Innovation can happen anywhere, says Liew, which is why he looks beyond Silicon Valley for investments.

On this episode of Recode Decode, hosted by Kara Swisher, Jeremy Liew stopped by the studio to talk with Kara about how venture investing has changed since he got into the business and why, in his estimation, the innovation that used to be a hallmark of Silicon Valley is now a commodity that can spring up even in unlikely places.

You can read some of the highlights from the interview at that link, or listen to it in the audio player above. Below, we’ve posted a lightly edited complete transcript of their conversation.

If you like this, be sure to subscribe to Recode Decode on iTunes, Google Play Music, TuneIn and Stitcher.

Kara Swisher: Today in the red chair is Jeremy Liew, a partner at Lightspeed Venture Partners, who joined the firm in 2006. He’s invested in companies like Snapchat, Giphy and The Honest Company. Before becoming a venture capitalist, he spent three years at AOL and Netscape. We have a lot to talk about there. Jeremy, welcome to Recode Decode.

Jeremy Liew: Thanks, Kara.

Let’s start with your background. I always like to know people’s background. People don’t know what a venture capitalist did before they were a venture capitalist a lot of the time. Tell me a little bit about how you got into tech.

I took a bit of a circuitous route. I grew up in Australia. I studied mathematics there and linguistics. Then I joined McKinsey out of undergrad in Sydney and when they opened an office in Johannesburg after Mandela was elected, I moved there for a little bit. I had this boss who left McKinsey to start Citysearch. One of the first-generation city-guide businesses.

Right, I was around for that.

Yeah, back in ’95. I didn’t know anything about the internet.

This was who?

Charles Conn.

Charles Conn, he had the best name ever in early internet.


Go ahead.

I didn’t know anything about the internet, but I thought he was a great boss. When he left to do that, I gave him a call and asked him if I could come and he said, “Sure.”

What prompted that? You just thought it was a cool idea? Or you just liked him?

I really liked him, I thought he was an excellent boss. I had learned a great deal from him and I figured that if I could continue to learn from him, that would be terrific.

You moved to LA?

I moved to LA.

That’s where it was.


Mm-hmm. I remember visiting the city, I must have run into you at some point there, because I talked to Charles a lot in those days.

Yeah, it was definitely an interesting ... ’Cause we were based in La Crescenta, which is not what I had envisioned LA to look like. My view of LA was based on episodes of “Beverly Hills 90210.” La Crescenta is deep [San Fernando] Valley, very very different.

You did eventually move to the nice part, if I recall.

Yeah, I did eventually move to the nice part.

When Barry Diller bought the company, or somewhere in there.

Yeah, so I was there for a couple years and actually there was another company called Zip2, Elon Musk’s first company. There was a long period of time where Citysearch and Zip2 were looking at merging with each other, actually had a deal signed. I was in charge of the post-merger integration. I found myself up in Silicon Valley going to visit the Zip2 offices when I was barred from entering the building by security.


I thought, “This is unusual.”

Right, for an integration. Not very friendly.

Usually they let me in. I called to find out what was going on and it turned out the deal had fallen apart the night before and no one had told me.

Oh my God.

My first interactions with Elon were sort of an odd one in that respect.

Yeah, you were escorted out of the building, right.

Yeah, exactly. That happens to me a lot, I don’t know why. Actually after that fell apart, I ended up going to business school. I came up here and went to business school at Stanford.

Why did you feel you needed to do that?

I had come from management consulting into this startup and I was doing the sort of typical ex-consultant stuff. I was doing strategic planning, I was doing business development and I wanted to get a little bit closer to the business. One of the things that Charles said to me was, “If you want to get close to business, you should work on the thing that’s most important to us, and that’s sales.” That’s not what I’d thought of myself as doing, but it’s what I did. I started selling websites door to door in 1996, which was not easy. We were literally knocking on doors and trying to convince everyone from cafes to oxygen tank resellers ...

Citysearch was essentially yellow pages, right?

Essentially, yeah.

Essentially, yeah, which is a direct hand-to-mouth kind of sales process, the most dirty of sales processes.

It is very much sitting down with someone and trying to convince them how you can help their business. Citysearch also had an advanced component, but at the end of the day, the money was made by selling websites to small businesses. I ended up leading the sales team for the new markets whenever we rolled out.

I realized that there was this huge difference between the McKinsey view of the world and the reality of running a business, which is that it was about people and customers and product and technology, it wasn’t about spreadsheets and Excel and bound sheets and projections. I felt like if I was really going to understand that, because it had really started to draw me in, then getting closer to Silicon Valley and to Stanford, which was really regarded as this epicenter of all that innovation, would be the best place for me to be. That’s what brought me to business school there.

You went to business school, three years?

Two years at business school.

Two years, sorry.

Luckily enough, that was the ’98 to 2000 period, [which] was a very good time to be in the Valley. Citysearch ended up merging with Ticketmaster online, became part of what’s now IAC, it was USA Networks at the time. I ended up spending my summer between first and second year at USA Networks and then I ended up joining them when I graduated, as VP of strategic planning. I spent a few years there.

You did the Hollywood thing.

It was interesting, because that was the period of transition from USA Networks to IAC. We sold the cable channels, we sold the TV and the movie studios. We brought in Ticketmaster, we bought Expedia, we bought Hotels.com, it was that transition. That was a really fascinating experience, to get a seat at the table when some of these massive transactions were happening.

