Nikesh Arora: Lessons from $102BN Market Cap & How to Create & Sustain Competitive Advantage | E1155

1. 0:00 – 0:45

   Intro

   1. NANikesh Arora0:00

      When you find a market where nobody wants to build a product, you're either a genius or totally stupid. Competitive advantage lasts for about two to three year in any enterprise software business. Our view on acquisitions is we buy innovation, we buy product, we buy it early. 'Cause if you buy later, you're paying multiples for revenue, which I don't believe in. I mean, if you look at Masa, he's one of the geniuses of our times, where he's one of the very few people in the world, his risk appetite hasn't changed as he ages.

   2. HSHarry Stebbings0:24

      Ready to go? (upbeat music) Nikesh, I am so excited for this. I've wanted to do this one for a long time. Thank you so much for joining me today.

   3. NANikesh Arora0:44

      Well, thank you for having me.

2. 0:45 – 6:20

   The Early Shaping of an Entrepreneur

   1. NANikesh Arora0:45

   2. HSHarry Stebbings0:45

      Not at all. But I always believe that great entrepreneurs are, are actually shaped pretty early in their childhoods. When you go back to your childhood, Nikesh, how would your parents have described you? How would your teachers have described a young Nikesh?

   3. NANikesh Arora0:57

      That's a good question. You know, um, my mother's visiting, and if you ask her, she'll tell you, uh...

   4. HSHarry Stebbings1:04

      (laughs) She wasn't available for comment, sadly. (laughs)

   5. NANikesh Arora1:07

      (laughs) Uh, she would say I always got my stuff done, never gave any trouble. Uh, wasn't one for rules, but not in a sort of a disruptive way. I just didn't like to follow too many rules, so I kinda did what made sense to me. And, uh, I got my stuff done on time. I was kind of pretty boring when I was a young kid.

   6. HSHarry Stebbings1:29

      Did you know that you were gonna be successful? Some entrepreneurs have an innate feeling that they would be. Did you have that?

   7. NANikesh Arora1:35

      You know, if you talk to my wife, she'll tell you that the one thing I don't seem to lack is self-confidence. So I'm not sure when she's being, you know, funny about it or when she's being sort of, you know, supportive about it. But, you know, I put my heart and soul into whatever I do, and I tell people that if there is an element of doubt in your head that you're not gonna get something done, you're just increasing the probability of it not getting done. So you have to attack or address everything with some degree of conviction. And, uh, that kind of goes with life, right? You know, I take on everything with a degree of conviction. Otherwise, you know, why would I take a job like Palo Alto six years ago, right? You know, why would I set myself in a situation where I did not have any conviction that I was gonna do well? Now, you have this conviction, you walk in, and you give it your heart and soul every day.

   8. HSHarry Stebbings2:21

      Where was your conviction most misplaced when you review your career? Or where did you put it, and it was wrongly placed?

   9. NANikesh Arora2:28

      I don't know if, if conviction is wrongly placed. I think conviction generally, you know, in hindsight you can always analyze stuff and say, "Oh my God, you know, he shouldn't have had that conviction." I think you always, uh, take on stuff, A, with conviction, two, with the belief that everybody else is gonna do their part, so to make sure that entire thing is gonna work. Uh, it's usually conviction starts to not result in outcomes that you want when a lot of different people get involved and you have to rely on other people for part of your outcomes that need to happen. And then the question is can you rally those people in your direction? And I think, to be fair, situations where I wasn't able to achieve the outcome that I set out to was usually when perhaps I wasn't able to bring everybody along or perhaps I wasn't able to convince other people who had a stake in the outcome that this was the right direction, this was the right thing to do. So there's learning in that for me, and I had to possibly work harder on getting buy-in or I had to work hard in understanding their perspective. So I think those, those are situations if I look back and say, you know, "Oh my God, had I gotten those people along, I'd have gotten to a better outcome," or perhaps replace those people depending on, you know, what the right, uh, strategy should have been.

   10. HSHarry Stebbings3:37

       Is the way that you get people convinced, has that changed over time?

   11. NANikesh Arora3:41

       Yeah, look, I think we all, when we get our first management job in life and, uh, you know, it's kind of like I tell people, uh, say, when they ask me, you know, "What is your advice?" I say, "Look, we all get to where we get to, to a certain point in life by being individually excellent." You know, whether it's coming first in class or second in class or top of your class, you're really good, and doesn't matter what other people do, what other people think. You prove that you're smarter than people around you, and usually that's why you get your job. And typically when you get your first job, you're given an individual task. Whether you're coding or you're doing something else, you're actually given a task. Then you say, "Great, I know what the rules are, I know what it takes to win." When you get your first management job and you sit down and say, "Wait a minute, this is a different job," now your task is not to do a great job yourself. Your task is to get the same level of quality from three people who are gonna work for you. That's where I think our first challenge comes in as individuals as we transition from individual to manager is, like, how do I get three people to deliver the greatest outcome that they can deliver? And perhaps that outcome's gonna be different from me.

   12. HSHarry Stebbings4:42

       I think it's one of the saddest things though, in the way that we expect everyone to make that transition from IC to manager, and actually there's nothing wrong with being a lifelong IC and being incredible at what you do. This expectation that everyone should scale I think is a s- a flaw.

   13. NANikesh Arora4:57

       Oh, I totally... Look, you know, by the way, organizations have, have understood that, and you realize that many of these smarter organizations have IC, or individual contributor, ladders where you can actually be very successful as an individual contributor. But, you know, part of it is that, uh, scale requires us to mobilize a lot of people towards a great outcome. That scaling of that requires not just sort of leading from the front and getting people convinced that this is the right thing to do. It's also to inspire them to do their best work, because if you can get 10,000 people to mo- motivate in the right direction, you can achieve a lot bigger sets of things. So I think that's why... I don't think we... uh, it's sad. I think it's just, it's just the scale of the outcome or result that you want that requires mobilizing a lot of people.

   14. HSHarry Stebbings5:43

       Speaking of that scale and mobilizing a lot of people, you know, you spent a long time at Google in the very formative period of their hypergrowth profile. Uh, what are one or two of your biggest takeaways having seen that up front, having lived it so viscerally?

   15. NANikesh Arora5:56

       Yeah, one thing which, which I learned at Google, which has stuck with me and I've tried to implement at Palo Alto is that in the end, tech companies live and die by their products.And very often, if you look at the graveyard of tech companies, you realize it's when products started to lose their shine and their luster, somebody else came up with something better, something that's faster, something that worked a lot better, met the customer needs. That's when companies, the other company starts to decay and go

3. 6:20 – 13:13

   Competition & The Role of Distribution

   1. NANikesh Arora6:20

      away.

   2. HSHarry Stebbings6:20

      Do you think that's still the case today, given the infinite supply of products? I think that was true a decade ago, but when discovery becomes the paramount problem today, is it not distribution that separates the winners?

   3. NANikesh Arora6:33

      It's always been a yo-yo between content and distribution. Uh, whether you take newspapers... You know, remember those days when people would talk about they used to go on a bicycle and go throw newspapers at people's doors?

