The Twenty Minute VCShervin Pishevar: What Really Happened in the Firing of Travis Kalanick | E1245
EVERY SPOKEN WORD
140 min read · 27,757 words- 0:00 – 1:00
Intro
- SPShervin Pishevar
I believe if Travis and Emil had stayed at Uber, Uber would be a trillion-dollar company by now. His true vision for Uber, which was to replace car ownership, and it was at that moment I realized, "Oh, the TAM is trillions."
- HSHarry Stebbings
We are actually full steam ahead. But things start to go wrong.
- SPShervin Pishevar
We had the wrong venture capitalist on the board. Unfortunately, in my opinion, it was Bill Gurley at Benchmark. We found out in our investigation that he hired some private investigators, had weekly meetings about, "How do we get rid of Travis?" That week, Travis tragically lost his mother in a boating accident. Benchmark, Gurley decide to go after Travis.
- HSHarry Stebbings
Ready to go? (instrumental music plays) Shervin, dude, I'm so excited for this. I've wanted to make this one happen for a while, so thank you so much for joining me.
- SPShervin Pishevar
Thank you, Harry. It's, uh, it's exciting to be here.
- 1:00 – 3:29
Mother’s Impact Getting Into Tech
- SPShervin Pishevar
- HSHarry Stebbings
Now, I would love to start with a little bit of context. Your... I'm actually gonna start, if it's okay with your mother. Um, I'm so sorry for her passing, but I know she was also incredibly impactful to you getting into technology and so talk to me a little bit about her being impactful and getting into technology as a starting point.
- SPShervin Pishevar
Absolutely. Thank you. Um, my mom passed away last Wednesday, um, and, uh, um, we're gonna have our funeral, uh, in a, in a few days. Um, and she was just the most incredible human I've ever met. She was a teacher for 14 years in Iran and when we escaped the revolution, um, and came to America, she started all over again. We came with $35, um, and then, uh, we had to escape, and, uh, we started with nothing, uh, and my dad drove a taxi while getting his PhD. My mom was a maid, uh, and worked two jobs as a caf- cafeteria worker, uh, and a maid, and I used to go clean rooms with her. Uh, so this is the kinda classic, uh, American dream story. And she took computer programming classes at the, uh, at a college in Maryland while I was a, a kid. And so she, and she would take me to her classes. So I... And this was, like, when they had the, uh, the paper, you know, uh, with the holes in it, you'd punch, punch the holes and that, that was how they coded, um, i- in the '80s. And so I, I got to kinda see that, and then I saw, uh, the Apple, um, and I begged for an Apple. My mom and dad worked, uh, you know, overtime for three months to afford it. Back then it was, like, $3,000, which was a lot in 1985, '86. Um, and they bought me my first Apple IIc, uh, and I did my first code on it, uh, and that changed my life. Um, and then later, she secretly put on her credit card a laptop when I was at Berkeley and I didn't have enough money to get th- get a laptop, uh, and she, uh, put it on her credit card and I always said that she was my angel in- my first angel investor, my first believer. But she really taught me how to dream in color, and I'm finding this process of grieving profound, uh, in that I see her now in ways that I couldn't see her when she was
- 3:29 – 5:01
The Uber Story and Joining Menlo: How It All Started
- SPShervin Pishevar
alive.
- HSHarry Stebbings
I think mothers are the most important people. Uh, I, I wouldn't be anywhere without my mother. I walk two marathons a weekend with her and it's kind of the, the sane space in my week. (laughs)
- SPShervin Pishevar
(laughs)
- HSHarry Stebbings
Um, she's also expensive. She loves Chanel. (laughs)
- SPShervin Pishevar
(laughs)
- HSHarry Stebbings
So there's downsides to everything, right? (laughs)
- SPShervin Pishevar
(laughs)
- HSHarry Stebbings
Uh, listen, dude. I wanna go to the Uber story, and I wanna go to your time at Menlo. How did that come to be? I, I'm gonna kinda leave it deliberately vague and open-
- SPShervin Pishevar
Yeah.
- HSHarry Stebbings
... 'cause I want you to lead the way there.
- SPShervin Pishevar
Absolutely. It was, it was a great journey. Uh, I started, uh, my first company, called WebOS, senior year of college, and that's when my mom bought me the, the laptop and I was working a night job to, to just, you know, as a security guard to, to make enough money to start my company. So I had the, the little LG laptop with a dial-up connection (laughs) that I was... While I was on a, you know, uh, uh, in the security job all night, I was, uh, working on, on the startup as well. And at WebOS, I started recruiting really young talent. Uh, and, uh, you know, because I was, I was young and at the time, the greatest developers in, on the internet were really young. They were, like, 15-year-olds, like Anthony Castellana, who's the founder of Squarespace. There was this kind of, you know, realization that I had an eye for talent, and then that le- later led to meeting Travis, uh, many years later, and getting that sense of like, "Oh, this, this Travis is different."
- 5:01 – 14:14
Meeting Travis Kalanick
- SPShervin Pishevar
Uh...
- HSHarry Stebbings
How did you meet Travis? Take me to that meeting.
- SPShervin Pishevar
Yeah. So, um, I met him because, uh, Sheryl Sandberg actually was a, a mentor of mine. And, um, I was building, you know, Facebook apps and iPhone games for my, uh, one of my first companies. And Sheryl read an essay that I wrote about entrepreneurship and reached out to me on her own and was like, "Hey, could you do lunch?" And she had just joined Facebook and she wanted advice about the App Store and what percentage they should charge and then I shared that, you know, Apple charges 30%, you could probably charge 30%, which is what they ended up doing. And so we would meet once a quarter, um, and she was a great mentor, and then I was selling SGN and she told me, "Shervin, you should go into venture. You'll be disruptive." Um, and I was like, "I just didn't think I had a seat..."... at the table. But she sent an email to, like, five top VCs, uh, the next day without telling me. I haven't seen the email, but I heard it's really great because I started getting recruited and I had an offer from Kleiner Perkins and an offer from Menlo, and I ended up going with Menlo. Um, and, uh, that really was the beginning of my venture career. I had been an angel investor before that, and been, you know, invested in Facebook and other, other companies. Um, but, uh, when I started at Menlo, I, I hit the ground running and I closed... In my first 90 days, I, (laughs) I closed Uber, Warby Parker, um, Tumblr, and Machine Zone. Um, it was a really fast start. On the whiteboard, I had a list of companies at the time. This is 2011, June 2011 when I started at Menlo. (smacks lips) And Uber was the top of the list, Airbnb was on the list, uh, Square was on the list. Um, and this was a particularly amazing time in, in Silicon Valley because these companies were just starting out. No one had heard of them. Um, and so I was in Lowercase as a seed investor and Naval Ravikant had introduced me to, to, to, um, to Travis over email. And w- um, I went and used Uber for the first time, and this is when it was, like, hundreds of, you know, cars in San Francisco. And him and Gary Camp had started the company and then, um, as a former son of a taxi driver in DC, I, I knew a little bit about the taxi market. So full circle, that actually helped me win the deal. Um, and I chased Travis and, uh, you know, even before Menlo for a year, I was trying to meet him and he was difficult to, to get to. Um, and so I asked Matt Kohler, who was a, you know, a longtime friend, uh, and, um... And so Matt, you know, promised to say something to him, but you know, that, that, you know, I waited for that. But meanwhile, I decided, "You know what?" And this goes to one of my mantras, which is, you know, uh, "The answer is always no until you ask." And so I basically bombarded Travis with references. So I had, like, Drew Houston, who's a dear friend, Sheryl Sandberg, Juliusz Janikowski, uh, all telling him, "You need to meet with Shervin." And finally, Travis said... you know, he's publicly said this, uh, that he met with me because he had no choice. (laughs) He had so many people telling him, "You, you need to meet him." So Matt called me in August of 2011, six months after Benchmark did their series A with Uber, and he said, "Hey, we just had our board meeting. Uh, we're gonna raise this- to series B. Uh, can you meet with Travis tomorrow?" So I went to Uber's, like, first official office and met with him at this table that he later gifted to me as our deal table and signed it, which was very kind of him. Um, and we hit it off. We, we met for, like, two and a half, three hours. Um, realized there was a lot of connection, um, and I was in the chase for the deal. Um, and then I got a call from Travis and he was like, "Hey, homie." He called me homie at the time. (laughs) "Uh, uh, I really wanted to do this deal with you, but I have to go with this other firm." And I, I didn't know which firm it was. It turned out to be Andreessen Horowitz. And I, and I... My reaction was as a founder first, not as an investor, and I was like, "You know what? Congratulations. I totally understand. Um, but if anything happens in diligence, just know I'm 100,000% behind you. Um, and so you have a strong backup, so negotiate with strength." And I'm really glad I said that because, (laughs) uh, a few weeks later, I was in, um, in Africa giving a keynote for Obama's, uh, Entrepreneurship Summit, and it was in Algeria, and I got an unknown call, which I never answer, but something told me I need to answer this call. I answered the call, it was Travis, and he was like, "Hey, homie, remember what you said two weeks ago? Uh, is that still true?" And I said, "Abso-fucking-lutely, it's true." Uh, he was like, "Can you meet me in Dublin, Ireland tomorrow?" And I was like, "Absolutely." Uh, and so I got on the plane and that led to my other mantra, which is always get on the plane. Um, and that's made all the difference is just, you know, make the effort, show up, um, meet with the founder, um, in person, break bread. Uh, so I flew to Dublin and we walked the streets, the cobblestone streets of Dublin, had a pint, and it was there that he told me his true vision for Uber, um, which he kept close to his chest at the time, which was to replace car ownership. And it was at that moment I realized, "Oh, the TAM is trillions. It's not..." All my competitors were, were basically doing their models based on taxi companies and black car companies and not realizing, "No, no, no, you're turning the... every car into an iPhone." You're creating a network machine, uh, on wheels, and that leads to a platform, it leads to a m- a two-sided marketplace. Um, and so I ran to my hotel and I, uh, wrote a term sheet at 290 million, and, uh, you know, I, I text him the term sheet and he didn't answer, and I was, like, waiting for an hour. I'm like, "Oh, no."
