EVERY SPOKEN WORD
110 min read · 21,576 words- 0:00 – 1:29
Hostile Takeover With No Money
- DSDavid Senra
[typewriter sounds] Can you run through the, the, how you wound up buying and taking the deal to get Take-Two Interactive?
- SPSpeaker
You know, interesting, it's not a story that we've told, and part of the reason is stories like this tend to be sort of self-serving because it worked out well, and, uh, not everything works out well. In fact, most deals don't happen, and deals that do happen don't always work out, but this one did. It's kind of a s- a set of one of one. The, the way we did this deal, uh, has never happened before, and I'm pretty certain it will never happen again because we, we essentially did a hostile takeover with no money. The reason we did that is we had no money, so it was really our only choice. But I had a background in the video game business and started ZMC with partners, and the goal of ZMC was to buy, in certain instances, turn around and in all instances build up and create value. And companies that stood at the intersection of media and technology. And the idea in '０１ when we started the business, uh, was that technology would supercharge media, uh, and create lots of value and destroy value. And, and of course, that's a story now that's more resonant than ever. I thought in '０１ it was pretty obvious, but it was non-obvious to the entertainment business.
- DSDavid Senra
I guess we should give some, some context. By that time, you had already spent two decades in the entertainment business? Longer?
- SPSpeaker
About that, yeah. I'd, I-- And I've been in every entertainment business there, there is.
- DSDavid Senra
So why was it obvious to you in 2001 and not obvious to other people in the industry
- 1:29 – 3:58
Becoming the New Media Guy
- DSDavid Senra
then?
- SPSpeaker
I was the new media guy, so I-- my goal getting out of grad school was to run a movie studio, an old business even when I graduated from grad school. So I got to Columbia Pictures in a very junior job. It was the, the only job I was offered, and by definition, the best I could get in the entertainment business. I was responsible for international television distribution, which, um, was basically the last stop on the train of distribution of film and television. In those days, there weren't many outlets. You-- With motion pictures, you went cinemas, and then you went to this, the beginning, the very beginning of home entertainment, the very beginning of paid television, the very beginning of cable television, and eventually free television. And my job was to distribute to free television. So, um, I'm sitting around, and new media has come along to the entertainment business. In those days, believe it or not, new media was home entertainment, which at that time was video cassette distribution and paid television.
- DSDavid Senra
And this is in the '80s? What time period?
- SPSpeaker
This is in '83.
- DSDavid Senra
Okay, so that's new media in '83.
- SPSpeaker
So that's new media.
- DSDavid Senra
A term still used all the time fifty, almost fifty years later.
- SPSpeaker
A-amazingly.
- DSDavid Senra
Yeah.
- SPSpeaker
So at big companies like Columbia Pictures, which made their money in film and television production and distribution, and were really old line companies who were just beginning to modernize. I was one of a, a small cadre of business school grads who had been recruited into the business, which was atypical for the industry, uh, until the early '80s. So they realized, like, we need a new media guy, like the way today everyone needs an AI guy or AI, you know, army. Uh, and so they looked around and they're like, "Who is the least valuable executive at this company that we can put in charge of new media?" [laughs] And that was me. So in addition to my day job, I became responsible for new media, which was the best thing that ever happened to me because I'd always been a futurist. My thesis in grad school was a history of the electronic entertainment business from its inception in 1895 until when I graduated in '83, and I tried to stay current since then. So the notion of looking ahead sort of came naturally to me, but now I had to do it for my job. Oh, and I had to deliver revenue in that job as well. So that was my initial exposure to new media. And actually, if you look at my career, it has been the combination of traditional businesses and new businesses driven by technology, which is why this is such an exciting time with all things AI.
- DSDavid Senra
I want to interrupt you one second. Did you say-- So you, you were a futurist by looking back, though? Did I just hear you were studying-
- SPSpeaker
Don't you have to be a futurist by looking back?
- DSDavid Senra
So wait, you started back in 1895. What was happening in 1895?
- 3:58 – 9:44
Lessons From Entertainment History
- DSDavid Senra
Who were you studying? Edison?
- SPSpeaker
The very beginning of electronic entertainment, recorded music, beginning of motion pictures.
- DSDavid Senra
What is the record-- The, the beginning of recorded, um, music is the phonograph?
- SPSpeaker
Well, the, in those days it was a wax cylinder, but, um-
- DSDavid Senra
Okay
- SPSpeaker
... you don't really need to know about it. I'll go into it if you want. But it's actually a wax cylinder. It looks like this. You can see them in museums, and that was the beginning of recorded music. That and player pianos.
- DSDavid Senra
I'm more interested in, like, what insights you were deriving from the past and then how you thought it was, uh, you were applying them in the '80s.
- SPSpeaker
So there are many insights, obviously, and we can go into them, um, you know, one after another. But the, the insight, I guess, that spoke to me, that probably helped me the most was you always have to embrace new technologies. If you fight against them, you'll be left behind. Number two, and I've, I've said this at all the companies I've been at, um, most human beings are wired to believe that which is going on now will never change. But the actual state of play is exactly what is going on now will change. It will always change. Uh, pe- for example, people, whether they like it or not, think toda-today's political environment is what it is. If they like it, it's gonna stay forever. If they don't like it, they're moaning that it will stay forever. But it won't stay forever. It'll change. The economy will change, and media and entertainment will change. And because I've always been wired that way, I was able, when I started ZMC, to make sure... I have an idea. Let's not buy legacy businesses that are under pressure. Remember, this is '01, so it was non-obvious. Like, let's not go into the movie business. It's a terrible business, you know, as a business. It's fun creatively, but as, as a business, it's a bad business. Let's not go into deficit network television production. Um, just a bad economic business. Different today than it was, but it was really bad then, where you, you would deficit these shows in hopes of creating enough episodes that you could syndicate them, and if you didn't get there, you had a massive loss. And if you occasionally got there, you had a huge hit, which is what motivated everyone. But it was... You know, the economics looked a lot like winning the lottery. I don't, but I don't win the lottery. How about you?
- DSDavid Senra
Yeah.
- SPSpeaker
Um, but that's not my life experience. But there are many other lessons as well. But the biggest lesson, I think, is that-New things come along and they can grow. Uh, old things in the media and entertainment business take a really long time to die. Sometimes they don't. Sometimes they, they stay in the business forever. Sometimes they come back.
- DSDavid Senra
What would be an example of that from the '80s, where we're at? We're, we're talking about new media, and that's what your focus is.
- SPSpeaker
Home entertainment, a- and which was basically, um, video cassette distribution, which became DVD distribution, which became digital distribution.
- DSDavid Senra
Which was a tiny market at that time that drastically expanded.
- SPSpeaker
It was just beginning to boom in the early '80s.
- DSDavid Senra
And you were an early believer in that?
- SPSpeaker
Well, so much so that I left Columbia Pictures to go to the largest independent home entertainment company, Vestron.
- DSDavid Senra
Okay, so tell me about that.
- SPSpeaker
Well, I'd been very fortunate at Columbia Pictures. I'd figured out how to double the division's revenue in six months, which was good for my boss's career, and therefore good for mine. So I became the youngest vice president at Columbia Pictures, and then I was recruit- I got sort of a reputation for, like, oh, this guy figures stuff out, and I was recruited to a company called Vestron, uh, which was then the largest home entertainment company that had ambitions to become a diversified entertainment company, which was also my ambition. You know, just refreshing conversation from earlier. I wanted to run a movie studio. Vestron wanted to start a movie studio. So I left to go to Vestron, where within, I think about, pardon me, about nine months of arriving, I became president. So I was now president of a public entertainment company, and I was twenty-nine, three years out of school. Uh, was not my expectation. And then I had this, you know, ability to take on the, the new movie division that hadn't actually made any pictures yet, so it was very early. I didn't start it, though. I got there and the team was already there, but I gained responsibility for it. And, uh, we started making movies.
- DSDavid Senra
Go to the new media part, though.
- SPSpeaker
So the biggest part of Vestron's business was home entertainment distribution, which was video cassette distribution. They would create movies and put them on video cassettes, which you would rent in video stores, you may recall. And they would also ultimately make movies and put them through the entire distribution system.
- DSDavid Senra
Would they buy other, m- uh, other content made by other people?
- SPSpeaker
Yes.
- DSDavid Senra
Okay.
- SPSpeaker
Yeah, that was actually how the business started.
- DSDavid Senra
That was the majority of the business?
- SPSpeaker
It was, it was the business when I got there until they started their own production.
- DSDavid Senra
And then the idea is, okay, let's, we're already gonna have-
- SPSpeaker
We gotta do this ourself.
- DSDavid Senra
Okay.
- SPSpeaker
In the same way that Netflix started as a distribution company and realized how to be in production.
- 9:44 – 11:52
Why Hollywood Feared Games
- DSDavid Senra
How did you get from new media is, you know, DVDs and, and home entertainment to, oh, wow, I think I'm gonna have-- I have a vision on video games and I wanna, like, move myself into that industry?
