CRV's George Zachary on health scare shifting focus, COVID threat, designer babies | Angel S4 E3

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Hey everybody, welcome to another edition of Angel, the podcast. This is the podcast where we talk to investors about how they make their decisions. Sebastian Thrun, after I think you invested in Udacity, yes. When Sebastian is now doing Kittyhawk, yes, right, the flying quad copters. George Zachary's a bit of a legend here in Silicon Valley, but you will not see him on VC blogs or on Twitter bragging. Nope, he just backed companies like Zip2 and Odeo. If you don't know those companies, you certainly know the founders. Zip2 was the company that came before SpaceX, came before PayPal, and came before Tesla. Odeo was the company that was the precursor to Twitter. Yes, that's right. George Zachary backed Jack and Elon before they were Jack and Elon and known by their first names. And he also created and co-founded with Jim Clark, a legend here, Silicon Graphics, which made high-end workstations. Correct, powerful computers at the time that cost $20,000, and all the first web servers ran on SGI equipment, if I remember correctly. He did a stint at Mohr Davidow, a venture capital firm that famously passed on investing in Google at a $48 million post, when you would have owned 16% of what is now a trillion-dollar company. If you had sold half your shares even, it would still be worth $80 billion. 20% of $80 billion is carry, would be $16 billion. Five partners, six partners in a fund, two or three billion dollars each lost. And you know, I've never done that math before. How do you as an investor... Thanks for coming back on the pod.

