0:00:00 - Alex
Oh, all right. Welcome to a very special episode of Experience Focus Leaders podcast. I am delighted to introduce you to Kevin Mahaffey. Kevin is a co-founder CTO, now on the board of Lookout, which is one of the cybersecurity leaders. He is also, very fortunately for us, an investor in Relate2. But, more importantly, he's an investor in over 100 seed and pre-seed companies, where 10 of them have become unicorns. Some of those names you may know, like Airtable, peopleai, and so welcome to the pot, Kevin.
0:00:48 - Kevin
Thanks for having me, alex, excited to be here.
0:00:51 - Alex
Great. Well, look, the audience wants to know about the story of Founding Lookout Because, particularly in your case, you started coding at age eight and you were what people would describe, or you describe yourself, as a hacker, and then you went on and built a unicorn in providing security, ultimately for the enterprises as well, and so that journey must be very interesting. So tell us about the Founding story behind it, and where did you take it.
0:01:25 - Kevin
Yeah, so it was a long time ago and myself, john and James, my two co-founders, we were all in school together. The computer meant the phone is no longer this thing that sits on an island. It is now, all of a sudden, part of the internet, and when things go on the internet, the one thing we knew is they tend to be hackable, and so, of course, we poked at it and found that there were some pretty nasty security, but also many other devices around the world, and we tried to get the manufacturer to use it.
0:03:01 - Alex
Sorry, I think I lost you there for a while. Apologies, kim. So let's. Where are you? I think I dropped off, at least on the Founding story, so I ask you the question and then let's just restart from there. Ok, sorry about that.
0:03:19 - Kevin
No worries. So we started the company a while back Myself, john and James, my co-founders we found a lot of mobile phones were just starting to connect computers. They had Bluetooth, and you have to understand now it seems pretty pedestrian that a phone and a computer can talk, but back then phones were these islands that were totally separate, and the thing we know is that as soon as things could talk to computers, they become hackable. And so we had one example of a phone we found was a Nokia 6310i black and white phone candy bar shaped, had snake, black and white screen. Many people had it, and we found like that and, honestly, many other phones from other manufacturers as well.
You could more or less fully take over the phone, read text messages, read someone's contact list, turn the phone into a bug, and we found lots of holes and we tried to get the manufacturers to fix them, and at that time the firmware update processes were so archaic you would have to bring your phone into a store and wait 30 minutes, so it was basically impossible to patch them and we thought that this was going to be a really big problem.
And so what we did is we wanted to raise awareness, and one of the things we did was go to the Oscars and hack the red carpet, so what? We put this device into a backpack. We stood across the street from the red carpet we were with ABC World News at the time and we basically scanned all the celebrities phones as they went into the Oscars and showed all the data we hypothetically could take. We, notably, didn't actually steal any data, because violating federal law on national television is not a good look, but we showed what we could do. And then in the lab, here's what. If we had pressed this button right here, here's what would have happened and like, take all the text messages and this is like how hackers do real growth hacking, because normally growth hacking is done by non-hackers.
You guys really show the art of the possible, but we didn't have a product back then and it was really only once we saw the response and how, like you know, it's obvious now, but it wasn't obvious then that, as people were using smartphones and relying on phones mobile phones more and more that this is like a catch your hip. There was even a Supreme Court case that I'm paraphrasing here was like if a hypothetical Martian came to earth, they would believe that smartphones were an appendage of people's bodies, given how frequently they use them, and I think that's right. And so we realized that, wow, this is a giant problem, probably not going to go away anytime soon, and if we don't do it, I don't know who will.
So, you know what? Let's start a company to fix the problem. And you know, I think that's you know the purest form of founding a company is taking a giant problem and saying let's go fix it, as opposed to saying, hey, how do we make a bunch of money, which oftentimes leads you to things you're either, as an entrepreneur, not that passionate about, or that you're one of many people doing the exact same thing. Because, honestly, as you all know, you know, running a startup is getting punched in the face every day. It's really hard. First everyone thinks you're stupid, then they try to kill you, right. And then maybe, like 10 years later, they might think you're successful, right.