- SPSpeaker
So I was not a pioneer in the video game business. The video game business started in the late '70s and began to grow in the early '80s. Uh, and just by way of background, um, I was really contrarian about video games because Hollywood had a horrible video game experience, which I'm not sure too many people would remember today. But in 1982, there was a huge hit called ET, and Warner Communications, very forward-thinking, had purchased Atari, which at that time was a leading video game company, and they made both hardware and software. And software in those days was cartridges, and cartridges were expensive to make and had a long lead time. So before you released something, you had to decide how many you're gonna sell and order it all. And if you were right, you did great. And if you were wrong, you had excess inventory. You, you didn't have just-in-time inventory with cartridges. It took too long to create. So, um, Warner's has Atari, they're doing well with it, and, uh, they have ET and they're like, "We should make an ET game." And because they didn't really have a lot of experience in how video games were made, they basically j- they made the game in five weeks and put it in the box, and it was a terrible game. And then they manufactured more games, more cartridges than there were Atari consoles. Not sure what their idea was, but they did. And then it, it was a disaster. No one bought the game because it was terrible, and there were visuals of the cartridges being plowed into landfill that you can find online today. And the entertainment business is a small business, and, um, everyone was like, "Oh my God, that, that nearly tanked Warner Communications." I think they took a write-down in '82 of four hundred million dollars, which was a lot of money in '82 for Warner Communications. So the rest of the business is like, "This is a disaster. Like, don't, don't ever get involved with video games. It's a terrible business." Okay, roll the clock forward. I've been at Vestron. I made a bunch of hits. The first picture I greenlight turned into a huge hit. That was very good for my career. Sometimes, you know, it's better to be lucky than smart.
- 11:52 – 20:54
Fox Turnaround and Barry Diller
- SPSpeaker
That got me recruited to become president of 20th Century Fox just a couple years later when I was thirty-two. So now I'm at Fox and, uh, and we turned around. Fox went from last place at the box office to first place.
- DSDavid Senra
Who recruited you to Fox?
- SPSpeaker
Uh, Joe Roth, who was chairman of-- had been newly named the chairman of the studio with the support of Barry Diller and Rupert Murdoch.
- DSDavid Senra
Okay. So what was Barry Diller's role at Fox at this point?
- SPSpeaker
He was the CEO of Fox.
- DSDavid Senra
He was the CEO, but then Rupert Murdoch-
- SPSpeaker
Well, he-
- DSDavid Senra
... owned it
- SPSpeaker
... he was the owner.
- DSDavid Senra
Yeah, okay.
- SPSpeaker
News Corp owned it.
- DSDavid Senra
Okay. But this was a flat-out turnaround.
- SPSpeaker
The studio part was-
- DSDavid Senra
Yeah
- SPSpeaker
... because they were in last place at, at the box office, and they weren't doing well at all, weren't making a lot of money.
- DSDavid Senra
But you're 32?
- SPSpeaker
Yes.
- DSDavid Senra
How do they identify you as the guy to hire for this?
- SPSpeaker
So it's sort of a long, complicated story, so I'll try to-
- DSDavid Senra
We're good. Ton of time
- SPSpeaker
... compress it.
- DSDavid Senra
Give me whatever version you want.
- SPSpeaker
All right. So, so in those days, imagine, like, the independent business is over here, siloed, and the major business is here, and never the twain shall meet. So Joe Roth was an independent producer, and he had never worked in a major studio, and, um, he made movies for Vestron. That's how I knew him. He made Young Guns and Young Guns II for Vestron, which were hits for us. And he and I became friendly in the way that I am, well, first of all, a friendly person, if you don't know that already.
- DSDavid Senra
Yeah, I know. Yeah.
- SPSpeaker
Secondly, like, when I work with people, I wanna develop relationships with them, and he was a highly creative person, a good guy, so we became friendly. Not intimate friends, but, but friendly. Um, so I'm now... I'm at Vestron for a couple years. I'm getting very worried about Vestron's business model for an array of reasons, and Vestron's senior leadership, the person I report to-
- DSDavid Senra
Does it have anything to do with technology?
- SPSpeaker
Uh, it had to do with the fact that the reason for Vestron to exist was that they were a pioneer in home entertainment, but everyone else got into home entertainment. You can never have a competitive advantage in the entertainment business through distribution only. That's why Netflix produces content. You can start with distribution only if you're a pioneer, but you gotta immediately go into production, and production's a very tough business, as I said earlier. So Vestron's not capitalized to be a diversified film and television production company with a video game division. Sorry, a video store division, not video games. And, um, it's, it's apparent to me they're gonna have problems, so I start looking around and, uh, for a job. And remarkably enough, at the age of 31, people are not exactly lined up knocking on my door to ask me to be president of a major film studio. But Joe gets this job as chairman of Fox, and behind the scenes, and this I was not aware of, but I became aware of it, Barry said to Joe, "Look, you've never worked at a major, and you've never run a business. You're an independent producer." But he needed a creative engine to turn around the studio is where that, which was true. "You gotta hire a business guy to support you here, like, to, to be your partner in building the business." So Joe comes from the independent world. Remember, totally different world than major world. He has no relationships in major world. But in independent world, like, I'm kinda well-known. Like, I'm president of the biggest independent. We've done really well. I greenlit Dirty Dancing, which was the highest grossing independent film of all time then, and stayed, uh, that way for a very long time un- until... Pop quiz. What?
- DSDavid Senra
I don't know.
- SPSpeaker
Blair Witch.
- DSDavid Senra
Okay [laughs] .
- 20:54 – 26:20
Rupert Murdoch and High Stakes Calm
- DSDavid Senra
What are you learning from Rupert at this time? I mean, you're in, you're in these weekly meetings with him?
- SPSpeaker
Uh-huh.
- DSDavid Senra
With maybe the most success-
- SPSpeaker
He wasn't always there, though.
- DSDavid Senra
But he's m- well, maybe the most successful person in media of all time.
- SPSpeaker
He was extraordinary. What I learned from him really was in a different moment, which is, um, he over-leveraged the company during my tenure there, uh, by buying, um, Star. And the company had real trouble with its debt facility, and my recollection is they had a diversified debt facility with, like, 150 banks and a whole cross-default mechanism, and, um... which was great when things are going well, because they kept the interest costs low, and horrible if things go badly, because of the cross-defaults. Suddenly things go badly, and he was at risk of losing the whole thing. I went on the roadshow with the bank, roadshow with him for a couple of the, um, a couple of the visits, and what I f- found remarkable was he was cool the whole time. He was... He wasn't overconfident. He just wasn't ruffled. I mean, he was at risk of losing his whole business, which had been his family's business, and it just didn't phase him. He just kept going, and he had... He was laser-focused on the conclusion, and he reached the conclusion just by being focused and calm. That's really what I learned from him.
- DSDavid Senra
It's incredible. Okay, so you're 32. You're doing this turnaround. What are the insights you are deriving at Fox that you're gonna wind up w- using later on when you do Take-Two?
- SPSpeaker
So the, the biggest insight... Well, we can get into how I work with creative people, 'cause that's probably the most important long-term thing. But the... I think going back to your question about video games, so it's now mid-'80s, 'cause I've been there for a couple years, and I now really understand the economics of the movie business. So, like, maybe I'm slow to pick it up, but I, I got it. And they're terrible. They're terrible underlying economics. And they were bad and, and they've been bad since 1955, since the consent decree that basically disaggregated, um, distribution from production and, and turned the motion picture business from a studio system into a boutique system. And a rubric for good versus bad entertainment business is a boutique system is generally bad, and a studio system is generally good or can be good. The studio system was long gone, and studio system means your creative talent, all your talent is on the payroll. Boutique system is they're not on your payroll. They can auction their services. And obviously, if talented people are auctioning their services for every project, it's gonna be much more expensive than if they're on your payroll in success. Um, so you have a structure in the motion picture business since '55, essentially. It wasn't-- didn't happen overnight in '55, but by the, by the late '60s, early '70s, mid-'70s, where it's heads I win, tails you lose. If the project does well, the boutique extracts a lot of the value because of the deal they were able to negotiate so they didn't go across the street. And if the... if it's a flop, you as the studio bear the entire cost of the flop, obviously. Whereas in the s- in the studio system, recorded music before its most recent changes was essentially a studio system. Video games to this day is a studio system. In success, you obviously pay y- your creative people, and we are incredibly generous in the way that we compensate our creative people for success. But the company also has an opportunity to create a return.I was aware that the economics of the film business were really lousy, and that you can't fight that. There was a Buffett aphorism, which I'm gonna get wrong, but the aphorism was to the effect of, if you take a management team with a re- a reputation for, uh-
- DSDavid Senra
Brilliance
- SPSpeaker
... for brilliance-
- DSDavid Senra
Yeah
- SPSpeaker
... and a, and a business with a reputation for being bad, it is the business' reputation that will stay intact.
- DSDavid Senra
Yeah. [laughs]
- SPSpeaker
And again, I, I didn't, I didn't... That wasn't an elegant version, but you get the idea.
- DSDavid Senra
Yep.
- SPSpeaker
So I saw, I actually saw this in Forbes magazine. Those days, you read magazines. It was in the back. Remember, they had quotes in the back-
- DSDavid Senra
Yeah
- SPSpeaker
... of Forbes, and I, I read it. It was like, "That's what I'm dealing with here." And I've been really fortunate. Vestron did well 'cause we made hits, and Fox is doing well 'cause we make hits. But you can't fight the underlying structure of the business. So I'm... My blinding flash of the obvious was I thought to myself, "See, here's the thing. As it turns out, my ambition had been to run a movie studio, and as it turns out, my ambition should have been to run a movie studio in 1927-
- DSDavid Senra
[laughs]
- SPSpeaker
... not a studio in 1991, whatever it is." So I, I think to myself, "What is the moral equivalent of the motion picture business in the 1920s?" I thought, "It's the video game business."
- DSDavid Senra
How did you know that?
- SPSpeaker
Because I was a student of the business, and I was aware that video games were a thing, and I was aware that they were, despite the issue that Atari and Warner Communications had, it was still a growing business. And by, um, the early '90s it was, it was a real business. It was a small business, but it was a real business, and I looked and I said, "I think this is gonna be huge." And remember, that was a very unpopular view in the entertainment business because of the Atari disaster, which p- people still saw in bli- you know, bright, flashing neon.