   4. HSHarry Stebbings6:46

      (laughs)

   5. NANikesh Arora6:46

      That was distribution. It didn't matter who was your editor, it mattered which kid was throwing which newspaper at your door. Because if you couldn't find the kid for the new newspaper that you and I decide to publish, it doesn't matter. At that point in time, distribution was king, and editors were okay. Today, if you look at the internet, we can all write on the internet. Distribution is no longer a limiting factor. Today brand and content becomes important, right? Suddenly, like, the influencers who have hundreds of millions of people look at Harry with his podcast. So many people wanna watch it. His brand is important. Distribution is not your problem. You don't have to worry about saying, "How do I hook up bandwidth to my house, and how do I make sure that everybody in the world who wants to see this can see this?"

   6. HSHarry Stebbings7:25

      I don't know. If you apply that to AI, and you think about a lot of the unbundled, vertically specific AI applications in the application layer, actually I think they will lose despite being better products because Microsoft has distribution. They will tack on the product which is the same, maybe 5, 10% worse, and win because they have distribution.

   7. NANikesh Arora7:45

      Well, depends. Are you talking about consumer application or enterprise? I think in enterprise, there's definitely brute force and distribution does matter. I think on the consumer front, you know, it's the App Store. Like, you know, why are certain things more successful than the others? I think you can tell me more than I can tell you. But, you know, why is TikTok more successful? Why did MySpace never take off? You know, why did Snapchat take off in a certain direction? And so it's kind of like it... Distribution is available to everyone. The question is, how do you create virality? How do you get the momentum from a distribution perspective, turn that into a bigger thing than everything else in your category? I think there's... Well, I don't know what the nu- current number is. I'm sure there's tens of millions of apps out there on the App Store. There'll be tens of millions of AI apps. In the consumer space, everybody's gonna be fighting for mindshare.

   8. HSHarry Stebbings8:29

      Listen, it's the end of the day. I'm freewheeling here. You mentioned TikTok there, why they win. I- in large part that people don't like to admit this, they win because they had the weapon of cash in an infinite supply that they leveraged incredibly well. Forgetting TikTok, you may agree or disagree and you can argue that, by all means.

   9. NANikesh Arora8:45

      (laughs)

   10. HSHarry Stebbings8:45

       Uh, more than welcome for that one. Uh, but, like, to what extent is cash a weapon in company building?

   11. NANikesh Arora8:51

       My old boss, Eric Schmidt, used to say, you know, "Cash doesn't solve all problems for mankind, but does take care of a lot of them." So, yes, you know, having a lot of cash on a balance sheet is not a bad thing. Uh, you know, there's pros and cons. You know, it's just like, you know, if people have too much money, they, they get spoiled. If companies have too much money, they get spoiled and they're not judicious and sometimes say, "You know what? Scarcity brings the best outcomes because you're very judicious about how you spend your money." Now, you know, in that context, you know, cash has been useful both for enterprise companies and well-run consumer companies for creating distribution and being used as a competitive advantage. As long as you understand that you are doing that to get scale and share and your underlying economics have to work in the long term, right? Your contribution margins have to be right. If you're spending more money acquiring customers, but your contribution margins are positive. I think the danger is when you have businesses which have negative contribution margins. It's like standing at the street corner and giving your two dollars in return for a dollar. That's a dangerous thing to do, 'cause eventually you run out of dollars.

   12. HSHarry Stebbings9:50

       How do you think about projecting yourself out to a time when that does make sense? There's a lot of... I'm sorry for just going so off track, but there, there's a lot of businesses where, yes, today we may be contribution margin negative. But when you actually project out a year, two years at scale with network effects, we actually have a very different business and margin profile.

   13. NANikesh Arora10:08

       Well, look, at the end of the day, the contribution margin that you have for your business is a consequence of both your fixed and variable cost. Now, if you say, "You know, my fixed costs are gonna decline as I get scale, and to get scale, I need to go spend dollars to get to a place where my margins become positive," I understand. If your variable costs are higher than your revenue, we have a problem. Because your variable costs are now gonna go, you know, start, uh, pretty sure will sort of start becoming a smaller percentage of total revenue over time because they're your variable costs. So I think it all depends on what you're selling, what your cost structure is, what your contribution margin profile is gonna look like, and how much cash is needed to get to the other side, and can you raise that money in that timeframe? Now, there are some amazing businesses. If you look at what Uber did, right? Uber had to get scale because you had to build a service, you had to get distribution. They needed enough consumers to be able to use those services to be able to go make all the math work. And, you know, both Travis and Dara eventually got to a point where they made it work. There are other businesses where it didn't seem to work and, you know, there are some examples I think, uh, where they crashed and burned because they kept burning money and then suddenly they ran out of money.

   14. HSHarry Stebbings11:13

       Nikesh, I don't like competitive markets. I find your customer acquisition costs are higher. Your retention is lower. It takes more in terms of brand spend. It takes better product marketing. It, it's just, uh, you have less pricing power. That's just shittier, harder-

   15. NANikesh Arora11:28

       But it's good for the end consumer, right? 'Cause they get two really good companies competing for their attention and creating better and better services or products for them.

   16. HSHarry Stebbings11:36

       Sure. I'm an ambassador to Cash. (laughs)

   17. NANikesh Arora11:39

       Yes, I understand that.

   18. HSHarry Stebbings11:41

       So I-

   19. NANikesh Arora11:41

       You want denying monopolies, uh, which can build great businesses over time and 100X your outcomes and then you can get out of them, then they can worry about the regulatory issues afterwards.

   20. HSHarry Stebbings11:51

       Exactly.

   21. NANikesh Arora11:52

       Got it.

   22. HSHarry Stebbings11:52

       How do you feel about competition?

   23. NANikesh Arora11:54

       Uh, how do I feel about competition? Look, in the business we're in, the enterprise space, it's inevitable. When you find a market where nobody wants to build a product, you're either a genius or totally stupid.... you're a genius because you found something nobody's figured out yet. And eventually, as you start winning, other people will figure it out and try and chase you and build product. Or you're totally stupid because there is no business there, you're just burning good money after bad. So, look, i- in any enterprise business we discover, I think the competitor advantage lasts for about two to three years in any enterprise software business. The question is, can you go ahead and build a moat in that timeframe? Can you get sort of momentum? Can you break through and get to a place where, you know, you become- you sort of cast a wave where other people are not able to cast a wave? And there are examples in- in the world where certain businesses have caught it early, run that product advantage for two or three years and kept building more advantage over that timeframe where they're always a few years ahead of their competition, which today are, you know, multi-hundred billion dollar companies, and then become too hard to catch. In the consumer space, I think to your point, that possibly is even a shorter window than two to three years. Then that point in time, distribution and scale becomes really important, and that's where people have used both virality and some version of lots of cash on the balance sheet to drive the distribution capability, 'cause that allows them to get escape

4. 13:13 – 19:37

   The Significance of Speed in Company Building

   1. NANikesh Arora13:13

      velocity.

