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How did you get to where you are today? What is your story? What incidents and experiences shaped your career path?

Summarized By: Jeff Musk on Wed Jul 29 2020
Tory really starts. You know, when I was quite young, I was always hustling small businesses. Uh, I had a deejay business that I started when I was in eighth grade and I would D J parties and dances. I can't even believe it today. But when I was in eighth grade, someone actually hired me. I think they paid me, like, $125 to play music. Their wedding. I think they must have been really desperate. And my dad was nice enough that we would drive me around with my speakers and my music and and then is I got a little older. I expanded that business. And and then I think by the time I got into college and and I was studying business, it became more clear to me that entrepreneurship, the idea of owning your own business or starting your own business seemed really attractive. And it just began to sort of explain who I waas to myself.

What is your investment philosophy? What type of founding team, industry domains, business models, and stages do you invest in?

Summarized By: Jeff Musk on Wed Jul 29 2020
like that answer into two parts. For many, many years, I've been an angel investor, and I've just invested my own capital. I didn't have any institutional investors to answer to, and so that created a lot more flexibility around the stage that I might invest at the types of companies I might invest in. And I think, you know, sometimes you invest for greed. But often times there are other reasons. For example, several years ago I invested in a cosmetics, a beauty company called Julep, and part of that motivation is because I have five daughters and I thought it would be an interesting outlet for me to expose them to business in a category that they might enjoy. And it was a female founder who I really look up to, and I thought she would be a terrific role model for my daughters, and so I would often bring one of my daughters to the board meetings. And so my motivation was not primarily money or a return. It was more of an experience and other times that made investments. For example, when I was starting stance, I did a research project on about 300 different consumer product categories, and I rank them based on the size of their market, the gross characteristics, the homogeneous ization of the competitive set, gross margin profile, repeat purchase rate, Internet friendliness, these kinds of things. And I became, quite, uh, researched in all of these different categories. I really began to understand them. Eventually I chose to start stance, which was focused on socks at the time. But I also liked the characteristics of luggage and now perfume. There were several other categories that I really liked. I just didn't do them. And so eventually when the founders of away approached me to do luggage because already understood the category and it spent a lot of time working on it, it was a really easy investment decision, and later I was approached to do a perfume business and same thing. You know, the reason why I didn't pursue it was because I knew it would be difficult to sell smell over the Internet. But I felt like this particular company had done a good job of sort of overcoming that, And so sometimes I would say the investments come in and they align on on a thesis that I had earlier, and and so it's a It's a really natural investment. At that point, the second part of the answer would be, you know, now that I am best on behalf of institutions, our charter, the scope of the kinds of investments that we make is much more targeted, and we primarily invest in series a rounds of financing. We like to be the first institutional investor we like the lead. We like to have ownership percentage targets of 15 to 20%. And like most other venture capitalists, we tend to invest in. Businesses that have high gross margin profiles have, ah, large R and D capital expenditure upfront, but eventually, when they build, their product will have high gross margins into the future. Of course, software and other kinds of technology businesses fit that perfectly, which is why I believe most venture capitalists target those kinds of opportunities. So today I probably wouldn't invest in a perfume company, whereas if it was just me as an individual, I might so the kinds of investments that I do today are slightly different. It would be hard for me to invest in a chain of Mexican restaurants, but I did that earlier in my career as an angel investor for fun

What information, statistics, or slide deck do you like to see in a founders' first email?

Summarized By: Jeff Musk on Wed Jul 29 2020
that really stands out above all is the trajectory, the traction and and however that is measured. It's often not revenue or profit because the company's air so early. So, you know, figuring out as an entrepreneur how you communicate the traction that you have in whatever format that might be. It could be as rudimentary as you know, transcripts of customer calls. But figuring out a way to communicate to the investor why you have positive momentum, I think above all else, that's the thing that gets someone's attention. If you're earlier than that and you don't have any traction or momentum yet, then you really have to rely on your historical credentials. The team, uh, you know, other the market characteristics, maybe why your team is so perfectly suited to create a solution to this problem. Um, but you have to rely on other elements. I think that's one of the reasons why it's easier for second or third time entrepreneurs to raise money because they can identify a problem in a market opportunity. And they have the credibility to raise money against it because of their past. And it's harder to do that as a first time entrepreneur in a pre traction, you know, pre product company, because you don't really have the resume or the credentials to give credibility to the market opportunity that you've spotted. So I think that's why the fundraising is is often harder for first time folks. Um, but I don't think it makes them any less capable of solving those problems.