- DSDavid Senra
So almost the way you get what you called in the past, like, the religion on video games is by comparing it to, like, what is the, the movie studio version of that today?
- SPSpeaker
Yeah, that-
- DSDavid Senra
Okay, so-
- SPSpeaker
Back to your point about being a student of the business.
- DSDavid Senra
Okay, so then you have that insight.
- SPSpeaker
Yeah. So now I've been at, I've been at this studio for, um, whatever it was, nearly four years, and we've had a great run, and I think, "I, I gotta go do the video game business."
- DSDavid Senra
So what's
- 26:20 – 38:04
Taking the Leap to Crystal Dynamics
- DSDavid Senra
your next move?
- SPSpeaker
I went to Rupert and I said, "Next big business is the video game business." And I remember sitting in his office, and I said, "So I think we should be in that business." He said, "Great. Go start one." And I said, "Yeah, I'd love to do that, you know, while I do my day job," which was now... I'd been promoted. I was now running the creative end business side, working for then Peter Chernin, 'cause Joe, Joe and Barry both had left. And he said, "Great, you c- you can do it. We'll give you the capital. You can pursue it, build a video game business." And I said, "Well, the only thing is, like, it's... I see it as an entrepreneurial venture, so I'd like a piece of it." And he said, "No interest." Like, "That's not an offer." So I was like-
- DSDavid Senra
Why, why'd he say no?
- SPSpeaker
Because Rupert doesn't have partners in his businesses except his public shareholders.
- DSDavid Senra
Okay.
- SPSpeaker
And it's just his... You know, there's nothing, like, that's... There's nothing wrong with that. It was just his approach. And he didn't pause. It wasn't like he paused, and, "Oh, let me think about it." He was like, "No." So I was like, "Okay, I guess I have to think about, you know, am I serious about this thing?" And then coincidentally, I get a call from a recruiter saying, "There's a startup pre-revenue video game business in Silicon Valley that is doing the most advanced video games. They're really gonna be the next generation of video games. Are you interested?" And I left. I took a 95% pay cut and moved my family from our beautiful house in West LA to, uh, Atherton, to a rental house that was going to be torn down. Um, so it was maybe a little dated inside. It was about to be torn down for a golf course.
- DSDavid Senra
'Cause you wanted equity. You wanted ownership in the-
- SPSpeaker
I wanted to build something, and I wanted equity, but primarily what motivated me was this notion of being at the cutting edge of media and entertainment, and the fact that it was driven by technology made it even more appealing.
- DSDavid Senra
Did you think that you were always gonna be an entrepreneur? Because at this point, if I understand your career, you've always just had jobs. You're a phenomenal operator-
- SPSpeaker
I-
- DSDavid Senra
You're a business guy, but did you, did you... In your heart, you're like, "I feel like I'm... I should be running my own thing. I should be an entrepreneur"?
- SPSpeaker
Yes, and I wasn't ready, as it turns out. So, um, but I did think that. And I, I knew I wasn't really a born entrepreneur 'cause I was a good employee and I liked running bus- big businesses for other people, but I also knew that if I really wanted to build something meaningful, I had to take a risk.
- DSDavid Senra
Why do you say you weren't ready?
- SPSpeaker
I didn't have much money, and I had a young family. And I think there are kind of two stages in life to be an entrepreneur: before you have anything and any responsibilities and obligations, and after you have some protection. And I was right in the middle. I had some responsibilities, and I had no protection. So emotionally, it was very challenging for me. And, um, I r- I don't think I was emotionally ready. So I did it for a couple years. Uh, Crystal Dy- Dynamics was very successful. Not hugely successful, but it still exists today.
- DSDavid Senra
I don't think I know the story of Crystal Dynamics.
- SPSpeaker
That was the company that recruited me.
- DSDavid Senra
Yeah. Te- tell me, tell me about the company.
- SPSpeaker
Well, it was, uh, it was, um, set up by Kleiner Perkins. They were, they were backing two very talented women with backgrounds at Sega at the time, and, um, they needed a CEO, and they wanted a CEO from the entertainment business, so hired me.
- DSDavid Senra
And literally, it was a video game studio?
- SPSpeaker
Yeah. So I, I set it up. I got them distribution deals. I raised a bunch of cap- lots of capital, uh, 'cause they hadn't raised much capital. Uh, and then I was recruited to go turn around a huge record company back in the days when that was not an oxymoron, and, uh, I decided I'm really not ready to be an entrepreneur going forward quite yet given this opportunity. And that record company, which was called BMG, agreed that I could start a video game division inside the company.
- DSDavid Senra
Before you took the job?
- SPSpeaker
Correct.
- DSDavid Senra
Okay, 'cause I was gonna say the jump from you s- you got religion on video games, and now we're jumping from video games to music.
- SPSpeaker
Recorded music.
- DSDavid Senra
Why'd you do that? Okay, so-
- SPSpeaker
Another turnaround. It was really interesting. Um, I'd never done music, and they said I could start a video game company.
- DSDavid Senra
Strauss Zelnick prides himself on running what he calls a rational organization. He said that he tells his talent that the company they build will be efficient-Organized, we'll make sound decisions, we will be calm, and we will be well-financed. He tells them that no one will let their ego interfere with what you do, and no one will take credit for what you do. We won't do anything crazy, and we won't go bankrupt. I've spent a bunch of time with Adam, who's the founder of AppLovin, and I would describe the way that he runs his business and the way that Strauss runs his business as hyper-competence matched with ruthless efficiency. Both Strauss and Adam want to build world-class products, and that is exactly what Adam and his team have done with their advertising platform Axon. Axon connects you with over a billion potential new customers. Axon allows you to capture undivided attention. Axon ads are full-screen videos that are watched for an average of thirty-five seconds. That is retention that blows other ad platforms out of the water, and you can launch in minutes. You set the goal, and Axon achieves it. No complex setup, no expertise needed. And Axon scales quickly. They can put your ads in front of over a billion potential customers. Other businesses have seen immediate results, scaled to hundreds of thousands of dollars a day in spend, and increased their revenue by millions. So you wanna get started quickly before all of your competitors are on Axon, and you can do that by going to axon.ai/senra. That is axon.ai/senra. So talk about starting the video game company inside of BMG.
- SPSpeaker
So I'm gonna hire Jay Moses, who's now on the board of Take-Two, and the model was, uh, external development, so making deals with external developers, and we were gonna use the BMG recorded music distribution system to distribute worldwide, which was pretty smart because we had this massive worldwide system of off-- local offices, so we could slot right into it without adding any overhead. That was the beauty of doing this.
- DSDavid Senra
Say more about that.
- SPSpeaker
Well, in those days, when you distributed records, you actually had to have, you know, physical offices to go sell physical disks, CDs, beginning of CDs and the end of vinyl, to stores.
- 38:04 – 43:57
Bootstrapping Without Capital
- SPSpeaker
No, direct marketing companies that were becoming digital, uh, market research companies that were becoming digital. Um, we turned around a, a Japanese record company of all things, so, you know, whatever deals that we could find, often, often very, very troubled companies, uh, because remember, we had no capital. Oh, I left that part out. We had no capital.
- DSDavid Senra
So how do you start a company with no capital?
- SPSpeaker
Exactly. So I put in $300,000 of my own money. I convinced people to work for free. We borrowed offices. We had one fewer chair than we had people, and I'm not kidding. The offices were so horrible that if you went to the restroom, like half the time it was flooding, and by flooding I mean like water sheeting down the walls.
- DSDavid Senra
[laughs]
- SPSpeaker
Uh, and I'm... I mean like you couldn't believe this was actually going on. And, uh, I would run around and talk to capital providers, you know, professional financial services firms and say, "You know, we're trying to... Here's our vision. We're trying to buy companies to build them up and create value." And they would be like, "Okay. Well, show us the company you wanna buy. We'll consider putting capital in." And then I would go to targets, to companies, and say, "I'd like to buy you." And they'd be like, "Okay, great. Show us the capital that you have to buy us, and we'll have a conversation." So this is going on for like [laughs] for like six months, and I'm like, "Hmm, there is a problem here," like, you know, empty suitcase and going to a lot of meetings. It became obvious to me that it was an issue when, um, we were at this very fancy private equity firm, and they said the same thing. They were like, "You guys are great. You all have great resumes, so we'd love it if you would bring us a deal and, you know, we'll put money into the deal." And we... It was at the end of the day and we're, um, we're packing up, and they've left the room. They... And the, the... There was a, a cleaning person who's emptying the garbage, and I said to my colleagues, I said, "I guarantee you that after we leave, someone who works here is gonna go to that person and say, 'Incidentally, if you see a really interesting company, why don't you come talk to us about it? We'll finance it for you.'"
- DSDavid Senra
Hmm.
- SPSpeaker
I realized, like, these were empty words. They said it to everyone. They were just looking for free options.
- DSDavid Senra
Yeah.
- SPSpeaker
So I had to find this lightning in a bottle where there'd be an opportunity to buy a company with third-party capital, and thankfully one came along. It was called Columbia Music Entertainment. It was a deeply troubled Japanese record company, uh, and I had recorded music experience. The short story is, amazingly enough, we turned it around, and it was-
- DSDavid Senra
And then... Because your idea is to buy, improve, and sell.
- SPSpeaker
Correct.
- DSDavid Senra
You're not holding for longer.
- SPSpeaker
We did, uh... It took us a long time. It took nine years, but, um, it was very difficult 'cause it was recorded music in the early 2000s. It was Japan. It had a .5% market share. It had way too much debt. It had no hits whatsoever.
- DSDavid Senra
So wait, how do you re- like 'cause you're saying early 2000s, now you're getting the iPod, now you're getting iTunes, you're getting... Napster was in '99. Why would you even do this?
