Mario Schlosser: "How to Deal with a 94% Decline in Market Cap" | E1136

1. 0:00 – 0:57

   Intro

   1. MSMario Schlosser0:00

      We went public, right, I think it was March 3rd or whatever, 2021. It was Josh and I ringing the bell. We're like, "Fuck yeah, this is gonna be great," and then we open and the thing falls. It opens low right away and it falls right away. The world doesn't end that often, and that is actually one of the things you do realize. Step outside of yourself and observe yourself and say, "You've done this before. It is gonna be fine." Sometimes the rhetoric in Silicon Valley of like, oh my god, life and death, whatever, is also just fucking stupid.

   2. HSHarry Stebbings0:24

      Ready to go? Mario, I'm so excited for this. I cannot believe it has been so long since we did our last one. Hopefully I've improved as an interviewer. Christ, I needed to. But I so appreciate you joining me today.

   3. MSMario Schlosser0:47

      I hope I've improved as a interviewee as an entrepreneur. We were both just starting out, I feel like, when we, when we last talked, so it's great to be-

   4. HSHarry Stebbings0:54

      I, I-

   5. MSMario Schlosser0:54

      ... back on.

   6. HSHarry Stebbings0:56

      It is astonishing

2. 0:57 – 2:15

   Background

   1. HSHarry Stebbings0:57

      how time flies. But I just want to go back to a little bit, actually, in childhood. I believe the best entrepreneurs are shaped early. When you think about your childhood, how would your parents and teachers have described the young Mario?

   2. MSMario Schlosser1:09

      They would say I always had a high degree of totally intrinsic motivation and just not really caring what others told me to do or what others thought about what I was doing. And so, um, I got a, a Sinclair ZX81, which had, I think, one kilobyte of RAM, relatively early on from not my parents on ... My father's a middle school teacher. Mother's a nurse. And so they had really no mathematical or computer science inclinations whatsoever, but a friend of my father gave me that little computer, and so I would type in listings and whatever, learn all that stuff, and so just get sucked into that and, and to do whatever I wanted there, really. Um, I don't think I was always that smart in, in going about learning it. I remember actually a summer where I kept trying to figure out how to have the computer draw lines, and I would just on, you know, square paper draw lots and lots and lots of lines and see how would you have to place the pixels to draw a line. And, um, the guys who invented Doom, for example, would have probably figured out a clever algorithm there. I couldn't figure it out, and eventually I realized, okay, floating point numbers, that's the thing you need there, but it took me way too long, okay? So the persistence and the intrinsic motivation and then the sort of not caring what others think about it's probably the biggest ingredients.

3. 2:15 – 7:11

   Early Signs of Exceptionalism

   1. MSMario Schlosser2:15

   2. HSHarry Stebbings2:15

      So I have this theory that the best entrepreneurs show early signs of exceptionalism always. It could be in sport. It could be in business they start very, very young. It could be in designing websites for local, uh, businesses. But there's always a sign of exceptionalism early. Do you agree with that as an investing thesis, almost, or not?

   3. MSMario Schlosser2:38

      I think it is almost unfortunately the case, and I say unfortunately because I hate for the world to be one where you're locked into your own destiny, into your own fates early on. I mean, that, that does not appeal to me as a socialist European, you know, as I know you're a fellow socialist European. I don't know about the socialist part. I think it's a very multivariate problem, though, but I don't think necessarily that we know exactly how to break down who's going to do something incredible based on just one aspect or measurable test or something like that. I do think there is some, you know, this dimension of sort of like, um, how much do you care about what others do, how much cognitive capacity you have, um, and then how much persistence do you have. Maybe that's a z-axis, you know? If you have people in the, in, in the ... There is an efficient frontier somewhere in there, and some ... When I went in- ... was in school, for example, there were definitely always, I think, one or two people who had better grades than I had, and they went on to become theoretical physicists. They didn't start companies, and they never will. And so there is something else in this sort of embeddings dimensionality of what drives performance that is not quite hard ... not, not easy to put the finger on.

   4. HSHarry Stebbings3:40

      You mentioned there, like, persistence. Uh, you know, um, Jensen Huang said the other day that he thinks we should have lower expectations, and people with lower expectations have higher resilience, which I thought was interesting. How do you feel about this?

   5. MSMario Schlosser3:56

      I, actually, didn't know that he ... I didn't know that that's a quote from him, but, um, that is 100% something I subscribe to. I had incredibly low expectations through my whole life, really. I mean, you know, when you grow up in a, in a small town in Germany and, and not, like, in a poor upbringing, whatever else, I was lucky that my parents were just basically various normal German middle-class people, uh, then you don't necessarily see yourself going to Stanford or Harvard or whatever else. That's in a completely different world. And in fact, actually, when I was at university in University of Hanover in the north of Germany, um, this is like 2001 or so, I kept reading about, um, you know, Napster was a big deal. Hank Berry had taken it over, um, and it was the most incredible thing to me in the world when two years later I met Hank Berry, a buddy of mine, uh, was friends with him, and we talked to him about peer-to-peer and file sharing and whatever, something that I then did some academic work in as well later on. Um, but just the magic that you feel as someone with low expectations when you finally get to the place where all the people with the high expectations are, like in, for me, Silicon Valley, is absolutely incredible and uncopyable.

   6. HSHarry Stebbings4:57

      I think it's also important, though, to have access to the people with high expectations. Otherwise, you can always live the kind of, I mean this in the nicest way, but the simple low-expectation life that I think maybe a lot in Europe do, because people go to the valley to have their mind expanded, to see the upside. How do you think about that balance of low expectations but also being around people who make you think bigger?

   7. MSMario Schlosser5:21

      And we're gonna talk about organization later on and startups and so on, but that is absolutely something that happens in, in the organizations as they grow. That's the, the bar just, and everybody will tell you this, just sort of goes, goes down because, um, people do not have-... a, a few standout folks or teams to look at and say, "Okay, that is the bar I could get to. That, that is actually what's possible when you, when you see somebody else there." And so for me, this was, is absolutely the case as well. I, I'll... Maybe two quick thoughts there. Um, there's a German competition called Jugend Forscht. It's like a classical German, like just, it literally, it's called Young People Do Research. That's the name of the competition. (laughs) It's a-

   8. HSHarry Stebbings5:56

      Brilliant brand.

   9. MSMario Schlosser5:57

      ... not a very creative German title.

   10. HSHarry Stebbings5:58

       I, I, I love that their branding is on point.

   11. MSMario Schlosser6:00

       Yeah.

   12. HSHarry Stebbings6:02

       (laughs)

   13. MSMario Schlosser6:02

       It's like a, it's literally the, like grammatical tense of the imperative, like the commands, you know? You, you...

   14. HSHarry Stebbings6:07

       (laughs)

   15. MSMario Schlosser6:07

       Young people are now gonna do research. And I, I did a bunch of work in that, and I built them an early eye tracker. So it was a camera in the computer, it's like 1996, and it would film you, and, and then the mouse would move based on where you would s- where you would look. And so I have the Apple Vision Pro, and I still don't think the vision tracking is that great, even now, you know, whatever, 26 years later, 27 years later. But point being, that competition was the first time for me where I saw people who were doing stuff that I could not even imagine doing, like designing ships or writing code or inventing cool stuff or saying they wanna start companies. I'd never heard anybody say that. And so that was a interesting bar. The other one I'll tell you is, um, I was at Stanford in computer science, um, as a visiting researcher, and I went to McKinsey and do an internship there. And I remember to this day, I had then... When I, when my Stanford advisor called me after I've been there for like a couple weeks or so, when he asked me, "How is it?" I said, "It is so incredible how fast you can build Excel spreadsheets." And I meant this from the bottom of my heart. It was an incredible, like bar-raising for how quickly you can build an Excel model. I'm like, "This is magical powers." And so you just need someone to show you where that bar is. And if you don't have that, it's a, it's

4. 7:11 – 11:59

   Understanding Stock Market Dynamics

   1. MSMario Schlosser7:11

      a big problem.