0:06:30 - Alex
It's not fun.
0:06:32 - Kevin
And yeah, and actually one entrepreneur is coming.
0:06:35 - Alex
Well, it may not be fun, but it sounds like you know to me. I don't know your experience. You obviously meet with more entrepreneurs, the ones that make the journey fun, right? Those are the ones that have extra motivation to go on and accept the punches. You know or you know that's part of the game.
0:06:57 - Kevin
Yeah, I think that's exactly right. You know, if you enjoy the journey, then you'll enjoy it, because the outcome is very long distance away. You're right there. So when we started the company, our archetypes for a good security company at the time were Semantic and McAfee, which had joy of their revenue come in B2B and, you know, some of the revenue come from consumer. You know the Norton, McAfee antiviruses of the world and at the time there weren't that many business users of smartphones other than Blackberry, which was a kind of a separate ecosystem.
So we decided to build a consumer product to start and we set out and started understanding what problem people had on their smartphones and we solved them. This is everything from losing your phone, losing data. People didn't want malware or getting hacked. We built a product that more or less sanded off all the rough edges and you know, the key thing that we learned then is maniacal attention to cohort metrics.
We were really fortunate that we had several mentors Kevin Hart, sean Ellis, who you know, both people who kind of Early on the what I would call modern consumer product development world. The Sean Ellis is kind of notable for originating growth hacking and what many people now know is the product market fit metric. How disappointing would you be if you no longer use this product? And then Kevin Hart's you know, multi-time founder, you know would then was running event bright with Julia Hart's, was also an incredible thinker and we were just really fortunate as, like really young entrepreneurs, to get you know, to work with folks who were at the top of their game and it effectively. Had we not add that like very quantitative approach to iterative product development, we would have died and in very specifically, we looked at cohort retention and this is so-called product market fit metric. How disappointing would you be and figured out what all the things that were standing in the way of a Great experience and then sending them off right.
0:09:03 - Alex
There's no way we would have shipped a product from day one and, just like you know, Got it right, got it right, and so the the end, the end customer that you were optimizing for experience Was that the at the time was still the consumer that had a smartphone at the time, or semi-smart, pretty dumb phones at the time, right, okay?
0:09:23 - Kevin
No, it was a Windows mobile smartphone. And then and bring came out and it became the main focus of the business.
0:09:29 - Alex
And Android was the game changer for you guys as it started started taking off, was that was sort of the initial wedge.
0:09:38 - Kevin
That. That's exactly right. We were kind of bopping around on Windows mobile, and even though we were one of the larger products on Windows mobile, there was no app store. It was very hard to download, not that many devices in the field.
0:09:49 - Alex
When Android came out, it was completely game-changing, and so when you go back and you kind of say we were focused on the experience right and for the user, what? How do you define that outside of that kind of the metric, the end metric of like, okay, you know, I don't need the solution, I need the solution right. What were the sub components of that? Because people, you know we are obviously running the, the podcast is an experience focus, right, but but I think there's many elements to it and what did you find to be the leading indicators of what that meant?
0:10:24 - Kevin
So a couple things. So I tend to look at experience in multiple dimensions. You know, one would be rational or utilitarian, like what does it actually do. The other is emotional or aesthetic right, you know how does it feel and and I think you have to manage both of them in like complex customer customer environment. So, for example, one of the challenges we had early on was this question of is it doing anything Right?
So people installed the app and they're like well, it's kind of like, says everything's okay, like, but is it working Right? And do you ever remember what's what's the shampoo is like? You know it works because it's a very complex environment. Who is like you know it works because it tingles. That that was the phrase we used in a lot of our design meetings early on is like well, how does it tingle Right If you just have a screen that says it's green and everything's working? So we did so. We added this little chart that would show all of the events were analyzed and all the network packets, all the system events who were looking for for malicious things going on, and that actually increased retention. Right, it's basically had zero.
