to, to, to use implants, uh, uh, to communicate or, or devices that are smaller. But I think we will see a world where people go to, uh, an operating system for LLMs, maybe a voice operating system. Um, I, I think there, I think there is many ways. Uh, th- th- that device may have not been invented yet, and it may take obviously longer. Look, I mean, telephone, you know, landlines are still around. So, uh, uh, when, when I, when I call it dead, uh, uh, I don't call it dead in the sense of we won't use it anymore, but I think it, it has reached the peak of, uh, of its, of its, uh, importance in people's lives.

    8. HSHarry Stebbings54:16

       Are you long or short on the Vision Pro?

    9. BLBastian Lehmann54:19

       On the Vision... As it is... The, the... How it is today, I... Short. I think it's a product in search of a market. Um, it may have a fantastic application in science and in medicine and, to a less degree, uh, in, in, in media. Um, and I think it is just a product that doesn't bring us together in the way w- uh, regardless of all its neat technology and the fake eyes and, and all of these things. You know what? I think Apple knows this, obviously, but... 'Cause they are... They have incredible people working for them. But the, the app that would change or, or the, the hardware that would change would just be unrecognizable... different from your regular reading glasses and it, and it would have un-unlimited battery life, overlay of information, um, anything that you can imagine in, in like, a very subtle way, um, that would, I think, would be a great tool.

    10. HSHarry Stebbings55:18

        That I completely agree with. I'm always in awe that we don't have like contact lenses that we put in every day and it's like, actually connected.

    11. BLBastian Lehmann55:23

        It will, it will happen probably, yeah.

    12. HSHarry Stebbings55:25

        Where do the benefits accrue? More to startups or more to incumbents in the next wave of AI?

    13. BLBastian Lehmann55:30

        So, in, in almost everything that we've seen, I think it is incumbents. I don't think that's too, uh, contrarian, um, because it, it, it, it, it just makes a lot of sense, right? Um, but there will be companies born today that will be larger in the field of AI than the companies that are the largest companies that we have today. And they will start as toys, and they will start as something that is, that is, that is, that is probably overlooked, and something that is not most applicable, and something that is not most obvious. That's my, that's my prediction.

    14. HSHarry Stebbings56:12

        Quick debate with you. But we've never had incumbents who have such data advantages that these incumbents have, and we've never had incumbents who throw off 350 million a day in free cash flow like Microsoft does, combined

18. 56:24 – 1:03:58

    Future of AI & Startups vs. Incumbents

    1. HSHarry Stebbings56:24

       with the data advantage. Are these incumbents not too strong to usurp?

    2. BLBastian Lehmann56:29

       BlackBerry at some point owned the entire smartphone market, Grubhub ran pretty much all food delivery in the United States. I mean, there is, you can, you can, you can go up and down that list.

    3. HSHarry Stebbings56:40

       Oh, th- th- those are weak examples. You can do better than that, Basti. Like, come on. Like, they had BBM as a network retention mechanism maybe, but I mean, the, the market itself was pretty small. Their market cap never exceeded a huge amount, their free cash flow was never a monstrous amount, Grubhub was not ever global, um, can, I mean, not even comparable.

    4. BLBastian Lehmann57:04

       So what, what, wh- wh- what's your point?

    5. HSHarry Stebbings57:08

       Like, is this incumbent set not more dominant than ever before and actually we're in a very different world of startup versus incumbent?

    6. BLBastian Lehmann57:20

       I still don't buy it. Uh, uh, uh, sure, uh, uh, uh, uh, uh, I think in retrospect it always looks like this. 10 years ago, Apple didn't produce their own chips. Like, everything looks like that. Uh, uh, at some point there is, there is a market that looks penetrated, a thing that can't happen. At the same time, look, it, it, this is how it starts, uh, dude. It's always starts like this. The things start to fall apart from the inside. Google already can't launch an AI without, without the, without the original founders coming back and having meetings with people with, with, with, with t-shirts of, of, of boops, uh, sitting in a room somewhere in San Francisco. It's like, uh, th- th- this is Google that you're talking about, and they shed the bad so hard. They literally just went from like the most respected company in the world to laughingstock in a matter of month. So, the, I just don't buy it. And look, this is, this is a marathon, this is not just a sprint, but the, the cracks start to show in the, on the inside. The Vision Pro, uh, an effort inside the company that was Herculean, I was told, where everybody was involved, where people had to take meetings they didn't wanted to know, where two teams of hundreds of people were pitted off against each other to get that thing onto the market, and now it doesn't, and now it fails. Dude, this will be the first product for Apple where they have more returns than they have on any other metric. You, you can plot the graph and it's the, since Steve Jobs came back, this is probably the first thing that is a turd. So, the, the, the stuff starts to happen from the inside. It's not only that there is smart kids coming along and they're, they're doing something, but it's a combination of both, and that I fundamentally believe in. At some point the people that did whatever made that company great and even their direct reports and the people that believed that, at some point that either shifts, moves away, and then it starts to feel a little loose on the edges. And when it starts to feel loose is exactly when there is opportunity for someone else. And sure, you can buy yourself out of this and you can M&A your way into whatever you want, but it can happen. It, it absolutely can happen. And then it won't happen overnight and it will look like a toy at first. It, whatever it is will be ridiculed. Then people try to catch up. If they're lucky they can buy someone. But every once in a while there is a company that rises and becomes extremely, extremely big even though the set of circumstances seem very unlikely.

