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Jay Hoag

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2021-09-28

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2021-09-28

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1. “In 1981 in Milwaukee, the strong Cornelius in funds at the time. My professor Dave Brophy of Michigan, who as I was kind of wandering aimlessly through my business school career after it wandering aimlessly through my undergrad career, got me interested in investments.”

   2021-09-28 · Invest Like the Best · Jay Hoag - Calibrating Market Adoption - [Invest Like the Best, EP. 244] · IDENTIFIED FROM THE TRANSCRIPT · source

2. “There are many on the list I'm going to probably over answer the question. I'll try to be brief per generally speaking, I have to say my mom is the kindest person always provided a warm environment to come home from school in. And by the way, this was in outside Chicago and Little Town, Wisconsin, and there was nothing technology involved. That support was critical. The second personal one is my wife saying yes, 31 years ago. She is the best person I know. And I way overachieved. So that is good. She looked kindly upon me at the time. And then I would say actually started working when I was 11. There's a woman that hired me, Mrs. Gunnerson, when I was a young kid to work 20 hours a week, which helped install a good work ethic named Dick Strong, who gave me my first office job.”

   2021-09-28 · Invest Like the Best · Jay Hoag - Calibrating Market Adoption - [Invest Like the Best, EP. 244] · IDENTIFIED FROM THE TRANSCRIPT · source

3. “And retain the better off we are. Good, solid work is good, solid work, but it's not going to be the differentiator for us. I also think one of the other benefits of studying colleagues is when you're surrounded by truly stunning colleagues, there's a vibrancy and a dialogue and a debate and great ideas win and it doesn't matter what somebody's age or title or tenure is. That's where people want to work. That is an added benefit to the approach.”

   2021-09-28 · Invest Like the Best · Jay Hoag - Calibrating Market Adoption - [Invest Like the Best, EP. 244] · IDENTIFIED FROM THE TRANSCRIPT · source

4. “Think some people think, well, the down's the kind of the negative of focusing on talent density and stunning colleagues is, oh, well, that means you're going to be tough on some people. Took me a while to get fully undocumented to reads approach, but just because therefore it may not be right for everyone doesn't mean that they can't go find gameful employment elsewhere. But the key observation is I think this is a true at TCV. The difference between investors is not like, well, somebody's 30% better and it's sort of like an engineer and therefore you pay them 30% more. The difference, again, is an order of magnitude. There is something very unique about a great investor. It's not where they went to school. It's not, are they smart? It's not are they hardworking. There's a magic there as well. And so my whole goal of TCB is the more magic we can bring in.”

   2021-09-28 · Invest Like the Best · Jay Hoag - Calibrating Market Adoption - [Invest Like the Best, EP. 244] · IDENTIFIED FROM THE TRANSCRIPT · source

5. “Would start with, I probably was more naive than crazy. In terms of starting something in 95. But to me, it's just like the companies we invest in, the advice is probably pretty straightforward. A small number of incredible people can do vast amounts of work and reads parlance, surround yourself with stunning colleagues. In today's world, invest as much in tools, technology tools to run the business as opposed to not and focus on reward, not risk.”

   2021-09-28 · Invest Like the Best · Jay Hoag - Calibrating Market Adoption - [Invest Like the Best, EP. 244] · IDENTIFIED FROM THE TRANSCRIPT · source

6. “Incredible insight. And I don't know what one that will happen later today or tomorrow, but that to me is what's just so incredibly exciting about being a technology investor. And I will say, I describe technology as the world's greatest industry, being allowed to invest and participate in it. There's such a luxury being surrounded by incredible colleagues at TCV who are teaching me something new every day is wonderful and thank God I stumbled across it 40 years ago.”

   2021-09-28 · Invest Like the Best · Jay Hoag - Calibrating Market Adoption - [Invest Like the Best, EP. 244] · IDENTIFIED FROM THE TRANSCRIPT · source

7. “Blockchain certainly is one. This next generation of, in some cases, neobanks, or others providing modern day financial services on mobile phone as opposed to out of physical facilities. Talk about a trend that has been around has accelerated dramatically. Obviously, the shift to cloud, the shift to multi-cloud, open source, and all of the DevOps tools, all of the next generation applications, all of that whole bunch of exciting companies like Mamboo and Redis and Spryker that are enabling enterprises or small businesses to take advantage of the cloud and the fact that it dramatically lowers the cost of compute and the cost of storage. And we're still very early days in that as well. And I always get excited about hearing a new pitch when lyrics go, oh, that just is unique.”