   2. HSHarry Stebbings13:13

      You said momentum there. I constantly oscillate in my mind on whether speed is the most important determinant of success in company-building. How do you think about that?

   3. NANikesh Arora13:24

      In the- and so the net of it, I think momentum is important because it's built from innovation perspective and agility perspective. Because in the early days, uh, as when you're investing, you're building companies, you will have a lot of ideas, you will test a bunch of stuff. The question is, you know, nobody walks out... W- I'm pretty sure that very rarely is it that your first incarnation of your product has perfect product-market fit. That's very rare. You really... And if you look at the largest companies today, they were all created for a different reason, and they ended up getting product-market fit for a totally different reason, right? Whether it's a Google or Facebook or YouTube, they all started with different intents. Or Slack and its early generation of being a gaming company. So, everybody starts a different intent. They keep innovating, they keep iterating, they start looking at product-market fit. And then suddenly, you know, you see a spark and say, "Let me go double down on that spark and move as fast as I can, 'cause I want to collect more and more people around this phenomena that I've created." So yes, I think speed is important, whether in the consumer space or the enterprise space, but the enterprise customers have slightly different standards and expectations because they're highly unlikely to last too long on an experimental set of products.

   4. HSHarry Stebbings14:28

      I totally get that in terms of that difference. Speaking of kind of the word momentum again and- and speed, I do think in the investing world of, you know, y- your former r- shop in SoftBank, can I ask you what are one or two of your biggest takeaways from that? It is such a interesting firm, and Masa is such a incredible figure. What are one or two of your biggest takeaways?

   5. NANikesh Arora14:48

      I mean, if you look at Masa, he's one of the- th- I think the geniuses of our times, where he's one of the very few people in the world, his risk appetite hasn't changed as he ages. And-

   6. HSHarry Stebbings14:57

      Unbelievable. I mean-

   7. NANikesh Arora14:58

      It's funny, like when we're kids, we're constantly... You know, our parents and entire life is spent in de-risking us, right? "Don't walk across the street. Hold my hand." Or, "Don't get on the bicycle, you don't know how to ride one." Or, you know, "You're married, don't get a big mortgage in case you can't afford it." So, if you look at how we're all brought up, over time, we're all brought up to constantly de-risk ourselves. So, you know, our risk appetite changes unbeknownst to us. But this is an amazing man. It doesn't matter, you know. He loses a lot of money in one deal, he stands up the next morning and says, "Holy shit, I found the next thing is gonna be 100X from here." And he goes out and goes all in every time. And he's done that multiple times. And he was the richest man in the world for 80 s- 80-plus days, and then he lost a lot of money and then went back and he levered everything and bought, you know, SoftBank g- w- mobile business from Vodafone and turned that billion-dollar investment to $40 billion. So-

   8. HSHarry Stebbings15:48

      Wow.

   9. NANikesh Arora15:48

      ... y- you know, he's been doing that on a constant basis. And look what he's done with Arm, you know, has taken that and he was- he was insistent, he says- said to me, "I've been wanting to buy that s- that business for 18 years. This time, I'm gonna buy it." And, uh, I myself couldn't understand why he thought it was gonna be so valuable. Look, today, it's a $130 billion company, and, uh, he was right. Not just that, he actually bought a bunch of it back pre-IPO because he still believed in it. So, you've got to give him high marks for conviction, something we talked about earlier. You gotta give him high marks for his risk appetite. And, you know, he goes all in.

   10. HSHarry Stebbings16:21

       How did you prevent the de-risking in yourself?

   11. NANikesh Arora16:24

       I think, I think compared to Masa, uh, all of us, uh, are on the de-risked phase (laughs) -

   12. HSHarry Stebbings16:29

       (laughs)

   13. NANikesh Arora16:29

       ... compared to what he's able to do and how he's- (laughs) he's able to, uh, he's able to- to sort of execute. So, no, I think, uh, relative to him, we're all de-risked.

   14. HSHarry Stebbings16:39

       What was the hardest part of the role? Y- e- like, when you look at it from the outside, respectfully, Nikesh, it just looks like you smashed it, well done, (laughs) and w- z- breezy. Um, I'm sure there were internal challenges. What was the hardest part about adopting the new role?

   15. NANikesh Arora16:54

       Hardest part was being stupid. Like, you know, I don't understand, I did not understand anything about cybersecurity. And then if somebody walk in the first day and somebody say, "Well, you know, firewall measures, you know, there's north to south traffic and east to west traffic." I say, "What does that mean?" They say, "Well, then SSL decryption, but you decrypt the traffic, the inspected, you encrypt it." I say, "What is this guy talking about?" All right, and they say, "Well, then sometimes you need a proxy server, Zscaler uses that. We don't use that." So this is just like every sentence is new. Like, I didn't go to school, I didn't go to cybersecurity school. I landed myself a top job in a company that does this for a living. So every morning, every person walks in, has more wisdom, more knowledge, more experience than you. Over time, you start to feel stupid. And it's your job to parse through all that stuff and try and make sense of it. And you don't know when the next sentence comes out of your mouth whether it's a really good question or it's a really stupid question. So yes, the hardest part is going through the learning process in full public display, and then getting those people to do things which you think makes sense, or you might have just said a whole bunch of stupid things right before that. That's kind of...... a complicated tightrope to, to navigate.

   16. HSHarry Stebbings18:02

       Were you nervous about having conviction in a new field where you didn't have such knowledge? People listen to your words. You're the CEO. They carry weight. I would be nervous to have opinions because I don't-

   17. NANikesh Arora18:15

       (laughs)

   18. HSHarry Stebbings18:15

       ... necessarily have the domain expertise.

   19. NANikesh Arora18:17

       The good news is now I get more nods than I used to get in the first month or the first year, so that's goodness. That means my, you know, my hit rate has increased. But that's the hardest part, to be able, to be willing to expose yourself and the lack of your understanding and then convince people that I do have other skills which are needed to run this place.

   20. HSHarry Stebbings18:35

       Do you think you can only do that because of the success you've had before?

   21. NANikesh Arora18:38

       It's very funny. If you look, I, I was talking with somebody the other day. You're, you're always known by your last act. You know, it doesn't matter what you did before. If you screw something up, people say, "Oh, that guy just screwed this up. Yeah, maybe he was lucky earlier, but this time he, he met his maker." So I don't think that, you know, your, your past successes, your past successes help you get the job, but that's okay. Now it's at stable stakes, you're in the job, the question is how are you gonna keep it? Now you've gotta be amazing at it, and that requires you to go back to basics and start from the ground floor and start to understand what needs to happen. And that, that, that, uh, requires a healthy dose of humility every morning.

   22. HSHarry Stebbings19:13

       On reflection, we need it now, and you can say yes, but I, I asked Daniel this at UiPath.

   23. NANikesh Arora19:21

       Yeah.

   24. HSHarry Stebbings19:21

       Um, do you think you're a great CEO?