    7. HSHarry Stebbings59:52

       Dude, I love it. This is what our business is based on.

    8. BLBastian Lehmann59:54

       That's my rant.

    9. HSHarry Stebbings59:55

       No, I love it. That's what our business is based on. You, you, you know, I, I really appreciate that and like it. Question, one company that seems to have risen obviously above any other is OpenAI. Do you think foundational models get commoditized and would you be a buyer of OpenAI at 90 billion?

    10. BLBastian Lehmann1:00:11

        It's a fantastic research company is how I would describe, um, OpenAI. I think it remains to be seen if they can launch extremely successful products other than, uh, a, a chat-based, uh, uh, or, or ChatGPT. It will be a dominant player, um, a- a- and, and look what they did by the way, coming out of nowhere yet working on it for seven years, right? You, you, you didn't, you didn't catch up with Sam every week to get the status, uh, o- on what they were working on for the last six or seven years, right? So, and suddenly there is this one product and, you know, and, and, and off you go, off you go. Um, so of course they're important, I think they're a, a great player that is now inspiring a lot of founders and entrepreneurs to do great things and have the audacity to, to, to sort of dream in a direction that for the longest time... Mostly because it was a market where if you worked in ML you, you got a nice salary at Google but the expectations was just that you please don't bother anyone too much, right? So, and, and now suddenly (laughs) you're like, you're, you're in demand, people actually listen to you, they believe that these things can work. You know, everybody wants to know what a token is. They will be a big player, I think they will be a very large company, um-... but, uh, there's other companies th- that I'm, that I'm, that I'm personally, like, more excited about, so.

    11. HSHarry Stebbings1:01:28

        Which ones are they?

    12. BLBastian Lehmann1:01:30

        Well, I don't know. Uh, I have, I have my list here. I have certain, I have certain names. I ha- I- I divide companies into, like, the big stuff, useful, and noise. And, and most of it is noise obviously, right? You, you have a lot of noi-... That's, that's just like someone who comes along and says like, I don't know, "We're developing a brain for robots." You know? That, that, and whatever. But I think what looks really good is Figure. I think their latest robots that, that we've seen from them, they're, they're remarkable. I think they work with OpenAI. That's an OpenAI investment. I think that you, you, you see a lot of, a lot of, um, really remarkable companies coming out, working with smaller models, more dedicated models, um, models that, that may be a lot more, um, uh, trained for a specific purpose than sort of that giant call center that can do anything. Um, but other than AI, I, I'm telling you, space, nuclear, count me in.

    13. HSHarry Stebbings1:02:27

        (laughs) Space, nuclear, count me in. Any, like, startups that have had a huge publicity and you're like, "I don't get it"?

    14. BLBastian Lehmann1:02:34

        A lot of them, but that's okay. I think technology is the absolute greatest thing. Faster, more enthusiastic into the technol- into the technological future. That's what I believe in.

    15. HSHarry Stebbings1:02:47

        I love it. Final one. You mentioned timescales actually taking longer. I am just intrigued. You said to me before, and you said, sorry, on Twitter before, not developing AI fast enough is what will kill us, not the other way around. What did you mean by that?

    16. BLBastian Lehmann1:03:02

        We are already facing and we will continue to face dramatic, uh, uh, challenges obviously as a country, as, but also as people. And, uh, uh, on this planet, moving to a new planet, um, uh, uh, if we want to be multi-species, I think the challenges ahead of us, we need to develop all the technology we can to solve them, to engineer ourselves out of global warming, to make decisions based on, uh, uh, uh, data and guidance that we can get from better software, um, getting to Mars, uh, uh, all of that, I think, it's essential that we make great strides in AI. The, the risk is not that there, that there will be an evil AI that will kill us. I think the risk will be that by not becoming more intelligent and using these intelligent tools, we'll become extinct.

    17. HSHarry Stebbings1:03:51

        Oof. Bold statements. I'm loving this. Glad we did that as a, as a quick fire on AI round, Basti.

19. 1:03:58 – 1:08:29

    Quick-Fire Round

    1. HSHarry Stebbings1:03:58

       That's fantastic. Uh, I wanna do a quick fire round more broadly. So, I ping you with a statement, you give me your thoughts. Does that sound okay?

    2. BLBastian Lehmann1:04:04

       Yes.

    3. HSHarry Stebbings1:04:05

       What have you changed your mind on in the last 12 months?