Can you walk us through the due-diligence process, and metrics you look for? What are the steps and a timeline from a founder's first email to cutting out a check?

Summarized By: Jeff Musk on Wed Jul 29 2020
Russ. Different firms think of due diligence in different ways, but the way that I like to think about it is when someone presents a deck to me. I assume that everything in the deck is true, that the market size that they're talking about the competitive landscape, the nature of the problem, the nature of the solution. I take all of that as truth. And so by the time we issue a term sheet, we've had enough interaction with the founders and the team, and we're familiar enough with the problem that's being solved, that we're quite comfortable signing a term sheet just on that. And for us, the due diligence process is just a little bit of checking that everything that the entrepreneur told us is true, you know, is the market size really is good. It is Bigas they say it is, or do the customers love it as much as they say they do, and we can reference that by calling the customers. And the only time I can imagine that we would pull out of ah deal is if something that we were told that front turns out not to be true, you know, So the entrepreneur represents something is truth. And as we go through and sort of double check everything that was told us if all of a sudden some of that turns out not to be true and it happens very rarely. But as an example, you know, we've had companies say, Hey, we have a run rate of a certain number And then when we pull the deposits into their bank account, we noticed that that number was rounded up not just a little bit, but by a healthy amount. Well, that would cause a something differently for two reasons. One, the valuation might change, but more importantly, it really speaks to the credibility of the entrepreneur. If the numbers were exaggerated during the fund raising process, we have to ask the question, What else don't we know? Um, and there's nothing more sobering than your first board meeting after you've invested. So, um you know, for us, the due diligence is probably, um, a little bit different than a traditional East Coast private equity firm. Um, we're more. You know, we make a lot of the investment decision based on all the interaction up to the term sheet and once we sign a term sheet, we assume that we're gonna execute and fund of that company. It would be very rare for us to discover something in diligence that would cause us to change our investment decision.

In a term sheet, what are typical terms for funding, cap table, governance, and liquidation? What should founders look out for in a term sheet?

Summarized By: Jeff Musk on Wed Jul 29 2020
I'd venture capital funds use the same standard term sheet, and I would characterized those terms as plain vanilla or straight down the fairway. You know they're founder friendly, on balance. And so, for example, most of the great venture capital funds would not use a participating liquidation preference. It would be nonparticipating. And in terms of voting and governance, it's likely on the side of the entrepreneur, because the investor is likely buying a minority position. Most venture capital funds targeted ownership percentage of around 20% and so the voting should reflect that it shouldn't. You shouldn't be able to dominate the decision making in a minority investment. And so I do think that it's important that investors get their capital out first before other people in the event of, um, the scenario where it doesn't work out. But I don't believe that investors should try and take advantage of entrepreneurs, and I think if you do that, particularly when a company is desperate, it harms your reputation. Entrepreneurs tend to talk with other entrepreneurs, and it's just a matter of time until your firm will not see the next best deal. And once you've been in the venture capital business for some period of time. You also learn that all of the money is made on the best companies, the winners, and you can't make a lot of money on the companies that didn't turn out as everyone hoped. And so trying to take advantage of the companies that didn't turn out like everyone hoped they would, um, again, I think it's it hurts your reputation and set you up for a short career. I think the best firms treat entrepreneurs fairly over a long period of time, and they're not overly self interested, particularly when things go bad.

How can founders reduce the risk of product-market fit? What are the common mistakes that founders make and how can they avoid those?