   25. NANikesh Arora19:24

       I think the results speak for themselves and people can decide, uh, if one is a great CEO or not. I think, uh, so far what, not just me, the collective team here has been able to achieve hasn't been done in the cybersecurity industr- industry

5. 19:37 – 23:10

   How Nikesh Achieved Unprecedented Success

   1. NANikesh Arora19:37

      before.

   2. HSHarry Stebbings19:37

      What do you think you did so right that other people hadn't done before that enabled your success?

   3. NANikesh Arora19:43

      I don't think it's something we did right. I think, look, we looked at the industry and, yes, I may not have known the cybersecurity industry, but having, you know, had the privilege of investing next to Masa or having, you know, worked at Google for 10 years, one has become a student of business. And you sit there and look and analyze business and say, you know, "Why is this, why is this industry so unique? Why is it that the largest player has 1% market share?" That is, that is not the industry structure of any other industry. When you're talking about winner-takes-all, like in a search, winner took all, for the most part, give or take. And there might be one or two people around with a few percentage points of share, but Google took all. You take at YouTube, right? You take a look at, you know, Netflix or something like that, you are, you do see in the consumer space there are a lot of industry sub-sectors where winner takes all. Enterprise also you'll s- you'll see in some sectors there are dominant market shares which are in the double digits and sometimes the 20, 30, 40% range. You sit there and say, "What is wrong with this industry structure? Why is it 1%?" And you look at the sort of the waves of success in this industry, you know, the, the stars of 10 years ago are no longer the stars of today, so that's kinda very unique in cybersecurity. You sit there and say, you know, "What are the unique ingredients of this company versus every other company's out there?" And you realize, the cybersecurity industry lets innovation happen in the next company that comes around. They get really good at selling their innovation. They maximize it. They generate huge amounts of cash flow from, uh, the better mousetrap they built 10 year, 15 years ago, but the next mousetrap is usually built by a different company. So, you know, the approach we took was, and I said, "Look, I'd seen this before when I was at Google, you know, there was generally a feeling that we're really smart, we can build amazing things, and other people aren't as well." So I kinda, like, learned from that and said, "Listen, you know, there are smart people out there. There are 3,000 cybersecurity companies, people like you are funding, or not you, people like you are funding. You know, these people must be really smart. And if we're not smart enough to build it ourselves, let's go find someone who's kicked our ass with a lot less resources." So we bought 19 companies last five years, right? We had no pride of, you know, it's like back to the, your doors of humility. Somebody else did it better, let's go bring them onboard. And then the difference we made was we said, "We'll let them run our business because they did a really good job out there. The only thing we can give them is more resources, more scale on the distribution front. What we can do is give them better innovation. So let's clear the decks, let them run as fast as they can, give them more resource, and give them distribution." That's kinda what we did. We've done it 19 times. Uh, a lot of them have worked, some of them haven't. But that's allowed us to at least creep up in market share and, you know, get to 4, 3 to 4% now for one.

   4. HSHarry Stebbings22:21

      Is there a danger that you lose your innovation and become a roll-up shop?

   5. NANikesh Arora22:25

      Oh, let's be clear. Palo Alto in the last five years, we have delivered north of 100 products, or sub-products if you will, uh, the, through a combination of organic and inorganic. The organic innovation we've done in the last five years is more than in the entire history of the company. So, in fact, we have been spurred in the category of innovation more and more so because of all these amazing people we've been able to acquire from the outside. Some of our best products was, you know, our largest best-selling product right now, X-IAM, is built in-house. Our SASE product, which competes

   6. NANarrator23:00

      mumbles ] ... was built in-house. So we have a, we have a large portfolio, but a lot of the good successful products have been built in-house. Some of them have, have been acquired.

6. 23:10 – 24:55

   Lessons from the Best & Worst Acquisitions

   1. NANarrator23:10

   2. HSHarry Stebbings23:10

      When you look at the best and the worst acquisitions, if you separate the two, what are the biggest lessons from the best and the worst, and how does that impact your future decision-making?

   3. NANikesh Arora23:19

      The things where they haven't worked out, I think perhaps one of the early ones didn't work out because we really didn't have enough of a playbook about how we wanna execute an acquisition, so we were a bit sloppy. That caused some of the founders to leave. That caused a bit of disarray. And, you know, we got better about it, learned from it, and pulled up our socks and made sure that the next 18 that we did were gonna be a lot better than the first one. I think one of the cases we just called the market wrong. We expected to be a large market, it didn't, it didn't sort of transpire, because our view on acquisitions is we buy innovation, we buy product, we buy early. 'Cause if you buy later, you're paying multiples for revenue, which I don't believe in. Like, why would I pay 10 times revenue? I'd much rather buy a really great team and an amazing product which has done proof of concept and got 20, 30 customers which is working for. So, you know, if you buy them later in life, you end up just paying a lot more money for the distribution/customer base that they have. Some of the ones we bought early, some of the markets didn't pan out the way we expect them to, so they didn't end up being bigger businesses. Uh, so it was more of a-... perhaps wrong technological bet. But on the flip side, the ones which we did do where the market panned out the way it was, and I think to some degree we were able to spur the market and grow the market, those have done really well for us.

   4. HSHarry Stebbings24:32

      Do you believe the best CEOs are the best resource allocators? It's a common saying.

   5. NANikesh Arora24:37

      More so I still go back to the idea most companies are inefficient. I think every company could be a lot more efficient, a lot more effective. I think the best CEOs are who are able to motivate lots of people to deliver great outcomes in a consistent, coherent manner

7. 24:55 – 27:02

   Why Most Companies Are Inefficient

   1. NANikesh Arora24:55

      together.

   2. HSHarry Stebbings24:55

      Why do you think most companies are inefficient?

   3. NANikesh Arora24:57

      You know, I've discovered in the last six years that you sit in a room and you say something, you have a point of view, but you need to make sure that point of view is understood by the person out in the front.

   4. HSHarry Stebbings25:08

      Mm-hmm.

   5. NANikesh Arora25:09

      Because very often, I, I usually say, people don't come to work to screw up. Nobody comes to work and say, "Oh my God, I'm gonna do the shittiest job I can possibly do today."

   6. HSHarry Stebbings25:16

      (laughs)

   7. NANikesh Arora25:16

      "Let me go see how I screw up." So if you believe that people are well-intentioned, they... you've run a rigorous hiring process, you've hired smart people, then the question is, why do you not get the greatest outcomes from everyone in the company? 'Cause if you could get the greatest outcomes from 15,000 people, we'd be three times better than we are today. And it boils down to one thing. It is lack of effective communication. So people are sometimes told the what and not the why. And if we understood the why out on the frontline, we'd do a much better job of innovating, much better job of adapting, much better job of sort of living by the principles of why we're doing this, as opposed to what I need to do. Many companies get into the what, and there's a lot of enablement in every company which are saying, "You will do this. When somebody calls, pick up the phone, ask them the following three questions. If they don't, go to page two, do this, and this is how you solve the problem." So, uh, and I understand why people do that, but you have to respect the individual intelligence and make sure you're doing an effective job of, of communicating the why every day to people. And when things change, you're supposed to make sure everybody knows about it. So I think one of those things that great leaders do is make sure that everybody understands the principle, everybody understands how they contribute and add value to the overall outcome. Very often people do their work and it's not clear to them how that contributes to the, the overall whole. And if there's 15,000 people and people say, "What I do doesn't make a difference," then they don't make a difference. The question is, does everybody make a difference to the greatest outcome? So I think there's a lot about people, there's a lot about motivating them, a lot about getting outcomes from them, which make for great companies. And I think great CEOs are good business strategists, because it's their job to see around corners. You have to see two to three years out and see where the wind is blowing, because most of the stuff that you can impact is going to create great outcomes two or three years from now, not in the next 6 to 12

8. 27:02 – 32:12

   Decision-Making Process

   1. NANikesh Arora27:02

      months.