   2021-09-28 · Invest Like the Best · Jay Hoag - Calibrating Market Adoption - [Invest Like the Best, EP. 244] · IDENTIFIED FROM THE TRANSCRIPT · source

8. “Become mainstream, you're going to see enormous next generation of companies that will come public and have a lot of runway ahead of them.”

   2021-09-28 · Invest Like the Best · Jay Hoag - Calibrating Market Adoption - [Invest Like the Best, EP. 244] · IDENTIFIED FROM THE TRANSCRIPT · source

9. “I think there is obviously some underlying technologies, and then there is currency itself, et cetera, et cetera. But I believe we are early days in that whole realm and that there will be some phenomenal companies built. I also think in the current generation of sizable financial technology-oriented companies has a tremendous amount of runway ahead of it. We're investors in companies that are not yet household names like Newbank and World Remit and Revolute and Trade Republic. All of these folks at a super simple level, the growing dramatically, they are competing with the established financial services firms who've been around for 20 or 50 or 100 years. And the old line did not are not delighting their consumers even before some of the underpinnings of the block.”

   2021-09-28 · Invest Like the Best · Jay Hoag - Calibrating Market Adoption - [Invest Like the Best, EP. 244] · IDENTIFIED FROM THE TRANSCRIPT · source

10. “Much changes on a quarterly basis. So, one of the long lessons and what people may underappreciate is just how much runway the next generation of companies has to go. Daniel Acken and my partner, Woody Marshall's on and the board there at Spotify, we were chatting the other day and again to sound like a historian. When TCV started, it was the year that the first song was made available to download. The only challenge was it took 90 minutes. That's a long time. And so now what does Spotify offer? Well, it offers 40 million songs available on your handheld device in under a second. Kind of shows you the progress of technology over the years. And Daniel talks about it's 100 plus million subs today, 200 plus, but that's a small fraction of the 4 billion smartphone users in the world. Let's not underestimate.”

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11. “Technology company XYZ is worth more than three physical counterparts combined. Yeah, maybe they should be because the growth prospects are such. And we'll point out that a lot of the market cap growth is still a pretty new phenomenon, but we should not assume it's over. If I look back 2005 of the 10 most valuable companies in the world, one was technology. In 2010, it was three. At the end of last year, it was nine, nine of 10. And the combined market cap went from 300 billion to 9.5 trillion. But what we're trying to do is, okay, who will join that group in the next 10 years? Let's focus on that. Let's not get distracted by how last quarter was. I do think fundamentals typically for the best companies move up into the right. Investor psychology can change a lot. It can be a scattergram.”

    2021-09-28 · Invest Like the Best · Jay Hoag - Calibrating Market Adoption - [Invest Like the Best, EP. 244] · IDENTIFIED FROM THE TRANSCRIPT · source

12. “Way I think about it actually is to talk about market caps. And there certainly is some school of thought as you think about the big public technology companies that a lot of people own them, that done super well, blah, blah, and maybe they're better days are behind them. And I personally think that it's nonsense. These are the best business models on the face of the earth talking about Facebook, Google, Microsoft, et cetera. And these are the best business on the face of the earth. They have unbelievable engagement. They have profit margins and cash flow curvature risks that we've just never seen before. And significant user growth ahead of them. One of the common mistakes is, oh, better days behind them or in some smaller companies, well.”

    2021-09-28 · Invest Like the Best · Jay Hoag - Calibrating Market Adoption - [Invest Like the Best, EP. 244] · IDENTIFIED FROM THE TRANSCRIPT · source

13. “Examples, the theater industry, the health club membership industry, physical health clubs. They have a future, certainly, but the prospects for folks who are delivering, in Peloton's case, fitness in the home, a phenomenal experience, or in the case of Netflix's movies, TV shows via streaming, you have to believe that the strategic landscape has shifted positively in favor of the technology companies.”