- HSHarry Stebbings
That's an awful wait.
- SPShervin Pishevar
Yeah, it's the worst. It's... So I was like, you know, "Is he shopping it?" So I, I, (laughs) I text him again, I was like, "300 million." (laughs) And for the first and I think last time and only time that I've ever seen Travis not, you know, negotiate, um, uh, strongly, he, he was like, "No, 290 is fine." And I was like-... I ran straight to his hotel room and I have a picture, I'll send it to you, of us at the door, uh, signing the term sheet, uh, for 20 million at the time. Later, I got another six and a half million through, uh, secondary for Menlo. Um, so that investment at today's prices is worth almost $7 billion. So it was, it was one of those, you know, once in a lifetime investments-
- HSHarry Stebbings
So 20 to 7 billion?
- SPShervin Pishevar
... 26 and a half million turned into like 6.7 billion at today's prices.
- HSHarry Stebbings
You do this deal as part of Menlo, correct?
- SPShervin Pishevar
Yeah.
- HSHarry Stebbings
How long were you at Menlo for?
- SPShervin Pishevar
So I was there for 18 months, uh, and then I became an advisor for a year.
- HSHarry Stebbings
You get where I'm going with this?
- SPShervin Pishevar
Yeah, yeah, yeah. No, it's, it was a good ending though (laughs) .
- HSHarry Stebbings
It was a good ending?
- SPShervin Pishevar
Yeah. So, um, I, uh, basically worked out an advisory agreement. Uh, and then I, because of what I had done, they agreed to give me, uh, increased carry deal by deal. So instead of the, you know, getting carry in the fund, I asked for carry in every deal that I did 'cause I had a lot of faith in the deals that I did. Uh, and that turned out to be great. So I got more carry than I would've gotten in the fund, um, by agreeing to do deal by deal carry. So that was a huge thing. And then Travis also, because I was very involved with, with Uber, I was on the board, uh, as a board observer and I was a, you know, and he was making me a strategic advisor after I left Menlo to start Sherpa, um, Capital. And, um, and so before I started Sherpa, I, uh, he allowed me to buy secondary shares from another early person. So I, I sold all my Facebook shares that had gone public at like 53 bucks, 58 bucks a share. And I put it all, I bet it all, everything I had, I put it all into Uber. So if Uber didn't work out, I would've been (laughs) you know, bankrupt.
- HSHarry Stebbings
What price was this?
- SPShervin Pishevar
Uber?
- HSHarry Stebbings
Yeah.
- SPShervin Pishevar
It was 33 cents a share effectively. Uh, based on today's prices, it would be 33 cents a share.
- HSHarry Stebbings
Wow.
- SPShervin Pishevar
Yeah. And so, so I had my direct exposure and I had my, my carry deal by deal. So that, that worked out, th- thank God.
- 14:14 – 21:36
Being Strategic Advisor at Uber
- SPShervin Pishevar
- HSHarry Stebbings
Thank God.
- SPShervin Pishevar
Yeah. (laughs)
- HSHarry Stebbings
I, I was suddenly shit scared-
- SPShervin Pishevar
Yeah, yeah.
- HSHarry Stebbings
... that $1.4 billion of carry was just like, "Nope. Nothing but bad luck." (laughs)
- SPShervin Pishevar
Yeah.
- HSHarry Stebbings
Um, okay. So n- we're now like right-hand man, strategic advisor. Take me to that time then.
- SPShervin Pishevar
It was one of the greatest experiences of my life. Uh, I think, you know, watching an entrepreneur of Travis's, uh, quality, um, is... And being able to work with him very closely.
- HSHarry Stebbings
What do you think makes him so good?
- SPShervin Pishevar
Well, my theory on this is, you know, I've been lucky to be able to work with what I call foundational founders, really exceptional intelligence, um, highly intelligent founders. Um, and you know, I got a s- I got this experience of, of kind of sensing that kind of intelligence because I was, I was in a magnet school, uh, with some brilliant, brilliant minds. Um, it was a math, science, communications magnet. They tested a bunch of kids and 100 of us were picked. We were the guinea pigs. So I got bused for like, you know, hour and a half each way every day, wake up at 5:00 in the morning, go to this school that was in Silver Spring, Maryland. Um, and then I met all these brilliant, brilliant kids, uh, kids that, you know, uh, would remind you of a young Elon or a, a young Travis. And a lot of them ended up, you know, helping build Google and build Danger, founded Danger. Um, and these were my, my, uh, my fellow, you know, students at, at, at the magnet school. So with, with Travis, I immediately was like, "Okay, he's extremely brilliant." Um, and one story I like to say is... I'm, I'm close to Yuriy Milner. He's been a great mentor. Uh, I met him when he first did the, the Facebook deal, and that's how I actually met Daniel and Shak through Yuriy. Uh, we went on a, uh, a, uh, a, a meeting and trip together and, uh, we all hit it off. And Yuriy, uh, I brought Yuriy into Uber. Uh, so I brought a bunch of people into Uber. I could tell you that story-
- HSHarry Stebbings
At what price?
- SPShervin Pishevar
Uh, at the, at the same 33 cents. 290 million-
- HSHarry Stebbings
So 33 cents is like what sort of price?
- SPShervin Pishevar
290 million valuation.
- HSHarry Stebbings
200 mil.?
- SPShervin Pishevar
Yeah. Yeah. And so, uh, Y- Yuriy and, and Travis were... We became close and, um, we were at this Oscars party, uh, event that I think CAA was doing. Um, and Yuriy, Travis and I were there. And then Yuriy, who is a mathematician and physicist, w- had this, you know, hobby of giving Travis really hard math problems. So he like gives him this math problem just verbally as we're sitting there (laughs) at this Oscar party, and you know, Travis famously like paces around all the time. Like, we were at... There was a track at the office at Uber with his like path that he would walk back and forth. He would think by walking. Um, and so he's like walking back and forth figuring out this problem, and a lot of my friends in the magnet school, they would see... They were the types that could see numbers, like brilliant mind, uh, and, and do calculations. So like, I could see him looking up and calculating. Uh, and he came back in like two or three minutes and he was like, "Da-da-da-da-da." He said, said the equation. Uh, and Yuriy was like, "Almost." And he was like, "Ugh." You know, he r- ran off and walked around and then came back two minutes later and had the right answer all in his head.... um, but it's that kind of brilliance. Um, you know, I've, I've been lucky to have invested in SpaceX and, you know, become friends with Elon and, and later I did Hyperloop and, and I, I got to witness, um, what an exceptional and brilliant mind can do. Um, and these are people that are like, it's not even 10X. You talk about 10X engineers. These are like 1000X humans, um, and so I've learned over time that it's, it's worth waiting for the 1000X founders, um, and investing in the future Travises or the future Elons or, you know, I invested in Airbnb and got to see Brian early on.
- HSHarry Stebbings
There's a lot of suggestions that the Uber culture was bluntly incredibly hard-driving, incredibly ruthless, and, and pretty tough to be in, to be quite frank.
- SPShervin Pishevar
I mean, I, uh, you know, I don't agree with that. I think Uber's culture was, was excellent. Uh, I think they were achieving greatness. Um, they were making history. It was the fastest-growing company in history, um, and you can't get there without being fierce. You can't get there without working extremely hard. You can't get there without having really intelligent people coming together to be part of one team, y-
- HSHarry Stebbings
Where were you not fierce enough?
- SPShervin Pishevar
Mm-hmm.