   2. HSHarry Stebbings7:11

      You know what worries me a little bit? And then I promise we'll get back to schedule of some kind. I speak to a great friend of mine who's a leading GP in the Valley every night, and we always talk about the deals that we do. And pretty much every time it's like, "Oh, I'm doing this amazing property management company in France or a B2B procurement company in Germany or..." And then he goes, "Oh, I'm reinventing the chip," or, "I'm investing in the next generation of LLM," or... And I'm like, I said to him the other night, "Do you not ever see how fucked up this is? Like I'm being B2B procurement and property management and you're doing redesigning chips and sending things into space."

   3. MSMario Schlosser7:53

      You should make sure to be nice to him w- and give him a good tip when he serves you coffee in, in 10 years from now. So, uh, they, you know?

   4. HSHarry Stebbings8:00

      (laughs)

   5. MSMario Schlosser8:00

      That's a high-risk game obviously. No, I'm, I'm, I'm, I'm more with you there as well. I think this is a, again, to go into a territory that I understand very well, US healthcare, that is one of the issues in US healthcare. The big ideas and the big disruptive approaches to just changing this $4 trillion system have not worked all that well for the most parts. Uh, nobody's completely reinvented primary care. Um, there's an incredible amount of very pedestrian simple workflows and ideas, where some amount of companies make a ton of money in US healthcare. And replacing the, their 40-year-old COBOL code base with what you just said, um, just a good startup that makes money early on, I think is a huge opportunity. And by the way, these guys who invent the cool chips, they gotta sell those chips and that compute to somebody. And I think that then (laughs) that'll be your companies (laughs) who will buy that.

   6. HSHarry Stebbings8:49

      What is the number one reason why so few have succeeded in healthcare? As we've, we've seen some amazing entrepreneurs. We've seen some bold visions and ideas. We've seen a lot of cash go in. What's the number one reason, in your mind, why we haven't innovated in such an archaic space?

   7. MSMario Schlosser9:05

      I think it's misunderstanding the market dynamics. You ve- you have very few market segments in US healthcare where you get paid more for delivering higher quality, uh, because that market isn't being created. You know, the employer market that buys insurance, for example, and has to buy digital health services is not necessarily driven by a deep understanding of, "If I buy this product, exactly what will I get and how can I beat the price down?" Like when Wa- when Walmart decides how to stock their shelves, they know exactly what to look for and how to get the best price for the best quality. That is not how... There is no such broker, so to speak, um, metaphorically speaking, in the US healthcare system. And so entrepreneurs don't understand this. They have this simplistic view of, "Oh, I build a faster and cheaper car and people will come and buy it." That's not how it works in US healthcare. And so you get this broken market, and therefore, the wrong approaches. And I, I used to say that there is, if you wanna draw a Venn diagram of companies or startups in healthcare, you've got the circle of startups with good technology, and you've got a different circle of startups that understand how healthcare actually works. And the overlap is very small.

   8. HSHarry Stebbings10:11

      Would you ever invest in a healthcare founder that didn't have deep domain expertise in healthcare? In traditional venture, you say, "Hey, I quite like outsiders to a problem. They bring naivety, which is creativity, and resilience in some ways." Here, given the expertise required, would you ever invest in someone without deep domain expertise?

   9. MSMario Schlosser10:29

      Definitely not somebody who doesn't wanna, who doesn't realize that and who wouldn't wanna bring that in. I think you can have a head of sales or, or somebody who's, you know, a head of, a commercial chief, whatever else, who understands healthcare has the relationships and things like that, and you can make that work. But I've gotten more cynical about this. I will tell you that. I, I think the... Look, there's definitely the possibility that, um, we will all have an LLM-based doctor next year, uh, and that something else will happen that completely changes the way healthcare works. It hasn't happened in the last 15 years and hasn't happened in the last 40 years.

   10. HSHarry Stebbings10:59

       My question to you is, quoting Jensen Huang again. He broke my heart recently because he said, "No, I wouldn't do it all again. H- and knowing all I know now, no." And my question to you is, knowing all you know now about how fractured, stressed the US healthcare system is, would you do something in healthcare again?

   11. MSMario Schlosser11:22

       So if I wind the clock back to 2012 when we started, yes, because at that time the idea of starting an insurance company as a startup wasn't at all on anybody's radar screen. You know, Oscar Moody was the first insurance company startup, and there was no category insure tech, whatever. That didn't exist. Everybody else came after us. And that aspect I love the most.... I loved the fact that people weren't doing it. A- again, I didn't have, had no illusion about the fact that I know anything about healthcare operations, anything like that, but I loved the fact that other smart people were not trying. That's not the case anymore. Healthcare is not that area. There's plenty of people who are smart,

5. 11:59 – 28:57

   Reflections on Going Public

   1. MSMario Schlosser11:59

      technology-orienteds who now have started s- startups in healthcare, but that aspect I, I loved back in the days. And so what I would today go into an area that has that aspect. Like, what is that? Is that agriculture in Kenya? Is that, um, you know, quantum computing in Iceland? Um, is that, uh, I don't know, you know, drugs in space or whatever? Uh, it needs to be something that is just not on people's radar screen.

   2. HSHarry Stebbings12:23

      I have a simple rubric for exciting business. Low competition. I find it hilarious the amount of people who want to go up against the Collisons or Toby at Shopify. Are you kidding me? You wanna... You chose the Collisons as your weak competitor? What a terrible.

   3. MSMario Schlosser12:36

      Yeah.

   4. HSHarry Stebbings12:36

      So low competition, one, legacy infrastructure of existing incumbent-

   5. MSMario Schlosser12:41

      Yeah.

   6. HSHarry Stebbings12:41

      ... that they cannot move off of. And then three is terrible talent brand.

   7. MSMario Schlosser12:46

      Yes.

   8. HSHarry Stebbings12:46

      And I think if you have those three things, I wanna go after that.

   9. MSMario Schlosser12:50

      Ooh, the terrible talent brand is a great... That's a fantastic dimension. Yeah. That's so cool.

   10. HSHarry Stebbings12:54

       Really more... 'Cause, 'cause great engineers do go Shopify-

   11. MSMario Schlosser12:58

       Yeah.

   12. HSHarry Stebbings12:58

       ... Stripe. That's-

   13. MSMario Schlosser12:59

       Yeah.

   14. HSHarry Stebbings12:59

       That's an excite- no great entrepreneurs like, or s- software engineers, like United Health. Yes.

   15. MSMario Schlosser13:06

       I lo- I love that one. That's a fantastic idea. Yeah, it's, and I actually really think it's exactly what happened with Oscar. That's, um, it was very easy to stand out with quirky ads and, you know, a couple of articles, whatever, and Josh doing a little bit of, like, the dance-

   16. HSHarry Stebbings13:19

       (laughs)

   17. MSMario Schlosser13:19

       ... in the sea of unbelievably boring and uninspiring insurance companies. And then you get five great software engineers, and they're gonna build you a cool system, and you go from there.

   18. HSHarry Stebbings13:29

       So, I hope you brought your inhaler because, um, (laughs) uh, some of these questions are gonna get a little bit more direct. Um-

   19. MSMario Schlosser13:36

       Okay, let's do it.

   20. HSHarry Stebbings13:36

       You've had an interesting ri- you've had an interesting ride. I mean, the stock price, it tanked 94%. (laughs) Um-

   21. MSMario Schlosser13:44

       But who's counting?

   22. HSHarry Stebbings13:45

       I mean, but who, but who's counting? I mean, it mu- much, could be worse. It could be 95, right? Um, wh- could you just help me understand, why did it tank so bad? I don't understand.

