YouSaid · the spoken record

William Janeway

lines on the record: 111
first: 2018-08-23
most recent: 2018-08-23
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“And if there's a cumulative drumbeat of companies that promised unbelievable transformational technology to the world failing to meet those expectations, that changes. You know better than I how market psychology, how investors shift the frame and the lens through which they're looking at investments.”
2018-08-23 · Masters in Business · William Janeway on What's Needed for the Innovation Economy · IDENTIFIED FROM THE TRANSCRIPT · source
“Credit spreads open up and it becomes possible to get a real return of five, six, seven percent as an institution investing in BBB bonds which will take a lot of money, shift money within the financial system. The other is that you have a fraud-like Theranos. You have the genius, the incredible genius and energy of Elon Musk now, let's say, subject to some closer scrutiny.”
2018-08-23 · Masters in Business · William Janeway on What's Needed for the Innovation Economy · IDENTIFIED FROM THE TRANSCRIPT · source
“Very rich, and so they're exposed to, I mean, the unicorn bubble, like all bubbles, will end. That's the law of bubbles, bubbles end. And you can see two different ways it can end. One is that the Fed indeed normalizes rates.”
2018-08-23 · Masters in Business · William Janeway on What's Needed for the Innovation Economy · IDENTIFIED FROM THE TRANSCRIPT · source
“Who are on the one hand prepared to accept so much more risk to get a return in the zero real risk-free rate environment, which we've had for almost 10 years. Right. And on the other hand, are paying Because as this goes all the way back to saying that the returns are so concentrated, but instead of saying, well, I'm going to put a million bucks into 50 startups and hope that two or three or four of them blow out and I write off 45 million, but the 5 million gets me big, big returns. They're writing checks that are 50, 100, 500 million. Play that game.”
2018-08-23 · Masters in Business · William Janeway on What's Needed for the Innovation Economy · IDENTIFIED FROM THE TRANSCRIPT · source
“All works out. When I was growing up in the business, my mentor was a guy called Fred Adler. Nobody remembers Fred anymore. He was a first generation venture capitalist, a lawyer who knew how to turn around companies. He had a motto. It was corporate happiness is positive cash flow. What it means is what you're getting paid by your customers generates more cash than it costs to deliver the goods or service. Two things happen. One You have validation that what you're doing is economically worthwhile. And two, you're liberated from dependence on the capital markets, which are there when they're there and when they're not there, you starve. Now, what's weird about this unicorn bubble is that it's institutional investors who are used to buying liquidity in the market.”
2018-08-23 · Masters in Business · William Janeway on What's Needed for the Innovation Economy · IDENTIFIED FROM THE TRANSCRIPT · source
“So lots and lots of startups, but the cost of building a business, the cost of getting to scale and the way these companies are doing it by generating cash, by selling services and products to customers, but by issuing securities to investors while they give away free in order to get users.”
2018-08-23 · Masters in Business · William Janeway on What's Needed for the Innovation Economy · IDENTIFIED FROM THE TRANSCRIPT · source
“Have someone else describe free software, open source software, rent your computer cycles and your storage from Amazon. You only pay as you use it. So getting something out and onto the net costs nothing.”
2018-08-23 · Masters in Business · William Janeway on What's Needed for the Innovation Economy · IDENTIFIED FROM THE TRANSCRIPT · source
“I didn't make it up improbable. $500 million. Half a billion dollars. Do you have any idea the kind of party you can have with half a billion dollars?”
2018-08-23 · Masters in Business · William Janeway on What's Needed for the Innovation Economy · IDENTIFIED FROM THE TRANSCRIPT · source
“It's really, it's an intellectual property company that licenses architectures for the devices that dominate the mobile phone business, along with Qualcomm. But they also, they put $500 million into a no revenue. That is a game proposes to deliver a platform for computer games called remarkably enough the company is called improbable.”
