Emil Michael: How I Negotiated the $4B Uber-China Deal, Why DoorDash Caught Up to Uber | 20VC #941

1. 0:00 – 3:13

   Who is Emil Michael?

   1. HSHarry Stebbings0:00

      Emil, this is such a joy to do. I've heard so many wonderful things. I've- you know, I've referenced the shit out of you with, like, you know, 20 people. But it was incredible to hear the depths of your relationship. So thank you first so much for joining me today.

   2. EMEmil Michael0:12

      (laughs) It's great, great to see you. I've been a fan of your podcast for a long time and I was wondering when my invite was gonna come. But here we are in 2022 and it's come, so I'm here.

   3. HSHarry Stebbings0:22

      I mean, and we actually have to thank Raf at Gopuff for this one. But, uh, I'm so excited to make it happen and I wanna start with a little bit of context. So, we- we see kind of the OG of negotiations and deal-making stay in Emil. But just walk me through like how did you make your way first into tech and then into investing? What were those two entry points?

   4. EMEmil Michael0:40

      Yeah. Uh, so I went, um, to college and graduated in 1994, which if you remember the time there, that was the very beginning of the internet businesses starting to come out. And so, in my same class at Harvard, um, Hadi Partovi, Ali Partovi, David Weiden from Coastal Ventures, Alfred Lin, Tony Hsieh, I mean, all of them graduated the same year. And so all of us sort of decided, "Hey, well, this thing is happening in the economy, we can go do an investment banking job, a consulting job, or figure out what this tech thing was all about." So, um, I moved to California. I went to, uh, unfortunately Stanford Law School, but at least I was in the middle of what (laughs) was happening in the Silicon Valley. And then Hadi, uh, Partovi, if you know, who runs code.org now, um, was co-founding a company called Tell Me Networks. And H- Ali Partovi was founding, um, the Internet Link Exchange with Alfred Lin and Tony Hsieh. And so I was working at both. I was kinda working at Tell Me, advising at both. And so it was at the very beginnings of the new internet entrepreneurs were feeling around for something important in the internet in 1994 through 1998. Um, so that's how I got started.

   5. HSHarry Stebbings2:00

      I have to start with, um, actually one from Dave Clark. But Dave Clark highlighted the breadth of your experiences pre- really diving into being the OG that you are today. We have, uh, Harvard, Stanford, Goldman, lawyer, uh, Department of Defense.

   6. EMEmil Michael2:13

      (laughs)

   7. HSHarry Stebbings2:13

      And he asked, "Which of these best contributed to your success today, do you think, on reflection?"

   8. EMEmil Michael2:18

      I mean, you know, uh, sort of none of them. The best one (laughs) was the Bill Campbell thing. When I got to the Valley, um, Bill Campbell was associated with Kleiner Perkins. Um, and Kleiner Perkins back in that day was the VC. They did Amazon, Google. Um, John Doerr was w- was the man. There was no one who, what he touched turned to gold. And he was buddies with Bill Campbell and, and he invested in Tell Me, that first company I was telling you about. And Bill took a liking to me and I was 25, and he became my mentor and, and he's the one who sort of propelled the future startups. He's the one who propelled, you know, working at the White House for, uh, Secretary Robert Gates. The education stuff didn't propel me for much of it, except meeting the guys, Hadi, Ali, David, Alfred. Um, so those are the two sort of influence I'd say that got me there.

   9. HSHarry Stebbings3:09

      So few people actually got to be coached by Bill Campbell. I think a lot of people

2. 3:13 – 4:40

   Bill Campbell's Mentorship

   1. HSHarry Stebbings3:13

      talk about him, but so few people got the experience that you did. Wh- when you think about that time, are there big takeaways from you of how it impacted you and your mindset?

   2. EMEmil Michael3:21

      You know, it's the... They called him the coach, the trillion-dollar coach 'cause he would, as you know, coach, um, Steve Jobs, who no one in the world thought was coachable. And then he would coach, uh, (laughs) Larry Page and Eric Schmidt and, and Sergey at Google, two of the most important companies. And he'd do it at the same time when they were both competing. But he was so good that both of them were okay with that. (laughs) I mean, think about sort of the character of this man. So he would give you these leadership lessons, less business lessons. Um, and being able to be in that, to learn that early, what was h- you know, how to do things 20 years later, so you're fast-forwarding your own future, um, was an amazing asset to have. And so I try to do that today with my own 20 entrepreneurs I talk to, to at- to s- at least, you know, do some part of what he did for me. And it's an incredible thing to have a coach early on in your career who cares, who has wisdom, um, and who has that kind of experience.

   3. HSHarry Stebbings4:23

      I, I totally agree. I've been so lucky with some of the kind of mentors and coaches I've had. You mentioned Tell Me a couple of times.

   4. EMEmil Michael4:29

      Mm-hmm.

   5. HSHarry Stebbings4:29

      I wanna dig in on that because Jared Heck's actually, one of, you know, your friends, said it was such a transformational time for you, obviously very early in your career as well. He asked, "What were some of the biggest lessons or takeaways

3. 4:40 – 7:53

   Lessons from Tellme

   1. HSHarry Stebbings4:40

      for you from that experience with Tell Me?"

   2. EMEmil Michael4:43

      (laughs) Yeah. I mean, that's I feel like where I got my first grit. And, you know, we had to have a lot of grit for Uber later on. (laughs) But, but, uh, we started Tell Me in 1999, so if you think about the timing of that, we were, unbeknownst to us, 18 months from, from the world coming to an end from a, from a technology investing standpoint. So we had done the things, four rounds in o- in 12 months, raised $150 million, which was a lot of money in the la- in the late '90s, a lot. I think more than Bezos had raised, uh, in his first couple rounds. And then the business model didn't work and the internet b- economy blew up, and we had scaled to 300 people, so we went down from 300 back down to 100, tried to refigure the business model. We had to reconfigure from what was a consumer model to an enterprise model. So you know those phone trees you call now that say, "Hi, uh, speak your name at American Express"? Well, that's still Tell Me. We, we built those (laughs) enterprise systems at Fidelity, American Express, American Airlines, and so on. (laughs) Um-

   3. HSHarry Stebbings5:47

      So, so it's you I have to blame? (laughs)

   4. EMEmil Michael5:50

      (laughs) When you're yelling and it doesn't understand you, yeah, it's me.

   5. HSHarry Stebbings5:53

      Yeah.

   6. EMEmil Michael5:53

      Um...And, and so imagine twisting that business around and then spending seven years building it customer by customer and enterprise by enterprise, trying to get them on the platform. And then we got to $100 million in, in revenue. In ni- again, in ni- in 2007, that was a lot more than it (laughs) seems like today. And I was able to, to help get it sold to Microsoft to be the base of their speech recognition technology today, and that's sort of embedded today.

   7. HSHarry Stebbings6:22

      We're, we're gonna talk about the acquisition. I just have to ask, then. Listening to you, that w- y- it was kind of, you know, it was so early in your career. You were so young at that point in 1999. Did you really feel the weight of expectation having raised so much money and really kind of, bluntly, being a lot less informed than you are obviously today?

   8. EMEmil Michael6:40

      Yes. But that's how owners, not renters feel, right?

   9. HSHarry Stebbings6:43

      Mm-hmm.

   10. EMEmil Michael6:43

       I was, I was, you know, when I started at Tellme, I was still a couple layers down in the org. It wasn't like I was, you know, out there, uh, a- as a co-founder who's 25. I was a, a business guy. And as you know, business guys are not top of the totem pole (laughs) in Silicon Valley, right, in general. Um, so I had to work my way up, work my way up. But then I think the way I did that is because I cared every day about that company, uh, and the people in it and the mission. And when you care that much, no matter what position you are, you feel the weight. But that weight makes you better, right? It makes your s- you stronger. If y- if y- you put weight on your shoulders, you walk around all day, your legs are gonna get stronger, right?

   11. HSHarry Stebbings7:21

       Mm-hmm.

   12. EMEmil Michael7:21

       So um, (laughs) that weight w- was real 'cause I'd recruited my friends. My cousin had interned there, Jared Heck had interned there, Matt Window. A lot of the p- you know, Silicon Valley l- uh, you know, illuminati, so to speak, had spawned from Tellme, PayPal, Opsware, which was Ben, where Ben and, uh, and Mark came from. All these companies were in and around the same time and employee pool, you know?

   13. HSHarry Stebbings7:47

       You mentioned the acquisition. It was actually Hadi that said, "There was a competing offer on the table at a fire sale

4. 7:53 – 12:40

   Negotiating Microsoft's Acquisition of Tellme

   1. HSHarry Stebbings7:53

      price." Drop the mic and ask him what happened then.

   2. EMEmil Michael7:57

      (laughs)

   3. HSHarry Stebbings7:58

      That, that was his words. He was like, "He didn't give me any more, so I don't know." (laughs)

   4. EMEmil Michael8:02

      So, so, so we had gotten this acquisition for, we can call it $300 million, which would have been a fine outcome, but you know, right, this was my last shot. And one of the things Bill tol- told me is like, "When you're gonna, when you're selling a company, you know, it's, it's sort of all bets are off. This is your last chance to create value for shareholders and employees and so on." So I begged Hadi for one hour with Steve Ballmer at Microsoft, one hour.

   5. HSHarry Stebbings8:29

      (laughs)

   6. EMEmil Michael8:29

      And everyone thought I was crazy. "You'll never get a deal done. They don't know us." So I flew up to (laughs) to, to, uh, to Seattle to see Steve Ballmer. And Hadi went jogging with him once a month or something, so I, I begged him for this meeting. And I said, "Every minute you talk to Steve gives m- is gonna get me 100 million more dollars (laughs) for the company." He's like, "Ha ha ha." S- you know, so I, he made me talk to Steve, got the meeting, flew up there. I rolled into the meeting with a BlackBerry. Um, Steve Ballmer purposely pours his water (laughs) on my BlackBerry, because it wasn't a Windows OS phone, kinda as a joke, but my phone was ruined. Uh, (laughs) we, we do this negotiation. He likes us, and he says, "You know what? You guys stay the weekend. We're gonna do this deal over the weekend." By the end of the weekend, three days later, I had a term sheet for $760 million, uh, plus the cash and the balances, so just about $800 million, and that was history. That was it. It was sort of like having the gumption to go there and not relent until we got that deal.

   7. HSHarry Stebbings9:33

      What did you do that made you-

   8. EMEmil Michael9:35

      (coughs)

   9. HSHarry Stebbings9:35

      ... so successful in that and get another 500 million in enterprise value? What specifically do you think it was?