0:11:30 - Alex
You needed to remind people that you guys were doing all that work behind the scenes, made them feel safe, protected in control of their device, of their life. And the reminder was the key because you didn't need to do it. You didn't need to do it.
0:11:47 - Kevin
And that actually hurt performance, right, because when you open it up it actually used battery life.
So on a rational basis it was strictly speaking negative, Right, but on an emotional basis, the question is is it working? Am I protected? Actually helped? And of course, most security companies at the time had the hypothesis of you need to scare people, so their logos were red and orange and yellow and you would always be this alert and I'm sure you remember this back in like the windows early days of antivirus. You get this really scary alert of like our heuristic detection engine found something different way. A heuristic just means hey, we don't actually know if it's bad. It means we're kind of guessing based on some other things. So it's like, first of all, they're using scary technical terms. There's big red X is everywhere and that's how they scared you into believe that it's working and that was just so antithetical to how we thought it should work. So our logo was green in large friendly letters. At the top right of the screen was where the words everything is okay and we showed. Here's what we're monitoring and the graph color is also green.
Everything's good. We're checking it out. That's smart. The right part is that we want people to believe and understand that they're safe, not to scare them into like buying something because they're afraid and because you know, I would say almost all product design is really just. How do you understand, like psychology and our belief at the time and I think it's played out is people actually trust you more over the time and are willing to pay you more when they trust you, versus people when they're afraid will do almost anything to not be afraid, but they don't trust you anymore. So that's not a good way to build a long term experience. Right, and you see this, you know, in security marketing. Right, if you scare someone, like you know insurance companies or travel insurance sometimes has the same sort of property, you know your trip's not protected, right?
0:13:30 - Alex
And you can get someone to translate once.
0:13:31 - Kevin
but if you're trying to build a really long term customer relationship, it's a good way to do that.
0:13:35 - Alex
You're in general in life and it sounds like in customer work, you want to build a game of multiple interactions, right, and so I think that's what you're describing. Then you want to build these habits and you brought up the shampoo. And I'm thinking of another psychology pattern where, when, when people are designing the tooth toothpaste right, they're giving you a sense, you know, not just for cleaning the teeth, but like the sense of feeling fresh, a little freshness and flavor, right, and the mint flavor, which indicates that something is working and it gives you something distinct as a pleasure, and it was absolutely unnecessary for the purposes of actually protecting your teeth, but it does the sort of psychological repeat sensation, right. So I think you guys are very sophisticated, you at the level of CPG and then, and then, if I understand the story correctly, eventually monetization moved you in the enterprise for the solution. So guide us a little bit, colleague. Why people so brilliant at getting the, the consumers, to love? You know the offering. Why did you decide to move the business in the enterprise?
0:14:47 - Kevin
Yeah, so we always knew that what we were doing was important for enterprises and I would also say mid market and small businesses as well like protecting the data on or accessible to your device. As more devices access cloud services, you need to do that. So the question is when and how? Early on, you know like most businesses just didn't allow that much access to data from their mobile device, just like email only. So consumer was really the only market that people really really cared.
Over time we saw as more enterprises did real computing access to all of their sensitive crown jewels from their mobile device. Did the security requirements become stronger and we started getting pulled. You see, you know enterprises saying, hey, let's, you know, can we, can we get like a multiple, multiple, multiple person license for look out in the enterprise? And then questions like, hey, we're really worried about data leaking off of our device and you know it might be a totally reasonable file sharing product, but if enterprise data is going from our enterprise data store into your personal account, that's actually a really big deal, you know, particularly if it's cross border or there's sensitive information and healthcare, finance or otherwise, how do we, how do we manage all that? So you have all these other business only use cases and that really started like about six or seven years ago, and that's where we're getting pulled into that direction, and so we really had multiple polarities of the business.