   23. MSMario Schlosser13:56

       Um, I would say, actually, two things. Okay, the simpler one is, people thought we're running out of money, and that be- gets discounted in the stock price, and then you have this sort of v- vicious circle that spins you down because, um, analysts write reports that say Oscar will be out of money in 2023, 2022, whatever else. You have to discount, sta- you have to start discounting the fact that we have to raise money again. The stock price goes down, oh, and then the dilution would get bigger on that raise you need, and boom, you circle down the, you circle the drain. Um, that's the biggest reason people didn't think we'd get to profitability in time. Very, very simple. The more complicated reason is the following: that people didn't know anymore which business models were real and whether there was any connection between the thing you said you're disrupting and you're doing and the actual way your business model was working. And that, I think, is still very much an issue everywhere in, certainly in digital health, but also in, I don't know, FinTech and in other markets as well. Is it really the case that some FinTech startup bank is attracting members more cheaply than J.P. Morgan is? Maybe the first million members, whatever, because they happen to be in the local town that they were in or whatever, there's like a small segment, but once you scale, is that still the case? Is it really the case that the systems we have built are allowing us to influence the economics of, you know, paying claims faster, paying them more cheaply, stuff like that? That is the other thing people couldn't put their finger on. I think it's related to, you know, would Uber ever make money because, well, they're just subsidizing these rides, and that's the other thing we have to work through.

   24. HSHarry Stebbings15:26

       I would ask you, is that not your fault, s- respectfully, for not illustrating that clearly to the public market, to Wall Street, of how you are able to do those things efficiently, given the team stack that you have?

   25. MSMario Schlosser15:41

       For sure. I mean, a, an efficient market is not efficient if you go down by 95% and then up by 8X, you know? That's not a hallmarks of an efficient market. I mean, the story of Oscar and the data we published, if you go back through time, did not change that dramatically. Um, if it not, it changed dramatically at the EBITDA level for sure, but the underlying figures, you know, the medical loss ratio moved from 86 to 82, whatever, right? That does not seem like an unbelievably massive move. It's a pretty big move in, in healthcare circles, but it wasn't something that was completely out of the question when we were at 86. So clearly, the markets were not understanding or were list- hearing something we were s- I was saying. And here is one learning actually from the public markets about this. Um, and a funny story recently, Mark Bertolini, the CEO no- CEO now, he gave a talk at the J.P. Morgan Healthcare Conference. That's like the Mecca and the Christmas of healthcare investing, you know? It's every first week of January in San Francisco, whatever, um, and everybody gives speeches and gives guidance for the year and all that kind of stuff. And one of our VPs of engineering, who's a very smart guy, came to me the day after and said, "Oh, it was great to hear Mark talk. Like, he makes things sound so simple and, and straightforward." And I said to him, "Just, can you give me some feedback and, so I can learn for next time I do this stuff? What did I not say? What did he say that I didn't say?" And he's like, "Yeah, I think you said all the same things, but he said a bunch of more stuff that was also more complicated." And peop- I think people just didn't want to listen to that anymore. (laughs) And so, and so he thought I was explaining the details he, as an engineer, wanted to hear in a good way. I sort of lay out these dynamics we were seeing, you know? Here's the claim system. We're paying 10% faster. Therefore, next year, it'll be another 10% faster, therefore this will all work in this way. Public markets don't care about that. They, they just don't... They have limited attention spans, at least for companies like, like ours. And so, um, my long story short to you is, yes, we try to show these things. If you look at our analyst reports and all that stuff, we try to always say, "Here are the things we are seeing and how our systems are influencing economics and outcomes." But when you lose $400 million a year-... fuck, what the fuck do I care? That's so much money. How are you gonna like, you know, get out of that by having a nice, red button instead of a blue button? It's to make, say it facetiously here, you just had to get out of that stuff.

   26. HSHarry Stebbings17:58

       I get you totally. Can I ask you (laughs) , is that not where actually a direct CEO brand is so helpful? Because you say on Twitter, literally, "Two analysts saying sell. We do X through Y." Like, I don't think enough actually communicate directly and simply enough. And I, I love you, Mario, but you're a smart dude, and you get lost in the details when you talk about those things.

   27. MSMario Schlosser18:23

       Yeah.

   28. HSHarry Stebbings18:23

       Wall Street is just pretty simple and basic (laughs) in, in a lot of respects.

   29. MSMario Schlosser18:29

       I don't know. I, it's not that easy, by the way, okay? Um, uh, Scott from Capital One, actually, um ... Uh, so let me tell you two stories, okay? I used to work at Bridgewater, big global macro funds, right? I mean, people say smart as hedge funds, uh, you know, the returns are not showing that, that much anymore, but certainly smartest group of people I think I've worked with s- so far. And so at Bridgewater, we always saw that analyst price targets lag stock market changes. So the market moves first, and then analysts move afterwards and, and move prices up and down. You just see this throughout history, okay? There is no, almost no information in analyst price targets. And I say this with the greatest due respect to analysts because... Now here's the second part. Scott Blackley's our CFO. Um, he came from Capital One, and I used to tell him that story. It's like, "Yeah, the analysts don't matter when they downgrade." I'm like, "The analysts don't matter or whatever, 'cause the price has already moved and all that stuff." And he's like, "Yes, buts." And he said at Capital One, the analysts in their models, they build these elaborate models, whatever, actually were always leading the publicly available data on credit defaults. Like the analysts had a very good idea of where default rates would go in credit cards, whatever, which is one of the things driving Capital One's business, of course, right? So Wall Street is in the details. They're not stupids. They are, they have incredibly smart... You are playing a game with some of the smartest, most motivated people in the world if you trade against anybody in Wall Street or if you're a company. Um, it is somehow... You know, we have a handful of analysts as a small company at that time covering us. Those guys don't necessarily have enough attention span, and the big long-only funds don't have enough attention span to, to make this all work. That's the issue.

   30. HSHarry Stebbings20:07

       Can I ask, do you regret going public?
6. 28:57 – 33:31

   Balancing Personal Life & CEO Responsibilities

   1. MSMario Schlosser28:57

      your full history apparently. It, like, deletes it after two years, whatever else 'cause I wanted to show on Twitter how often I looked at the stock price in the last two years, and I look at it when as it goes up. I don't look at it when it goes down anymore, which makes me a bad financial trader for sure. Like I couldn't be that... Um, but, um, but they, it... Going to your kids and just doing nothing with them is a good sort of safety blanket for the soul. It just, it just is. And, and some... Then not making the dis- the, the, the mistake, by the way, of projecting your frustrations with your own life into your kids. I had that quite a bit as, as well. I'm like, "Well, I'm a shitty CEO apparently, and I don't know how to do math 'cause otherwise the stock price would be better." Um, so now I'm mad at my son for being, you know, not, not the, the world's best mathematician either next time. That's a, that's another sort of thing I think, that actually the, kind of the drugs help with that a little bit, um, to not have that-... it's an extrapolation of stuff you think about yourself and too many other situations. But a family life of people who support you and love you is, is an, is an, is a great thing, and I have a great relationship with my, I think my w- certainly my wife and, and kids and my parents also. Um, and just going back to Germany, my childhood home, for example, was one of these places where you really felt like, "You know what? Fuck it. This is the same Donald Duck comics that were back in the days. I lost investors a lot of money, but I can still read that comic book." You know? That was, in a weird way, stabilizing.

   2. HSHarry Stebbings30:25

      I find, and actually, it sounds so, like, you know, hippie, like, but, like, actually being in nature stabilizing because it's, like, the tree that's been there for 200 years will be there for another 100 and it doesn't care about your stock price. (laughs)

   3. MSMario Schlosser30:37

      Yeah.

   4. HSHarry Stebbings30:37

      And it's unimpacted by the rain, the wind, the whatever. And it's like the permanence of life goes on.

   5. MSMario Schlosser30:45

      Yeah. Yeah. It, it does.

