tag:blogger.com,1999:blog-75337272645071285602024-03-09T02:18:36.431-08:00Lessons Learnedby Eric RiesErichttp://www.blogger.com/profile/12249063135381216090noreply@blogger.comBlogger390110tag:blogger.com,1999:blog-7533727264507128560.post-31520727952917560562021-10-18T11:55:00.001-07:002021-10-18T11:57:03.486-07:00Honesty and Optimism in the New York Times<p>I recently spoke with <a href="https://www.nytimes.com/2021/10/02/business/dealbook/ozy-eric-ries.html?referringSource=articleShare" target="_blank">the<i> New York Times</i></a> about an issue that's both very much in the news and on my mind: building a company honestly. </p><p>The temptation to "fake it 'til you make it" in
business is real. For some, it's overpowering. The pressures to succeed
are immense and come from both within and without. It should go without saying--though apparently not since so
many people are now having to say it--that it's our solemn duty as
entrepreneurs and investors to resist the temptation to make things look
better than they actually are for the sake of buying more time and
raising more cash. <br /></p><p>As I told the <i>Times</i>, "You have to come clean about what you’re doing and why. Otherwise, your customers might come to rely on something you said or a promise that you can’t deliver that would harm them. And that’s not only morally wrong, it’s bad business to build that reputation."</p><p>It's easy to blame entrepreneurs for giving in to the lure of wealth by way of dishonesty. But we also need to look at the systems that induce this behavior. They're really not very different from the incentives that public companies face. To pick just one fairly recent example, <a href="https://www.cnbc.com/2019/11/03/under-armour-is-the-subject-of-a-federal-accounting-probe-wsj-reports.html" target="_blank">Under Armour</a> inflated their numbers one quarter by borrowing from the next quarter. Then the next quarter they had to borrow a little more from the quarter after that. One white lie led to another and eventually it became a massive scandal. What often starts small with a decision that seems like a one-off can snowball faster than
anyone might think possible into ruin. We need to fix the systems companies are operating within in order to make it not just easier but routine to start off with integrity and then stay on that path long-term. </p><p>If you'd like to read the whole interview, <a href="https://www.nytimes.com/2021/10/02/business/dealbook/ozy-eric-ries.html?referringSource=articleShare" target="_blank">you can find it here</a>. <br /></p><p><br /></p><p><br /></p><p><br /></p><p dir="ltr" id="docs-internal-guid-08f91cd0-7fff-8334-cc36-ba7d3ab9b0db" style="line-height: 1.38; margin-bottom: 0pt; margin-top: 0pt;"><a href="https://www.nytimes.com/2021/10/02/business/dealbook/ozy-eric-ries.html?referringSource=articleShare" style="text-decoration: none;"><span style="-webkit-text-decoration-skip: none; background-color: transparent; color: #1155cc; font-family: Arial; font-size: 11pt; font-style: normal; font-variant: normal; font-weight: 400; text-decoration-skip-ink: none; text-decoration: underline; vertical-align: baseline; white-space: pre;"><br /></span></a></p><br /><br />Startup Lessons Learnedhttp://www.blogger.com/profile/16441445454879378457noreply@blogger.comtag:blogger.com,1999:blog-7533727264507128560.post-31496981785964525392021-08-26T09:00:00.001-07:002021-08-26T09:04:51.740-07:00A letter to our future<br /><p><br /> </p><div class="separator" style="clear: both; text-align: center;"><a href="https://www.ltse.com/blog/letter-to-future?utm_source=eric&utm_medium=email&utm_campaign=twilioasana_listing_launch+" style="margin-left: 1em; margin-right: 1em;" target="_blank"><img border="0" data-original-height="1332" data-original-width="1414" height="376" src="https://1.bp.blogspot.com/-zNamSsHLpFY/YR_9P7tFwCI/AAAAAAAACqc/Y_RfHG9hSSw31hYC52pkasqx0GRxkRh5ACLcBGAsYHQ/w400-h376/Screen%2BShot%2B2021-08-20%2Bat%2B10.54.32%2BAM.png" width="400" /></a></div><p></p><p><span face="Slack-Lato, appleLogo, sans-serif" style="-webkit-text-stroke-width: 0px; background-color: #f8f8f8; color: #1d1c1d; display: inline; float: none; font-size: 15px; font-style: normal; font-variant-caps: normal; font-variant-ligatures: common-ligatures; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: left; text-decoration-color: initial; text-decoration-style: initial; text-decoration-thickness: initial; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px;"> </span></p><p>Ten years ago, I first put forth the idea of a stock exchange that could help reimagine capitalism as a force that serves not just some of us, but all of us. A group of deeply committed people coalesced around my outlandish idea, and together we built the Long-Term Stock Exchange. <br /><br />Today, LTSE has its first two listings: Asana and Twilio. The chance to partner with these exemplary companies in our first foray into the markets is deeply meaningful not just for LTSE, but for the future they’re working to shape. I’m so grateful to every person who contributed their time, expertise, talent and good will to this achievement.<br /><br />I wrote the <a href="https://www.ltse.com/blog/letter-to-future?utm_source=eric&utm_medium=email&utm_campaign=twilioasana_listing_launch+" target="_blank">Letter to Our Future</a> above to commemorate this bold step forward. It’s a marker and also a pledge. The time to start building a better future is now. Let’s get to work.<br /><br /></p><br /><p><span face="Slack-Lato, appleLogo, sans-serif" style="-webkit-text-stroke-width: 0px; background-color: #f8f8f8; color: #1d1c1d; display: inline; float: none; font-size: 15px; font-style: normal; font-variant-caps: normal; font-variant-ligatures: common-ligatures; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: left; text-decoration-color: initial; text-decoration-style: initial; text-decoration-thickness: initial; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px;"></span></p>Startup Lessons Learnedhttp://www.blogger.com/profile/16441445454879378457noreply@blogger.comtag:blogger.com,1999:blog-7533727264507128560.post-52182369403282158932021-05-25T08:22:00.014-07:002021-05-27T11:27:13.458-07:00Out of the Crisis #27: Eren Bali of Carbon Health on public health, COVID vaccinations, and working as a unified society to solve problems<p><a href="https://www.linkedin.com/in/erenbali/">Eren Bali</a> arrived in Silicon Valley from Turkey in 2010 hoping to relaunch <a href="https://www.udemy.com/">Udemy</a>, his online education company. He spent a few years working at the tech startup <a href="https://speeddate.dating/">SpeedDate</a> before following through with his original plan, after which Udemy went on to be enormously successful. When his mother became ill and Eben spent some months accompanying her to doctors in order to get the right diagnosis and treatment, he had a realization that led him to his true mission. <br /> <br />"I just directly observed that the technology for doctors was really far from what they needed to operate at a high productivity level," he told me. "And that idea stuck in my head--that the largest, the most expensive resource of any country was one of the worst utilized." His first instinct was that "somebody" should rethink how a doctor operates, how they communicate with the patient, and basically how the whole concept of care delivery works. Then he realized that somebody was him.<br /> <br />Now, as CEO and founder of <a href="https://carbonhealth.com/">Carbon Health</a>, Eren is leading one of the country's fastest growing healthcare startups. It's mission is to provide really high quality healthcare to the entire population, with a special focus on underserved demographics. A provider of low-cost health clinics across the country, Carbon Health was also on the frontlines when the COVID pandemic hit--and even understood what was coming long before most people in the U.S. did. They pivoted to monitoring patients for COVID, then testing. Ultimately, <a href="https://www.businesswire.com/news/home/20210115005598/en/Carbon-Health-Launches-COVID-19-Vaccination-Platform-to-Accelerate-National-Rollout">the company partnered with the City of Los Angeles</a>, and as Eren recalls, "seven days after the original handshake and launch into a scheduling website, we helped launch Dodger Stadium, which was the single largest mass vaccination site in the country." From there, Carbon Health fully reinvented themselves as a full-stack public health company. <br /> <br />Eren and I talked about why, when so many companies shut down in the face of the crisis, his "decided to just go to the other direction." We also discussed what it was like to arrive in Silicon Valley, why a private startup ended up playing such a vital role in the vaccination rollout, and what the fact that it did says about the future of public health, public private-partnerships and the civic fabric that we all inhabit. We also discussed the role every citizen can play in fighting the pandemic "at a time when "more people are getting medical advice from Joe Rogan than Fauci." </p><p><br /></p><p>You can listen to our discussion on <a href="https://podcasts.apple.com/us/podcast/out-of-the-crisis/id1505392824" target="_blank">Apple</a>, <a href="https://podcasts.google.com/feed/aHR0cHM6Ly93d3cuYnJlYWtlci5hdWRpby9mZWVkcy8xMjg1NDEyLnJzcw/episode/aHR0cHM6Ly93d3cuYnJlYWtlci5hdWRpby9vdXQtb2YtdGhlLWNyaXNpcy9lLzg3NzkyOTA4?sa=X&ved=0CAUQkfYCahcKEwjQxtLYverwAhUAAAAAHQAAAAAQAQ">Google</a>, or wherever you like to get podcasts. <br />
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A full transcript is beneath the show resources below.</p><p><br /></p><h1 style="text-align: left;">Highlights from the show:</h1><p>Eren introduces himself and talks about his background (3:34)<br />Coming to Silicon Valley and Speed Date (5:08)<br />Eren's first impressions of Silicon Valley (7:17)<br />The differences between Silicon Valley and other places as he immersed himself in the culture (8:48)<br />Moments he felt he didn't fit in (10:53)<br />Eren's words of advice for Turkish listeners (12:01)<br />Entering the Silicon Valley state of mind (13:15)<br />Eren on using Lean Startup to launch Speed Date before Lean Startup was known (14:45)<br />Building Carbon Health and the Minimum Viable Product version (17:21) <br />Translating leadership from one context to another (19:04)<br />How Eren decided to pivot to healthcare (20:04)<br />The sketch he made in 2013 that led to Carbon Health (22:20)<br />How he decided he was the one to take on the problem (24:59)<br />Carbon Health's mission (26:25)<br />Carbon Health's position just before the pandemic hit (28:09)<br />Eren's mindset as he became aware that COVID was spreading but most of the US was not (31:15)<br />Some of the "crazy ideas" Eren came up with that ended up being implemented (34:51)<br />How Carbon Health became a critical part of the vaccine infrastructure and response (37:34)<br />Partnering with local government for a fast vaccine rollout (39:29)<br />Reconfiguring Carbon Health's platform for vaccine distribution (40:39)<br />What Eren thinks it will take to get to herd immunity (43:08)<br />How everybody can mobilize to help now (47:33)<br />Uniting to solve the problem (48:25)<br />On not leaving the job half-done (52:22)<br />Balancing Carbon Health's core business with its Covid response (54:35)<br />The future of public health in America (56:23)<br />Problems for founders to consider taking on (58:47)<br />The long-term impact of the pandemic (1:00:39) </p><p> </p><h1 style="text-align: left;">Show resources: </h1><div style="text-align: left;"><a href="https://www.udemy.com/">Udemy</a></div><div style="text-align: left;"><a href="https://carbonhealth.com/">Carbon Health </a></div><div style="text-align: left;"><a href="https://au.news.yahoo.com/carbon-health-launch-100-pop-130051676.html">"Carbon Health to launch 100 pop-up COVID testing clinics across the US</a>"<br /></div><div style="text-align: left;"><a href="https://finance.yahoo.com/news/carbon-health-launches-covid-19-021300134.html">"Carbon Health Launches COVID-19 Vaccination Platform to Accelerate National Rollout"</a></div><div style="text-align: left;"><a href="https://podcasts.google.com/feed/aHR0cHM6Ly93d3cuYnJlYWtlci5hdWRpby9mZWVkcy8xMjg1NDEyLnJzcw/episode/aHR0cHM6Ly93d3cuYnJlYWtlci5hdWRpby9vdXQtb2YtdGhlLWNyaXNpcy9lLzgyMTg2ODg2?sa=X&ved=0CAUQkfYCahcKEwi45fmWnOXwAhUAAAAAHQAAAAAQAQ">Ron Klain on Out of the Crisis</a> <br /></div><div style="text-align: left;"><a href="https://www.youtube.com/watch?v=ymgTj2z05-8">Sir Ian McKellen as Gandalf </a><br /></div><div style="text-align: left;"><a href="https://medium.com/@sohanmurthy/visualizing-americas-health-care-deserts-675f4502c4e1">Visualizing America's health care deserts</a><br /></div><h1 style="text-align: left;"><br /></h1><h1 style="text-align: left;">Transcript for Out of the Crisis #27, Eren Bali</h1><h1 style="text-align: left;"> </h1><div style="text-align: left;"><b>Eric Ries</b>: I'm Eric Ries. This is Out of The Crisis. It's been a long 18 months, hasn't it? And during that time we have seen it again and again: unlikely people thrust into the spotlight for their work fighting the pandemic, and even more, tirelessly working away out of the limelight. One such person is Eren Bali. However, if you went back in time and told Eren a few years ago that he would one day be at the center of one of the largest public health responses in history, I don't think he would have believed you. Eren came to the US from Turkey to work at a Silicon Valley tech startup, which is actually where I first met him a few years ago. But now as CEO and founder of Carbon Health, Eren is leading one of the fastest growing healthcare startups. <br /></div><div style="text-align: left;"><br />Carbon Health is a provider of low-cost health clinics across the country. As you'll hear, COVID arrived unexpectedly and directly on their doorstep. They had to decide whether and how to respond. What happened next was entirely unexpected, even by those of us who've admired Eren for a long time. Carbon Health is now running some of the largest vaccination sites in California, most famously at Dodger Stadium, in partnership with the City of Los Angeles. During the pandemic, Carbon Health fully reinvented themselves from an affordable care provider into a full-stack public health company. This raises the question: how did Eren go from building apps on top of Facebook to ensuring that hundreds of thousands of Americans got their vaccines? We've seen this story before, even on this podcast with stories like Curative. Why did a private company, a startup, wind up playing a vital role in the vaccination rollout? What was it about Carbon Health that made them ready and able to step into this vital civic responsibility? What can this tell us about the future of public health, about public private-partnerships and about the civic fabric that we all inhabit? <br /><br />In this conversation Eren and I talked about his journey from a small town in Turkey to founding the education startup Udemy, also quite successful, to Carbon Health and eventually Carbon Health's vaccination efforts. Eren spoke openly about his growth as a founder and leader, as well as gave candid advice for future founders. His number one takeaway is one we have heard again and again. Put the mission first, think long term, and everything else will fall into place. Here's my conversation with Eren Bali.<br /><br /><b>Eren Bali</b>: My name is Eren Bali. I'm the founder and CEO of Carbon Health. We are a technology enabled healthcare provider, and most recently we have been helping the vaccine rollout and we run some of the largest mass vaccination sites in the country, including Dodger Stadium in Los Angeles. Before Carbon Health, I was the founder and CEO of Udemy, which is now the largest online education platform in the world.<br /><br /><b>ER</b>: Eren, thank you so much for coming on. How have you been? How's your family? How's your team? How have you been weathering the storm?<br /><br /><b>EB</b>: I think I have been doing fine because of Carbon Health. We have been really the front lines of the pandemic. When you're very busy with something it's actually like, it helps you stay strong. I have three small toddlers. I mean, that’s a lot when working from home quite a bit.<br /><br /><b>ER</b>: I know the feeling. Share a little bit about your background. You've done some really, really interesting things in the tech industry, including going back to when we first met, but I also think it's not the usual path people would imagine to running a healthcare company. So, talk a little bit about your background. How did you first get into tech and come to Silicon valley? <br /><br /><b>EB</b>: If you go really back, I was born in a small village in South-east part of Turkey. That's the kind of lowest income part of the country, which had a lot of accessibility issues. So, I grew up where we had all the one teacher for the entire school, rotating between classes. Where healthcare education access was really limited. So, was the 80s, and I was able to break out of it because I was very interested in mathematics, and to everyone's surprise, ended up winning the silver medal in the International Math Olympiads, which was one of the first time somebody from the Eastern part of Turkey had really participated and won a medal.<br /><br />But the main reason this happened in my mind was that the access to internet really made a big change in my life, because even when you're in the place of lowest access to education having access to other people online, mathematic problems, it allowed me to self-study. This innovation would not be possible probably 10 years before. So, I studied computer science and mathematics in Turkey and then decided to start a platform for everyone to be able to teach online. But, I was really inspired with platforms like YouTube and Blogger, and I thought somebody should have, should do the same thing for online education, and started the company in Turkey first. That didn't work. I shut it down.<br /><br />We had to move to Silicon valley. So, it was a really long story. I guess it took three, four years to get Udemy off the ground. But yes, I migrated from Turkey to Silicon Valley in 2010 and started Udemy. But before that, actually, there was this a couple of years break where, when Udemy did not work in Turkey, I met this Silicon Valley entrepreneur who wanted to build online, like speed dating, a video-based speed dating application. So, we actually took the original live customer application, converting their live video dating application. So, that's how I came to Silicon Valley in the first place.<br /><br /><b>ER</b>: I remember Speed Date. That's one of the very, very early companies that I was talking to Lean Startup about. What was that, 2009, 2010?<br /><br /><b>EB</b>: Yeah. I think it was 2009 and 10.<br /><br /><b>ER</b>: Yeah. Wow. That was, that's a blast from the past. Say a little bit about what drove you to want to come to Silicon Valley in the first place.<br /><br /><b>EB</b>: Honestly, I wasn't even aware of Silicon Valley or this whole concept of startups and tech companies until 2005. I thought these were just websites built by some amateur hobbyists. So, I was really interested in programming, design development, but I didn't realize the kind of business aspect for a very, very long time. When we started at Udemy, in Turkey in 2006 and 2007, there was no funding available. Eventually I started working at nights as a contractor for Silicon Valley companies as a way to fund a project in Turkey. Then eventually, they asked me to come to Silicon Valley and maybe just work in person, and then while I was visiting Silicon Valley, I realized that there was this complete new world of technology companies. They are businesses. They're professional, and they do things differently. So, I got involved. I went back and forth and eventually I realized that to really build the vision we had for Udemy, we had to be in Silicon Valley.<br /><br /><b>ER</b>: What was it like the first time? I remember even just, I grew up in San Diego, so not nearly as far as Turkey and yet, even for me, the first time that I drove around Silicon Valley and saw the headquarters of all the companies that I had had all these relationships with as a customer, as a developer, it was a profound thing. What was it like for you?<br /><br /><b>EB</b>: It was a very interesting experience as in, it wasn't what I was thinking Silicon Valley is. I thought I would come and there would be just massive buildings, really like technology infrastructure and squeeze everybody. So, I was imagining it more like an Asian, Hong Kong type of city.<br /><br /><b>ER</b>: Almost like Blade Runner.<br /><br /><b>EB</b>: In my head I was like Silicon Valley, and I came in and it was a bunch of suburban houses.<br /><br /><b>ER</b>: Yeah. It's very boring.<br /><br /><b>EB</b>: It was a lot of boring, like visually, but I loved the Valley. I loved the fact that it wasn't intimidating. It was just a bunch of people, smart people, very welcoming, very open to people from other cultures. So, the surprise was how un-intimidating it was for a newcomer. But I think the, I just quickly adapted and I realized it wasn't just about writing software, things like customer service, marketing growth, those ideas were ... they were very refreshing, because those ideas are very unique to Silicon Valley, or back in the day, they were very unique to Silicon Valley.<br /><br /><b>ER</b>: How would you contrast the difference? I think one of the things that we, who are, you have the privilege of being here, in America, in California, in Silicon Valley. We don't even see and appreciate the water that we swim in, so sometimes it takes an outsider with an outsider's eyes to help us understand what is distinctive about it. So, what were those differences that caught your attention when you first immersed yourself in the ecosystem here?<br /><br /><b>EB</b>: I was really shocked at how collaborative the whole ecosystem was. I mean, I was observing our founder, Simon, he would ask for help and they would meet us and just give us all the information we needed. So, it was weird like, you could just literally ask help from anybody and they will try to help. And yeah, I think most other countries have more a cynical approach to businesses and every company is thinking of each other as a competitor. So, Silicon Valley just felt super open. It also made me think that there was opportunity for people, for newcomers to come in and be successful there. But then on the negative side, the whole world of raising money, investors, that part felt intimidating. So, there's definitely the feeling that you just, sometimes you didn't belong. Like when you, when essentially I interacted with money, then I felt a little more foreign. But, if you talk to the people in the ecosystem, starting companies that was very open.<br /><br /><b>ER</b>: That's really interesting. That is a common experience we hear from outsiders that there's only two cultures of Silicon Valley, and when we get into the funding and financing of companies, that that's really where the bias can come in. Was there a particular moment you remember, or a particular story of just feeling like you didn't belong, or someone treated you in a way that you look back now, you realize was about that difference?<br /><br /><b>EB</b>: I remember two things. One is, occasionally we would sit down at the table, like the small talk is the hardest thing for immigrants. So, you talk about American sports and American sports are also very different than the rest of the world's sports. Trying to adapt that to, that was always a tough challenge for me to just be a part of, trying to be a part of it. I also, I mean, I'm still a man and I just also understand if you don't even enjoy sports, like those small talk subjects were always like the most challenging. I would feel most stressed in the first couple minutes of discussion. So, and then the second thing is like, occasionally, a lot of people would assume I'm a technical, like CTO of a company. So, most people would make the assumption like that I'm not the CEO of the company, even after we started Udemy.