And then I would say, the other thing that started to happen is it became less about simply defending the device but more about defending the enterprise, the data, the applications that are accessible via device.
And we you know, if you look at a lot of our focus today at lookout it's, you know, of course we we stop fishing and malicious websites and data leakage and bad apps, but also it's how do we ensure that, anytime something touches corporate data, that it's up to date, it's compliant, it has the right security controls? And that's where, actually, where a lot of our movies towards like cloud security, and then we've a towards like Mac and Windows, laptops and tablets, and so that's where we're going to go, because you want to have a unified security posture across all of your devices. And so if you would have asked me back then, did I think enterprise security across all devices would be where we go? That maybe, but you know it, just as we follow the needs of our customers and just continually try to invest ahead and not just sell a product but actually solve a problem.
0:17:23 - Alex
So your transition, right, like you start your CTO of this of the business, right?
So you're kind of hacker stacker, you know, so to speak, right, or the good, the good side of it, obviously. And then your, you know when, when I interact with you, you know the feedback that we get from your other fans. Like you're, you know, very non stereotypical engineer, very empathetic, very patient with people way smarter than yourself, like like me, for example, right, like you know, basically, like, really, are you very polished as an executive in this sort of environment? And now, obviously, you're investing in startups and you know, helping them move across different, different businesses, business direction. Some of them you know very well, some of them are relatively new areas for you.
So how do you could have maintained this humility but grow yourself like whether it was was look out, you know, in making that kind of transition from a small business to to kind of a business that serves the enterprises, and then the transition into the VC world, where you know you're you're not coming across as somebody who's like, okay, I'm just a, you know, super technical person and I don't care how. You know, how people experience me, I have the right answers, right, which is sort of the stereotype, perhaps of somebody you know who comes from, from your from from from the sophisticated technical background, like you do.
0:18:57 - Kevin
You know, you should have met me my 20s and I say that in jest, but you know I would say, like everyone, you have an arc Right and and I would say is probably a little bit more stereotypical, straight ahead, you know aggressive, you know personality in early days and I would say is I'm very grateful for some of the folks that really look out and you know around, look out and personal mentors that you know that helped me, you know develop, I would say as a as a kind of fully rounded human being, and thank you for those who were very patient with me when I was, I was maybe a little bit less less, less polished.
I would also say that if you think about the career arc of engineers and you talk to like really experienced vps of engineering and CTO is and I've been fortunate to work with several of them like on that, who is a CTO for or, sorry, vp of engineering, look up for a long time. And if you think about the really senior engineers, the development areas are on human interaction, soft skills, because there's a limit to just simply knowing technology deeper. It is, of course, a necessary but not sufficient, and if you think about technology extremely well, you can be extremely effective, but if you can also interact with others and teach, you know folks that are, that are less experienced and more junior folks and have an impact beyond yourself, and that was the thing that I really learned. There's limit how much I can do personally.
0:20:23 - Alex
And.
0:20:24 - Kevin
I would say, as I'm still kind of on, I would say, on the journey on all fronts, both the interpersonal and the intellectual side, to be more effective. So definitely with some combination of self reflection and hard feedback. And you know I spent a lot of time reading about human psychology and why. It's actually kind of funny, I joke, it's like I understand humans and software mode.
0:20:51 - Alex
So you, really you use your analytical skills to understand.
0:20:55 - Kevin
Yeah, yeah, it makes sense Right. If you, if you take a broad enough view and understand here's why people act the way they do in our evolutionary context and you understand the cognitive bias we have, that actually make a lot of sense. I think cognitive bias gets a lot of bad gap because it can lead you astray, but in many ways it actually is optimal. Evolution is like a lot of optimization, pressure, getting us there and understanding why that's okay and that we are emotional creatures and that is okay. And you have to meet people where they are. You know life's hard and and when you, when you kind of add that to technical skills, I think you can get technical leaders that are extremely effective outside of just technology. And you know I'm also an investor in many venture funds of people I deeply respect and and kind of have that you know rational and emotional sides to them, because I think you have to be if you want to be effective in society.