Right. Barry was trying to create a consortium of related companies — the keiretsu, that was his kind of thing that he was talking about at the time.

Yeah, you’re exactly right. He was taking a bet on the trend. That the comments was gonna go interactive and he had some insights from being early at QVC and HSN, that shopping and commerce was a huge opportunity on the internet and that’s where he placed his bets.

Right, he was very early. People don’t realize how early. Not sure he took full advantage of his earliness, but he certainly was around, compared to other Hollywood people.

Not only that, but if you look at just IAC narrowly now, you miss the fact that it’s spun off companies like Expedia, companies like TripAdvisor, Match, Ticketmaster, these are all part of the same company. He’s always been very good at capital market stuff and trying to figure out whether things are more valuable together or apart and spending them appropriately.

I was working on a lot of these acquisitions and everything that I ended up buying, ended up reporting to the president of IAC, John Miller. When John left to be CEO of AOL in 2002, I ended up following him.

Wow. You follow people, Jeremy.

I do.

That was an interesting job for John. I remember his big line was, when everyone was so mad, because everyone was mad post-merger. Everyone was furious and essentially having baby tantrums, little executive baby tantrums, he had a sign or he kept telling people, “I’m not the person who towed your car.” He had seen that at a tow place and he was like, “I didn’t tow your car, so don’t be fucking furious at me,” kind of thing. He tried, that was a very fraught period. You wanted to walk into that AOL mess at the time?

What I’ve found is that when I meet people that have a certain level of insight and that I feel like I can learn from, I want to just keep on learning from them. Early in my career, that’s a policy that served me well.

You went to AOL and what did you do there? Clean up, that’s the clean up people, during that period.

I was SVP of corporate development and chief of staff to the CEO and so a lot of the work that we were doing was strategic in nature, in that we were managing this transition from a bundled, access plus content plus service company through a world where the core of that, which was the dial-up access, was becoming less and less relevant.

A lot of the work that we did was trying to think about, could we build a media company separate from the access business and it was totally unclear at the time if we could do that. This was the period where you had seen all of the pure-play internet companies fall off cliffs. We decided that you just had to do this, you couldn’t hold back the tide. This was what needed to be done and there was pain that needed to be taken, but you had to do it.

Well one of the problems was that they wouldn’t do that at that Time Warner, they wouldn’t combine the content, it never got fully integrated, or integrated at all in any way. Or they didn’t embrace any of the digital technologies, largely because of personalities, not because it wasn’t the right idea. Years later, that’s exactly what they did, which was interesting. You could sort of argue that Facebook was kind of AOL, the next version of AOL, or it still is, in a lot of ways.

I think that you bring up a really good point. There’s this sort of sway between walled gardens and the content being brought inside, to openness and then back to walled gardens. Yeah, there’s definitely cycles as people think about that.

What was it like working for that? Because that was literally the worst period of AOL’s, there was so much … the disaster of the merger, Lehman left, Case left, Pittman left, John was there. I think Ted was still around, Ted Leonsis was still around. Then there was such an enmity from the Time Warner side for people, so how did you manage through that? Besides telling them, “I’m not Myer Berlow.” I don’t think that works, necessarily.

John is a very likable guy. I think that helped a lot. You’re right, there was always a level of dissatisfaction because of what had happened in the past. I think fundamentally, we needed to come to the conclusion that we did need to carve off the content business, but it was a big bet to do it with AOL. What we ended up deciding to do was to run an experiment first, see if we could build a media business. AOL had bought Netscape back in ’99. I dropped in to run Netscape in about 2004, with the express mandate to see if we could build a standalone media business there.

Which Netscape had tried to do previously.

So much of this is about timing. The difference between trying to do that in 2004 versus in 2000 ...

Well, Yahoo beat them to it, and they helped Yahoo get to where they were, by being on the Netscape browser.

That’s very true. What we discovered is that from the 2000 to 2006 period was that yes, you could in fact build a media business. That’s what gave AOL a little bit more of the data to say, “Okay, we should take this plunge, we should totally remove access from content and build a content business on its own. Just accept the fact that it’s gonna go down before it goes back up.” That’s in fact what happened.

How long did you stay there? There were a lot of people there during those various periods, had gone through AOL like Chamath [Palihapitiya] and all kinds of people have gone through the AOL grinder, which is kind of fascinating.

Yeah, that’s right. Tina Sharkey.

Tina Sharkey, yeah, whole bunches of them.

Jim Bankoff.

Jim Bankoff, yeah.

We were all, Chamath, we were all there at the same time.

How long did you stay and what do you think you accomplished there? Because so much of this stuff, when I think about it, ’cause I’m so freaking old, is things don’t work and you guys just move on, but the thing before, you were like, “That was right.” Then it’s not right and then that was right and then it’s not right. You just move on from your schemes, you know what I mean? Whatever scheme of the moment and then you move to the next thing. What did you learn there? What do you think you actually accomplished?

The thing that really stuck with me about AOL and Netscape is that the core user for technology is Middle America. The things that we see here in Silicon Valley are not necessarily representative of the way that things look in Middle America, or what’s gonna appeal to Middle America. I’ll give you an example. I was running Netscape and of course Netscape was my homepage. I would see the same article every day as the header on the Netscape homepage. I went to our editor in chief and I said, “Why is this still in the middle of the homepage? It’s been the fourth day in a row.”

Right, there’s something called news, you might wanna change it.