<br /><br /><b>ER</b>: Yeah. I've heard that story from a lot of folks. I'm sorry. You know, we actually have a lot of listeners of this podcast in Turkey. It's actually consistently one of the top countries for reasons I don't totally understand, but I'm curious given that we have a lot of listeners from Turkey, if you have words of advice for them, or if there's anything you'd want them to know if there's folks listening right now, who hope to emulate your footsteps someday?<br /><br /><b>EB</b>: Yeah. I think most people from Turkey ask me whether they should move to Silicon Valley. Is this the requirement? My answer's really it isn't, that is, since 2005, a lot has changed. The reason we have so many listeners from Turkey is a good proof that the information is more democratized at this point. So, you don't have to be physically in Silicon Valley or San Francisco to honestly get access to the best advice. Also, the funding has also been democratized. I have made several investments in Turkey. I mean, when we first started somebody had asked me in a conference, whether they thought there would ever be a billion dollar company from Turkey.</div><div style="text-align: left;"><br />I guess in fairness, I started Udemy in Silicon Valley, formally. But it is, in fact, a company started by Turkish people. Then, there were also two other companies started in Turkey, which were multi-billion dollar exits. There's another one I’m watching, which is on the path to be a 10 to $20 million company.<br /><br /><b>ER</b>: Incredible.<br /><b><br />EB</b>: So, I think the last 10 years, the Turkey ecosystem has, I guess like the cost of Silicon Valley has been less about the physical location at this point and more about-<br /><br /><b>ER</b>: The state of mind.<br /><br /><b>EB</b>: The state of mind industry we are in.<br /><br /><b>ER</b>: Yeah. That is a hard thing for folks who've never experienced it directly and who tend to mythologize this physical place. It's not like the sunshine and the low-rise buildings you were describing and the strip malls is the thing that makes it magical. It is a certain ethos about innovation and about people, and that kind of cross cultural collaboration has been emulated now by people all over the world. I think that's actually an incredible positive development.<br /><br /><b>EB</b>: I think Eric, you've been a part of this idea that if you really democratize the advice and then choose your starting companies and everything else, funding and physical space and talent, those things are actually solved over time.<br /><br /><b>ER</b>: Yeah. Well, I appreciate you saying that. That certainly has been part of my mission now for a number of years. So, thank you. I’ve got to ask you one question about SpeedDate. I'm really curious, for now and when founders encounter Lean Startup, it's a famous old idea for most folks. Yet when you were at SpeedDate, you were the head of engineering there, I think, at a time, that was before the book had been published before even Lean Startup was especially famous. What was it like to be on the receiving end of that advice at a time when it wasn't very popular??<br /><br /><b>EB</b>: I was actually, I remember actually the first time the Lean Startup ideas came, and it immediately resonated with me because we had spent 18 months building the first version of Udemy in Turkey, which was a live education platform for learning. We spent all this time building, and we obsessed about a lot of details and we launched it, and we realized there's no way a live marketplace for online learning is going to work. Like literally after 18 months and 10 days, it became obvious that by the time people schedule a session to participate, we were losing 95% of people, and most people were really horrible at live teaching. Unfortunately, we did not have any resources to do take two so I had to shut down the company, move to Silicon Valley full-time. And then we came to Silicon Valley, and we launched the first version of a SpeedDate, I think in seven days total.<br /><br />We had to raise some seed capital. I literally took the original Udemy live video platform, converted it to live with a dating application. In seven days, we launched the application. Like we literally did not have a forgot password button, and the app has like a million bugs and issues. But we just launch it and started having users and iterated with the user feedback. So, that was the polar opposite of what we had intuitively done in Turkey. Then, I think that was right when you and Steve had this idea of iterating with customer feedback. To me, I just sucked in all of that knowledge, because back in that day, it was like a very refreshing concept. At this point I think it is so mainstream. So, people default.<br /><br /><b>ER</b>: Yeah.<br /><br /><b>EB</b>: So, back at the time, it wasn't default. The default was spending two years trying to perfect an application and doing a big launch and demo day, or I mean, TechCrunch Disrupt. The goal was that in the first day of launch, it was getting so much press. It was getting a bunch of customers, and some of those customers would be retained. That used to be the playbook back in the day.<br /><br /><b>ER</b>: Yeah. It's actually such a short time that this has changed, that a lot of new founders can't believe it, and so I'm glad to get you on the record, just as a testimonial about what it was like, it was only 10 or 11 years ago that we're talking about.<br /><br /><b>EB</b>: Exactly.<br /><br /><b>ER</b>: Yeah. It's been a wild time.<br /><br /><b>EB</b>: And I think one of the things, I'm going to jump to Carbon, but, I think since then actually the concepts have evolved quite a bit, so we are now realizing it's not a single playbook, but when we first studied carbon health, so in healthcare space, it's not easy to just build an application in seven days and launch it, right?<br /><br /><b>ER</b>: Of course.<br /><br /><b>EB</b>: Because we were trying to be a technology enabled primary care provider, but to be a healthcare provider, you have to get the license, and you have to incorporate, you have to have a physical location, you have to be able to prescribe medication, you have to be able to order labs, medical imaging, referrals, insurance, billing, the bar is fairly high, but we didn't launch the first version in seven days. I think it took us 10 months to launch the first version, but there is still some similarities.<br /><br />When we launched the first version, what we tried to prove at first was that patients would actually want this technology driven, mobile app driven, customer experience, and to prove that, we started accepting patients, but we couldn't tell them that the service was going to be free. So we literally did not have an actual billing infrastructure, but we didn't tell people at first, we sort of just acted like we were going to submit their claim to their insurance company. We just never actually did it, just so that we can prove some of the thesis earlier, right?<br /><br /><b>ER</b>: Mm-hmm.<br /><br /><b>EB</b>: It wasn't, I guess that wasn't your typical, let's launch an application and mold an iterate model, but then even healthcare does it similar. I think the concept has actually evolved, the methodologies are just getting better, like are changing based on the industry.<br /><br /><b>ER</b>: Yeah, of course. I mean, I think that's one thing that people miss often is that leadership is a philosophy, it's a set of principles. It has to be translated into specific tactics and strategies that are very context sensitive. And so yeah, when you're in a highly regulated industry like healthcare or finance, the playbook is going to look really different, but the mindset is really what we're trying to cultivate. So I actually think it's really an interesting example of you taking something, that was learned in online education and online dating and then to take it into a much more, if you forgive me for saying, a much more serious problem domain of healthcare. I'm of course really honored to have played even the smallest part in that, that was my aspiration in writing the book originally. But I'm curious why you made that choice to make that switch. How did you... Tell us how Carbon Health came about, why it's a much more difficult problem to tackle? What inspired you to do it?<br /><br /><b>EB</b>: Honestly, I think from Udemy to Carbon, in my perspective, I had a very linear approach, but I can totally see how it feels non-linear. So we started, I was at SpeedDate, left to start Udemy in Silicon Valley, again in 2010, and Udemy became, I would say, widely successful. We grew quite a bit in the first five years. I was a founder and CEO and Udemy's mission was really making online education more accessible, but broadly I was fascinated with this idea that you can use technology to make something really essential accessible to more people. And I was really thinking Udemy was a great example of techno-optimism. I assume, when you build the platform, a lot of people who are not your typical, ideally college professors can be teachers can make your living, but also they can actually share their expertise with hundreds or thousands of other people.<br /><br />And then I started thinking about "what other industries need this type of transformation?" And healthcare was really top of the list for me. And then, while I was thinking about it, my mom had this disease called Neurosarcoidosis, so she had this full-body stroke, which was completely unexplained. She's back in Turkey so I moved back to Turkey for a couple of months. My sister is a physician. We were going from doctor to doctor and trying to understand what was happening, and we were carrying thousands of pages of documents, lab results, DVDs with MRI, CT scans, and I think we kind of just jumped around thirteen really kind of specialized physicians.<br /><br />And there's no sad story here, so the physician number fourteen diagnosed it and the treatments worked fairly well, but I just directly observed that the technology, the tooling, for doctors were really far from what they needed to operate at a high productivity level.<br /><br />And I actually made a sketch back in 2013, I think, so three years before I started a Carbon. And the story here is, if you're going from doctor to doctor, every doctor would look at these pages, and they just go through hundreds of thousands of pages, and write some things in their notebook, and then they use the notebook to understand what might be happening. And I asked my sister, I said, "What are they writing on their notebooks?" And she said, "They're making a chronology of the case". And my immediate naive reaction was, "Why don't we give the whole content in the chronology format in the first place, if that's how they are thinking about the problem". And I made a sketch about it, how I would design the physicians interface, if I was building a new kind of healthcare software platform, and I just left it sitting around. When my Mom recovered, I came back to Silicon Valley and continued to be the CEO of Udemy.<br /><br />But that idea did kind of get stuck in my head that the largest, the most expensive resource of any country was one of the worst utilized, and I said somebody should really rethink how a doctor operates, how they communicate with the patient, how that whole concept of care delivery works. And I and a couple friends, we kind of sat down and started making some sketches, and I realized that this was one of the thorny problems, with a lot of regulatory challenges that most funders were not wanting to work at.<br /><br />There were healthcare funders, but they always wanted to take a slice of the problem, and what I really wanted to do was just bring the strongest technology product physician, kind of clinical-operations people, together to figure out whether we can use technology to make great healthcare accessible to more people. So what really was disappointing for me was that the rare healthcare companies and technology, were using technology, but they were all exclusively focused on young affluent, high-income patients. And I hadn't really seen even a single company who's trying to serve the average retail worker, average teacher in this country. That domain was almost completely unserved from the technology space, and understanding how complex this problem was, I thought somebody should spend 10 years of their lives just obsessing on this problem.<br /><br /><b>ER</b>: So how did you get from "somebody should really do something about this" to you're going to do something about this?<br /><br /><b>EB</b>: I initially tried to look for funders to invest, so I met bunch of funders. I didn't realize the intersection of the funding team who's technical enough, was product driven enough, with intersection of the funders who are open to learning this new concept. Just not making any assumptions about how healthcare works, we were willing to just come in and learn from some of the people in the industry, as well, and, the intersections, part of the intersection is people who are willing to work on a thorny problem, right? Like mass market healthcare delivery--I literally couldn't find anybody that I thought was doing it the way I thought it should be done, and I decided that... At that time, Udemy was already at the maturization phase, I think we were a fairly sizable company, and we had a strong executive team, and I thought just hiring a CEO for Udemy, and then me taking on this new challenge, sounded like the right thing to do. <br /><br /><b>ER</b>: So what is the mission of Carbon Health?<br /><br /><b>EB</b>: It is very simple. It's all about how you can provide really high quality healthcare to the entire population, and especially focusing on the demographics which are not being served. So really it's just combining this very software driven, very technology driven approach with day-to-day healthcare. But more tactically, we decided that we have to start from the front door of the healthcare system, because that's a consumer decision. So things like primary care, urgent care, virtual care, maybe even mental health, these are decisions that consumers make, so we theorized that if you provide an amazing experience, without increasing the cost at all, you could really dominate as that front door. And if you can become a very sizable healthcare provider in the front of the healthcare system, what happens is the rest of the healthcare system like specialists, and hospitals, and imaging centers, things like that, so those really rely on your patients to really, I mean, to feed their business.<br /><br />If you become their primary customer acquisition channel, you can now use your influence with the front door of the healthcare system to create a more democratized marketplace for the rest of the healthcare. So that's really kind of the thing, it's a little more complicated, in reality, but it's truly owning the primary care with high quality, low cost, very modern care, and then really trying to pressure the rest of the healthcare system to have the highest, best clinical outcomes at the lowest cost possible.<br /><br /><b>ER</b>: So take me back in time to right before the pandemic, the start of 2020, where was Carbon Health at that point? How big had it gotten, how many clinics did you open? And just give us a sense of the stage of the company as you wound up facing the pandemic.<br /><br /><b>EB</b>: So we were in a very interesting phase because I started Carbon Health in 2016, so we were a four year old company, and we had spent the first several years really nailing the unit economics, the customer experience, really this software operations finance, and we had finally come to a place where the numbers were just undeniably working. So we had managed to provide a really modern healthcare experience with very high NPS score, very high retention, while still having a very strong provider experience. And lastly, innovate where we were seeing very good profitability with Medicare reimbursement rates. So essentially we had finally hit the benchmark, which I considered as the benchmark, to just start scaling the company like crazy. It was several years of optimization and then we were actually scaled at that moment. I think January of 2020 was when we said, "Okay, now we are going to just take this and scale it as fast as humanly possible".<br /><br />And I think we had seven clinics just at that moment, but we also had a pipeline of 20 clinics for 2020, and the pandemic hit us actually fairly early because we have the system that takes the details of the patient's problem. And, when we started seeing the news from China, we put some additional questions to screen for COVID risk, and, as early as January, we started seeing patients who were coming from, literally from Wuhan, China to California, and they were coming to our clinics with respiratory symptoms. So we caught this really early and then started really getting into this crisis management mode in January, so by the time it was considered a pandemic, in March, we had decided that this is going to be our focus for the year, for the foreseeable future.<br /><br /><b>ER</b>: Did I read correctly that the first case in California was found in a Carbon Health clinic?<br /><br /><b>EB</b>: So it was one of our patients, which we couldn't get tested, but then, eventually, because CDC, well only CDC was providing testing at that point. With that patient, we were monitoring a lot of patients, not just one patient, we were monitoring thousands of patients remotely. So we were asking them to stay at home, we would actually check back with them daily, and then, if their symptoms get worse, we would actually then suggest to go to other places. So I think one of those patients went to ER and then got tested by the CDC at a community hospital, and was considered one of them. I think it was considered the first community spread patient.<br /><br /><b>ER</b>: Talk a little bit about your mindset as this information was rolling in. This was before the general public really had an awareness of this, and obviously the American response and kind of our level of alertness to this crisis was very slow. What was it like having that information? How did you know what actions to take? What did you view as your guiding light as you started to navigate those difficult waters?<br /><br /><b>EB</b>: So there was a lot of uncertainty, I would say the CDC guidance honestly was very weak. It didn't really tell us anything substantial about what we should be doing as a healthcare provider, and there were some people who, in the company even, who said, "This is going to be a massive problem. We have to just put all of our resources to fight this pandemic." And then there were all sorts of people who thought this might be a three-month kind of problem, and it might be gone by the summer, and I had to make the final call as the CEO. And there was also just massive PPE shortage. We were literally short of N-95 masks, and I just discussed with our clinical leadership and we made the decision to just be on the front lines of this pandemic and offer testing as soon as possible.<br /><br />Essentially, I and our clinical leadership said, "We just have to be in the solutions part of this problem". Because, just going to put that, at that time, most healthcare providers, some, pretty much all of them, were trying to shut down clinics, who'd use ours. They were mostly trying to reduce their risk factors, and they were hoping that the government, the public health departments, would actually take ownership of the response there.<br /><br />So we decided to just go to the other direction, and I remember talking to my wife about this because I felt really horrible, I guess. I mean, the analogy I give my wife is I said, "I feel like I'm a general sending soldiers to the front lines" because we really did not know what the real risk factor is. And, for all we know we could have, I don't know, 10% of our staff getting infected. And, because, in Italy, the news about healthcare providers were very, I mean, they were not good, but our clinical leadership actually had a lot of experience in front of the original SARS pandemic, back in the day, so they thought that, if you have the right protection, rights, protocols, we could actually safely help our communities. But as I said, I think our clinical leadership made the final decision to just lean in. And I felt horrible. I was so--for our employees, I mean, I just, we started like trying to, I just said like the entire team now your job is to support our frontline workers. And as the situation became more and more dire around the end of February, and we had this executive meeting and our head of product Ayo said, "Let's just think about what we wish we would have done if we knew that this is going to be a devastating pandemic.” And I had brought it actually a list of like really crazy ideas for the meeting. And my goal was just to...kind of inspire some other ideas. And I kind of had this list of 10 crazy ideas that we could consider if you really want to kind of take this pandemic very seriously. And I think what happened is over the next 18 months, we have implemented every single one of them.<br /><br /><b>ER</b>: Give some examples.<br /><br /><b>EB</b>: So the first one was just building, the simple one, was building a risk assessment system to evaluate Covid risk. The second one was I think, just buying a bunch of trailers and converting them into mobile testing centers and going to underserved communities. Another one was partnering with companies to help them operate safely, if they are essential companies. I think that another one was really kind of partnering with local governments on this part and trying to help them. And one of the most immediate things was going to residential. Not residential, assisted living centers and registered nursing homes and try to screen them on a weekly basis. So, I mean, in retrospect these look like straightforward ideas, but I think the only thing we haven't done in that original list was kind of building a makeshift ICU center. 60 hospital ICU beds really, like gets completely booked so we were considering to work with the military to be able to build a kind of a portable ICU kind of system. So I think like aside from that, everything else became necessary. Actually one more was doing at-home testing. All those kind of original, crazy ideas became reality like in the last, next year or so.<br /><br /><b>ER</b>: If you could go back in time and give yourself a piece of advice from those early days, is there something now, you go back, and you wish you had done or had done differently?<br /><br /><b>EB</b>: I think the only thing that we didn't anticipate was how long this was going take. So, we funneled off our resources into responding to the pandemic, assuming it's going to, it was going to be a three to six months problem. And then after, I guess like, a little more than a year, we are in better shape. But I honestly don't think we would have done much differently because it's just like, there were certain solutions we built that we realized wasn't the most important solution, but like, I think our attitude was correct because we just decided to take this more seriously than pretty much anybody else in the country.<br /><br /><b>ER</b>: So fast forwarding a little bit, you wound up becoming a critical part of the vaccine infrastructure and <br /><br /><b>EB</b>: So the story of vaccine, our involvement with vaccine actually just started last summer. So when we, when I was observing how to counter how we were so unprepared to do testing on scale, then seeing that vaccines might come in sooner than people expect. So I had actually written an article and I said like, we have to start preparing the infrastructure for vaccines like from today. We should just have to build them as if the vaccine is going to be ready six months later.