2018-08-23 · Masters in Business · William Janeway on What's Needed for the Innovation Economy · IDENTIFIED FROM THE TRANSCRIPT · source
“There are two things. One is They used a substantial hunk of that money to help buy ARM, not exactly a venture investment. AR holding is the same.”
2018-08-23 · Masters in Business · William Janeway on What's Needed for the Innovation Economy · IDENTIFIED FROM THE TRANSCRIPT · source
“Just unicorns. Just straight up unicorns. Well, Airbnb in the data, Airbnb is usually counted in accommodation and not as a tech company. But something like 250 globally.”
2018-08-23 · Masters in Business · William Janeway on What's Needed for the Innovation Economy · IDENTIFIED FROM THE TRANSCRIPT · source
“But now that feeds into one of the phenomena that actually got me back into looking at this whole process, this intersection of government and the stock market and the market economy, what I call the three-player game in my books, in my lectures”
2018-08-23 · Masters in Business · William Janeway on What's Needed for the Innovation Economy · IDENTIFIED FROM THE TRANSCRIPT · source
“We thought it's a tiny percentage of. Well, that goes with this institutional change in the market, the rise of people managing other people's money. Where, if they don't do at least as well as the index, guess what? Their clients, their investors take their money away. And then, of course, when more and more of that institutional money is passive index funds, you're by charter, by contract, you can't be a contrarian. So what it means is cumulatively you get more momentum investing, more hurting behavior At the same time, we've had this extraordinary phenomenon since two thousand, the number of public companies in the United States, as you know, it's half of what it was.”
2018-08-23 · Masters in Business · William Janeway on What's Needed for the Innovation Economy · IDENTIFIED FROM THE TRANSCRIPT · source
“Do it the best funds, but don't just have a 3% allocation for a $20 billion fund that has to be invested in venture capital because there's a, you know, there's some real good stuff in economics. There's a concept called adverse selection. Sure.”
2018-08-23 · Masters in Business · William Janeway on What's Needed for the Innovation Economy · IDENTIFIED FROM THE TRANSCRIPT · source
“They've now expanded their work. They've really increased the scale of the firm and the fund and their investing globally. So we'll have to see can they maintain with a somewhat different profile the kind of outstanding results they've had for a generation. Firms also go through generational shifts and leadership. But by and large, the point about this is... If you're a trustee of a pension fund And the consultants come and tell you, you know, you got to play venture capital. Over time, you're going to add incremental return to the portfolio. The answer is if you can get into the venture funds that don't need your money.”
2018-08-23 · Masters in Business · William Janeway on What's Needed for the Innovation Economy · IDENTIFIED FROM THE TRANSCRIPT · source
“didn't exist 25 years ago. Didn't exist. Right. And firms go through changes. I will give in the 90s benchmark was founded and they've generated a 20-year record now.”
2018-08-23 · Masters in Business · William Janeway on What's Needed for the Innovation Economy · IDENTIFIED FROM THE TRANSCRIPT · source
“First, I'm talking about the venture funds You take all the venture funds that have ever been raised and invested since 1980, a ridiculously small number of those funds have delivered all of the excess return versus the NASDAQ index. But here's the second fact, and this is distinctive, if not unique, to venture capital. There is what they call the academics call persistence in the returns. In other words, firm X.”
2018-08-23 · Masters in Business · William Janeway on What's Needed for the Innovation Economy · IDENTIFIED FROM THE TRANSCRIPT · source
“You know, I'll tell you what's really interesting because this is now I'm going to put on my academic hat. There's been a lot of academic research on venture capital, and I'm a student of it, and I've contributed to it, and I teach it. So I really know this data and I know the analysis of the data. There are two overwhelming what they call statistical stylized facts about the history of venture capital. It's about since 1980. That's when we start to have real data. The first is there's incredible skew in the returns.”
2018-08-23 · Masters in Business · William Janeway on What's Needed for the Innovation Economy · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, they sell you go into any running store and you'll find something like this. Just go for the bottom end. 11 bucks. Yeah, if I want to know how my heart's doing, you know, I just take my pulse. I don't need a $250, $500,000.”