It was a feature article, it wasn’t a news article. It was service journalism, but it was the same. It was top 10 ways to, something, I don’t know. She said, “I’ll change it when people stop clicking on it.” I was like, “Well, that’s actually a really good point,okay, carry on.” The point is that we use the internet differently than normal people do. It was my homepage, and because I was the general manager of the site I was seeing it 10 times a day, 20 times a day, and so I was sick of seeing that same article. Normal people at that time were not logging onto the internet multiple times a day, every single day. It was new to them. Just that understanding that Middle America is interacting with the technology dramatically different from the way that I am and that my intuition and my judgment, which had gotten me to the place that I had gotten to, was actually no good anymore. I had to look at the data. That is something that has continued with me throughout my career.

Using the data to do that?


Well, not paying attention to Middle America seems to be the theme this year.


We’ll get into that later.

Yeah. Look, it’s a great point, because if you lived here in Silicon Valley and you just judged from the experiences that you had, you would think the Tesla Model S is the top-selling car in America.

Exactly, although if you lived in D.C., you would think the BlackBerry was doing great.

That’s right, that’s exactly right. In both cases you’d be a 100 percent wrong.

I was just at a party, they all had it, I was like, “What? What’s going on?” We don’t use these covered wagons anymore. Let’s try to move on to the next vehicle. It was kind of funny.

Well it’s interesting, because the point you’re making is that Washington D.C. is living in the past, maybe Silicon Valley’s living in a version of the future that isn’t representative of the present.

Exactly, so we’re gonna get to, in the next section, how you got to be a VC and talk about some of your investments and what happened after that. Because you soon become a VC, correct?

Yeah, so right after I finished up at Netscape, I got a call from a friend from business school who asked me if I’d ever thought about venture capitalism.

What is your first thought? Then we’ll get into that next.

My first thought was like, “Wow, that sounds really interesting.”

Oh really? You didn’t go, “Oh my God. No, I want to stay an operator.”? Or were you sick of it?

I think that you have to know what you’re good at. To be a really great operator, I think you need to have a singular focus and level of leadership and management and charisma that can make you incredibly successful. I’ve seen what good looks like and I’m okay, but I’m nowhere as good as the best operators and CEOs in the world.

All right. When we get back, we’re gonna talk to Jeremy Liew about how he became a venture capitalist and he seems happy with it, which is unusual, but we’ll get back to that.


We’re here with Jeremy Liew of Lightspeed Ventures. He is a venture capitalist, but he had a lot of experience before operating companies and working at AOL, Netscape and a whole bunch of stuff. You came here and became a VC, did you have any experience? What was that like, that transition?

It was difficult.

Mm-hmm. Why is that?

I think that to be a good operator, you learn certain habits. Things like make decisions quickly. Because if you make the wrong decision, you can always reverse it.

Change it, right.

Things like if you see a problem, jump in and try to fix it. Things like making sure you hit budget and hit plan and really being focused on what can go wrong and how you can accommodate that, so that you always hit plan. Make the month, make the quarter, make the year. I think those instincts can actually lead you astray in venture capital.

For instance, let’s talk about making decisions quickly. You can’t unmake an investment decision as a venture capitalist. Once you make that decision, you’re living with it for the next seven or eight years. It actually rewards you to just be a little bit more thoughtful and do your diligence a little bit more.

Although a lot of people feel like venture capitalists are kind of sheeple. They just follow along with trends and things like that and that’s the thing they have a hard time resisting.

Yeah. I think that there are lots of different ways to do venture capital. If you do early-stage venture capital, you tend to need to have a perspective on the future that’s independent. If you’re gonna do momentum investing, where you can identify winners and then jump into them, then it’s a different approach. I think there are lots of different ways to make money.

Let’s talk about your approach when you started and then talk about some of your investments, obviously Snapchat is, but we’ve talked about bitcoin. I know you were certain about, the prices are up right now again. We’ve talked about all kinds of stuff. You’ve been in Giphy, Honest, they’re all different. Talk a little about how you look at venture capital when you started and right now.

Right now, I’d say that I think about consumer technology as popular culture. If you’re thinking about popular culture, the early adopters of popular culture tend to be young women. If I see a product, a service, an app that is really taking off amongst young women and taking off because of genuine word of mouth, then that’s something that gets me really excited. I think that’s predictive of the future.

How fascinating that most venture capitalists are not young women, they’re usually old white men.

That’s why your judgment is actually no good anymore. Now this is different from the first boom. In ’96, ’97, ’98, the internet was the techy early adopters and Silicon Valley was actually completely representative of ...

What was happening. That’s a really fair point.

The early adopter marketing, so people’s judgment and intuition was perfect and they got very reliant on that to pick companies. Today, where everybody’s got a smartphone, everybody’s got fast broadband wireless access, you’re talking about Middle America. If you are not representative of Middle America, in particular if you’re not representative of the early adopters of popular culture, then yeah. You’ve got to look at the data. That’s why I think you’re seeing an explosion of startups in New York and in LA, which have historically been the places that led popular culture in America.

Have been behind in the first one.

That’s exactly right, and it’s because the barriers to entry have dropped, the technology needs have dropped. Back in the day, when you needed 30 engineers just to launch a website, there’s only one place in the world that you could find enough engineers who knew enough about it to start a company, and that was here. Today, if you want to build an e-commerce site, you can get it off of Shopify, off the shelf. If you want to build an app, you can read some blogs and ...

Figure it out?