Summarized By: Jeff Musk on Wed Jul 29 2020
stategy on product market fit is to spend as little money as possible to get as much information as possible. And I think this our initial concept was really Ford by a guy named Bill Gross in the late nineties, and he started incubator called Idealab. It might have been one of the first incubators. And you know what most people don't know is that Google AdWords came from Idealab. One of the companies that they produced was called Overture, and they had the original paper click AdWords business model long before Google adopted it. But one of Bill Gross's tricks was to spend as little as he could toe learn as much as he could. So, for example, let's say that you were going to start an online automobile sales e commerce website. One approach could be you could go by a bunch of cars, spend a bunch of money on inventory and then begin to try and sell those cars online. Another approach would be you could just try and sell those cars online without even owning them. And then, if you happen to sell something, you just go by the car at a full retail price, take no margin on it. But what you've proved is that you knew how to sell that car, and maybe that process would reveal Yeah, how many cars you could sell that the kinds of cars you could sell, the price points you might sell them at. And it might dramatically refine all the thinking that you had around selling cars on the Internet, and you could learn all of that just by doing the marketing. And, yes, you might even lose money on every sale. But the goal initially is not a positive gross margin. The goal initially is product market fit. So how do you learn as much as possible about what the customer wants and how you might provide that? And then I think Secondly, you start to solve the problem of unit economics and gross margin. And so I think the hack the trick is spend as little money as possible. To get as much information is, is you can, and product market fit is something that evolves over a long period of time. The best companies air still adjusting their product market fit, you know, year after year after year, they're customer centric. So initially as an entrepreneur. The hard, hard part is figuring out what you're going to sell, how many you can sell. Can you sell them in a positive enough unit economic to make enough money to have a profitable company over time? And you might not be able to go to solve all of that before year First angel round of your first venture capital round. But I think they're certainly a class of entrepreneur that does. That solves that problem on a shoes shoestring budget. And there's another class of entrepreneur that tries to raise all the money and maybe solves it in a less efficient way.and this is a quite a common strategy. There's nothing novel about this, but you know the first couple of customers and a B two b setting might be free. In other words, let's say that you had a large enterprise that's willing to try your product. You might say, Well, deliver this value to you free of charge if you'll agree to do a case study and give us all the feedback about what worked and didn't work in your environment and maybe a larger businesses willing to take a risk on this small company because the technology appears novel and they're willing to be a part of a case study. And how about the startup? Another approach is you could give a small amount of equity to the first couple of customers that on board. Um, you know, maybe there's some other way to align the incentive with that company, and you know, often times those are the kinds of arrangements you can make with a distribution partner or consulting partner. But again, I think the point of your first couple of customers even in the B two B setting, is not to maximize profit. It's just the opposite. It's to maximize product market fit because if you can get the product market fit right, you can go to all the other enterprise customers in the world and get the profit later. So getting someone to take a chance on you to try you early on, whatever you need to give up to do that is probably worth it is without that first customer relationship, you just don't know if you're solving the customer needs very well. And my guess is a lot of those conversions happened because of a personal relationship. You know, someone on the founding team used to work at that company. No, someone really well at that company, and through that personal relationship, they're willing to take a risk and try it.

How do you set goals and track a startup's progress? How much do you get involved in the day-to-day operations? When do you intervene?