    2021-09-28 · Invest Like the Best · Jay Hoag - Calibrating Market Adoption - [Invest Like the Best, EP. 244] · IDENTIFIED FROM THE TRANSCRIPT · source

14. “Companies in those segments. I think near term you have the greatest of technology and all that we've focused on, I hate to say now, as I'm heading into my fifth decade, is just very prominent. And obviously that's also been reflected in the market cap of some of the best public companies. Near term is a whole bunch of noise. You have companies whose businesses were really technology companies negatively hit by an online travel company to companies whose businesses were accelerated. I think subscriber businesses like trying to tease out patterns with what portion of Coleton's business enough businesses was accelerated. And as you work through those comps, there's all sorts of noise in the marketplace on a monthly and quarterly basis, blah, blah, blah. But it doesn't change the long-term secular outlook, which is incredibly positive. You just have to work through that noise. And I would also say many industries, again, using those as”

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15. “And I was dead wrong in terms of the public markets. But what has become even more evident is technology really has been the glue that has allowed us all to operate, to allow businesses to operate and trends that might have taken years to show themselves were accelerated dramatically, sometimes out of necessity, zoomed obviously being a classic example. It's true of payments. It's true of many other categories across the challenged landscape. We're not investor in DocuSign, but can you imagine going back to signing papers versus document? And it certainly is true in real estate with Zillow, things that might have taken multiple years have all been accelerated. I think those changes are permanent, and it means the size of the price has gotten ever bigger for those segments and for the leadership company.”

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16. “Doing this for a long period of time. And by the way, when I started on that July 1st of 1982, I should have mentioned this earlier, the Dow Jones industrial average was 811. Just pause that for a moment. So at 34,000 plus, it's been a pretty good tailwind. You know, that's for the Dow, and obviously technology has outperformed that dramatically. The last 18 months, even for a long time technology bull has been amazing. And I will confess, I didn't see playing out exactly this way. If you go back to obviously March 2020, and we shouldn't talk about COVID era without first acknowledging the pandemic and the huge toll it's had on human life and on businesses. And as I thought about market corrections having lived through 1987 and 1990, internet bubble and internet bursting, the global financial crisis, I had thought that we would be in for a long, tough slog.”

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17. “Everyone is doing their best. Some happen to be Michael Jordan, and others aren't. But you can't beat up on them. I think it's important for an investor and a board member to, if there are hard questions to ask, to ask them, but to do so in a professional way. There's lots of ways you can ask a hard question. I've seen lots of bad behavior in our industry over the years. I don't think that's necessarily appropriate. I also think that it's the tough times as an investor that really allow you to differentiate yourself. It's super easy to be a cheerleader when everything's going well, but I like to view us as a partner with the CEO and help provide solutions to turbulent times, not point out the flaws. Because we are in it together.”

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18. “Lessons I maybe learned from that era and hopefully apply today is as a board member and investor, I try to always be balanced in phenomenal times. Let's not get a little too carried away. And in tough times, let's be supportive because the CEO walks in and shares disappointments with you. Why on earth would you be negative? You have to work through with them.”

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19. “The bursting. And it's hard to describe what was going on at the time. And obviously now all of the fundamental underpinnings of the internet and technology have played out, but it was still pretty early days. There was such an emphasis on speed that it was just an incredibly stressful time. Literally, you met a company and they left your office without a term sheet. You might lose the deal. It was enormous FOMO. I remember vividly one of our LPs had a direct investment effort. They were doing a deal a day. That guy was stressed. Made all sorts of mistakes during that era. We also had some nice investments that were knocked over by the internet bursting, bubble bursting. And then fortunately, we had a few good ones that allowed us to keep operating. But we had to downsize TCV for a while. That was incredibly stressful and incredibly hard.”