Figure it out. Anybody can do that.

You have AWS and everything else.

With the barriers to entry from a technology perspective coming down, it’s the unique insight to popular culture that becomes the unique resource. I think that we are actually seeing more of that from the traditional centers of popular culture than from Silicon Valley.

Talk to me about Snapchat. How did you get into that? That’s obviously the story of the year, probably this year because of the public offering and everything else. What was your instinct there? Because a lot of people didn’t get that company initially when it started, although it certainly boomed rather quickly once people did.

It was a bit of an ordeal to finally get a meeting with Evan, but when I did ...

What did you like, what did you see that you wanted a meeting so badly?

I wish I told you that I had the insight, that I knew as soon as I saw the product, what it could be. The reality is that it’s a social product, so unless you have a lot of friends using the product organically, you don’t actually understand how it’s used by the core audience.

Normals, you can say it: normal people.

At the time, it was primarily used by young teens. Women, young women teens. I don’t hang around with a lot of young women teens.

I’m glad you don’t, Jeremy.

There was no way that I could’ve organically understood what that engagement process looked like. What I could do was open up the Flurry analytics dashboard with Evan and look at the numbers and see 50 percent month-on-month growth and see engagement and retention metrics. There were multiples of what we might expect from other companies. Something was working. It didn’t matter that I didn’t understand it right away. It didn’t matter that my intuition was bad.

That you don’t get this product.

What mattered was the data. The next question is, this is clearly working, why is it working? Evan could explain it, he had some really unique insights that said why Snapchat was taking off at the time and we listened. We said, “That makes a lot of sense. You seem to have unique insight,” which is gonna lead not just to one good idea, but to many good ideas in the future and that’s proven to be that case.

Why wasn’t that possible here? What was his unique insight that was not happening at say ... Facebook sort of sold itself as a utility and still does to this day, which is sort of a dull way, it’s like, “Oh, it’s utility.” It just sounds like an electric company or something else. What was the unique difference there? Because obviously all Facebook does right now is copy Snapchat, or seems to — borrow is the way they like to say it, borrow ideas and stuff. Why was it incapable of companies here to understand that?

Imitation is the sincerest form of flattery.

Right, it’s also just imitation.

It’s also just imitation. I think a lot of this comes down to Evan being a pretty special person. Most of us, we use these unconscious metaphors, as we think about new companies or new business, new products. Even the best product management visionaries in the world oftentimes rely on these unconscious metaphors. A good example might be, Friendster started doing reverse chronological order in the feed and ever since then, every other social network has done reverse chronological order in the feed. Then Evan comes along and says, “Well, how do people tell stories? They tell them beginning, middle, end.” Reverse chronological order is end, middle, beginning. “That doesn’t make sense, maybe we’ll do ours beginning, middle, end.” That’s a great example where people never even question the metaphor, they just did what had been done before and Evan comes along and says, “What makes more sense?”

Another great example is with video chat in Snapchat. Even if you think about FaceTime or any other video chat application, it borrows a phone metaphor, it rings to see if you’re there, then you pick it up. Then you’re both talking to each other.

It’s asynchronous.

It acts as if you don’t know whether or not the other person is there. Evan’s observation is, if you’re messaging with somebody, you know they’re there. It doesn’t need to ring, it doesn’t need to be two-way either.

Just send a message.

It’s fine for one person to be video and the other person texting back. It’s not that he questioned these rules, he saw that there was a construct, a metaphor that was constraining what could be and he starts from first principles and asks himself, “What would people do?” This is not something that’s just happened once, it’s happened many times now.

It has. He really is quite ...

It’s a bit of a pattern.

You live in Silicon Valley, what prevents that from happening here? Because it seems, maybe it’s just me, I feel like the innovation has dried up quite a bit. You don’t see a lot of fresh ideas or feel like there’s freshness. There’s a lot of recycling, a lot of just feature creep, I guess. I don’t know what else to call it. I think probably Snapchat was the freshest idea to come for a long time. Obviously it’s taken off and people are copying it, but how do you imagine you keep that innovation mentality going?

I think ...

People talk about with Apple right now and everything else.

I think on the infrastructure and enterprise side, you’re still seeing a ton of innovation based in Silicon Valley, because it does require people to ...

Like Slack and things like that.

Or AppDynamics, which just got acquired, or ...

That’s a Lightspeed company?

Yeah, it’s a Lightspeed company. Now that you mention it, yes it is. True infrastructure in enterprise, that innovation is still happening in Silicon Valley. As I said before, because consumer technology has become popular culture, you really need to understand popular culture to be able to have an insight about it. Then to be able to drive new innovation from that. I think Silicon Valley is such an isolated bubble, our reality is not the reality of a normal American in normal America. That is what is preventing as much insight and therefore innovation happening here.

How does that change, how does that occur? Because you can get this idea of the product visionary like Evan or Steve Jobs or whoever, fill in the blank. It doesn’t necessarily have to come from one person, but if you just have one person doing it, now everyone is copying that, that’s not innovation. You know what I mean when I say, I make a joke about copying, but it doesn’t add to the next ... You think of artists and they copy each other and then they innovate, there doesn’t seem to be that second part happening.

I think the more important point is that innovation has been happening everywhere, people have been having these insights, but they haven’t had the ability to act on it before. We only saw successful innovation here in Silicon Valley because you had the overlap of someone having an interesting idea and being able to go build it. Now that people can build it everywhere, you’re seeing innovation happening everywhere. You see Supercell springing up in Finland. You see Blue Apron springing up in Brooklyn and so again, this opportunity for people to have an insight and turn it into a technology enabled company can happen everywhere. It’s fine that it doesn’t happen in Silicon Valley.