<br /><br /><b>ER</b>: Really smart.<br /><br /><b>EB</b>: So, and we were opening these pop-up clinics, the trailers. And my goal was that when vaccines were available, we will be using pop-ups as the kind of core vaccine distribution infrastructure. But when the vaccines actually came out, there were two things that like, I hadn't calculated. Number one, the storage requirements are very strict, like shipping them at minus 80 celsius was not going to something you can do in a small clinic or pop-up. And the number two is for especially older high-risk patients, you had to, you had to monitor them for 30 minutes. So, I realized that vaccinating somebody takes two minutes, but the monitoring is 30 minutes. So your main bottleneck is going through the physical space. So we quickly pivoted from this mobile clinic base model to like, thinking about how we could do mass vaccination.<br /><br />And I sketched something over the New Year's. And I think early January, the vaccine rollout in California was really bad. I think California was one of those kind of...diverse states in terms of the vaccine distribution and Los Angeles was particularly struggling. It was a fairly sizable city and there was a state launch system, which was not working very well. And they were really struggling. So we quickly showed them what we thought should be available to do vaccine distribution on scale. And, to the credit of the mayor's team and the LA fire department, they saw what we had built and sketched, and they said, "What's the fastest you could imagine launching this?"<br /><br />And we asked them for two days and two days later, two days after our first meeting...we launched a website to just get people to sign up or get joined to the waiting list for getting vaccinated in LA and then, we launched the front-end scheduling system first. And then like in seven days after we built our first version of the provider platform.<br /><br />And this is not completely from scratch to be fair. Like, so, because we own our entire technology stack, we had all the infrastructure for scheduling and triaging patients like the private platform, registering medication administration. We already had the infrastructure, we just built a new, a skin on top of our existing software platform. It's like we had a bunch of those pieces, but we had to bring them in a different structure so that it's the most efficient you can imagine. Because the staffing was very limited back in that time. So, yeah, so we launched this and then seven days after the original handshake and launch into a scheduling website, we helped launch Dodger Stadium, which was the single largest mass vaccination site in the country.<br /><br />And that was another, just like amazing example of, I think like being lean and just iterating because I had to go there with 30 or 40 people from our technology team: executives. We all just physically went to Dodger stadium, stayed there. We actually like, built some of the software on the ground there. And then the first version was working fine. It was better than what existed before Carbon, but it was far from perfect. It was not very accessible. It was not a great first. I mean, as an example, if you're using a landline, you couldn't use it because we required SMS verification.<br /><br />So we knew about the issues when we launched it, but it was still better. And then every day since mid- January, we have been making iterations on the platform. After a couple months, I would say like, it's now like a state of art vaccine distribution platform.<br /><br /><b>ER</b>: Do you know how big of a fraction of the California vaccine rollout you guys have been?<br /><br /><b>EB</b>: I think we have done 1.3 million vaccines.<br /><br /><b>ER</b>: Wow.<br /><br /><b>EB</b>: California should be 30 million. So around 4%. And I would say like, we have capacity to do at least three times more than what we did if we had enough supply. So there were, there was definitely a supply shortage. So we had capacities like, we had, we built enough to do 40,000 vaccines a day. Everything went well but then like around like one week ago--until like last week, we were barely able to kind of handle the demand and supply was the main constraint. I think last week it changed from supplies to the demand.<br /><br /><b>ER</b>: So we've been talking about getting to that tipping point now for, for a couple of months, you know, that some point it would, we would switch from demand to supply constraint. So what do you think needs to happen next? Now that we're going to enter into a period of being demand constrained, what's your view about what needs to happen to eventually reach herd immunity?<br /><br /><b>EB</b>: I mean, what has to happen is...we need to vaccinate roughly 30% more of the population. I think give or take like 50% are getting vaccinated or are-<br /><br /><b>ER</b>: We have to get to about 80%, right?<br /><br /><b>EB</b>: We need to get around 80% because 15% of the population is, strictly like, against vaccination. I think those are really hard to convince otherwise. And there's another 4 to 5% which are immunocompromised. So they can't get the vaccine or even if they did, like, it was, it's not going to be as effective for them.<br /><br />So, if you really completely want to go back to normal, like no masking, no social distancing, if you want to forget about this, we roughly need 75% of the population to have to vaccinate them.<br /><br />So, really the challenge right now is, how do we convince that remaining 25%? And I think we have to change our approach here. So the paternalistic approach, where we act like people are being dumb for not getting vaccinated, that's wrong because that's what we are missing is like, there's still an accessibility issue.<br /><br />And the accessibility issue has gone from physical space accessible to now information accessibility. So you and I are always like following the beats of this. We track the latest developments and we know the CDC needs guidance, we are aware of that. But a lot of the population actually doesn't have this like, as fast of...I mean, essentially they're not on top of the news cycle, as much as we are.<br /><br /><b>ER</b>: Of course.<br /><br /><b>EB</b>: We just have to push the information that vaccines are indeed very reliable, fairly low risk, and most people like, the majority of people in the clinicals are all getting vaccinated. That's actually that, like, we really have to push the information to the rest of the population who are not actively like, on Twitter, kinda following the news cycle.<br /><b><br />ER</b>: Are you optimistic that we can reach that threshold?<br /><br /><b>EB</b>: I am optimistic, but I think the remaining 20% is going to take a lot of initiative from not just local governments and Department of Health and clinical providers, but we will also need the help from other community leaders, maybe religious groups. We will need help from celebrities, athletes, sports teams. To just really help the public pass the message. There's definitely a lot of confusing information. So, people need to hear this from the people that they trust. And honestly like, clinical or the CDC or the local governments are not always the ones that the entire population trusts completely. I mean-<br /><br /><b>ER</b>: Yeah. Well, we live in an era where we're trust in institutions is at an all time low, really with the exception of the private sector.<br /><br /><b>EB</b>: Exactly. I think the--I mean...unfortunately like more people are getting medical advice from Joe Rogan than Fauci at this point.<br /><br /><b>ER</b>: Lord help us. Well, you know, it's interesting though, we had Ron Klain on in an earlier episode of this podcast from before the election even, and for those who haven't heard, it was fascinating now to compare what's happened to his predictions and his philosophy.<br /><br />But one of the things that he has been going on about quite a bit in public is the idea that there was going to be a whole of government response to COVID and people kept asking him, "Well, is that, does that include FEMA? Does it include the military?" And he kept being like, "What part of whole of government are you not understanding? We're going to mobilize every resource and asset," leaving aside the question of how well they've done. You know, obviously, the jury is still out, but it seems like it's going pretty well.<br /><br />I kind of feel like we are still missing the kind of whole of society response. Like we're now at a moment where, you know, elites and leaders of companies, of communities, of religious leaders, like all of us who have a privileged position in society, it seems to me ought to be coming together to try to reach this goal. It's not just so that we can have the convenience of the old normal back. It's much more so that we're talking about still quite a lot of lives to be lost or saved.<br /><br />And I wonder if you have a view kind of having been on the front lines, if you had an ask, you could say, "Hey, if there are people out there who are listening to this right now, what would you want them to do to mobilize and to help even now in this late date?"<br /><br /><b>EB</b>: I would say we are in the phase where, now everybody can have a sizable impact on this. So because when it's all about just a hesitation to get vaccinated, or maybe not evaluating the importance of it. So I think this is where everybody can play a role.<br /><br />Like three months ago, the person in a church, like, was not very relevant to the response because it was all about scaling distribution and administration of vaccines. So companies like Carbon Health had a more central role. But at this point, when you, when it comes to convincing and educating the population and like, this is one place where we have to work as a whole society. And honestly, when people look at the response in Asia that's one of the differences. I think like they have worked really as entire society together to solve this problem.<br /><br />I think that United States, it's still a bit more fragmented. There's a lot of, this problem has been just very unnecessarily politicized. So, and now we couldn't have discussions about, "Should you shut down? Should they just reopen everything and schools?" Like, I mean, I know a lot of people have opinions about these subjects, as they should. But, that kind of inner fighting is really becoming an obstacle when we are about to solve the problem completely.<br /><br /><b>ER</b>: Yeah, this is, I mean, it's literally one of those unite or die moments. You know, if we can find the unity, if we can find a sense of common purpose we can beat this thing. But if we don't all the energy we face, we spend on, on ancillary issues, I just, it feels like such a waste.<br /><br /><b>EB</b>: Yeah. Look, I was always very optimistic about just beating the pandemic because this must be the first time where major total civilization just like worked towards the same goal.<br /><br />And so we dealt with that. We had to be found as more where we were all united in fighting against this pandemic and this virus. And I think we made like a ton of progress and we are about to knock it off for good. But, it's just like, we need a, like, it's just, it's the last quarter, but we still have to play the last quarter. Because otherwise this is just going to just stay as endemic, it's going to be persistent and people will, like people will learn how to live with it, and that might be okay, but you know, what would it be better than learning how to live with it? It's just really eradicating it.<br /><br /><b>ER</b>: Indeed. I don't know why, maybe this will seem cheesy, but I have had Lord of the Rings on my mind quite a bit lately. And this idea that if we can find common purpose and not waste our energy, we can defeat this thing.</div><div style="text-align: left;"><br />It's really magical. And so for those who kind of have been on the sidelines or have been knocked out of the fight, you know, I always think about, and we don't have Sir Ian McKellen here to deliver the line properly. But the idea that when Gandalf returns, he says, like, "I come back to you now at the turn of the tide." And this is that moment. So any one of you can be Gandalf the White and be a hero now in the fight to get us through this last push. And if we do that, if we come together to make that happen, think about the story we'll be able to tell our children and grandchildren about a world that is free of this kind of disease. But also hopefully not just COVID-19 is eradicated, but we learn what is necessary to defend ourselves against these kinds of threats in the future too.<br /><br /><b>EB</b>: Yeah, absolutely. And, to be more practical, if you're an employer, if your employees just- give them time off to get vaccinated.<br /><b><br />ER</b>: Yes, please, please do that.<br /><br /><b>EB</b>: I think one of the things we are observing is if you're affluent just a lot easier for you to take time off go get vaccinated. So that's number one, and just good knowledge for everybody, at this point there's so much vaccine and supply you can just go get vaccinated same day. It really will take less than an hour, just drive somewhere. At this point they no longer even require scheduling, so you could just come in, register yourself, onsite, get in and out in half an hour or so. So that is easy. So, and also if you know people who don't have a car who needs some maybe companion to get vaccinated, just do all those things. If everybody brings one or two people to get vaccinated, we'll be able to just honestly do large gatherings faster.<br /><br />But otherwise I'm slightly worried that- There's a fatigue in dealing with the pandemic, and if you just assume it’s completely gone and revert that, there will at least be one more comeback. It is going to come back. Because right now the kids are doing well because we are still in semi quarantine mode. But if you had reopened completely without the remaining...<br /><br /><b>ER</b>: Yeah, yeah. If we leave the job half done, we will certainly regret it. And we have seen that pattern through the pandemic multiple times, how many geographies, countries, cities have had a really effective response to the pandemic during some phase, and then relax, because they feel like they won. It's beaten. And conversely ones that have had really disastrous responses sometimes bounce back much stronger for the next wave because they really learn their lesson. So we have this one chance, this one chance to get this right. And now is the moment to be in action. And I know the fatigue is real and I know people have struggled, but one final push and we can eradicate this for good.<br /><br /><b>EB</b>: And by the way, I'm not saying that like we should continue to quarantine. At this point it's safe to be outside and have dinners and a haircut, and you should just enjoy these things. But if we completely divert, it's going to come back because we haven't vaccinated enough people yet. But if we do this in conjunction with also getting our neighbors and our friends who are maybe just feeling lazy. It's just, if you have a friend who's not vaccinated, just get together, go get vaccinated. If you do these things while we are reopening, I think it will be fine if we do not get the remaining 20, 30%. But, I mean the remaining 50%, but I'm assuming that there is 15% that we want people to reach out to us. And so we need to get essentially 60% of the remaining people or so. But if you open 100%, if you forget about the virus completely, it is going to come back. But we slowly transition and do our job, then I think we can just forget about this problem, like next year, or even like by this fall, we should be able to really just act as if COVID no longer exists.<br /><br /><b>ER</b>: That would be truly a miracle. Talk a little bit about how you've balanced and how you see yourself balancing the work of this COVID response with the core business of carbon health. Has that been a challenge and have your investors understood and been able to comprehend that you have this dual mandate? What's it been like trying to do that balancing act?<br /><b><br />EB</b>: It certainly has been difficult, and there's no perfect answer here. But luckily our board and investors have been very supportive. So they generally know what we are on a daily basis. So we understand, but the company has grown quite a bit since the pandemic started. So I think we were roughly 200 people in the beginning of 2020. And if COVID never happened, you'd like to be six or seven hundred by the end of the year. But instead we have gone from 200 people to 2000 people in 14 months. And I think we might be one of the fastest growing companies who actually have physical operations, and some of it has been really good specific vaccine rollout testing type of efforts. But you have also gone from 10 clinics, 13 clinics, to 67 clinics right now.<br /><br />So it's a dual mandate and we keep balancing resources. For example, when vaccine rollout was really problematic, we put almost all of our efforts to it for at least a month. And then after a month we were able to pull back resources to like primary care and our more longer term health care initiatives. So again, it's a constant kind of balancing act. It's all about if there's a truly urgent problem in our communities, we feel like we have to in response. If not we tried to invest in more longer term core business.<br /><br /><b>ER</b>: What do you think is the future of public health in this country, especially how do you see the relationship between the government and private industry? You've kind of had to straddle both during this response. Has it changed your view about what public health might look like in the future?<br /><br /><b>EB</b>: It has certainly changed. So, we are now formally building a public health division within the company. So if you think about Carbon Health, so we have our consumer division working with clinics direct to consumer, and then we have an enterprise division working with companies, and I'm now formally incorporating a public health division. We'll have a GM. We'll have dedicated product people, engineers, operations support, all of those things because I was able to observe, observe firsthand that to the traditional model where the government and local government puts a big RFP and then bunch of contractors respond to that RFP, that model is not working well because it just like the RFP ends up really convoluted and bloated, and then the contractors are building really software they think as a one-time software they have to build. So they don't think of this as a living organism.</div><div style="text-align: left;"><br />So what we are trying to do differently at Carbon is, I especially want to replicate what we did for vaccine rollout and some other public health problems. So we want to be technology but a public health partner. And there are- If COVID completely goes away, there are a lot of public health challenges from healthcare in rural areas to healthcare or maybe unsheltered populations. Essentially, if we want to fix healthcare for the most underserved communities, it's very hard to do that purely as a for-profit entity. And we actually kind of saw that there's nothing wrong with a private for-profit private company to partner with the local governments and nonprofits to focus on all the same problem. And I think that that type of partnership worked extremely well when we helped with the vaccine rollout with multiple counties and cities. And I think that was like a really magical set up. I want to continue that set up for other public health problems in the future.<br /><b><br />ER</b>: If we have some founders who are listening, any issues or problems in the space that you have learned about or noticed since you've been doing this that you'd encourage them to work on?<br /><br /><b>EB</b>: So I would say even in places like Los Angeles county, there are big healthcare deserts, places where you don't have good healthcare access in 50 miles. And that problem is not solvable purely from virtual care, so you need still some physical access points. So there's some kind of outstanding problem. I assume I would say working with schools- In the school systems, there's huge disparity between the resources of different school districts, and some of them require more like local governments help. So yeah, honestly, I would just generally suggest that this whole public health project is not something exclusively for large defense contractor-type companies. Even smaller startups can actually operate fairly well, just help- as long as they listen to the local governments and understand their problems, because some of the best solutions I've seen in COVID related public health efforts, they're actually coming from technology startups. They were not Google, Amazon coming in to save the day type of issues. If anything, actually, I was really disappointed with the response from large companies. I don't think those massive companies have made a significant role in the pandemic, but then some smaller tech startups, smaller other entities have actually probably done it a lot more than the kind of Googles of the world in this pandemic response.<br /><br /><b>ER</b>: It definitely was surprising. I spent a lot of time on the phone with companies large and small the past year and yeah, the results absolutely speak for themselves. So what do you feel like the longterm impact of the crisis will be?<br /><br /><b>EB</b>: I think the silver lining is like 20 years later, we will actually be in a far better position because so many more people are now entering the healthcare space. There are a lot more strong technical product people coming into the healthcare space. So it's really between the funding, the interests from talent- I think actually it might end up becoming a net positive for healthcare because of especially the increased number of people working in the space. You were not very involved in public health or healthcare in general. You're now putting a lot of minds into how technology companies can help you out. So I think that is actually very promising. Definitely increased usage of virtual care. But I think what you're seeing is that the omni-channel care idea is going to become more dominant. Essentially patients are now expecting their healthcare providers to work with them both online and offline. So that fragmentation, I think, is going to mostly disappear in the future because now every single healthcare provider has learned how to do virtual care. And then I think they will continue to do this as a part of their practice.<br /><br />So, lastly I think some of the industries which went digital first won't be coming back. I'm really hoping a lot of investor meetings will now be virtual first, so you won't have to travel as much, which might cause the capital to be more democratized around the world. I think there's interesting implications for healthcare and also the broader industry.<br /><br /><b>ER</b>: Absolutely. Well, Eren, I want to say, thank you first for coming on and sharing the story with us. As well, thank you for all of the work that you've done as a founder and as a leader, especially here in California during COVID. But also how lucky we feel that you chose to immigrate from Turkey and to do what you have done here in the valley. It's just been awesome to get to see all come together for you. So congratulations and thank you.<br /><b><br />EB</b>: Yeah. Thank you very much, Eric. And honestly, I'm mostly a spokesperson for the frontline role because we have the people work in the product teams and technology teams and support teams. They will have done all the work. I'm merely just helping get people in the same direction. So, but thank you very much.<br /><br /><b>ER</b>: Well, a true servant leader as we always look for. Let me ask you one final question, which is simply how do we get out of the crisis?<br /><br /><b>EB</b>: I think we are close. We really need to just stop politicizing this a little bit and realize that we are about to be all over with it. And everybody's on the same side here. Increase vaccine information and reduced the current things, but still have some minor protections until we are fully over the hump. And I think just to kind of really just like work as a whole society just together for the next- I think, three more months and we are completely over this problem.<br /><br /><b>ER</b>: Eren, thank you so much for coming on.<br /><br /><b>EB</b>: Thank you very much, Eric.<br /><b><br />ER</b>: This has been Out of the Crisis. I'm Eric Ries. Out of the Crisis is produced by Ben Erlich edited by Zach McNeese and Sean Maguire. Music composed and performed by Cody Martin. Hosting by Breaker. For more information on ways to get involved, visit helpwithcovid.com. If you or someone you know, is leading an effort to make a difference. Please tell me about it. I'm at E-R-I-C-R-I-E-S on Twitter. Thanks for listening. Please rate and subscribe wherever you like to listen.<br /><br /></div>Startup Lessons Learnedhttp://www.blogger.com/profile/16441445454879378457noreply@blogger.comtag:blogger.com,1999:blog-7533727264507128560.post-35190243617641651972021-05-04T12:46:00.002-07:002021-05-05T08:35:50.354-07:00Out of the Crisis #26: Brian Armstrong of Coinbase on cryptocurrency, being mission-oriented, and institution building<p>A few weeks ago, <a href="https://www.coinbase.com/" target="_blank">Coinbase</a> , which facilitates buying, storing and purchasing cryptocurrency and also operates a cryptocurrency exchange, went public. It was one of the year's most successful IPOs so far, and has been heralded as a <a href="https://www.nytimes.com/live/2021/04/14/business/stock-market-today" target="_blank">"landmark moment"</a> for cryptocurrency's entrance into mainstream investing. <br /></p><p>Just before the IPO, I had a far-reaching conversation with co-founder and CEO <a href="https://www.linkedin.com/in/barmstrong/" target="_blank">Brian Armstrong</a> as he approached this major milestone for the company he co-founded back in 2012. We talked about a wide variety of topics, including what the decline in public trust of institutions means for companies, how to codify company culture and intentions, remote work, the concept of the ICO--initial coin offering--and his side company, ResearchHub, which he founded to counter his belief that "there's a crisis happening in scientific research, that is just slowing down human progress."</p><p>We also talked about why he took <a href="https://blog.coinbase.com/coinbase-is-a-mission-focused-company-af882df8804" target="_blank">a very public stance</a> on the role of corporate leadership in social issues, and how it relates to fulfilling Coinbase's mission. It's a controversial subject, but one that so many companies are coming to terms with right now. Though Armstrong wasn't looking for the attention he got, he says "I wanted to stand up in front of the company and say, 'This is why we're