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20. “Fundraise. So we're sitting there in May of 95. We had circled about $45 million and we were stuck. We'd been raising for a couple months. And we didn't know if $45 million fund would be viable. And then thank goodness the folks, it's actually the Hellman Group out of Pittsburgh said we would like to see you the Friday before Memorial Day in Pittsburgh. And of course, we did. Off we trudged to see if we could get them as an investor. This was in the era when your presentations were on flip charts. So basically print it out slides and a slide carousel. And I can still remember we had maybe 20 slides at the presentation. We were flipping them in about eight slides in. It was upside down. Somehow they looked through that and gave us a break. There's all sorts of stresses. The other huge stress period was the building of the internet bubble and then”

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21. “There's a couple. I'll answer it more than just investing. Rick and I quit our jobs in 1994, so good solid salaries and bonuses. Took 100% pay cut to go prepare to launch TCV. We gave 188 presentations around the globe to ultimately raise $100 million, TCB1, but there was incredible stress during that point in time. One of the stresses was people didn't like crossover. They wanted either a private fund or a public fund. Think about the irony of that. When your fundraising first fund, there's nothing efficient about it. If you say, hey, I'm going to be in Chicago next week and somebody gets back and says, well, I can't be next week. I can meet October 3rd at 9.30 a.m., you're probably going to make it October 3rd at 9.30 a.m. And I would also say at one point in the”

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22. “The future Michael Jordans, how much magic is there both in the product and then in the products and engineering teams? What does the roadmap look like where this offering is going to get is compelling today and going to get to become even more compelling over time?”

    2021-09-28 · Invest Like the Best · Jay Hoag - Calibrating Market Adoption - [Invest Like the Best, EP. 244] · IDENTIFIED FROM THE TRANSCRIPT · source

23. “Costs, et cetera, et cetera. But you can also get some false positives and whatever the opposite of a false positive is out of that. And so I think our business is a combination of if that's science, combination of science plus art. One has to look at patterns and assess how strong is consumer value prop. It's not, you punch a bunch of numbers on a scale one in 10 and it pops up. It's 9.2. And also you have to for some of these companies envision, well, not just what the offering is today because you assume that it's going to be dramatically different and better in a year's time and two years time and three years' time. If you think of the science part in a sense is the easy part because a lot of people are financially trained. The more challenging we have a lot of great folks at TCB doing it is the art part. It could be as simple as is this the CEO, one of those rare breeders.”

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24. “I think there's some base level things that one has to execute against, of course, which is have a big enough presence, and I don't know whether that's brand or just size of fund or size of team, where you are seeing sufficient volume of things to be able to then pick the winners and avoid the losers. Pretty simple business, right? If you're not seeing that flow, then you're probably suboptimizing because you're making decisions on a small reference set. That's sort of table stakes. The way I describe it is we're still in a world where TCV's business and investing generally is a combination of R plus science. We have a team of data scientists who are doing great work. We look at a vast amount of financial data around cohort analysis and customer acquisition.”

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25. “Company had done was stick with their current path. They might not be here. It does point out that there are no hard and fast rules. One of my other truisms is the only absolute is there are no absolutes. I think focus just has so many benefits. And again, it helps operating discipline and it helps, I think, oftentimes making the right strategic decision. And sometimes it means incrementally forward investing against that North Star to go faster and perhaps delay profitability, but it results in a better future.”

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26. “I think clarity of North Star for a company is critically important. So then that gets to focus. At the end of the day, every decision you make, what is the North Star? Again, as a longtime disciple of read at Netflix, it was focus, focus, focus. And every meeting, every quarter, every year people are, why don't you do advertising? Why don't you do this? Way back in the day, why doesn't Netflix become a online portal for all things entertainment sort of similar to what Yahoo was at one point? I think focus allows companies to properly prioritize. There's a purity of that where they can then go and execute and not get distracted by the idea of the day. That said, of course, there have been some great pivots where if all”

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27. “Might answer a different way. I think the power of online community is enormous. And so companies like Strava that are tapping into that Elaton as well have several benefits. One of you can increasingly engage that consumer. And coming back more and more and more doesn't necessarily mean more revenue, but it means a locked in consumer who then also is likely telling their friends about the service. And so word of mouth can be an organic growth can be enormous. In addition to those companies, I guarantee there are a new set of phenomenally capable entrepreneurs figuring out how to unlock this enormous and engaged online community for their specific businesses.”