   10. EMEmil Michael9:40

       I mean, I showed ... And Mike McHugh, who was the CEO, who was there, I'll be able to give him full credit for building the company and collecting his talent and so on. It was just about showing sheer determination that, come hell or high water, we were gonna win. Inside of Microsoft, inside of another company that ma- had made that offer, alone. No matter what, we were, we were gonna win. And he asked us, "Are you guys gonna stay around?" And without blinking, we said, "Hell yes, because we believe in this vision, so we're gonna stay around wherever, as long as it takes to make this work." And when you say that as an entrepreneur to this guy like, you know, Steve Ballmer, and he believes you, you know, he's wi- you know, he's like, "Okay. We'll, uh, like, if you're gonna stay and we're gonna do this together, let's do this." And there's, there's other mechanics in between getting the number to that number, but-

   11. HSHarry Stebbings10:27

       (laughs)

   12. EMEmil Michael10:27

       ... but that's, that was the sentiment that got us there.

   13. HSHarry Stebbings10:29

       Can I be so bold and ask, was that the first real money that you made? I think when you first have your big hit, it does change a lot mindset-wise. Was that your first, and did it impact your mindset?

   14. EMEmil Michael10:39

       Uh, yeah, it was my first, so I used that merger proceeds to pay down my student loans. So I was, I was student loan free in 2007, so call it, I was 35. Um, 'cause I'd been with Tellme now for, you know, eight years at that point. And, uh, it changed my mindset in so far as like, "Wow, this is possible," right? I was an immigrant from Egypt. (laughs) My parents came here, you know, with nothing. It's a cr- classic great immigrant story for America. But it was sort of proof positive when you see that many zeros in your bank account. You're like, "Wow, th- this is actually the land of opportunity." And it really is. Um, so in that way, but y- but I s- I was sort of still someone who didn't spend the money or was afraid it would go away at any time. So my lifestyle didn't change, but, but my attitude, uh, did change.

   15. HSHarry Stebbings11:29

       Can I ask, with that ... and I, and I hope it's okay, but with the kind of downside protection immigrant mindset that ... I have the same. My family lost all money when we were younger, and I have the same. I worry that it actually makes me not so good at investing, 'cause you sometimes are too downside protectionist and not upside.Do you ever think about that? And how do you prevent that from happening?

   16. EMEmil Michael11:47

       Yeah. You know, I've got the opposite. I'm like, "If I lose this, I'm gonna be okay." (laughs)

   17. HSHarry Stebbings11:54

       (laughs)

   18. EMEmil Michael11:54

       Um, (laughs) no, now to be fair, I, I had the Uber situation on top of that, so now I have a lot more cushion. Um, but- (laughs)

   19. HSHarry Stebbings12:02

       (laughs)

   20. EMEmil Michael12:03

       ... but, but, but, you know, it didn't, it didn't make me do that. It actually, in some ways, it made me invest in people who had similar chips on their shoulder that I did. In, in that, like, they were gonna win no matter what. No matter what business, and so on. And that which goes to an investment philosophy of how much do you bet on people versus ideas, um, and in what order do you be- how do you weight them, right?

   21. HSHarry Stebbings12:25

       Well, well, I mean, Emil, listen. I told you, this is like us having a chat with a bourbon. How do you weigh that? Because I'm, I sway between the two. Um, so how do you think about centrality of founder versus market versus product?

   22. EMEmil Michael12:37

       Yeah. So I'm founder first, and

5. 12:40 – 14:12

   Founders vs. Markets

   1. EMEmil Michael12:40

      I do believe, and I will s- I will say this, and I'll have this argument with anyone, that a mediocre founder with a great idea and a big market might win, but it's also not that fun to be along the ride with (laughs) because they're mediocre. So if you're gonna work there... Now this is working versus investing, right? Now if you're gonna work somewhere, for me, who the founder is, and if it's, you're a co-founder, is the most important thing by far. Most companies pivot anyway. So what market you start in might not be the market you end in. Um, but product, you know, but, but the product, what are they trying to do? Is it in a big enough idea, uh, period? So as an employee, it was in, it was, uh, it was founder, and then it was product, and then it was market. As an investor, it's still founder for me, but then the market matters because the product, I don't know, the product's gonna, you know... It depends on how good the, the founder is, it depends on how competitive the market is, how much it evolves, how much money is going into it, the macro climate, all those things.

   2. HSHarry Stebbings13:45

      We've spoken about investing, we've spoken about some of your old classmates, and we've spoken about the acquisition. Bringing kind of all those together, I chatted to Alfred Lin before this show.

   3. EMEmil Michael13:55

      (laughs)

   4. HSHarry Stebbings13:55

      And he said that Emil is just the master when it comes to deal-making. Number one, this was the number one question for him. He asked, "What is your framework for deal-making, and how has it changed over time?"

   5. EMEmil Michael14:07

      Framework for deal-making. So I always tell people, all those negotiation books and negotiation

6. 14:12 – 16:30

   Framework for Dealmaking

   1. EMEmil Michael14:12

      classes, and the McKinsey BATNA stuff, throw it out for a little bit. Just say, stay with me in my, in the Emil Michael mini lesson here, which is (laughs) number one thing in negotiations is outwork whoever you're negotiating with. And that means, when I know and I'm negotiating with you, I try to know everything about you, Harry, before I get to that meeting. Everything about your company, your industry, if you're having a rough quarter, your org chart, what your financial outcomes are looking to be like. How do you get promoted? How do you get fired? Um, and everything around that, because it brings the human dynamic and the real-world dynamic into a negotiation. So BATNA, your best alternative to a negotiated agreement, is a number or a level. It doesn't account for the ins and outs of how one, you know, defines their own BATNA, or even gets something done within their org. I'm an incredible student of, of a negotiating partner before I get in there. So that's framework piece number one.

   2. HSHarry Stebbings15:14

      Okay. Can I just ask a question on that?

   3. EMEmil Michael15:16

      Yeah.

   4. HSHarry Stebbings15:16

      Do you let your, um, not opponent, but do you let the person on the other side of the table know the depth of information that you have? Or do you want to keep it in wealth of reserve?

   5. EMEmil Michael15:27

      Framework number two is (laughs) the less information you give and the more you get, the better. Um, and so none of this is sinister, it's just if they haven't done the research, I'm not gonna do it for them on me. But, but I, if I've done the research, and it's just, this is Google stuff, right? I'm not, you know, this is nothing nefarious. This is just trying to put a picture around someone. If you had to write a chapter on Harry's life, I wanna be able to write it before I get in the room with you.

   6. HSHarry Stebbings15:54

      (laughs)

   7. EMEmil Michael15:54

      Um, and so whether I told you I wrote that or not, uh, you know, is my advantage to, to, to keep, if I can do that. Um, and, and information is power. People don't, don't, don't realize that enough. Um, that the more you learn, the better you're gonna be at these things. Even about your own company.

   8. HSHarry Stebbings16:12

      I'm so enjoying this.

   9. EMEmil Michael16:13

      (laughs)

   10. HSHarry Stebbings16:14

       Um, tell me, what do you do if you have someone who's highly emotional? Where they really let emotion, not rationality, govern their responses and decisions.

   11. EMEmil Michael16:24

       Yeah. You know, I... So you, there's a couple different strategies. One, I'm typically,

7. 16:30 – 19:00

   How to negotiate with someone who is highly emotional

   1. EMEmil Michael16:30

      and this may not work for everyone, a shock absorber. Meaning, I can absorb the shock of someone else's emotions, on my side, on their side, and kind of be okay with it. I'm like, "Hey, this person's having a moment." And I'm gonna go take a drink, you know, of water, or I'm gonna say, "Hey, why don't we, why don't we go get a coffee or something (laughs) and come back in?" Um, or l- let them yell and scream, and then I'll, I'll say, "Are you done yet? 'Cause when you're done, we can start again whenever." So depending on the context, I never get emotional back. Um, and that gives me power, right? It gives me power to, because I'm regulated. They're unregulated and uncentered, and that means they make more mistakes than, than I would. And so if you could be a shock absorber to emotion in negotiations, that's a winning strategy in general, in my view.

   2. HSHarry Stebbings17:20

      The hardest thing that I have is, I most often, whenever I'm negotiating in tense, tough times, and believe it or not, despite my youth, it's happened many times-

   3. EMEmil Michael17:27

      (laughs)

   4. HSHarry Stebbings17:28

      ... um, these people lack self-awareness very often. And so they struggle to see their own weaknesses and my strength and ability to crush them for them.

   5. EMEmil Michael17:36

      (laughs)

   6. HSHarry Stebbings17:36

      That is annoying because it means I don't have the fucking leverage that I want to get the deal signed-

   7. EMEmil Michael17:41

      (laughs)

   8. HSHarry Stebbings17:41

      ... because they're too lacking in self-awareness. See, what do you do when they don't even see or lack such self-awareness that you don't have the leverage?

   9. EMEmil Michael17:50

      Um, that they think you don't have the leverage.

   10. HSHarry Stebbings17:53

       Yeah.

   11. EMEmil Michael17:53

       Uh...You know, this is where, um, sometimes it helps to use your network to whisper to this person, "Hey, this p- this person might, might have some leverage here because they can go do this other thing or that." You know, and this is part of the research is bringing every tool to bear. Your network, their network, how is it connected, to whom, how deeply? Y- red, yellow, green, how deep the ties are to this person and this c- company. So that if you can't communicate that in the m- in the minute because it'd be awkward to do so, you communicate it after. Um, and that is the whole, I call it a whole of deal approach. It's not just a negotiation you go in for a room and come hours, come out three hours with a handshake. This is a whole approach of winning in negotiations.

   12. HSHarry Stebbings18:42

       C- can I ask, what are the biggest mistakes that you see people make in deal-making? Where you're like, "Ah, great."

   13. EMEmil Michael18:49

       (laughs) Um, I used to joke that, that I could read upside down, so leaving papers on their side that I could read. (laughs) But I'm joking, but I'm j- I'm joking on that. Um,

8. 19:00 – 20:33

   Biggest mistakes in deal making

   1. EMEmil Michael19:00

      no, the biggest mistakes people make, the emotion thing is a, is a, just a massive tell because it is... And this is why being a shock absorber is better. Even if you're, are emotional, sh- try not to show it, um, or let it impact your decision-making. Um, the emotion thing... And, and then there is this sort of eagerness you detect in people where it's a, it is the leverage point. It's d- like, do they think they have leverage? A- and you were talking about it before, but they show it in different ways. It could be that they think you don't have leverage and that gives them leverage, or it could be that they actually have leverage, and they know they have it and they're gonna use it, or they don't know they have it and they're gonna use it. So which of those combos is it? Um, is something I look out for from the second I walk in a room. Who stands up to shake my hand versus who sits down? Who offers coffee? Who pours it? Who set up the meeting on whose turf? You know, all, all the signals will show you or indicate to you who has leverage. And paying attention to those things is sort of like a, a CA agent paying attention to a subject. And if you do that over time, 10... You do your 10,000 hours of negotiation, it kind of, it becomes sort of innate.