2018-08-23 · Masters in Business · William Janeway on What's Needed for the Innovation Economy · IDENTIFIED FROM THE TRANSCRIPT · source
“That's not an Apple Watch. 41 years ago, I traded an addiction to nicotine. For an obsessive compulsion for running. And so my default is a running watch. And I have a good watch. I have a couple of decent watches. But this is sort of what I put on in the morning and take off if I'm going to a fancy dinner party in the evening. And you know what? If I drop it off the side of a rowboat. Can you still?”
2018-08-23 · Masters in Business · William Janeway on What's Needed for the Innovation Economy · IDENTIFIED FROM THE TRANSCRIPT · source
“We would be doing the same kind of experimentation on every imaginable form of battery technology, the science of energy, chemical conversion.”
2018-08-23 · Masters in Business · William Janeway on What's Needed for the Innovation Economy · IDENTIFIED FROM THE TRANSCRIPT · source
“And it scales up in response to government orders when the government doesn't care that it's really expensive because it's putting, you know, it's building the memory systems for the guidance systems for the Minuteman missile. But then they do something else. They actually broker a deal between IBM and TI. The technology gets transferred to IBM in return for IBM giving TI a big order. It's the kind of active intervention based on intelligent experimentation. We should be doing ARPA-E, which has got barely $250 million of funding. ARPA Today still has over $3 billion. If we were doing this seriously and we had somebody at the Department of Energy with a mission not to protect the coal industry with all of its 50,000 employees.”
2018-08-23 · Masters in Business · William Janeway on What's Needed for the Innovation Economy · IDENTIFIED FROM THE TRANSCRIPT · source
“Producers. And the guys in Washington put out a whole bunch of experiments. And it turns out that this little oil field instrument company in Houston. Texas Instruments. Works out how to process silicon. It's not quite as good theoretically, but practically it's much better.”
2018-08-23 · Masters in Business · William Janeway on What's Needed for the Innovation Economy · IDENTIFIED FROM THE TRANSCRIPT · source
“Okay, the transistor has been invented. The notion that you can use solid devices with particular properties not vacuum tubes. Right. To switch signals, that idea is out there. Nobody knows how to actually turn that into working machines that can function at scale. IBM makes a bet. bets on a material called germanium The physicist will tell you germanium from a purely theoretical perspective was right because the electrons move through it. Better than silicon.”
2018-08-23 · Masters in Business · William Janeway on What's Needed for the Innovation Economy · IDENTIFIED FROM THE TRANSCRIPT · source
“We still need some really innovative new technology, particularly energy storage for sources of energy that are intermittent that come and go.”
2018-08-23 · Masters in Business · William Janeway on What's Needed for the Innovation Economy · IDENTIFIED FROM THE TRANSCRIPT · source
“I think it is. I see it in the work that is being done to understand the strategic investments China's making and not just in China. Yeah, exactly. In Africa, in Southern Europe, they're making major investments in transforming the energy infrastructure of those parts of the world. You do get some people saying, you know, the Chinese are almost embarrassed because they thought it was going to take another 20 or 30 years before they could challenge us.”
2018-08-23 · Masters in Business · William Janeway on What's Needed for the Innovation Economy · IDENTIFIED FROM THE TRANSCRIPT · source
“It's just the Chinese. If we're going to formulate, we need exactly the same kind of upstream funding, upstream commitment to research, to technology development, to support of the deployment that we got with the digital revolution. We're not doing it. We've abdicated the Chinese are doing it. And that's why the biggest message from where my book stands today is that we may looking forward over the next generation have the opportunity to see only the second, only the second passage of leadership of the innovation economy from the incumbent dominant nation, now the United States, 100 years ago, 120 years ago, Britain. To a new leader”
2018-08-23 · Masters in Business · William Janeway on What's Needed for the Innovation Economy · IDENTIFIED FROM THE TRANSCRIPT · source
“That's looking backwards, but it's also, there's a problem looking forward. If we're going to organize globally any kind of coherent response to climate change, which may I stipulate, is real.”