I would say at different points in my life, it did. It definitely did mess with me. It messes with you, right? There, being honest about that. Yeah, it did because you think, I could have placed that bet. I was there at that time. And I asked myself, what would I have done differently? How would I have convinced other people in my partnership to do this? Yeah, maybe I didn't speak loudly enough about it. Right, you were there. The person who blocked it said, 'We don't need another search engine. These guys won't take coaching.' Literally, there's one person in the room who basically destroyed the Google bet. Thank you. Completely blocked it. He just blocked it. In front of the train, said, 'Over my dead body, we're not doing this.' And the reason given is Larry and Sergey are arrogant, won't take coaching, and who needs yet another search engine? And that was the period when there were a lot of search engines. Yeah, and most of them didn't work out well: Magellan, Lycos, Excite, AltaVista. And for a breakout success even in a category that's crowded, it's very true. If there's a market in a category, you should not dismiss what could be the ultimate player. But there's some cognitive bias that some people have. I don't know if there's a name for it, but it's almost like, 'We've knocked on that door, nobody answered, therefore there's nothing behind the door. We've looked over that mountain, we didn't find the oil, we drilled, we didn't find the oil, therefore there's no oil.' And it might be just that you didn't drill far enough or the drill bit wasn't sharp enough. Right. I think it's two pieces. One is historically, most venture investors... Well, that's not really a good idea because you can actually add really good management to a leader. What's an example of that? What's the best example we've seen in Silicon Valley? I can think of two probably on the same two. Like management added to a leader. Let me explain the other piece. Go there. Yeah, so you can have... If you don't have a great leader for a company, you're kind of toast, dead in the water. Yeah, I mean you need the leader for vision, drive, for persistence, for execution. That's the person that inspires everyone in the company. Got it. You cannot have a company without a leader. Right. I mean, a company is a group of people. You cannot get a group of people to go somewhere. Yeah, you need that leadership. Yeah, that inspiring. Yeah, so they... My comparison, yes. So they need to hire management. So some people on the board will needle them about the management, right? And then they'll be like, 'Oh, this person can't manage stuff.' But you don't need to. Yeah, so you'll get comments like, 'You know, Larry and Sergey, oh, okay, these people aren't really good managers. Why won't they take coaching?' Yeah, well, they're not managers. They don't need to be. Yeah, they are leaders with an incredible vision. Yes, so you know, in that case, it was a really good thing that Larry and Sergey could stay basically running the company. Yeah, you know, Eric became management. Eric Schmidt, who was adult leadership, was brought in at a time. That's what we called it in the industry: 'We're gonna bring in some adult leadership.' Yeah, they literally... Android, this is why we're buying YouTube, this is why we're making these risks, this is why we're gonna go plus, we're gonna spend billions of dollars trying to build a social network. They had that founder authority. Yeah, so you know, a very well-known example that set the tone for Silicon Valley is Steve Jobs. Okay, so a notorious bad manager. Yeah, great leader, somewhat Machiavellian. Yeah, big swings, a lot of passion, ton of passion, very user-centric, right? Determined what he was doing, cared about that more than anybody, obsessed over it. It wasn't like, 'Okay, I'm gonna build some features and figure out what the product is and then...' He always put great people. He had Jony Ive heading the design group, he had Tim Cook running operations and the distribution, I guess, supply chain. Then you got Eddy Cue, I mean, right on down the line. Who knows who's the better manager there? But at some point, he was smart enough to know to put great management in so he could just focus on the customer and walk around the neighborhood. Here, where we take a look, he would take a lot of walk and talks in this neighborhood. We're in Palo Alto right now at CRV's office. Thanks for hosting. With Walt Mossberg on Sunday nights, talking about product and customers. Think about that. Yeah, and I actually think it was the arrival and notice of Steve Jobs here in the early 2000s. Larry and Sergey are at Stanford, they come here, they live in Palo Alto. Zuckerberg comes, he sets up shop here and he lives in Palo Alto, he sets up shop on University. The guy who laid down on the tracks, where is he now? And have you ever talked to him about that moment? Has there ever been a reckoning of who the person at Mohr Davidow who laid on the tracks and said no? Okay, I know I'm going back now. Yeah, no, I haven't. I mean, the person comes from... I see like her old... Like back then, because you were part of the transition. I was part of the transition. You know, I got in the business in '95. That was still the era where sales and marketing ruled a company's success. It was all about shifting and moving atoms. There was no bits in the business. Packaged software is packaged software. It was hardware. Right, gonna write some servers, gonna rack some servers, buy some licenses and boxes, rip 'em up and install them on floppy disks. That's right. There was no internet network web to distribute, right? No over-the-air updates. Exactly. So all right, $400 a seat Lotus Notes, you bought $500 seat, Novell Networks, whatever it was. Yeah, so you... Important, but if we don't have great sales and marketing people, we're toast. So it all keyed off of that. In fact, a lot of venture investors were former sales and marketing people. Wow. So you had the MBAs coming out of Stanford, Harvard, Wharton, whatever, but then you also had the sales and marketing executives who had run a sales department. Said, 'You know what makes a great venture capitalist? Somebody who could sell.' Yeah, and in fact, when you think about it, Oracle was a sales-driven culture, still is. Yes, they just ram and jam that salesforce. Also, sales-driven culture. Yes, because he came from that world. Yes, and Steve Ballmer, sales-driven culture at Microsoft. And Intel was that way. What was it, do you think that changed this philosophy? Over the name... Focus on product, the product experience. Ah, so you ended up getting product people into venture. Interesting. A big shift. Like a lot more product people. So because consumers could buy the software, because consumers were now driving it and making the decisions, not the salespeople ramming and jamming some product down a CTO's throat, it changed everything. Yeah, so it's really the buying cycle changed. The buying cycle completely changed. And who got it to the end user and presented to the end user changed. Right. When did the VC start changing and realizing? Do you remember what the moment was like in those discussions? Because you went from Mohr Davidow to... And then you... Retired people said, 'You know, this is undeniable.' Is there a company that led that in a way that changed? You know, I think the bust of 2000, which very few venture investors right now were even in business. Wow. Think about that. I mean, the average age of people in venture now is about 40, so they were about 20 in the bust. They were in school. Yeah, so they're not... They had no... Average venture investor being 40 has no scar tissue or experience of a bust. Yeah, which is kind of scary if you're a limited partner. So back then, it started... But most of the companies just went splat against the wall from the 2000 bust. So everybody got even more cynical and said, 'Yeah, consumer internet, oh, you know, it's stupid. Oh, Amazon's, you know, it's a perpetual money loser. Oh, look at all the other consumer e-commerce things, they are losing money. None of this is gonna work out. Amazon will never make money. Amazon will never make money.' Yeah, it's a huge... Yeah. So venture investors by and large kind of ditched consumer. Huh. Interesting. All right, when we get back from this quick break, I want to talk a little bit about your experience backing Jack from Odeo and then into Twitter. And then... Live wherever opportunity takes you. 