   2. HSHarry Stebbings27:02

      It's challenging for teams when there's change, when there's pivot, when decisions are made and then you have to communicate them and get them on board. You know, Eric Schmidt once said, uh, "I wish I'd made better decisions, or my better decisions faster."

   3. NANikesh Arora27:16

      Yes, I've, I've heard him say that. Yes.

   4. HSHarry Stebbings27:19

      How do you think about your decision-making process?

   5. NANikesh Arora27:21

      There's some people who like a lot more information to make decisions. And if we had per- if we all waited for perfect information, you know, it might be too late. So there's always a certain amount of gut, a certain amount of sort of intuition, a certain amount of guesswork involved in making decisions. As I always say, all the easy problems get taken care of before they get to me. All the easy decisions are done. So believe it or not, when you, you know, when you're leading an organization, you end up with the hardest decisions, and they matter. And normally people come to you because they've agitated over them for weeks or months and they've tried every different thing, because most people don't like coming for help, especially to the CEO. So, you know they're in a bind when they come to you because they haven't been able to solve it. So then they're expecting you to make a good, quick, and thoughtful decision, which are all dangerous words. You wanna be good, you wanna be quick, you wanna be thoughtful. So, so I think part of our job as leaders is to be able to make those good decisions with limited information. You are gonna get some wrong. The question is, are you able to identify the wrong decision and go back and correct it, course correct it midstream?Are you gonna get too invested in your decision and say... and watch it try and play out longer than it should be? So I think decision-making for all of us needs to be quick, but also needs to be... we need to be adaptable, that if we've made the wrong decision, we have the ability to check it and be able to go back and have the courage to go back and say, "Listen, I think I screwed up. It's time to go change course," and that did work.

   6. HSHarry Stebbings28:51

      Nikesh, what's been the best decision you've made as CEO of Palo Alto Networks, and what did you learn from that?

   7. NANikesh Arora28:57

      You have to put yourself in a learning mindset, right? You just cannot afford to stop learning because, A, we're in a very innovative industry, you know? The bad guys are always looking for a new way to come hack you. They don't wait... they don't try use the same technique they used yesterday, which we figured out. So every morning you wake up, there is a new technique they've figured out to come after you. So you have to be in a constant innovation, learning mindset.

   8. HSHarry Stebbings29:21

      What was the worst decision?

   9. NANikesh Arora29:23

      I'm sure there are many. I mean, I don't think there's one particular worst decision that I once made. Uh, you know, uh, at Google, I, I was very stroppy with Eric when they bought Android and I said, "Eric, I used to work in the mobile industry. I thought you hired me for my experience. And, uh, we shouldn't be buying Android. There's 200 OSes out there." And Eric turned to me and said, "You know what? We respect everybody's opinion, but then we do what makes sense to us." I said, "Okay, I get it." And, uh, Android kind of worked out. At Palo Alto, you know, I was very, very, uh, enthralled by the idea of doing consumer cybersecurity. And we actually spent a few years trying to build a product, and then we realized that was a bad idea. But we invested resources. But then, like I said, you know, my management team and I, we collectively sat down and said, "Shit, it's not working. What do we do?" So we had the courage to shut it down. Even though we had invested good resources and built something, we said, "Listen, you know, we cannot go out there with this. It might perpetrate this for some time because we might think that we have to prove something, but we should be able to call a bad decision a bad decision and move on," which we did.

   10. HSHarry Stebbings30:24

       When are you able to call a bad decision a bad decision? When, when should one read the tea leaves and say, "Enough is enough"?

   11. NANikesh Arora30:30

       As I said, a part of our jobs as CEOs...... is to look around corners. Constantly look at data and reassess what's gonna happen. I tell this story, I was on a flight to India. I was going to speak at a- my- my alma mater about, uh, uh, 35,000 people that were graduating. And I landed in Dubai, and I saw all this flutter about ChatGPT and, "Oh, my God, OpenAI has launched this amazing product," which is an AI product, and there were all kinds of rhetoric around it. But I had nothing to do for a few hours, so I tried to figure out how to get access to it, which I was able to, surprisingly, and I started playing with it. And the next three hours and the next day, uh, I rewrote my entire graduation speech, and I made it all about how AI is gonna be a pivotal moment for every one of us. Now, the reason I tell you this story is that I used the flight back to think about, "How does that impact Palo Alto?" And we launched a series of things internally, which were drastically, sort of drastic measures, which it- it required us to rethink everything. And you play the movie forward, is AI gonna make sure that everything's gonna be different in 10 years from now? For sure. 20, for sure. The question is, what do I need to be doing today that I'm the next Amazon and not the next Costco, which is also a great company, but I'm the next Amazon or I'm the next company that is gonna be really successful because we were able to adapt to AI effectively? That's a big challenge. So we spent a lot of time.

   12. HSHarry Stebbings31:55

       Yeah.

   13. NANikesh Arora31:55

       We spent a lot of time trying to figure out how we're gonna do that.

   14. HSHarry Stebbings31:57

       Do you not think we overestimate adoption on a year-long period and underestimate it in a decade-long period?

   15. NANikesh Arora32:02

       Yes.

   16. HSHarry Stebbings32:02

       I- I- you know, I- I- yeah, I look at a lot of enterprises today, especially, uh, in Europe. Like, I think 48% don't know what Slack is, 92 don't know what Notion

9. 32:12 – 39:05

   The Reality of AI Adoption by Major Companies

   1. HSHarry Stebbings32:12

      is. But, like, the idea that we are all gonna adopt, right, the biggest companies will adopt AI overnight, I think is- is naïve, bluntly. Do you agree or do you disagree?

   2. NANikesh Arora32:21

      Adopting the internet is one thing. Being able to accelerate your business and use that as a competitive advantage is another thing. Every brick-and-mortar business by now has adopted the internet, but none of them used it to become Amazon. So the question is, is adopting enough, or can I use it to, you know, change the trajectory of my business? Those are two different questions. I'm sure every company will adopt it at their pace. Can somebody adopt it well enough that it changes the tr- tra- trajectory of their business? Say, "Oh, my God, look at these guys. They levered it- leveraged it and became better, bigger, faster."