- HSHarry Stebbings
When you look back now to those times-
- SPShervin Pishevar
Oh.
- HSHarry Stebbings
... and you're like, "We should have been fiercer."
- SPShervin Pishevar
Lyft. Yeah. Uh, we could have been way fiercer on Lyft earlier. Um-
- HSHarry Stebbings
In what way?
- SPShervin Pishevar
It was the one time I saw Travis hesitate. Um, uh, so what happened was, Lyft was, you know, Zimride, and, uh, I had passed on Zimride, and then, um, they saw Uber launch with black cars, and so they launched effectively what became UberX later. We were already working on launching UberX, and, um, and so... But they beat us to it and they launched, launched with Lyft with the pink mustaches and people's cars and, and so on. They weren't black cars. Um, and they were illegal. Like, they didn't have approval from the San Francisco Taxi Commission. So Travis, basically for six months, was like, you know, telling the, the Taxi Commission, the city government, like, you know, "Hey, these guys are illegal." Like, w- you know, "Why are you allowing it?" Et cetera, instead of launching it, you know, as well, um, which was like the first and last time he ever made that mistake. Um, and in that six months is when Lyft kind of took off, and they ultimately ended up with about 30% market share. They never expanded globally. It's funny, Andreessen, having lost the Uber deal, they ended up doing the Lyft deal, and we had, you know, Travis and Emil, y- you know, they were close to, to acquiring it, uh, acquiring Lyft, uh, which, you know, uh... But they wanted too much, uh, (laughs) ownership, uh, so that luckily didn't work out. Um, but Lyft was... I remember taking the first 100 Lyfts to gra- gather intel for, for Travis, um, and talking to drivers and, you know, you sit in the front and you'd do the fist bump and all of that stuff. So they, they were, they... it was cute. They were onto something, um, and they beat us to, to the punch by six months, and that cost 30% of the US market at the time, um, and so, you know-
- HSHarry Stebbings
Why were you too fierce?
- SPShervin Pishevar
I was involved in the beginnings of, uh, Uber China, uh, so there's a good story about me getting TPG and Bonnerman in there, and I can tell that story. It ultimately comes to, um-
- 21:36 – 26:05
Recruiting Emil Michael
- SPShervin Pishevar
- HSHarry Stebbings
Can we unpack it b- just first with Emil-
- SPShervin Pishevar
Yeah, yeah.
- HSHarry Stebbings
... 'cause you mentioned Emil's name there, and I just want to kind of do it stage by stage a little bit.
- SPShervin Pishevar
Yeah.
- HSHarry Stebbings
Emil obviously had a big role to play, and I hear you were part of recruiting him.
- SPShervin Pishevar
Yeah. So Tr-
- HSHarry Stebbings
C- yeah.
- SPShervin Pishevar
Yeah. Though Travis came to me and was like, "Hey, I, I need to recruit, you know, a number two, um, and this guy, Emil Michael, you know, everyone speaks really highly of him. Um, uh, can you help me recruit him?" So Travis and I basically, uh, divided and conquered, and we both worked on, on getting Emil, uh, and, and we were really close to getting him, and in one of the calls, he said, uh, "Listen, I, you know, have these other offers, uh, and they have titles like President of Clout or President of Jawbone." And, um, you know, he wanted a president title, uh, or chief operating officer and, and so I called Travis and I was like, "Hey, um, Emil, y- you know, uh, is, is interested. He wants a title. He's been offered this title." And, and Travis didn't like titles, so he said, "Tell him, uh, he can be president of myself on the business card." (laughs) So, uh, and, uh, so I called Emil and I was like, "You know, Travis says you can be president of yourself on the business card." And-
- HSHarry Stebbings
Oh, uh, how kind of you to relay the direct information.
- SPShervin Pishevar
Yeah, direct. Directly. (laughs)
- HSHarry Stebbings
(laughs) You did not varnish that one.
- SPShervin Pishevar
Yeah, I did not.
- HSHarry Stebbings
(laughs)
- SPShervin Pishevar
Uh, and, uh, and Emil took the president of Clout position, uh, and so, you know, I called Travis and I was like, "Hey, um, he took this other position, uh, but I, I..." You know, look, I've... In the past, I'd experienced, like, losing someone and then getting them later, and if they're special enough, you'd, you'd want to get them later anyways. So I said, "Look, I think I know what to say to him to, to kind of plant a seed for later on." He was like, "What are you gonna say?" And I was like, "This was an IQ test and you failed it." And now that I know Emil, I would never say that to him because he's one of the smartest people on the planet, um, but I'd said it and it worked, and he told me, like, you know, for six months, Uber was, like, going like this and Clout was, you know, uh, doing okay, but not, not an Uber, um, and he was like, "Damn it," you know, "I failed the IQ test." (laughs) Um-And so later, uh, that year, I, uh, organized a trip. Uh, I had introduced David Bonderman and, and Coulter to, to Travis and we were working on the series C. So Google was leading the round. And I said to Travis, "Look, you know, we should, we should get Bonderman on the board and get TBG as a counterweight to Goo- to Google." 'Cause it's like that, you know, if they're on the board then you need, you need a counter. Um, and then two, Bonderman could call any leader in the world, and he just passed away last week, uh, same day as my mother. Um, and, uh, he was a great mentor, uh, great investor. Um, and so we had breakfast, they hit it off, uh, and then they invited us to go to the Oscars, uh, with them. So we got on a plane, flew to the Oscars and then they were like, "We're going to Asia, five countries in six days. Do you wanna come with us?" And they had their two planes and Travis was like, "Sure." Like so we got on the plane, we got on the plane again, the, the mantra. We did five countries in six days. Um, and I think it was the first time that Travis was in China. Um, and then we introduced him to the CEO of Baidu and that led to the joint venture that led to Uber China. So that was where it began. And then on that trip, we go to Hong Kong and, uh, we're at this restaurant, um, and, uh, it's Bonderman, me, Travis, Coulter, uh, and I go to the bathroom and, um, Emile is at the stall next to me (laughs) and I'm like, "Emile, what are you doing here?" And he was like, "I'm here for a wedding." And I was like, "We're all here. Travis..." And, and he came over and that was it. We closed him that night, uh, and he became chief business officer and the rest is history. He architected the 15 billion dollar raise. Uh, he had a massive impact on the trajectory of, of Uber and he became, uh, really, uh, Travis's, um, right hand, uh, and, um, sparring partner in building, building
- 26:05 – 30:01
Uber China: The Challenges and Triumphs
- SPShervin Pishevar
Uber.
- HSHarry Stebbings
You mentioned Baidu China there, I just wanna take them in turn. Was that a good joint venture?
- SPShervin Pishevar
I mean-
- HSHarry Stebbings
Like was China good for Uber?
- SPShervin Pishevar
Yeah, I mean, I, I would say, look, it, it was... It cost a lot of money to compete with, um, with, uh, Didi and, and the other, uh, companies. And, and, you know, essentially these, these companies in China are favored. It was, it was remarkable that we got permission to launch, first of all, as a US company, because like Google, Facebook, they never were able to launch in China. And so we were really one of the first to be able to launch a consumer internet product, uh, that was an American invention inside of China. So that, that was remarkable. I thought it was worth, given the size of the market to, uh, as part of our global expansion to be present and to also mitigate the risk by having a, uh, a joint venture partner that is as strong as Baidu. So I, uh, our fund, we put 50 million into the beginning of, of Uber China and then later put another 50 million into Didi when they merged. Um-
- HSHarry Stebbings
And this was when you were doing Sherpa?
- SPShervin Pishevar
Yeah. Yeah.
- HSHarry Stebbings
How big was Sherpa?
- SPShervin Pishevar
Um, Sherpa ended up, you know, it w- we... Our first fund was small, like 153-
- HSHarry Stebbings
Yeah.
- SPShervin Pishevar
... million. Second one was like 175 and then the third one we-
- HSHarry Stebbings
Yeah, so to put 50 in, you were like-
- SPShervin Pishevar
Yeah, and so one thing I did, just a little history on (laughs) , on venture capital, uh, is VCs did not like SPVs back then. So I was really the first one to push SPVs hard. So I ended up doing... We ended up doing $200 million of SPVs for Uber on top of these other investments and, um, and then w-, uh, you know, uh, we also brought our LPs into co-invest. Um, you know, TBG was one of our LPs at Sherpa, so we brought them into, into Uber and they put like 83 million and then Google didn't want a share. They wanted the whole $250 million dollar, you know, allocation. And, uh, and Travis didn't want more dilution. And so my solution to that was, uh, what's called Waverley Loans, which no one had used in 30 years, but I used Waverley Loans to structure my secondary purchase of shares from an early founder, um, when Travis let me, uh, you know, become a, you know, um, an advisor and, and, and investor directly when I left Menlo. And, um, basically the way Waverley Loans work, it's like a tax-free loan to a founder, uh, and you exchange it for shares later and you retire the, the, the preferred shares, um, that you're replacing, uh, with common shares. So, it's basically a swap.