here This is why I started this company. I want us to go solve this
really important thing in the world." And I knew that that would upset
some people." <br /></p><p> </p><p>You can listen to our discussion on <a href="https://podcasts.apple.com/us/podcast/brian-armstrong-coinbase-on-cryptocurrency-being-mission/id1505392824?i=1000520089483" target="_blank">Apple</a>, <a href="https://podcasts.google.com/feed/aHR0cHM6Ly93d3cuYnJlYWtlci5hdWRpby9mZWVkcy8xMjg1NDEyLnJzcw/episode/aHR0cHM6Ly93d3cuYnJlYWtlci5hdWRpby9vdXQtb2YtdGhlLWNyaXNpcy9lLzg2MTM2ODU1?sa=X&ved=0CAUQkfYCahcKEwiQ6PSw7rLwAhUAAAAAHQAAAAAQAQ" target="_blank">Google</a>, or wherever you like to get podcasts. <br />
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A full transcript is beneath the show resources below. <br /></p><p> </p><h1 style="text-align: left;">Highlights from the Show:<br /></h1>What is Coinbase? (:33)<br />Brian on his personal and professional pandemic experience (2:46)<br />On deciding to make Coinbase's pandemic planning for employees public (3:20)<br />On remote work and its future (4:23)<br />The moment when Brian became aware of crypto and the original Bitcoin whitepaper (7:17) <br />His thoughts on who Satoshi (the author of the paper) is and why it doesn't matter (13:21)<br />How Brian got into computers and coding (14:08)<br />How he got the idea for Coinbase while at Airbnb (17:44)<br />The company's first minimum viable product (MVP) (21:05)<br />Finding a co-founder and adding the "killer feature" that created product-market fit (24:42)<br />On being mission-driven (27:06)<br />Coinbase's mission: to create an open financial system for the world (29:51)<br />Institutionalizing intentions (32:21)<br />The value of marrying skillsets to form a company that's both innovative and compliant (37:20) <br />Building a company that lasts while also accepting the reality of creative destruction (40:43)<br />The role of business leaders in the creation of our civic fabric (42:07)<br />Fear of the new and mitigating risk (45:39)<br />The political dimensions of working on economic freedom (47:06)<br />Brian's thoughts on the firestorm he created by separating politics from the company mission and his advice to other CEOs (48:34)<br />The current lack of trust in institutions (55:28)<br />Creating the ICO (Initial Coin Offering) (56:47)<br />ResearchHub, Brian's company for accelerating scientific research (1:05:32)<br />Brian's thoughts on the long-term impact of the pandemic and his hopes for the future (1:09:28)<br /><br /><p> </p><h1 style="text-align: left;">Show resources:</h1><div style="text-align: left;"><a href="https://www.coinbase.com/" target="_blank">Coinbase</a> </div><div style="text-align: left;"><a href="https://blog.coinbase.com/coinbase-planning-and-response-to-covid-2019-d0cb3379bc3e" target="_blank">Coinbase planning and response to Covid-19 blog post</a><br /><a href="http://satoshinakamoto.me/whitepaper/">Satoshi Nakamoto's Bitcoin whitepaper</a><br /><a href="https://academy.ivanontech.com/blog/byzantine-generals-problem-an-introduction" target="_blank">The Byzantine General's Problem</a><br /><a href="https://nakamoto.com/satoshi-nakamoto/" target="_blank">Satoshi Nakamoto</a><br /><a href="https://github.com/" target="_blank">Github</a><br /><a href="https://www.linkedin.com/in/fredehrsam/" target="_blank">Fred Ehrsam</a><br /><a href="https://en.wikipedia.org/wiki/Economic_freedom" target="_blank">Economic freedom</a><br /><a href="https://news.airbnb.com/about-us/leadership/brian-chesky/" target="_blank">Brian Chesky</a> <br /><a href="https://www.principles.com/" target="_blank"><i>Principles</i>, Ray Dalio</a><br /><a href="https://www.amazon.com/Enlightened-Capitalists-Cautionary-Business-Pioneers/dp/0062880241" target="_blank"><i>The Enlightened Capitalists</i>, James O'Toole</a><br /><a href="https://news.stanford.edu/2005/06/14/jobs-061505/" target="_blank">Steve Jobs's 2005 Stanford commencement address </a><br /><a href="https://www.theatlantic.com/ideas/archive/2021/02/how-public-health-messaging-backfired/618147/" target="_blank">"5 Pandemic Mistakes We Keep Repeating", Zeynep Tufecki</a></div><div style="text-align: left;"><a href="https://medium.com/@barmstrong" target="_blank">Brian's Coinbase blog posts</a></div><div style="text-align: left;"><a href="https://lessig.org/product/code/" target="_blank"><i>Code and Other Laws of Cyberspace</i>, Lawrence Lessig</a><br /></div><div style="text-align: left;"><a href="https://www.researchhub.com/all" target="_blank">ResearchHub</a></div><p><br /></p><p style="text-align: left;"><br /></p><h1 style="text-align: left;">Transcript for Out of the Crisis #26: Brian Armstrong </h1><h1 style="text-align: left;"> </h1><div style="text-align: left;"><b>Eric Ries</b>: I'm Eric Ries. This is Out Of the Crisis.<br /><br />What are institutions for? Can we build better ones? What is the role of public and private organizations in governing our shared civic fabric? These questions have come up again and again, as we've seen this crisis unfold. As you'll hear, BA became an entrepreneur without expecting to have to address such questions, but that's not how it's turned out. Brian is the CEO of Coinbase, a successful tech company, and one of 2021's most successful IPOs. Coinbase was founded in 2012 and operates a cryptocurrency exchange. The company's market cap at the time of their entry into the public markets topped $100 billion dollars. Coinbase's IPO reflects the massive growth in interest and investment in cryptocurrencies, such as Bitcoin and Ethereum around the world. However, cryptocurrencies raise fundamental questions about what the future of our institutions will hold. Can institutions be totally distributed or should they be rooted and loyal to a certain community or geography?<br /><br />Do we need more regulation in this area or less? With a rise of cryptocurrency and its attendant freedoms be a boost to, or hamper the recovery that is just now underway? But beyond its products, Coinbase is an interesting company in itself. For many of us in Silicon Valley, one of the notable events of the crisis was Brian's public stance about the role of corporate leadership in social issues. Every company I meet these days is grappling with this topic, from ESG to employee activism, to so much more. The pandemic has brought these issues even more to the forefront of public attention. What are the responsibilities of corporations and leaders? In the years to come, are there limits and boundaries to politics or is everything political? Does our civic cohesion require some level of shared common ground? And if so, who gets to decide what that is? I spoke to Brian a few weeks before he took Coinbase public when many of these issues were at the forefront of his mind. Here's my conversation with Brian Armstrong.<br /><br /><b>Brian Armstrong</b>: My name is Brian Armstrong. I'm the co-founder and CEO of Coinbase. Coinbase is the most popular way people can buy and sell and use cryptocurrency today in the United States and 33 other countries.<br /><br /><b>ER</b>: Brian, thank you so much for coming on. Before we get into Coinbase and your history first, how are you holding up? We're having this conversation still in the midst of a seemingly never ending pandemic and lockdown. How has it been for you? How has your team been? How's your family? How are you weathering the storm?<br /><br /><b>BA</b>: Yeah, thanks for asking. Well, I feel like we've been in a very fortunate position in that we've been able to run Coinbase in an entirely remote way. So I've been able to move to another location with my partner and another city, I should say. And just get a little bit more nature, not have as much time commuting and traveling around the world. And in some ways, it's actually been quite nice as an alternative way of working. So I feel very fortunate in that regard.<br /><br /><b>ER</b>: Talk a little bit about the strain this has been on your team and as kind of the organizational challenge of having to make these shifts so rapidly.</div><div style="text-align: left;"><br /><b>BA</b>: Yeah, well like everybody last year, we saw the pandemic starting to happen and got in a room and tried to think about what we should do. And of course, we started putting together a plan about how we might evacuate or get out of the office for day-to-day work and how we might start to provide services to employees. Our first thought was just, how do we take care of our employees? And we wrote up a plan about how to do that. One of the things I did was actually, I saw this great plan that was being written by the team. And I thought, you know, there's probably thousands of companies trying to figure out how to do this right now. Why don't we just put this plan on the internet? And I actually really liked doing this. It's one of those things that founders can do sometimes where other employees are afraid to do it.<br /><br />But if I see a really great piece of work product, I generally will just try to, say hey, let's post this on the blog externally.<br /><br /><b>ER</b>: Oh, if it's worth doing, it's worth blogging about.<br /><br /><b>BA</b>: Yeah. And so I think we saved... We got so many positive inbounds from that. We got another bunch of other company's opinions saying, "Hey, thanks for posting that. You saved me a bunch of work I was going to have to do this week to try to put together our own plan." So it was good to collaborate a little bit during those times. And then after a few weeks of working remote, one of our employees came up to me and was like, would we ever think about keeping the company remote indefinitely? And my initial reaction was no way, like we would never do that. I don't see any big tech companies that have great cultures that are doing fully remote.<br /><br />But I couldn't get it out of my head. And for the next couple of weeks, I kept thinking more about it, reading more about it. I got to hear some people speak about it. People like [inaudible 00:04:49] from WordPress who'd had a remote company for a long time. And eventually, I started to think about a few key points. One was, we're always trying to get top talents into Coinbase. And if you look at what percentage of the global population lives within commuting distance of one of our offices, it's a tiny fraction of the world, far less than 1%. And so, it had always been attractive to me. It'd be great if we could somehow hire people all over the world, that would be great. And then, the other thing I always thought about was, well then, are people going to actually be able to be creative, be collaborative? Have those sparks of innovation? Are they going to be able to build real true relationships at work and have friendships and be able to learn from their colleagues, if it's all just video conference?<br /><br />And so it was a big question, but I eventually decided, you know what, we need to try this, or we're being forced to try it anyway because of COVID. So we might as well make the most of it. And as things started to work, I got more and more convinced that this was actually the future of work, that the benefits outweighed the drawbacks and that we were just going to go forward like that as a company. It was kind of more true to the ethos of crypto as well. And so far it's gone incredibly well. So I don't think we're ever going to go back. In a post COVID world, we're continuing to be a remote first company, which means people can go into an office if they want.<br /><br />I understand some people have different work situations at home that make that easier and more difficult, but everyone, whether they're in an office or not is going to work as if they're in a remote environment, so that there's no disadvantage to being remote. And the executive team is going to set an example by never coming into one office in one location, because I think that would create a negative incentive for others to follow us there. So yeah, so far it's been great.<br /><br /><b>ER</b>: That's really great. And I really applaud you for having that first impulse be about taking care of your employees. I mean, I think that's something that really has been a hallmark of the best companies during this time. And you can really tell even as a customer, as an outside vendor, which of the companies whose kind of first reaction was to take care of their key stakeholders and which reaction was kind of to look out for themselves first and people are paying attention in a crisis. They remember what you do.<br /><br /><b>BA</b>: Absolutely.<br /><br /><b>ER</b>: So let's go back. I want to talk about how you first got into crypto and how it first came on your radar. I can remember the first time I read the original Bitcoin paper and the kind of light bulb moment of seeing like a genuinely novel solution to a longstanding computer science problem, published anonymously and kind of in this unusual way was like a really dramatic... How did it come on your radar for the first time?<br /><br /><b>BA</b>: Yeah, well, the first time I saw the Bitcoin white paper, I saw it on Hacker News, which is a website that YCombinator runs. It kind of aggregates technology content, I suppose. And yeah, I was just home for the holidays at my parents' house. I think it was December of 2010, and happened to just be reading that paper on the internet one day and just immediately captivated my attention. So that was my first interaction with it. I'm curious. What was your first reaction when you saw it?<br /><br /><b>ER</b>: I couldn't believe it. I just thought it was so brilliant. And of course, I wasn't really interested in the finance side of it to me. So like the fact that it could be used... Obviously, the many things that it has subsequently been used for wasn't really foremost in my mind. I just thought it was a really brilliant solution to a problem that I had certainly spent a lot of time thinking about and on the computer science side and just how to do this kind of decentralized coordination. Maybe for those who are not as technical who are listening, maybe you can just give a brief description of what you took away from that paper that first time and what you thought it would be good for?<br /><br /><b>BA</b>: Yeah. I studied computer science also, but when I first read the paper, my thought was, wow, this could be kind of like the internet. The internet was another global decentralized protocol that was being used to move information around and it kind of democratized access to that and publishing and moving information around. Well, this Bitcoin white paper was describing another global decentralized protocol, but instead of moving information, it was for moving value around. And that kind of captivated my attention in the sense of I'd always felt like the global financial system was a little bit inefficient and it had high fees and had these delays for no reason that something would work in one country and not another country, many countries had totally unstable currencies.<br /><br />And so that the idea just initially made sense to me. I was like, that would be amazing if the world had a common set of standards for a monetary system or a payment system or whatever it ended up becoming that nobody could manipulate, nobody could abuse it. It was a decentralized common thing where we just had to trust in the laws of math instead of the laws of men. And it would be amazing. So from a pure computer science point of view, I had never really studied consensus algorithms in depth. I hadn't focused on that area of computer science, but the Bitcoin paper solved this long standing problem in computer science, which people refer to as the Byzantine General's problem. And basically, it's a coordination problem about how messages are passed and how do you know which ones are true and which ones aren't. And so the algorithm essentially proposes how using something called hashing power or proof of work. People can pass around these different transactions in a totally decentralized way.<br /><br />And then the network can come to an agreed upon state that says, hey, this is a valid transaction. This one's invalid. And it prevents people from double spending crypto. I guess, an even simpler way to think about it is previously, if you had a digital thing like a photo or a message or something, you could make infinite copies of that photo. There wasn't anything that was digital that was provably unique. And in this crypto algorithm, they said, well, since we're all making this distributed ledger, we now have provably unique digital items that I can send to you, Eric. And provably, we know that I didn't send the same copy of it to anybody else. So in that way, it was totally unlike a photo. It had scarcity. It could be used almost like digital gold or digital money.<br /><br />And that was a breakthrough. Nobody had quite solved that problem before, and it's led to this entire massive industry now.<br /><br /><b>ER</b>: What I think isreally interesting, when people hear that this was a novel computer science result, most breakthroughs in computer science, in kind of academic settings have to do with the kind of computational complexity of a problem or some kind of novel algorithm that takes advantage of some computational property that was really abstract, abstruse, and couldn't be figured out. What I thought was really brilliant about the Bitcoin paper was it was a novel result. Like this is a new way to solve a longstanding problem, but it relied on a kind of an understanding of what would be valuable to the many players. It almost had like a social engineering component to it, as much as it was an algorithmic breakthrough. And so introduced a new primitive into the world of computer science, which then people have built all kinds of remarkable things on. And I guess as I'm talking about that, it really is a lot like the early days of the internet. TCP and the other foundational technologies of the web had that same property, that there was something really computationally especially complicated about them, but it was their social value. When many people could agree on a common standard that unlocked all of the incredible value that has come into the internet and that we're especially now realizing how valuable those digital tools can be in navigating difficult times like that.<br /><br /><b>BA</b>: Yeah, that's true. It had a number of kind of game theory elements in there that it really understood, if I'm trying to get this global group of people to come participate in this new thing, how do I align incentives so that they're aligned to be good actors in that and participate in it. And the early adopters would be rewarded. And so it attracted more people in. It really wasn't brilliant paper on a number of levels. The computer science part of it, the game theory part of it, the economics part of it. And I encourage everybody to go read it. Don't feel bad if you don't understand it the first time you read it. I didn't fully understand it certainly. And I had to reread it many times. It wasn't actually until when building the early version of Coinbase, I went and implemented a Bitcoin node in from scratch in Ruby of all languages, which was probably not the right choice.<br /><br />But it wasn't until I actually implemented it and went through all of the details of the protocol, like after about 60 or 90 days, I was like, okay, I think I actually understand this protocol now, but that doesn't matter. Go read the paper, even if you only understand like a portion of it. It's really kind of a brilliant thing that was dropped onto the world. And it's an amazing artifact. And of course, we don't know who wrote it, which is another really fun and interesting point.<br /><br /><b>ER</b>: You don't have to say who, but do you personally have a theory? Have you subscribed to one of the theories about who Satoshi really is?<br /><br /><b>BA</b>: Well, I certainly don't know for sure. I've read about it quite a bit, of course. And it makes sense to me that it probably was some combination of Hal Finney or Nick Szabo and maybe others, I don't know, but it could have been a combination of folks like that. And the beauty of it is that, of course, that it actually doesn't really matter who Satoshi is, because the idea of it stands on its own. It's kind of like whoever discovered penicillin, you don't need to know their name. You can still go get a shot of antibiotics.<br /><br /><b>ER</b>: So I want to go back. You compared discovering the paper to discovering the internet and the power of the internet. So tell me when you first had that realization, how did you first come online? When did you first learn to program computers? How did you come into this field in the first place?<br /><br /><b>BA</b>: Yeah, well, I was fortunate enough to grow up in a household where computers were present and my mother actually worked at IBM. She was an early programmer there and she had started her career as a math teacher. And she kind of took a training course that IBM was providing to learn programming. This was as she explains it on punch cards and things like that back in the day. And so while she was at IBM, we were living in San Jose, California, where I grew up in the Bay Area. And so we had access to early IBM, 46 computers, things like that. And we got these in the house and I didn't really know what to do with it at first. I played around a little bit with the command line and DOS and playing some simple games on the computer.