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Visit zeusliving.com/angel and explore all their beautiful homes. Okay, let's get back to this amazing episode. Hey everybody, welcome back to Angel. This is the sister podcast to This Week in Startups. We're in our fourth season and we're looking for wisdom from founders who have a billion dollars under management. Which Charles... Which CRV originally called Charles River Ventures in Boston. There's a river... Him, I think 2000-2001. How did you meet Elon and then how did you wind up backing Zip2? Kimball and his company. So Elon and Kimball Musk and friend Greg Kouri showed up at our RSVPs. Yes, died at 50. Yeah, 51. So tragic. Very. They showed up at our office at CRV pitching a very controversial idea that you could put an address into an internet page and another address and it would actually tell you the directions and show you a map. Which a bunch of venture investors thought was a dumb idea because everyone had a map in their... Had heard my parents arguing enough about, 'Where are we? Where are we? Let's pull over to a gas station.' Yeah, and my favorite part of the road trips was you'd have a map and you'd say, 'Okay, the map gets us to Albany, but we'll get a map along the way on the Thruway so that we can figure out getting from Albany to Niagara Falls.' So there were these waypoints where your map ran out and you would refresh and get the next map. A good thing called the gas station which would have a rack of maps. When you move to LA, get that famous big thick book with the maps. Yeah, I've got the name of it. Somebody will like 50 people are emailing me right now who are listening to the podcast. But there was a giant book that you would get like when you got off the plane in LA that you could look up any street name anywhere in LA. I... Maps, Waze, Apple Maps, or anything else. There was that little interim of MapQuest. Yes. So they pitch you this idea. There they were at Stanford, I guess. Yeah, and this is named. Elon was working actually at one of my mentor's companies. Oh, really? Which company? Rocket Science, started by Steve Blank. Steve Blank, the Lean Startup guy. He did... He did the Lean Startup kind of stuff. So Steve Blank was running something called Rocket Science. Yeah, what was it? It was an interactive CD-ROM company, game culture, trying to combine on games and movies. Right, they were doing multimedia back in the day when computers got CD-ROM drives. People were like, 'Wait a second, you could...' Really wasn't that much fun for people watching movies. It was basically like bad games combined with bad webpages. Yeah. Like it was like a little bit of Spotify, a little bit of the web, and a little bit of an app. Yeah, but people bought them. He would go to CompUSA and buy a $60 CD-ROM. The Beatles' A Hard Day's Night. Yeah, for a while. But the game versions were not popular. No, it was a bust. So Elon worked at Rocket Science for a while, but I didn't meet him that way. Yeah, so he showed up at CRV. A seed investor introduced him to my partner John Feiber. The seed investor was... They would write like five hundred thousand dollar checks in the 90s. This is in the 90s and they were very well known. Yeah, like who were they? Mike Markkula was one of them. Yeah, he was one of them. Yeah, so are Ron Conway. This is before Ron Conway. Yeah, there were nineties angel investors. Yeah, so somebody put a hundred thousand into Google before they raised... Someone I forgot. There's Andy Bechtolsheim. Yeah, Andy was a co-founder of Sun and another networking company. He made... He got one percent, right? Yeah, he was a billionaire from Google, but he had made so much money beforehand. Right, so he's a former Stanford University professor. He in fact still might be at Stanford. He put... Yeah, he did a couple other companies too. Yeah, he just hit home run after home run. Yeah, I use a... Right, which is... Sand Hill Road is next to Stanford. Yeah, because early venture people lived in Woodside. Stanford was at Stanford and Sand Hill Road connected them. Right, and he did it in an office on Sand Hill Road so people could come from Stanford somewhere and people didn't want them coming over their houses because it didn't look professional. Right, so 3000 Sand Hill got started with people's crappy dinky offices because there was a golf course there and a crappy place to eat lunch. Right, and everyone had their small offices with small funds. Everyone had to collaborate together. It was hot. Yeah, which was also known as collude. Yeah, collaborating, colluding. Yeah, and that was the early version of venture as it started to emerge really. And that's why... Time would be a million, two million, three million. Yeah, two, three, three million. I mean, the fund sizes were 30 or 40. When I joined MDV in 1995, we had a $105 million fund. Median was 120. NEA's fund was one of the largest funds and their fund was $200. We were like, 'Whoa, that's a huge fund. That is gigantic.' Yeah, now but we're like, 'I'm doing my first seed fund, it's 300.' Yeah, like what? Yeah. What would colluding look like back then? You just somebody would come pitch everybody and then what would happen? Everybody go get lunch and say, 'What's a good price that we can...' And how much rolling control? Coming it was before me because when I joined MDV, the fund sizes started to get big enough to do the whole thing that you could start to do the whole thing that you needed to... What do you think the price of this should be? 'Well, would you do it at a $20 million post?' 'No, that's too high. What are you thinking?' 'Yeah, this is Series D. It should be $15.' Right. That's hilarious. Said Series D. C back then, the founders would wind up owning less than 10% of their companies. Yeah, pretty regularly. Pretty regularly, except in the cases where there's significant trade secret or IP in the founder. Right, in any patent that they had beforehand. Got it. They could use that patent as like the shield to get extra leverage. Yes, fascinating. So Elon comes in, pitches you, you go to bat and put 500k, a million dollars. And so we put in three million dollars. Wow. And back then that would be 20% of the... Meant that was a principal. Uh, you know, because there was title inflation going on. Yeah, back then. Zip2, it wasn't believed might not being like a Yelp, Kana. It became the pre-Yelp, Yelp. Right, because they needed a business model and it was, 'Here's a directory of vendors.' Yeah, because okay, you're going from this direction to this direction. Oh, you're going to a restaurant. Oh, restaurant could use an ad here. Got it. Interesting. And that wound up selling to New York Times or something? No, it ended up getting sold. Remember, he was supposed to be merged with AltaVista and spun out as a public offering. Oh, really? But it was supposed to be a share for share transaction. Elon was smart... With you know, Peter Thiel and David Sacks and Max Levchin's X.com, right? Which was their idea about using replacing fiat money, right? You know, use various kind of funny money on old BlackBerries, on Palms. When you think about it, like they really had the right idea. It's so amazing because going back to the Google where the 'another search engine' wins, it's like you look at PayPal and now it's like Stripe and Square and cryptocurrency. Yeah, they were that was like a version of crypto, right? Which was the pre-crypto version, which was how do we replace fiat money? Right, and we're just gonna have people beam it. And it was like, 'Okay, we've just limited the entire market to people who owned a $300 Palm Pilot with a green screen that looks like an army...' Was supposed to be an internet-only retail bank. Right, we're supposed to compete with Bank of America or Chase. Yeah, whatever. And I thought it was too early. Yeah, and it was. We didn't invest. Oh, brutal. And this is a case in venture where you can be right and wrong. You can be right conceptually but absolutely wrong in the financial outcome. So you're right, it's too early for a bank, but they still won because they pivoted and iterated. Because they merged with Confinity. Right, Sachs came up with the product idea: 'Let's just email each other money' as opposed to becoming the payment method for eBay. Right, and then they really had something. That's fascinating. Yeah, when you think about it, you have all these... Sometimes they get it right but they're triangulating at that stage. Right, isn't that a lesson? Yes, proceed in Series A. Right, if you're doing Series B or C, they should have it dialed in. It should be about scaling. Yes, at that point. So that you know, the quote-unquote mortality rate at seed in Series A is pretty high. 80, 90% go to zero. 70, 80, 90. I'd say for the top firms, to zero it's about 40%. For you know, one X's it's about another 30%. One X means you got your money back. Would you say the same as you're getting your money back is you know, 80 cents on the dollar, which is the same as zero as far as we're concerned. Yeah, LPs don't pay us to do one X. Still a zero. Yeah, so you still at 70%. Yes, meaning... Doing 11% of the top quartile. Top quartile means 25%, so 11% of 25% which is 2.5% or so are doing 3X. 3X, that's what I do. Does that mean I'm good at this? Yeah, I'm doing okay. Yeah, I think I'm at 3X. But remember, it gets more difficult to scale. Right, and that 11% is the median fund that does that is $531 million. Interesting. By the way, none of this is a solicitation for you to invest in my funds. At the end. Yeah, so as you get bigger, it gets harder to scale. Why? Why is it harder to scale? Think about that for a second. When we get back on Angel the podcast, I want you to explain why the bigger numbers harder. Let me get back on Angel.