- HSHarry Stebbings
Wow.
- SPShervin Pishevar
Um, and, um, so I popularized that and then the TBG solution was I introduced them to Waverley Loans and we did the largest Waverley Loan in history, it was 83 million, uh, and bought, um, Garrett Camp's shares, uh, for, for TBG, um, for, for that amount. So that was at a-
- HSHarry Stebbings
He sold out fully?
- SPShervin Pishevar
Uh, no, no. He's, he's, uh, he held on, uh, a lo- to a lot. Yeah, he's a multi-billionaire.
- HSHarry Stebbings
I, I don't know Garrett-
- SPShervin Pishevar
(laughs)
- HSHarry Stebbings
... but my heart just sank for him (laughs) .
- SPShervin Pishevar
Yeah. But, I mean, you know, the- they... I, I think TBG on that 83 million made close to two billion.
- HSHarry Stebbings
Oof.
- SPShervin Pishevar
Yeah. So-
- HSHarry Stebbings
Well they must be very grateful to you (laughs) .
- SPShervin Pishevar
(laughs) .
- HSHarry Stebbings
And on Bonderman actually, I cold emailed him 11 years ago.
- SPShervin Pishevar
Yeah.
- HSHarry Stebbings
And he jumped on a half an hour call with me when I was 17.
- SPShervin Pishevar
Oh, that's nice.
- HSHarry Stebbings
I always remember that thinking, "Wow, what a dude."
- 30:01 – 34:06
15 Billion Raise
- HSHarry Stebbings
we have that and so we have now Emile onboard. You mentioned the $15 billion dollar raise.
- SPShervin Pishevar
Yeah.
- HSHarry Stebbings
Take me to that.
- SPShervin Pishevar
So, you know-... we're looking at global expansion and you want to expand to 800 markets and dominate, uh, the world. Um, and, uh, at the time, the, the world was up for grabs and no one was better at, at, uh, what we were doing than, than Uber. And, um, so the idea was, okay, we've raised this round with, with Google, that was a series C, um, but we wanted to do a much bigger round and a much higher valuation. And so Emil kicked off that fundraising, and this is where the partnership really took hold and, uh, they would line up the investors outside so they all saw each other in the (laughs) in the hallway. Genius. And then they would have a s- tight deadline, like we're raising this much, uh, we're gonna expect term sheets by Friday. Um, so it was a very efficient process. Um, and so that series D, like a year after the series C, which Google and TPG did, that was at three billion, this was at 17 billion and we started off at 10. So Emil (laughs) was able to negotiate from like 10, 11 billion valuation to 17 because there was so much competition for the deal, right? And so like Kleiner Perkins came in, Mood Rohani led that deal, I think they put $100 million in at that round. Um, and then, you know, then it was, uh, you know, uh, the SoftBank raise and, and, uh, um, you know, the much bigger raises. And so ultimately, we had billions of dollars to be able to, uh, expand around the world, um, and that led to the market share that, that Uber has today, with, with Uber Eats, with, with, uh, Uber itself.
- HSHarry Stebbings
Can I ask, was that a necessary evil? And what I mean by that is, that much money that early, was it required to achieve what Uber achieved or, in reflection, was it a little bit too much too soon?
- SPShervin Pishevar
No. It, it was what was required. Uh, you know, this is atoms and bits, like you, you need cars and people and labor and millions of them, right? Uh, around the world. And you need to be able to subsidize it, uh, to get, uh, the market share going. I mean, I remember I went to most of the city launches around the world and we came up with like a whole playbook, um, including getting celebrities to come in. And so I, you know, in my round, I, you know, brought most of Hollywood (laughs) into Uber. Uh, Guy Oseary likes to joke that, you know, I've made m- more people in the music industry money on, on Uber than they have in the music industry. Uh, but I brought Scooter Braun, Troy Carter, um, Ari Emanuel and, and WME, um, uh, m- uh, many, many others. Uh, Sophia Bush, uh, Olivia Munn, um, you know, all, all invested in that, in that series B at 33 cents. So, um, and then they, they helped us because when we went around the world and we wanted to launch, it helped to have a celebrity be rider zero or rider one. So I brought Edward Norton into Uber. Um, and so I remember for the LA launch, um, we were like, okay, we're gonna have... Rider zero was, was, uh, Travis' parents, his mom and dad. Uh, and then rider one, I was, I was having dinner with Edward and I was like, "You know, what, why don't, why don't we..." And he was like, "I'm going surfing this weekend." And I was like, "Would you mind taking an Uber SUV with your surfboard to the beach and be rider one?" And he was like, "Absolutely." Uh, and so he was our rider one and we, we did a blog post about that and then we replicated that playbook all over the world. So in India, we would launch with a Bollywood player, uh, actor or a, or a cricket player. So...
- 34:06 – 47:30
The Beginning of the End: Betrayal by Benchmark
- SPShervin Pishevar
- HSHarry Stebbings
I, I absolutely love that. So we have this continuous meteoric growth, we've got the $15 billion now and it, it's just going through the roof.
- SPShervin Pishevar
Yeah.
- HSHarry Stebbings
W- where do things start to fray? 'Cause this is like the dream story to date.
- SPShervin Pishevar
Yeah. Well, I, you know, the business did not fray. Um, the business was executing, um, at the highest levels of excellence. Um-
- HSHarry Stebbings
So the business is not fraying.
- SPShervin Pishevar
Mm-mm.
- HSHarry Stebbings
We are actually full steam ahead. But things start to go wrong.
- SPShervin Pishevar
So, um, what went wrong was we had the wrong venture capitalists on the board, and that was unfortunately, in my opinion, it was Bill, Bill Gurley at Benchmark. And, you know, I haven't told many of these stories, uh, and, uh, I've kind of waited until we found out exactly all the things that happened. Um, but basically, Gurley was pressuring Travis, uh, and Uber to go public as soon as possible, all right? And he was, you know, pushing, pushing for, for that, uh, incessantly. He did a blog post that didn't name Uber, but was like talking about that they... these companies need to go public. Um, and, and so at, at one point, you know, Travis stopped, you know, responding to, to Gurley, uh, 'cause he was, you know, being annoying. Um, and, uh, and, and so, you know, Gurley is like a 6-foot-10 Texan guy who's used to like getting his way and being listened to and so on. So, um, when Travis stopped, you know, responding to him, um, we found out in our investigation that, um, you know, he, uh, hired, uh, some private investigators, had weekly meetings about, how do we get rid of Travis? Starting in January of 2017. Um, and then when the Susan Fowler blog post happened about a month later-
- HSHarry Stebbings
Remind everyone what was the Susan Fowler blog post.
- SPShervin Pishevar
It was an engineer that, um-... had a bad experience with a, kind of a middle manager, her, her, uh, engineering, uh, uh, middle manager, um, who, uh, har- basically harassed her. Um, and, uh, and so she wrote a blog post about it. Um, and I remember that day vividly because, um, Travis, uh, and I were in, uh, Malibu. We, you know, uh, every summer we rented a, a Malibu house, and, uh, with, uh, some good friends of ours. Um, and, uh, so we had this w- kind of, I call it the last innocent weekend in Silicon Valley (laughs) . Uh, so we had this, you know, great weekend, laughing and, and, uh, relaxing after working really hard, just flown in from China. Um, and, uh, the blog post happened and Emil walked in and was like, "Hey guys," like, "you should take a look at this. It's got 3,000 likes." Um, so we read it, um, and then Rachel Whetstone called, who is a political operative that had, uh, Gurley had advised Travis to hire. Um, and it turned out there were two political operatives from Google that were hired, um, and Rachel was one of them. So Rachel's on the line, and she immediately says, you know, "We need to hire, uh, Attorney General Holder," uh, which was Obama's attorney general, who had, uh, recently stepped down and was at a big law firm. "We need to hire our Attorney General Holder to do an independent investigation of workplace culture." Um, and I looked at him, and I was like, "It's a trap." (laughs) uh, you know, and he, he was in a conversation so he didn't hear me, um, and it went over his head. But, uh, you know, he agreed to it, and that was the beginning of the end 'cause you're, you're basically giving up, you know, um, a lot, and, and, uh, you're becoming very vulnerable in that situation. Um-
- HSHarry Stebbings
Just for... Why are you becoming vulnerable? Because you're opening up.