- SPSpeaker
No, it was early 2000s.
- DSDavid Senra
Yeah.
- SPSpeaker
This all has happened.
- DSDavid Senra
Yeah, exactly. So like-
- SPSpeaker
Yeah, so why would I wanna be in the record business?
- DSDavid Senra
Yes. [laughs]
- SPSpeaker
Yeah, I didn't wanna be in the record business. I was like, "Been there, done that."
- DSDavid Senra
[laughs]
- SPSpeaker
Um, I had no interest, and it was a really horrible company. So it came about because one of the capital providers that we spoke to was a company called Ripplewood, and, um, there's a partner there named Jeff Hendren. And Columbia Music had been part of a, a sort of a two-part company, and essentially Ripplewood wanted to own the good part, and they wanted to find some person like me to run the bad part. I didn't know that entirely, but okay.
- DSDavid Senra
[laughs]
- SPSpeaker
And I, I didn't... I wasn't smart enough to figure that out until it was too late. And so Jeff, who was, um... I'd had a couple meetings with, and you know, let's buy a company together, called me up and said, "Here's a perfect deal for you, for your first deal. It's recorded music, which you know. Sure, it's in Japan, and they have .5% market share and altogether too much debt, and probably there are criminals lurking around. But nonetheless." And so I said, "Well, I know the business," 'cause I was in the recorded music business. I said, "It's a horrible company. It's a disaster. Like don't, don't do this deal, and I'm not doing this deal." So he said, "Okay." And a week later he calls me and he said, "You know, we're still looking at this business. We really think you ought to look at it seriously with us, 'cause you'd be perfect for it and be your first deal." And I said, uh, "Okay, listen, it's a public company, so I'll, I'll pull all the public docs and I'll look at them over the weekend." And my partner at the time, Ben Feder, and I spent the weekend poring through the documents. On Monday I called Jeff and I said, "It's even worse than I thought."
- DSDavid Senra
[laughs]
- SPSpeaker
"Just run in the other direction. Don't do this deal. It's a disaster." And he said, "Okay, thank you." Called me a week later. I promise all of this exactly, like there's no hyperbole. I sometimes can be accused of hyperbole.
- DSDavid Senra
Mm-hmm.
- SPSpeaker
This is not one of those moments. I remember I'm s- I'm in my dining room and there's like a wall phone, like this is a long time ago. This is '01. And, um-He calls and I, I pick up and he says, um, "Look, we're gonna do this deal, and we really want your firm to take it on and be responsible for building and managing it." You know, obviously we're gonna... We had a upside in the deal, and they would put up the capital. And I said, "Jeff, look, I told you it was really bad." Then I spent a weekend looking at it. It's even worse than I thought. Like, we're passing. You should pass. He said, "Can I ask you a question?" I said, "Sure." He said, "Just how busy are you?" [laughs]
- DSDavid Senra
[laughs]
- 43:57 – 47:01
Carl Icahn Connection
- SPSpeaker
So it's '07. Um, we, we started raising our own capital in '07 and '08, so it's the very end of our being w- was at that time called a fundless sponsor. Now today they call it an independent sponsor 'cause it sounds much nicer than fundless [laughs]
- DSDavid Senra
[laughs]
- SPSpeaker
But I promise you, we were fundless. So even though we'd done six deals at that point, we had very little capital. You know, very tiny balance sheet. I'd become, quote, "friendly" with Carl Icahn. I put it in quotes because he is the man who said, "On Wall Street, if you want a friend, buy a dog."
- DSDavid Senra
[laughs]
- SPSpeaker
But, um, in any case, I had a relationship with Carl, and the relationship took the form of... And I did this intentionally, was I'd go over and visit with him. He's a lot of fun to spend time with, and I'd bring him ideas. And I brought him an idea initially for something that we couldn't act on, but he could, 'cause he did public markets investing. And he said, [clear throat] "Listen, I just want you to know, I'm happy to listen to your ideas, but I'm not paying you for them." And I said, "Yeah, I know." Um, and you know, I thought to have a relationship with Carl Icahn, you never know where it could go. So w- I'd bring him ideas, and they were good ideas. And, uh, the first one I brought him was actually Reader's Digest. I had a feeling something would happen there. It was underpriced. He bought, I don't know, for him, nothing. He bought, like, $50 million of stock. Uh, it immediately went up. I go over to his office like three months later and I said, "Sell your stock." And he made whatever. For, to, for him, nothing, but nonetheless, he likes making money. He made, like, 50 million bucks. Um, incidentally, at the end of it, he said, "You know, I really, I need to thank you." He said, "I told you I wasn't gonna pay you." I said, "Yes, you did." He said, "But you know what I'd like to do? I'd like to take you and your wife out for dinner."
- DSDavid Senra
[laughs]
- SPSpeaker
I said, "Thank you. That's great." So Wendy and I go for dinner with him and his wife Gail. He only went to two restaurants in those days, uh, a Japanese re- a Chinese restaurant I forgot the name of, and an Italian restaurant called Il Tinello. It was good food, actually. And, uh, Wendy and Gail and I get there early 'cause he tends to work late in the day. And, um, I remember he comes to Il Tinello, and they know him very well, and as he's sitting, I see the waiter sort of glide over and put a martini in his hand, and it looks sort of one smooth movement. Martini in the hand, sits in the chair, drinks the martini, puts the empty glass down. That was how dinner started. And we have a very nice dinner, [laughs] and Carl's a good storyteller and he's a lot of fun. But about halfway into the dinner, my wife leans over to me and she said, "Honey, he doesn't know your name." [laughs]
- DSDavid Senra
[laughs]
- SPSpeaker
Anyway, uh, Carl then started calling us, 'cause I had a team, and he would ask us to research ideas that he had. So we would research ideas, and I remember my partner, Carl Seitoff, who's still to this day the president of Take-Two, got really annoyed, Carl speaks his mind, because I was asking them to do, like, research for Carl Icahn. He's like, "He is the richest guy on Wall Street and we're doing spec research for him. Oh, and incidentally, he has informed us we will never get paid."
- DSDavid Senra
[laughs]
- SPSpeaker
"Like, what are we doing here?" I said, "You know, I just don't know, but I feel good about this." So one day Carl calls up and he says, "Can you... Are you familiar with this video game company called
- 47:01 – 56:36
Take Two Proxy Coup
- SPSpeaker
Take-Two Interactive?" And I said, "I'm really familiar with it, obviously. It's a really messy company. At this point-
- DSDavid Senra
I used to own 20% of it [laughs]
- SPSpeaker
[laughs] Take-Two's in very bad shape. It's failing. It's got very bad management. The chairman had been indicted. It was under investigation. They hadn't filed financial statements, and it wasn't even that cheap despite all that, because-
- DSDavid Senra
Wait, wait. The chairman is under indictment?
- SPSpeaker
Yes, at that time.
- DSDavid Senra
Okay. They're being investigated.
- SPSpeaker
Yes, they did-
- DSDavid Senra
They cancel their annual meeting.
- SPSpeaker
Correct.
- DSDavid Senra
They're not filing financial statements.
- SPSpeaker
Yes.
- DSDavid Senra
The company is being investigated by a bunch of different-
- SPSpeaker
Four. Four entities.
- DSDavid Senra
Okay, four different entities.
- SPSpeaker
Yeah, IRS, SEC, New York DA's office, and, and, uh, FTC.
- DSDavid Senra
They have how much in revenue?
- SPSpeaker
Uh, about 700 in revenue, and losing loads of money, and no debt, thankfully, and about 50 in cash. And we looked at the numbers and we're like, "They're gonna be bankrupt in six months. That's what's going to happen here."
- DSDavid Senra
And you're like, "Great." [laughs]
- SPSpeaker
No, I'm not great.
- DSDavid Senra
Okay. [laughs]
- SPSpeaker
I said, "This is a disaster."
- DSDavid Senra
Okay.
- SPSpeaker
And so we wrote a whole memo and we said, "Stay away from it." No, I, I wish I could sound so forward-thinking. So I sent over the memo saying, "This is a disaster. Stay away from it. By the way, like, I've done video games. I, like, no interest." And we were doing other stuff that was more tech-driven that we were doing really well with, really well with. So he calls up, like-
- DSDavid Senra
So what was the market cap of the company back then, though?
- SPSpeaker
About 700.
- DSDavid Senra
So it went up 7X from when you had to sell, 'cause it was 100 million when you had 20%.
- SPSpeaker
Correct.
- DSDavid Senra
Okay. Okay.
- SPSpeaker
So you know, it's not great, frankly, in a gr- growth business. And they had increased their revenue materially. They'd built a business. It was a business, al- albeit a very bad one.So he calls a month later and he says, "Listen, I have a friend who's looking at buying a big stake in Take-Two. Can you refresh your memo and, and do this for the friend?" At this point, Carl Sleightoff like loses his mind. His head ex-- He said, "All right, so this is-- It was bad before when we were doing free work for Carl Icahn. Now he's pimping us out to his Wall Street buddies for free?"
- SPSpeaker
[laughs]
- 56:36 – 1:01:37
Turnaround Cost Cutting Playbook
- DSDavid Senra
What was your plan?
- SPSpeaker
The plan was there was only one good property, which was GTA, which was in development and was soon to be released, we thought. Ended up getting delayed. And everything else was a total mess, except the NBA franchise, which was really tiny. It was making a tiny amount of money. Everything else was losing money. So our plan was meaningfully to cut costs, run a rational company, be friendly to creative talent, diversify the product pipeline, and build an entertainment company.
- DSDavid Senra
Did I hear correctly that you cut something like forty to fifty million a year?