   2. HSHarry Stebbings20:15

      Can I, can I ask-

   3. EMEmil Michael20:16

      (laughs)

   4. HSHarry Stebbings20:16

      ... what's been your... When you look back at the many deals you've done, what's been the best that you've done or maybe one that you're most proud of? And, and why that one?

   5. EMEmil Michael20:24

      Yeah. I always talk about this one, and it was such... It was the hardest one I've ever done. And it was

9. 20:33 – 26:53

   DiDi's Acquisition of Uber-China

   1. EMEmil Michael20:33

      with, you know, the o- the, the most fun one I ever did was with Steve Ballmer doing a deal over the weekend when he broke my BlackBerry. But the, (laughs) the hardest one was doing the, the Uber China acquisition with Didi, the Chinese counterpart. Because there's a lot of suspicion, just we were death competitors. Um, and th- uh, the woman on the other side who was my counterpart, Jean Liu, was fierce. You know, a fierce operator. And I would go toe-to-t- she... I would put her toe-to-toe to me. It was like anyone I've ever seen from a, from business and negotiation standpoint. And she'd come to San Francisco and she'd, you know, invite to, to the hotel room with her colleague and one of my colleagues. She didn't trust any of my colleagues to come, so I had to go there alone with five Chinese business people. The l- the shades drawn, my phone put in the bathroom so they didn't think I was recording them, and then tried to charm them into (laughs) to buying my company for $7 billion. Um, (laughs) and, and all the while Travis not really wanting to sell the company, but I knew we had to because of the regulatory heat and how much money we were spending in China. So the art of doing that and getting it done-

   2. HSHarry Stebbings21:47

      Just take me through-

   3. EMEmil Michael21:47

      Yeah.

   4. HSHarry Stebbings21:47

      Take me through that. How do you do that? Is it small talk?

   5. EMEmil Michael21:50

      (laughs)

   6. HSHarry Stebbings21:50

      Is it, "Oh, have you had a nice trip?"

   7. EMEmil Michael21:52

      (laughs) It was-

   8. HSHarry Stebbings21:54

      What did you do there?

   9. EMEmil Michael21:55

      No, d- it's exactly not that. When people go, "Oh, how, how was your flight? Where'd you come in from? Where are you staying?" The small talk stuff is fine, but it's, it's... It sort of betrays a little naivete like that you care or they care. 'Cause if there's... You're in a serious negotiation, no one cares about that. They just care about, like, what you're trying to do. Um, it was more about trying to build some trust. And so one of the ways I built trust with Jean Liu was say, "Hey, I'd, I'd be interested to hear your perspective. We were in this competitive battle here. Here's how I saw it. What did you see?" Um, something that wasn't sort of central to the negotiation, but try to establish a rapport about how both of us saw the same incident so differently. And she's like, "Oh, we didn't, we didn't shut off all your phones or send spam text messages to your drivers saying they weren't gonna get paid." I was like, "You didn't? Who did?" And then (laughs) we'd have a joke about like, "Well, who was trying to sabotage both of us?" Um, and it was a little bit of that until... And it took me four days of going to that dark hotel room until she allowed me to bring one of my colleagues to at least take notes so that I wasn't o- o- overmanned here (laughs) . It was that kind of rapport that started it. So rapport matters. And knowledge of what their problems were matter. And sufficient humility but sufficient strength projection showed them that they were dealing with... Dealing with me meant that they were dealing with Travis and me, and I had the, I had sort of that authority. So it was those combo of things.

   10. HSHarry Stebbings23:22

       What do you think got them over the line on that deal?

   11. EMEmil Michael23:25

       Besides the industrial logic, I really believe that it was mine and Jean Liu's relationship. Um, we spent a week t- a week together in dar- a dark hotel negotiating this, and she trusted me at that point. And then we flew to Macau, and we flew to Macau because, um, sh- we didn't... She was well-known in China. She was f- family of a politician. And if they saw her with some American, they'd be like, "Oh, there's this Didi-Uber merger happening." So we flew to this hotel room in Macau for another four days with lawyers and the whole thing. And we really just pushed it through, she and I. We got our teams on board, we got our CEOs on board, we got our lawyers on board, accounting. This is a cross-border M&A China-US...... consumer, it was so complicated. And every day I made sure, at the end of the day, say, "Jean, how are we doing? Are we ... How are you and me? Did I say anything that you didn't like, that you thought was wrong? Let's clear it out." Sort of like a marriage. Before you go to bed, you clear your air.

   12. HSHarry Stebbings24:29

       (laughs)

   13. EMEmil Michael24:29

       We cleared our air every day, and then we closed the deal. And I remember going in, she asked me to go to dinner the day after the deal closed, and she's like, "I heard you were such a tough negotiator."

   14. HSHarry Stebbings24:39

       (laughs)

   15. EMEmil Michael24:39

       I was like, "I am tough, aren't I?" She said, "No, but you're fair. You told me what you were gonna do, and you did it, every single time. No matter what it was, no matter what clause, you said, 'I'm gonna get this done,' and you did it." (clears throat)

   16. HSHarry Stebbings24:52

       (laughs)

   17. EMEmil Michael24:52

       "And I trusted that, and that allowed me to do the deal." That kind of thing.

   18. HSHarry Stebbings24:56

       How did you get Travis over the line-

   19. EMEmil Michael24:58

       (laughs)

   20. HSHarry Stebbings24:58

       ... on the flip side? That seems like a tough thing to do as well. (laughs)

   21. EMEmil Michael25:02

       (laughs) Um, it, y- y- Travis and I worked together so well. The two ... The thing that we had lots of discussion about was M&A. Should we buy Lyft, should we not buy Lyft? Should we merge with DiDi, should we not buy DiDi? Should we sell, buy Grab, re-, all the different ride-sharing companies around the world. I was always for it before he was for it. But the China thing was so unique, Harry. Operate ... Op- no- think about what consumer tech companies operate in China. Zero. There was, there's enterprise tech like Hewlett-Packard and IBM and all those guys, but no one else had done that. And we didn't ask for permission, we just did it. We showed up in Jan- Wang- uh, you know, Hang- Hangzhou, and Hua- and in Hunan Province, and, and we just launched Uber. So there was some amount (laughs) of risk to that. That, yeah, if you don't sell it, it might just not exist one day, given sort of how the government rolls. (laughs) And we were spending $100 million a month competing there, 'cause it's, remember, it's, this is the biggest market in the world. Um, hund- 1.3 billion people, and we were gonna win, and I'd just raised three and a half billion from the Saudis, and so we were gonna win. So the combo of those things made the industrial ... And, and when I handed it to the owner platters, like, this is done, this doesn't, you know, let me start. This is finished, 45 days from beginning to end. He agreed.

   22. HSHarry Stebbings26:30

       (laughs)

   23. EMEmil Michael26:31

       (laughs) I'm sorry, I gotta move on.

   24. HSHarry Stebbings26:32

       I'm sorry, I've got to ask one more. But you managed in the, I mean, another insane deal-

   25. EMEmil Michael26:35

       (laughs)

   26. HSHarry Stebbings26:35

       ... uh, brilliant that you did was the three and a half billion dollars that fueled so much of Uber's trajectory.

   27. EMEmil Michael26:40

       Mm-hmm.

   28. HSHarry Stebbings26:40

       How did that come about? How was that?

   29. EMEmil Michael26:42

       (laughs)

   30. HSHarry Stebbings26:42

       Just, like, take me there. Story time. I'm loving this. (laughs)
10. 26:53 – 28:43

    How Uber got funding from Saudi Arabia

    1. EMEmil Michael26:53

       or just the stories.

    2. HSHarry Stebbings26:54

       Yes.

    3. EMEmil Michael26:54

       You think the stories are good? So, the public investment fund in Saudi is, you know, when the new crown prince sort of took over in Saudi, his thesis was, "We're gonna modernize this economy. We're gonna take fossil fuel revenue, we're gonna start investing in, in tech companies." He'd appointed Yasser El-Rumyan, who was a g-, uh, you know, a fr- a friend of mine, uh, who was head of the, uh, the Saudi Stock Exchange, had a deep financial background. He said, you know, "Go find some companies to invest in that'll put us on the map, so that people know, if they want money, they could come to the public investment fund." And David Plouffe, who was our head of government relations, met him at a conference. He said, "I heard a lot about Uber my son uses, and I'd love to come meet them." And from that, we took the meeting. 60 days later, three and a half billion dollars in the bank. (laughs) Lots of meetings, uh, in New York and in Riyadh. One, Travis had to attend one meeting to get it done. So I prided myself by how much money I could raise with, you know, the least of Travis's (laughs) time. And this guy Fraser Robinson, who I think you might know, in the UK, he led that deal. So, I credit him with that Saudi deal, um, as much as me. And it was the largest amount ever invested in a startup. That was the biggest round and highest valuation ever done in a startup. It was the next day that I called Jean Liu at DiDi and said, "Okay, now I'm, now I think I have a lot of ammo. I think now we should negotiate (laughs) a truce." And that's what kicked off that. So it was, it was, all this happened in the summer of '16, um, and was an exciting time.

    4. HSHarry Stebbings28:26

       Just insanely cool to hear. Um, I, I, I do wanna flip though. Uh, what was the worst deal you've ever done?

    5. EMEmil Michael28:33

       Oh f-

    6. HSHarry Stebbings28:33

       We've all made mistakes. What was the worst deal you've done, and what did you learn from that?

    7. EMEmil Michael28:36

       The worst deal I've done. Well, you know, they have to be material to be bad, right? So I'm not gonna tell you about the small, the small, we call them SLDs,

11. 28:43 – 30:21

    Worst deal ever done

    1. EMEmil Michael28:43

       small shitty deals. Um, (laughs) uh, so shitty little deals. Um, so I'm not gonna go back to that because every company sort of does deals, they make mistakes. I'll talk about a big one. I'd say that the deal that was under my watch, I didn't like it at the time, but I, I, you know, it got done, was, was Uber acquiring, um, Otto, which was the autonomous car division that, uh, that got started out of Google guys. It was ... And I didn't like it for different reasons, it turned out to be a bad deal 'cause of that, ended up in that lawsuit with Google. But it was so complicated, with multiple earn-outs and who owned what entity. And I, as a lawyer, I come from a s- a little bit start with, start with simple and then complicate if you have to.