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All right, the Loki lad is back on the pod. George Zachary, you're not gonna hear about him pounding his chest, beating some drum on Twitter. He just puts his head down and works and the work speaks for itself. Why are hard? Why is it harder to triple the big funds? And then what does that say about the state of affairs in Silicon Valley today where these funds are getting ginormous? Why are LPs, if they know it's hard and impossible to triple the billion, two billion funds, why are they doing it? So what's going on? Almost all funds that have a 3X return have at least one company that is a fund returner. So it returns the entire fund. Yeah, or it returns at least half the fund. And then... Minus 5%, right? So let's pick 20. If you own 20% of a company, in order to return a $500 million fund, you need to have five times that in terms of the value of the company, which means five times 500 is $2.5 billion. Yeah, so you need a company. Remember, dilution from wrapping employees, from future rounds, so you might get diluted by half. Yeah, that's the math. If you start off with 20%, you're gonna wind up with 10% by the time there's an IPO. So 10% at IPO means a $5 billion company returns it. And there aren't that many $5 billion companies. Let's be honest. No, there are not. So that's why this game is so hard if you do big funds. Which leads me to my next question. When that's why there's 11% of the top quartile. Got it. Kind of round area. Zoom, Zoom. Certainly. Airbnb certainly will be in the 30, 40, 50 or something. So yeah, it's really hard to do. Yes, you have to get really lucky or you just keep the fund size smaller or you keep this one, which is what Wilson does with his. Yes, is that what your strategy at Charles River? Yeah, our fund size has been $400 to $600 million. And how many partners in there? Typically, we just upped the amount of people we have to 16, up from six over the last four years. So everybody has... I'm the old guy here. Yeah, which is saying something. Like, see, when do you do? What do you think the sweet spot is for a venture... Tracks and blocked the Google, which we got. I got enough that name. I gotta go find him. I think it's 30 to 50 years old. 30 to 50. Explain why. Is this the sweet spot? What is it? Where does the combination of whatever it is, experience, wisdom, risk-taking, hunger, personal net worth? What are the factors that make that the sweet spot for fund managers? For consumer internet, the older you get, the less in touch you are with the needs of consumers. If you're doing really well in venture, you have so much money that you are not really paying attention to what consumers need because you can basically get whatever you need through money. So you get disconnected from reality. You get disconnected from... Already got winning. Caught your Starbucks. Yeah, so you know, I had heard this from a friend of ours that's the co-founder of eBay. But from another venture investor who passed on eBay, and he told me, 'Well, we didn't invest because one person in our firm blocked it. The most senior person in their firm. And their comment was, 'Who buys stuff from flea markets? There's no margin. Stuff at flea markets.' Right, and by the way, that's like 70% of people in the world are buying new stuff at flea markets because they don't have enough money and they want to get a deal. Yeah, so you know, so from their perspective, it was, 'I'm super wealthy, probably...' I'm reading into this part, right? 'I'm super wealthy, I don't go...' Connection to that. So that's some consumer internet boomer. Every venture capital firm should get a boomer and when they're doing a deal, they should just look over as a group and say, 'Okay, boomer, what do you think of this?' And then if they fight it, they should increase the amount they invest. And if they say we should totally do it, they should say, 'You know what, we're gonna pass, but you can invest personally.' Yes, just get an 'Okay boomer' for like the end of the table. Like some chrome and who's like, 'Now get it.' Like, 'Why would people take a video of themselves and share it on Snap, Crackle, and Pop? What do you call it? A Snap?' Just get an 'Okay boomer.' So it's actually this is the reason why you should absolutely have younger people in a partnership because they're more sensitive towards the consumer market. Think, 'Oh my god, I've got this venture job. I could potentially have a bigger venture job. Do I want to take the risk of saying this? Political capital. They don't want to lose that political capital at the table.' And if you fight for something in a world where we just said 70 or 80% are basically zeroes, you know, one X equals zero. So if the default case is 80% lose, fighting for something is fighting for something with an 80% chance of zero. Yes, so it goes against all logic to fight for something with the majority. It's so much easier to just be cynical and be like, 'Yeah, I think that's gonna fail.' Yeah, some VC was dunking on a company that failed on Twitter and they got barbecued because it was like, 'Hey, everything fails.' So for you... Occurs, I think, which is, 'Oh, did you pass on that?' 'Yeah, I passed on that.' So there's kind of a cross-reference of like, 'Oh, I feel good because I can... You told me you passed on this and I can say I passed on it. Okay, you know, I feel good because another smart person said that they passed on it and I passed on it.' Yeah, thing that you should be getting credit for is saying yes to something that most people don't understand. Right, isn't that the skill? Yeah, the key thing is not the thing you passed on. The key is what you did right, where you place the bet. Yeah, one of my mentors in the business, the person actually who told who basically blocked the Google, told me, 'It doesn't make a difference.' Dramatically after the Uber investment, they were just like, 'Here, you want a book deal? Here, you can be on our podcast.' And I'm just like, 'Okay, I'm just like, yeah, you're a genius.' And if it starts to become a positive feedback cycle, that is right. It does because then better companies come to you and say, 'You're the guy. Would you do Uber?' Okay, and you're the guy who did Twitter. In fact, let's go to Odeo. Yeah, and it can be a negative feedback cycle if you have a bunch of companies that are not doing well. What happens to the usual investor is there's just a meltdown. 'Oh, I'm not good at this. I'm not sure.' Basically, yeah, it's like, 'Oh my god, this company's doing well. What do I do? Like, I got to talk to the founder. Like, what can I do to fix it?' Like, yeah, it's like a massive amount of anxiety. And if you have five of those... That leads to it. Is a lot of young people, inexperienced people entering the business. They apply this bad rule of probability. They think, 'Oh, one out of ten companies will be a huge hit.' Well, probability isn't equally distributed to everyone. Right, this is what I try to explain to people. When I'm like, 'Let's pick a roulette table. Tell me which one has the most red because we're betting black.' And like, 'That one has eight reds.' I'm like, 'It makes no difference.' Like, there are instances of... There are documented instances of like 50 reds in a row. Like, if you look up in the Guinness Book of World Records, where people actually are like, 'Look, here's an actual run of 50 in a row.' So if you're trying to do the Martingale system and double your bets, like probability can be really brutal on people. I had that. I've had that happen in my career. You get those bad beats. You... It's not fun. It's not fun. How do you fight through it? What do you tell yourself? Well, I've been through it. So this is for 25 years, so it gets easier. Yeah, it's like frontline warfare. So it's like, 'Okay, people are gonna die. You know, my position's gonna get battered. It's gonna happen. But remember, I've done well enough that I don't worry that I'm not gonna have a house. Right, I'm not worried that I don't have money for my wife and kids. Right, that takes the edge off. That takes a huge edge off. Right, you just have to look at it and be like, 'Listen, this is not the risk of ruin we're talking about.' Than the average person in the business. What's been the biggest hit for you? I don't even know the answer to that. Which one is panic? Economically or on a personal fulfillment basis? Both are important. Yeah, I would say they're for me where I'm close with the founders and they really do great. It's a huge, huge sense of fulfillment. It is. Yeah, I love to see founders who I really like do really well. I can't tell you how important it is to me. So interesting. Yeah, and of course, you know, making money in those companies is very important, you know, for my partners, for me. Right, I'd like to make more money. Absolute return doing that than a slightly greater return. Right now, let me tell you, if there's like a WhatsApp return and I kind of like the founders but I don't absolutely love them, right, I'll take it. I'm good with that. Yeah, I'll take that situation. Yeah, yeah, so I got a little tiny slice of that. I was in one of the funds that graduated and that was some bizarre outcome. So you know, looking back chronologically, PillPack was a huge, huge thing for me. Yeah, bought by Amazon for over a billion dollars. Well, I go out to say how much? Oh, right. But I do know that was a... I was definitely a ten-finger, so it was three commas in there for sure. Four commas? Tres commas? Yeah, not those. So I have a friend of mine that's on the board who told me afterwards, right, they feel great about that. Yeah, and one of the most important things that also came out of it is that drug pricing, a huge amount of it is absorbed by all these middle players. Right, like it's the difference. Yeah, a lot of people don't know this, but the gross to net pricing of drugs is absorbed by people like... There's a drug called Humira. It's a biologic. The gross price to consumers is $600. The net price to pharma manufacturers is $150. Hmm, big spread there. Yeah, like net to pharma companies is actually went down the last two years. Amazon reduce prices, right? I mean, it's amazing. It's amazing. I, this is one of the paradoxes of modern-day capitalism, which is what's good for consumers in a broad sense—lower prices, more choice, more efficiency, faster, cheaper, better—can sometimes be bad for some number of workers who are also consumers whose jobs have been eliminated or there's been a freelance economy that emerges. When we get back from this quick break, I want to know how you met Jack and Odeo and tell that story, and then get into your recent obsession with health and coronavirus.