- SPSpeaker
Yeah, we cut about forty million.
- DSDavid Senra
Explain how you did this.
- SPSpeaker
Well, we have an approach-
- DSDavid Senra
The costs
- SPSpeaker
... to, you know, when you're doing turnarounds, you have to cut costs. But our approach is a little different, which is we don't wanna show up and fire people. It's a great way to build ill will. Also, you don't know anything when you show up, and so you, you might fire the wrong people. And also, who knows, maybe you need everyone. Like, you just don't know. But badly run companies-- Oh, we have a rule. We only-- We're-- We only do turnarounds if we're the first team in. Like, if someone tried and failed, we don't do it. You know why? We're not so smart. Smart people all do the same things. So if someone came in before us to do a turnaround and they failed, guess what? They probably did all the stuff that we would end up doing, and they still failed. That's not for us. But we were the first team in. If you're the first team in, the first thing we look at is third-party expenses. Every company, particularly a big company, has-- big companies, has deals with third parties. You know, I don't know, the-- in the, in the... This was days where you'd put, um, disks and cartridges into boxes. So we had a printing deal. We had a cardboard deal. We had a pressing deal for our disks. And we, we do a top ten vendor survey. So all the top ten vendors and how much we spend with all of them. Then we call them all up and negotiate them down. And the reason we do that is, number one, you immediately save money. Number two, you don't scare or upset the team. Number three, you begin to create credibility with the team because the team's like, "Wow, they just saved all this money and no one got fired. Like, that's pretty good." We also don't do things like, uh, you know, put in new expense policies. Like, that is a great way to alienate everyone. Or, or let's say, "David, let me see your expense report. Why did you have lunch, you know, at McDonald's on Tuesday with, you know, Mike? Like, why?" Like, that's a great way to alienate David. And if David has another option, he's gonna leave the next day. So we don't do that either. But our top ten vendor approach saves a lot of money. And then, you know, about three to six months in, when we know, you know, what's going on, then we have to rightsize the overhead. In most instances, of course, you know, you have-- sadly, you have to cut some headcount.
- DSDavid Senra
Yeah, especially in a company like this. How much money was GTA making back then?
- SPSpeaker
When GTA released, the company would have a meaningful profit, like, hundred or so a year. But it only released every four years, so it lost money the rest of the time.
- DSDavid Senra
Okay, so what was your plan for that?
- SPSpeaker
Make other hit titles.
- DSDavid Senra
This is, it goes back to your, your insight from... 'Cause I don't even know if we were explicit about this enough, but you wanted-- When you were, like, a kid, you're like, "I wanna run a movie studio," right?
- SPSpeaker
Yeah.
- DSDavid Senra
And then twenty years into your career, you're like, "No, I wanna run a movie studio [chuckles] in nineteen twenty-six, not nineteen eighty-seven," or whatever it was.
- SPSpeaker
Right, exactly, and here we are.
- DSDavid Senra
So then you, you, you took that idea, and you're like, "We're gonna build a movie studio, and it's gonna be video games."
- SPSpeaker
And how are we gonna do it? We're gonna try to be the most creative, the most innovative, and the most efficient company in the business, which was the same rubric I used at every entertainment company I ever ran. When I told that story, because Take-Two is public, I had to tell the story, I remember investors saying, "How does that plan differ from your plan when you were at Fox?" I said, "It doesn't. It's the same plan. It's the entertainment business." And we have found that that rubric, which we use to this day, you know, if you're honest, um, and if you're true to the rubric, if your decision-making supports the rubric, tends to work.
- DSDavid Senra
You take over the company, the market cap's seven hundred million-
- SPSpeaker
Whatever, yeah
- DSDavid Senra
... whatever.
- SPSpeaker
Ish.
- DSDavid Senra
Today, it's thirty billion, whatever.
- SPSpeaker
Thirty-five-ish.
- DSDavid Senra
Thir- that's an insane run, by the way. That's absolutely incredible.
- SPSpeaker
Thank you.
- DSDavid Senra
Um-
- SPSpeaker
Great, great team.
- DSDavid Senra
So can you explain the ideas that you're putting into place? Like, was anybody even thinking about taking ideas from building movie studios in the nineteen twenties to video games in the, you know, early two thousands?
- SPSpeaker
No, that isn't what people thought. What people thought about there was making a great video game. That's what they had to think about.
- 1:01:37 – 1:06:24
Leading Creative Geniuses
- DSDavid Senra
Yeah, this is something I thought that was interesting I heard you say, where, you know, your pitch to talent was... Well, one, y- you-- I think anybody that's successful has some form of ego. Um, but you're willing to, like, put yours aside, and you've said some stuff where, like, in the entertainment business, the only people that matter are... You're like, "I don't matter. It's the people that make the hits that matter."
- SPSpeaker
Yeah.
- DSDavid Senra
Which is like a very interesting thing, thing to say. And then-
- SPSpeaker
Has the added benefit of being true.
- DSDavid Senra
Y- yeah.
- SPSpeaker
Yeah, you can replace people like me.
- DSDavid Senra
Yeah, you can replace the hit-maker. So but what's fascinating to me is your pitch to them is just like, "I'm just gonna run a rational organization." I want you... You've used the word rational organization, I think at least once in this conversation. I've heard you say it before, too. It's like, but the, the pitch is, "We're just not gonna do any crazy shit-
- SPSpeaker
Yeah
- DSDavid Senra
... over a long period of time, that is an edge." Can you talk about that?
- SPSpeaker
That was a sort of a nice-to-have. The, the must-have was, "We are gonna give you the resources, creative and financial, to pursue your passion. We're not gonna interfere creatively. We want you to make the best video games on Earth." That was the pitch. And we mean it. "And we will support you through thick and thin to do so, more than any other company. Oh, and by the way, then we'll run a rational business organization. No one's gonna scream at you. You're not gonna find out that someone's getting indicted. We're not gonna get sideways with the FTC. And, um, you know, it, it'll be like a real grown-up company." And then over time, I couldn't promise this right away, but, but I had to promise it. I said, "We'll also have a solid balance sheet so that when we fail, inevitably you fail in the, the entertainment business, we can live to play another day." That took us a few years.
- DSDavid Senra
'Cause these, these super talented people also tend to be like, highly disagreeable, somewhat erratic. Like, and I just find it interesting that you kind of balance their... You know, you, you say you're not talented, which obviously your, your talents are different. You're very talented, but I think you mean in like a creative way, like you're not the one that can create the video games.
- SPSpeaker
Not in the least.
- DSDavid Senra
How do you deal with these very disagreeable, like, you know, talented geniuses?
- SPSpeaker
I love them.
- DSDavid Senra
[laughs]
- SPSpeaker
I'm serious.
- DSDavid Senra
Okay. Then why don't you gotta say more about that?
- SPSpeaker
I mean, y- you, you have to sincerely care about other people to be an effective leader. I sincerely care about, care about my colleagues, genuinely. And I don't love every attribute of every one of them, and I don't love every conversation we have, but they don't love every attribute of me. I just did a three sixty. I found that out. [laughs] Not that it came as a surprise. Um, but we care about one another, and I want the best for them and for the organization. And, um, I treat everyone with respect, and I demand that everyone do the same thing. There's no yelling at the company. There's no bad behavior. If, if you engage in bad behavior, you gotta leave. So one of our competitors at one point had five hundred sexual harassment claims at their company.
- DSDavid Senra
From one guy?
- SPSpeaker
N- no, no.
- DSDavid Senra
[laughs]
- SPSpeaker
Unfortunately, it was broadly distributed. You know, and we don't, we don't have... You know, we've had obviously a few things here and there, but we don't have claims like that. Um, we're-- we treat people with respect. People can come as they are. We don't care about your ethnic background, your religious background, your orientation, your lifestyle, the color of your hair. Just do great work, seek excellence, and be kind to others. And by the way, I've had plenty of hard conversations, like super hard conversations. And, um, you know, you said it earlier, like, and we... I think I learned this with Barry Diller. I just don't take it personally. It's not personal. Like, we have a business... W- I never say the word that executives use, something like, "We're a big family here." We're not a big family here. This is an enterprise. Like, my family's at home. Um, so we don't have all the angst around being a family. However, we are an enterprise that treats people with respect. And if someone is off sides with me and they misbehave, like, I don't see myself as so important that you can't do that. I don't feel the need to, like, teach everyone all the time. I had to learn the hard way, like the delete key is there for a reason. I had one, um, creative person who isn't with us any longer because it just, it did get to be too much, and the, the value delivered wasn't worth it, to say the least. But he used to send the most outlandish and unpleasant emails. And I remember saying to someone, I don't know, maybe a board member, I said, "This is really tough because the lack of decorum is, is so outlandish that at some point he's gonna do or say something where I just have no choice but to fire him." And then I realized, wait a second, I always have a choice. You know what the choice is? Delete.
- DSDavid Senra
Right now.
- SPSpeaker
I just s- started deleting his emails. I would see the first-
- DSDavid Senra
Oh, I thought you meant delete him as a person.
- SPSpeaker
No, delete his emails.
- DSDavid Senra
Okay.
- SPSpeaker
I was like, how can I be offended if I delete them? I just delete, deleted them.
- DSDavid Senra
Without reading them.
- SPSpeaker
Absolutely. If I read them, they'd upset me.
- 1:06:24 – 1:07:54
Rationality Beats Magic
- SPSpeaker
for a long time.
- DSDavid Senra
I don't know. I, I find this very interesting that, like, just doing, like, being ra- completely rational over a long period of time can actually give you an edge in business.
- SPSpeaker
Well, in the entertainment business particularly.