    2. HSHarry Stebbings29:26

       Mm-hmm.

    3. EMEmil Michael29:26

       And it was this complex kind of thing where it was a sort of separate company. And I didn't like the ideas of, of other employees having different motivations at my company about what they were gonna do. I want everyone to be motivated the same way. So I tussled with Travis on it, he won. We did that deal. Um, we got some great people that, that are now running Uber Freight. So there was, like, a great talent migration there. But it ended up in, in destroying our relationship with Google. So the cost to that was, was quite significant.

    4. HSHarry Stebbings29:57

       That's a tough one. Well, you know, uh, there's good and bad. (laughs) You, you can't have them all. Um, I ... We mentioned, like, acquisitions with Telme, we've mentioned M&A, we've mentioned fundraising. We're in this very kind of weird new world where ... And most of us actually haven't kind of seen a recession or, you know, a downturn like this. So I wanna ask you, with your kind of OG status, how do you analyze fundraising and M&A in the current market today?

12. 30:21 – 32:13

    M&A Analysis in the Downturn

    1. HSHarry Stebbings30:21

       And I'm just gonna put the general question there for you to take.

    2. EMEmil Michael30:25

       Yeah, so I'm, I'm deep in the capital markets now with a lot of the companies I work with. I'm on the board of their advisor. And I say, guys and gals, last year was FOMO. You want to create FOMO with investors if you're trying to raise a round or merger partners. This year is JOMO, joy of missing out. They are happy to miss out on (laughs) whatever deadline you put on them for whatever round. They're happy to not take a look if you've got something in hand. So those, that whole strategy of FOMO and creating pressure and dynamics is over. Don't try it. Stop. It may, it's go- you are going to be disfavored. And people are gonna say, "Thank God I didn't have to look at that company and say no." So, the humility factor from entrepreneurs has to come back in terms of what's realistic. And we're getting there, um, 'cause you're starting to see some of these rounds not happen or you're starting to see things creak a little bit. I think we're at the end of the beginning though, not the end of the end. The next phase is structured rounds, down rounds, like true down rounds, um, and then sales or, unfortunately, companies sort of not making it. And I think that'll happen in Q1, you know, the, the phase two will happen in Q4, Q1, and then Q2 to Q3 will be phase three.

    3. HSHarry Stebbings31:47

       How do you advise founders? 'Cause I, I hate changing your fundraising plans to align to markets.

    4. EMEmil Michael31:52

       Yeah.

    5. HSHarry Stebbings31:52

       We don't know what Q1 or Q2 is gonna look like.

    6. EMEmil Michael31:55

       (laughs)

    7. HSHarry Stebbings31:55

       Raise when you need to.

    8. EMEmil Michael31:57

       Yeah.

    9. HSHarry Stebbings31:58

       Um, do you agree with that statement or do you actually think, no, if there are things that you can do to elongate or alter, try and find leverage?

    10. EMEmil Michael32:05

        Yeah. So let's talk about it in three parts. Revenue, cost, and, and market and f- and market is wherever the fund or the dollars

13. 32:13 – 37:46

    Founder Advice for the Downturn

    1. EMEmil Michael32:13

       are. On the revenue side, um, where we were valuing growth market on revenues, I'd say, like put that second for a second. It's been first for 10 years. Put that second. Put first, um, your net burn. So just like you have cash in the bank, what is your net burn? And David Sacks tweets about this a little bit and it's sort of my derivation of it, but it's make sure that you know what you're burning and if your revenue has to... If your growth has to come down from 80% to 30%, that is okay in today's market. In 2021, that was not okay, right, in o- in order to reduce your burn. So but it is oh, 30% growth versus 80 is okay if you're gonna buy yourself another year of burn, right? So just start there. And unfortunately that results in some rifts almost certainly. So all the bloat that we built over the years 'cause it was a hot war for talent, war for talents necessarily lead to too many warriors. It just, it's just how the, you know, it works. So you have to sort of slim down to your fighting weight. You're, you're now a, a wea- you know, a, a welterweight again, hopefully. (laughs) And then, then you go, I have to put out numbers that I'm gonna hit. For years, and here's the thing, Harry, you know this, entrepreneurs, we'd put out numbers that we may or may not hit and it didn't matter 'cause there was enough money out there and you were like, "Whatever, someone's gonna take a look at the new numbers and, you know, decide. It doesn't matter. Up is up."

    2. HSHarry Stebbings33:41

       Emil, let's be honest. 5% of our companies hit their numbers in '21.

    3. EMEmil Michael33:45

       (laughs) Right.

    4. HSHarry Stebbings33:46

       Yeah, yeah, yeah.

    5. EMEmil Michael33:46

       Right. Yeah. Right, at all. So, so this year I'm telling people, be the company that hits the numbers even if the numbers are anemic or low. Even if it's 15% growth and 10 million burn and you were gonna do 80% growth and 30 million burn, hit your goals 'cause at the end of this year when all this dry powder's sitting there, they're gonna go, "Where can I put this money? It's been a year, I haven't put anything to work." They're gonna put it in someone where the CEOs hit their goals, that they have growth levers that they've proven, that they know and, and are smart enough to have transformed their business to meet the market environment, and those are the ones who are gonna be the survivors in my view.

    6. HSHarry Stebbings34:25

       You said there about kind of the down rounds. I think the down rounds come from this kind of value reshuffling of realizing that actually, you know, Twilio is worth 13 billion at four and a half billion of ARR. Well, fuck me, that's hard to build a decacorn. (laughs)

    7. EMEmil Michael34:37

       (laughs) Mm-hmm.

    8. HSHarry Stebbings34:39

       So my question to you is like, as founders, like approaching these down rounds, what, what advice would you have for them specifically 'cause it is very de- not dehumanizing but disincentivizing for teams.

    9. EMEmil Michael34:51

       Yeah, yeah.

    10. HSHarry Stebbings34:51

        It's tough.

    11. EMEmil Michael34:52

        It's super tough. Um, and that's why I say there's, the time before down rounds is structured rounds, same valuation, higher lick preps-

    12. HSHarry Stebbings35:02

        Yeah.

    13. EMEmil Michael35:02

        ... you know, more protection for the investors optically. It's a, it's, it's sort of close to what you did before, the same, uh, but the investor has better downside protection essentially, right?

    14. HSHarry Stebbings35:13

        Yeah.

    15. EMEmil Michael35:13

        Employees don't fully get that, but at least it d- it doesn't feel like a bigger loss of momentum as a down round.

    16. HSHarry Stebbings35:19

        Yeah.

    17. EMEmil Michael35:19

        Um, the problem with the structuring rounds is that it's hard to do the round after the structuring round because once that investor has protection, well, the next one wants it and the next one wants it. So your 2X lick prep starts to eat the whole cap table for every, you know, investor down the line.

    18. HSHarry Stebbings35:38

        And you don't think we'll have pari-passu? And for obviously the audience, pari-passu is when everyone's equal in the lick prep stack. You don't think we just see the equalization of lick prep stacks?

    19. EMEmil Michael35:47

        You, you, you do when things come back, but if, if your company thought they needed to raise 100 million this year to keep their growth and they didn't hit their growth and that 100 million went away, so now they need 50. But that 50 inv- but that 50 million investor is going like, "Well, hmm," you got to kind of sweeten it, right? Some more ends or some lick prep. They're gonna ask for potentially more, well, more lick prep which, which sort of is, is a bastardization of pari-passu, because if I get 2X lick prep and you have one, even if it's pari-passu, I get more, right?

    20. HSHarry Stebbings36:20

        Yeah.

    21. EMEmil Michael36:20

        Or, or senior preferences which are, I am senior to you, so that's not pari-passu. You will definitely see more of that in the next two quarters.

    22. HSHarry Stebbings36:28

        So, to me, the people who get fucked, honestly, is the early funds who have no-lick prefs and are not in any way, you know, structured to win when they get these down rounds and when liquidation events do happen. Do you think that's how it plays out, then, and the later big guys are the ones who get it?

    23. EMEmil Michael36:46

        Um, I know, I... Look, the early round guys and gals, 'cause their basis are so low, unless they wanna put up money to help bridge the company, that's, that's the life you picked, right? You... As a series A fund, that's the life you picked, is in down times you don't have to pony up 'cause you don't have it. You're a smaller fund, so by definition you don't do these late stage rounds. But then in these environments, you get a little crushed. But since your base is so low, you should be fine. But thes- them's the breaks, you know? That's kinda how it works.

    24. HSHarry Stebbings37:18

        I, I think it was Keith Raboya, when I had him on the show, he said, "Pay-to-play rounds, I've never ever made my money back from these."

    25. EMEmil Michael37:25

        (laughs)

    26. HSHarry Stebbings37:25

        Would you say the same, and how would you approach pay to play as an investor?

    27. EMEmil Michael37:29

        I don't like pay to play either, man. I, I, I, you know, Lime had to do one a couple of years ago, um, the scooter company.

    28. HSHarry Stebbings37:36

        Yeah.

    29. EMEmil Michael37:37

        And Uber put in $100 million, and, and I told Dara, I was like, "This is bleh, this is not a good idea. These pay-to-play things never

14. 37:46 – 39:21

    Pay-to-Play Never Goes Well

    1. EMEmil Michael37:46

       work." It didn't work at Bird, it didn't work at Lime. And those were somewhat s- sector-specific. I just think... (scoffs) I've never seen them work. But I'm sure there are examples. If you do your homework, Harry, like if we were negotiating and you study this, someone w- has made these work. I just haven't heard of them myself either. And, and pay to play is different. That is a recap, that's stage three, you know, hurri- you know, category four hurricane, you know, a recap, right? Structure, down round, recap. Those are kind of different things in my mind in the spectrum.

    2. HSHarry Stebbings38:21

       I'm seeing recaps already.

    3. EMEmil Michael38:22

       Oh, yeah. Yeah.

    4. HSHarry Stebbings38:23

       Yeah. Um, such exciting times in '22.

    5. EMEmil Michael38:26

       Mm-hmm.

    6. HSHarry Stebbings38:26

       I remember in '21 I was like, "God, there's too much money." Now I'm like, "I miss '21 (laughs) so much."

    7. EMEmil Michael38:32

       (laughs) We all miss '21. We all miss '21. Are you kidding?

    8. HSHarry Stebbings38:36

       The title for this episode, we all missed '21.

    9. EMEmil Michael38:38

       Miss '21, yeah, yeah.

    10. HSHarry Stebbings38:40

        Now, we, we mentioned, you mentioned Dara there. I, I, you obviously spoke to so many of our friends, uh, about Uber. And I know we've touched on, uh, aspects before. Um, uh, Dave Clark started, and he, he said you've just got to ask him. Why were you taken out of Uber, and was it fair?