0:21:53 - Alex
So let's talk about your investment transition, right Like you don't toot your horn on Twitter that much and you're not like hyperactive in the forums, but when you speak to insiders and when insiders do the survey of like who are the most influential early stage investors, you consistently come up on top 10 list of those folks, and your track record across multiple funds now with 10 unicorns is remarkable. So tell us about this transition and what can prompted you to start investing and where do you see the recipe that's driving some of the success for you personally, especially since you're not out there self-promoting at all and I was just looking up like there's not a ton of podcast interviews of you, so I'm very delighted that you decided to do it with us.
0:22:51 - Kevin
Well, I mean, I think, first of all, several things. I've just been really fortunate to work with strong entrepreneurs and when I moved to San Francisco in was it 2009? It was just a very formative time and the new platform shifts was motivated people and there's a lot of things in the ether there that I can trace a lot of strong investments to friends or other people who were just in the ecosystem at that time and that are now running large companies or working at companies or investing. And I do think there is something to be said about deal flow being a causal factor. Could it investment success? And I'm fortunate that I would say I got lucky to some extent. I mean there's always some combination of like luck, hard work and preparation for opportunity, and teasing them apart is impossible unless you can like split the timeline, but let's just call it luck for now.
0:23:52 - Alex
As I mentioned at the beginning introduction, you're very humble, so you're invalidating that. But yes, let's say it's luck.
0:24:01 - Kevin
Well, I also think, like believing anything other than you can make a mistake and blow yourself up is actually unhelpful. So, regardless of whether the truth is like, it's a helpful belief that, hey, everything is luck and you have to work really hard Sorry, all right, because I think it saves you from like believing you're on bullshit or thinking you're good or less than your laurels, or pick your metaphor there. And the reason I honestly started investing early was I mentioned some of those people who were formative at Lookout and, frankly, I was just really grateful.
And the only reason like the Silicon Valley success story is what it is is because when people see success, they give back to the next generation, and so for me, as a recipient of a tremendous amount of like unearned help from people I like, well, I have to do this to next generation because otherwise the story ends. So in 2013, like many, many people didn't have that much money, but had a little bit of money. So I started investing in other startups and I didn't intend to start a fund, I just thought it would be kind of fun doing my duty. And then over the next couple of years, I was like wow, I actually really like this.
This is fun and, I would say, very fortunate to have discovered what makes me happy, and I think happiness, if you look at that like more from like what actually makes people happy. It's not usually if you ask them to say what makes you happy and they say this it's what on a Tuesday morning and you do it. That journey that you mentioned earlier actually delights you, and I was fortunate to find early that two things make me happy. I'm an engineer and I like building things. I like my hands dirty If I'm not involved in something, I go crazy At the same time, though, if I'm only doing one thing like my intellectual curiosity, it feels like it's sitting on the bench, and I also go crazy.
So, I learned that I need to do some level of building and some level of helping people build, and if I do those two things in my life I am happy as a clam. And so that was kind of the genesis of turning from a little bit of angel investing to like, hey, let me actually start a fund while still working at Lookout. And that was the genesis of SNR1. And most people don't know the fun name because I've purposefully kept a low profile, because I think the thing I've learned in venture is that there's a thousand ways to do it right and there's no one right answer or wrong answer. The question is what's authentic to you that you can do for multiple decades? Because the thing about venture is, I think it does take decades both to see returns but also to like, get good. And so if it's not something, if it's a, hey, I want to get rich and I want to invest in some unicorn. Like it's probably not going to happen.