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In fact, the first time I ever did one of these, an SPV, you know what it was for? Calm, the meditation app. And that worked out really well. Yum yum skis. Thanks to Assure for powering my syndicate and for offering this discount to Angel listeners. Okay, let's get back to this amazing episode. All right, the Loki legend, George Zachary, back on the pod. Go watch the horrific interview I did in 2012 where I don't even know how to answer our questions and we're in the... Go to Odeo, wrap up the Elon story. Sounds like a present. Yeah, so Tesla you pass on. Mistake. Yes, now you got Tesla, SpaceX, and you knew him before he became like Elon like family. 20 million followers on Twitter. Elon has... Has he changed as a human? No, he's always been bold and focused. Yeah, he's Sam Elon. Samuel? Ah, yeah. Now he's just surrounded by everyone trying to get to him, which is bizarre. Which is yeah, it's annoying for him. Yeah, I would think so. Annoying for me. I mean, how many emails do you get asking for introductions to every day? Little eats. Every day of my life. I get in somebody... Between those two and now it's starting to happen with the Calm guys where it's like, 'I have a problem. Can you ask your currently hottest, most famous friend, richest, whatever, most successful to solve my problems?' I'm like, 'Yeah, that's your problem. That you need a keynote speaker or that you need an angel investor or you need somebody to come to your benefit dinner. That's not their problem.' Yeah, people are weird. Well, it's really... You know, why is it gonna be worth this person's energy and time? And time is the precious commodity. Yeah, I asked anybody for any help. Maybe that's a flaw. Pay them. Yeah, good segue. You had some health scares. Yeah, last couple years. It's not been fun. Not been fun for you. You know, share what you're comfortable sharing. We're friends. Anything. Yeah, so what happened? I know that. Wow. So I kind of disappeared for a little bit and you said, 'I got to take care of myself here.' Yeah, so what happened to George? Where is he? Yeah, he said he was just being every party. Did he go to Mars? Did he go to Mars? 2015, I was taking a statin as a test. Well, then yeah, all the men in my family have died from heart disease and so I figured maybe I'll try to head this thing off. Sure, so I just did as a test. My doctor says, 'Hey, if your stomach starts hurting, it's a really bad sign. You need to go to the hospital right away.' Okay, my stomach's okay. Then I was thinking, 'Why did they say they might give me a ring tomorrow?' Yeah, the next morning my phone rings. I'm here at work. I'm just about to meet a founder. The radiologist says, 'You need to have an MRI.' And I said, 'Why?' Yeah, and I said, 'Well, there's a mass that's 9 centimeters by 7 centimeters by 4 centimeters that needs to be imaged right away.' 9 by 7 by 4. This feels like a grapefruit or a... Well, it's about the size of three-quarters the size of my fist. Okay, so somewhere between the two. An apple. Yeah, you got an apple in there. They don't like it. Yeah, and it's like a heterogeneous mass in the imaging and it's got arteries and veins going through it. Cancer? Yes, or something terminal. So wow. Yeah, go see your mind at that moment. You're on the phone. I was kind of in shock. I had like I was just about to walk into a meeting with a founder. Yeah, so I was like that scene from Saving Private Ryan with Tom Hanks at the beach. It was like this huge bomb sound went off next to my head and now I was ringing and spinning. I walked into this meeting. I don't even remember who the founder was or anything of what they said. Wow. At all. Yeah, yeah. I was rocked. So you know, it was a long period of trying to figure out what's going on. It was really... Noticed was that most people in cancer wards were just listening to what any doctor would tell them, right, as if that doctor was like the voice of God saying, 'This is what will happen to you,' right, or 'You need to do this.' And what I discovered was that there's no set prescription or description of what's going on that is a hundred percent known. Right, in fact, when I really grilled the doctors, they really weren't sure. So I thought to myself, 'Hey, I've got a lot of money. I've got a bunch of education. I have a bunch of time. And you got contacts. And I got contacts. Get in any room.' Most people don't know this, right? Though they don't have time for... Because I'm a science and engineering geek. I'm not a political services geek. To start investing in bioengineering. Huh, biology.