    11. EMEmil Michael38:57

        Um, I was taken out with Travis because Benchmark Capital lost their nerve. Bill Gurley, who was on our board, lost her nerve. And the reality is there's another economic principle called loss aversion, right? If you invest $33 million in Uber and it looks like 10 billion four years later, 10 billion on a 33

15. 39:21 – 45:50

    Travis and Emil's Downfall from Uber

    1. EMEmil Michael39:21

       million investment.

    2. HSHarry Stebbings39:22

       And a 500 million fund, which was crucial.

    3. EMEmil Michael39:24

       Yeah. Uh, right. So you, you, you, you're going to say, "Well, how do I protect that? Forget about the next 10 to 100 billion in, you know, or 10 to 20 or 30 billion in value that'd create." That bred some fear that any time something happened or every time something happened, this whole thing was gonna come apart. Um, which was dead wrong. Um, company's doing fine. Travis went on six months later to start a grand new company, CloudKitchens. I went on. So it's not like this company, like we were incapable as leaders, um-

    4. HSHarry Stebbings39:57

       No, but there might have... Bill, Bill was a smart dude. There must have been things that led him to losing that nerve.

    5. EMEmil Michael40:02

       Yeah. Yeah. He's, uh... I mean, there, there's certainly mistakes there. So d- let, make no mistake that we didn't make mistakes (laughs) , and I'm not saying that, um, but w- in retrospect, when you look at them, there's no honest person who looks back at them and goes like, "Oh, yeah, there was the pres- the driver video thing, and, uh..." You know, they seem a little quaint in retrospect. Not all of them, but they seem mostly quaint. I believe he's a catastrophist. Catastrophists are one who... The sky's always falling. And I'll remem- I'll give you two examples. In 2014, in the middle of the bubble, we were raising... The first round I did at Uber, and I was kind of doing negotiation, and Bill called me and he said, "Emil, take $8 billion valuation. I've never been more certain of anything in my life that the economy's crashing now," in mid- mid-2014. (laughs) And it's like, "Bill, like, I'm gonna run this auction one way or the other, and if that happens, it happens." So instead of eight, we got 17 billion two weeks later. And then the next six months we got fourty- 40 billion, and the next year 50 billion, next year, 62. So even then in '14, he was predicting, you know, a bear market in '14, which didn't show up till 2022. So I learned that there are people who... A bear market is always around the corner, always lurking behind a door. And for an entrepreneur, that's kind of cancer, because you're like, "Ah!" Every... You can't wake up every day thinking the world's gonna end, 'cause if you do, it actually is gonna end like it did for Travis and I, because, uh, well, you know, at one time or another, we're not, you know... There's gonna be enough fires burning that he's gonna convince others that it, well, you know, death is right around the corner.

    6. HSHarry Stebbings41:47

       I'm... (laughs)

    7. EMEmil Michael41:48

       (laughs)

    8. HSHarry Stebbings41:48

       I'm going for it, but I'm too interested. I, I think I've heard s- other people say it was when Travis lost the support of the team that it, it made it impossible. Is that fair or not fair?

    9. EMEmil Michael42:00

       I, I mean, th- the... Benchmark's a sophisticated organization. You can imagine them asking the me- some s- uh, some subset of the team to tell the board that they weren't satisfied with the team. Um, and... But, you know, y- you know, there's a lot... You could imagine them hiring a PR person and a law firm and a strategy consultant, and all, all the things that come with, with the scorched earth tactics they used. Um-... and that being the outcome people saw. But the reality is, yes, he's lost some support, but remember, and here's a critical fact, Travis agreed to take a leave of absence after his mom died, and after we had that board meeting. He said, "I, I, I'm gone. I need to go take time to, to..." But no, leadership, family, and I, and, and everyone agreed on the board, unanimous board vote. 10 days later is when they cornered him in a hotel room in Chicago and gave him the, "I'm gonna smear you" letter, or, "You're gonna quit without counsel in an hour" letter. So anyone who says that it was the support of the team that caused that, he agreed to take a leave of absence. He was the... in a hotel in Chicago interviewing a COO candidate to take the job so that he can have some time to go do what he needed to do. So just think about that when people, you know, bring up this story.

    10. HSHarry Stebbings43:25

        So he la- he then calls you, tells you, and you go punch a wall or punch back there. How do you respond to that?

    11. EMEmil Michael43:32

        You know, if I had been there... And so I'd gotten sort of tossed the week before, and that was purposeful because I'm a lawyer, I knew all the investors. All the investors wanted us to stay that late stage because the investors who invested at 40 billion, they just weren't, they weren't looking for it to stay at 40 billion like where it is today. They were looking for it to trouble, triple, quadruple. In fact, we'd made a lot of promises, so they wanted Travis and I to stay. So I was an impediment to Benchmark's strategy here. I was a lawyer, I was in a boardroom, whatever. So I was out on whatever technicality they can find, some expense report that someone else on my team submitted six years-

    12. HSHarry Stebbings44:13

        (laughs)

    13. EMEmil Michael44:13

        ... before to my assistant that I never saw. Total BS.

    14. HSHarry Stebbings44:16

        You're like Al Capone with taxes. (laughs)

    15. EMEmil Michael44:18

        Yeah. Right, right. It was just... And it wasn't even me, it was someone else. It was, it was totally, totally pretext. And it was... And, and that's part of the re- you know, one of the things I, I, I, I really ding them on that they never apologized for that, they were, they, they even, they knew it was unfair. But anyway, so I didn't talk to Travis that day. Had I talked to him that day, I would have said, "Travis, walk out of the room. If you want to, rip up the papers in front of them, and we'll get, you know, get a lawyer and whatever. This is ridiculous. You've, you know, there's, this is unfair. This is coercive, and we need to have a negotiated discussion about what happens to the company in your absence and how we run it and what things we have to improve." And that's not what happened. And then Benchmark sued the company and just, you know, all the nastiness of 2017 continued.

    16. HSHarry Stebbings45:02

        Yeah. Phew.

    17. EMEmil Michael45:05

        Yes. (laughs)

    18. HSHarry Stebbings45:05

        Um, ooph. I need to get, get told Julio just listening to that. Um, uh, I, I do want to ask though, um, and Alfred asked this one. Okay, so moving on from the Benchmark side, Dara today, what do you honestly think of Dara's management? How do you feel? Good, bad? What are the thoughts?

    19. EMEmil Michael45:22

        I mean, the, there's no... Just let's start at, at a factual basis. The company's valuation is lower today than it was when Dara took over. And even if you account for the macro environment, the NASDAQ's still up 50%, he's down 50%. So it just is. And then you're like, "Oh, what about ride sharing?" Ride sharing is down. Well, what about e-commerce? Amazon up and wix.com and Overstock are down. So Uber should have been the leader in this category and brought everyone up and

16. 45:50 – 48:59

    Emil's Honest Opinion on Uber's New CEO Dara Khosrowshahi

    1. EMEmil Michael45:50

       showed them how to make an efficient business model. Um, there's been an enormous talent drain. The company is loaded with debt right now. It's one of the only ride sharing companies, uh, in the world with net debt. Um, it lost in food delivery to, um, DoorDash big. We went from a 60 point sort of gap to, you know, being the opposite. And that's a $30 billion mistake if you think that, you know, Uber could have been DoorDash. So, um, you know, by all objective measures, it hasn't succeeded from a financial standpoint. So I, you know, he's a nice guy. He cleaned up the company in terms of things that were sort of excess from a culture standpoint. He was a diplomat. He was able to get the company public. But in terms of hiring talent, innovating, and succeeding from a financial standpoint, you know, it's not d- it hasn't happened. It's an, it's an F. You know?

    2. HSHarry Stebbings46:43

       Mm-hmm. Other than that, I, he was great. (laughs)

    3. EMEmil Michael46:47

       (laughs)

    4. HSHarry Stebbings46:47

       (laughs)

    5. EMEmil Michael46:49

       He's a, he was a... Look, I will say, look, look, here's, I'll take self-criticism. We were aggressive barbarians at the gate trying to make, uh, uh, ride sharing work 'cause we had to, 'cause of the regulations and all that.

    6. HSHarry Stebbings47:02

       Okay.

    7. EMEmil Michael47:02

       That couldn't have gone on forever, right?

    8. HSHarry Stebbings47:04

       Are we gonna, are we gonna go back to that time though, of aggressive barbarians at the gate and not the ping pong offsite retreats-

    9. EMEmil Michael47:10

       (laughs)

    10. HSHarry Stebbings47:10

        ... yoga and kombucha bullshit-

    11. EMEmil Michael47:11

        (laughs)

    12. HSHarry Stebbings47:11

        ... that we've been living in for the last, like (laughs) -

    13. EMEmil Michael47:13

        (laughs) I think there's a reversion to that, yes. But, um... Or Uber was first. We were first. Remember, 2017, this, you know, Uber's problem started sort of in, in, in, in 2017 right after Trump was elected and there was a lot of anger in the electorates, especially in California about what is happening in the world. And it was starting to turn on corporations, you know, who didn't previously wanna be in politics at all. And it started with Travis sort of, uh, being invited to a business council with President Trump, along with Elon Musk and Mary Barra from GM and whatever. And w- somehow we got the, you know, tainted with that, and that sort of led to a cascade of events. And then, you know, the whole, for the last four years, through 2021, kombucha, you know, quinoa, you know, qui- "Where's the quinoa?" "There's not enough quinoa in the salad line when I get there." (laughs) And I think austerity turns us back. I think investors are start- are gonna say, "Look, I need someone who's gonna go through the hard times." Their, their appreciation for an entrepreneur who has to, who has to be bullheaded goes up. Um, but I don't know if-

    14. HSHarry Stebbings48:22

        I, and I think this was also, I think this was a job security. When you see half of your, you know, friendship group lose their jobs, your-

    15. EMEmil Michael48:27

        Yeah. (laughs)

    16. HSHarry Stebbings48:27

        ... desire for quinoa goes down a little bit with the realization that you actually have a job.

    17. EMEmil Michael48:31

        Yeah. (laughs)

    18. HSHarry Stebbings48:32

        Um, maybe.

    19. EMEmil Michael48:33

        Maybe. Maybe.

    20. HSHarry Stebbings48:35

        Uh, (laughs) maybe.

    21. EMEmil Michael48:35

        (laughs)

    22. HSHarry Stebbings48:35

        Unless you really are entitled. Um, final one on Uber I do just want to ask is, um, and again, I can't remember who it was, um, but someone asked this and I liked it, "Here you go, Emil, Travis and you, you are back running Uber. You said, um, you know, before about, you know, the mid, lost opportunity in, uh, food. You spoke about Uber Freight.... what are the opportunities that you would have jumped on and what would you not have jumped on?