How does that change your life as a VC, because a lot of VCs like being in Silicon Valley. They like it here, they like the iron triangle of Stanford, the startups, Google, the big companies. The VCs again are ... I don’t think the triangle, but it’s an interlocking group of people who socialize in the same places and stuff. How do you adapt as a venture capitalist then?

I remember when I first joined the industry more than 10 years ago, people said that if they couldn’t drive to a board meeting, they wouldn’t make an investment.

Market reasons, then.

Yeah. The reality is I have one board seat now in the entire Bay Area. I’ve invested in Toronto, I’ve invested in D.C., I’ve invested in London, I’ve a lot of investments in LA and in New York. I’ve looked at investments in Chattanooga, I’ve looked at investments outside the Walmart headquarters in Arkansas.


Yeah, it’s Fayetteville, it’s the next one down. My point is, you’ve got to get on a plane, you’ve got to go meet these entrepreneurs who are having these ideas all over the country, all over the world. There’s no monopoly on innovation in Silicon Valley.

We’ll get to, in our next part, where things are going and a little bit more about your other investments and how you are thinking about this.

Talk a little bit about Los Angeles, because Myspace was big and then it wasn’t. Demand Media was big and now it’s Snapchat. There’s usually a single company and a small ecosystem around it. You’re talking about this idea of diffused innovation all over the place. Is Snapchat enough to do that to the Los Angeles scene? Because there’s a few venture capitalists down there like Mark Suster and others, but there’s not that much. It doesn’t seem like there’s that much going on, with the people here reaching out.

I have five portfolio companies down there.

Which ones are they?

Snapchat, Whisper, ZestFinance, Honest Company and Holler. There’s more than one. There’s a lot going on down there and there are plenty of other great companies down there. I think Parachute Home is doing some great stuff.

Sheets, right?

Sheets, yeah, and home wear. I think Laurel & Wolf is a really interesting company. MeUndies, there’s a lot of really interesting companies being built down in LA. Yeah, again, these are all driven by consumer insights.

Right. At the same time, something like Honest grows big, rumors of sale, possibly not selling and stuff like that. How do you get them past that point? Now obviously Snapchat has broken speed velocity, whatever you call it and they’re going up. How do you move them to the next level when they’re in these places?

All startups go through zigs and zags, it’s not dependent on their location. I think Snapchat is one of the few exceptions where there’s been very few zigs, it’s all been zags. They get brought through by maintaining the vision of the founders and keeping that as the North Star. When things go a little bit sideways, then trying to readjust and move back towards that North Star and that’s the same whether that company is in Silicon Valley or in LA or in Fayetteville.

What are you looking for now? How do you look at this scene now? Because there hasn’t been many IPOs, obviously Snapchat’s on that. Probably Airbnb and Uber. How do you look at where we are right now and where venture capital is in investment? Because most people seem to be in the doldrums of some sort. Although money’s being raised and people are raising money, but there was a little bit of a hot market and then it’s cooled a little bit, would you agree with that, or not?

I think that the level that we’re making investments has been very steady over the last few years and we project it to be steady going forward. I think if you look at a lot of our pure early-stage venture capital firms, you would see the same thing. Because innovation cycles are sort of unrelated to the Dow.


Now what is related, is later-stage investing, when you find new people coming in who have historically not invested in venture. That’s I think driven up some of the enthusiasm that you saw in ’14 and ’15, that sort of tapered off in ’16.

Yeah, I remember hearing complaints from, Jeff Yang was going on like, “These people are overbearing.” It got out hand from what I can understand.

What that’s left is the core venture capitalists who were making investments before and making investments now and will be making investments in the future and continuing to invest. Our job is to find that innovation.

On the consumer side, I think there’s a couple of areas where I’m seeing a lot of opportunity. One is around the migration of video consumption from television to mobile and online. This is something that’s been happening for a long time. YouTube got bought in 2006. It was only last year that we saw cable households drop, the first time. I think that’s because if you were 14 years old in 2006, you’re 24 years old now, you’ve never had a TV habit, you’re forming your household for the first time, so you don’t get cable. What that means is that all these new TV OS players, the Netflixes and the Hulus and the Amazon Prime videos of the world, are now no longer a supplement to TV, they’re a replacement for TV. That’s creating this dynamic where, if you think about TV, which is five hours a day of consumption for the average American.

Which is depressing, but go ahead.

It’s a combination of appointment TV and ambient TV. Appointment TV, you’re giving your full attention to, it’s the “Game of Thrones,” it’s “Westworld,” that sort of stuff. Ambient TV is something that’s on in the background while you’re doing something else. You’re watching “Good Morning America” while you’re getting the kids ready to go to school in the morning. You’ve got “The View” on while you’re doing some work around the house, or you’re watching “The Daily Show” while you’re unwinding.

The cable shows. I turn them off now because they’re noisy.

This is the thing, is they’re a company. If you think about what the equivalent of ambient TV is for Netflix or for Amazon or for Hulu, they don’t really exist.

Doesn’t exist.

Now that those services need to stand alone, I think there’s actually an opportunity for the ambient TV use case to come on to them. We invested in Jon Steinberg, who is building Cheddar.

Cheddar, right.