Maybe it will, but like most likely like a decade for actually to impact you. And so if it's not something you really enjoy and like really enjoy helping founders and like really digging into tough, meaty problems, I don't think you're going to be good at it. And for me I'm not someone who really enjoys having my name out there all the time and whatnot. I really enjoy spending time with founders working through problems and I would say, if you look at where investing people spend their time, it's everything from like how do you source, how do you evaluate, how do you win, how do you help? And then how do you run your firm and how do you raise money Like I like helping and evaluating right.
So I basically have designed my life so I've almost nothing other than those two things. This is how I spend my time, and so you know what I think happens in the venture ecosystem and as a, if you just are a good person and help, it puts you up in like the 95th percentile of investors, because most people just don't help, like they don't respond to emails. And if you just show up and help and are like ethical and moral for like a decade, deal flow takes care of itself and I guess I'm fortunate that you know that, you know to be in an ecosystem where if you just follow that, then you know good things will eventually come.
0:27:58 - Alex
I can vouch for the moment SVB disaster happened. You were one of the first emails that I received asking, hey, how can it help, how are you doing? And that was actually like very pleasant right, like to just get that.
0:28:12 - Kevin
You know, caring was out you know, was offered to help. I still remember that I think it aged like a decade, those few days. But it's, you know, if I can send a message to every investor on the planet, it's just show up and help, right, you know? And it's not necessarily like forcing help, but just making sure you actually respond to investor updates. There's nothing worse than shouting in the ether and having no one respond.
0:28:38 - Alex
I could feel. I feel very much that authenticity that you're describing in every interaction that we had. So congratulations on finding something that makes you be yourself and enjoy what you're doing, because then you know what else is there to do. You know, like, how would you improve in something that you hate doing. So it sounds like you've engineered your investment in the way that maximizes your talents and what you really you know. That's the goal. I mean you know it's not worth it. You want to live for right.
0:29:13 - Kevin
Yeah, Scoot the floors, but you know I feel fortunate. So help.
0:29:19 - Alex
So you know, obviously then you get a lot of inbound, but you still made a few pretty remarkable bets, like one of the companies we love that you invested in is Airtable, we embedded in Relay2, and so we could have loved seeing the skin of the format inside us. So tell us, like how did you know, as that example, or some other, like how did you know that yes, I wanna be in this right Still pretty early stages that you invest in typically, so there's a lot of uncertainties. What are your characteristics, to use a big word, in helping you make those decisions?
0:30:01 - Kevin
Yeah. So I think several things. At the very earliest stages, you are underwriting, not analyzing, and I use those words very precisely. Analyzing is looking at past metrics and trying to define what something is worse. This is what public market investors do. Underwriting this is what insurance people do. They're trying to understand the possibility of future events transpiring.
And at early stages, like there's no revenue to analyze. You're trying to understand where is risk and I think the best venture capital investments are those where you have a accurate understanding of risk, particularly where those others have an inaccurate understanding of risk. And as the company succeeds and shows where the real risk is and isn't, then you're rewarded, based on the valuation of the company or the, eventually, the liquidity of the company being reflected there. And I think that's a very exact circumstance there, and so what are the factors you have to underwrite?
Certainly a human or humans because the early team, everyone's again, like we talked about earlier. People are gonna tell you you're an idiot, they're gonna hate you. It's really really, really, really, really, really, really, really hard. Is the team gonna stick through it? Is there some reason that they're gonna run through walls for this company or are they just trying to get rich quick? The latter almost never leads to success. Second is are they doing something that's going to be important to their customers? This could be consumers.
This could be businesses but it's not important why the matter? Third, are there a lot of them? This is the so-called market size and notably, I like thinking about the individual customer, how much it's worth to them and how many of them are there, versus going to some analysts firm and asking them to analyze it, because I found that bottom-up psychology is a much more reliable way of figuring out, when markets are changing or technology is changing, what people will believe, because I would say, looking at top-down caggers of markets, that's always gonna be a trailing indicator. And venture capital we deal with underwriting leading things, not analyzing trailing things. And then, to the extent, is there evidence that the product they're building has product market fit?