2018-08-23 · Masters in Business · William Janeway on What's Needed for the Innovation Economy · IDENTIFIED FROM THE TRANSCRIPT · source
“Billion dollars. Right. But as soon as there was a floor under the financial crisis, Then we were back to the world in which the government exists only to screw up markets that would otherwise give you the efficient outcome. And that misses the point, the whole point of the economics of innovation. The whole point is that you need sources of funding that are not focused on immediate economic value, that have a long-term strategic purpose. And what we've lost now is two things from the rendering the government illegitimate. One, very limited, if any ability to respond to the forces of globalization in a way which is damaging the constituents, many of whom don't know that there's no other source of support”
2018-08-23 · Masters in Business · William Janeway on What's Needed for the Innovation Economy · IDENTIFIED FROM THE TRANSCRIPT · source
“Now, if you sat down with the entrepreneurs of Silicon Valley, Intel wouldn't have existed without the government. Government was the solution to how do you do a startup into a capital-intensive, massively strategic industry that nonetheless needs time and support from a collaborative customer as well as the benefit of the upstream research funding and silicon processing and all that stuff. The flip side, we had, you know, in 2008, when the world came to an end for about three months, the government was there. Around the world, from London to Beijing to New York to Wall Street.”
2018-08-23 · Masters in Business · William Janeway on What's Needed for the Innovation Economy · IDENTIFIED FROM THE TRANSCRIPT · source
“As Johnny Cash famously said, why do I have to choose? Of course, it's both. It's both. The disruption of micro markets like the New York Market for Transportation or Accommodation. But on the other hand, it was this IT revolution, this digital revolution that enabled the second great globalization, the integration of financial markets, critical to the financial crisis of 2008. Just by the way, as they telegraph and the steamship produced the first great globalization at the end of the 19th century. But this is happening at a very special time. It's happening when the hard work over a long generation of some very smart, committed people who knew they were doing the right thing by their light To render the government illegitimate as an economic agent.”
2018-08-23 · Masters in Business · William Janeway on What's Needed for the Innovation Economy · IDENTIFIED FROM THE TRANSCRIPT · source
“The same And when they infect the banking system, the credit system, when they pop the consequences are horrible, when it's just in the public market, in the stock market, and it pops, there's no leverage. But in any case, what's happened, what's clear over the last five years, the digital revolution has taken on a momentum of its own. It's running out of control. It no longer needs support and subsidy from the public sector. On the contrary, it's attacking the authority of the state. At every level.”
2018-08-23 · Masters in Business · William Janeway on What's Needed for the Innovation Economy · IDENTIFIED FROM THE TRANSCRIPT · source
“Televisions or automobiles every new industry seems to go through that boom and bus phase. A lot of bubbles leave you with nothing, but ranch houses and the Nevada desert. Financial bubbles don't leave.”
2018-08-23 · Masters in Business · William Janeway on What's Needed for the Innovation Economy · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, the first edition of the book was frankly a kind of celebration of this extraordinarily constructive partnership between the public sector and particularly the defense department. And with DARPA as this point of the spear and the private sector, including the entrepreneurs and venture capitalists like me. But looking back from the last six to 12 months, something really fundamental has changed. The digital revolution, which began to reach maturity thanks to the extraordinary speculative funding of the late 1990s, the end of the 20th century.”
2018-08-23 · Masters in Business · William Janeway on What's Needed for the Innovation Economy · IDENTIFIED FROM THE TRANSCRIPT · source
“So, in a sense, I'd seen the movie before too. So beginning in about 1998, we had this portfolio that represented something like 200, 250 million invested, and we just started liquidating everything we could into the bubble. We own so much of BEA that we only got 85% out. All right, not before the bubble ended. But there was still another $500,000 that came out later. So it actually was more than $7 billion on the five, but a little longer time.”