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28. “In the world, much less millions of dollars for a consumer facing e-commerce company in the spring of 2001. It really was a post-internet bubble nuclear winter. And fortunately, TCV ended up stepping in, providing that capital, structuring it that there were some other insiders that participated, proven to be a great financial move for TCB as a firm, but just as importantly, allowed Netflix to survive that nuclear winter and ultimately go on to greatness. And that may now recur for some of these great companies, but if investors decide formerly great companies heading into the desert of disillusionment, it is worth contemplating that.”

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29. “I love obviously talking about our companies, but it is worth reflecting to maybe amplify this point, how different the world is today. I mentioned we invested in Netflix. First Mass actually in 99. And there were a series of up and to the right financings at ever higher prices. Some capital sources that we introduced. The company actually filed to go public in March of 2000 as the Nasdaq was deciding that to decline 30% and then ultimately peaked the trough down 70%. And the company had not yet achieved cash flow positive. We're talking early 2001. But to us, it was pretty clear they were going to. Anyway, there was a not really an emergency financing, but a financing to help ensure that they would have the cash to get to that point of cash flow break even. There was not a penny available.”

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30. “Piece of advice. Look for investors who want to share a vision of what the long-term prize might look like and are not just playing some near-term momentum game. When you have that long-term conviction, don't be shaken from it. Don't adopt more conventional approaches that might reduce risk but will minimize your ultimate outcome. A newish piece of advice. It has been incredibly and maybe forever robust fundraising environment for most companies. Don't always assume that capital will be available. It might be, but think through if capital sources tightened in the future, how to make sure that this vision you have for the company, you get to continue to pursue it. And so that might also get into choosing the right investor group. One other little historical story that”

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31. “That's actually a little bit of a historical factory. People don't recall the Netflix's stock traded down 15 to 20 percent post IPO and stayed down for six months. That too provided an interesting entry point.”

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32. “That approach allows us to take a different lens to the public market and say, huh, if we were to buy into this business at this enterprise value and take a five or ten year view, would we want to own it? And we've done that knock on wood with success. We've also had some not great investments. But one of the things you also have to be willing to do is to be wrong near term. You just have to make sure you're right long term. One of our more successful investments was a pipe investment we made in Netflix in 2011 when the stock had declined 70%, still pretty early days in streaming, but that was the bet that by shutting out the noise, we had no idea whether exactly what the next quarter was going to bring, but that we wanted to be an incremental shareholder at that point in time. And just like the Netflix IPO, the saturated down shortly thereafter.”

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33. “Now, some 400 companies privately, and leverage that knowledge to really figure out who are these companies that are providing something magical that can become someday $100 billion enterprise value, $500 billion, a trillion to join the ranks of the major technology companies. And we also should benefit from the view that business is not meant to be measured by quarters. And of course, public companies are being a long-term investor again from the private market roots, one can hopefully shut out the noise. There's lots of chatter, lots of company reports, quote unquote, bad quarter doesn't mean the visions change, doesn't mean the strategies change, doesn't mean the outlook for the company actually has changed. It just meant something didn't happen right at the end of the quarter. And so I was light or a couple of big sales didn't close, et cetera.”

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34. “Us better public market investors, and I'll get to that in a moment. And being a public market investor, it makes us better private investor. And the capital allocation is to exercise, is to look across the technology landscape, take advantage of all the research and knowledge that we have, and look for the best investments. Kind of simple, and not be bucketed by either private or public. So as we're talking to large enterprises about what they are buying, where they see the future, as we're tracking across the consumer landscape, all of that knowledge base is helping both the private and public side. The benefit of being a private market investor is often you get very detailed information on trends, on companies, and competitive dynamics that often a public investor doesn't get. So we should have an advantage as we get to know and track and invest in.”