<br /><br />And it wasn't until the internet really came to our household, which, I remember having this thought, like I'm never going to be bored again. I remember I was always bored as a kid. I was trying to look at the same things in the house for the fifth time. And I would read books or run around my bike, the neighborhood or whatever, but we got the internet. I was like, I'm never going to be bored again. There's always something new to discover. And at that time again, my parents kind of exposed me to certain things where I got a chance to see what a programmer was, go do take your child to work day, things at IBM, places like that. And I got to meet other programmers.<br /><br />And the first time I learned about programming, I thought it was very difficult and unapproachable. I remember trying to learn, like I had some books someone gave me, like learn Java in 30 days or something like that. And I was trying to read this book and I couldn't really understand it or get anything to work. And later when the web came out, there was HTML, which was a little more approachable, right? And I started to learn simpler languages like HTML, PHP. And I remember feeling like this was in high school now. I started to go to some community college classes on programming and things like that, and started to build early websites. And I remember feeling like this incredible feeling I had never really felt before. I imagine many people feel it when they find something that they really love, whether that's painting or art or whatever.<br /><br />But I remember creating this early website. And I went to sleep and I woke up in the morning and I checked on the little counter or whatever. And like 500 people had looked at it or something while I was asleep. And that just felt like the coolest thing ever to me. It was like having replicated my brain or something. And I was able to help people, even while sleeping. It felt like a super power. And I thought maybe if I could do 500 people could help with this, maybe I could help a million people or something like that. And I basically just became obsessed with trying to start businesses. And with technology as a really important lever to improve the world.<br /><br />And I had all kinds of little businesses I tried starting and things like that in high school that all failed spectacularly, but it was very educational.<br /><br /><b>ER</b>: What was that first website that you created?<br /><br /><b>BA</b>: I made a website for the middle school that I was attending, actually, in probably like seventh grade or eighth grade. And then in high school, I tried starting this little company that was reselling computer hardware with another friend of mine. And we ended up trying to find this like refurbished computers in the neighborhood or something like that. And we'd resell it online, like a very early e-commerce thing that was happening. So that was some of the first ones I built.<br /><br /><b>ER</b>: So what were you doing when you had the idea for Coinbase and how did it start?<br /><br /><b>BA</b>: Yeah, at that time, Coinbase really was founded in June of 2012. But the idea was germinating before that for about a year, a year and a half or so. I was working at Airbnb as one of their early employees. I was writing some software, I was doing some product management stuff. And I got a front row seat to see how difficult it was for them to move money to the 190 countries around the world where they were operating. It was so amazing, like we were trying to send payments into Uruguay to pay people who are listening to their homes on Airbnb. And I remember we were trying to work with this local payment provider there so that people could pick up cash and things and reading their API documentation. And it became clear that we had no idea how much money was going to show up on the other side of this API. We didn't know what the exchange rate was, we didn't know what their fees were.<br /><br />We called them and they couldn't even answer the question themselves. And so we eventually just sent $100 through it and asked somebody in Uruguay to tell us how much money showed up on the other side. So we had all these kinds of situations like that. At one point we had to turn off all the hosts in Cuba, because US companies weren't allowed to work with Cuban citizens. And there was all these things about the global financial system. I always remember feeling like it was sort of inefficient. It was a barrier to innovation. Just to step back in history even more, of course so I had studied computer science and economics in college. I had tried starting another company in college that was a tutoring company. And we had just had massive challenges trying to move money to the different contractors we were hiring in different places.<br /><br />I'd also spent a year living in Buenos Aires, Argentina. I had gotten to see what a hyperinflation economy looked like and what it had done to devastate the population there, especially the poorest people in that society, by the way. Because generally poor people hold their wealth in cash, which is the most affected by inflation. Whereas wealthy people can put their assets into inflation-resistant things like real estate or they can move their money overseas. And so I'd gotten a sense of what that could do to a population and it certainly wasn't unique to Argentina. Inflation had happened in various ways in many countries in the world. So I was sitting there as an employee at Airbnb, and I read that first Bitcoin white paper in December of 2010 was when I first read it, and that's when it kind of really kicked off this momentous thing, which now became Coinbase many years later.<br /><br />But I guess what it really ended up doing was it caused me to start thinking about, "Am I ready to start another company? Is this the thing I want to start?" It sounded like a crazy idea trying to help people use cryptocurrency. It was such a new thing. All my friends thought it was kind of crazy or it might be a scam or something. I had tons of self doubt about, "Is this what I really want to do?" But my gut was telling me, "This is really exciting and this is going to be huge," or at least it could be. I thought there was a pretty high chance it could fail, but if it didn't, this would be enormous, like something on the scale of the internet. And so I kind of just couldn't get it out of my head. And I started working nights and weekends on a prototype, which I eventually submitted to YCombinator and that became Coinbase. So there's a lot more detail in there if you want to talk about it, but that was the journey.<br /><br /><b>ER</b>: Talk about that first minimum viable product that you built.<br /><br /><b>BA</b>: Yeah. So the first product that I had in mind was I wanted to build a hosted Bitcoin wallet that was easier to use. I didn't even have the idea to really make an exchange or a brokerage at the beginning to help people buy and sell it. But what I was thinking in my mind was SMTP is the protocol that powers email, and some people run their own email servers on their own computer, which is what people with Bitcoin were doing at the time. They were all running their own Bitcoin node on their own computer. But email quickly moved into the cloud. There was Gmail and services like that, where you could access it on your phone or your laptop. And if you lost your phone, it's not like all your email was gone. It was stored in the cloud.<br /><br />And all the security and backups were being kind of managed by this company. So I had a thought like that, "Someone needs to make the Gmail for Bitcoin." And then I had another thought, if you look at Git, which is a tool that programmers use, which led to the company GitHub. Git is another decentralized protocol really for version control and software. It was difficult to use and all this and GitHub made it easy to use. So those were my two models, Gmail and GitHub kind of based around a new protocol that had come out. And so I thought, "All right, I'll make a hosted simple to use Bitcoin wallet." And that was the first thing I put out. And I posted it on Reddit and Hacker News, and some places like that. I got a couple of hundred people to come in and check it out, but they wouldn't really stick around and use the product at all.<br /><br />And so my user adoption numbers were really kind of flat-lining. And I remember I just... In Y Combinator, they talk a lot about this idea, "Well, go talk to the customers." That's basically the loop of how you find product market fit is go talk to the customers, take their feedback, and go improve the product. Then talk to the customers, improve the product. You just keep doing that until you find product market fit. So as one of those surveys, I was basically emailed 10 of the people who'd signed up from Reddit. And I said, "Hey, I'm the founder of this app. I saw you signed up and you haven't come back to use it. Would you be willing to get on the phone with me and just talk about it?"<br /><br />So I called some of these people, maybe three or four of them emailed me back. And I remember one of the people I talked to said, "Well, I kind of liked the product, but I didn't come back because I don't have any Bitcoin." And I thought, "Okay, well, if I put a button in there that said, 'buy Bitcoin' or something like that, would you use it?" And they were like, " Yeah, that would be better, because I think there's some way to buy Bitcoin, but there's these random exchanges like Mt. Gox in Japan and I'm not going to send a wire to Japan. If it was something easy then maybe I would do it." So I thought about that for a while and I basically started on the path to try to do that. And that was a simple feature to describe, but it was hard to build in the sense that I was now accepting payments from customers.<br /><br />I had to think about compliance. I had to think about fraud and chargebacks, because I had read this book called PayPal Wars about the history of PayPal. And there were so many challenges with fraudsters and things. People would put in stolen credit cards and bank accounts and try to defraud the company. And luckily I had worked on that, a bit of that at Airbnb fraud prevention. So I knew how to build some of these systems. And through a process of just focus, and working 12 hour days, and calling banks, and trying to get the early bank accounts set up and integrating with the APIs of these bank accounts. I say we, at that time, right around that time, I found a co-founder finally, by the way, Fred Ehrsam. I had failed to find a co-founder to that point.<br /><br />And I guess my main lesson from that was just keep making forward progress. I had reached out to probably 50, 100 people to try to find the right co-founder. None of them worked. And as Fred happened to move to Silicon Valley, he saw the prototype I had posted on Reddit, I think. And he reached out to me cold. At that time, the right co-founder reached out to me. Right around the time Fred joined the bank integration and all that was finally done, we flipped the switch so people could click 'buy Bitcoin', and that turned out to be the killer feature. But basically from that moment, we struggled to keep up with the demand as opposed to trying to create more demand. And that was the moment where we found product market fit.<br /><br /><b>ER</b>: And the rest, as they say, is history. It's funny because founders always call me and ask for advice about whether they've hit product market fit or not. I always say, "If you have time to call me and ask me this question, I'm sad to say that you do not have product market fit. Because once it starts, you will know. I promise."<br /><br /><b>BA</b>: Yeah. There's a great analogy I saw someone online wrote where it's, "You feel like you're pushing a boulder up a hill every day before product market fit. And then once you find it, it's like you crested the peak and the boulder is rolling downhill and you're chasing it as fast as you can." And we had some moments kind of like that where it basically became a working capital issue, because people would come into the site and buy Bitcoin. We would initiate a debit to their bank account, but we wouldn't receive the funds from their bank account for two to three business days.<br /><br />And we had to make sure we bought the Bitcoin on the moment they clicked buy, because otherwise the Bitcoin price might be higher when their money finally arrived to us. So I think we had only raised maybe $600K or something at that point. And it quickly became where we were using maybe $500K of our raised money to serve the day-to-day, like basically as working capital to acquire the Bitcoin that we were going to receive the customer funds for in a couple of days. And we hit a point very quickly where we said, "All right, we're either going to have to turn off buys or go raise more money." And that was a good story to go raise money, by the way.<br /><br /><b>ER</b>: My money printing machine is not able to keep up and I need money to keep my money printing machine going.<br /><br /><b>BA</b>: Exactly.<br /><br /><b>ER</b>: The best classic venture pitch. I want to talk a little bit about the organization that you built. We've been talking so much about the product and raising money for it and and finding product market fit with it, but I think one of the things that's really notable about the way that you've built the company is that you've always said that it was important to be mission driven and you've built a real culture and ethos around that. So, tell us what does being mission driven mean to you?<br /><br /><b>BA</b>: Yeah. Well, I think it's important for every company to try to tackle something big and important in the world to try to improve the world. And the reason is, there's a bunch of reasons for this, but one of them is that doing a startup is just so difficult. Like your chances of failure are already so high. And basically, you're going to give up if you don't try to do something that's about more than, I don't know, just making money or something like that. Because usually the first couple of years of a startup are just moving from one setback to the next with enthusiasm. If somebody sues you, if somebody quits, somebody steals your idea, like whatever it is, and all these unanticipated crazy things happen. So I see people sometimes tell me, "Why are you doing this startup?" And it's like, "Well, it's such a good idea. The product is needed by people. It'll make a lot of money."<br /><br />And I just keep thinking like, "You're going to burn out within the first two years, because you're not in it for the right reasons." So the first one is you got to be getting out of bed everyday for something bigger. The second reason is you got to be able to attract great people to come join you on this. And the best people want to work on really difficult important missions that are going to improve the world. I think it's hard to get great people to join a company just based on comp or even just based on learning or growth opportunities. They also have to feel like they're doing something important for the world. So, those are all important reasons to have a really big, ambitious, compelling mission. And I would say as the company, especially in Coinbase's case, as the company kept growing, we got over 1,000 people.<br /><br />There was a moment where I realized we had sort of defined the mission a little bit ambiguously and almost euphemistically. And I realized the whole company wasn't even on the same page about what exactly was in scope for the mission. And this sounds like, "How could that possibly be?" But these things tend to happen.<br /><br /><b>ER</b>: It's still common actually.<br /><br /><b>BA</b>: Yeah, it's super common. And really anything, your values, a strategy document, everything. It's hard to get people to all really understand it in the same way. And so there's periods of time in Coinbase's history where I've had to kind of realign the company towards the mission and redefine it and re-clarify the definition of it. And so you want a lot of variety in the people that you hire. You want people from all different backgrounds and different skill sets around the table to get really an innovative and creative company, but you want everybody to be excited about the mission and have the same values that you articulate. So you want people to have the mission and the values in common, and you want them to be really different in every other dimension. That's how you create great companies. You got to get ready to keep rolling in the same direction.<br /><b><br />ER</b>: So what is the mission of Coinbase?<br /><br /><b>BA</b>: So our mission is to create an open financial system for the world. And what we mean by that is we want to create a financial system that is powered by cryptocurrency. It's more fair, it's more free, it's more global, and it brings more economic freedom to the world, because that was one of those other big things I had noticed when I first read that Bitcoin whitepaper was I was thinking about, "How could this bring more freedom to the world?" I always felt like people want to do good things, they want to be able to keep the upsides of their labor. They want to have property rights. They want to have the ability to work at the company they want to work out and join the company they want to work at. And this term economic freedom, it's kind of an interesting one. You can go read about it on Wikipedia and whatnot, but it's sort of a metric that economists use to look at the various countries of the world and measure how economically free those places are.<br /><br />And what's interesting about it is that economic freedom correlates with a lot of things you'd really want in society, not just higher GDP growth and things like that, but also higher self-reported happiness of citizens, better treatment of the environment, better literacy, and all kinds of things. So the insight that I had and kind of more crystallized the longer we worked on Coinbase was this invention of cryptocurrency might be the key, the secret to allowing us to create more economic freedom in the world and inject this reliable financial infrastructure, property rights, rule of law into these countries all over the world. And we do that by creating the open financial system. That's what we kind of have boiled down to as a phrase. So I think it's a really important mission. I think it can have all these downstream effects in society and it's really ambitious too. It's almost like saying we want to create a new alternative economy for the whole world. So that's certainly a big mission.<br /><br /><b>ER</b>: I think it's so interesting that you were conceiving this while you were at Airbnb. And I had a conversation a little while ago with Brian Chesky where he was talking about the importance of institutionalizing your intentions, and I'm sure you have heard him talk about this ad nauseum, having worked there, but I mean, a big part of what he has tried to accomplish and in taking the company public is to take his view of what a 21st century company should be and bake it into the structure of the corporation, so that it remains true to his mission, which of course what he's trying to accomplish is in some ways different from what you're trying to accomplish. But I wonder if that resonates with you. What are the steps you've taken to institutionalize your intentions, so that as this organization grows, as more and more people come into it as eventually someday someone else may lead it, how can you be sure it will remain true to that mission?<br /><br /><b>BA</b>: Yeah, absolutely. So there's a important moment every company goes through, I think where in the first couple hundred people or something like that you, as a founder, can interview all of them, you can evaluate them, you can go around and talk to all of them, have some kind of regular touch point with a couple of hundred and just make sure everyone's on the same page, moving in the same direction. If you see something that's off track, you can help correct it. As the company gets bigger. I don't know, let's say 500 or some kind of threshold like that, or 1,000, you pass Dunbar's number, the number of people you can really remember, everyone's name, and what they're all doing, and what their relationship is to each other, and some people think that's around 150 or so, but it varies depending on the person.<br />And so you quickly reach a point where you actually can't interview everybody who comes into the door and you can't check in on everyone. You can't even know everyone's name. And so how do you make sure everybody is still aligning in this larger structure? You do have to go institutionalize and memorialize some of those ideas. So I think that CEO's have a couple of different tools in their tool belt to do that. One of them is to go write down what are the values. And the values are what we use to hire and promote people. Coinbase's values are on our website, you can go look at those. We also wrote down a culture doc. And the culture doc kind of gets into more details about, not only how do we hire and promote people, but how are we going to operate and work day to day?<br /><br />How are we going to treat each other? That was an important document to write. And we did that with a bunch of input from the company and the employees. And you always want to have this balance in the document of like are you just saying euphemisms that any company could say or are you saying things that are truly distinct to your culture? Like one way to test that is could you say another company that had the inverse of your value? So you've got the values, the culture doc. Of course you have the mission. And I don't know, I think if you think about even much longer term, like how does Apple continue on in the spirit of Steve Jobs, even though he's passed away. Like how do you make a company that is multi-generational or something that can persist on. That's, I think, probably one of the hardest things to do. A lot of companies, frankly, when the founder passes away or moves on, they do lose a little bit of that magic spark or something that made it what it is. Companies need to evolve, you don't want something to be frozen in time. That wouldn't be innovative, but it does need to kind of stick true to what made it unique and what made it special. And so I think you see people like Ray Dalio, he's writing that book, Principles or he's written it. I think that's my guess, I don't know, that's his way to sort of try to memorialize that for the next 100 years or something at Bridgewater and see what people might do there. But yeah, I don't know if anybody's found a perfect solution to that. If you think of one, I'm curious to hear what you, Eric, what other ways have you seen founders kind of memorialize what made a company special?<br /><br /><b>ER</b>: It's funny you ask me that, I literally have a deck of cards that I had made, which is sitting on my desk right now. If it wasn't for COVID, we could do this in person and I would take this deck out and show you, because I'm a collector of the structural things at the level of kind of governance, incentives, disclosure, economic alignment that companies can and do use to maintain this alignment. It's extremely difficult. And if you read the history of business and go back to case studies, and I think I've recommended this book on the podcast before, I'm not sure, there's a book called The Enlightened Capitalists, which is like 150 years of case studies of people who have tried to solve this problem and failed. So it's an old problem in capitalism, where people who find some more purpose-driven way of operating a corporation, if they don't have real alignment and institutional protections as it relates to their investors, usually, but their board and many other stakeholders, you wind up having these case studies.