CNBC over the top is a sort of idea aimed at millennials and that’s a good example of an ambient television network. If you believe that all these new TV OSes are gonna have to pull in the ambient TV, they’re gonna have an equivalent of live ...

Do you think maybe the behavior’s gone? Because I’m thinking of my own kids who love, by the way, Snapchat. It’s all they do is Snapchat, YouTube and pay-per-view. They do use cable, but there’s not a bit of ambient, they specifically watch and then they stop. When they’re on the phones, it’s Snapchat that is their entertainment or my son uses Discover, he uses all kinds of stuff. I know that’s been an up-and-down thing for Snapchat, but he definitely uses it. He doesn’t have an ambient habit at all, except that he uses the internet, that he’s using these things, but they’re highly specific.

I think that’s right. I think that a little bit of that is an ages-and-stages thing. How old is your son?


14. When you’re 14, you have more time than money. You’re looking for ways to be drawn in and consumed and entertained. Millennials is 15 to 35 now, so 80 percent of babies born in America are born to millennial parents. Millennials are having babies, they’re having families and they are starting to deal with this issue of, “I need to get the kids ready for school in the morning and I can’t do that while glued to my phone. I can’t do that while watching something on YouTube.” Just having that sort of ambient company is comforting for a lot of people. The big question for me is, does that actually have to be video? That’s a bet that we’re making, but as we’ve seen Alexa really take off in the last little while, there’s an open question as to whether it’s an audio solution that provides that.

I think it’s audio. Especially podcasts.

Well, this is a great point.

No, we’re doing great, it’s fascinating.

My point is, most podcasts actually require you to pay attention. The classic NPR-style podcasts, you can’t do other things while you’re listening to the podcast. Even the audio experience is going to have to change, it’s going to be more like music in that you can do other things while you’re listening to music. You’re seeing innovation in podcasts and you’re seeing fiction as a genre, really start to pick up in podcasting. With things like Alexa, you have the ability for interactivity, which is completely not being utilized by podcasts today, by audio today. These are the areas where I think there’s a lot of opportunity, the use case is ambient entertainment.

I’ve never heard that from anyone, into ambient television.

I think there’s a huge opportunity.

Yeah. It’s interesting because it’s something that older people do, my mother’s got Fox News on all the time, which makes her homicidal most of the time. That’s how they behave, but I don’t see it manifesting in my children.

I think that’s because you’re conflating the television with the use. Because that’s the only place you can get it today.

I think the only way it becomes like that, is if it’s a heads-up display, if it’s around your eyes all the time. You know what I mean? You do walk around San Francisco and everybody’s doing this, staring at their phones, which is fascinating. My new game, I tell people, is where I literally walk around San Francisco and people are doing this, especially crossing the street, which drives me crazy. I go, “Hey, hey, hey!” Like that, and they’re like, “Whoa.” I’m like, “Stop it. Stop it.” It’s really interesting.

Are you going to make that a law when you’re mayor?

Yes I am. Yes, you’re not to look at your phone. If you do, you’ll be arrested and thrown to the ground, yes. I think people would cheer, I think I would win in five seconds if that was my platform.

You raise a great point. We’re sitting in this room right now and there’s a screen over there, there’s a big Dell screen over there and it’s blank. That’s because most screens today are treated more like computer monitors than like televisions. If that was a television, in most offices, it would be tuned to CNBC with the sound off. Because it’s a computer, it either has a screensaver on it, or it’s off. I think there’s actually a really small switch between those two behaviors, because every screen is internet connected now. It doesn’t have to be the full attention that a phone demands, there is no way to consume that ambiently, but there are enough screens in any given environment.

The wall, the walls will be screens.

Talk a little bit about commerce, because that’s something that’s been up and down for a lot of people, there’s been a lot of commerce disasters this year. Tons of them all over the place, and sales. Jet.com was it and then it sold, it clearly sold because it wasn’t gonna beat Amazon. I know they declared victory and ran around.

Three billion isn’t bad.

It isn’t.

It’s pretty good, actually.

They wanted something else, they were hoping for something else. It’s nicer to be Amazon and sell to whoever. I get it, but the goal was something else I believe, from what I understand.

I agree with you, but if your failure is a $3 billion exit, it’s not a terrible failure.

Yes. I get that, I get it. I know you all declare victory and move on. How do you look at commerce? Because Amazon is dominating everything, pretty much. We all live in Amazon’s world at this point, in the commerce space. How do you look at it?

If you take the long view and you say, 10 years from now, will we be buying more stuff online and on phones than we are today? The answer is obviously yes. Then you say, how do you build a business that doesn’t get crushed by Amazon? I think what people are starting to realize is, that selling products made by other people, that’s a really tough business to compete against Amazon. You really need to build a brand, be vertically integrated.

It’s just your own stuff that you can’t get anywhere else.

That allows you to have a little bit more control over your destiny. You can very well sell that through other channels in the future, but if you get born online, you have the advantage of fast iteration to get product market fit. Once you’ve got that product market fit, then you can continue to drive direct to consumer online, but also you can start thinking about other channels as well.

That’s what Honest did, it’s what Bonobos did, we recently made an investment in a company called Hungryroot. They are trying to reinvent convenience food. If you think about Campbell’s soup or Lean Cuisine, they don’t really resonate with the millennial consumer.

Yeah, they’re gross.

What Hungryroot has been doing is trying to develop fresh, healthy versions of convenience food that you can keep in your fridge. Within six or seven minutes, have something that’s ready to eat.