- DSDavid Senra
I think in all... I mean, this is something Munger and Buffett, like you mentioned Buffett earlier. I'm, I'm obsessed with him. And that was the whole Munger's whole thing. It's just like we're just able to be rational over long periods of time.
- SPSpeaker
Yeah. We don't engage in magical thinking.Which is hard not to do in the entertainment business. Magical thinking is because I want it, it's going to happen, right? Magical thinking is, oh, I, I don't know, someone's gonna see this podcast, and they're gonna call me up and say, you know, "We need to give you $10 billion to do X." Like, that's magical thinking.
- DSDavid Senra
That's very likely going to happen [laughs] .
- SPSpeaker
[laughs] Let me know. I'll, I'll give you a call.
- DSDavid Senra
[laughs]
- SPSpeaker
I'll give you 10%. Um, that's magical thinking.
- DSDavid Senra
That's better than what Brad Jacobs gave me.
- SPSpeaker
[laughs]
- DSDavid Senra
Brad Jacobs was episode three. We all go to his house. This guy's laughing. He's like, "I love David." He goes, "I raised $750 million out of his audience, and I had to pay him a fee." And he, like, slapped his knee. And I was like, "That's not funny." [laughs]
- SPSpeaker
I got, I, but I had dinner with Carl Icahn. Um-
- DSDavid Senra
Oh, there you go. You got a, you got a dinner, and then you found out he didn't even know your name.
- SPSpeaker
But he-
- DSDavid Senra
And then he put you to work
- SPSpeaker
... so the starting point is not like we run a rational organization. The starting point is we will support your creative activities through thick and thin, and that gets tested. It... and you know when it gets tested? At the worst possible time. And so I like to say culture, like character, is tested in the breach. You're not tested when things are going well. Great, we just delivered a hit. We're making all this money. This is awesome. Like, have a celebration.
- 1:07:54 – 1:09:28
Borderlands Bet
- SPSpeaker
That's not a test. The test is when someone comes into your office, and this happened to me, and we had not turned around the company yet. We had very limited capital, and we were developing a game, and it was about to be released two months later, which is to say it's done, and we'd spent a lot of money. And the head of the division came into my office and said, "Look, we just don't think this is good enough, and we think we screwed up, and the art style is not appropriate, and it's not differentiated, so we wanna remake the game." I was like, "What does that mean?" And this is a long time ago, so it's slightly different. He said, "It means $50 million of incremental dev costs," which was a lot of money to us, "and another year." And it was on our release schedule, which we had announced. And, um, I was like... I dug in. I mean, I would- I don't give, like, knee-jerk, uh, answers. I dug in and did my homework. In the end of it, I supported the decision, and that title became Borderlands. Had we not done that, Borderlands wouldn't have been a hit.
- DSDavid Senra
Yeah, it's a huge-- That's a huge game now.
- SPSpeaker
And that was a non-obvious decision, and I ca- I pretty much can assure you no one else in the business would have done it.
- DSDavid Senra
Why?
- SPSpeaker
'Cause it was insane. They would've said, "The game is done. Put out the game. Move on to the next thing. I'm not spending fifty million bucks to remake the goddamn thing in another art style, and I have no evidence that one will work either."
- DSDavid Senra
So you just trusted the, the intuition and the talent?
- SPSpeaker
I had to. That's what I'm-- That's the story. Be the most creative, be the most innovative, be the most efficient. I hired the most creative people. I said, "You have to pursue your passions. We will support you." They came and said, "This is our assessment. This is our passion. Are you gonna support us?" And I said, "Yes."
- 1:09:28 – 1:11:22
GTA Timelines Pressure
- DSDavid Senra
The timeline's slipping because you're sitting on the most valuable media property in the world, and everybody online is just like, "When's GTA VI coming out?"
- SPSpeaker
Yeah.
- DSDavid Senra
Like, how do you deal with this? How do you deal with the timelines? It's just like the answer to that question is, "I don't know," right?
- SPSpeaker
Well, no, no, November 19th. I do know.
- DSDavid Senra
Oh, okay.
- SPSpeaker
Yeah. No, it's been announced.
- DSDavid Senra
But this has been pushed back-
- SPSpeaker
I think twice
- DSDavid Senra
... for, like, how many years?
- SPSpeaker
I think we're about eighteen months behind the original date.
- DSDavid Senra
Okay.
- SPSpeaker
Not, not much more than that.
- DSDavid Senra
Is it the most successful video game of all time?
- SPSpeaker
I think so, but it depends on how you count.
- DSDavid Senra
Okay.
- SPSpeaker
Like, if you counted-
- DSDavid Senra
From reve- just revenue.
- SPSpeaker
I think if you counted every... like, Mario Kart and Call of Duty and a bunch of others, it's not entirely clear, but I think in terms of the value of the IP, most people believe it's the most valuable entertainment IP ever created. But people could argue about that.
- DSDavid Senra
And you don't disclose the revenue for GTA V, correct?
- SPSpeaker
Not the total revenue. It's a lot.
- DSDavid Senra
[laughs]
- SPSpeaker
The reason people keep playing is because it's constantly updated, and it's really great, and the most recent content pack was awesome.
- DSDavid Senra
And ho- honestly, like, the social element to, like, catch up-
- SPSpeaker
Yeah, you can actually-
- DSDavid Senra
Yeah
- SPSpeaker
... talk and-
- DSDavid Senra
Exactly
- SPSpeaker
... connect and play together and... Yeah, it's amazing that people don't realize that, you know, online games are s- highly social experiences.
- DSDavid Senra
Yeah, especially when you see this with, like, kids now with, like, Roblox and everything else. Like, it's-
- SPSpeaker
Oh, it's everything. I mean, my mom is 90. She plays, um, she plays bridge online and she's-
- 1:11:22 – 1:21:34
Specific Goals Visualization
- DSDavid Senra
to play with each other. There's something you said earlier that I wanna pull out from your book. You said, "I don't believe in magical thinking," and I don't think visualization is magical thinking, but you do talk about in your book being very, very particular. The note I left myself when I got to this section of the book is that, "The universe rewards the specific ask and punishes the vague wish." And your, your point was-
- SPSpeaker
And that does sound a little magical, but you have to dig into-
- DSDavid Senra
That, that was my note-
- SPSpeaker
Yeah
- DSDavid Senra
... based on, like, my interpretation of what you're saying. And you're talking about this idea of, like, creative visualization, which again, like, people think is, like, some willy foo-foo thing. I've read four hundred and fifteen now biographies of history's greatest entrepreneurs. I've kept every single note, every single highlight, every single transcript of anything I've done for that project I've been doing for a decade in this giant searchable database. Visualization comes up all the time.
- SPSpeaker
Right.
- DSDavid Senra
And these are not willy foo-foo people.
- SPSpeaker
No.
- DSDavid Senra
And I love what you said about why it might be effective. You said, "I'm pretty sure it works because the method requires one to concentrate hard, exclusively, and frequently on what one wants." Can you say a little bit about that?
- SPSpeaker
Sure. I mean, I think having n- not done as much research as you, but having read a billion biographies, I was very focused growing up o- on success, sort of traditional success, but also political success. And I tried to sort of drill it down to, like, what is the factor that is most common among highly successful people? And the only thing I could come up with was they knew what they wantedAnd it's not because you know what you want, like Napoleon Hill, you know, write it on your mirror, like, "I want a million dollars on Thursday."
- DSDavid Senra
[laughs]
- SPSpeaker
It's because I wanted to build a diversified collection of media communications and entertainment assets supercharged by technology starting in '01, and I've been laser-focused on it ever since, which means I make choices that are in service of that. So here's... Magical thinking is, "I wanna do that, but you know what? It's a very nice day out there. I'm going to the beach today, tomorrow, and the next day." You just told me, like, you're a reasonably successful guy, I think. You just told me you work seven days a week. I have, you know, three jobs. I work really hard. Why? Because I have a set of goals, and I'm focused on achieving those goals. Now, there's still no guarantee. There's still no guarantee. But by knowing what you want and working in service of what you want, you are much more likely to get what you want than if you don't know what you want or work in service of that thing. That's the truth. And I-- when I started ZMC, I thought, "I wanna build, I don't know, a twenty-billion-dollar company that looks like this." And it was out of the blue. And I can't... It wasn't like I ran around and was talking to people as I was endlessly and vainly trying to raise capital or find companies that they were saying, "This is awesome. You're doing great. Like, you are... Who's better than you?" People were like, "This is a crazy idea. This is crazy." But I looked at it and said, "I don't think it's so crazy. I think it's possible. And even if I fall short, I'll probably get closer than if I don't try." And I was okay with that. And I've said this, and I said it publicly, like, it took us... I think after ten years, I was speaking at MIT. I remember I wanted to build a twenty-billion-dollar company, and s- one of the students said, "Uh, how big is your company now?" And I said, "Well, if you take everything together, I don't know, it's about a billion-dollar company." And he said, "Are you deeply disappointed?" [laughing]
- DSDavid Senra
[laughing]
- SPSpeaker
And I said, "Well..." I was-- I really appreciated the question. I said, "Look, it isn't what I set out to do yet, but you know what? We're-- It's directionally correct, and I'm not stopping. And if this is as good as it gets, at least I tried, and, you know, we, we made a little progress. We did okay." Well, today, our company, taken as a whole, and it depends on our market cap, we call it a forty-billion-dollar company. We've kind of exceeded our goals, and we're not done yet. But we wouldn't have done that if we didn't know what we were trying to achieve. So today, Take-Two has this... And I advocate this for every enterprise. The mission of Take-Two is to be the number one entertainment company on Earth. That's a pretty bold idea, but everyone understands it. The strategy to get there is be the most creative, be the most innovative, be the most efficient. Remember? I said that earlier. And the culture in which we work is one of seeking excellence, working together as a team, and being kind. Remember that from before. There are fourteen thousand people at Take-Two. There's not one person who can't tell you that. It's simple, it's straightforward, and it has the added benefit of being true.