   3. HSHarry Stebbings32:57

      Mm-hmm.

   4. NANikesh Arora32:57

      Everybody's adopted the internet, everybody's enabled e-commerce, they still have their brick-and-mortar stores.

   5. HSHarry Stebbings33:02

      Mm-hmm.

   6. NANikesh Arora33:02

      A bunch of entrepreneurs took that trend and said, "You know what? I'm gonna change the economics of this business in such a way, I don't need physical stores, and I'm gonna be able to create shipping warehouses and go ship this to wherever we want, and I can have a- the everything store." That only one company did. So they used the technolo- technological shift to build an entire new business, which is worth $3 trillion, compared to everybody else who was able to marginally improve their business. That's the question.

   7. HSHarry Stebbings33:29

      What does that mean in terms of how you think about running Palo Alto today? Like, take that and then apply it to your business.

   8. NANikesh Arora33:36

      You know, am I going to apply AI in my business? Yes. Am I gonna get more efficient? Yes. Already, we've got people working on it. I'm pretty sure a lot of companies are thinking about it, how do you get leverage from whether you can write code using one of these code tools now or that you can go to customer support efficiency based on deploying LLM and ingesting data and building a faster sort of knowledge retrieval system. So we're all gonna do that, and that's gonna be good for all of our businesses. And, you know, some companies will do it faster than the others, and they will have better margins sooner. Some keep- some companies will take longer, but the fact that I have better operating margins because I was able to deploy AI internally is not gonna make me a better competitor to somebody else unless, you know, maybe I'm using cash generated from it as a better competitor. The question is, can I use the technological chain that is out there to build a net new business? So can I build a series of AI, uh, security tools that I come out first with and I get disproportionate market share because I was fast?

   9. HSHarry Stebbings34:31

      What will be the te- determinant of whether you're successful with that or not?

   10. NANikesh Arora34:35

       I have better AI security tools that I can build, take more market share.

   11. HSHarry Stebbings34:39

       (laughs) Were you nervous about such a change of strategy? I remember when you made the change publicly, it was like, "Whoa."

   12. NANikesh Arora34:47

       I think part of what one has to understand is, we see the business every day. You know, as I said to you earlier, in the enterprise business, there's a two to three year, you know, product innovation mode that one has for the most part. Because if you build something cool, other people want to build it because they know they're losing business because they don't have it. So if I've got a two or three year runway, now's the time to capitalize on it, and I can't wait around for that to diminish or go away. So, you know what? We took the- took the decision to go, and we're moving fast. That's what we're gonna do.

   13. HSHarry Stebbings35:19

       What do you think is the biggest constraint on your business today, Nikesh?

   14. NANikesh Arora35:22

       Our biggest constraint is that time. You know, we're- we're transitioning our business from having soul to different parts of the organization to actually having to get leadership and get them bought into this transformation and say, "Yeah, we get it. This happened for Salesforce, it happened to Workday, it happened to other platform companies. Why shouldn't there be a platform in cybersecurity? Why shouldn't there be a Salesforce of cybersecurity?"

   15. HSHarry Stebbings35:44

       Are you having as much fun as you always did?

   16. NANikesh Arora35:47

       I have fun every day.

   17. HSHarry Stebbings35:48

       Do you?

   18. NANikesh Arora35:48

       I- I don't... Look, I always joke, you know, the US government takes away 50+ percent of my money in taxes, you know? I don't get to make all my decisions at home. Here, I get to make 90% of the decisions. It's great. It's wonderful.

   19. HSHarry Stebbings36:01

       (laughs)

   20. NANikesh Arora36:02

       (laughs)

   21. HSHarry Stebbings36:02

       Do you actually, though? That's kind of what I think though, which is like, people think being a CEO is great, and- and in some ways it's a bit like being a politician, which like-

   22. NANikesh Arora36:09

       No.

   23. HSHarry Stebbings36:09

       ... yeah, you do, but-

   24. NANikesh Arora36:11

       No, no, no, no, no, no. I think, I think there's a big difference between CEOs and politicians. It's okay for us to- you know, when we make a decision, if some people are not happy, it's okay for us to make that decision, because hopefully time will prove that that was a good decision or time will prove it's a bad decision, and you can go back and say, "Sorry, uh, you were right and I was wrong." But politicians don't get that opportunity, you know? You make a decision and people are unhappy, they don't work for you. The difference is, I- I- I- you know, it's very funny. There was a CEO of a company who-... uh, you know, ran for public office in California. And I had the privilege of having dinner with that person and Larry. And Larry asked that person, "What's the biggest difference between, you know, being a CEO and running for office?" That person said, "You know, I spent my entire life, uh, maximizing profit and generating shareholder value where economics was important," because in the end, that's the language shareholders understand. And he said, "In politics, it's one person, one vote. People are important."

   25. HSHarry Stebbings37:09

       Mm-hmm.

   26. NANikesh Arora37:09

       Every person is important. It doesn't matter who they are. And it's a very different mindset. And if you look at people who've been doing one worse than the other for a very long time, you realize that, you know, CEOs do not... Uh, what did you say earlier? You know, either people are for the brand or against the brand.

   27. HSHarry Stebbings37:26

       Mm-hmm.

   28. NANikesh Arora37:26

       There are very few people in the middle. Um, that doesn't go down well in politics.

   29. HSHarry Stebbings37:31

       You don't think? I'll push back on both of those statements.

   30. NANikesh Arora37:35

       Go ahead.
10. 39:05 – 41:46

    Relationships to Money

    1. NANikesh Arora39:05

    2. HSHarry Stebbings39:05

       Can I, can I, can I ask you, um, one thing that I do find really hard is, like, relationships to money, actually. When you think about relationships to wealth over time, how has yours changed over time? Because I think it's one which is a challenge, actually.

    3. NANikesh Arora39:19

       I came to this country with no money. So, that's always good. And, uh, I've been blessed that I've had the opportunity to make some money along the way in my various jobs at Google or SoftBank.

    4. HSHarry Stebbings39:31

       Did growing up with no money kind of shape how you think about money?

    5. NANikesh Arora39:34

       For sure. Look, i- it's kind of like you relish everything that you get to enjoy, you know? We ate meat once a week at home, and that's kind of like, "Oh my God, how does that even work?" It works perfectly fine in India. Or, you know, we drank Coke, uh, when somebody had a party at our house, and my parents would let me have it because there was excess Coke around in the house. Coke as in Coca-Cola, uh-

    6. HSHarry Stebbings39:56

       (laughs)

    7. NANikesh Arora39:56

       ... do not get confused. Uh-

    8. HSHarry Stebbings39:59

       (laughs)

    9. NANikesh Arora40:00

       ... yeah.

    10. HSHarry Stebbings40:00

        It was a very adventurous household in the Arora household. (laughs)

    11. NANikesh Arora40:04

        No, no, trust me, trust me, far from it. So, you enjoy the smaller things in life much more, you know, when you have to go play cricket and one person has a cricket ball. And when they say, "I gotta go home," they take their cricket ball and go home. And nobody else has one because not many of us could afford having cricket balls lying in the house. You start to appreciate, you know, that these things have a meaning. Yes, it does shape how you, how you grew up. It does, uh, treat you, teach you the value of money, teach you the value of resources over time. Um, I think at the same time, you know, even if you have more of it, you don't attribute as much value to it beyond a certain point.