I see. Better Lean Cuisine, essentially.

I’m not sure I would use those exact words. My point, I’m not ...

100 percent less gross.

I don’t want to specifically focus on Hungryroot, it’s just this idea that you can start online and then you have so much more data. What these guys can do, for instance, that another food company can’t do, is they can see what sells and then what sells again. How reviews compare to that. They can start tweaking recipes and they can get the product market fit.

What’s the retail company that does that with shirts and t-shirts, they’re competing against the Gap, there’s one that millennials love. I’m blanking on the name, they’re making ...



Yeah. This is a tactic that can be applied across many, many categories. Then if you can build that brand equity directly, then for a start, you have a lot more of a market.

You’re looking for fresh ideas on things, when you’re thinking about that.

Look, I think that’s one area where you can play the trend of e-commerce, without having to worry about Amazon.

What do you think of Amazon? What do you think of it, when you think about it? Because you do a lot of commerce investments.

They are an extraordinary competitor. I would prefer not to be going head to head against them in general and that’s why I think that the bigger opportunity for startups is people who are gonna build these vertically integrated online native brands.

Sure. A couple more things I want to talk about: Bitcoin. You were the first person to talk about bitcoin with me. How do you feel about it? It really hasn’t quite taken off, but it sort of has.

Back when it started out, people thought that bitcoin was gonna reinvent payments. That has 100 percent not happened. What has happened is that it is being used as a store value in countries where people don’t trust their local currency, or their local government. Here in America, you’d be crazy to store your worth ...

The dollar seems to work.

The dollar works pretty well. The pound is great. The euro, the yen, these first-world currencies, you can have great confidence in them. If you live in a place like Argentina that has had double-digit inflation forever and anticipates double-digit inflation forever, the volatility that goes with up and down actually seems okay relative to something that’s only gonna go down in value. There are a lot of countries that have that long-term persistent inflation problem. Or if you live in a place where there’s real questions about the stability of the government.

You mean like in the U.S.? No, I’m sorry.

I have a little more faith in our systems.

All right.

If you were living in the Ukraine right now, it’s not certain that in 10 years time Ukraine will be an independent country.

No, it will not be.

If it’s not, it’s pretty certain that you don’t get to trade in the Ukrainian ...

The Ukrainian whatevers.

The Ukrainian whatevers for ...

Rubles, it would be rubles.

Most likely. You start to think about, what are ways that I can store my value in a way that’s not gonna get wiped out overnight because of a change of government, or because tanks are rolling over the border? There are countries in the Middle East that look like that.

You see that as a safety, now bitcoin is a safety mechanism.

If you live in a country that has that turmoil.

Is it a bigger business? Because you were in a bunch of them, what was the main one you were in?

We are the lead investors in Blockchain, which is the biggest bitcoin wallet in the world. We are seeing exactly that. We’re seeing that growth in developing-world countries that have either economic turmoil or political turmoil. We’ve seen usage double over the course of the last 12 months. On top of a double for the previous year. What we’re not seeing is that growth in the U.S. and Europe and so forth.

In the usual regular commerce transactions.

It’s just like we said before. If you live in Silicon Valley, you don’t necessarily see the other use cases.

The rest of the world works, yep, absolutely.


I’m not gonna drag you into politics unless you want to be — and a lot of people want to be these days. How do things change under Trump? Obviously the tech leaders walked up there and did their walk of shame into Trump Tower and said that there’s a lot of anti-regulatory stuff that’s going on that’s good for Silicon Valley, there’s the repatriation. What do you see during this administration? Does it change your investing ideas right now? Or are you just gonna keep investing? Because clearly certain things are gonna do better than others, or do you anticipate any differences?

I moved to America in ’96.

Oh, an immigrant.

We get the job done.

Well said.

I only got naturalized last year. I got naturalized specifically to vote in this election. My candidate did not win. I do have faith in the institutions and I think that the institutions include the fourth estate. I think the country can survive four years of presidency, of bad presidency. It has in the past and it will in the future. It self corrects, like all good systems should. I also think that specifically around investing, the micro trumps the macro.

Interesting. What do you mean by that?

I’m more focused on this founding team and their insight, or the technology they built. Or the growth that they’re seeing, than what ...

Whatever’s happening, the noise.

... the China trade dispute is gonna mean.

Do you see a more serious creator, or do you see a more frivolous creator? What do you imagine? It seems a little more serious around drones and cars and health care.

I think there has been a widening of the aperture because of some technology advancements, specifically around AI. As it relates to computer vision and so forth in the last few years, that is now allowing a whole bunch of new things like drones and autonomous vehicles and applications to health care and so forth. I think it’s a widening of the aperture, I don’t think it’s a replacement. Frankly, in the consumer world, entertainment of some sort has always been the key driver.

Always been the key driver. My last question is, you brought up this concept of not thinking about Middle America, thinking about other places, looking outside the bubble of Silicon Valley. One of the accusations that’s made about Silicon Valley is that it has utterly ignored most of the country in development, in locating its businesses, in doing manufacturing. Does Silicon Valley have to do that? Do you think they will change that? Have they not been paying enough attention? Or will it be like, Apple will open a small plant and then have a little walk-through with Trump and that’ll be that and there will be 500 jobs that don’t really move the needle.

As I said before, I think that innovation on the consumer side is becoming much more dispersed and that’s creating opportunities all over the country. You look at Blue Apron that was started in Brooklyn, for instance.