    23. EMEmil Michael48:57

        Yeah. I think we

17. 48:59 – 51:50

    Uber's $30BN Mistake in Food Delivery

    1. EMEmil Michael48:59

       ... instead of buying, um, Careem in the Middle East, Postmates, Jumpbike, I think all of those will be a hundred percent write-downs. Those were some of the worst acquisitions done in tech. Um, maybe ... Postmates may be the worst acquisition done in tech in the last five years. It was for a $3 billion company that was, like, gonna be a zero within three months, and Uber got nothing out of it, no market share gain, nothing. So, there was just a bunch of y- y- ... just bad ac- sort of ... And I think Dara was trying to repeat the Expedia thing, which is, like, buy all these random things, like stitch them together and, like, that's a platform. That's kind of not how it works. Um, so I would have beaten Door- we would have beaten DoorDash, guaranteed. We were ahead by 30 points when Travis and I left, so letting that atrophy was not an option. Um, I think we would've had an Instacart competitor way earlier, and we would have been, if not ahead of Instacart by now, but neck and neck with them in every continent, just not one continent like Instacart's in. So, even if you think Instacart's a $15 billion business, I think we could have built a $60 billion business globally on that, on top of Eats, which was another, another 60 to 100 billion if we'd won DoorDash. And, uh, we were gonna beat Deliveroo. And then the rides business where Uber, to, to Dara's credit, is winning in the US against Lyft, another 60 billion. So you're talking about a $200 billion business without any creativity. This is just winning where we should have won and beating Instacart, um, when we should have beat Instacart.

    2. HSHarry Stebbings50:33

       I, I'm still astounded today at Deliveroo's market cap, I think is about 1.5 billion, uh-

    3. EMEmil Michael50:38

       Astounding, right?

    4. HSHarry Stebbings50:40

       Unbelievably well-run company, phenomenal team. Not a bad one. Multinational.

    5. EMEmil Michael50:46

       Yeah. I like Will a lot. I think he's ... You know, he came up with CloudKitchens ideas, actually crea- ... He was a banker, you know, more your Stanley banker, but he's quite good as a-

    6. HSHarry Stebbings50:55

       Oh, he's-

    7. EMEmil Michael50:55

       ... as an entrepreneur.

    8. HSHarry Stebbings50:56

       Oh, he's also aggressive like- (laughs)

    9. EMEmil Michael50:58

       (laughs)

    10. HSHarry Stebbings50:58

        ... he and Travis. Um, but, uh, I, I, I do wanna move to, uh, my world, which is obviously venture-

    11. EMEmil Michael51:05

        Yeah.

    12. HSHarry Stebbings51:05

        ... where we sit on the sidelines and do very little, unlike, you know-

    13. EMEmil Michael51:09

        (laughs)

    14. HSHarry Stebbings51:09

        ... uh, operators like you. Um, you decided ... And then he decided to go full-time investing with Coatue, uh, and then you decided to go back to being an operator. What was the thinking behind that move back to being an operator?

    15. EMEmil Michael51:19

        You know, the Coatue guys did me a great favor. They said, "Come in for six months and see if you li- you know, you like being an investor, and we'll see if we like you." And they're some of the best in the business. Philippe Lafont, Thomas Lafont, Daniel Sanft, Chris Frederickson when he was there, Dan Rose, you know, Matt Mazzio. They're, they are pros, and they have built an incredible franchise in China, in late-stage. They're just all ... They're, they're just very innovative and I like them a lot. So, I loved doing the China stuff, so I said, "Okay, I could do the China

18. 51:50 – 53:05

    Emil's Return to being an Operator

    1. EMEmil Michael51:50

       stuff, I could do late-stage stuff." And r- ... And they're j- ... I just ... I am not built to oppose an entrepreneur in a negotiation. I know that sounds crazy, but I can't si- ... I can't sit in the investor seat and not empathize with the entrepreneur I'm negotiating with, which is what you do when you're an investor. Um, I'm just ... It's, it's a hard to ... I'm he- ... I can help the Gopeth guys go up against Masa, Tiger, Hu- you know, you name it. Me bearing down on Raff and Jared Hecht and these guys is just not in my DNA.

    2. HSHarry Stebbings52:25

       It's funny. Um, I, I've spoken to a lot of the best investors and they're like, "Oh, there really should never be investor-founder misalignment in the best relationships." And I think that's just bullshit. Like, there are unavoidable misalignments, that even if you're both phenomenally good human beings, there are times and situations where, if I have $100 million fund and you're giving me $10 billion back from Uber, like, it makes more sense for me to do- have some protection mechanism, or whatever that is.

    3. EMEmil Michael52:51

       Yeah.

    4. HSHarry Stebbings52:51

       Do you know what I mean?

    5. EMEmil Michael52:52

       Yes.

    6. HSHarry Stebbings52:53

       Are there any glaring, uh, misalignments that you see that you think more founders should be aware of?

    7. EMEmil Michael52:58

       Y- totally. So, m- ... So, er, when early-stage investors get to this point where there's just

19. 53:05 – 55:13

    Misalignments between Founders & Investors

    1. EMEmil Michael53:05

       a lot of paper gains, we ... the- there should be sort of term limits on board seats. (laughs) Like, term limit out. If I get to, you know, a 10X return, and can get you some liquidity, then you can move on. Because the early board members who sit on late-stage companies, it's fear-based, naturally. They're, well, they're again ... The, the, the natural incentives are not to do what the company needs to do next to grow the next 10X.

    2. HSHarry Stebbings53:33

       Mm-hmm.

    3. EMEmil Michael53:33

       And so that natural misalignment, it's not wrong, it just is. You know, it's just how it is. Um, those things could be t- ... could be jiggered a bit. And so more ... The thing we ... I wish we did more of Uber is give more investors liquidity when they got scared. I would have been like, "VentureX, sell." Like, "I'll find you someone to sell to. Sell. Go get the second, g6, and, uh, h- ... you know, the whatever, the Discovery property in Wyoming, and then leave me alone and let me, uh, build a business." Um, and I, I wish I'd done that. So early-stage but coming-to-late-stage is where there's a real disconnect still.

    4. HSHarry Stebbings54:08

       Yeah. No, I totally agree. It was actually fascinating. I was speaking to someone from, like, one of the best funds, and they said, "When we invest, the most difficult people are the early-stage investors." And I was like, "Why?" And they said, "Because now X-branded firm is in, that's their golden goose and they just wanna-"

    5. EMEmil Michael54:23

       Yeah.

    6. HSHarry Stebbings54:23

       "... protect it. They don't wanna see the upside 'cause it's like, 'Sekoya did it, it's gonna be our special one.'"

    7. EMEmil Michael54:29

       Yeah, yeah.

    8. HSHarry Stebbings54:29

       Do you see what I mean?

    9. EMEmil Michael54:30

       Yeah, totally. Yeah, that's exactly it.

    10. HSHarry Stebbings54:31

        Yeah. No, I totally agree. Who's the best board member that you've sat on a board with, or seen at a board level?

    11. EMEmil Michael54:36

        Well, I'm gonna brag about my friend David Weiden from Coastal Ventures. Um, have you met him?

    12. HSHarry Stebbings54:41

        Do you know what? I mean, we, we spoke before this-

    13. EMEmil Michael54:43

        Yeah.

    14. HSHarry Stebbings54:43

        ... which is really the first time. He was so lovely. He was like, "First-time,"

    15. EMEmil Michael54:47

        Mm-hmm.

    16. HSHarry Stebbings54:47

        "first-time caller, big fan." I was like-

    17. EMEmil Michael54:49

        Yeah.

    18. HSHarry Stebbings54:49

        ... "Oh, this is an ego stroke. Love it."

    19. EMEmil Michael54:51

        (laughs) Yeah, right. (laughs)

    20. HSHarry Stebbings54:52

        Uh, but no, I hadn't met him before.

    21. EMEmil Michael54:53

        So he's an under the radar, um, VC in terms of being at Vinod- in Vinod Khosla. It's- it's his firm, and David's been a partner there for about 15 years and has made some of their biggest wins in Okta, um, you know, all the b-big s- uh, they, uh, RingCentral, all these $10 billion enterprise companies that you didn't know that

20. 55:13 – 56:53

    Emil's Favorite Board Member

    1. EMEmil Michael55:13

       Khosla was a big investor in them. They did Square, and w- and David was a big part of all those. So I'm on a few board... I'm on a board with him now, and he is just the polite contrarian, which I (laughs) , which I love. A- and, and especially in this environment, he's like, "Well, what if blank happened? What would we do about it?" And, and it's not in a way to scare, it's just to push the thinking to the edges. And if you, if you believe in, in sort of small liberal, uh, small L liberal thinking and a little bit of Socratic method of what ifs in scenarios when companies are deciding whether to pivot, how to raise money, whether to sell, he has the contrarian, polite approach. I have never seen an entrepreneur not go, "Huh, hadn't thought about that. Let me think about that and be better prepared for the future," um, after that. So he's a sleeper hit, in my view.

    2. HSHarry Stebbings56:07

       I, I, I, I love that, and, uh, I love the kind of "What if?" mentality.

    3. EMEmil Michael56:11

       (laughs)

    4. HSHarry Stebbings56:11

       Can I ask you... W- we mentioned kind of CO2 earlier. We've seen many firms come in, whether it's your Altimeters, D1s, Durables, and then obviously SoftBank slightly before that, but, like, this explosion of capital. What does that mean for the founders? Is this a great thing? Is this a bad thing? How do you analyze that?

    5. EMEmil Michael56:28

       For founders, it's more a good thing than a bad thing. That means that, um, there's more capital out there, so if your business model requires more capital, you can get it. And look, people are gonna say, "Oh, my God, s- loose capital, free money, blah, blah, blah." Companies like Uber, like Airbnb started in that era for a reason. It's because we could raise a lot of money and, like, try a bunch of stuff. And if money's too tight, maybe we wouldn't have

21. 56:53 – 58:51

    Is the explosion of capital into venture a good thing?

    1. EMEmil Michael56:53

       gone into Uber Eats. We just would have, like Lyft, stayed in our lane. So, there is some value. Loose, loose money cycles, they actually have a purpose (laughs) , and, and they're an example of looser money policies, um, the D1s and Tigers of the world. So having the... Did they... Is the overvaluing they created great? I don't know. It's not great for other investors who wanted to get in cheaper, I guess, but it's great for entrepreneurs (laughs) .