Summarized By: Jeff Musk on Wed Jul 29 2020
ocean. The first part would be it depends on the stage of the investment seed stage. Companies need a lot more help than a Siri's A or a Siri's beer Serie C. So the longer the company has been around, the more self sufficient it becomes so early on. You know, there's a lot of work around recruiting. There's a lot of work around customer on boarding. There's a lot of work around, just the core business processes that can be repeatable and scalable in a company. And that could be everything from the back office, accounting and operations to the go to market motion marketing and sales and getting customers. And, of course, all of those things evolve as a company hires more people and gets more revenue and develops itself. So we typically invested the series a stage, but sometimes the companies are quite small. A handful of employees, so early on, were involved in all of that work. As the company's get a little bit larger, they become self sufficient, and they rely on us less. Eventually they get big enough where they have their own internal recruiters and really confident sales people from other companies who have done it before and they rely on us very little for those things. Um, I would say at that point a lot of the conversation with the capital partner becomes around, you know, strategic alternatives. You know, evaluating is one path better than another. We tend to not get very involved in what I would call the day to day operations. We're not trying to operate. Companies were trying to be a capital partner to great entrepreneurs who operate the companies. Um, so it would be very rare that we would get involved in any kind of what I would call day to day. Our day today is making investments, not operating, and then in terms of when to intervene, Ah, board of directors really only has two decisions that they make. One is who is the CEO and the other is the annual plan and budget. And beyond that, the board really has no decision making capability. Maybe there's some informal power in some cases, but formally those are the only two ah operational elements that we get involved with. And so if we've lost conviction that we have the right person operating the company, we could make a change, and it's not just us, it's the entire board of directors. And then every year when the company resets its forecast and its budget, that's our opportunity to say, Hey, we think you're spending too much and we think you're spending too little or we think you're under investing in this area or over investing in this area. But once we voted and ratified the plan, we really don't get involved at that point throughout the year. Those ongoing board meetings are really just checkpoints to see Hey, how is the team executing against the plan that they presented and that we ratified? So I would say we intervene very rarely. Um, and it's typically when things aren't going well and then the question is, are they not going well because of the person leading the company or they not going well because of our strategy in the way that we're solving customers needs

What are the typical profiles of Limited Partners (LPs)? How do VCs raise funds from LPs? What are the typical investment terms?

Summarized By: Jeff Musk on Wed Jul 29 2020
venture fund is a little bit different, but I think the pools of capital tend to be the same. So historically, venture capital funds have raised money from pension funds, both public and private pensions, and those tend to be a good fit because they tend to be large pools of capital with very predictable liquidity. So venture capital funds good ones tend to produce very high returns, but they lack liquidity. In other words, most of the funds air 10 years long, and so you're investing over a long horizon versus a public security where the return may be lower. But you can always sell the security, so your investment is much more liquid. Other pools of capital would be endowments from universities, common venture capital investors or Yale, Princeton, Harvard, Stanford, Michigan, uh, others. Another source would be sovereign wealth funds, sovereign wealth funds, particularly in the Middle East, like United Arab Emirates or Saudi Arabia or Qatar or Oman or Singapore, where they're generating massive amounts of free cash flow more than they can invest in their own countries. And sometimes it's highly concentrated in oil or energy, and so they're diversifying that into other asset classes like real estate or technology, and those air often venture capital investors. And I would say to some degree, although it's probably the smallest group large family offices or very wealthy families that might invest directly into venture funds, those were the primary sources of capital. There certainly could be others, but those are the most consistent. And then, in terms of how we raise money from LP's, it's much the same is how entrepreneurs raise money from a venture capitalist. There's a presentation that outlines three investment strategy. Hopefully, that investment strategy is sufficiently differentiated that it's able to produce, um, predictable and consistent returns over time. And it's a lot about the team and their backgrounds and how well they're positioned to be able to generate those returns. Just like are the entrepreneurs well suited to pursue the business dream that they have? And of course, people look at historical performance when that's possible. It's not possible on first and second time funds, and the terms are generally consistent. Most firms charge anywhere from two to a 2.5% management fee, which tends to decline after the fifth year, so you typically have five years of active investing and then the 2nd 5 years is typically managing and harvesting the investments that were made early. Most venture capital funds, or 10 years in length with 21 year extensions and then most venture capitalists charge anywhere from 20 to the very best. Firms can charge up to 30% of the profit, and that is called the carried interest. So if you had $100 million venture fund and you were charging in 2.5% management fee, you would withdraw 2.5 1,000,000 every year to fund the operations of the firm and around here five that would start declining. Maybe it goes down to 2% or eventually 1.5% all the way through the 10th year. And then let's just say that for round numbers you charge 2% for 10 years, so that would be $20 million. Now you've got the 100 million of capital plus the $20 million of fees. And let's say that you returned 120 million with the 100 that you invested, and so 20 million would come off the top to pay back the management fee, and the 100 million would be split. 80% of it, or 80 million would go back to the original investors, and 20% or 20 million in this case would be distributed among the investment team. And, of course, those economic. Sometimes we're all equal, and sometimes people have more seniority and affirm, and they might have a disproportionate amount of those economics. But that's a typical venture capital structure, and it's not uncommon to see firms raising a new fund every 3 to 4 years, sometimes faster, sometimes slower. But every 3 to 4 years is probably average. And so you spend four years putting that capital, the work and as you see yourself running out of capital to make new investments, you typically go fundraise and raise a new fund. So a successful venture capital firm will have multiple overlapping funds