Brooklyn’s like here, essentially, with worse beards.

At what point do you want to stop saying it’s like here, though? Is Chicago like here? Is Miami like here? Is Atlanta like here?

Yeah, I’m talking about Rustville. I’m talking about Chattanooga, Tennessee or parts of Michigan that aren’t ... These are the areas that voted for Trump, for example. These are areas that have long forgotten and are not on the ... I’m of the feeling that this election was about people who believe in the future and have benefited from it and those who have not. How do you pull along the ones that have not, and does Silicon Valley have a job to do that? A responsibility to do that?

I think that you’re not giving enough benefit to the people who are living there and their ability to build companies on their own. When I went to Fayetteville in Arkansas, I went to see a company called Country Outfitter. That’s a company that are growing to a $100,000,000 in revenue, on very little capital. Selling cowboy boots and western lifestyle wear to people all across America.

Probably the world.

They figured that out on their own, it wasn’t because someone transplanted from Silicon Valley with an idea. That innovation is happening. You look at a company like Bellhops, which is trying to build a marketplace for movers. That’s based in Chattanooga. I think we should not regard that there’s an obligation for Silicon Valley to save the rest of the country. The rest of the country is capable of saving itself. They’re doing that.

Now that the technology requirements to start new companies has come down and it’s become about the insight, you’re seeing those companies. Now they’ve got to grow, so they’ll be more obvious seven years from now than they are today, because the companies we see today were founded seven years ago. You’ve got to allow that time to pass. I have great confidence that the ingenuity and the insights of Americans across the country, not just in Silicon Valley, are going to generate a lot of really wonderful companies. I’m on planes a lot of the time trying to meet them.

My very last question that just occurred to me. I had a really interesting discussion with someone from Facebook when I was recently abroad about the ... Everyone’s talking about fake news and things like that. Facebook has slowly come around to the fact that perhaps they have some impact, “Oh, no, no we don’t. We’re just a platform, it’s not us.” That was their first response. Now it’s like, “Okay, perhaps we might have some responsibility for this.” When you argue with them, it’s either they’re lying to you or they just really believe this. That they don’t have responsibility.

The argument I finally made was, you know what? My kids like Snapchat because it’s not the cesspool you’re starting to become. Because they do verified publishers, you know who you’re getting. I said, “At the very least, Snapchat’s become a place that’s pleasant to be. You get what you want, you get quality stuff.” Twitter’s on the far end of hellscape at this point.

Then you have Facebook, which you’re starting to see glass on the grounds of the suburb. Suddenly the suburb is a little more trashy. Like, “Oh. Why is that garbage can overflowing over there? Why am I reading about Hillary Clinton being a lizard person? Why is that happening?” Then you go to Snapchat. Do you feel like consumers are gonna flee the noise? I would think something like Snapchat or people that verify publishers, start to clean it up a little bit, have a better experience, perhaps. That’s an easy one for you, of course yes, Snapchat’s so much better, but how do you look at that?

As you said, Snapchat has made that move. I do think that there is a distinction between news and entertainment. What a lot of people call fake news is really entertainment, people aren’t necessarily ...

Well, it’s toxic entertainment, but yes.

It is. People are turning to that because it is validating their own beliefs, which makes them happy. That’s kind of what I call entertainment, rather than seeking out new information to form a decision, which is more like news. Now sometimes those two things happen in the same place. Both of those things happen on Twitter, both of those things happen on Facebook. To be honest, both things happen in Snapchat too, but the entertainment is of a different nature. It’s what’s happening with the Kardashians. It’s not necessarily around politics. When politics becomes entertainment, which it is for a lot of people, then those lines can get a little blurry. I think you just need to pull back a little bit and understand that they understand that it’s not news, for them it’s entertainment, too.

Interesting. Do you imagine that there’s an opportunity for people that do create a better, more pleasant environment right now?

I think that as I said before, consumer world entertainment always seems to win. I’m not sure.

You’re not sure. All right. My very last question I ask everybody, if you had to think of a mistake you’ve made, or maybe a great thing you’ve done, either one. What would be something you did that you would say, “Okay, this is what I did and I should have done this and this is what I learned from it.” I want a little learning moment here, you know what I mean? “I really fucked up there.”

Well, one of my biggest regrets is not chasing Yelp harder in their Series B.

Why’s that?

I took a lot of actions that I thought indicated how excited I was about the company. I had always at that point felt that actions speak louder than words. I just hadn’t spoken enough, I hadn’t been clear enough about how excited I was about that company. It turns out that words actually speak louder than actions in a lot of cases.

They didn’t like your honey-baked ham, you should’ve just gone in and said, “I love you, I love you, I love you.”

No. I spent a lot of time with the company and talked them through a lot of their sales stuff, because it was very relevant to their sales businesses that I’d run on Citysearch.

Of course, from Citysearch.

Tried to deliver a lot of value, make some useful introductions. I didn’t just say ...

“I want you, I want you.”

[I didn’t say] “This is the most exciting company I’ve met in a long time and I want to be an investor in your company and I want to help you build it. Tell me what I need to do to do that, because I will do that. I love your company and I think it’s gonna be really important and powerful and it is gonna change the world.” Today when I meet an entrepreneur and I feel that way, I tell them that way.

The more expressive Jeremy Liew. All right Jeremy, thank you so much for coming on the show, this has been really interesting.

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