2018-08-23 · Masters in Business · William Janeway on What's Needed for the Innovation Economy · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, it is right, but there's a postscript. Because John Vogelstein was a great student of markets, and he studied, he knew bubbles come, bubbles go. When it's too good to be true, it's too good to be true. I had actually written my doctoral dissertation on 1929 to 31”
2018-08-23 · Masters in Business · William Janeway on What's Needed for the Innovation Economy · IDENTIFIED FROM THE TRANSCRIPT · source
“Exactly. Wow Exactly right. And the technologies that I'd been exposed to at Xerox Park and that I'd done some investing in from Eberstadt”
2018-08-23 · Masters in Business · William Janeway on What's Needed for the Innovation Economy · IDENTIFIED FROM THE TRANSCRIPT · source
“Private companies from institutional investors based on our firm, the Eberstadt firm, Deep Work in understanding the science-based industries. I had come to John Vogelstein at Warburg-Pinkez again and again with really interesting companies, but that required passive investment. No control, no board seat. And John would again and again tell me, you know, this looks like a really interesting business. It's not an investment for Warwick Pinkers. In the mid-80s, we sold our firm to a British merchant bank as brokerage commissions and our business model came under stress. And it became clear after a time that if I was going to do what I'd been learning to do, I had to go someplace else. So John and I had lunch. We talked through, we just finished each other's sentences. And I landed at Warburg Pink as an 88 at a wonderful time.”
2018-08-23 · Masters in Business · William Janeway on What's Needed for the Innovation Economy · IDENTIFIED FROM THE TRANSCRIPT · source
“So, the firm had been when I joined the firm was already more than 20 years old. It had not been an active investor in technology. It had followed the founding great firms like Kleiner Perkins, asset management, the Silicon Valley firms. But as they had raised the first billion dollar fund that anybody had raised in 1986, they decided that maybe they should try to invest in technology the way they invested everywhere else as the lead strategic partner with management. I had spent the previous 10 years building an investment practice of raising money for private companies. Sounds a little bit like unicorns, but a big difference.”
2018-08-23 · Masters in Business · William Janeway on What's Needed for the Innovation Economy · IDENTIFIED FROM THE TRANSCRIPT · source
“And every once in a while I do a sort of black box anti-gravity machine tech deal that was going to cure cancer. But it was very amateurish. Lionel and John had a very simple idea. If you actually focus Your attention, all of your attention on those investments, understand the context, the business issues, the business model, the competitive situation. You are likely to do a little better than just throwing money against the wall.”
2018-08-23 · Masters in Business · William Janeway on What's Needed for the Innovation Economy · IDENTIFIED FROM THE TRANSCRIPT · source
“I've known the firm for almost a decade. Warwick Pinkers was one of the original firms. It was the largest founding member of the National Venture Capital Association. It was founded by two extraordinary men, Lionel Pincus and John Vogelstein, who had an idea going back to the 60s that when the investment banking and brokerage firms in Wall Street, you know, they did deals and they do a movie deal and they do an oil deal. They're all one-on-one.”
2018-08-23 · Masters in Business · William Janeway on What's Needed for the Innovation Economy · IDENTIFIED FROM THE TRANSCRIPT · source
“On the one hand, in nineteen eighty the PC revolution began to take off and the commercial markets began to be bigger, whether it was for microprocessors or for software, bigger than the government market. Second, a bill was passed through Congress, which said that DARPA had to justify every dollar it invested in terms of its direct military significance. It hadn't been that way before. It was a much broader, much, you know, there's a great line from the play that became Hello Dolly Dolly says, you know, money is like manure. For it to do any good, you got to spread it around. And that's what DARPA did. DARPA was an extraordinary institution, particularly in the years from Sputnik, which was why it was founded, 1957-8, through the 1970s.”