   6. HSHarry Stebbings30:47

      That-

   7. MSMario Schlosser30:47

      And by the way, I think, um, you know, Josh, my co-founder, likes to say this, uh, uh, "The world doesn't end that often." And, and you- that is actually one of the things you do realize, and you cannot find this in any... That thing you don't get from reading books, that experience. The more you go through this stuff, it does get easier. It just does. I mean, if you- because simply, you, you sort of- pattern matching, you say, "Well, I did survive this before. That at least gives me the opportunity of surviving it again." Um, you know, you have that- I had a, a guy left Oscar, uh, alumni of Oscar, alum of Oscar I had dinner with a couple of days ago. Um, one of the greatest things when people leave your company and then they start companies themselves, right, and they get bigger even than, than Oscar, I hope certainly, and that guy asked me, "Oh," this three-year-old company, "I have somebody leaving who was with me from the very beginning. What should I do?" I said, "What you should do is not..." Just, like, say, "Fuck yeah. It's great that you're leaving. It's great. I love it. Like, best of luck for you for your next steps." And then mean this from the bottom of your heart. So many people will leave your company. The first time you will freak the fuck out. Like, "What did I do wrong? How can I do... People don't like me anymore or whatever. I'm too stupid to do this." Um, it just is not the case. People have all kinds of other reasons. And more- sometimes also those reasons certainly, but you can't do anything about those reasons, so whatever. Um, just be okay with it. So the repetitions do matter. So it's- that goes to Jensen Huang's thing. If you can at a- at a low-stakes situation survive getting shot at a couple of times, it does get easier then when you go on the battlefield. And by the way, the other thing I would say is, now there are real wars in the world, right? And none of us is fighting any of those real wars. So sometimes the rhetoric in Silicon Valley of like, "Oh my God, life and death," whatever, is also just fucking stupid. Like, none of us is, you know, gonna get shot at in the trenches of Ukraine if, if, if our stock price goes down.

   8. HSHarry Stebbings32:32

      Uh, listen, I agree. Uh, uh, uh, kind of multi-billion dollar founder says to me the other day when I was moaning to him, like, "You're trying to do something very, very hard. It was never meant to be easy. I- if it was easy, a lot, lots more would do it. You are in this position because it is hard."

   9. MSMario Schlosser32:47

      Yeah.

   10. HSHarry Stebbings32:47

       Like, you have to be punched and get back up again.

   11. MSMario Schlosser32:50

       Yeah.

   12. HSHarry Stebbings32:51

       Um, can I ask you a weird one? You just said, "Hey, I feel like a shitty CEO." Do you think you're a shitty CEO now? Now out of the seat?

   13. MSMario Schlosser32:59

       Uh, I mean, I'm certainly bad at some things that I think professional CA- CEOs should be good at. I'm probably bad at delegation. I'm probably bad at, uh, um, you know, uh, operationally managing people. Like, saying, "Hey, I told you to do these three things. Did you do those three things? Next week..." You know? I think I'm forgiving-

   14. HSHarry Stebbings33:15

       Do you think that's what, do you think that's what, do you think that's what CEO-ship is about? Like, CEOs don't do that.

   15. MSMario Schlosser33:19

       That, I don't know.

   16. HSHarry Stebbings33:20

       That's-

   17. MSMario Schlosser33:20

       That, that's a-

   18. HSHarry Stebbings33:20

       That's-

   19. MSMario Schlosser33:20

       ... that's a huge question. I, I don't know that. I think this is some... There's a lot of stock advice VCs give you, um, uh, and books give you, whatever, and I think it is a little

7. 33:31 – 44:55

   What CEO-ship is About?

   1. MSMario Schlosser33:31

      bit like ... I used to wonder from, like, a purely scientific view, how is it that we could get dietary advice so wrong over so many years, right? We do- told people for a while, "You should not eat fats," and then we're like, "Oh, oops, never mind. You should eat fats, but don't eat carbs," or whatever. And then, "Oops, never mind. Like, do another thing," whatever. Well, now it's there're drugs, so now we're all fine anyway. But, um, the only explanation scientifically is not people are stupids or, or, like, cheat on their scientific papers. I think the explanation is, um, it depends. It depends on the person and the metabolism and the genetic makeup, whatever, of the people who take the advice. And I think that very thing is true for CEO-ship as well. Um, I actually remember a conversation with my, with, with an executive coach as well. Um, and I, I'm sure every founder has had the question of, "What would Elon Musk do?" That should be like a bumper sticker, you know? "What would Elon Musk do with my company?" And I so many times thought when they lo- watched another fucking rocket launch, I'm like, "What the fuck am I doing," you know, trying to, trying to, I don't know, configure this database when Elon Musk is just doing all these things all the time. I asked my coach, "Should I try to, like, fire more people," or whatever, like, more executives. "Should I be just like, 'You're not good enough. You get out the door now,'" or whatever? And, um-

   2. HSHarry Stebbings34:40

      (laughs)

   3. MSMario Schlosser34:40

      ... he's like, "Well, it's not what you do. So if you do it, you can't play act. You have to do it all the way and every time and with everybody and in- throughout all of your life. You can't be inconsistent about these kind of, these kind of things." And I thought that simple thing was very good. For better or worse, you are what you are. You might as well stick to the- understand that better and then stick to that and try to design an organization around those things. That introspection is good. But to then say, "Good CEO advice is to have more to-do lists," uh, that is in- that's your genetic makeup and the makeup of your brain, the embedding space that you live in or whatever else. Um, it's not necessarily w- the thing that ever you should be pulling.

   4. HSHarry Stebbings35:21

      I think the secret to unhappiness is comparing yourself to other people. I, I, I often ask, like, you know, "What would Elon do? What would MrBeast do?" In my case, you know-

   5. MSMario Schlosser35:29

      Oh, yeah. Yeah.

   6. HSHarry Stebbings35:29

      ... ... with the content business. Um, but I really don't try and assess myself according to anyone else. Like, you know, Alex Wang at Scale is my age. Jesus Christ.

   7. MSMario Schlosser35:40

      Yeah. (laughs)

   8. HSHarry Stebbings35:40

      This guy has made a $7 billion company, and I do podcasts and funds. Like, I look like a complete chump compared to him.

   9. MSMario Schlosser35:48

      (laughs)

   10. HSHarry Stebbings35:48

       But actually, I'm fine. I'm happy. I'm doing well. In other cases, I'm doing much better.

   11. MSMario Schlosser35:53

       I want to give you one p- uh, one things to share there actually. Uh, l- like, literally when I, when I said I'm gonna be on, on, on Harry's podcast, I got, like, tons of people in the company saying, "Oh my God, you're o- on, on 20 Minutes VC. That's amazing. Fucking love it." And, and some-... the, the lesson here is that no matter what you did, I'm sure in your life, and when we first met in 2017, um, you did not think that that's what, that that's the level you would get to. I- I would imagine you didn't. Um, and-

   12. HSHarry Stebbings36:24

       No.

   13. MSMario Schlosser36:24

       ... um, and, uh, and the bar consistently shifted upwards for you. You would not have ... I mean, back then, so you're comparing, like, yeah, obviously not Elon Musk, you know? That's, like, an obvious comparison. Why would I compare myself to that silly whatever? Just like you wouldn't compare yourself to Messi, right? Like, playing soccer looks easy. Like, there's a guy running past the ball to the fucking guy, right? So you're British, so you've had your share of soccer pain. (laughs)

   14. HSHarry Stebbings36:44

       (laughs)

   15. MSMario Schlosser36:44

       Um, uh, English to be precise, and the bar just shifts up, and I think as long as you understand that part, I, I think it's actually not a bad thing. I mean, the mere honor of being at a point where you can even think the sacrilegious thoughts of, "Well, maybe I could do more than, you know, the next guy," or whatever is a great place to even get to in life, I think, and it's also a good place to not stop there. I mean, that's something I, I think about a lot today as well. That's, um, I admire the people who put their, who have an ability of putting their chips back on the table when they got to a certain place, and, I mean, that's, uh, one of the great things about Elon Musk certainly, right? That he's like, "Screw this. I'm just gonna take my 100 million and buy Russian rockets," and, right?