- DSDavid Senra
This is why I asked you before we started recording, like, if you mind if I do an episode on your book for my other podcast. I, I... Again, I wanna read this 'cause I think it's really important and, you know, people have asked me before, it's like, "What's the most important thing you've learned from this, this crazy, like, decade-long study of history's greatest entrepreneurs you've done?" I was like, "If I had to put it into one word, it'd be focus." It's like they are just unbelievably, almost like a different species in the term of, uh, in, in terms of how they can focus. I wanna read that part I just read. It says, "I'm pretty sure it works because the method requires one to concentrate hard, exclusively, and frequently on what one wants." And then you end this chapter with another great sentence. "The most important thing you can do to achieve the success you desire is to discover your ambition, narrow its scope with a great-- with as great a degree of specificity as possible, emblazon it on your consciousness, and revisit it daily."
- SPSpeaker
And that is visualization. It's just not, like, magical visualization. I was on the phone with, um, a Zoom call with, uh, one of my colleagues, 'cause I'm, I'm reachable by everyone. Everyone. Um, if, if people email me or text me or Slack me, I respond. And I'd been doing a town hall in our office in Austin, and this woman Slacked me afterwards, brand new, um, colleague, and said, "Can I have a chat with you about my career?" And, um, I said, "Sure." And we were chatting, and she was really impressive. I was quite taken with her. Uh, and at the end of the call, she said, "What should I do to succeed around here?" I said, "Well, you need to know what you want, and then you need to show up on Monday and think about how you're gonna create more value than you cost. And then on Friday, think about, did I create more value than I cost? Because if you're here for a year, and you get paid a hundred dollars plus twenty-five dollars in benefits, and you generated ten dollars in value for this enterprise, one of two things will happen. Either you're gonna lose your job, or this company will fail. If you wanna succeed and you want the company to succeed, you gotta create more value than what you cost." And I said, "So think about that." 'Cause she'd already decided what she wanted. This was not about... She knew what she wanted. She wanted-- wants to be CEO, which is great. Um, terrific. Um, and then I said, "And so, you know, and then come to work, don't have political exchanges, put a smile on your face, say yes. You know, you're gonna be fine."
- DSDavid Senra
Are you surprised... So first of all, I've heard you say this, and you're like this to me, 'cause when we were, like, at lunch and I was like, "Hey, do you have, like, a team I need to go through to, like, schedule the podcast?" You're like, "No, we're gonna do it together. Like, just text me, and, like, you respond." Are you surprised at how few people take you up on this, the fact that you will respond to emails or to messages?
- SPSpeaker
No. Um, here's what surprises me, and this part I don't get. So I spend, like, twenty to twenty-five percent of my time mentoring and coaching people-
- DSDavid Senra
Which I wanna talk about, yeah
- SPSpeaker
... using the, the tools in the book. And as you saw in the book, like, some of them are exercises. Like, you have to do the work to get the benefit. And so someone will reach out to me, and while I'm easy to get to, like, you still have to do some homework. And I don't schedule. Like, maybe I s- I don't even schedule. I have, like, have an assistant who schedules me. So there's a bit of a process to have a meeting with me. It's not like, "Hey, come on in tomorrow at nine o'clock." And I am amazed. Like, people will come in with a specificAsk for something that would affect their life. And we spend time on it, we talk about it, and maybe I assign them one of the exercises in the book. I usually do. And I would say about half the time they never follow up. And that to me is kind of astonishing, and I don't think it's because I'm a horrible person or I'm scary or something. Um, I think there are people who believe if I can just get into a room with that really successful person, they can just wave a magic wand and I will have success. Sort of my point earlier, someone's gonna listen to the podcast and I'm gonna win the lottery, and it doesn't work that way. One of the things I understood about starting ZMC... Look, I've been around the block. I, I don't think I have an enemy in the business. I mean, I... And you probably know this from your homework. Like, I know everyone and I like everyone, and as a result, most people like me, and I've... I think candidly, I have a very good reputation. Nonetheless, uh, I think people confuse, you know, that with somehow, like, having a shortcut. So I had the attributes I just described. Lots of people wanted to help me when I started ZMC. You know, the conclusion I arrived at was no one can. They would love to. I had all kinds of goodwill. What can they do for me? I had to run out, I had to find the deals. I had to go see Carl Icahn. I had to hire a team. I had to pay the team out of my pocket. I had to, you know, manage the team, you know.
- DSDavid Senra
Think of the story you told earlier when you were recruited to 20th Century Fox. I, I have a maxim that, that appears in these biographies of history's greatest entrepreneurs. It's like opportunity handled well leads to more opportunity.
- SPSpeaker
Right.
- DSDavid Senra
You had to handle the opportunity at Ver- Vestara... How do I say the company name?
- SPSpeaker
Vestron.
- DSDavid Senra
Vestron first for this guy to be like, "Hey, I need some help now."
- SPSpeaker
Right.
- DSDavid Senra
And the whole thing is like, that's why he's like, whatever... This is, um, again from Buffett and Munger. They say they believe in, like, Carlisle's pres- prescription, which is like, do the best possible job on the opportunity you have in front of you.
- SPSpeaker
Yeah.
- DSDavid Senra
And that will then... You don't have to worry about the opportunity. It will unlock future opportunities.
- SPSpeaker
Or, or it may not, but it's the best that you can do.
- 1:21:34 – 1:31:52
Service Leadership Mindset
- SPSpeaker
goal.
- DSDavid Senra
Let's go back to, um, the, the talent, uh, and how you serve the talent because when I hear what... the conversation we had, the book I've read, and the interviews I've heard of you, it's like you seem to be, like, very comfortable, almost like you're in, like, the service business. Is that a way that you think about this or no?
- SPSpeaker
Yeah, I think a, a good CEO needs to serve his or her team. And, um, no work gets done in the CEO's office. So what do you really do? You agree on the mission, you set the strategy, you agree on the culture, and then you drive daily execution. But you're driving that daily execution through other people. And how do you do that? You have to motivate them, for you have to obviously stay informed, so you know what's happening, and then you have to motivate them. On the very rare occasion that a problem can't get solved below my level, you've got to solve the problem. On the rare occasion that a, a decision about an approach or capital allocation, you know, isn't obvious or is above someone's approval level, it comes to me. You know, I'm not writing memos. I'm not... you know, I'm not doing Excel spreadsheets.
- DSDavid Senra
And are you adapting your style to each individual talent?
- SPSpeaker
Of course.
- DSDavid Senra
Okay, so this is-
- SPSpeaker
Well, I mean, I'm, I'm true to who I am, but of course.
- DSDavid Senra
Okay. So we had the same experience where, like, some of these books are great and the titles are terrible. Like, How to Win Friends and Influence People.
- SPSpeaker
That sounds like how to be the most popular boy in the class.
- DSDavid Senra
It's just like-
- SPSpeaker
Yeah
- DSDavid Senra
... so many people told me about that book. I didn't read it because, like, the title's terrible.
- SPSpeaker
Terrible.
- DSDavid Senra
But, uh, you almost saved me the need... I already read the book, but you almost saved me the need to, to read How to Win Friends and Influence People, and your whole thing is just like, take a sincere interest, with an emphasis on the word sincere, in other people.
- SPSpeaker
Right. That's-
- DSDavid Senra
That is really a book-
- SPSpeaker
That's the story of the book.
- DSDavid Senra
That is really a book on sales and leadership.
- SPSpeaker
Yeah. And friendship.
- DSDavid Senra
So explain how you apply that inside of your own work.
- SPSpeaker
Well, I mean, I just did a 360 and, you know, I... There was criticism in it, to be clear. But one of the positive attributes, and there were plenty of those too that, that were noted, was when he sits with you, he really, really cares about you. He sits with anyone at any level in the organization. He responds to everyone. He's kind to everyone, and you think you're the only person in the room when he's talking to you. You ask me, like, "How do you deal with, like, difficult creative personalities?" I say, "Because I love them. I care about them. I genuinely care about them, and I care about my executive team. I care about everyone who works at the business." But frankly, I care. You're gonna find this hard to believe, and it sounds... I really don't mean it to sound self-serving. I think it's, it's like table stakes of humanity. I care about the person behind the counter at Starbucks enough to say hello, ask them how their day is going, and interact with them a bit if they're not busy, you know, pouring coffee, which sometimes they are, to see if maybe I can brighten their day a little bit. Like, why wouldn't I? There's a great story in Dale Carnegie's book where he tells a story of, "I had a, I had an idea. I went out, went, went into the post office and I wanted to brighten the day of the guy behind the counter, and he... So I'm struggling with what I can say because I really was... This is an exercise for me." He gets to the front of the counter and he... and the, the, uh, uh, postman behind the counter apparently had a great head of hair. And so Dale Carnegie says, "You have a great head of hair. I wish I had a head of hair like that." And the guy said, "Oh, thank you, because actually I'm kind of proud of my hair." And they had a little interchange. And Dale's telling the story to a friend, and the friend says, "Well, Dale, what did you get out of that?"And he said, "What did I get out of it?" Are we so small-minded that we need to get something out of every interaction? How about that I improve that person's day and it improved my day. How about that? So if you're taking that position as a starting point... Look, if you're taking a position like, "I'm here doing this podcast. Here's my goal. My goal is to look awesome in your podcast." Well, that's a very bad approach. You know, my goal is when I show up to have some, an engagement like this, and I've had plenty, how can I be of service to David and to his audience? That's what I'm thinking.