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35. “Dictated by Peloton non investors who said, I've seen this movie before and I know how it turns out. So crossover investing, just to give you a little history, I believe despite some who claim to have invented it in the 90s, was first practiced, at least to my knowledge, by two individuals, a City Corp, my alma mater. Dave Bellet and Chet Sueta. And my City Corp days, we were exercising that same discipline. And when we then fast forwarded to founding TCV and the C in TCV technology crossover ventures, we started as and then it got shortened to TCV, thankfully, because technology crossover ventures is a mouthful. We say that crossover literally is our middle lane. And going back to our original founding, I looked at the document recently and it's not super attractive by modern day standards. But the fundamental view was that by being a private investor, it made”

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36. “Take a trip down memory lane because I think that history is informative. History doesn't always dictate the future, but I do think technology investing is some combination of experience and then a totally new and unique perspective. And that new and unique perspective can come from anywhere within the organization.”

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37. “Can set picks, get them the ball. These are various analogies in terms of additional financing, et cetera. Occasionally, when they patch to us, we better hit the basket, hit the shot like Steve Curr or John Paxton, if you know what I'm talking about in the bulls history. And it really is to do anything and everything we can to support their greatness. And again, through thick and thin, because ultimately that's likely to have some bumps along the road.”

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38. “Almost all great companies go through a desert of disillusionment where private investors or public investors decide that they're not worthy of sticking with. And you can cite chapter and verse around some of the companies I mentioned previously. Facebook, again, being a great example where we invested privately. And then at the time of the IPO as a world shifted to mobile, investors decided maybe this isn't the greatest company ever. That's where I think being a long-term investor and allowing the vision to play out can be super helpful. Going back to the sports analogy, I grew up in Chicago and liked to think of the Jordan era Chicago Bulls. And if I were to say, well, what is somebody at TCV's role? We backed Michael Jordan. We just want him this great CEO or her to do what they do. And if we”

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39. “Similar path, and at the time we invested in Spotify, streaming was not really viewed as a thing. Another subscription service, and then that led us to Peloton as well. And in those cases, I think one of the ways we can specifically help companies is by using all of the experience building a subscription business to help the next company leverage best practices in a little bit of an industry buzzword, but learn from that different nuances that a newcomer might not have. I like to think that one of the key things we at TCB do, in addition to being their strategic partner and assist in the various ways I said, is to be there in good times and bad. I earlier said I have many truisms, one of which, or two of which are, even when you can see the mountaintop, it doesn't mean the path there is going to be an easy one. And related.”

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40. “I love talking in analogies, and I like talking in sports analogies in particular. Before doing that, I'd say when you stumble across these individuals, by and large, being a little flipped, by and large, I just sit on the sidelines and applaud. There are lots of ways, some of the functions that hopefully I and my colleagues play, because again, there are many people part of TCV, is be a strategic sounding board, help on recruiting, sometimes helping super rapid growth companies anticipate the team they will need in the future as opposed to the team they have now or the team that got them here, partner introductions, et cetera. One of the benefits of foking around for a long time in this industry is to some extent the Netflix experience led us to Spotify, hey, if an entertainment bundle streamed to your various devices makes sense, maybe music has”

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41. “Got in the early days. Well, you should just sell your software on other people's devices and kind of, with all due respect, if you spend much time in hotel gyms or elsewhere, those are not exactly elegant machines that you put your software on. You wanted to control the entire ecosystem. I think by doing so, it created a magical consumer experience, but it was very different from what anybody thought made sense. He had to seem very crazy. In fact, he was actually a visionary. And then I would also say as an investor, sometimes backing these individuals, you have to be willing to be thought of as an idiot for some period of time. Hopefully, you're right in the end, but the biggest opportunities can be where you are right, but you also stepped in in a contrarian way.”

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42. “He had a big software effort, obviously. Oh, I know. Something also would seem crazy at the time. Let's have our own delivery fleet so people get an awesome delivery experience of back then Telaton Pike and the tread. And we're going to own the entire ecosystem. And we are going to, as a result, be able to drive tremendous NPS and great customer satisfaction and back on the engagement level in the last quarterly call. They talked about 20 workouts per subscription. That's a very engaged audience. But all of that struck people as A, it's going to cost quite a bit. B, it's going to be really complex in what happens if one of those legs on a multi-leg stool doesn't work perfectly. It felt so far outside the box to people that he got turned down repeatedly. Some of the advice.”