    2. HSHarry Stebbings57:17

       (laughs)

    3. EMEmil Michael57:17

       Um, you know, I do worry that because many of them are crossover funds, when their public market portfolio goes down, they get, you know, f-fearful of their private market portfolio, so they're not as consistent. But, you know, then you have Bond Capital, who I love. Consistent, they're not really in the public markets or in between, um, the late stage. Those kind of companies have been great additions to the ecosystem that didn't exist 10 years ago.

    4. HSHarry Stebbings57:42

       I totally get you. I think also the thing that people forget is just, like, your Tigers as well, they have so many hungry mouths to feed at scale.

    5. EMEmil Michael57:49

       Yeah.

    6. HSHarry Stebbings57:49

       And that's the challenge.

    7. EMEmil Michael57:50

       (laughs)

    8. HSHarry Stebbings57:51

       Um, so I totally agree. Okay, well, let's analyze. Which VC brands... Oh, I love this question, uh, it's one that I often get asked by LPs, and then I trash-

    9. EMEmil Michael57:58

       (laughs)

    10. HSHarry Stebbings57:58

        ... a couple of names, and they go, "Yeah, we are the anchors in their funds," and I go, "Oh, no!" (laughs)

    11. EMEmil Michael58:04

        (laughs)

    12. HSHarry Stebbings58:05

        Um, so tell me, which brands are winning in your mind, and why, and which are losing their prominence, and why?

    13. EMEmil Michael58:12

        Yeah. So I'll give some recognizable names. Obviously, there's a lot of, of solo or small founder funds that I love. I love Breen Kimmel's Work/Life Fund, I love, uh, Richard Kerber's EQUAL Fund, I love Lackey Grooms fund, I lo-... You got a lot of these little ones that are not institutions yet, in my view, but there's a lot of good stuff. I mean, Lackey's kind of an institution, I mean-

    14. HSHarry Stebbings58:32

        They're institutions. Lackey's got more money than the US Treasury. (laughs)

    15. EMEmil Michael58:35

        Yeah. Yeah, they, yeah, they got more money.

    16. HSHarry Stebbings58:35

        (laughs)

    17. EMEmil Michael58:36

        But I guess they, they haven't surrounded themselves... The world doesn't know about them yet. Uh, I think the world will. But if you want to talk institutional brands, Andreessen Horowitz is certainly on the way up, um, despite whatever's happened in crypto, and I'll tell you why.

22. 58:51 – 1:04:14

    Which VC brands are winning and losing?

    1. EMEmil Michael58:51

       'Cause they're innovating. They're innovating on how they communicate their PR stuff, they're innovating on the type of funds they do. What Mark and Ben are doing are... Th- they're on-... They're being entrepreneurs in venture, and they're trying a bunch of stuff. And ma-... All of it may not work, and maybe they over-hire to whatever. Some of it's gonna work because those guys are good, and they may be going through this period now of having overdone a bunch of stuff, but, but they are gonna be winners. And they... Look at what Sequoia's doing. Sequoia's doing something similar. They're building multiple products and, and they're trying to figure out what a venture capital looks like in the world when you have the Lackey Grooms that could raise a billion dollars in one month. What does the... You know, so there's real competition for Sequoia now, um, from a guy like Lackey. And how do they win? Well, they're gonna build all these other things, and I think they have to. And that's why I think Benchmark ultimately is gonna... It ha-... It has no innovation. Forget the reputation, which, which most entrepreneurs, if they do their due diligence, will find out about, but just not innovating, stuck at 435 million for the next 10 years is not gonna work.

    2. HSHarry Stebbings59:59

       Is it stuck or is it sticking to your knitting? You know, USV do the same. Um, I mean, Ribbit don't actually, they've scaled (laughs) up a lot.

    3. EMEmil Michael1:00:08

       (laughs)

    4. HSHarry Stebbings1:00:08

       Um, but there are... You know, Aleph in Israel, who I rate a lot, um-

    5. EMEmil Michael1:00:13

       Yeah.

    6. HSHarry Stebbings1:00:13

       ... Michael Eisenberg. Is it sticking to your knitting or is it just being behind the times?

    7. EMEmil Michael1:00:17

       I mean, Lyft stuck to their knitting, and they're about... They're getting crushed. Um, the world... They're not changing with the world. You gotta play the game on the field, and the game on the field is different than it was, and I'll tell you why, Harry. There are going to be fewer tech acquisitions in this antitrust environment. Fewer, much fewer. So your outcomes for mid, middle companies, like Telme, are gonna be farther... You know, fewer and farther between. So there are gonna have to be the, the, the returns coming from the big winners, the big wi-... And to win big, you've got to try to invest across multiple stages, and that's what Sequoia can do, that's what AH can do, that's what Ribbit can do, that's what DST can do. And I think if you can't, you're just gonna get, have to get lucky, 'cause there's gonna be fewer and fewer mid-level winners to sort of bet, to, to return the portfolio, uh, so you have to find the ones that are gonna 10x it.

    8. HSHarry Stebbings1:01:10

       Okay. So, we have Andreessen on the institutional side as, as pr- pros. Anyone else that you're like, "Yeah, really impressed by them."

    9. EMEmil Michael1:01:17

       Um, I like Coatue, like I said. I like, um, Bond, like I said. Bond just occupies this non-crossover sort of territory.

    10. HSHarry Stebbings1:01:29

        Yeah.

    11. EMEmil Michael1:01:29

        Um, where they're, they have the patience of public, pr- private market investors, but they're gonna come in at this stage that Coatue and Tiger are in.

    12. HSHarry Stebbings1:01:38

        I also like their e- elasticity of mindset. You know, they don't do that often obvious a deal.

    13. EMEmil Michael1:01:44

        Yeah.

    14. HSHarry Stebbings1:01:44

        You know what I mean by that? Like On Running.

    15. EMEmil Michael1:01:45

        Yeah. (laughs) Yeah.

    16. HSHarry Stebbings1:01:46

        Great deal. Great deal. But not that obvious.

    17. EMEmil Michael1:01:49

        Yeah.

    18. HSHarry Stebbings1:01:49

        Like, where'd they-

    19. EMEmil Michael1:01:50

        Yeah.

    20. HSHarry Stebbings1:01:50

        Um, I totally get you. Uh, and so other than Benchmark, (laughs) -

    21. EMEmil Michael1:01:55

        (laughs)

    22. HSHarry Stebbings1:01:55

        ... which, which, uh, which was not an advert for, for the show, unsurprisingly.

    23. EMEmil Michael1:01:58

        (laughs)

    24. HSHarry Stebbings1:01:58

        Um, are there any others where you're like, "I would short them"?

    25. EMEmil Michael1:02:01

        Um, I ... What would I short? God, it's hard, it's hard to say. There's so much money floating around. (laughs) It's sort of like, you wanna look at the red, yellow, greens as what's happened from investments made in 2021, and you're like, "Okay, well, that's consistent." Uh, I, who would I short in the VC world?

    26. HSHarry Stebbings1:02:17

        So I, I always think about shorting kind of one and a half billion and above multi-stage generalist funds that are tier two/tier three-

    27. EMEmil Michael1:02:24

        Yeah.

    28. HSHarry Stebbings1:02:24

        ... with not great brands and subject decision-making.

    29. EMEmil Michael1:02:29

        Yeah. You know, I, I don't, I don't have a good sense of, of who's up and who's down. I mean, I lo- ... I think Accel's done very well in Europe, in your hood.

    30. HSHarry Stebbings1:02:38

        Yeah.
23. 1:04:14 – 1:05:37

    How did becoming a father change your life as an investor and operator?

    1. EMEmil Michael1:04:14

       a, had a successful marriage and a kid. I don't know how ... I, I just don't know how it's possible, and I don't think it is. So, um, it ch- it changed me insofar as now I know why tech, whether I like it or not, is a young man's game, young man and woman's game, in that there is a certain reason that y- you, you know, young people start startups. (laughs) It's because they have the time and energy to do it and the risk appetite that you have, don't have as much when you have other important things in your life, like I do now.

    2. HSHarry Stebbings1:04:49

       I have an interesting lesson though, which is actually like, I prefer to back older founders for two simple reasons. One, when times are good, younger founders buy the hype, they buy the Gucci, they believe they're God's gift. Older ones go, "I've seen this happen before. They hated me before, they'll hate me again."

    3. EMEmil Michael1:05:07

       (laughs)

    4. HSHarry Stebbings1:05:07

       And then on the flip side, when times are really bad, young ones really feel it. The emotion really takes over. Older ones, again, they have children often. They're aware that their children could get sick. That is much worse than my head of sales leaving or something happening. And they have this temperament that's much more calm.

    5. EMEmil Michael1:05:24

       Right.

    6. HSHarry Stebbings1:05:24

       Do you agree with that?

    7. EMEmil Michael1:05:25

       I think it's a fair comeback, but I don't th- ... Look, I may- ... And maybe the difference is this. Hypergrowth versus non-hypergrowth, and by non-hypergrowth, I mean great growth, like venture-backable

24. 1:05:37 – 1:07:32

    Older Founders vs. Younger Founders

    1. EMEmil Michael1:05:37

       growth. But hypergrowth, what Uber, Airbnb experienced, that kind of situation, we, we grew faster than any company in the world, both geographically and revenue-wise, including Google. I just didn't think it wa- ... I just don't think it was humanly possible to do that without that kind of time in your life. For a company that's, that's gr- ... that has an industry where th- doesn't permit that kind of growth, I think you're probably right. But, but there is different times for different, for different kinds of companies. If you're building software that's like, you know, gonna be a better database and it's not hypergrowth, sure. I ma- I may agree (laughs) with you, Harry, that like somebody who's more mature in the highs and lows when they lose a customer contract or not, that that's better.

    2. HSHarry Stebbings1:06:20

       (laughs)

    3. EMEmil Michael1:06:21

       But, (laughs) but i- in some of this hypergrowth stuff, it's a different ballgame.

    4. HSHarry Stebbings1:06:24

       Emil, one of my biggest winners ever is a compliance management company.

    5. EMEmil Michael1:06:29

       (laughs)

    6. HSHarry Stebbings1:06:29

       (laughs) Like I, I think we have some different perspectives-

    7. EMEmil Michael1:06:32

       (laughs) You do, yeah. 100%.

    8. HSHarry Stebbings1:06:33

       ... on what we like. Yeah.

    9. EMEmil Michael1:06:34

       Yeah, it sounds like it.

    10. HSHarry Stebbings1:06:35

        Give me a payroll mechanism and I'll be all over you. Ah. (laughs) Um, why am I single? So strange.

    11. EMEmil Michael1:06:41

        (laughs)

    12. HSHarry Stebbings1:06:41

        Um, anyway. Uh, tell me, final one for you. You've done so many incredible things. You have so many incredible years ahead of you, I'm sure. What do you want the legacy of Emil to be?