   16. HSHarry Stebbings37:27

       So I think visions are one of the most dangerous things that people can have, and that sounds very strange. But visions often underestimate your true ability. Well, going back, when I started this, I wanted to be an associate at a fund in London. That was, like, the dream end goal.

   17. MSMario Schlosser37:43

       Yeah.

   18. HSHarry Stebbings37:43

       You know, now we manage over a half a billion dollars, and we have millions of listeners. If I had stuck to the vision, I would have accepted the jobs that were offered to me-

   19. MSMario Schlosser37:53

       Yeah.

   20. HSHarry Stebbings37:53

       ... and just done that. I think visions can limit you. Do you agree or not?

   21. MSMario Schlosser38:00

       Oh, yeah. I think, um, absolutely, yeah, totally. I think, um, what is it, I think, uh, Jeff Bezos saying is, um, "I reserve the right to change my opinion even without new facts." Uh, and, um, that is totally true. I think you just should constantly try to rethink, "What should I do with my life," whatever, and, um, "What should we, what should the company do" and stuff like that. And, and you don't need to tell people all the time about it. (laughs) But, uh, but if you have this one thing you cling to, that's limiting. I agree.

   22. HSHarry Stebbings38:29

       Okay, so if you reserve the right to change your opinion and change the way that one lives, you made a decision to step aside as CEO, take on the CTO role, and then obviously bring in an amazing CEO. Why? And what did that decision-making process look like, Mario?

   23. MSMario Schlosser38:46

       Um, it was a, for me, a couple of different things. Uh, I think, um, I remember watching the 2018 World Cup, which was in Russia, and Germany got kicked out in the, in the first round after winning the World Cup in 2014. And, eh, the coach was Jogi Löw, the same coach who had coached them to be world champion in 2014. And, you know, if people know soccer, then w- you just don't become the world ch- Like, you and I, I don't know about you, but I certainly measure my life in Germany's performance at World Cups. I'm like, "Oh, that's when they last won. That's when they went next whatever," you know? It's like such a markers that you just remember. And, uh, so they win the thing, and then they go back to Russia. The guy stays on, and they just get kicked out in the first round in embarrassing fashion. And I thought it was such a great... And then he didn't leave again still, even after that, and then, of course, they get kicked out of the next tournament as well. And, um, it was such a great example of the guy just lost his, his, like, hat was empty of magic, of rabbits to pull out. He just lost his ability to talk to the team, motivate them, whatever, and I was very concerned about that. I was very concerned about, um, you know, we had the stock price at that... At that time, at the beginning of last year, Mark came in in April, I think, we announced him, or M- March, April, something like that. At that time, it was relatively clear that the company would not need to raise money again. It would be profitable, um, within the foreseeable future. It would have a profitable insurance business in '23 'cause the way insurance companies work is we get all membership at the end of the year before. It's all locked into a price that we can't change, and we do all these things in such a way that we have very good visibility into the, to the annual numbers. I mean, stuff can always happen, um, but it's exactly what ha- what ended up happening. I mean, our '23 numbers were the same if not better than what I thought they would be in January 2023. Okay? So I knew we were essentially out of the woods. That was ve- I had a very, very strong feeling a- about that, and I think the board felt that too and whatever else. Um, we'd quit the right markets. We'd quit the right sort of other deals that didn't work out and whatever, and it was all behind us. I had made those decisions, and we were done. But I was concerned that if we would ever turn down again and if stuff ever happened again, it would be my last crisis. I would not be able to go and do the same stuff that I said before and people would still believe me, and I didn't want to risk that. I think greater leaders and greater CEOs would have risked that for sure, um, and maybe there's a survivorship bias of, uh, of people who then do that and then become great and others that don't and then just pe- fade from obsu- obscurity. But I thought it's a better thing for the company, and it's, I, I think, and probably a better thing for me if I then do the right things with that later on. There's a coda to this to just hand that over, um, and have somebody come in who, if there was a crisis again, would have a different bag of tricks and could do different things with the company. And to me, that was Mark. The other thing though was I had spent two years talking to him. We met him in the IPO process. We asked him to join our boards. He's like, "I'm on enough boards. I don't wanna do that, but I'll talk to you once a week." And so I talked to him once a week for an hour, an hour and a half or so, um, and I got to know him, I thought, really well. And he told his stories about, uh, you know, when he had crises and ver- you know, just really, uh, deep private stuff that, that we shared with each other, um, that I think got to... I, I read, uh, he has a biography. I read the biography. I underlined stuff. I shared the underlined quotes with my chairman of the board and with Josh and were like, "Okay, what kind of guy is he based on the book?" (laughs) So tried to do the research there. Um, I never showed him that. I shoulda shown him that. Uh, and so-... so he was a unique guy to bring, to bring in. There wouldn't have been any other person, I think ... I wouldn't have wanted to run a CEO search, whatever. I wouldn't have wanted, like, tried to look for other people. It's a unique moment in time.

   24. HSHarry Stebbings42:21

       Did you feel like you were out of tricks? You mentioned, kind of, the German manager pulling tricks out of the hat.

   25. MSMario Schlosser42:26

       Yeah.

   26. HSHarry Stebbings42:26

       Did you feel like your hat was out of tricks?

   27. MSMario Schlosser42:29

       I thought I was out of tricks, certainly against the next crisis, and I thought I was, um ... I thought that ... I mean, Oscar needs a bunch of more tricks, that's for sure. I think we, there's a huge opportunity for us to, uh, you know, shift more towards software as a service, um, towards this, some of the stuff that's happening in the US healthcare market around individualization of care. Those are big opportunities. Um, I didn't think necessarily my bag of tricks was the way to unlock, go and unlock these, um, in the CEO seats.

   28. HSHarry Stebbings42:58

       I think a really unfair thing that happens with the idolization of Elon Musk, Jeff Bezos, Mark Zuckerberg, is this idea that founders should be the CEO forever, and it's like as you said, it needs a different bag of tricks, and you need to find product market fit in each stage as a CEO and as a founder. And I think so few actually do, respectfully.

   29. MSMario Schlosser43:18

       Yeah. Yeah.

   30. HSHarry Stebbings43:19

       And there's nothing wrong with that. That's (overlapping)
8. 44:55 – 47:14

   Building Organizations Based on Personal Preferences

   1. MSMario Schlosser44:55

      even management tooling in the company, like, who meets at what point in time, what data do we look at, whatever. Where I, I've always had ... I've always thought about that in a certain way. I, I could never quite get there, but there's this, like, a system in my mind. I would like to see that system be the thing. Um, but Mark is now doing a different way. Uh, that one I don't like giving away. I don't like it if ... I mean, look, it is difficult not to be the person with the top authority anymore. It just is. I mean, anybody who doesn't tell you that is an fucking idiot, you know? Like, if, if you are the guy who can tell everybody what to do and they all have always respect for it, that's a sweet gig. Um, if you don't have that anymore, you feel like a chump. You know, you have dreams at night of, like, not getting, literally not getting invited to the party anymore. Like, that's how it translates almost (laughs) , you know? Um, that part is more difficult. The part that's easier is things along the lines of you gotta deliver a tough message to a person. You gotta tell this person to shut up and do this now. Um, that was, is always more difficult for me. And so one of the reputations Mark had was to be more of a hard ass, and I, I, I always thought the company needs more of a hard ass. And Mark is not, I would say, showing up that way as much in, in, at the moments of just, like, a guy who's like, vroom, you know? And he's probably also mature, mellow, and whatever, but he's got that more than I have it.