<br /><br />There's a brutal story in that book about a founder who is literally on his deathbed. He built this purpose-driven company. He had run it for something like 40 years, built it into a behemoth, and then one day, some investment bankers in his board engineered a coup to kick him out, and take the company public, and basically strip-mine it and destroy what made it distinctive. And he was on his deathbed, had this regret, the regret of his life is that he hadn't required the board members he had stacked the board with to sign a pledge, a mission fidelity pledge, so that they were able to... They didn't even bother trying to justify that their actions were somehow in line with the company's mission.<br /><br />So yeah, if you look at who is on the board, who has board power, who has voting control, how the company rewards and incentivizes its long-term investors versus its short-term investors, that's a common error that people make. And then, how does it engage employees and its other stakeholders? Brian Chesky is always trying to figure out how to put stock in the hands of his community and how to bring community input into the governance, because that's such an important part of the ethos of Airbnb. I could think of a lot of ways where the decentralized nature of crypto could give rise to other mechanisms that you could bring in that would be natural to think about.<br /><br />And then, some of the stuff is just really brain dead simple, like make sure that you have a product and strategy committee of the board, somebody who is responsible for thinking about what the company strategy will be longterm, so it doesn't devolve into lawyers and lobbyists. Obviously, you have the mission pledge, obviously, what you do with voting control. So there are these mechanisms that people use, but what's so interesting to me, having worked with so many companies over the years, big public companies, private companies, companies going public, is how often, as the company grows, because the company is successful, everyone starts to get really overconfident about how this bad stuff is not going to happen to me.<br /><br />And so then, the voices for the status quo start to get a lot more powerful, a lot, lot louder in the room. And so, all of a sudden, you have finance, and compliance, and bankers, and folks like that. Not that those people are bad by any means. I mean, they're incredibly important to build a compliant organization, to be able to successfully do something like an IPO. And yet, sometimes I meet with founders who are a little bit frustrated that this longer-term perspective of what is this going to look like 10 years from now, 50 years from now, 100 years from now, isn't really part of the everyday conversation. So I think creating mechanisms and fora for that are super important in an organization.<br /><br /><b>BA</b>: Yeah, very well said. I mean, it's such a complex and interesting topic. I think you're right, that companies do best when they have this marriage of skill sets, or even you could call it a healthy tension, where there's a founder-CEO who wants to... The founder is a little crazy, right? They're contrarian. They think differently. They question why is that? They want to try ambitious things that look like toys today, but could be really big in the future. But on the other hand, founders can get a little too crazy and they can blow up companies. You need, really, steady hands operators, executives, and those other functions that you mentioned that are more like risk functions, legal compliance, HR.<br /><br />And so, you can get a company that falls too far either way, right? We all can name some companies that probably the crazy founder blew it up a little bit too much. We also can name companies that they frankly just haven't innovated in decades because they're run by risk functions, more or less. And even if you look at... I'm not here to bad mouth any particular industry or anything, but if you look at some large banks in the US, most people would say they haven't innovated as much as they could. And they've almost become like quasi-government institutions in a way, and they're so focused on risk mitigation that it's not about innovation. There's the large banks and those are it. There haven't been really new upstarts or anything in that realm.<br /><br /><b>ER</b>: Don't get me started about stock exchanges.<br /><br /><b>BA</b>: Oh, yes. Yeah. I mean, so this is... Also, I'll just make one other final point. So I guess if you think about it, a company doesn't need to last a thousand years or something. I think it's nice. For the founder who created it, their ego is attached to it, and so it's nice to think about how do you make something that lasts. I think that's a very valuable pursuit. But there's also something beautiful about creative disruption, right? It's like, sometimes it's time for a new thing to come along. And if something does get too set in its ways, it stops innovating.<br /><br />Jeff Bezos says it's always day one at Amazon, right? Steve Jobs, in his Stanford Commencement address, said, "Stay hungry and foolish." There's many versions of this. At Coinbase, we talk about repeatable innovation a lot. But whenever a company stops doing that, or a country for that instance, or just as another example, I think it's like they probably should be disrupted, right? That's better than never having anything new at all. And so, that process of something maturing, and then stagnating, and then something new coming along is kind of... It's the way we make progress to keep going forward as a human civilization.<br /><br /><b>ER</b>: That's really well said. And bare survival should not be our goal. And I think we all have interacted with organizations that have become bureaucratic and who have no purpose anymore. They simply exist to preserve themselves. And when that happens, it's actually something like really genuinely dark. So I think trying to really find that spark of continuous innovation and to make sure that remains at the heart of our economic engine, both at the level of individual companies, and of course, as we think about the macroeconomics of our country, I think that that is really important. Talk a little bit about what you see as the role of civic leaders, business leaders, in advancing that for us, in terms of our civic fabric.<br /><br /><b>BA</b>: Yeah. Let's just start with, I guess, the highest level, which is that I think if you want to improve the world, starting a company is one of the best ways to do that, especially a company that is trying to drive some kind of science, or engineering, or technology innovation in the world. There are some businesses you could think of that probably wouldn't be examples of that, but I think one of the beautiful things about capitalism and free markets is that if you want to... The only reason someone's going to part with their hard earned money is if you provided something that they really want and need, right?<br /><br />And there's exceptions to that, right? You could think about addictive things, like cigarettes, or people that have monopolies, or whatever, but by and large, I think capitalism is a force for incredible good in the world. And let me give you an example. Some of the biggest problems in the world, let's look at climate change or something, governments all over the world have debated this endlessly. There's been so many papers written on it, the academics, there's the Paris Climate Accord, we're in, we're out, all these things.<br /><br />And what's going to be the thing that actually potentially makes the most forward progress on solving climate change? It's probably one person who started a company, like Tesla, Elon Musk, and now, suddenly every car company has an electric car program. We're talking about solar in much bigger ways. So that's such a clear cut example. What other major problems are there in the world? Education, healthcare, financial services. I think if you want to solve education, look at things like Khan Academy. Khan Academy is actually a nonprofit. It's not a company. So start a nonprofit, too. I think those also can be very valuable. If you look at healthcare, I think technology is driving some of the most important innovations there. If you look at financial services, I think the same thing. FinTech is driving a lot of the most important changes.<br /><br /><b>ER</b>: And we're all waiting in line for a vaccine that is a technological modern miracle.<br /><br /><b>BA</b>: Absolutely. Biotech, longevity, energy, entertainment. I really think that there's a weird thing happening in the world now, which is that it's become fashionable to bash tech companies or something like that. And we see it in our media too. There's a lot of entertainment and stories that come out.<br /><br /><b>ER</b>: Yeah. Well, not to say that we haven't had some deserved examples of mistakes, too. So yeah, fair enough.<br /><br /><b>BA</b>: Sure. Sure. I mean, there's always... With any new tool, it can be used for bad or good. A scalpel could be used to kill someone or to save someone's life. Anyway, there's certainly... Nobody knows exactly how these things are going to evolve, too. If you latch on to some new technology, like Bitcoin or whatever other company examples are, you don't know exactly how it's going to play out in society. One of my views is that a vast majority of people in the world, 99% or more, are good. Yes, there's 1% of people who are going to try to abuse something. That doesn't mean we shouldn't keep making forward progress and building new things.<br /><br />Do you need to mitigate the risks? Yes. Do you need to take that very seriously? Yes. But it shouldn't prevent us from trying and building new things. I think there's a bit of fear about change. There's a fear about new. There's a fear about how we'll be unprepared for that. And it's almost a negative message for young people to hear, I think, that these things are destroying society or whatever. If you want to advance society, I think that the best way to do it is, basically the best lever we have as a society is science technology, starting companies, building products that can help people. Yeah. I feel like that's a very important path forward.<br /><br /><b>ER</b>: We've come a long way from the super optimistic message of Star Trek.<br /><br /><b>BA</b>: Yeah, yeah. And Terminator, and all these things. Peter Thiel has talked about that. Why are the messages coming out of Hollywood often Terminator-esque, or Black Mirror, or kind of dystopian, I guess?<br /><br /><b>ER</b>: Well, you see it in how people are responding to the pandemic, I think. Yes, we've had terrible bad news and it's been an awful year, but there's been some recent articles, and Zeynep, who we also had as a guest on, had a great article recently about why are people being overly pessimistic now, and why is there this tendency to downplay the good news that we're finally starting to see, and then the harms that that can cause. Because ultimately, it's our collective imagination and determination to make things better that is ultimately what is the driver of human progress.<br /><br /><b>BA</b>: Yeah, absolutely.<br /><br /><b>ER</b>: I want to go back to what you said about economic freedom for a minute, because I think that's such a really interesting concept, and it's such an unusual thing to have a CEO talk about as the mission of the company. But I think for some people who are listening, they're going to find it especially surprising, because one of the things that I feel like I'd be remiss if I didn't ask you about, one of the things that you've been... Those who follow the tech industry have noticed during the pandemic, that you came out and said that you did not want to talk about social issues and politics as part of what you're doing at Coinbase.<br /><br />And yet, economic freedom, some people would say would be a very political agenda that, of course, the whole crypto movement is in some ways trying to push. So talk a little bit about what that experience was like being at the eye of that firestorm, why you felt the need to take that stand, and how do you reconcile that with the mission of the company and your political objectives in terms of rule of law and economic freedom?<br /><br /><b>BA</b>: Yeah. So I think it goes back to what we talked about earlier with mission first, mission focused as a company. So I do think every company should have a very ambitious, important mission that is going to move the needle and improve society, and they should be pretty focused on that mission. So for us, that's about creating an open financial system. It's about creating more economic freedom in the world. And that certainly has political aspects of it. We engage with politicians, and regulators, and do all kinds of policy work around crypto for instance, and even economic freedom.<br /><br />So to me, it's fine to do political work as a company as long as it's on mission. And one of the challenges that I went through last year was that I realized at a certain point, not everybody was aligned about what the mission of Coinbase was and what was in scope for that mission. And so, of course there were a number of challenging events happening in the world last year that were incredibly important, and rightfully so, many people were focused on it. I really wanted the workplace at Coinbase to be a refuge from that kind of division that was increasingly happening out there in the world.<br /><br />And I felt like we already have a really important mission that's going to try to improve the world. And so, for us to really make progress on that, it's going to take years and years and decades of really focused and intent work. And if we try to boil the ocean and try to solve every problem out there, it's actually more likely we're not going to make progress on any of them. So that was my... It was a very difficult moment to go through. I think that it showed that I had not made that clear to the company. I had not done a good enough job of making sure everybody was aligned to the mission.<br /><br />And so, that's one of the things about being CEO, I guess there's always something new to learn. And last year was my time to learn that, and go out and say, "All right. Let's clarify what the mission is, what we're all here to do." And I recognize that not everybody was going to be on board with that, so what we did was we made a pretty generous offer to anybody who felt that they had not signed up for that mission. And some people took us up on it, and they decided to leave. But as a result afterwards, I think the company is much more aligned. We're all moving in the same direction. I actually think it was probably the most important thing I did as CEO last year, even though it was kind of difficult and unpleasant to go through.<br /><br /><b>ER</b>: Do you have any regret about picking that issue, that moment, to take that stand?<br /><br /><b>BA</b>: I really, really wish it hadn't been that time, at that moment. I had no desire to get that kind of attention for that. I really felt that I just couldn't wait. I wanted to stand up in front of the company and say, "This is why we're here. This is why I started this company. I want us to go solve this really important thing in the world." And I knew that that would upset some people. And I was also worried that we're hiring people really quickly. When are we going to... The next 1,000 or 5,000 people join this company, I'm not doing them any favors by not making this clear.<br /><br />And so, I just really felt like after three or four months went by, and I was like, "We can't wait. I've got to come out and say this." And I knew it would be somewhat controversial. I knew some people would misinterpret it. But it was one of those things where, looking back, I don't regret it. It was difficult, but it was important and necessary. Are there some ways that we could have done it better, in terms of how we wrote out the messaging? There's always some things we could have edited around the margin. But overall, I think it was the right thing to do, and in that sense, I don't regret it.<br /><br /><b>ER</b>: Let me ask you, do you mind if we do one more follow-up about the politics thing? Because I think that's important for people to understand what you really meant by that. So, it certainly was a brave thing to do, and to put yourself really in the center of so much attention and emotion in that moment. Do you think all CEOs should take a similar stance? Or what advice would you give to other CEOs who are contemplating where they should net out on that question?<br /><br /><b>BA</b>: Yeah, so I certainly wouldn't presume to say that every company should take such a mission focused approach, which is how I described it in that blog post. Just because, first of all, it's none of my business to tell them how to run their company. But also, I kind of like that there's a variety of ideas tried in business. That's part of what we find what works, and some people emulate it, some people don't. So I wouldn't presume to tell everybody to do that.<br /><br />But if there are CEOs out there who are feeling like, "I just feel like the employees are becoming distracted, that they're focused on the wrong things." And if you just start to feel like something in my gut is wrong, maybe even that people feel afraid to speak up in the company because it's becoming a hostile environment or something like that, that's where I feel like maybe you have an obligation as CEO to stand up and say it.<br /><br />And a lot of people did actually reach out to me, current employees and new employees who applied to Coinbase as a result of it, and others out there in the world who said, "Really, thank you for speaking up. I was increasingly feeling uncomfortable at work. This was a really unpleasant environment, and it was starting to affect my engagement." And I realized I was not the only one who was feeling that way.<br /><br />And so, if you feel that way, either you're going to have to go as CEO or you're going to have to make it a company that you want to work in. And if you make it a place you want to work in, there's probably other people that want to work there too, from all different backgrounds and everything, by the way. So people from every different background want to work at a mission focused company that is trying to achieve something really difficult in the world, and it's a workplace that is a refuge from division.<br /><br />Not everybody wants to work in that environment, but there's a great variety of people who do. And so far, it's actually, I would say... Initially, it sort of had a chilling effect on our hiring in the sense that some people were unsure, what is this, what does it mean? But I'd say, actually now, it's had a net positive effect on our hiring, and we have people joining who just understand what they're getting into, and they understand what the mission of the company is. And so, they're self-selecting in, and a number of them have been telling us, "Oh man, I was so frustrated at this at my past company. It was so hard to even get work done there." And that's the reason they came and applied to Coinbase. I don't know. If other CEOs are feeling similarly, maybe I would suggest something the same.<br /><b><br />ER</b>: It does seem like we're about to enter into an era that, I think when we were growing up, and certainly for our parents and grandparents, it might've seemed like science fiction where trust has gone down in almost all of our institutions as so many of the institutions that govern our civic life have decayed in our lifetimes. And we're starting to see a world where the civic values that really matter are increasingly being defended, not by journalists and not by universities and not by politicians, but really by corporations. And corporations, because they want to be mission-driven, because that is the new demand of people where they want to work, and also investors and customers, that's increasingly important to them, we're starting to see a diverse set of companies stand for the different elements of the kind of core values of our civic fabric.<br /><br />I almost feel like even if other CEOs who disagreed with you or had a different value set than you did, you took a similar stand, it might actually be better for our civic health overall, because if Coinbase is really standing for economic freedom and a diverse set of other people have a chance to bring their ideas into the marketplace and to stand for the other important civic values, maybe as a whole, as a society, we're better off.<br /><br /><b>BA</b>: Yeah. I mean, that's a big question. It's certainly possible. I agree with you. There is a lack of trust kind of happening in media and in government and I think there's fewer even religious people now, if I'm remembering correctly.<br /><br /><b>ER</b>: That's right.<br /><br /><b>BA</b>: There is a strange thing that I didn't quite anticipate starting a company where, frankly, maybe this was naive of me, I was thinking when I first started Coinbase, how we're going to build a great product and people are going to want to build that. And a lot of people have started looking up to me and saying, "What do you think about all these broader issues?" And I never really anticipated that, which might've been naive of me. But yeah, I guess a company, it is another tribe that people want to belong to just like a university or a sports team or something like that.<br /><br />I've always been sort of uncomfortable in that position, to be honest with you. I never really thought about myself as a natural leader. I always thought of myself as sort of an engineer who likes to build new products. I'm sort of a reluctant leader in that sense, but I guess it's been working out okay and I've sort of made peace with it and it's fun.<br /><br /><b>ER</b>: Join the club. As we're recording this, your IPO for Coinbase is imminent. And I know that limits, of course, the kinds of things that we can talk about, but talk a little bit about the choice to do an IPO versus, say, do an ICO for Coinbase.<br /><br /><b>BA</b>: Oh yeah. Let's see. For those who don't know, an ICO would be an initial coin offering. There's a lot of different words around that, which basically are referring to companies, could they someday go public, on the blockchain. And when I first heard that term going public on the blockchain, I thought, "What does that even mean?" And I guess what it means in practice is companies have shares, which are securities like stocks that can be traded out there. And some people have made crypto tokens or crypto assets that represent those shares, and those crypto assets can be traded on crypto exchanges, just like any other crypto asset. Today, most of the crypto assets that are out there that are being traded. They're not securities, they are commodities, they're tokens of various types, rewards tokens, governance tokens. And there was actually a big question in the industry about, are any of these crypto assets securities? And the SEC has come out and opined on several of them, which I won't get into.<br /><br />But when we thought about Coinbase going public, I certainly, that was one of the first thoughts that went through my mind is, "Hey, how cool would that be? If we could go public kind of in a crypto native way. We're trying to build the open financial system. Why don't we use our own exchange to create a crypto asset and go public that way with a crypto asset that represents shares of Coinbase?"<br /><br />There was a bunch of consideration that went into which one, right? One argument in favor of doing a crypto IPO is that most of the early people who got super into crypto, they were retail customers. Like, the big institutions were initially quite skeptical on crypto. And then in a way it's kind of like going to our base, going to the audience that got us here and saying, "Hey, all of your crypto traders, now you can own Coinbase stock." Like how cool would that be?