What qualities and accomplishments does your team look for while hiring associates or interns? What is the interview process and what type of questions are asked?

Summarized By: Jeff Musk on Wed Jul 29 2020
I think with all things in business, a huge part of it is their interpersonal skills, the way that they carry themselves, the way that they communicate, the way that they think strategically, the way that they learn, how they interact with entrepreneurs, how they interact with people in the partnership, and so personality is always an important part. Obviously, we look for people that are reasonably intelligent or have an affinity for a certain space. But I would say nearly everyone that works in venture capital is quite smart, so and knows how to learn, so that's not necessarily a differentiating factor. I think a big part of a great associate is just how well they fit into the culture of the particular firm they're working with. Every venture capital fund has a different culture, a different process, a different approach to the way they do their work, and so fitting in and finding a place where you feel comfortable where you can be yourself in that environment is really important. And I think when it doesn't work out, it's usually because the personality of the associate didn't fit well with the culture of the business. Um, you know, personally, I think is an associate. Um, the important part is learning the investment business, and there's a lot of specific skills. There's obviously generic skills, like modeling, which he could learn at an investment bank. That's less important when you're in early stage investor. Maybe a more important skill might be how to do a successful reference call. How do you engage someone really positively over the phone, make them feel comfortable talking about a person or ah, market or a company? How do you ask those questions? How do you get that information that you need on? That's a skill where you might have to make 100 reference calls before you start to become very proficient. That doing it. And so that's an example of a very soft, qualitative skill. But it's a skill that is still vitally important no matter how old you are, how long you've been doing it. Networking is really important. It's a business that's very collegiate, so firms often co invest with each other or the minimum there, following another venture capital firm as an investor. And if you know people in those other firms and you have a friendship, it's easy for you to call and get real accurate information. So being able to have real relationships with a large number of people, you know, it's often been said that venture capital is a young person's game because the young venture capitalists tend not to have families and they can go out every night, network and hustle and sort of identify opportunities is their first emerging. The implication is that the older partners at the firm have families. They go home at night to be with their kids. They're less active, they're working less hours. And I actually think today with Koven, just the opposite is true. If you're ah, venture capitalist that's been working for 25 years in an industry you probably have a vast and deep network. And if you're 26 years old and you're just starting out and every bar in the world is closed, how do you build a network? So I actually think right now, you know, with the work from Home and Cove in nature, those people that have spent 20 or 25 or 30 years of their life building a really robust network of other venture capitalists and entrepreneurs and team members and strategic acquirers and investment bankers are in a much better position than someone who is young trying to build their network.

What helped you to stand out in your hiring process? How should someone prepare for an interview for a job like yours?