- SPShervin Pishevar
Well, if, you know, if, if someone has a nefarious strategy to get rid of you and you agree to a, uh, independent investigation by the attorney general of America, you're vulnerable. Like, they're, they're, they're going through every single thing, and they can turn it into something that it's not, right? Um, and so things can be manipulated and all of that. Um, and, and so, you know, six months later, it's, uh, the report's supposed to come out, and, uh, that week Travis, um, tragically lost his mother in a boating accident. Uh, um, mother and father, uh, were in a boating accident, and she passed away, and he was in the hospital, and his father was also, like, close to death. And in the middle of that tragedy, um, Benchmark, Gurley decide to go after Travis, so they delayed the, the release of the report. And the report, by the way, didn't find anything wrong that, you know, that Travis did or I did or... There was nothing, nothing in there about, you know, him, you know, directly... Um, and the recommendation was, like, to go hire, uh, a Sheryl Sandberg, like, a chief operating officer. So Travis was actually in Chicago the week that he lost his mother, um, and recruiting a chief operating officer, and, um, you know, dealing with the tragedy and trying to take care of his company. Um, and Matt Kohler and Peter Fenton show up at his hotel room, surprise him, with a letter f- with five early investors, um, basically saying, "You need to step down as CEO."
- HSHarry Stebbings
Who were the early investors?
- SPShervin Pishevar
I think it was, you know, Lowercase, First Round Capital, Menlo, um, obviously Benchmark. I think that was it. Um, and, and they basically said, "Look, if you don't resign, we're gonna release this letter publicly, you know, to the press," et cetera. And so (sighs) Travis was kind of, you know, in the room for hours and hours trying to decide what to do, and he ultimately agreed to, to step down. Um, which I highly regret, um, y- because-
- HSHarry Stebbings
Did he have a choice?
- SPShervin Pishevar
I now look at, like, how Sam Altman handled his coup d'etat, um, and, over a weekend, and, um, and how he galvanized the employee base, right? Um, and I think he, he learned some lessons about what's happened in the past to Steve Jobs, to, to Travis, um, and he was able to, um, you know, find his way back when he thought he was gone, right? And, and obviously that's been-
- HSHarry Stebbings
Could Travis have pushed back and said, "Release the letter. See you later"?
- SPShervin Pishevar
I think... Look, you know, I think he was in a very tragic week in his life where he's lost his mother, and I've just lost my mother, so I understand the grief that you're going through, especially in a tragedy like a, like a boat accident. And so he was very vulnerable, and, uh, and they pounced, y- which is just unbecoming. Like, uh, it's not the type of behavior that, uh, any VC or investor should do. Um, and, uh, they took advantage of that fact, and it worked. Uh, they got him, they got him to, to step down. And then what happened which got me directly engaged in the battle, in the, what I call the Uber war, um, was that about in early August, they then sued, in Delaware courts... After they had already gotten rid of Travis, they then sued to get rid of him and his two board seats that he had gotten that he hadn't appointed yet.... so three board seats. So they wanted, you know, effectively, board control, um, and they sued to get rid of them. So I hired Quinn Emanuel, John Quinn who's like the fiercest litigator in the, uh, world, in the corporate world, and, um, and I, and I countersued Benchmark and, um, you know, flew to Delaware, uh, and landed, went to this little courthouse and it made me fall in love with the American justice system because this, the entire corporate legal system is held up by this tiny little town, you know, little courthouse. And as I go in the courthouse (sighs) , we make our arguments, uh, and the judge finds with us and rejects Benchmark's attempt to get rid of the three board seats. So I remember calling Travis and being like, "Hey, um, we won. Um, your three board seats are protected," like, "Appoint them now." (laughs) He ended up, uh, appointing Ursula from Xerox, um, and, uh, and, and, uh, former CEO of Merrill Lynch, uh, to the board. Um, and then I found out through our investigation, uh, two weeks later, after I won this case, um, there was a firm called Fusion GPS, which is the firm famously that, uh, did the Russian dossier against Trump, the fake Russian dossier, uh, and it's a, basically a political operative type firm, former journalists, uh, who were, uh, basically the weaponized arm of the DNC. So they did the Russian dossier against Trump to basically, you know, make him lose to, to Hillary and then cause all kinds of trouble during the first term. Um, really, like, immoral people. Um, and, and so we found out in the investigation that two weeks after I won the case, um, a founding partner of Fusion GPS was sitting in a café in DC with a reporter from Fast Company with a memory stick and a fake police report from London, uh, about me. Um, and, um, they gave it to the reporter. The reporter, we found out, you know, I, I filed lawsuits to do discovery, um, a law called 1782 that allows if you have a British case, you can actually, um, sue in federal courts in the US. It's a treaty from 1782 and then, uh, basically, um, it, it allows you to do discovery in federal courts in the US for a case in, in, in the UK. So I hired the top expert on 1782s and won against, uh, Fast Company and we got discovery on the, the emails and there were multiple emails from the London Police telling the reporter, like, "This is not our report." And he still reported it, and it, it, uh, basically threw my life into a tailspin. Um, and so-
- HSHarry Stebbings
How so?
- SPShervin Pishevar
Well, i- i- acc- ac- accusing me of, of, uh, of, of, you know, uh, something awful that I never, never did, and that, uh, you know, I was innocent of and, and they fabricated a police report in order to get reporters to, to do it, and once the first one did it, every other publication did it. Um, and then when we countered with a letter from the London Police, um, saying, "This is not our report," um, basically, that quelled that at the time and then they had continued with, like, five anonymous, uh, accusations, um, and this is in the middle of the MeToo movement, right? Uh, directly in the middle of it. This is like October, November of, of 2017. So I basically realized, like, if I, if I don't, uh, you know, either take a leave of absence or step down, they're just gonna keep attacking until I'm... until that happens. And so they were trying to stop me from... 'cause I, I had organized, uh, a shareholder group, uh, with people like Ron Burkle, who I'd brought into, into Uber along with Ashton and, and Guy, they had a fund called A Grade. Um, and, uh, Adam Leber who was a, you know, a top music agent, uh, and other investors, uh, to basically counter-sue and fight what was going on. I was meeting with, um, Rajiv Misra about, like, buying Benchmark's stake 'cause I was, you know, publicly going on CNBC and saying, "Hey, like, we'll buy Benchmark's stake. If you don't..." "... if you want out of the
- 47:30 – 55:17
The SoftBank Investment & Leadership Changes
- SPShervin Pishevar
company, let's get you out and let-"
- HSHarry Stebbings
Why was, why was that not-
- SPShervin Pishevar
"... Travis continue."
- HSHarry Stebbings
... why was that not an option? People want liquidity. We see this more and more with secondaries and late-stage secondaries today. Why did we not just say to Benchmark, "Hey, Bill, you know what? You want liquidity? I get it. I'm an investor, I get it. You want liquidity? We'll buy you out at a great price." Why was that not an option?
- SPShervin Pishevar
So the SoftBank conversations, ironically, Travis and Emil started those conversations, the ultimate $12 billion investment from, from, uh, SoftBank Vision Fund. Um, they started that, that whole negotiation and then Travis got, you know, uh, removed from Uber and, and so did Emil at the same time. And so they got two of... two of the greatest minds (laughs) in Silicon Valley were taken out of the company. This is the greatest value destruction that's happened since, um, firing Steve Jobs at Apple, um, and it was a massive mistake. If you look at... if you look at Tesla, it's a trillion-dollar company now. I believe if Travis and Emil had stayed at Uber-... Uber would be a trillion-dollar company by now. Um, and, you know, uh, they brought in Dara Khosrowshahi, who is a, a, a dear friend. So I, you know, I call, uh, Dara the great, you know, stabilizer and, uh, he has taken Uber to, you know, $175 billion market cap, which is great, um, and profitable. He's done all of those things. Um, you know, Travis was working on ideas like self-driving, uh, and automation. And, and, uh, he was very, he was, he was in pole position at the time and I saw him speak in Saudi Arabia at the FII a couple months ago, and they asked him like, "What would you have done if you had stayed at Uber?" And he specifically went to like, "If you look at all of the great things that are ha- happening in AI," and the paper that came out in, in 2017, we were on top of that. We were working on things. And so he would've been one of the great AI automation entrepreneurs in the world. He would've applied his intelligence to Uber in a way that nobody can. Nobody can do what Elon's doing. Nobody can do what Travis is doing. No matter how great you are. These are like rare, rare Nobel Prize-winning, essentially, founders. Uh, m- and, and so, you know, Uber would've been a trillion-dollar company. So in their greed to go after their, you know, current winnings of billions of dollars, single digit billions, um, Benchmark, uh, and the other investors made a critical mistake. And, um, what could have been, uh, what others, uh, that are in Tesla or SpaceX, for example, right now, who stuck by an exceptional founder with a strong personality like Elon, um, if they had stuck by Travis, we would be experiencing what they're all experiencing, which is imagine if Benchmark had kept their ownership of let's say 10%, right? They would've had $100 billion to give to their LPs at this point if, uh, you know, if they had just not done this. Um-
- HSHarry Stebbings
I always like to see both sides, um, that and Gurley does still scare the shit out of me at 6'10" and a Texan.