And we're gonna use that precisely meaning do those customers actually like the product as it is today? And it's okay. Oftentimes we're investing in pre-product it's a hypothesis and of course the valuation at that time reflects the risk of developing product market fit. Then a company moves towards hey, we've achieved product market fit. We have people or companies who like what we're doing, they're willing to pay us. Now the question is, can we reach more of them? And that's the quest for repeatability. And after you do that you just say, hey, yep, we can get people who reliably try it, like it, use it.
Then this quest of scalability Can we raise money, deploy it in growth efficiently and then effectively have this model where we put in a dollar and $3 comes out Right and that's a scalable company. And once you achieve that, you're usually ready for to go public. But like most of the time, at least for me, I deal with this pre-product market fit or product market fit and so directly answer your question. With respect to Airtable, you had the team HowEight and team who super smart in it for the right reasons and if you look back at some of the early things they wrote, the reason for existence of Airtable was to empower non-software engineers to have the productivity and the power that software engineers have achieved. So it's a beautiful vision right.
It is allowing everyone, not just highly educated engineers, to participate in the efficiency gains and truly the overall wealth creation of software. And it's like a very radical vision, right, and to allow that to be accessed by everybody. And then, in doing so, they had a very particular vision of merging the concept of a spreadsheet in a database where spreadsheets are unstructured, so one sheet that is orders, and other ones customers, and they're not really linked together and you can screw it up all the time. Database, highly structured but also very hard to use and it's very hard to change and whatnot. And so by making the ease of use of a spreadsheet with the relational power of a database, they produce something that ordinary people can model very complex workflows and indeed my entire investment firm effectively runs on Airtable. I know many companies like really large scale who run on Airtable. Right, it's pretty incredible. And back then a lot of people said, oh, you're never gonna beat Excel right, and then people didn't invent it, Whereas if you actually live, hey, this solves the problem.
You have a team that's willing to do it and if they do it, the so-called what could go right, this is gonna run.
0:35:05 - Alex
This could be huge. This is all right.
0:35:07 - Kevin
Yeah, you could try to do it right, and that was the hypothesis.
0:35:11 - Alex
So now the AI is the new kind of no code right Like in sort of like as the kind of the buzzword of the day. You've been investing for some time. You've had, you know, the waves of AI. You know before, before the generative AI of now, like what's your take and how do you help? You know the rest of the world kind of interpret the future, and you know, right now you're making these bets in an area that's a little bit hyped up. So how do you just discern the real deal from the hoopla of the moment?
0:35:50 - Kevin
Yeah, so I mean I like thinking in principles, because the principles don't change. At the end of the day, a business has to delight their customers and, you know, usually do so in a way that the customers feels like it's a fair shake for how much they're paying for the product and the company can't charge more for the product than it costs to make it, and that's their profit and that's good business.
So questions how does AI change companies? My view is that AI allows companies to either serve their customers better by allowing new features previously unthought of, or increase their margins with the same service, or reduce their costs, preserving their margins. Right, and there's different reasons why companies might want to do one or the other, but at the end of the day, it's all business principles, like it just comes back.
0:36:42 - Alex
It's fundamentals, yeah.
0:36:43 - Kevin
Yeah, this time is different as BS. So now the question is okay, well, how does a particular company do that? And that's like that's a very hard question. But I think that you know, anytime you have a workflow, that you can deliver a better customer experience, people are usually either gonna pay more or you're going to be able to, like, take a market share from your competitors. If you do it and they don't, or if you can do more because, oh, let's just say, hey, you have an operations team and you know they needed to put in like one calorie of work per unit of customer value. All of a sudden you can even that same one calorie of work and deliver three units of customer value.