Summarized By: Jeff Musk on Wed Jul 29 2020
that. So when I was graduating from college, I went to a school called Brigham Young University in Provo, Utah, and right down the street from our campus was a large, multi $1,000,000,000 networking company called Novell. And Eric Schmidt was the CEO prior to joining Google, and he had created a $300 million venture capital fund, and I wanted to work in venture capital. They were local, and I thought that would be a great place to work. So I found out who was running the venture capital fund, and I went and I contacted him, got an introduction and had several lunches in the Novo cafeteria, and I thought for sure he would give me a job offer. They were expanding the fund, and I was excited to work there, and they didn't. And within a year or two after that, Eric was recruited to Google and eventually the team running the Venture fund. They left and joined another local venture fund to be independent and not affiliated with the corporation. And many, many years later, the old chief technology officer of Noval, who worked for Eric, was retiring. He was 71 years old, and the other members of the team. We had co invested and we had stayed in touch. But they called me and said, Hey, one of our partners is retiring and we're gonna have an open spot on our team. Would you ever consider coming back to the venture capital side? So I like to characterize it as the job offer that took 20 years to get. So you never know how long it will take, um, to get the job that you wanted. Um And so it's it's how do you stand out in the hiring process? Um, look again. I think a lot of it has to do with energy personality market knowledge. Um, you know, already understanding, um, the kinds of investment feces that affirm might have and being able to find investments that might line up under that. I think all of those can help someone stand out. Um, at least in our firm, you know, it's certainly not, um, degrees and ah, a resume. It's more about the experience, the personality in the Fed. Um, you know, often some of the people that I've worked with that I really enjoyed have been people where I worked within an operational role and had a meaningful interaction with them. Maybe they were on the team of a business and I was on the board and they would come in and present to the board and just be really impressive. And of course I would make a mental note that that person seemed really great. And maybe your paths cross later in life. That's often how it works. Maybe you eventually recruit them to a different company or you end up having them. You know, come and do a stint at the French Capital Fund. Maybe when the company sells or goes public, they now spend out and are looking for something new and you get a chance to fund their business and then eventually they end up working at the firm. So there's all sorts of ways toe get into venture capital. But I think what you're really hoping for is to have some kind of a meaningful interaction with people that worked at that firm in some way. And working within a portfolio company could be a good way. Working at an investment bank that the venture capital fund often uses could be away. But figuring out how to have meaningful interactions so that they already trust, admire and respect you. And then when there's a job opening, they might think of you as a fit. I know we have. Ah, you know, we've been interviewing a candidate who works at one of our portfolio companies, and they're not on the senior management team. But we had exposure to them and we really liked the interaction. And they reached out and said, You know, if there was ever an opportunity and venture capital, that would be interesting for us, So that gives us the ability to start to have a conversation with them and we know their performance because they work in one of our portfolio companies.

How would new industry developments affect the job market? What skills, majors, and upcoming job roles would you encourage students to consider?

Summarized By: Jeff Musk on Wed Jul 29 2020
you know, the best skill set for venture capital is just working in a startup and really having a broad contextual understanding of the business of startups. So certainly you can learn something about strategic thinking if you work in the consulting business. And certainly you can learn about valuation and modeling and liquidity and credit if you work in an investment bank. And maybe those things can be vaguely helpful. But the reality is that building startups from scratch is kind of its own practice, and I think the only way to really get a repeatable skill set is to be involved with a start up. And I think that could be the best way to sort of understand how companies were built over time. And the more that you understand that you the better. You can understand how venture capitalists play a small role in the company building process. You know how to accelerate that, how to de risk it and how to be helpful to an entrepreneur. So I think most venture capitalists place a relatively high value on operational experience. Um, I think You'll Seymour and Mawr, a lot of the venture capitalists that have been hired have come out of high profile startups like Google or Facebook or others and its employees, who joined those companies when they were relatively small, and they gained valuable experience through the hyper growth, and that makes them fairly well, uh, fairly well able to understand how a startup works.

What responsibilities and decisions did you handle at work? What were the challenges? What strategies were effective in dealing with these challenges?