   2. HSHarry Stebbings46:14

      One of my biggest weaknesses is I shy away from hard conversations 'cause I hate discomfort and I care about being liked. Are you the same, and what do you do? 'Cause that's not how ... It's a really bad skit- trait, I, I think.

   3. MSMario Schlosser46:27

      I don't know anybody who's good at that. That, that's one of these other things. Like, when you ... This is why I'm glad you're doing these kind of podcasts, um. If you think that the people who are famous in this world somehow are good at these things, it's a complete nonsensical thing. In fact, one of the ... I think they're good at avoid- they're better at avoiding these conversations than we are. You and I are good at maybe avoiding conversion because we don't like- wanna have it. They are good at manipulating you in such a way that you didn't realize they avoided the conversation, (laughs) you know? So, um, that is a whole different skill, and so, um, uh, I, I think that's just n- n- not ... There are very few people who are sch- uh, schizophrenic or, um, you know, psychologically, uh, hampered enough that they don't feel difficulty

9. 47:14 – 48:40

   Having Hard Conversations

   1. MSMario Schlosser47:14

      telling you something you don't wanna hear. In fact, to the point where you need to get, you need to get it out of people. Uh, this is something I always disliked. That's, um, when I talk to my board, for example, or even to Josh, I'm like, "You don't be polite to me. Like, it's just not helpful. Don't tell me, 'Oh, this was a really nice thing you did, Mario.'" I'm like, "Okay, but then why are you not happy?" You know? And like, um, clearly you are unhappy about the other three things I did that were not good, um, and that's a hard thing to do.

   2. HSHarry Stebbings47:41

      I, I get you've, you've-

   3. MSMario Schlosser47:43

      Yeah.

   4. HSHarry Stebbings47:43

      ... you've gotta be willing to accept that. And I mean, I had a time probably about a year ago, two years ago, where literally just another bit of bad news just broke me even more.

   5. MSMario Schlosser47:54

      Mm-hmm.

   6. HSHarry Stebbings47:54

      And I just didn't feel like I could take another hit in the face.

   7. MSMario Schlosser47:58

      Yeah.

   8. HSHarry Stebbings47:58

      And so when Mario said to Harry, "Do you really want the hard feedback?" My heart screamed no.

   9. MSMario Schlosser48:04

      Yeah.

   10. HSHarry Stebbings48:04

       Because I just could not take another hit. Did you ever have that?

   11. MSMario Schlosser48:08

       Yeah. Oh, oh, my God. I used to have this issue of when there's an email and I know it's bad, most likely, or there's an Excel table I know it's bad.... you don't want to open it, and I just-

   12. HSHarry Stebbings48:21

       No.

   13. MSMario Schlosser48:21

       ... find ways not to open it. By the way, a good trick is to open it in the presence of other people. It's a great... That's, like, how I got over it eventually. And like, if, um... Uh, so we used to have this thing, it's actually an Oscar thing. We used to have this thing where, um, uh, it's... I don't want to go too much into the weeds, but the gov- the federal government redistributes revenue of insurance companies in the

10. 48:40 – 53:08

    Dealing with Bad News

    1. MSMario Schlosser48:40

       market we are in depending on the risk of the membership base you've attracted. So if Oscar has a younger membership base than another insurer in the same states, we have to send money to the other insurance company because, you know, members of Oscar went to the doctor less. And this is called risk adjustments. It's an incredibly clever way to actually get insurance companies neutral in who they wanna br- who they wanna sign up as members. You wanna get every member, then manage the member well. It's actually a very well working system now. It didn't work so well early on, now it works well. The way it works is that in late March, we get the first report from the federal governments as to where our risk score lands, and it moves the numbers by a staggering amount. Like, it used to move the Oscar numbers by, like, you know, um, on a, I don't know, half... On a billion revenues, this thing would move it by like 100 million up and down. It's insane. Like, it's completely crazy. And big private companies have failed in sometimes estimating that thing well. We now know how to do this. We now know how to have a really good system that lands within, like, $10,000 or whatever, you know, off, off the estimate because we get so much throughout the year or whatever. But that was one of these things where I could not bear to be the, open the email or whatever, or hear the phone call or whatever, and we would then go and sit down, it usually comes on a Friday nights, and we'd have whiskey out with the actuaries. And we would sit there and wait for this thing to come. That is the way to deal with bad news, to just deal with it with other people for whom it is equally bad, but at least you share the badness in some way. So yes, I had this too. It's totally normal, um, I think there may be some, um, schizophrenic hedge fund managers who don't have it, uh, but I'm glad you have it because it makes you a real human and, and that's a great thing. Maybe, maybe you and I will not build fusion power or fly to Mars. That's... I, I think I'm o- I've accepted that limits to my abilities. It's okay. (laughs) But if you didn't have that, I think you would do many other things you would not be able to do.

    2. HSHarry Stebbings50:36

       I did not know about this mechanic in readjustments. I, I do want to go, like, a little bit below you and your leadership though. You mentioned kind of the bag of tricks earlier for the team and being able to lead them. You said to me before, "You might as well build organizations the way you like it, not the way that a book or advisor tells you." I just want to throw that one out there and be like, what did you mean by that? Where does that come from? Can you just explain that?

    3. MSMario Schlosser51:03

       There's a stage every founder goes through where the board tells them, "Now you have to bring in professional people." Uh, and then you go and hire a cons- like, a recruiting firm and you find the first CFO and COO and whatever else. And, and, um, you know, I wouldn't miss any of the people we had in those roles. They were all... They're still great friends, every single one of them, and so we have great relationships. Uh, but what then happens inevitably is that those people will bring in management systems that have worked for them, and they will tell... They, they will make you, as the founder and CEO, feel that it's time to grow up dudes. You know, like, "Just don't be in every meeting and, and not... And whatever. Like, let us handle this one and let's... And you do that," and so on. And that is, is, uh, that can be a good thing. I mean, you should certainly always learn from other, other people as to how they do things. For example, I am so surprised, like, podcasts for example, don't ask more the very simple question of, "What is your weekly meeting? Like, how do you meet with your management team?" I remember asking, um, the, the COO of Ai- Airbnb that and, and, and she was telling me, uh, "Oh, we change it all the time," which was very relieving to hear because they had also gone through the same different iterations of mana- weekly management meeting compositions in the same way we have, and I always thought there must be some kind of way to do it and you eventually get there. No, there isn't, so it's different stuff works for different periods and different people and all that kind of stuff. And so, listen and ask people what they're doing, that's great. Don't just do what the professional managers will tell you to do, for sure. And, and so, uh, for example, um, I've always thought there is no way around spending hours and hours and hours in a room to just go through all priorities of your company with, with people in detail, uh, once a month or whatever else, or once a qu- or maybe once a quarter or whatever else. And, and we just never really did that, uh, because people are always like, "Oh, that doesn't seem necessary," or, "That's..." and whatever. And I think that is one thing where I today know that suited my style. It's, it, it gets m- I like the ideas I get when I do that so I can make more connections, um, I do think I have an ability of, of keeping more pieces of information in my mind at the same time than, than most others, uh, and, um, so design around that as opposed to just sort of

11. 53:08 – 54:43

    Pitfalls of Professionalizing Management

    1. MSMario Schlosser53:08

       reading the book, you know?

    2. HSHarry Stebbings53:09

       What are the biggest things to break in company scaling? Like, I, I, I fundamentally don't believe that you can have... How many people are at Oscar now, employee-wise?

    3. MSMario Schlosser53:17

       We've got 3,000.

    4. HSHarry Stebbings53:19

       Okay, 3,000. We're always like, "Oh, hire A+ talent." There, there's not 3,000 A+ talent. A+ by definition is top 1% in my mind.

    5. MSMario Schlosser53:27

       Mm-hmm.

    6. HSHarry Stebbings53:27

       It, it's just, it's too hard.

    7. MSMario Schlosser53:29

       Yeah.