- DSDavid Senra
One of my favorite quotes ever, it comes from Henry Ford. He says, "Money comes naturally as a result of service." And I think part of what we're trying to do here is, like, this, this whole show is like a, sort- essentially a love letter to capitalism. And the reason I say that-
- SPSpeaker
He also said, or it's apocryphal, not clear, "Whether you think you can or you can't, you're right." Now, he's a-
- DSDavid Senra
Yes
- SPSpeaker
... that's attributed to him. It's not clear it was him, but we used that line at ZMC for the first couple of years, because it was so hard to do, we did.
- DSDavid Senra
It's in your book.
- SPSpeaker
Yeah.
- DSDavid Senra
That line is in-
- SPSpeaker
I haven't read the book in a while. [laughs]
- DSDavid Senra
Well, I read it this, this past week. Um, but no, I, to the degree that we do have any kind of influence, it's just like, uh, you know, I'm the son of a Cuban immigrant. I grew up meeting people that literally risked their lives to flee communism. I knew from the time I was probably nine years old, something's weird about this country I've been born into, something special here. And so what we're trying to do is, like, there's also, like, you know, corruption and crony capitalism, and it's just like we're trying to celebrate people that, like, they build products that make other people's lives better. They build wealth for their- themselves, their family, their employees. They create jobs. We had John Mackey on this podcast, founder of Whole Foods. One of the stories he told is one of my favorite stories. Just, like, because of the, the fact that we went public early and, and there was stock options for s- for our employees, like, these are grocers. These are normal, just, they're, they just wanna live a normal life, and they're able to send their kid to college because of the stock. They're able to buy a home because of the stock. Like, why wouldn't that... John started that with an idea with his girlfriend and two other co-founders. Like, these people should be celebrated, and I think the reason I thought that came to mind when we're talking right now is just like, but not celebrated because you wanna do it for yourself. It's in service of other people.
- 1:31:52 – 1:34:22
Media Versus Entertainment
- DSDavid Senra
I had somebody that works with you email me. I'm curious, people think Take-Two is in the video game business. I think you think of it, you're just in the media business.
- SPSpeaker
The entertainment business, yeah.
- DSDavid Senra
Okay. What's the difference between the media business and the entertainment business?
- SPSpeaker
Well, media is just a broader rubric.
- DSDavid Senra
Okay.
- SPSpeaker
That can include any-- It could include advertising, for example, would be media business.
- DSDavid Senra
Why not describe it, like what's the difference between entertainment and video games then?
- SPSpeaker
Video games just sounds a bit narrow, and we provide an entertainment experience expressed through video games, and maybe that's a difference. It doesn't make a difference, but I think it does.
- DSDavid Senra
Okay, so explain like how you think about this.
- SPSpeaker
You could think of a video game as like a mobile video game you spend seven minutes on, or you could think of it as Grand Theft Auto 6 that you spend hundreds of hours on. Um, they're very different experiences. They're both entertainment experiences. I think to call them both video game experiences maybe understates the diversity of experience.
- DSDavid Senra
Do you think all the different forms of entertainment are kinda like they compete with one another, but they kinda like they're all kinda collapsing? Do you look at it like that or no? Like, the distinction between a video game and watching something else or listening to a podcast or interacting with AI, to me, is just all entertainment and information.
- SPSpeaker
Oh, yeah. I mean, I look at the media day broadly and according to Activate, a consultancy, the media day is like thirteen hours in the US, and anything that fits within the media day can compete or coexist. So yes, in that way. But no, at the end of the day, like, you know, playing a video game is still a very different experience than watching a linear television show or a movie. It just is.
- DSDavid Senra
This goes back to your, your insight that, I don't even think we talked about this, but when you thought about new media, you're like, "The n- the most valuable new media is not going to be passive. It's going to be interactive," I think is the term you used.
- SPSpeaker
Yeah, and, and that's, that's the case with video games because it's the biggest entertainment business, and it's growing more rapidly than any other.
- DSDavid Senra
And the size, it's bigger than all the other forms combined. Is that-
- SPSpeaker
Yeah.
- DSDavid Senra
Okay.
- SPSpeaker
At the, at the software level, yeah.
- DSDavid Senra
Th- that's an insane, like-
- SPSpeaker
Yeah.
- DSDavid Senra
And it's growing faster.
- SPSpeaker
Absolutely. Yeah, we're roughly double the rate.
- DSDavid Senra
Is there any other thing that you would be interested in pursuing in media besides video games?
- SPSpeaker
Sure. I'm open-minded. Um, I think that in the fullness of time, one could ask would it make sense, for example, for Take-Two to diversify into other forms of entertainment? I can assure you we would not diversify backwards into [chuckles] backward-looking, legacy declining businesses. But there are other exciting entertainment businesses, and there'll be more in the future. And, um, you know, live entertainment's a really interesting space, for example, that's growing.
- 1:34:22 – 1:36:08
AI Productivity Reality
- DSDavid Senra
How is Take-Two using AI right now?
- SPSpeaker
We have, um, hundreds of projects going on, and we, we already have promulgated enterprise software. So we have enterprise versions of ChatGPT and Claude that are available to everyone to use, that are fully licensed and paid for. And then we have about two hundred projects going on to try to create, um, more productivity and to give people the tools they need to, to do their jobs, whether they're creative jobs or executive jobs, more effectively, more efficiently, with more innovation.
- DSDavid Senra
Let's go back to that story where you're like, "Well, we need a twentieth-century Fox, so we need a business guy. Let's grab this guy." So when you realized you needed an AI person, did you create an entirely new role? Like, how was this structured?
- SPSpeaker
No, we have a new CTO to Dave Klein, and it all reports to Dave because it's technology. It sits within the technology world. And no, I don't, uh, you know... Not in any way to minimize the effect of all things AI, but first of all, the words mean different things to different people, and we're a technology company that makes entertainment. We always have been. So this is not new to us. And engaging with technology aggressively to create better products, to market them better, and to run our business better is what we do. You know, innovation and efficiency. So it fits well within our system, and we've pushed really, really hard to be as ambitious as possible. And even so, I'd say we're getting internal criticism and that we're not moving fast enough, but we're trying to.
- DSDavid Senra
So what is your overall viewpoint on AI, though?
- SPSpeaker
Again, that's, that's sort of like saying, how do you feel about motherhood and apple pie? I like both. All things technology that can create efficiency, I'm, I'm all in on.
- DSDavid Senra
But you're doubtful of the creative ability of AI?
- SPSpeaker
No, I'm not doubtful of anything. I'm totally open-minded.
- 1:36:08 – 1:39:26
Why Hits Surprise
- SPSpeaker
But do I believe that, um... Remember what AI is, despite the fact that there are people in Silicon Valley who don't want you to believe this, is big datasets, lots of compute, and a large language model mushed together. That's what they are. So datasets, by their very nature, are backward-looking. Creativity, by its very nature, is forward-looking. Creativity is informed by data. We're inf- you're informed by those hundreds of books that you read, and when you have a podcast, you're informed by the ones you've listened to. How could you not be? But if yours was just a really high-quality clone of Patrick's, who would watch yours? And the thesis that, wow, with AI, we can more efficiently create a completely derivative property, like derivative properties don't work. So that's where the thread has been lost, thatAI so far is really great at asset creation, but hit creation isn't asset creation. Asset creation is a necessary but insufficient condition for hit creation. So I would love to say that AI will make it easier, quicker, and better to make hits, because who would benefit more than we? We're in the business already. We own IP, right? That you know. So you don't have to create new IP, which is really, really hard to do with or without AI. Like create a, you know, a This Table Goes to Hollywood, getting someone to buy that video game, that's incredibly hard. Getting them to buy GTA VI, not so hard by comparison. So, um, it's, i- it's not that I take at all lightly the potential benefits of new technology. To the contrary.
- DSDavid Senra
No, I think your entire career has been a example of that.
- SPSpeaker
That's the story of my career. It's just that when, you know, our stock goes down by 50 points because people are like, "Anyone can make a video game." That was the thesis. Any- with AI, anyone can make a video game. It's like, anyone could make a video game last week. Like, anyone could make a video game five years ago. The, the technology's readily available. It's commoditized. You know how many mobile games get put out a year? Thousands. You know how many hits are made in a year? Zero to five. You know who makes them? Thank you very much. We do.
- DSDavid Senra
[laughs]
- SPSpeaker
This is just true, and that's not... I mean, that's just true. It's like we don't... You don't need this new technology to create assets that are competitive. That already exists. It will be quicker to do it, but speed isn't the issue. If I told you, "David, with this technology, you can create something that looks exactly like GTA, and it's gonna take three years, not 30 seconds," you'd be like, "I'll spend three years on it. It's worth it." But... And that exists. You can, in three years, technology exists prior to AI to clone GTA, but it won't be GTA. It'd be a clone of GTA. Clones don't sell. All hits are, by their very nature, unexpected. That's the most important thing to take away. Things that are data-driven in their entirety can't be unexpected. But that doesn't mean AI isn't super helpful.
- DSDavid Senra
Perfect place to end. Strauss, thanks for the time. This was awesome.
- SPSpeaker
Thanks for having me.
- DSDavid Senra
Really appreciate it. I hope you enjoyed this episode. Please remember to subscribe wherever you're listening and leave a review, and make sure you listen to my other podcast, Founders. For almost a decade, I've obsessively read over 400 biographies of history's greatest entrepreneurs, searching for ideas that you can use in your work. Most of the guests you hear on this show first found me through Founders. [upbeat music]
Episode duration: 1:39:27
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Transcript of episode 1ZgUcrR0K7I