2018-08-23 · Masters in Business · William Janeway on What's Needed for the Innovation Economy · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I think that that kind, there was a link certainly to the NSF. I mean, the funding for the research work as graduate students that produced the page rank algorithm that was the basis for Google came from the National Science Foundation. Complex history, however, of how from silicon to software and then onto the internet, all of the fundamental building blocks of the digital revolution were initially the consequence of upstream research financed by the government and the government as the first customer for this stuff when it was still immature, when it was too expensive and too unreliable for commercial use. That big changes took place between 1980 and 1983.”
2018-08-23 · Masters in Business · William Janeway on What's Needed for the Innovation Economy · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, there's no question that from speech recognition to the geographical positioning satellites and on to all of the machine learning technologies, the US intelligence agencies have been major funders of upstream research. That goes back a long way. Of course, the Pedrank algorithm, a couple of graduate students at Stanford, got a grant from the NSF, which was directly related to the NSA's interest in being able to do efficient search of what people were doing and saying on the internet. So there's a history there that goes back to the 50s.”
2018-08-23 · Masters in Business · William Janeway on What's Needed for the Innovation Economy · IDENTIFIED FROM THE TRANSCRIPT · source
“Out of that, well, Apple, they never had a chance to invest, and that was Apple, that was Steve Jobs being the brilliant opportunist he was. But it took him 10 years. It took the corporate bureaucrats back in Stanford 10 years to work out that it was better to own 20% of something versus 100% of nothing.”
2018-08-23 · Masters in Business · William Janeway on What's Needed for the Innovation Economy · IDENTIFIED FROM THE TRANSCRIPT · source
“Xerox wasn't trying to build the business, it was a beneficiary of the work that had been done on its nickel out at Xerox Park. That actually worked. And a couple of really valuable businesses were creating that.”
2018-08-23 · Masters in Business · William Janeway on What's Needed for the Innovation Economy · IDENTIFIED FROM THE TRANSCRIPT · source
“And it generated an enormous amount of cash. It was a different kind of innovator's dilemma, however. The existing business was so good and so certain that when one of the young guys from the park would come east and say, I got a great idea for a business plan, just give me 20 million bucks, and in five years I'm going to have a $300 million business and it'll be profitable. Go back to your cave. And they finally worked out, but it took a long time. In the late 80s, they worked out that, you know, if they just did a deal with the young entrepreneurs and took 20% of the company in return for giving them the intellectual property, the patents, and then let them go out and find venture capital.”
2018-08-23 · Masters in Business · William Janeway on What's Needed for the Innovation Economy · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, two things. One, neither did AT&T. They licensed it. The big deal they cut with the government in 1982 where they gave up the long-distance monopoly and they broke up the company in return for the opportunity to use the technology and go out and compete with IBM and Digital demonstrated that AT&T had no ability to compete in commercial markets Xerox is a different story. Xerox's monopoly was based on patents. Patents for this phenomenal ability to make copies, very low cost.”
2018-08-23 · Masters in Business · William Janeway on What's Needed for the Innovation Economy · IDENTIFIED FROM THE TRANSCRIPT · source
“And the deal was it could keep its monopoly on long distance telephones if any technology developed at Bell Labs that was not directly used for communications Would be licensed on a fair and non-discriminatory basis to the world. And that's where Unix came from. That's where a whole raft of innovative technologies that had general purpose use, not just for communications. Were given to the world, given to academic researchers, given to companies that were learning what to do with this stuff and laying the basis for the digital revolution that began to emerge in the early 1990s.”
2018-08-23 · Masters in Business · William Janeway on What's Needed for the Innovation Economy · IDENTIFIED FROM THE TRANSCRIPT · source
“Or were they up to a point? There was a deal. ATT in 1956 cut a deal with what was then an economically active government. Unlike where we are today.”
2018-08-23 · Masters in Business · William Janeway on What's Needed for the Innovation Economy · IDENTIFIED FROM THE TRANSCRIPT · source