    12. HSHarry Stebbings40:39

        Mm-hmm.

    13. NANikesh Arora40:39

        Because you, you know can go back to living a much simpler life if you have to, because that's how you grew up. That's how I grew up first 20 plus, 25 years of my life. I started in the United States with five guys, one bathroom, in a five-bedroom place. I don't know why that place had one bathroom and five bedrooms, in Jamaica Plain, uh, right by Roxbury in Boston. That's where I, that was my first two years and first year and a half in the United States.

    14. HSHarry Stebbings41:06

        It's a very strange configuration for a house, isn't it? (laughs)

    15. NANikesh Arora41:09

        I know. I think it was a-

    16. HSHarry Stebbings41:10

        (laughs)

    17. NANikesh Arora41:10

        It was a large three-floor house. I think that, that floor-

    18. HSHarry Stebbings41:13

        (laughs)

    19. NANikesh Arora41:14

        ... was the sort of the entertaining section. They decided not to have too many bathrooms. But-

    20. HSHarry Stebbings41:18

        That is one busy bathroom in the morning, huh?

    21. NANikesh Arora41:20

        ... it, it, it made for some interesting, uh, you know-

    22. HSHarry Stebbings41:23

        I'm gonna realize-

    23. NANikesh Arora41:24

        ... imaginations.

    24. HSHarry Stebbings41:24

        So, I think the secret to a r- romantic relationship is separate bathrooms, actually.

    25. NANikesh Arora41:28

        (laughs)

    26. HSHarry Stebbings41:28

        I think this is like, um, crucial in that respect.

    27. NANikesh Arora41:31

        There was no romantic relationships between those five guys over there, so let's get one thing safe.

    28. HSHarry Stebbings41:35

        Yeah, I, I, yep, yep. No, just to clarify that, uh, and... (laughs) There was no excess Coca-Cola and there was no, no romantic relationships-

    29. NANikesh Arora41:42

        There we go. Yeah.

    30. HSHarry Stebbings41:43

        ... in the bathroom. Clarification is important. Um, how do you think

11. 41:46 – 47:44

    Fatherhood & Marriage

    1. HSHarry Stebbings41:46

       about on the money side? It's one thing for yourself. That's an easier thing actually, because it's only yourself who you're actually influencing. With children, it's another thing. You're influencing another being. When they're brought up in, in a world of, bluntly, wealth, how do you imbue the same hustle, ambition, hunger in children?

    2. NANikesh Arora42:06

       That's a great question. Look, I have three kids. I have a 26-year-old and younger kids. And, you know, part of it actually boils down to how you bring them up and the values you teach them. And, you know, my wife does a really good job of making sure that our kids understand the value of money.

    3. HSHarry Stebbings42:23

       How, if you don't mind me asking, is hard?

    4. NANikesh Arora42:25

       Dear, not.... allowed to squander resources. They're not allowed to go ahead and get what they want. They have to make sure they understand the value, but they have to understand that it's not, everything is not easy to come by. They have to go do tasks to make sure that, that they earn the right to enjoy the resources that they have. Now, having said that, look, there's a quality of life difference. There's a quality of life difference in terms of what I grew up with every day or what my kids grow up with every day, and that's something you have to accept. That, you know, there's a difference in quality of life in the United States and India, right? So, you have to understand that there is a basic quality of life that is different for your children than you had for yourself. So you have got to make sure you don't over-correct, because I've seen situations where, you know, people are constantly reminding their kids, "When I was your age, I didn't have this, I didn't have that." And eventually the kid says, "Okay, you, I get it, but you're no longer in India this year, you're no longer of that age. I, this is my peer group. This is what I'm growing up with, so I've got to be, you know, I've got to live within these parameters." So I think to that extent, like I have seen, uh, kids of very wealthy people who have a very strong work ethic, they've tried to prove to themselves, to their family, that they can work hard, they can make it on their own. And I've seen, seen kids of very poor people not want to work hard. So I don't think that... I think part of it is nature, part of it is nurture. Uh, I think there are kids who will do things based on how they're brought up, what values that are inspired into them, and what they get inspiration from. You know, my 26-year-old works hard, as hard as I do or sometimes harder.

    5. HSHarry Stebbings43:57

       How has the way that you'd done fatherhood changed when you compare how you were as a father with your 26-year-old to how you are with your younger children?

    6. NANikesh Arora44:05

       Yeah, I think depends if you ask my wife, she'll say probably not a whole lot. If you ask me, that, you know, probably somewhat different. I think, uh, uh, the first time around I probably was running around trying to work hard to make sure I was going to make it. Uh, I think now I have a little more time on my hands so I can, I can stop and smell the coffee or I can spend more time with my kids as they're growing up. Uh, it's never enough time, because they grow up fast. So I think from that perspective, my wi- wife would say that I'm not spending enough time and not doing enough with them which I should be doing. So I think there's a balance. Uh, but I'm pretty sure that my kids today are getting a lot more of my time than my, my older kid got when she was growing up.

    7. HSHarry Stebbings44:43

       Do you believe in balance and being truly great? When you see the videos of Elon Musk who talks about the early days of him building when he lived in the office. His girlfriend would come visit him in the office. You see Sam Altman who say just like, "When you want to stop, keep going." Do you believe in the balance?

    8. NANikesh Arora45:01

       Look, one believes in the balance, but I think it would be wrong of any one of us to say that in the process of trying to get what you're trying to get done, we don't sacrifice other things, uh, while getting there. So yes, will I sacrifice something on the family side? Sometimes, for sure. Will I sacrifice spending time with my friends in return for this? Yes. Will I end up working non-stop for a bunch of time? Yeah. So, I think we all aspire for balance, but I also think, uh, you said that earlier, like and there's, uh, a bunch of us who are mission-driven, trying to get stuff done. We over-index on trying to get stuff done.

    9. HSHarry Stebbings45:38

       Is there anything you won't ever sacrifice? Some people are like, "I will never sacrifice my eight hours of sleep." Other people are, "I will never sacrifice my gym session." Other people, "I'll never sacrifice," you know?

    10. NANikesh Arora45:52

        One has to adapt a little bit all the time. I will never sacrifice my kids' birthdays. I learned that lesson the hard way. My daughter, older daughter, reminded me once that she'd gone back and looked through the pictures and I wasn't present in a few of them. And I think since that day, that's possibly 14 years ago or 15 years ago, I've never missed her birthday.

    11. HSHarry Stebbings46:09

        Did that upset you?

    12. NANikesh Arora46:10

        Yes, it did. And it sort of, she showed me the mirror, God bless her, because I remember I flew from Europe one evening at 6:00 PM and I made it back here by 7:30 and I surprised her at her dinner, at her birthday dinner party at 8:30, when she didn't think I was gonna make it, but I did.