- SPShervin Pishevar
(laughs)
- HSHarry Stebbings
Uh, listen, he does. Uh, a- and, and I, you know, I have respect for him as an investor, like candidly. Um, is there a justification for it? I try and put on my investor hat and I think now, "Well, if we haven't re- returned cash to investors in a long time, I need liquidity. If investors are pressuring me to put liquidity back in the pot..." Is there any justification?
- SPShervin Pishevar
No. (laughs) Absolutely not. Uh, i- it's, it's absolutely ... The answer is no. And the reason is, you know, Benchmark invested in 2010, February of 2010. Um, and, uh, or, yeah, sorry, March, March 2011 is, you know. So Benchmark invested in March 2011, um, at a, I believe it was a $50 million pre-money valuation. They put $10 million in. So they were sitting on a massive win. Um, but they were only in the company for like six years when, when Gurley went after Travis. Um, and, you know, typically it takes seven to ten years to get to liquidity. So it wasn't in the zone or the window where you'd be like, you know, "10 years, 12 years we ha- we don't have liquidity," et cetera. It's like, give him four more years. If you had just waited four more years, (laughs) you know, this would be a trillion-dollar company. So that, that ... When you look at that and the impact it would've had on the world, um, there's no justification for it.
- HSHarry Stebbings
Do you think Google, TPG, and other investors should have been more active as a counterbalance to the letter that was handed to Travis?
- SPShervin Pishevar
The perfect storm was that Google at that point saw Travis and, uh, Uber and the self-driving initiative that Travis was doing as a threat. And look at, you know, look at what they ultimately did to Anthony Levandowski, right? To Travis, you know, recruited. Anthony acquired, you know, his company, um, Otto, which was the, the self-driving, uh, semi, semi trucks and, um, and they, they went after him. They, they, they tried to put him in jail. He was gonna go to jail until he got pardoned, uh, by Trump, uh, in the first administration. And, um, you know, they, th- and, and, and so the- Google was not in the mood to be trying to do anything, uh, favorable, uh, at the time to- for Uber or for Travis. So they were gonna stay out of it. Um, other investors, I was ho- honestly, you know, disappointed and shocked that so many were easily manipulated by, by Gurley, uh, and Benchmark and that they went along with this scheme, uh, in the sense that, you know, the letter. Um, I don't think anyone knew the extent to which, um, uh, Gurley had executed, you know, the strategy of, you know, hiring people, uh, like private investigators. Um-
- HSHarry Stebbings
Was it an unfortunate time in terms of just the, the coincidence of timing between the terrible di- situation of mother dying and the la- you know, bluntly the situation? Or was it deliberate coinciding?
- SPShervin Pishevar
I mean, I think they took advantage of an accident, for sure. Um, but, uh, it was a architected strategy starting, like I said, January of, of 2017, to get rid of him. Um, and I, I believe that it was, you know, one of the-... worst venture, uh, decisions ever, um, and value destruction happened for, for everyone involved. Um, and you know, I, I think one venture is too secretive of a industry, um, and that's one of the things I, I, I believe is, is as this kind of story comes out of what exactly happened at Uber and more will come out, um, as our investigation kinda completes now. We're kinda in the sixth, seventh year and the
- 55:17 – 58:19
Expenses on the Investigation
- SPShervin Pishevar
lawsuit-
- HSHarry Stebbings
How much have you spent on this investigation?
- SPShervin Pishevar
I hired the top investigators in the world to figure this out. The fact that we found out it was Fusion GPS, that somebody hired Fusion GPS, um, to, to fabricate a police report and go after me. Um, and then the fact that they went to that extent, um, you know, and usually you never find out about these firms 'cause they're hiding behind multiple layers of law firms, so you can, you can't pierce the veil. So the story of how this, this firm, you know, figured out is, is pretty incredible. Um, so I feel very lucky and my dad, who's 86, made me promise to, to figure out what, what happened 'cause, you know, people who know me know I was innocent and it was in fact fabricated. And so we had all the proof, uh, and I put that out there because, you know, it did hurt my reputation at, at the time. And, and so I had to kinda go through a, a pretty, um, pretty difficult experience. Um, and it was worth it to me to, you know, spend millions of dollars on a legal fees and doing the 1782s. We filed seven- four 1782s. The latest one is against Fusion GPS and the judge found with us last year and it's gonna force Fusion GPS to say who hired them. And so they appealed it and now we're waiting for the judge to make the final judgment, um, to force them.
- HSHarry Stebbings
What do you expect it to say?
- SPShervin Pishevar
Um, well, I can't say (laughs) I can't say publicly who I think hired Fusion GPS, but that, that may be for a, a second episode.
- HSHarry Stebbings
(laughs)
- SPShervin Pishevar
(laughs) When we, uh, when we, uh, get that judgment. Bad actors and bad behavior and, and VCs who do things against founders that is unjust, um, that it's too secretive, that people are too afraid to talk about it. Um, and what I hope happens, uh, from me talking-
- HSHarry Stebbings
Do you think there is a lot more to come out?
- SPShervin Pishevar
There's definitely more. In my case, there's definitely more to come out. Once we find out who h- who hired Fusion GPS, then, you know, I think careers are gonna fall.
- HSHarry Stebbings
Do you think there is a lot more outside of this case?
- SPShervin Pishevar
Oh, yeah. Yeah. Uh, there's a history of VCs who have done this type of thing. Uh, and, and in Benchmark's case, they did it against Naval. They hired private investigators, um, and... Naval Ravikant, uh, he had a company called EGroups and he got thrown out of it. Very similar playbook. Um, and so that's happened multiple times, uh, at Benchmark and it's happened in other funds, uh, and it just needs to stop. And the... Also, the political operatives who came into Silicon Valley post-, you know, uh, Uber and Facebook, uh, it attracted them like flies, and, uh,
- 58:19 – 1:04:25
The Future of Venture Capital
- SPShervin Pishevar
they started to apply-
- HSHarry Stebbings
Well, you thought this before with me. Uh, a brilliant thing.
- SPShervin Pishevar
Yeah.
- HSHarry Stebbings
Uh, you said it was the... 2017 onwards was a drunken period of VC.
- SPShervin Pishevar
Yeah, 2017, uh, the period from, like, 2005 to 2015 was incredible. That's when most of these great companies, whether it was SpaceX or, or Tesla or Facebook or Uber, um, uh, you know, were, were founded. Um, and there was a, there was a, uh, there was a culture of, like, meritocracy and everyone was helping each other and open-minded and you'd meet at cafes. It was a beautiful era in Silicon Valley. Then what happened is when people realized, "Oh my God, these people are gonna become billionaires (laughs) and there's billions of dollars to be made," it... You had the carpetbaggers, you had the political operatives, you had the consultants, you had... All these people started to, to, to come in. Um, and, and then the other thing that happened, um, and I blame myself a little bit because bringing TPG into Uber in the Series C, um, kicked off the whole wave of private equity coming downstream into venture. Series C, B, A. Like, you know, when you looked at, you know, what happened from 2017 to 2021, '22, in the drunken period, um, you had mega funds come in, spread billions of dollars, add massive valuations that didn't make any rational sense. WeWork as an e- as an example. Um, uh, $18 billion went into that company and I passed on that company th- It was ironically another Benchmark company. Uh, I passed on that company because it didn't... The... I remembered the dot-com crash and all the office buildings being cleared up and I was like, "I don't get this business model." You don't own, own it and, and, uh, you could be removed, you know, pretty quickly from, you know, your, your, your, your customers. Um, so I d- I didn't see the strength in that business model. But companies with bad business models were getting $18 billion in cash and that's crazy. Uh, that's not classic venture capital.
- HSHarry Stebbings
Doug Leone said on the show that we've gone from a high margin boutique, uh, business or kind of community to a low margin commoditized industry, and he said there's no way of p- putting that genie back in the bottle.
- SPShervin Pishevar
Venture capital as it is today, especially with private equity coming downstream and what we've seen with the drunken era, um, venture capital is dead.... the, the venture capital that we grew up with and that we looked up to is, that model is gone. Um-
- HSHarry Stebbings
So why is that model gone?
- SPShervin Pishevar
The rate at which companies can be accelerated, um, is, has grown to the, to the point that you can execute on a business plan, um, and in many cases, we're seeing more and more founders actually self-fund or, you know, be able to generate enough, uh, success to be able to build the company. You see more and more opting out of venture capital. The other trend, especially with crypto, is that you have these kind of DeFi and alternative financing mechanisms that are evolving to a point where I think you can actually tokenize venture capital. Um, I think you can demo, demo, democratize venture capital and allow non-accredited investors, uh, to begin investing in the future. Uh, and I think we have a moral obligation to open up venture, uh, and you know, when I, by early, I mean early stage angel investing in the Facebooks and the SpaceXs of the future. But let, you know, mom and pops, you know, be able to invest, um, small checks, be able to invest. So I think in the Trump administration, we'll see changes in that direction of like opening it up. Um, and so that model I think is gonna, is gonna change.