    4. BLBastian Lehmann1:04:07

       Again, technology. I, I, I mentioned it before. I, I think we were in a little bit of a slump there for a while. It seemed like, you know, sort of, uh, you know, everybody shut off the engines and we had to be very apologetic and it was sort of... Now, I think we're so back and I think it's great, 'cause, 'cause I, I really, I'm saying it again, like, accelerate into the technological future as fast and as enthusiastic as we can.

    5. HSHarry Stebbings1:04:33

       What are you most concerned about in the world today?

    6. BLBastian Lehmann1:04:36

       What am I most concerned about?

    7. HSHarry Stebbings1:04:37

       Mm-hmm.

    8. BLBastian Lehmann1:04:38

       United.

    9. HSHarry Stebbings1:04:42

       Go on.

    10. BLBastian Lehmann1:04:43

        G- Going on a United airplane.

    11. HSHarry Stebbings1:04:46

        Oh. Wow. Uh, I, I thought, I thought you were like United, I was like, "Is that like, uh, we're talking about like geopolitics?"

    12. BLBastian Lehmann1:04:52

        No, I was just-

    13. HSHarry Stebbings1:04:52

        Are we talking United?

    14. BLBastian Lehmann1:04:53

        ... flying United. (laughs) I'd be very concerned about that.

    15. HSHarry Stebbings1:04:55

        (laughs) Well, you know, life is good then. You could get a PJ, Basti. That seals-

    16. BLBastian Lehmann1:05:01

        There you go.

    17. HSHarry Stebbings1:05:01

        (laughs) We won't go into that. Uh, single biggest way VCs and founders are misaligned.

    18. BLBastian Lehmann1:05:06

        Expectations.

    19. HSHarry Stebbings1:05:08

        Hmm. Why expectations? VCs always just want more?

    20. BLBastian Lehmann1:05:11

        No, it's, uh, n- Uh, expectation is more in the sense when and, and, and, and sort of how, and, and, and I think there, there's a lot of friction there in general.

    21. HSHarry Stebbings1:05:20

        Okay. What's the most lavish purchase you've made?

    22. BLBastian Lehmann1:05:23

        Having two kids.

    23. HSHarry Stebbings1:05:25

        (laughs) What's the biggest piece of BS advice that you hear most often?

    24. BLBastian Lehmann1:05:30

        I... Oh, so much though. I, but I can't really pick a winner. Wait, wait, wait, yeah. Oh, the first X dollar in revenue is always the hardest or something like... There, there, there is a, there is a version of that in, in, in, in, in sort of, uh, uh, coming out of everybody I've ever met. So, yeah.

    25. HSHarry Stebbings1:05:47

        Uh, yeah. Okay. Uh, what's the kindest thing anyone's ever done for you?

    26. BLBastian Lehmann1:05:51

        You know, I think my co-founder, Sean Place, is, is one of the greatest humans that I know and I am so thankful for his friendship. Um, because what, what, what he has done for the entire time while I was the, while I was the CEO and ran the company and, and, and, and did a lot of the, did a lot of the front of the office work and, and he- we often banged heads and I, uh, you know, reserved the right to have the final decision on a lot of things, that guy has just been the greatest supporter you can imagine every day. And he showed up every day and he said, "B, let's do it." And he drove us to the fundraising's and he was... I mean, it's ju- he is just, he is j-... I, I'm, I think he has given 10 years of his life in something that I made him believe in and, um, and, and, yeah. And so, I think e- just, eh, th- that in itself is, is, is a remarkable gift.

    27. HSHarry Stebbings1:06:50

        Other than Dara, which CEO do you most respect and why?

    28. BLBastian Lehmann1:06:54

        Oh, man. Uh, uh, no, and, e- e- I ca- I can only name one 'cause if you, if you now name another one, then it's a can of worms, right? Other than Dara, I believe that the, that the world would be a better place if we had more founder CEOs. And I hope that the founder CEOs that we have, that they stay CEOs for the long time. Patrick at Stripe, uh, Zach at Plate, uh, Max at Affirm, uh, uh, these are all just remarkable, remarkable people that run their companies so well and, and that had to fight battles and, and, and overcome, uh, all sorts of challenges, what- whatever they are, uh, uh, which each of them. I mean, in Zach's place you, we were bought, the acquisition couldn't go through, you have to go back and build again. I think that those are just like r- tho- those are just like... If these guys, uh, are ever, uh, uh, uh, and, and, well, Patrick in that case and Zach, if they run their companies publicly, they will, their, uh, th- books will be written about their leadership style. I'm certain of that.

    29. HSHarry Stebbings1:07:55

        Final one. 2034, where do you wanna be then? Where's Basti in 2034?

    30. BLBastian Lehmann1:08:01

        Realistically, probably at some sort of sport event with my kids, whatever they play is probably where I will be, right? So, I have two of them which, uh, e- e- maybe ballet or whatever they pick up. My oldest one likes basketball. So, uh, yeah, that, that's probably what I will do.

Episode duration: 1:08:30