With everybody listening to the doctors as gospel, as God's word, what is the right way for us to interface with doctors? What have you learned in that? And I know not everybody has the same resources or time, but just in an ideal world, how should somebody who has to face what you're facing execute a plan?

So you have a testing different drugs on it. I'm imagining like the Matrix. Remember the movie The Matrix? Everybody was in those like things. And see, we don't have to do this on humans. Yes, we shall see it on petri dishes. Yeah, so they take stem cells out of people who have Alzheimer's or some other monogenic disease. You're not going to take the whole brain disease like schizophrenia because it's very complex. But you take a monogenic version of autism or a very specific type of Alzheimer's. Alzheimer's covers a group of diseases. And then basically, so we take the stem cells from... see if it's doing anything. We do that. Can we do it with like a hundred drugs a day or a thousand drugs a day? I speed robotics. It's high. It's literally that's what I was thinking. Like, is it a robot feeding this and taking video, and then the machine looks at the videos and tells us which one to use? You have to use pretty high speed, high powered microscopy to do it. Wow, and that's resource intensive and expensive. But you know, then you have to have computers analyze the pictures. You still have to have scientists in the process right now. Can we take those, in the case of the stem cells and the neurons that are firing wrong, can we computer model that in the same way we can make a virtual reality?

Back to that lifetime question. I'm always interested in talking to people who are rolling up their sleeves in this area. In our lifetime, which I'm gonna put out a couple of decades, two, three, four, hopefully we get going. What could we see? What could we experience? And then what would our kids experience? What would be the best-case scenario? Things you would hope to see happen. Cancer eliminated in our lifetime? Mitigated in our lifetime? Alzheimer's in our... I think, well, I'm not a believer that immortality is a good thing. Okay, this is a philosophy question here. So we don't want to live forever?

You can see a lot of things that might look like tumors but they're not. So yes, but they're not. And to payers, that becomes a very expensive proposition. Ah, so economics. We're back to economics. So cost of MRI machines have to come down, the MRI service has to come down. MRIs need to be done outside of hospitals and out of major medical institutions. Like a major medical institution here wanted to charge me $9,500 for an MRI. Well, why? Why outside to a third party who did it for $900? I talked to my... you know, literally the same thing for $900. That's ridiculous. 10% of cost. I talked to my doctor about this and I would like to get some feedback from you and also the audience. I said, 'Should I do one of these full body scans?' He said, 'Okay, here's what's gonna happen. You have to think about that. Is it worth doing? Taking the time to do it? And what would I do?' And he said, 'That's the problem. You're gonna get this thing back, it's gonna have things that's gonna make you anxious. You're better off not knowing. And what, are you gonna cut yourself open to find stuff?' And I was like, 'I don't know if this is actually good feedback or advice, because maybe I want to have the downside protection. What if we do find something? This one in a hundred...' I found this bizarre tumor inside of me that was big and I had no idea was there, coincidentally through taking a statin. And the odds are that you wouldn't be here if you did. The thing could have popped inside of me and I would have bled out. We wouldn't be here if they didn't find that. This probably not. I could have bled out and I would have died. You would have died. You know, my normal GP doctor at all...

Is this the big unlock? You think this is going to be a huge unlock?

They used CRISPR technology to flip the sequence of their gene that would make them HIV resistant. Was the concept. It's inevitable. It's inevitable. Yeah, yeah. There will be designer babies. It will start first, yeah, with disease modification. You know, Arceus? Yeah, yeah. Okay, your baby's gonna be born or might not be born and will die. So we have to basically modify, you know, your dad but I did the DNA. Wow. Okay, so we did that, baby lives. Then it's gonna be like, your baby might have a problem at age 30 because there's a long-term disease that... okay, let's take care of, we'll deal with it.

This weekend, Prometheus. And let's talk about it. Be like a good excuse for us to get back together. But Prometheus, I think, is a masterpiece where you're really starting to get into this concept of should we be opening up this Pandora's box? Should we be flipping these switches? And to what ends? Because in what, in this case and the movie, it's you know, a crazy billionaire who wants to live forever basically. But the movie is amazing. It's really... I'm thinking, man, science fiction. For me, this was like the evolution of the aliens series. Like, yeah, how did the aliens get created? Well, they created engineers who created the engineers, or the engineers created humans. Okay, you know, yeah, why? And you start to figure out, has the term... should we do this ever stop the creation of anything? Nuclear bomb? No, yeah.