Based on experience at: Executive Vice President, Logoworks, Hewlett Packard Enterprise
Summarized By: Jeff Musk on Wed Jul 29 2020
hard up. We were one of the original, if not the original graphic design marketplace. And we were a venture backed company backed by benchmark Capital and benchmark had placed a very big bed that ended up working on eBay. So they understood marketplaces very well, and they started to invest in other marketplaces. And when I was there, I ran sales, marketing, business, development of finance for the entire company. So I had pretty good visibility to all the operations. I was also on the board of directors, and that gave me a great interaction with both the venture capitalist and the independent board members, um, that were part of the company. And when HP acquired the business, I moved into a slightly different role where I oversaw, um, the new ventures. In other words, HP wanted to build MAWR Internet businesses aligned with its existing businesses, and I worked in a group that that was really responsible for generating those ideas and or making acquisitions of those companies. And so I think the roles were quite different. The first role was highly operational. You know, my job was to deliver, you know, positive revenue metrics and and you know, operate the company successfully. And then once I joined Hewlett Packard, my job was to actually generate new businesses that could be meaningful for HP and as a very large company of his. Prior to HP being split, the company was doing about 120 billion in sales. And so the kinds of businesses that might impact the business of that size our businesses that are inherently very large in scale, often times already public or companies that would be acquired or very large, late stage, venture backed companies. So we focused a lot of our thinking on the kinds of investments or acquisitions that could actually drive the earnings per share of the company and be naturally adjacent and strategically aligned to HP's existing businesses. So I would almost characterize those is two very different jobs. One was much more operational in the weeds doing the work, and the other was much more strategic

How did the school prepare you for your career? Think about faculty, resources, alumni, exposure & networking. What were the best parts?

Based on experience at: BA, Marketing, Brigham Young University
Summarized By: Jeff Musk on Wed Jul 29 2020
is that you know our entire education system is outdated because it's largely based on memorization. Here's a textbook memorized key concepts show up in a testing center and regurgitate uh, those key concepts that you've memorized. And memorization is not necessarily a great proxy for someone's ability to deliver value in the workplace, particularly when we have the Internet. And nearly any piece of information is readily available through a search. So I think the best part about a university experience, and I certainly got this as part of my education. I wouldn't cite three things. One just the ability to learn and learn quickly. How do you assimilate a lot of despair? It information and make sense of it strategically. So if you can focus your learning on that and less on memorization, that's a skill that conserve you for a long period of time, particularly in the venture capital business, when you're looking at really emerging technologies and what the implication might be of those technologies. That's the kind of strategic thinking that great learning can provide. A second thing that I received in my university experience, Waas Ah, lot of my other student friends became people I worked with or other entrepreneurs that I could network with. So there were a lot of students that I went to school with. That I ended up, you know, working with many times and so having great relationships with you're other students being in study groups. You know, if you're a business major, you need to have great relationships with the computer science school so that you could be partnered with great developers, and together you might be able to build something really interesting and vice versa. And then the third thing that I think I received from my university experience that I think was really valuable was I had a couple of very dear and continue to have dear relationships with certain professors. So I certainly didn't get along with every professor love every professor I had. But I had several professors that were exceptional, and I was able to develop relationships with them and learn from them. And those relationships continued long past graduation, and it's really valuable. And here's why. You grow up, and if you're really lucky, you come from a supportive family that's been helping you develop and building your self esteem and basically giving you the validation that you're a good person with a lot of potential, and that's really helpful. But what's more impactful than that is when someone that you've never met that doesn't know your family and has no connection to you. They're completely independent when somehow they get to know you and they see your goodness and they see your potential and they communicate to you that you can go out and become something That's an incredibly validating experience for any human being. And it can certainly happen with a university professor. A university professor has all the power to do that for their students. And if you miss that at the university, my recommendation is that when you take your first or second job rather than optimizing for the job, that would pay you the most money. You optimize toe work for someone a leader who might spot that potential and be able to mentor you in that way because I don't think anything anything in life helps propel a potential more than a random person just believing in you. I liked always tell my managers that their job is to find one or two or three people on their team that they sincerely believe in. Tell them they believe in them and help them develop. And I have kids, and it's kind of the one thing that I can't do for them. It's a little bit of course, they expect me to be a positive reinforcing person in their life. But there's something more powerful when someone unrelated to them does that for them. So it's the one thing that I hope some random person will come along and do for my own Children. The one thing I can do for them. So I think, in the university setting, if you confined, just one professor that admires you believes in. You sees your potential and you can develop a relationship with them that can be an extraordinarily powerful part of your university experience.