- HSHarry Stebbings
You're an LP in many funds, and we were chatting ou-
- SPShervin Pishevar
Yeah.
- HSHarry Stebbings
... outside before this and you were like, "There's just no cash coming back from the last vintage."
- SPShervin Pishevar
(laughs)
- HSHarry Stebbings
How do you think about that? Have we seen the death of liquidity?
- SPShervin Pishevar
Liquidity has been a major problem, um, and especially during the f- the four years of Biden. Uh, (laughs) um, and, uh, it just coincided with really bad policies and, you know, a dearth of M&A, uh, lack of IPOs. Um, I think that's gonna change in the next four years.
- HSHarry Stebbings
You do?
- SPShervin Pishevar
I think, I think during the, you know, I, I was a early, um, person to come out and support Trump, and I co-hosted David Sacks' fundraiser which came off back in, uh, June 6, um, and publicly endorsed Trump. And, you know, and most of my, my generation, my cohort, um, people like Elon or David Marcus or, um, you know, Sean from Sequoia, uh, Emil Michael, like a- all of these guys and gals are in Palm Beach doing like 17-hour days. You know, it's like the, the best and the brightest have converged. And also it's very similar to like Silicon Valley goes to Washington, you know? Uh, and so I'm very excited 'cause, you know, you look at David Sacks is now the AI, you know, and crypto czar for the president. Elon is running Doge with Vivek. Um, you have some of the brightest minds in the world about to revolutionize the way government works and make it way more efficient. Um, you know, I wrote a proposal about privatizing, um, many aspects of government, including the US Postal Service, which is a big money loser, is not using modern technology to compete with FedEx and, and, uh, UPS and, and DHL and so on. Um, and we could do a lot better. Amtrak. Uh, Amtrak should be hyper- l- h- you know, uh, privatized and turned into Hyperloop, uh, and high-speed rail.
- 1:04:25 – 1:10:27
Quantum Computing & AI: The Next Frontier
- SPShervin Pishevar
Um, and, and so we can do really great things and there should be also moonshots for AI for... I do a lot in quantum computing. I've done it for a long time. I believe AI and quantum are gonna merge and that's gonna really accelerate the future. So I think the market's waking up, especially after Willow, uh, and what Google announced. And th- this is, this has been my thesis for over 10 years. Uh, there's another company called PsiQuantum that came out of Cambridge here in the UK.
- HSHarry Stebbings
What do you think we should do with tariffs? I'm, I'm getting more and more intrigued by Chinese cars and Chinese car subsidies. And I just find... I'm, I'm a massive believer in Adam Smith's invisible hand.
- SPShervin Pishevar
Yeah.
- HSHarry Stebbings
I was always like, "We should let them sell. This is ridiculous-"
- SPShervin Pishevar
Yeah.
- HSHarry Stebbings
"... they'll add a cost." And then I saw how much they're subsidized and I'm like, "This is an egregiously unfair playing field."
- SPShervin Pishevar
Yeah, I mean, uh, th- they're basically state-owned enterprises, right? So the Chinese government is subsidizing them. Um, and so that's a major threat to our ability to be competitive. Um, but even with tariffs, these, (laughs) the Chinese, uh, electric car companies have gotten to the point that, you know, their cars are like $15,000 and they're good cars. Um, so even if you add 100% tariff, you're still talking about $30,000. It's still affordable to a lot of people. So they're still gonna be able to compete because their prices are so low. Um, and so that, that's something that we need to, you know, uh, we need to kind of think through because, uh, America has to build its own manufacturing capabilities, especially in the semiconductor space. So you saw Masa announcing the $100 billion investment in AI in American, you know, American, uh, economy and, and companies.
- HSHarry Stebbings
What did you make of that?
- SPShervin Pishevar
Masa in Saudi, one of the things he talked about is he, he did his calculations and the numbers for me make a lot of sense. Um, that basically you need to spend, you know, trillions, single-digit trillions, and then you're gonna get nine trillion of annual value, uh, coming out of it.
- HSHarry Stebbings
I saw this.
- SPShervin Pishevar
Yeah.
- HSHarry Stebbings
He said you need to spend nine trillion in CapEx and that will result in nine trillion in annual gains.
- SPShervin Pishevar
Yeah, yeah.
- HSHarry Stebbings
And I thought, "My word, he's very precise-"
- SPShervin Pishevar
(laughs)
- HSHarry Stebbings
"... on this nine. Not eight or 10, nine."
- SPShervin Pishevar
Right, right. But, you know, I, uh, the, the scale of what's happening, uh, everything has gotten bigger and more consequential. I think the next 25 years is gonna eclipse everything we've seen in our lifetime. Uh, and we're about to go through civilizational change in the next 20 years. So, you know, a fund like yours and a fund like mine has a really lucky timing.
- HSHarry Stebbings
Are we lucky or are we too small?
- SPShervin Pishevar
... I think if people like you, Harry, uh, and me, and you know, others who have great instincts about people and about companies and trends, uh, are always going to succeed. Um, and they're going to get in that deal even if they lose it to a, a bigger VC like I did in, in the Uber case. Um, your resilience and your grit matters, so if you can build authentic relationships with the great founders of the next 20 years, you'll be their partners in, in, uh, in, in building these, these amazing trillion-dollar companies. Um, and you know, so I do think, I think we're lucky. I think we went through a drunken period because the business models weren't actually correct. But now you're dealing with AI quantum computing, you're going to have basically the power, the mind of God in terms of computing power as you saw with Willow. And you know, I've said for a long time, the reason I'm doing quantum computing is that with quantum computing, what I see coming down the pike will be able to solve problems that would take billions of years to solve. We'll be able to solve them in hours and days. And-
- HSHarry Stebbings
Like, what, what is that? Is that like... I'm, I'm so naive. And is that like solving cancer? Is that like solving climate change with-
- SPShervin Pishevar
Yes. So, you know, where, where I think things are gonna go is that quantum and AI, even at the chipset level, are going to merge. Um, and then that's going to revolutionize all aspects of our lives. We'll find cures to every known disease known to mankind, uh, within I would say the next 10 years. So one of the things I, you know, started saying before Bryan Johnson who's a dear friend, uh, uh, to my- and I've said to my friends is like, "Don't die." Like don't, don't jump out of planes. Don't ski. (laughs) Uh, just don't die in the next 20 years 'cause we're gonna reach a point of longevity where you'll be able to health- live a healthy life for 150 plus years.
- HSHarry Stebbings
Do you really think so?
- SPShervin Pishevar
Yeah. Yeah. Absolutely. The level of advancement that we're about to experience is like a Cambrian explosion of superintelligence. And superintelligence-
- HSHarry Stebbings
So you don't buy the negativity around the plateauing of LLMs, the plateauing-
- SPShervin Pishevar
No.
- HSHarry Stebbings
... of data availability, compute, energy?
- SPShervin Pishevar
I know too much. Like I've, I've seen some of these technologies that other people haven't seen that are coming down the pike. I've seen technologies that are gonna get us to a million qubits, like Google's at like 100 qubits, you know, uh, even with, with, with Willow. And so, um, you're talking about a million qubits. That's the, that's the mind of God. And so you'll be able to solve problems that would take billions of years to solve in hours and days. And so being able to say, "Hey, we can, we can basically find a cure for all diseases known to mankind," and, and people are just gonna die from accidents and not, not disease. Uh, I didn't have to lose my mother, like I, you know, um, so many of our loved ones that we lose to, to old age, like they can live healthier, longer lives and, and, and
- 1:10:27 – 1:11:48
Spicy Questions
- SPShervin Pishevar
stay with us.
- HSHarry Stebbings
Fucking love Bryan. (laughs)
- SPShervin Pishevar
(laughs) He's amazing.
- HSHarry Stebbings
What a dude.
- SPShervin Pishevar
Yeah.
- HSHarry Stebbings
Uh, listen. I wanna do a very special round where basically we actually ask questions submitted by friends.
- SPShervin Pishevar
Okay.
- HSHarry Stebbings
Um, and there's a, uh, so you can choose. If you don't want to answer it, of course, you can't.
- SPShervin Pishevar
Yeah. Yeah.
- HSHarry Stebbings
But game show. Uh, but you have to donate to a charity of your choice.
- SPShervin Pishevar
Okay.
- HSHarry Stebbings
So what, so do you, do you wanna donate?
- SPShervin Pishevar
Y-
- HSHarry Stebbings
If, if you don't wanna answer it. Between $1,000 and $5,000.