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43. “And sift through ah, this reminds me of XYZ. And oh, let's look at this segment. The road is littered with dead carcasses of companies that went after home fitness and failed. So that's one lens. Second thing is John felt very passionately his vision was to do the following. You need to make your devices. You need to develop your own studio to develop the content so that it gets better every day. Have your incredible instructors who are part of that be very much part of the fabric of the company to help create a magic experience. He wanted to have stores so as the company releases new products, you could experience them in a store.”

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44. “Love talking about each of these companies and journeys. As I said earlier, many of these great companies start with a concept that is not intuitive to people. And no matter what people like to think, I think there are not a lot of contrarians extant in the world. I also think, though, that different can hold the keys to success. And so On the one hand, I understand why John Foley had such a tough time because think about go to 40,000 feet and say, okay, what was going on in fitness over the last 30 years prior to Peloton? A bunch of devices sold into the home that generally didn't get used, maybe prior generations of fitness via video, VHS tapes, going way back to Jane Fonda days. Investors like to be pattern recognized.”

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45. “That's a small fraction of the one audience, 4 billion plus smartphones in the world. And that base is growing. So as long as those companies continue to produce great, engaging content, I don't think there is any limit to the audience side. In gaming, another example where we're still early days, I think, in cloud gaming, but that too should dramatically increase the audience as you move from selling tens of millions of consoles, hundreds of millions of mobile devices to a world in five years where cloud gaming has dramatically lowered the device cost and you are looking at multiple billions of potential consumers.”

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46. “I think fundamentally. Great content will have an audience. And I would point out that the underlying expansion of the ways we engage with content is pretty dramatic. One should not lose sight of that and think that we're in the twilight years of content consumption. The reason for that, and again, some of this may be obvious, is the number of devices in the world to view content, listen to content, such as hopefully some audience will be doing here, is in the billions. And as many have spoken about, with each generation of technology, the industry has moved from hundreds of thousands to millions to tens of millions to billions and out to multiple billions. How do I think about it? Netflix today has a bid north of 200 million subscribers. Spotify is heading towards that number.”

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47. “That's available to the consumer directly. And so Expedia technology advance, and this is really dating myself, was they put what had been on a mainframe-based system in a travel agent's office. They put that search power onto a NT server, Windows NT for the non-historians, and made it available via a website. And that was a huge unlock in that industry. And he's obviously done that in real estate and other areas as well.”

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48. “Over the next one, two, three, four, five, ten years, the vision of the future will play out and you can't quite see what the offering will look like today, then that's proven to be where some of the greatest opportunities come from. The other great entrepreneur, which I know has been on your show here, Rich Barton. I'm sure you've heard his spiel about power to the people, but his insight was there is all sorts of data out in different verticals that is behind a wall. So way back in the Expedia days, it was you get on the phone and you call, this is when phones were used, pre-cell phones, you call a travel agent who then goes through all of the different fairs and hotel options, et cetera, and you book a trip that way, be it for business or pleasure. His insight was, well, wait a minute, as compute power is getting more and more powerful, why don't we make...”

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49. “Also, as a public company, was going to forward and invest in this new digital world and actually at the time it wasn't clear whether it would be download or streaming and ended up being streaming and seeing a future where that would be the dominant form of way that people received their entertainment TV or movies and see around corners and see a future that no one else can predict is a unique skill. So as an investor, you hear all sorts of ideas that may seem crazy if they're too logical. That may not be the exceptional opportunity. But if they're somewhat crazy and you can poke around a little bit to see if it makes sense and if the different trend lines around cost to compute or cost of storage or consumer behavior will indicate that, yeah.”

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50. “Almost to a person, the biggest technology successes were thought of as idiotic at the time or going after small prizes. Brian Chesky at Airbnb. Wait a minute. So you have this idea where strangers are going to stay in strangers' houses or on their strangers' couches or in a stranger's bedroom while they're still there. Yes, that was an incredibly unique insight. But it was not viewed as logical at the time. Or in the case of Reed, I'm talking about the transition from DVDs to streaming. Here we are having good success in DVDs. And as a visionary, he's able to see a future world where DVDs will start to taper off. That was in nobody's consciousness. And therefore, Neft”

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