<br /><br />Now, there’s an argument on the flip side, which is that most, if you look at most IPOs that happen, the majority of the shares are owned by institutions. They're not owned by retail. I think maybe like 20 or 30% is owned by retail, like on some of the stocks I've seen recently. And so would we be actually missing out on a larger segment of the institutional money out there that would want to hold a stock like that? And now of course, just in the last two years or so, institutions have started coming into crypto in a major way. That's starting to change, but there's still, I would say probably the majority of institutional money out there can not actually hold crypto assets. Due to their bylaws and LP agreements and things, they can only hold public securities, like in the traditional sense.<br /><br />So then my next thought was, "Okay, well, why don't we do both?" Sometimes companies do a dual listing, right? They might list on the long-term stock exchange and another exchange, or they might list on like the Hong Kong exchange and the New York Stock Exchange or something. So why don't we call it a dual listing, but this time, instead one of the listings will be a traditional IPO, one will be a crypto token that trades on crypto exchanges.<br /><br />That was kind of what I was initially planning to do. Now, as life goes, things turned out to be a little more complicated than that. One of the things that we would need to have gotten done to start to do the crypto IPO and actually trade security, which is, of Coinbase shares, a security token they would call it, was we needed to get some more licenses and regulation in place. So that would be, in our case, like a broker dealer license, we needed to operationalize it. There's a bunch of control environments that need to be in place approved by regulators. And currently there's no crypto exchange out there that I'm aware of that, at least in the US, is licensed to trade security tokens.<br /><br />So, we started to look into that process about how to go do that. And long story short, it would have delayed our IPO by, I don't know, at least a year or so. We may still do it in the future. I think that would be exciting to try. And I think there's a lot of benefits to that. I can talk in a minute about what it might look like for other startups to do that once things are a little more developed in the crypto industry, the market structure and everything. That's basically the short story about why we decided to do a direct listing, not a traditional IPO, but we did that in the traditional public security sense.<br /><br />I would love to keep exploring that and seeing if we can make crypto IPO as a thing in the future because I think that's one more piece of the open financial system that we can innovate on and get rid of a lot of the inefficiency, which I'm seeing bits and pieces of going through it the traditional way. Crypto has the potential to revolutionize a lot of different pieces of the traditional financial system. But one of those pieces is how companies get formed, how they raise money, how they manage their cap table and how they eventually go public.<br /><br />There's already been some large fundraisers in crypto, crowdfunding if you will. And it shows the potential where, in a traditional fundraising environment, you typically have to go to one of a few locations in the world where venture capitalists live and pitch them. And if you don't live in one of those locations, or you're unable to fly there, a lot of entrepreneurs around the world struggle to raise money for their brand new ideas.<br /><br />In a way it would be amazing to sort of democratize access to fundraising. And some of these crypto fundraisings have been enormous. They've, not for specifically raising money for securities, but for other reasons, they've been able to issue tokens and get thousands of people around the world to put in money in a matter of hours. Some of them have exploded in spectacular fashion by the way, in a negative way, because it's a new thing, but it shows the potential for fundraising. That's an important piece.<br /><br />Now, once companies have raised some money and we crypto could democratize access to that fundraising, they then need to manage their cap table. And this turns out to be a pretty expensive process. Companies spend a lot of money on legal fees and lawyers, drafting agreements and share transfers, restrictions, and all kinds of things. It's basically all managed through very expensive lawyers instead of if it was just a crypto asset and I wanted to transfer some shares from a to B, you can just transfer that on the blockchain and it would be as easy as sending any other crypto transaction instead of requiring hundreds of pages of legal documents.<br /><br />Now, the last part of that lifecycle is that someday companies might want to go public and there's a bunch of pageantry or whatever you want to call it around how companies go public. There's a lot of archaic pieces that might not be necessary if it were to be created again today. There's a lot of fees baked in that go to the current groups of players that bring these things to market.<br /><br />There's a really interesting opportunity to make that whole process just much more seamless where we could even 10x, 100x the number of companies that get created that way, if you were to able to democratize access to fundraising and reduce the legal fees, the friction, and reduce the overhead in terms of how companies go public.<br /><br />In the early internet area, there was this thing called the .com startup that came out and eventually you didn't need to say .com because every startup was using the internet. My guess is that within 10 years, most new startups will be using cryptocurrency in some way, shape, or form. You won't need to call them a crypto startup. They'll just be a startup. And they'll use crypto to raise money or manage the cap table or accept cryptocurrency payments, or build their community in some novel way or go public on the blockchain.<br /><br />I'll give you one or two quick soundbites about things that could be novel in that space. One is you could actually reward your community with shares of the stock, the customers who helped you grow the business. Imagine the hosts of Airbnb or the drivers of Uber or whatever had gotten shares in the company. Those kinds of things could be more possible in a world of crypto securities and IPOs. You might even be able to do other kinds of governance innovation, which I know you're a student of and have innovated a lot on yourself, which is, for instance, you could make a security token that every year that you hold it, you get an additional vote in the governance of the company, right? That would incentivize long-term ownership of the token.<br /><br /><b>ER</b>: Indeed.<br /><br /><b>BA</b>: Things like that start to become possible with this new technology and the open financial system with programmable money and securities. Those are the kinds of things that I think we'll hopefully see in the years ahead for crypto.<br /><br /><b>ER</b>: I'm sure you're familiar with Professor Lessig’s idea that code is law and that's never more so than in the governance of corporations eventually, that the software we currently write in English prose, which is prone to so much ambiguity, will obviously eventually be in machine readable code and therefore able to be executed in a much more transparent way.<br /><br /><b>BA</b>: Absolutely. Yeah. Smart contracts are a brilliant invention. I think that's going to have profound implications for governance and government and whole kinds of things in the future.<br /><br /><b>ER</b>: I want to talk a little bit about ResearchHub. Can you tell us a little bit about what that is?<br /><br /><b>BA</b>: ResearchHub is a project company I've started on the side that is something I'm passionate about, which is accelerating scientific research. Scientific research today is incredibly inefficient, both in how funding happens, a lot of the papers are not reproducible, a lot of the papers are frankly not really read by anybody, it's difficult to prioritize them, find actionable insights from them, commercializable insights, if you're an entrepreneur. And so there's kind of a crisis happening, I think, in scientific research that is just slowing down human progress.<br /><br />I mean, think about whenever you get a company that actually is founded on a major scientific breakthrough, it tends to be an incredibly valuable company. I mean, Genentech, Google, like those were both founded on research papers that came out of Stanford, right? Even Coinbase is really founded on the research paper written by Satoshi Nakamoto, the Bitcoin white paper, which was a computer science breakthrough. Space X, Tesla, go down ... It was really the most valuable companies in the world. But most companies are not like that. Most companies are created that are basically just repackaging. Think about beverage companies, consumer packaged goods, like makeup or something. Those companies are 90% marketing and 10% product. In fact, they're often sometimes manufactured by the exact same factory as a hundred other products that just, they've outsourced the creation of the product. It's all about marketing.<br /><br />Similarly, you have scientists that are coming out with some amazing breakthroughs, but sometimes scientists don't know how to go commercialize those, or they don't want to go build big companies. That's not their skillset. And so I kind of want to try to find a way to ... How do you bring those two worlds together, the scientists and the entrepreneurs, so we get more of these Genentech's, Google's, Space X's.<br /><br />That's sort of the idea behind it. And by the way, it scratches one other itch for me, which is I'd wanted to sort of see what it was like to create a crypto startup and ResearchHub does have a crypto asset called ResearchCoin associated with it, which we're using to help incentivize the community to come together.<br /><br />It's been a learning ground for me because one of the goals at Coinbase is we want to help the whole crypto economy take off with thousands of companies. Well, I felt like, okay, to better understand the needs of that customer base, maybe I should try going to create one of these and seeing what the real pain points are.<br /><br />ResearchHub is still very early days. We have a V1 product out there that's gotten some initial traction. If people are curious, I'd love for them to go check it out and basically sign up and check out the particular areas of research you're interested in and help us build a community. It's early days, but the potential is enormous.<br /><br /><b>ER</b>: Having talked to a lot of scientists and public health folks and biotech leaders and just, a lot of people related to the pandemic response, a recurring theme has been research delays and the inability to share has caused really important consequences that we only really appreciate and see research delays, especially we see it in COVID when organizations and scientists were able to share data and genomic data, vaccine data, how important that has been just saving so many lives. And when that doesn't happen, the consequences as well.<br /><br /><b>BA</b>: Absolutely. Yeah. COVID kind of showed us how inefficient the traditional process was of peer review in journals and it takes years to get your thing out. During a pandemic, it was like, "No, publish it to Twitter. I want the right to see your peer review on Medium." That's the kind of thing that why doesn't all research happen that quickly? There's no reason for the journals to charge like thousands of dollars for people to access this stuff that was often funded by public funding. It should be free and available. So many areas of improvement there, I'm hoping we can try to make a dent in that.<br /><br /><b>ER</b>: Kind of zooming all the way out and looking at everything that you've learned, especially this past year, in such difficult times for so many people, what do you really hope will be the long-term impact of this crisis? What do you hope for our society? What will we learn in the new normal as we get out of the crisis?<br /><br /><b>BA</b>: I'm hoping that people have optimism about the future and they feel determined to get there and to improve the world. I mean, it sort of shows you the great resilience of human civilization, which is we see these big challenges come at us and we're able to rise to the challenge, whether that's creating a novel vaccine or creating new companies to help people work remotely, or finding new ways to support the local neighborhoods and small businesses.<br /><br />In a way, it brought the world together. It helped us focus on what mattered. It also just pulled the world forward five years in some ways. Why can't we do that all the time? It's really a matter of culture and perspective and determination and optimism.<br /><br />There's an argument that we should have that every day that we live. People always say that that's kind of a cliche thing, like live every day like it's your last, but I guess it's kind of true when we find these things that create urgency, they propel us forward. And there's a great value in that. I hope we retain some of that.<br /><br /><b>ER</b>: Amen to that, Brian. Thank you so much for taking the time. This was really great.<br /><br /><b>ER</b>: This has been Out of the Crisis. I'm Eric Ries. Out of the Crisis is produced by Ben Ehrlich, edited by Zach McNeese and Sean Maguire. Music composed and performed by Cody Martin. Hosting by Breaker. For more information on ways to get involved, visit helpwithcovid.com. If you or someone you know is leading an effort to make a difference. Please tell me about it. I'm at E-R-I-C-R-I-E-S on Twitter. Thanks for listening. Please rate and subscribe wherever you like to listen.<br /><br /> <br /><br /><br /></div><br />Startup Lessons Learnedhttp://www.blogger.com/profile/16441445454879378457noreply@blogger.comtag:blogger.com,1999:blog-7533727264507128560.post-24399923205467724882021-02-12T08:41:00.001-08:002021-02-12T08:47:26.407-08:00Investing in the post-modern economic era<p>One of most interesting things to me about the stock market’s recent wild ride is that it isn’t actually anything new. Short-selling is part of the way our markets work, and in fact it’s an important mechanism for creating liquidity. To those in the financial world there’s nothing unusual about what happened to company stocks like GameStop and AMC. What has made the last two weeks different is that now, everyone is paying attention. And that’s because a lot of ordinary people, joining together on social media, have been thrust into the public eye. Suddenly, the general public is asking why this kind of trading activity isn’t illegal, and how platforms can be allowed to pause due to volatility. What’s been less covered is the resulting question for companies: how can they prevent themselves from becoming the next GameStop?<br /><br />That was the focus of a conversation I had last week with Amy Butte, the former CFO of NYSE, and <a href="https://g100network.com/">G100</a>’s membership. And a lot of what it came down to was this: what is the purpose of a market? <br /><br />Fundamentally, markets are meant to be a representation of company value. But in the last fifteen to twenty years, the balance has shifted away from value and towards volume. In other words, away from investing towards trading. What’s happening right now is what I have been calling post-modern economics: the markets reward trading that’s about itself, rather than the development of the companies it’s connected to. <br /><br />Liquidity is a good thing, of course, but there’s an urgent need to reinvest—figuratively and literally—in R&D and value creation. We need to consider the consequences of continuing to allow events like the GameStop scenario to happen. Bubbles and mania aren’t new, but prior generations classified them as a bad occurrence. Now, when we see people making a lot of money without making actual things our impulse as a society is to cheer. <br /><br />One of the best tools we have to help rebalance is a stock exchange. That’s because in addition to being platforms for trading, exchanges are avatars for corporate governance. In particular, they can call for governance that demands value creation over time rather than quick, ephemeral profit. One of the most effective ways they can achieve this is by asking companies to bring on more long-term investors, which will significantly reduce the kind of volatility we saw last week (<a href="https://blog.ltse.com/shrinking-the-volatility-gap-85777d2a1924">my colleague Martin has written about this</a>). <br /><br />In order for this to work, public companies need one more thing: transparency around who holds their shares. When companies go from private to public they move from a group of deep relationships formed over time, to a much larger, more anonymous field. The result is that they have no way to know whether their investors are truly supporting the company’s efforts versus looking to get in and out when the timing is right. In addition to seeking more long-term investor alliances, governance can also direct how companies engage with those investors. In particular, companies can suggest that long-term investors register their shares so they can’t be lent out for short-selling, signalling that the company is committed to long-term value creation and identifying the investors who share that goal.<br /><br />Another way governance can empower value creation is by aligning incentives with all stakeholders in a company’s ecosystem. Think about GameStop’s retail outlet employees during the company’s upheaval. Everything happening to the stock price was completely disconnected from their lived experience as people helping the company meet its goals. They had, in every sense, no stake in it. But what if they had access to shares through a company-created stock endowment (like the one Airbnb recently created for hosts)? The company’s success would be their success, and the resulting shared dedication to growth would help support an entire ecosystem. <br /><br />I believe so firmly in the need for a shift towards long-term behaviors that I founded LTSE to do it. Recent events have only strengthened my conviction that we need to focus as much on value creation as we do on trading activity. If you’re interested in learning more about the ways we’re working to help realign the markets with true value, please visit us at <a href="http://ltse.com">ltse.com</a>.<br /><br /><br /><br /></p>Startup Lessons Learnedhttp://www.blogger.com/profile/16441445454879378457noreply@blogger.comtag:blogger.com,1999:blog-7533727264507128560.post-70739699532815274772020-11-13T08:14:00.001-08:002020-11-13T08:14:59.948-08:00Out of the Crisis #22: Ron Klain on pandemic response and preparedness, entrepreneurship, and rebuilding trust in institutions<div style="text-align: left;">Earlier this week, Ron Klain was <a href="https://www.nytimes.com/2020/11/11/us/politics/ron-klain-biden.html?searchResultPosition=1">named President-Elect Biden's chief of staff</a>. The two have worked together for the last 30 years, and Ron also served as Biden's chief of staff during the Obama administration. He was the White House Ebola Response Coordinator in 2014 and 2015, when
the Obama administration set up a pandemic prevention office and created
a playbook for managing future outbreaks. It included everything from preparing the health care system to testing, treatments, and the acceleration of vaccine development.</div><div style="text-align: left;"> </div><div style="text-align: left;">As 2020 began, most Americans thought the coronavirus--if we thought of it at all--was something that was going to be a problem in China only. Ron delivered the opposite message loud and clear. In a January 22nd op-ed in the <i>Washington Post</i> written with <a href="https://ldi.upenn.edu/nicole-lurie-md-msph" target="_blank">Nicole Lurie</a>, he told us,"<a href="https://www.washingtonpost.com/opinions/the-coronavirus-has-landed-in-the-us-heres-how-we-can-reduce-the-risk/2020/01/22/afebe9ee-3d53-11ea-baca-eb7ace0a3455_story.html" target="_blank">We are past the if question and squarely facing the how-bad-will-it-be phase of the response."</a> </div><div style="text-align: left;"><br /></div><div style="text-align: left;">Not only that, but he made it plain that the idea no one could have foreseen the pandemic was nonsense. His work on the pandemic playbook gave him an intimate understanding of the situation and the ways in which the response to it had already been bungled. Upon coming into office, the Trump administration had disbanded the pandemic prevention office and shelved the playbook, which is a good deal of the reason we find ourselves in the situation we're in today with the virus.</div><div style="text-align: left;"><br />This conversation was recorded before the announcement of Ron's new position in the incoming Biden administration. At the time, he was advising the campaign while also serving as Executive Vice President and General Counsel at
Revolution, a DC-based VC firm created to fund startups led by diverse
founders all over the country. </div><div style="text-align: left;"> </div><div style="text-align: left;">We talked about the need for joint public-private efforts to rebuild the country, the role of startups in the recovery, whether a different administration would have handled the virus differently, working with Biden, the advice he got from Dr. Anthony Fauci, and many other things.</div><div style="text-align: left;"> <br /></div><p>You can listen to our discussion on <a href="https://podcasts.apple.com/us/podcast/ron-klain-the-ebola-czar-on-covid/id1505392824?i=1000487692038?i=1000487692038">Apple</a>, <a href="https://podcasts.google.com/feed/aHR0cHM6Ly93d3cuYnJlYWtlci5hdWRpby9mZWVkcy8xMjg1NDEyLnJzcw/episode/aHR0cHM6Ly93d3cuYnJlYWtlci5hdWRpby9vdXQtb2YtdGhlLWNyaXNpcy9lLzY5NTYxNjU1?sa=X&ved=0CAUQkfYCahcKEwj4y5r4hO7rAhUAAAAAHQAAAAAQAQ">Google</a>, or wherever you like to get podcasts. <br />
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A full transcript is beneath the show resources below.<br />