- SPShervin Pishevar
Okay.
- HSHarry Stebbings
Yeah?
- SPShervin Pishevar
Yeah. Yeah. Sure.
- HSHarry Stebbings
Sound good? Okay. Number one, how much money did you make from Uber?
- SPShervin Pishevar
(laughs) Um, couple hundred million. Yeah.
- HSHarry Stebbings
(laughs) Savage. Um, who do you think in the Silicon Valley is one of the worst CEOs but who's had the best outcomes?
- SPShervin Pishevar
Steve Ballmer. (laughs)
- HSHarry Stebbings
(laughs)
- SPShervin Pishevar
Uh, you know, the decade that he was CEO of Microsoft, Microsoft was completely just flat, right? Um, and, uh, he's now richer than Bill Gates, right? So he ultimately won. And, uh, you know, they, they did a great job in hiring Satya because Satya's just been, I think, the greatest, greatest CEO, uh, one of the greatest CEOs of our lifetimes.
- HSHarry Stebbings
I love that.
- SPShervin Pishevar
Yeah.
- 1:11:48 – 1:23:34
Quick-Fire Round
- SPShervin Pishevar
- HSHarry Stebbings
Uh, I wanna do a quick fire. So the quick fire is, is essentially I say a short statement, you give me your immediate thoughts. What have you changed your mind on in the last year?
- SPShervin Pishevar
So before my granddaughter was born, Aurora, uh, I didn't fully understand what being a grandparent was. And, uh, I have to tell you, it's like 10 times more powerful than having a kid. It, I've changed my mind now in this sense that I actually think the whole point of life is to become a grandparent. The, it unlocks a level of love that you've never experienced in your life. Like I'm totally obsessed with my granddaughter. Um, you know, I see her every day. I moved across the street from her. Um, she's the light of my life and I live for her. She's given me, um, a massive boost in energy and drive to make the world a better place for her and her generation. Um, and so I just didn't realize, you know, what being a grandparent was until I became one. And, you know, I became one at 48, so I was a young grandpa, a YG. And it's, um, it's the most important thing that's ever happened to me.
- HSHarry Stebbings
What's the single best fund investment that you've made?
- SPShervin Pishevar
Um, (laughs) I would say it, it would be Lowercase, um, Chris Sacca's fund. Uh, I put, you know, a little check in there and got 4 million out. Um, like 25,000 turned into 4 million. So it was, it was a legendary fund. I think it was like 10 million in return, like one point.... five billion or something. Um, so that's, that, that's, that's, that goes in the record books.
- HSHarry Stebbings
How did you get into SpaceX?
- SPShervin Pishevar
So couple, couple ways. One, Elon and I were friends. Uh, and then another friend of mine, uh, Justin Fisher-Wolson, who was on the board of, uh, of, of SGN. Uh, Sean Parker was the Founders Fund representative, uh, who led the deal, but Justin was the one that would come to the board meetings and we became really close friends. And, uh, when Yuri did that deal, I went to, to Justin's house and I actually named 137 that night-
- HSHarry Stebbings
(laughs)
- SPShervin Pishevar
... um, because I, I looked over as we were talking about, you know, him starting a fund and I was like, "What is that number block on your table?" And it said, "137." And he was like, "Oh, that's my, uh, my grandfather's number seat on the Wall Street, you know, on the exchange." And he bought it, uh, after coming to America from Russia. He was a Russian Jew who came with nothing, uh, created success and I was like, "Well, that's, that's the name of your fund, 137." And he was like, "You're right." (laughs) Um, so anyways, he, he's amassed a, you know, he helped bring SpaceX to, to Founders Fund. Um, he was like a, you know, a junior partner or associate, uh, principal type, uh, along with Alex Jacobson, who was this co-founder of, of 137. And so they advocated for spacec- SpaceX investment and then they did a bunch of secondary when they started 137. So they've done really well. Um, and so he had some available back in 2014 at like a, you know, $6 billion valuation, so we, we put some, uh, some money in at that, that valuation. So I, I think, I think SpaceX will be a $10 trillion company. Um, it's, uh, it's just getting started.
- HSHarry Stebbings
What do you think is your most outlandish belief? SpaceX as being a $10 trillion company is quite a bold statement.
- SPShervin Pishevar
Yeah.
- HSHarry Stebbings
Saying there will be many more trillion dollar companies is quite a bold statement.
- SPShervin Pishevar
Yeah.
- HSHarry Stebbings
Saying that you think that we'll get to a stage in 20 years where we won't die. Any others?
- SPShervin Pishevar
(laughs)
- HSHarry Stebbings
Uh, you got any more for me? (laughs)
- SPShervin Pishevar
Yeah. Um, uh, you know, I, I helped start the Network State movement with Balaji and, um, and Joe Lonsdale. I had lunch with Joe, like, 2012 and I, I said, you know, "Hey, what if we started, you know, new cities that had sovereignty, new city states and tokenize it and, you know, uh, uh, have, have ownership become, citizenship become ownership?" And, um, we started hosting New City Salons and Balaji came to it and then Balaji wrote Network States, the, the book, and then we had the first two Network State summits. That movement led to another mantra of mine which is, you know, great founders should try to start new industries, not just companies. Should start a completely new industry. Like Hyperloop was a new industry, um, and, and in this case, uh, network states and new cities is a new industry and there's now hundreds of startups starting new nations. Praxis is another one of them that I'm involved in that's one of the largest network states, uh, and they're looking at a million acres of land, uh, in, uh, in different places in the world, and that I've been helping them with. But we're gonna basically see new nation states, new countries be started in our lifetimes and you're gonna see a lot of people opt in to those, those new, new nations. So I think that's, that's one of my probably more controversial, uh... But the map, the world map 200 years ago looks very different than it does today and it's gonna look very different in 200 years. Nations are not supposed to be permanent. They're supposed to evolve.
- HSHarry Stebbings
What was your biggest miss?
- SPShervin Pishevar
I had the opportunity to invest in Snapchat, um, in the seed round and I had the opportunity to invest in, um, Pinterest in the seed round.
- HSHarry Stebbings
Why did you not do both?
- SPShervin Pishevar
Um, I, so I brought Snapchat to Menlo. Uh, Evan and I hit it off. I really believed in it. I was on, on it in the first 30 days 'cause my kids were on it and so they showed it to me and I, and I was chasing it and Evan and I hit it off. Um, and, uh, unfortunately, Menlo passed, uh, on the, on that round and then the next round as well. And they, um, and then Pinterest I looked at when I was angel investing, so that was my own, you know, fully my fault. Um, and one lesson I learned there is I did the meeting with Ben, um, 'cause I met him through Jack Abraham and I had funded Jack when he was 22, uh, in his company Milo, and then he introduced me 'cause he, he invested in the seed round of Pinterest, was like, "You should take a look at this." And at the time I was talking about, like, social commerce being the next big wave, uh, so it fit perfectly but I did it as a call instead of a in-person meeting, so the one time I didn't get on the plane. Um, I... The, the presentation over the phone wasn't the same than it would've been if we had met in person, so I, I passed on it, uh, 'cause it didn't, it just, you know, it was, y- the presentation just didn't, didn't hit it, didn't hit it for me. Um, but if I had met Ben, I, I, I would have gotten the sense of his brilliance, but over the phone he just didn't present well at the time, and this was like two thousand, I don't know, 10 or 11.
- HSHarry Stebbings
You can only invest in one fund. Which fund do you invest in?
- SPShervin Pishevar
Honestly, the one I'm really excited about is 1789 that my friend Omid Malek started. Um, and Donald Trump Jr. just joined as a partner there. Um, I think they're going to kill it. I think they're gonna do some amazing things. Their thesis early on was to invest, um-... in, in companies that are all pro-America, um, you know, and, uh, you know, anti-woke. Uh, and that thesis has, has worked really well, and I think they're in a really amazing position to, to invest in really incredible companies. So I, I, I, uh, I really believe in them, 1789.
- HSHarry Stebbings
What fund do you think is most overhyped?
- SPShervin Pishevar
Benchmark. (laughs)
- HSHarry Stebbings
(laughs)
- SPShervin Pishevar
Uh...
- HSHarry Stebbings
Do you ever speak to Gurley?
- SPShervin Pishevar
No. No. And th- these were, these were friends of mine. Like Matt Cohler was a dear friend, and, you know, I- I was at his 30th birthday party, his 40th birthday party right before all this happened. And so, you know, we've lost, um... dear friendships that were meaningful, friendships in our lives, um, you know, because of that battle. Uh, the Uber wars is something that should be studied, um, in order to learn lessons about what to do right and what to, you know, what to avoid, the types of mistakes that were made.
- HSHarry Stebbings
If you had the Uber wars again, is there anything you'd do differently?
Episode duration: 1:23:44
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