    13. EMEmil Michael1:06:51

        Man, if I could have a fraction of the impact that Bill Campbell had on 20 other people, all right? That's my rule of three, you know, kind of a rule of 20s, or 20, 20VC, right? Which is-

    14. HSHarry Stebbings1:07:04

        (laughs)

    15. EMEmil Michael1:07:04

        ... you know, he probably mentored about 20 people, including the ones we mentioned, and made such an impact on all of us. And even the people, um-... you, there was a lot of people on the list who were doing great things, you know, and n- not a lot of people know about. If I could do the same, after all the experience I've had and have people go, when they do, you know, "You're 20 BC five years from now if you're still doing it," and be like, "Wow, Neil helped me do this and helped me grow in this company, and I built this company and I made

25. 1:07:32 – 1:09:37

    What do you want your legacy to be?

    1. EMEmil Michael1:07:32

       my impression on the world," sort of that would be something I'd be proud of. Second, (clicks tongue) I went to work at the White House in '09 at the Defense Department, and that was a, a, you know, worked for Secretary Gates. I r- I spent a lot of time in Afghanistan, Iraq, Guantanamo Bay, Pakistan, so did a lot of stuff where I got to see the real world, not what the bubble in Silicon Valley or Soho in London is. Um, and bringing a little bit of public service ethic back into business, not ESG, but just ... I, it drives me crazy when the tech companies won't support, like, the Defense Department software, like, we won't rent you our cloud, things like that. Um, those notions of being patriotic and supporting a country that's supported you-

    2. HSHarry Stebbings1:08:21

       Mm-hmm.

    3. EMEmil Michael1:08:21

       ... and your business kinda drives me nuts. So if I can make an impact there, I'd be happy to do it.

    4. HSHarry Stebbings1:08:26

       Having just come from the hospital-

    5. NANarrator1:08:27

       (laughs)

    6. HSHarry Stebbings1:08:27

       ... where they still use the fax machine-

    7. EMEmil Michael1:08:29

       (laughs)

    8. HSHarry Stebbings1:08:29

       ... uh, I haven't seen ... I was like, "A fax machine? Wow, this is so cool."

    9. NANarrator1:08:32

       (laughs)

    10. HSHarry Stebbings1:08:32

        I was, like, doing a BeReal of the fax machine.

    11. EMEmil Michael1:08:34

        (laughs)

    12. NANarrator1:08:35

        (laughs)

    13. HSHarry Stebbings1:08:35

        Um, but, uh, that was when I knew I was a real Gen Z VC.

    14. EMEmil Michael1:08:39

        Yeah. (laughs)

    15. HSHarry Stebbings1:08:39

        Um, listen, I wanna move into a quick five, my friend. So I say a short statement, you give me your immediate thoughts. Does that sound okay?

    16. EMEmil Michael1:08:45

        Yeah.

    17. HSHarry Stebbings1:08:46

        What's the favorite book, Emil?

    18. EMEmil Michael1:08:48

        I'm sure you've heard of this before, but Sun Tzu's Art of War. And-

    19. HSHarry Stebbings1:08:52

        (laughs)

    20. EMEmil Michael1:08:52

        ... especially one chapter in it, where he talks about encircling your enemy. If you encircle, fully encircle your enemy, they fight harder, so, like, always leave 'em a exit path. And I use that in negotia- think about that in negotiations, actually, if you think about it as applies to, as it applies to Russia-Ukraine war, it really matters, is like, where is the off-ramp? How do you get people to save face? If you don't let people save face or have an off-ramp, you, you can have some combustible situations in business and, and, you know, personal life and in, and in sort of geopolitical conflicts as well. (laughs)

    21. HSHarry Stebbings1:09:26

        "What would it take for you to go full-time in-house again?" That was from Jared.

    22. EMEmil Michael1:09:31

        Oof. Um, being invited to be the CEO of Uber? I don't know. But I- I don't know if you read the

26. 1:09:37 – 1:10:17

    Emil's Favourite Book

    1. EMEmil Michael1:09:37

       other day that, uh, someone's mentioned to Elon that I, I wo- should be up for the CEO of Twitter. Some job where it's an important global mission that, um, that I really could dig into, not about the money but about the global mission. Tw- Twitter, as much as I hate it and it's a hellscape and all those things, there's some- there's a globally important asset, and someone has to do something with it. And I'm glad that Elon's doing what he's doing. I think Uber could be that asset. I think there's probably three or four other things out there that, um, I'd have to f- I'd have to find so that I can actually choose and say, "I'm doing this again."

    2. HSHarry Stebbings1:10:16

       "What happens in

27. 1:10:17 – 1:11:06

    When will Emil come back?

    1. HSHarry Stebbings1:10:17

       the Elon Twitter event, and would you want to be CEO?"

    2. EMEmil Michael1:10:21

       I mean, there's only one CEO in Elon companies, and that's Elon Musk (laughs) so-

    3. HSHarry Stebbings1:10:27

       (laughs)

    4. EMEmil Michael1:10:27

       ... let's start there. Um, wha- i- if I could be a part of it because it'd be fun to work for him and, you know, transform what is a hellscape into something that's, that's better? Sure. But, um, what I think happens in this situation is I think they have a negotiated ... My number one, 60% chance, they have a negotiated settlement at a lower price in the next 30 to 60 days. Scenario two, which is sort of 30% likely, Elon's forced to buy it, and I think only a 10% chance that Elon wins and he doesn't have to buy it.

    5. HSHarry Stebbings1:11:03

       Got you. Tell me, what's the best investment advice you've ever

28. 1:11:06 – 1:11:55

    Could Emil be Twitter's next CEO?

    1. HSHarry Stebbings1:11:06

       received?

    2. EMEmil Michael1:11:06

       I, it's sort of the first question you asked, is what is your ordering of, um, priorities when you're operating and investing? And for me, for both, it's been the connection with the founder. So I don't do investments where, you know, it's like, "Hey, drop a check here. I've vetted it, da-da-da." I, I need to meet the founder. It could be for 20 minutes on a Zoom. I need to look him in the eye and see if they have that thing.

    3. HSHarry Stebbings1:11:37

       My biggest mistakes have always been when I relied on someone else.

    4. EMEmil Michael1:11:40

       Yes.

    5. HSHarry Stebbings1:11:40

       Even if they're amazing. Never do that.

    6. EMEmil Michael1:11:42

       Yes.

    7. HSHarry Stebbings1:11:42

       Um, tell me, what mistake have you made in hindsight you wish you hadn't made?

    8. EMEmil Michael1:11:46

       You know, I'd, I'd wished ... one of the things that, you know, besides, like, wished we'd never had Benchmark as an investor at Uber, I wished that w-

29. 1:11:55 – 1:15:15

    Emil's Favourite Investment Advice

    1. EMEmil Michael1:11:55

       one of the things that happened with these hyper-growth companies is we should've turned the corner earlier, 'cause what ... I describe companies when they're startups as tribes. And as your tribe gets bigger, you start to intersect with other tribes, and you better become a civilization or the tribes are gonna be at war. So you build these companies, they're actually really civilizations, they're not tribes, and you can't run 'em like tribes anymore. You have constituencies, you have politics, you have to have governance, you have to have clear, transparent rules that everybody can follow. And Uber, Airbnb, Lyft, all became those things. And it's hard to turn ... And, and Reid Hoffman talks about the pirate first, uh, whatever, matrix that he's got. I, I-

    2. HSHarry Stebbings1:12:35

       Right.

    3. EMEmil Michael1:12:35

       ... have something similar. It's like, you gotta turn from a tribe to a civilization. Had Uber done that a little earlier, I think we could've, you know, potentially avoided some of this chaos.

    4. HSHarry Stebbings1:12:44

       When do you think that is? Is that like 500 people to f- like, that's the turning point? 200? 1,000?

    5. EMEmil Michael1:12:50

       It's the right qui- uh, for, uh ... you know, f- we went from 250 people to 20,000 in three years. So you're like, I don't know when we're at 500 or 1,000 (laughs) somewhere in there, but, but it was so, it was so extraordinary. Probably, probab- just to give you an answer just so you have an answer, probably no later than 5,000 employees, because what happens at that point is, you have, you have no names for a while, but at that point, if you're not training managers on how to manage, having-... plans about how people get promoted and all the, all the bureaucratic things that you hate as an entrepreneur, but you're that big. You know you're gonna make mistakes. Uh-

    6. HSHarry Stebbings1:13:34

       Tell me, tell me, why do you no longer go for dinner with business contacts or friends?

    7. EMEmil Michael1:13:40

       (laughs) I mean-

    8. HSHarry Stebbings1:13:41

       I told you I did my research. I stalked you. Yeah.

    9. EMEmil Michael1:13:44

       (laughs) Y- yeah, you did. I mean, you know, so it's, it's dinner at home with the fam and I move my parents from, you know, you know, my immigrant parents who are living in New York in the cold weather. It's like, "Come on, you have your f- only grandchild down here. Come move to Miami with me." And so they live a couple miles away. So it's dinner with that fam that I haven't had 'cause I was busting my butt at a startup from 1999 to 2017 and in the White House and all these places. So now I'm catching up a little bit. And so I try not to do business dinners if at all possible. Um, I'll do coffees, I'll do uh, all the other things, but try not do dinners.

    10. HSHarry Stebbings1:14:20

        Dave Clark asked me a question to ask you, and I thought it was a- and he did a crying laughter emoji face. And I was like, "Uh, that tells me that I should probably adapt it slightly." Are SPACs over? And what did you learn from yours?

    11. EMEmil Michael1:14:34

        SPACs are over. (laughs)

    12. HSHarry Stebbings1:14:37

        (laughs)

    13. EMEmil Michael1:14:38

        Um, what I learned from mine is that I relearned a lesson, that I am not a financial engineer. I'm a deal maker and SPAC, this SPAC world is not deal making. It's financial engineering. It's moving money around from one part of the ecosystem to another and trying to get the IPO out fast and about disclosures and what you're allowed to say in this situation versus not. It is just a- and this is, I think, unfortunately what Dara does at, at Uber, what a company like Verizon does. They're all f-

30. 1:15:15 – 1:17:29

    The End of SPACs

    1. EMEmil Michael1:15:15

       they're all financially engineered, they're not innovating. And so when there's a market collapse, all these financially engineered Frankenstein products like a SPAC, collapse. (laughs) And, and that's what's happened. And it used to be a backwater financial product and Chamath brought it to mainstream, and I think it's just gonna retreat back to being a backwater financial product.

Episode duration: 1:19:15