When we get back on this week and dystopian theories, George. Not so. You don't want people to live forever, do you? Do you buy the singularity? Will we be able to get our consciousness into a computer eventually?

Then just even bringing up the big C-word is really hard. Because what is... how do you define what consciousness is? Yeah, is it us having this conversation? Is it us being able to interpret the world? Where does it start? And is a conscious? And you know, per species, what is consciousness? Yeah, I mean, this is... trees, plants, are they conscious? Like, and what, how do you define their consciousness? And consciousness is probably defined by what creates survival for that species.

Well, become invested in one. Which one? Wild Type? Huh? Are they doing fish fillets or shrimp?

You think we'll solve that with this slurry-based, you know, printing them in labs? Can we get there?

Oh, coronavirus. We're staying here. Yeah, on Valentine's Day. I set it up that way so you can... I could have our time. We're here on February 14th. Coronavirus is 30 days out, something. Which actually, thanks for coughing. Yeah, it's about... I was clearing my throat, not a cough. Yeah, it's about... it's probably two months out from the... week. Ah, but the news started percolating out about the end of January. We had 10,000 cases at the end of January. Yesterday we had 65,000. So it's 6.5x in two weeks. So this thing is 10x-ing in three weeks or something. It's crazy. It's hard to... it's exactly hard to model. You know, my modeling was based on New England Journal of Medicine. They modeled about doubling every 7.4 days. And that depends on factors like the density of the city and what precautions people are taking. Are people still shaking hands and taking flights, or are people Florentine? That's exactly right. There's a huge amount of factors like that. Yeah, and by the way, authoritarian regimes are... again, dictators really are effective at building roads and quarantine. Young people have an advanced police state with cameras everywhere. Perfect. See people's temperature. See people's temperature. If you coughed too much on camera, we'll send somebody out. And now they're sending drones out. Did you see that? Yeah, they're sending drones out to read the heat signatures on people. So the drone's gonna follow you. And then supposedly, who knows? Because it's North Korea, but Kim Jong-un reportedly... some high-level person came back from China and then went to a public bath like two weeks after. Like, his... I don't have burner. If I go to the public baths, shot him outside. Shot outside for doing that. This could... there'll be, if this keeps scaling up, more of this could occur. You know, and it's gonna lead to like remote everything. Yeah, tella tella... out. I'll get it. Boom. So literally, they were showing people getting groceries. And is it Wuhan? Is the city where it's learned? So they're showing people in Wuhan getting food. They were walking up to a store, a person was putting the bag of food on a stick and putting the stick out the window and handing it to somebody. To me, this is nirvana. This is the world I want to live in. Please, by all means, stay ten feet away from me. I'm a germaphobe. I'm constantly using the... you know why? I wash my hands ten times a day. I'll shake anybody's hand for the last five years. I've had a sick kid. Everyone in the office laughs because people come in, they're like, 'Oh my god.' I'm like, 'Don't shake my hand, I got a sick kid.' Well, this girl like, 'Do you really have a sick kid?' Because the people who work for me see me do that 365 days a year. People come into the meetings that... this could lead to a new market of what I'm... something for it or a cure. Who knows?

