00:12:21 · Scott Kupor, David Senra
[00:12:21] S2: When I did the math for myself, and I was trying to convince my wife why in the middle of the global financial crisis we should pick our family up from North Carolina, go back to the Bay Area and do this thing, my math was like, Okay, I'm pretty confident they'll raise the first fund. No idea, quite frankly, what happens after that, but my general cactus was like, case, these funds take a long time, you know, we'll kind of weather through the financial crisis, and, you know, these guys had always been very good to me in terms of taking care of me, and I was like, look, you know, I'll find a job. I'll find another job, basically, if, like, this thing just doesn't pan out. That was kind of my general general back of the uncle of calculus. I never imagined we'd get to where we were, and nor did I... Actually, nor did I imagine we would get there as fast as we did. And I think that was the big thing. So Marc's talked about this, but in literally, like, first couple months after we closed the first fund, we invested in Skype. And, yeah, if you remember, Skype was part of eBay, right? Skype was bought by eBay, and it was, like, completely neglected inside of eBay, and yet amazingly, had this incredible network effect. If you look at the numbers, like, numbers of subscribers just kept growing and growing. So we joined with Silver Lake at the time. I don't know if you know Egon Durban who runs Silver Lake. [00:13:26] S1: Michael Dell, I just saw him a few [00:13:27] S2: day Yeah.
00:13:27 · Scott Kupor, David Senra
[00:13:27] S2: day Yeah. [00:13:27] S1: A few nights ago. He speaks very highly of them. Yeah. She brought him up the other night.
00:13:30 · Scott Kupor
[00:13:30] S2: Exactly. Yeah. And and and Michael Dell was, was part of that too, but it's literally like we did essentially a buyout. Like, it was like a crazy thing to do. We'd... We had just gone on the road and told all of our investors we're doing early stage venture investing. And we hinted, by the way, this this Skype thing was going. So, like, we pretty much said it was gonna happen, but we couldn't say it was gonna happen because, you know, it hadn't been done yet. But... So it wasn't actually a surprise for LPs, but it was clearly very different than the strategy we had laid out. And so we did this thing, and immediately, of course, everybody attacks us and says, these guys are crazy. What the hell are they doing? Doing a buyout. It'll never work. And there was all kinds of stuff at the time. If you go back and read the stuff, you'll see it. There was this big IP dispute with the original founders like Janus and Niklas and eBay about who actually owned the fundamental underlying IP. So a bunch of people looked at buying Skype, but nobody could get comfortable because they're like, gee, if we buy it, what if Janus and Niklas come out of the woodwork and say they own it, so do you really own the IP? You know, Janus's genius, was, let's actually figure out a way to work with these guys. So we actually... You know, our bids came together, and we actually worked collaboratively with with these guys as a way to moderate this IP question. But anyways, everyone's like, look, this is crazy. But the beauty of it, literally eighteen months later, we sold to Microsoft for four times what we paid, like eighteen months before. And so, the news cycles were just unbelievable. And look, part of this business is momentum against momentum, right? Which is true of so many businesses. And so, we were able to actually raise our second fund well ahead of what we had planned doing, in part because the Skype thing just worked out so well, and it just completely changed the narrative. We also had a company called Nasira, which was in the networking space, Martin Casado, if you know Martin, is one of the partners there today. His company got sold to Cisco early on in first fund. We had these very quick early wins, which basically potentially could have gone the other way, but they didn't. They went in our favor, and they basically just dramatically accelerated the progress.
00:15:19 · Scott Kupor, David Senra
And key to our business model, right, to do the Michael Ovitz business model, we had to have enough of a fee stream to be able to hire all these other non investing people, right? Yeah. And, you know, Marc talked about this before, but, you know, what Marc and Ben did, they were very magnanimous. The two of them didn't take... They took no salary, right, at the beginning of the company because they wanted to basically take, you know, as much of the fees as they could to give it to me to go hire other people, you know, to build this thing out. But, you know, we needed another... You know, in order to kinda continue that build out, the second fund gave us, you know, a, you know, stacking fee stream that allows us then to say, okay, now we can actually double down on the strategy. So it was one of these things where, like, we had early success. It was also 2009. Right? So, again, middle of the global financial crisis, you you know this, but, like, you know, Sequoia guys put out this, you know, RIP presentation. Have you seen this? [00:16:07] S1: RIP good good times?
00:16:07 · David Senra, Scott Kupor
[00:16:07] S1: RIP good good times? [00:16:08] S2: RIP good times. Right? It's literally like the world's coming to an end. We're all gonna die. Sounds a little bit like today, actually. One will ever raise any money, like, all your money under under your mattress. And so, like, we were this shiny gold, you know, like, object in 2009 when everyone else was hunkered down and worried about their portfolio companies. So we had this enormous advantage, which is we put a shingle out and we say, Hey, like, we're open for business. And every other venture firm, and rightly so, I understand it. Like, they had these enormous amount of portfolio companies that they were very worried about whether they would survive or not. So so much of, like, all that early momentum accrued to our benefit, which enabled us then to go raise the second fund, which gave us the funding to build out the services strategy, and that really kinda compounded in a way that I I don't think we expected. Now Marc and Ben may tell the story differently, which is they always knew they always knew it would be a success. And and I'm certain, I believe that, right? I mean, guys are
00:16:56 · David Senra, Scott Kupor
[00:16:56] S1: entrepreneurs Obviously, for entrepreneurs are being self confident, and they don't wake up thinking they're going to lose, but they're always surprised. There's no fucking way, if you build something that they're confident they're going to succeed, but they can never predict the degree to which they do succeed. It's funny that you say that they might tell the story differently, because one thing I love talking about Marc, and it's obvious if you watched the episode of him and I did together, is the amount of business history that's in that guy's head. [00:17:21] S2: It's a wiggle. [00:17:21] S1: It's like I'm just constantly prompting, and it's like, I don't tell people, you know this, we don't know [00:17:25] S2: what we're [00:17:25] S1: gonna talk about before we talk about this, not a list of questions. I surely didn't say anything to him, other than we're both psychopathically obsessed with business history, entrepreneurs, all that sort stuff, impossible not to have an interesting conversation. But I'm like, Damn it, I should get Marc on it. I want him to... Instead of telling the history of other businesses, I should get the history of a16z from him, like, why you're speaking.