    8. HSHarry Stebbings53:30

       And that for me is where it breaks. You see degradation of quality.

    9. MSMario Schlosser53:34

       Yeah.

    10. HSHarry Stebbings53:34

        Where do you think companies break, and do you agree with my assessment there?

    11. MSMario Schlosser53:37

        One thing I certainly observed is, um, if you try to professionalize management at the top level, e- everyone below you will try to do the same thing, and that's how you end up with nine layers, you know? Or nine is nice, like, 20 layers. Uh, so if you tell... If you as the CEO say, "Look, I have a great idea, I wanna have a meeting now, we meet and go through these things, and that's where we're gonna get our ideas," and, um, "I wanna delegate more," and whatever, your people are gonna do the same thing, and the people that they- that report to them will do the same thing. That's how you end up with lots of meetings, lots of spans of control, and fewer people doing the actual work. Um, I, I think that's the biggest thing. The other thing I would say is, and this is actually a problem I have, if things remain unspoken about how stuff should run-... eh, a useful thing is we had the story at Oscar actually, where I think this was 2014, 2015, so around, like, two years or so, we didn't have values written down. At that time, it was actually a little bit more rare that companies had values. Now it's a very common thing, right? You know, right, an episode with our stuff. And I also... You're making a very funny face. A funny face might mean, you know, it's like if you have to say, "I'm an ethical company," you're probably not an ethical company, that whole thing, you know.

12. 54:43 – 1:01:23

    Importance of Expectations & Behaviors

    1. MSMario Schlosser54:43

       (laughs) But, um-

    2. HSHarry Stebbings54:43

       No, no.

    3. MSMario Schlosser54:44

       ... I think-

    4. HSHarry Stebbings54:44

       It's like company va- company values, you should... I'm sorry. I'm, I'm gonna jump in here. You should be for or against them. You know, we... Fairness and honesty, if you're not in for these, then obviously you're an immoral person, respectively. What are you in for unfairness and immorality? Like, I, my values are, this will be the place where you work harder than you will ever work in your life.

    5. MSMario Schlosser55:07

       Yeah, yeah.

    6. HSHarry Stebbings55:07

       You will also make more money here than anywhere else, and that's cool to be about money. That's fine.

    7. MSMario Schlosser55:13

       Yeah.

    8. HSHarry Stebbings55:13

       We are very hard.

    9. MSMario Schlosser55:14

       Yeah.

    10. HSHarry Stebbings55:14

        Don't have feelings in this business-

    11. MSMario Schlosser55:16

        Mm-hmm.

    12. HSHarry Stebbings55:17

        ... because you'll get roasted.

    13. MSMario Schlosser55:18

        Yeah.

    14. HSHarry Stebbings55:18

        Like, people can be for or against those. They're values, in my mind.

    15. MSMario Schlosser55:23

        Okay, so, but there are certain things I think that you h- if you go one level down from these, you expect certain behaviors that flow for you from these values very obviously. Like, the make money thing, for example, means that you don't have to share all of your inf- I don't know, maybe, like, it's okay to be competitive and, like, steal a deal from the other guy or whatever. I, I don't know, you know. Like, that might be too far. Um, but there are certain things you implicitly expect as behaviors, and other people might not understand this. And so that is a, a problem I think we had. People, um, don't know when, when I wanna brainstorm. They don't know when I wanna g- I don't know, get work done or whatever else, and that you have to codify for people. Otherwise, you get lot... That's the other thing 3,000-person companies don't do, um, they don't know, why are you in this meeting with me? Are you in the meeting with me because you don't trust me, or are you in the meeting with me because, yeah, you do trust me, and I think my work's getting done well, but you wanna brainstorm, you wanna have ideas, you wanna be in the juices, you know? Um, that stuff you have to explain to people, and companies don't do that enough.

    16. HSHarry Stebbings56:21

        I don't even think that's values. I think that's a personal preference.

    17. MSMario Schlosser56:25

        Could be, but, uh, yeah, but they have to ideally align with these values.

    18. HSHarry Stebbings56:27

        That's the, that's the desire for creativity, for innovation, for collaborative thinking. That's the way that you like to do it, which is great, and that's fantastic, but it's not like a company-wide value.

    19. MSMario Schlosser56:38

        I th- to me, that's a value. I, I f- I f- that stuff is, to me, a v- So here's a, I tell you the story real quick. In 2014, '15, we said we should write down our values. What we did is we gave the whole company an afternoon off, about 100 people at the time. "Let's do a values bazaar." People were able to write values that they felt Oscar should have on a screen, and they were holding them up, and then people would congregate and gather, and we would pick values that way. And then I got all the... And I was in there as well. Got the data back, and they were the most boring fucking values ever. They were, like, excellence and integrity and, like, all totally vanilla, because you took an average of extremes, and that is just gonna be somewhere in the boring middle. You just need to lean into something as a company. You need to say, "We are a company that is, like, eh, they're gonna generate ideas, and we're gonna do it unabashedly." That mean we will do all these things, but it me- means I wanna understand what else is in your minds. And it's not every company that way, so.

    20. HSHarry Stebbings57:32

        No, I agree, and I totally agree with you in terms of taking the average, and actually, the, the binaries of those is probably where you should be or where most telling signs are. Uh, w- we mentioned money there. Uh, I do find it an interesting and, and, uh, telling point actually, which I think we demonize unfairly.

    21. MSMario Schlosser57:48

        Yeah.

    22. HSHarry Stebbings57:48

        How do you reflect on your own relationship to money, Mario? Going public, making money, um, you're a public company CEO for a long time.

    23. MSMario Schlosser57:57

        Yeah.

    24. HSHarry Stebbings57:57

        You're now a public company founder. How do you think about your own relationship to money?

    25. MSMario Schlosser58:00

        My observation from being in the, in, in, like, navigating the woods of Silicon Valley, um, as well, I have a, and this might be a bit of a European thing, um, have a fairly strong feeling that others should judge my value and my worth. That's, um... And I actually sort of... I, and, and I trust the system to some degree. So I say, shouldn't be on me to decide, you know, what equity I get or what's, uh, you know, how much money I have or all that kinda stuff. If, if some- there is enough systems in place that allocate value based on whether I did something that was useful for society at large or not. I certainly, by the way, think money is the best way we have to measure societal impacts. Like, it's not perfect by any means, um, but, um, I, I, and I don't like it necessarily, um, but I absolutely think that, uh, it is, it's not that the wrong, it's always the wrong people who are rich or whatever else. That, that stuff, that's stupid as well. Like, it's a good metric to sort of assess this.

    26. HSHarry Stebbings58:57

        How can, how can you say about trusting systems to align values efficiently when healthcare is the most inefficient alignment of values?

    27. MSMario Schlosser59:08

        Yeah.

    28. HSHarry Stebbings59:08

        Does not at all support that at all.