So in actually in many cases, I think people you know will say oh well, ai will eliminate jobs. I think the opposite might happen is that AI means you have the same number of jobs but people just have a lot more prosperity, right, and I think that's you know kind of. If you look at the history of technology, it's not like in the technology in the last several hundred years that we have massive unemployment. We don't. In fact, we already work more now than we did the hundred years ago and a lot of industries, but our quality of living is just that much better and we can, and if you. One of my favorite measurements is the so-called time prices, which you measure how many minutes of work does it take to get a pound of ham or a pound?
of copper or a square foot of an apartment, and if you look at like almost every one of these measures, we are more prosperous in all income levels across basically everywhere in the world. You know it takes less minutes to get a pound of ham or a thing of broccoli or you know, or some copper than it did 20 years ago, 30 years ago, 50 years ago, and I feel like AI, if we just really zoom out, we'll just continue this trend of increased human prosperity.
0:38:30 - Alex
Super interesting, kevin. I know I'm conscious of time, but I think one of the things that comes out is you're very positive and a lot of people, even though we're living in these best of times, tend to be down Like, oh my God, there's a recession here, there's this here. So what inspires you? Where do you look for guidance? Whether it's, you know, a leader that you follow or one of your books go-to books to put things in perspective for yourself. You know what keeps you aligned and grounded the way you are. You know here, in this conversation even.
0:39:06 - Kevin
Yeah, it's a good question. You know there's all sorts of material Founders podcast is quite good, works in progress you know it's formalized. The study of progress, I think, is quite good and really I think, understanding what does the evidence tell us about how economies work and how technology works versus what are our biases?
0:39:33 - Alex
And because I think like back to when we started off.
0:39:36 - Kevin
There's a rational and emotional component to everything, and change is scary, so let's not dismiss the emotional scariness of change, but at the same time let's make sure we understand rationally how change tends to have to have to aspire. And so, for example, one thing we also know is when you have periods of technological change, you do have a lot of change, change you do have a lot of disruption. There is when you have jobs eliminated or, particularly in the factory towns in the US, you have higher rates of substance abuse, mortality really bad stuff, and we have to take that seriously. At the same time, you don't want to give up the benefits of change, because there's an argument that billions of lives have been saved because we have enough calories on the planet. Now, was it painful to make those changes and were there economic structures disrupted? Absolutely, but if you think about it, would you save billions of lives or preserve an economic structure? We should probably save billions of lives.
0:40:30 - Alex
Save lives, create more Beethoven's and Einstein's Absolutely.
0:40:38 - Kevin
We should at least. Again, my view is, if you look in a lot of that ecosystem of the folks I mentioned, there's a lot of both historical context and perspective around. How do we respect and understand the emotional challenge and indeed some of the economic challenges that will hit very particular people whose lives or economic structures are disrupted by technological change, and then figure out what we can do both as a society, for companies, for employers, to help that transition, be as graceful as possible At the same time not losing the forest through the trees and saying, hey, human prosperity is a very important thing that we need to take seriously, and making sure that we don't hamstring prosperity for billions of people because we are afraid of dealing with a short-term, tough consequence. I do believe you can actually have your cake and eat it too, where you can help folks doing these transitions but while at the same time having the benefit of prosperity. Of course, that's a much longer conversation for another day.
0:41:41 - Alex
Well, I hope there's going to be another day very soon. Kevin, thank you so much for joining us. This has been really fascinating, and I feel one of the reasons why I wanted to start the podcast is to share with the world some of the amazing conversations that I've had on my entrepreneurial journey, and chatting with you is always a pleasure. I've learned a lot from this, and I hope our audience has benefited from me as well. Kevin, what's the best way to find you and where?
0:42:12 - Kevin
I would say the honest answer is nowhere.
0:42:15 - Alex
Nowhere, you're not to be found, I understand, except for you can listen to you here. Well, kevin, thank you so much for joining.
0:42:24 - Kevin
Take care.
0:42:25 - Alex
Bye-bye.