What three life lessons have you learned over your career? Please discuss the stories behind these lessons, if possible. Stories could be yours or observed.

Summarized By: Jeff Musk on Wed Jul 29 2020
question. Of course. You know, life is filled with learnings, whether you want them or not. Um, I think you know, I would just say what everyone else would probably say. Which is I think the failures and the hard times teach the most. It causes the most development. It causes you to stretch, and so often times I think the biggest learnings are associated with a lot of pain. Um, you know, my very first start up was a big failure that was able to raise venture capital. And I grew the business to about 120 people. We had some great customers. We were getting traction. And then the dot com collapse happened in the year 2000 and we went to raise our next round of capital in nearly every venture capital fund. Uh, they were closed for business, and we had architect of the business in a way that we were reliant on that capital to keep going. We were losing money. And so that really informed a lot of how I approached my future start ups. And one it really made me focus on the question you asked earlier about. How do you get product market fit fast without taking a lot of risk of money to How do you make your business as profitable as possible as soon as possible? Eso my my last company stands. Our first year we did a $1,000,000 in sales are second year. We did six million Our third year we did 22 million and over a $1,000,000 of EBITA. So by the third year, we were making money and we were no longer reliant on any outside capital. It was at that point that I finally went and raised outside capital when we actually didn't need it. And we could use that capital exclusively for growth, opportunistically, strategically, for growth. And that's very different than how I might have done a start up earlier in my career where I spent every last penny and really optimized for growth only and no profit. And that made me over reliant on external capital. So when that capital wasn't available, the company went away. And so that's a big life lesson. Nothing is more painful than laying off 100 people going to each and every employee and saying we can no longer pay our payroll you need to find a new job. This was our failure. Is the leadership team right? So I would say that failed startup Waas taught me mawr about startups than the two successful startups I did after that. Uh, and I think those start ups were more successful because of all of the hard lessons that I learned during the failure. So I think most of the lessons around startups how to build a great team, how to go to market, how to optimize your capital there. Now, with the Internet, you know you can go to the University of YouTube and learn everything you need to know about how to optimize a startup. There's so much written and spoken around optimizing startups, there's not much more to talk about other than when you're actually living it. You know, those lessons are really personal, emotional and difficult

What starting job (after internship) would you recommend to students who hope to grow professionally like you? What other parting advice, dos, and don'ts would you give?

Summarized By: Jeff Musk on Wed Jul 29 2020
is that entrepreneurship? It is a special special thing. So first, being in a country that allows you to start businesses and chase a dream, um, is really important. And so having an environment where you can find other co founders where you can get to customers where you can raise capital is important. And so how do you prepare yourself to be an entrepreneur? You know, how do you prepare yourself, Teoh? Start a company and one way might be toe work in another start up where you can observe a lot of the lessons and sort of learned them vicariously. So when you do it on your own, you're ready. So I think operational experience is really valuable. If someone wanted to get into the business off starting a company or venture capital, which is really financing startup companies, then I would probably discourage them from the traditional big business careers. I don't think working in a small silo in a big, big business is going to give you the kind of experience they don't prepare you for a start up, so I would encourage you to be a part of a start up and to do anything and everything that that started needed to make yourself valuable. And what you'll find is that all of those lessons will come back and help you when you start your own company. Getting a job in the venture capital business is very complicated because there's only about 13,000 people that work in the entire industry. And so they're just not that many jobs available. And every person graduating from an MBA program for some reason wants to work in private equity or venture capital or some form of that. And and I think, um, I think that education is not necessarily the best preparation, uh, to work in a start up. Um, there's kind of no substitute for just doing it. So I think if someone said, Look, I would like to be an entrepreneur or I would like to be a venture capitalist I would say work in a high growth, start up environment with other experience, people that you can learn from and really optimize around a big growing market and a team that will be supportive of you and that will probably give you the kinds of lessons you need to do your next start up or make you more valuable to a venture capital fund