As we wrap up here, what's the source of all this stuff? I heard people say the wet markets are this big problem. And I typed in 'wet market' and I started looking at it, and I was like, 'Oh my god.' You know, people eating bats and funky creatures that were alive and they're cutting them up in front of people because they want proof that what they're eating is what... think because there's so many people doing knock-offs. You know, like there's a lot of counterfeiting of bags or whatever. So I think amongst Chinese people, they're like, 'I don't want to get ripped off. I'm buying a bat or a toad or a shark fin that's been frozen for two years, and I don't know if it's actually a shark fin. It could be something else. It could be a dolphin fin or whatever.' So I want to see you cut the fin off a live shark, or I want you to cut the whatever out of the bat. Yeah, and they have these wet markets where there's just... you know, why they call them wet markets? I actually don't know why they call them wet markets. I'm assuming it's not that they're in water. No, it's the blood. It's the blood. You know, so when you're... what I throw them, the floors are covered in blood. So people are walking through... I'm just... now twice that this has come from the wet markets. I think it's a long-term cultural issue. I mean, it's... I don't know. We'll see how that gets dealt with. I mean, Chinese authorities are pretty severe in dealing with things that threaten the long-term stability of China. Tiananmen Square and like a million Muslims being... very educated right now. Like, yeah, they basically take a severe deep dive into whatever is, you know, they're not copacetic. I think the Chinese people would also opt out of this concept if they saw what coronavirus... they're gonna just be like, 'I don't want to ever go to wet market.' So then wet markets won't exist because people will not go to them. Yeah. So the question I ask myself is, is the cost of being wrong in taking action... is the cost of being wrong and not... terrorize people, right? Because, 'Oh my god, I might have coronavirus. Oh, I got to run to the...' Mido for being cautious is... you cost an inconvenience to everybody. You cost society billions of dollars in lost travel and tickets and conferences. Yeah. The cost of being wrong is an exponential rise. 10 million people die that could... overload society. And of course, you know, there's people know us at all. You know, SARS, avian flu that didn't really kill a lot of people because we overreacted. There's no fucking memory now of the 1918 flu. There's no memory of the plague in China that in 1855 that killed people. There's no memory of that plague that went from China that... Lou Island up in... notice to anyone. San Francisco quarantined all of Chinatown and all Chinese people in Chinatown, but not anyone who is non-Chinese. Oh boy, that's crazy. And people don't even remember the... they just don't remember this. They just think, 'Oh, we're okay now. Everything's modern. We have modern health systems.' Wrong. Flu kills 50,000 people. Yeah, the flu kills 0.07% of people, not 2%. And the people it kills are sometimes people at the end of their life with a weak immune system, as we talked about earlier. And that's, you know, it's not gonna kill a healthy person necessarily. Yeah. And people don't even remember that. So to go full circle to a conversation like we literally have... venture capitalists remember the dot-com bust. How the hell can we have anybody... wander then. You know, we have those now. So gotcha. I'm thinking bath houses, brothels, or otherwise places where people are... yeah, bottom transmitting. Transmitting. I mean, it is. Yeah, when you think about it, it's... people have such short-term memories. And they... people weren't around. And you know, there's denial. People don't want to... people are terrified by this, you know. But there isn't proof yet that this will happen now. But it is inevitable that this will happen in our lifetime unless we have like vaccinations for everything, which we can't. They mutate too fast. Yes. And global... this is the thing. When you have a global society and you... all diverse backgrounds, and they shipped them all over the planet after putting them in a plane for 6 to 15 hours to stew and bake in their own bacteria and viruses. Yeah, this is a new phenomenon. Global aircraft transportation is going to cause these things to go supernova. And we haven't even thought it through. It's the same thing with Facebook when you think about it. We never thought what having a billion people on a platform would do. No, now we've got them. And yeah, it breaks the Constitution of the United States and democracy. So that, you know, that went viral, right? So now it's the other thing. This is now going viral, and we might use social media to spread viral the news about a real virus. Right. And then we have an election. If people start freaking out, right, people say, 'Close the borders. I'm getting guns and bullets.' You think that this... yeah, I mean, that's an extreme low chance of that happening. Yes, it's nonzero. It's nonzero. I mean, what about that? I literally just was talking to my wife this past week. And I always keep two or three weeks of food in the house, much to the chagrin of my wife. It's like, 'Why do we have two cases of canned ravioli and soup?' I'm like, 'If there's an earthquake, you're gonna really enjoy those raviolis.' Like, trust me, there's a reason for this. The prepper in all of us will come out. I think it's wise. I mean, I think that there's a reason why smart rich people... which could actually be an interesting new platform. Why are we not just eliminating it? This is what leadership should be. The people who are in positions of power and communication need to look into cameras and say, 'Stop shaking everybody's hands. Fist bumps only. That's it. Step one. Stop shaking hands.' I go through conferences for the last ten years holding a cup of coffee and holding my phone in the other hand. Do you know why? Because when somebody comes up and wants to shake your hand, I just go, 'Oh, I'm sorry. Great to meet you. Tell me about what you're working on.' And I just put two things in each hand so I don't have to be rude. But this barbaric concept of shaking hands. Like when you go to Japan, they bow. Yeah, shaking hands... don't have a gun in your hand. Yeah, it was to see if you had a weapon. Yeah, yeah. I don't know when that started. Was that your up or something? Something a fact. You sound like your up or something. Like you have a sword or... it's the one... yeah, show me your hands. Might even be medieval. Probably it's still medieval. By the way, I'll shake hands like it. And then people want to shake my hand at a party or something, and I'm like, 'By the way, you know this isn't... it's a tech conference. So I've literally had a hundred people come up and shake my hand. Do you want to be the hundred first? Because it's a fucking petri dish. And by all means, if you want to, we can go there. But it's not in your best interest.' So I just... and it's my advice to everybody. You could just wear a shirt that says, 'I've been coughing lately.' Yeah. I call it the corona bump. I call it the corona bump. Everybody, let's just learn a... said people make very fashionable ones. And I got pitch. Don't start making fashionable ones for Shanghai and Beijing because of air quality. Yeah. And I think that's gonna become a thing. And I'm rethinking... you just have to put them on properly. So there's no air leaks. If there's air leaks, you have to fit them properly, which is what people do in hospitals. They have them fit there. I have a suction test of some kind. And that doesn't exist in the real world. But I'm rethinking my travel schedule now. And I just... I already started. My sister, I was like, 'You know what, I'm only gonna fly private now.' I just told her. I was like, 'You know, I was trying to be a...' She's like, 'Just... I'm gonna use my plane more often.' I don't have a plane. I'm joking. Well, on my Southwest flight yesterday, yes, there was plenty of people with masks. Not plenty. Ten. Three, three. But there's like... half. There was a half full... speaking gigs in Asia. I was gonna do Japan, Singapore, and Manila. And it's in May or June. And I said, 'Okay, let's put it on the calendar, fine. But we have to see what's happening.' Did you see Mobile World Congress, guys? Yeah, isn't that like a hundred thousand people or 50,000 people? It's a giant con. To cancel that, yeah, that's gotta be tens of millions of dollars in impact, yeah, for the sponsors and tickets alone. Even if they reschedule for next year. Yeah, yeah. So you know, this is real. You know, short trade shows, short airlines, short anything with physical gatherings. Long... you know, tell anything. Yeah. Somewhere, Parker Lucky is like, 'I told you guys, you should...' I can't make fun of... rather than a regular fence, if you wanted to know how many people going across the... like, why would you put a wall? Why not just put towers with cameras and sensors? Yeah, you need ground-penetrating radar as well because they dig underneath it. Yeah, tunneling. Yeah. But I mean, if you actually knew how many people going across the border, we have a real logical discussion about this. Yeah.

All right, listen, George. Everybody can follow you, George Zachary, on the Twitter. But you don't go on that. It's two times. Ooh, yeah. What's a while? You jump in, see the screaming maniacs. I do. Whoa. You got it. Loom bar. You got Bloomberg. What do you got? Bloomberg. Who you vote for? Who isn't you? Lead right now. Well, I'm definitely out voting for Trump. No. And there's no one on the...