    13. HSHarry Stebbings46:26

        You mention your wife several times. I, I do just have to ask, and I'm, I'm learning from you in so many respects on this, um, what's the secret to a happy marriage? You've been married now for several years, happily.

    14. NANikesh Arora46:37

        I think both of us being able to pursue our passions. I think both of us, uh, giving each other space to do that, respecting what each one is doing. I think, uh, there are no real stereotypes in our household. I think having a healthy, uh, balance between spending time together and being able to do other things. Um, and I think having each other's back. Always knowing that the other person is gonna be there for you. That's why you go back home. And I met this guy, uh, a long time ago, on a flight, and, uh, he was in his 70s and I was possibly in my late 20s. And I don't know how this conversation came up about happiness, and he said to me, "Happiness is about waking up in the morning and being excited about going to work. And happiness is finishing a good day of work and being excited to, about going home."

    15. HSHarry Stebbings47:31

        Is there anything you could do to be a better husband?

    16. NANikesh Arora47:33

        I'm sure I could. Uh, but I'm gonna save that one for my wife, to give you a long list of what she thinks I should be doing to be a better husband.

    17. HSHarry Stebbings47:39

        Who's coming on the show next week? (laughs) No, I'm joking.

    18. NANikesh Arora47:42

        (laughs) I hope not.

    19. HSHarry Stebbings47:43

        That'd

12. 47:44 – 54:31

    Quick-Fire Round

    1. HSHarry Stebbings47:44

       be a surprise. Listen, Nikesh, I want to get into a quick fire with you. I've mined, uh, very personal areas and you've been very patient with me in doing so. Uh, I'd love to ask a few quick fires. Is that okay?

    2. NANikesh Arora47:53

       Sure.

    3. HSHarry Stebbings47:54

       Okay. So what have you changed your mind on most in the last 12 months?

    4. NANikesh Arora47:58

       You know, I'm constantly reassessing, um, our strategy. Constantly reassessing, you know, who is right for the role or not in different circumstances. So, and I keep moving back and forth on certain, some of these things and-

    5. HSHarry Stebbings48:10

       Does that worry you? Like flip-flopping is difficult.

    6. NANikesh Arora48:13

       No, I think, uh, constantly reassessing is different from flip-flopping. You know, many years ago I used to be an equity analyst and, uh, and you'd spend a lot of time, and you show up one morning and say, "I think we should buy the stock." And then the afternoon, something would happen, like, "Holy shit, I didn't know that was gonna happen," and the company told me they wanted to do something like this and they went and did it. And you have to make a decision. You can flip-flop...... which makes you look bad, or you can double down and, uh, you have to reassess. So, you learn early in your life, as an equity analyst, that it's very important to have conviction and not have noise distract you unless there's real signal in what's come up. Because noise but noise has the ability to distract you because you just made a big bet. So, whilst I go back and forth and reassess, uh, before I act on it, I've just stepped back and decide if I have enough information and things have changed substantially for me to change my decision. So, you asked me how many, what have I changed my mind on, you didn't ask me what have I acted on when I changed my mind, so two different things.

    7. HSHarry Stebbings49:16

       Forever the politician. Love it.

    8. NANikesh Arora49:18

       It's not a politician. I'm, you know, you won't to have an honest conversation and giving you an honest answer.

    9. HSHarry Stebbings49:22

       I know. I- I- I love it. What are you most concerned about in the world today? What worries you?

    10. NANikesh Arora49:27

        You know, I try and worry about things I can control. I try not to worry about things I can't control. Um, there's a lot of things to worry about in the world, you know. We can worry about wars, you can worry about pandemics, you can worry about the economy if you want to, you can worry about elections if you want to. But I think one of the things we all saw in the last five years is the tremendous resilience of humankind. If I told you that we would all have to live, you know, under closed doors, have to wear a mask, not be able to fly anywhere, not go to public places, not go to the movie theater, not even go to the grocery store, you sit and say, "Holy shit, that's gonna be horrible. All kinds of bad things are gonna happen. People are gonna start doing crazy stuff and the world is gonna come to an end." And it didn't. You know, like seven plus billion people around the world somehow adapted on a dime, turned around, did it, we lived an orderly life, the stock market went up. You sit and say, "Holy shit, how did that happen? What just happened?" And there were all kinds of, you know, disaster theories, there were all kinds of doomsday theories out there. People said, "Oh my God, this is the end of the world." You sometimes say, "Holy shit. None of that happened. We all are happy, we're all alive, everybody's appreciating each other more." You know, some people did all kinds of crazy things. So, you sit there and say, "That's only possible if you believe that we as humankind are a tremendous amount of resilient." So-

    11. HSHarry Stebbings50:49

        Mm-hmm.

    12. NANikesh Arora50:49

        ... I'm pretty sure collectively we'll get through most of these things, (clears throat) which we want to worry about right now.

    13. HSHarry Stebbings50:54

        Jensen Huang said, "Lower, we should lower our expectations and it will lead to increased resilience."

    14. NANikesh Arora51:00

        He also said that he wouldn't do NVIDIA again if he, if he had a chance to do it again. So, I don't know.

    15. HSHarry Stebbings51:07

        I know. I was like, "What?" Yeah, it was, I found it quite disappointing when he said that, because I obviously hold him in-

    16. NANikesh Arora51:12

        If you said that, then you wouldn't be able to invest, Harry.

    17. HSHarry Stebbings51:15

        What, in NVIDIA?

    18. NANikesh Arora51:16

        Or anything, like, oh my God, if foun- if, if he's telling founders not to go do something that's really hard, and if he had a chance of doing it again, he wouldn't do it, that's kind of dangerous.

    19. HSHarry Stebbings51:25

        Well, it's quite, quite strategic, isn't it? It's like, it's like, you know, uh, the Sequoia-

    20. NANikesh Arora51:28

        Well, that way, no competitors, right? So, you -

    21. HSHarry Stebbings51:30

        Yeah, yeah, it's like, it's like Sequoia's RIP good times and then they went on an absolute spree and made a ton of great investments -

    22. NANikesh Arora51:35

        Yeah, I never thought about that. I get it. I get it now. Yes. See, thank you for clarifying why you said that.

    23. HSHarry Stebbings51:40

        (laughs) Uh, if you could choose one person as a board member who you don't have, who would it be? Could be anyone.

    24. NANikesh Arora51:47

        Mahatma Gandhi.

    25. HSHarry Stebbings51:51

        (laughs)

    26. NANikesh Arora51:53

        (laughs)

    27. HSHarry Stebbings51:53

        Well, not anyone. I mean... (laughs)

    28. NANikesh Arora51:56

        Oh, come on. (laughs)

    29. HSHarry Stebbings51:57

        Come on. (laughs) You went for Gandhi? I was thinking-

    30. NANikesh Arora52:00

        Of course. I, I'm sure he was a great guy, non-violent, you know, people, very inspiring, people liked him.

Episode duration: 54:31