    29. MSMario Schlosser59:10

        Sure, it might not be true, but certainly in the world I live in, I think, you know, the venture investing, whatever, that, like, purely for myself, I, I did not try to somehow m- go to the board or whatever and say, "I need more. I need this and need that," and whatever else. And, and so, and that actually is not, that's not a good, uh, piece of advice. I, I consistently think that, um, uh, and, you know, I, look, I'm, I'm a white male, so probably it's easier for me comparatively to get paid the right amount than, than other people who prob- I, I actually do believe these inequities are in the system, and we gotta do something about the fact that, you know, women have few opportunities, and, and people of color and everything else. And, you know, we try to really pay attention to that unabashedly, and none of the Ackman bullshit or whatever change their mind anyway on that. Um, but, um, but, uh, I do think that I've seen the people who make the real amounts of money, the people who become the moguls, they have an incredibly strong sense of what they are owed by society and by the system or by other people that I don't have, and I think it's almost a brain defect. If you become a billionaire, you don't just become it randomly. You have an unbelievable n- uh, desi- like, your brain tells you, "I am owed this. I will get it from you. I will demand it from you." And I don't do this in, as much, I think. I mean, do a little bit probably, um, but, um-And that is actually not a good thing. If you wanna be, uh, one of the absolute top people, you have to have that as well, uh, and some- a certain amount of self-delusion about it as well. It's obviously, like, IQ is in- in... Like, this is always the favorite- famous thing in- in- in AI now, right? Like, there's a fairly... IQ is a- a normal distribution and not a- they're not a, um, power-law distribution. Um, so by definition, we know that, you know, the- whatever top, uh, IQ there is, like, you know, there's one percent of them. It's not that there's, like, three people of them, whatever, um, so they're not as extreme of a distribution, and yet the outcomes that they lead to are extreme. Like, it's- it's their power law, the- the distribution of wealth and influence in the world is a power law. Um, and so when normal distributions somehow work their way through the system into power-law outcomes, then that means- that has to mean that there's- that the mechanism is not perfect for going from one to the other. There's some weird nonlinearities that are random in

13. 1:01:23 – 1:08:15

    Relationship with Money

    1. MSMario Schlosser1:01:23

       that- in that thing.

    2. HSHarry Stebbings1:01:23

       When did you first become a millionaire?

    3. MSMario Schlosser1:01:25

       (laughs) I mean, it's- question is paper versus- versus not. We had a- we had a, um, on paper, I think it was when- the 2015 fundraising round, thereabouts. We did a-

    4. HSHarry Stebbings1:01:34

       Let's say cash. Pa- pa- paper is one thing, but cash is another. Like, looking at the bank and seeing that...

    5. MSMario Schlosser1:01:40

       We did a secondary round, I think, in- in that 2015 fundraising round, I might say, and so we tried to, at that time we took everybody above a certain tenure and- and level at that time. They were all able to sell just about the same amounts, and we thought that that was important because otherwise you'd have that sort of inequity of, like, why did the, you know, why can the founder sell something, whatever...

    6. HSHarry Stebbings1:01:59

       How did you feel? You know, people always say, "Oh, money doesn't make you happy, money..." 2015, you do actually have a million in cash. How did you feel?

    7. MSMario Schlosser1:02:08

       I, at that time it wasn't a million yet, by the way. It was- but it was approaching that level, I think, um, so then- but, yeah, it was close enough, so like 900,000, something like that. I have a screenshot of the bank account still, of my checking accounts, and that I was in, which clearly made- shows you- made me feel great. Uh, I think, um, it- it- it makes- it really gives you a feeling of- for sure of accomplishments, there's no question about it, so you're very relieved that that is the case. There's relief as well that if shit goes to hell now, not everything will be taken from you, um, but the third thing is you have an instant feeling of, holy shit, now it's on. And- and the- the- the level of fall just goes up, like, you're like, okay, now if you fuck it up, it's really painful. Now I have- the excuses go away, and I do adm- I- I admire people who have an ability of going through that and then pushing the chips- I said it before- pushing the chips back- chips are back on the table. This is one reason why I think, um, you know, mathematicians do their best work before the age of 25 or whatever, right? Nobel Prize laureates tend to be, I don't know, like, 35 or something like that, and not like 70- I mean, they're 75 when they get the thing, but they're 35 and do the work because you just don't wanna venture out of the woods anymore. You know how... You, in some sense, I know how improbable the journey of Oscar was because I was there for the whole thing, and I was- I was there for all the times when it almost blew up and fell apart, and it is that sense of improbability that I will now forever project into everything else I will do from here on out. And that's a terrible thing because you start measuring against an improbability as opposed to against the naivete you had- I had in 2012, was like, "I'm smart, I can fucking figure this out, no problem at all." And that, I- if there's one thing I wanna do in my life, I mean, there's many things, I would try to get over that- that sense of improbability again and say, "You know what? If I do something again, I try to build a, you know, a computer based on ant hills," just take a completely random example, um, "then I wanna go and do it, and if it doesn't work out, the ants eat me, that is a completely fine outcome." You know? And it is the case that with that money you can do more of that, for sure.

    8. HSHarry Stebbings1:04:14

       What thing that money buys or brings do you most value?

    9. MSMario Schlosser1:04:17

       I think it is that sense, um, that I do not have to go do what others tell me to do. (clears throat) I could go- I- I love, absolutely love, and it is unbelievably ineffective, to just do something that I find intellectually somewhat interesting. Like, I learned Mandarin in the last two years, for example, for no reason whatsoever. Now I'm trying to learn how to read Arabic. Um, I think there might be something coming out of it at some point. I built this game this week- this weekend, I'm hoping to publish it next week or so. It takes, like, words and puts them into some kind of riddle thing. Also, it's hard to explain, um, but, like, I just programmed this myself and it's very ineffective, I should hire somebody to do it, whatever, um, uh, but I love doing those things and I like the idea of being able to do more of those things, and I also think those things have sometimes randomly gotten me somewhere, and you have to put yourself into these, like, maelstroms of randomness.

    10. HSHarry Stebbings1:05:07

        Final one before we do a quick fire, but you go to many events with the biggest CEOs, execs in the world now, you sit at all the tables with the most powerful people. I luckily now sit at them too, and a little bit of me is like, huh, you've got- you've got that house and you've got that thing, and I always laughed at people who are like, "Ah, bigger boat." Do you ever have the bigger boat dilemma?

    11. MSMario Schlosser1:05:31

        For me, it's the- it's not the boat at all. I- I- I, like, for example, um, I- you know, when- when we fly with the kids or whatever, we- even when I fly somewhere myself I probably still do economy or something like that when plenty of people fly- fly with planes nowadays, um, and it's very nice, like, putting my backpack on and a pillow or whatever. I just li- like- it reminds me of when I still thought everything was possible, and- and so- and this whole discounting improbabilities in- in some sense. And look, I mean, I- again, this is not a big hard trip, right, to fly from- to- to the- to the West Coast on economy. It's not like that somehow in the trenches of Ukraine, let's be very clear again here as well. But the thing I- I really, um, am very, uh, the- the thing where there's- where I feel exactly the way you just said is in the influence sides. And this is some- I forgot who said this to me as well, probably, I don't know, Charlie Munger or whatever, but there's always a- there's always a room you're not in. And I'm sure that's still the case even for Zuckerberg. Like, if Zuckerberg is to get invited to-... I didn't go to the royal wedding, whatever. I was just like, "Damn it. I wish I was at the royal wedding." Um, and so there was just always a thing that you don't get invited to when you're... Somebody who doesn't call you back. And, and by the way, I learned plenty of those things. And that attention economy, once you get to the level of, I don't know, Silicon Valley, whatever, where that, where money is less of the issue, that is much more important, I think. Um, way more important than, than, than money. Everybody can sort of get, try to, you know, get some NBA tickets or something like that. Um, I couldn't care less who's at the Super Bowl or something like that. I just really don't give a shit. Or like a Taylor Swift concert, who gives a shit? Like, I really don't care. Um, it's the influence. I, I, that, are you, is, are you getting a phone call when people want to know something about AI and language models? And by the way, not just from the big guys, but from the, even former engineers in the company or whatever else. That actually does, that, I love it when somebody, like, calls me about, "Oh, this, I have this, I saw this model. Do you think it's a useful model?" Or whatever. I like that way more. Um, and so, and, and I actually do think that that is a relatively efficient market as well. Smart people, you know... I used to think, "Why do actors hang out with actors? That's so stupid. That's, like, a sign of, you know, they're stupid," or whatever. It's not the case. Like, I actually think, um, actors and writers, whatever, they, they are incredibly creative people. They operate at this level of performance that few others can get to, and they just don't want to be bored in conversations. And so not be- having, being boring in conversations is maybe the, one of the biggest goods you can have, which is a great way maybe to... I hope this was not boring (laughs) as we talked. So...

Episode duration: 1:16:41