<br /> <br /></p><h1 style="text-align: left;">Highlights from the show:</h1><div style="text-align: left;">Ron introduces himself and discusses his quarantine (2:32)</div><div style="text-align: left;">Disparities in how the pandemic has impacted people (4:01)</div><div style="text-align: left;">Ron's background and how it affected his initial awareness of the virus (6:12)</div><div style="text-align: left;">How the Obama administration's Ebola efforts led to pandemic preparedness (6:51)</div><div style="text-align: left;">Why pandemic preparedness plans were dismantled (9:49)</div><div style="text-align: left;">Ron's attraction to and path through public service (13:02)</div><div style="text-align: left;">Could a different administration have handled coronavirus the way Ebola was handled? (16:17)</div><div style="text-align: left;">What a proper response would have looked like (18:55)</div><div style="text-align: left;">The problems that stem from not believing science holds the answers (20:15)</div><div style="text-align: left;">The problem with the "no recriminations" approach (24:04)</div><div style="text-align: left;">What concerns Ron the most, months into the pandemic (27:37)</div><div style="text-align: left;">Why testing is essential for containing the virus (28:19)</div><div style="text-align: left;">How better health strategy is also better economic strategy (31:07) </div><div style="text-align: left;">Dr. Fauci's advice about fear and honesty (32:38)</div><div style="text-align: left;">What the pandemic has revealed about our civic fabric and the institutions that govern American life (35:03)</div><div style="text-align: left;">The polarized response to the virus (38:16)</div><div style="text-align: left;">What bipartisan politics and policy actually are (41:28)</div><div style="text-align: left;">What Ron thinks we have to do to regain trust in our institutions (43:47)<br />The steps we should be taking now to build a more resilient, equitable, society for the long-term (46:07)</div><div style="text-align: left;">The prospects for a coordinated response to everything from hunger to education to unemployment (50:52)</div><div style="text-align: left;">Building pilot programs with philanthropic, state and local money to demonstrate their scalability (56:32) </div><div style="text-align: left;">The necessary dialogue between government and the private sector (58:48)</div><div style="text-align: left;">How Ron sees the role of startups and entrepreneurship in the recovery (1:00:43)</div><div style="text-align: left;">What it's been like to work with Vice President Joe Biden on the Recovery Act other initiatives, and his presidential campaign (1:03:31)</div><div style="text-align: left;">Doing debate prep with Biden (1:06:12)</div><div style="text-align: left;">The lessons from the 2008-2009 financial crisis and response (1:07:09)</div><div style="text-align: left;">What we need to get out of the crisis (1:09:54) <br /></div><div style="text-align: left;"> <br /></div><div style="text-align: left;"><br /></div><h1 style="text-align: left;">Show-related resources:</h1><div style="text-align: left;"><a href="https://www.revolution.com/" target="_blank">Revolution</a></div><div style="text-align: left;"><a href="https://www.idsociety.org/globalassets/idsa/public-health/covid-19/covid19-health-disparities.pdf" target="_blank">COVID-19 and Health Disparities in the United States</a></div><div style="text-align: left;"><a href="https://www.washingtonpost.com/opinions/the-coronavirus-has-landed-in-the-us-heres-how-we-can-reduce-the-risk/2020/01/22/afebe9ee-3d53-11ea-baca-eb7ace0a3455_story.html" target="_blank">"We're past 'if' on the coronavirus. We're on to 'how bad will it be?'"</a>, Ron Klain,<i>Washington Post</i>, 2/22/2020</div><div style="text-align: left;"><a href="https://obamawhitehouse.archives.gov/the-press-office/2014/12/02/remarks-president-research-potential-ebola-vaccines" target="_blank">Remarks by the President on Research for Potential Ebola Vaccine</a>s, December 2014</div><div style="text-align: left;"><a href="https://www.washingtonpost.com/outlook/nsc-pandemic-office-trump-closed/2020/03/13/a70de09c-6491-11ea-acca-80c22bbee96f_story.html" target="_blank">"I ran the White House pandemic office. Trump closed it." </a>Beth Cameron,<i> Washington Post</i>, 3/13/2020</div><div style="text-align: left;"><a href="https://www.congress.gov/bill/111th-congress/house-bill/1/text" target="_blank">American Recovery and Reinvestment Act of 2009</a></div><div style="text-align: left;"><a href="http://www.startuplessonslearned.com/2020/07/out-of-crisis-16-robert-schooley-on-why.html" target="_blank">Out of the Crisis #16: Robert Schooley</a> </div><div style="text-align: left;"><a href="https://www.cnbc.com/2020/02/05/watch-us-house-panel-holds-hearing-on-the-coronavirus-outbreak.html" target="_blank">U.S. House panel holds hearing on the coronavirus</a></div><div style="text-align: left;"><a href="http://testandtrace.com">testandtrace.com</a></div><div style="text-align: left;"><a href="https://www.youtube.com/watch?v=RieABEtmpUg" target="_blank">Charlie Brown, Lucy, and the football</a> ("A Charlie Brown Thanksgiving")</div><div style="text-align: left;"><a href="https://www.vox.com/2020/7/1/21308809/covid-19-coronavirus-2020-trump-election-polls-polarization" target="_blank">"Trumpism, not polarization, drives America's disastrous coronavirus politics",</a> Ezra Klein,<b> </b><i>Vox</i></div><div style="text-align: left;"><a href="https://www.fema.gov/disasters/defense-production-act" target="_blank">The Defense Production Act</a></div><div style="text-align: left;"><a href="https://wck.org/" target="_blank">World Central Kitchen</a> </div><div style="text-align: left;"><a href="https://www.cftc.gov/LawRegulation/DoddFrankAct/index.htm" target="_blank">Dodd-Frank Act</a></div><div style="text-align: left;"><br /></div><h1 style="text-align: left;">Transcript for Out of the Crisis #22: Ron Klain</h1><div style="text-align: left;"><b>Eric Ries</b>: This is Out of the Crisis. I'm Eric Ries. Would you believe me if I told you this whole thing was avoidable? I'm talking about the pandemic but also the ripple effects we are all experiencing: economic distress, social displacement, increasing inequality in schooling, in health care, and so much more. Is there a way we could've avoided or at least softened the damage? One trope I am really tired of hearing is that we are living through an unprecedented situation. Who could've seen this coming? The media, our leaders, people on social media keep mentioning this idea, as if we've never seen anything like this before. But this kind of pandemic is not actually unprecedented. Pandemics have happened before. Scientists have been warning about this exact scenario for many years. In fact, a coronavirus caused a shutdown as recently as 2005. This is not ancient history.<br /><br />We need to stop pretending that we didn't know what to do. We could've chosen to know what to do. We could have learned from what worked in the past. There is a world of research and experts who have seen these situations before, know the common mistakes that societies make, and have developed a playbook for avoiding these kinds of disasters. We had the opportunity to act, and our leaders chose not to. We have to come to terms with the fact that this was a choice, as heartbreaking as it is to do so.<br /><br />Ron Klain may know more about the leadership side of pandemic response than almost anyone in the U.S. He was named President Obama's Ebola czar in 2014 and led a coordinated response to that disease, resulting in only 18 cases and 2 deaths in this country. On top of that, he has dedicated his life to public service. He has been the Chief of Staff to two different vice presidents and has long been an advocate of science-based policy. Ron saw this coming. He wrote about this pandemic in January and laid out a plan we could have used to avoid the crisis. In our conversation, I ask Ron point blank if the outcome we are living through was inevitable, or could we have avoided this catastrophe? You're not going to like his answer. Here's my conversation with Ron Klain.<br /><br /><b>Ron Klain</b>: I'm Ron Klain. I'm currently Executive Vice President at Revolution, a Washington-based investment firm. Previously, I've served in both the Clinton and the Obama administrations, including as White House Ebola Response Coordinator under President Obama.<br /><br /><b>Eric Ries</b>: Ron, thank you so much for taking the time to have this conversation.<br /><br /><b>Ron Klain</b>: Thanks for having me.<br /><br /><b>Eric Ries</b>: Before we get into it, how are you doing? It's hard to focus on leading when you're not taking care of yourself. How are you? How's the quarantine been for you and your family?<br /><br /><b>Ron Klain</b>: Well, we've been very lucky. No one in our immediate family's gotten sick, and of course that's the most important thing. I think it's a challenge, right? I mean, I feel very, very fortunate on the one hand. I'm working from home. I'm able to do my work from home effectively, and all the technology, everything works. But I do think, look, it's hard to be isolated from friends. It's hard. I haven't seen my mom the entire time we've been quarantined and socially isolated. So I think we're going through a lot of the same things that everyone else is going through, a lot more fortunate than the vast majority of the people. But I think even for those of us who have nice homes and the technology to work from home and the opportunity to work from home, there are challenges, as well.<br /><br /><b>Eric Ries</b>: It's interesting to be going through something that so many others are at the same time. One the one hand, this has been a bonding moment for many of us, having a similar experience, and yet, in another way, this emphasizes the incredible inequity in our society. Some of us have been able to weather the storm relatively easily, have the right setup and other forms of support. And so many don't. I really keep thinking every day about those who don't have that luxury and how hard this must be for them.<br /><br /><b>Ron Klain</b>: Yeah. Look, there's no question. From the start of this, what I've said is people say we're in lockdown, we're in stay-at-home, all these things. That's not true. Even from the most rigorous period of this, millions and millions and millions of people had to go to work every day so that millions others could work more safely from home. And that includes the people who generate the electricity that makes this conversation possible and the internet that works and makes this conversation possible, as well as, obviously, the people who we see more up front, obviously the health-care workers but also the people who are delivering things to our homes and putting the things in the boxes that get delivered to our homes and making the things to get put in the boxes to get delivered to our homes and so on, so forth. So this has been an incredibly uneven pandemic in terms of its impact on people. That's obvious. That's clear from the data that's coming out, a great disparate impact of people of color, particularly African Americans and Latinos, but also disparate based on class, disparate based on employment, disparate based on all kinds of other circumstance in terms of whether or not you've been able to be more safe or be less safe. And that's, I think, one of the real sterling and most pervasive features of what we're going through.<br /><b><br />Eric Ries</b>: For those who don't know you, would you share a little bit about your background? I want to make sure people understand why your voice carries so much weight in this moment. And I also thought I would just start with a quote from something that you wrote, if you don't mind, because I couldn't believe that this was written on January 22nd of this year, at a time when I think it's safe to say that most of us thought coronavirus, if we'd even heard of it, was something that was going to be a problem over there. We've been dealing, for months now, with people who've been saying that no one could've known or no one could've foreseen or all this nonsense. It says, and here I quote, "We are past the if question and squarely facing the how-bad-will-it-be phase of the response." That was on January 22nd. Talk a little bit about how the pandemic first came on to your radar. How did you know this was going to be such a severe problem at a time when most of the rest of us were in denial?<br /><br /><b>Ron Klain</b>: Well, we need to roll the clock back to before this pandemic, to the fact that in 2014 and 2015, I served as the White House Ebola Response Coordinator. And of course my principal job during that period of time was to coordinate that whole of government response that President Obama marshaled towards fighting Ebola, mostly over in West Africa, but also getting our country ready for the occasional case we were going to see, preparing our health-care system, preparing the testing, preparing the various treatments we were going to need, and of course helping to accelerate development of a vaccine.</div><div style="text-align: left;"><br />We did all that, and in the course of doing that, I got very interested in and connected with people who have been focused on this question of pandemic preparedness and wound up then spending parts of the next five years working on this issue. I think that, "Nobody saw it coming is about as wrong as you could get." In fact, what's been widely circulated on the internet the past few months is a speech that President Obama gave in the middle of the Ebola response at NIH in December of 2014, which my team helped write, where he said, in December of 2014, "Hey, Ebola is a dangerous, horrible disease, but it's hard to spread. It's a wake-up call that someday soon," and he said then, "maybe five years from now, maybe 10 years from now," but five years later, December 2019. He said, "Maybe someday soon we're going to see a flu-like virus that spreads easily, that is deadly. We need to start to get ready for it."<br /><br />So, during the Obama administration, we did things to help get ready for it, even after we fought Ebola. We created a pandemic response playbook that we wrote in 2015, in 2016. We set up a bunch of global surveillance systems like one called PREDICT that was supposed to find these diseases early on. We worked with the Chinese government to put U.S. experts inside the Chinese disease-response agency. So there were a lot of indications that something like this was going to happen, and a lot of steps were taken to prepare for it to happen. And when the first signs of this virus emerged in China in the public in December of 2019, I think it was pretty clear that this was exactly the kind of threat we'd been preparing for, exactly the kind of threat that we thought we would see here.<br /><br />Now, look, early on, I think, as I said in that piece in January, it was hard to know how bad it would be. It was hard to know how quickly it would spread, how widely it would spread. And indeed, one reason why it was hard to know was part of the outcome depended on our response to it. When people say, "Well, who could've foreseen this," well, part of, I think, is we couldn’t have foreseen exactly how bad it's been because it was hard to foresee that our government would bungle this as badly as it did. So I think the bottom line, Eric, I think is people in the field knew that something like this was coming. They put in place measures to try to prevent the worst-case scenario, and yet our government has bungled and stumbled into the kind of disaster that we're seeing now.<br /><br /><b>Eric Ries</b>: It's been almost criminally negligent. We don't have the language or concepts for this kind of disaster. No one would have ever thought to write them down as a crime before because doing them was seen as inconceivable. To me, the big tell more so than the stuff that has happened since the lockdown began is that many of the pandemic preparedness actions and structures that you talked about that were put in place while you were there were dismantled before the pandemic. Why?<br /><br /><b>Ron Klain</b>: Yeah. It's interesting. Why on earth? So, look, I think that one thing we said at the end of the Ebola response was that we should never have to have one of these specialized disease responses again. And I said, "Let's set up, inside the White House, a permanent office on pandemic preparedness and response, of experts who can help prepare for what is inevitable and bring together all the different disciplines you need to monitor the risk, assess the risk, quickly respond to the risk, quickly run the response." So President Obama set up that office after I departed, put someone named Beth Cameron in charge of that office, a real global health expert. With the change of administrations, Donald Trump kept the office for the first year and put Admiral Tim Ziemer, who was a veteran of the Bush administration's work on AIDS in Africa in charge of the office, and I think continued to do a good job.<br /><br />And then, in 2018, John Bolton took over as National Security Advisor, and Bolton had a very traditional view of security. His view was that the idea of a disease arising in a developing part of the world and spreading here... His view was that those kinds of threats, those were development problems. Those were problems for social workers and aid workers, that diseases would spread in poor countries, and we'd need to send relief over there. His view was, that wasn't a national security threat. That was kind of a do-gooder problem. We should have a bunch of do-gooders go over and do that stuff. So he said, "Look, what we're going to do is we're going to shut down this office that Obama created. We're going to keep a few people to keep an eye out for terrorists because Bolton was very focused on the idea that terrorists might bring diseases to this country, but not that tourists would bring diseases to this country.<br /><br />In fact, what we've learned painfully over these ensuing six months is that it really didn't matter if COVID came here as a bio-weapon or merely because a bunch of people on tours from China and from Europe brought it here. We're all suffering a big price, and it has a big national security impact. So I think the answer to your question is a very traditional and out-of-date view about national security led people to view these threats, these what they called soft threats, not hard threats, as not real problems. It's the same reason why some people in the national security community, particularly ultra-conservatives, don't view climate change as a national security threat. It's an environment problem. It's a problem for the environmental people, but it's not really a security threat. Global health issues were seen the same way by Bolton and his allies, and as a result, the pandemic-prevention office at the White House was shut down, and the team was disbanded.<br /><br /><b>Eric Ries</b>: Talk a little bit about how you first got into public service and into government. How does one eventually become the Ebola czar. It sounds like a career.<br /><br /><b>Ron Klain</b>: It's not a career path. No, no, no, no.<br /><br /><b>Eric Ries</b>: Talk about why you felt called to do that and just how your path through public service has led to this moment.<br /><br /><b>Ron Klain</b>: I'm a lawyer by training, and I served in the Clinton administration in the White House Counsel's office and ultimately as Chief of Staff to Vice President Gore, and worked on Capitol Hill both before and after that in both the House and the Senate. So I had experience on the Hill. I had experience in the White House. At the end of the 2008 election, Vice President Biden asked me to be his Chief of Staff, and I spent the first two years of the Obama administration as Vice President Biden's Chief of Staff and also as overseeing the team that implemented the recovery act, the big economic recovery package that President Obama got passed in 2009. And implementing that package involved coordinating the work of 14 government agencies, spending $900 billion in two years.<br /><br /><b>Eric Ries</b>: Which used to be seen as a lot of money.<br /><b> </b></div><div style="text-align: left;"><b>Ron Klain</b>: It used to be a lot of money. At the time, it was the most money the government ever spent on something like that. We got it out the door on time. We did it with a minimum of waste. It was seen as one of the most efficient, transparent government programs in history. And I think it was that experience that led President Obama to come back and take over the Ebola response. His view at the time, in the fall of 2014, was that he had excellent medical experts, he had excellent scientific experts, but that the government wasn't really executing fast enough, that the agencies weren't working together, the throughput of the system wasn't as fast as it needed to be. So he had the view that, based on my experience in implementing the recovery act, he would bring me in to oversee this vast Ebola response that he had commissioned.<br /><br />We ultimately put 10,000 people on the ground in West Africa to fight the disease there. We got 100 hospitals and health-care facilities in the U.S. ready to receive potential patients, to test potential patients, to screen and isolate potential patients. We treated about 18 people in the U.S. with Ebola. Two people died. One person who was misdiagnosed initially in Dallas who passed away. And then we had a U.S. doctor who was fighting the disease in West Africa who got misdiagnosed there. And by the time we got him back to the U.S. to be treated, he was just too ill to be saved.<br /><br />So we successfully treated 16 of 18 patients, and I think we put together the right kind of response in terms of testing people who needed to be tested, screening people who were coming from West Africa to the United States, tracing their interactions with others in America, and protecting the country from a potential outbreak here. Even while, obviously, the vast majority of our efforts were about fighting the disease in West Africa and containing it there, the best way to keep people throughout the continent of Africa safe and ultimately other parts of the world safe was to try to contain and fight the disease in the three countries where it was raging in 2014.<br /><br /><b>Eric Ries</b>: Oh, man. I vividly remember the cable news histrionics and the fear-mongering and the way that we in the public received the story about the Ebola outbreak. I mean, given that some of those same players are still on the air now, we understand how many of those arguments were really, truly in bad faith. I guess one of the big questions that is lurking in the pandemic response is: was that outcome available for COVID-19 for the U.S.? If things had been handled differently, could we have had a similar deescalation? It's almost like a fantasy now that the experts could have been criticized for exaggerating and fear-mongering. That's a fantasy outcome. Is that something that we could've had? Was that possible, given the facts on the ground?<br /><br /><b>Ron Klain</b>: I think we were always going to see many more cases of COVID in the U.S. than we ever saw of Ebola. I think that the disease is spread so much more easily. So I don't think we could've had the same kind of outcome. I do think we could've had a much, much, much, much better outcome if we had handled this properly. So, if you look at countries like Korea, for example, which had thousands of cases but many fewer deaths, not just two like we had with Ebola but several hundred, but nonetheless got the disease under control in relatively short order and didn't suffer anything like what we're talking about here in the U.S., 130,000-plus deaths already and continuing to mount at 500 more a day.<br /> </div><div style="text-align: left;">So nothing about the extent that we've seen was inevitable. I do this, though, that certainly some epidemic here or some outbreak and some spread here and fatalities here were inevitable. I mean, I think that... Could you have had an outcome that was more like H1N1 in 2009, 2010, where over the course of a little more than a year, about 13,000 people died, so about 1,000 a month? Right now, we're still at 500 a day on COVID. I think something like that was much more possible than what we've seen. So this was... I've said from the start we did a great job on Ebola. This was harder problem, and it was always going to be more difficult, but we sure have botched it up. I don't think there's any question about that, too.<br /><br /><b>Eric Ries</b>: In a previous conversation, we had an epidemiologist, Dr. Robert Schooley from UCSD, and he talked a little bit about, from the medical and scientific perspective, what a proper response would've looked like and what could have prevented more than 100,000 deaths. I wanted to ask you the same question but from the point of view of leadership. What are the attributes that were needed to make this work? What I think has been so interesting in these conversations is the ways in which the pandemic reveals as much as it causes problems. It's revealed all these other epidemics of inequality, of short-term thinking, and a real failure to take leadership seriously.<br /><br /><b>Ron Klain</b>: Yeah.<br /><br /><b>Eric Ries</b>: I wonder if you could talk about, in a hypothetical universe where the president had called you after he saw your op-ed on January 22nd and said, "Ron, what do we do?"<br /><br /><b>Ron Klain</b>: Yeah, sure.<br /><br /><b>Eric Ries</b>: What would a proper response have looked like?<br /><br /><b>Ron Klain</b>: Well, so first of all, I think the pandemic both reveals and causes. I think both things are true. And I think, look, the first thing I would've said was... And I said that in the piece and that you read from, Eric, and in the other pieces I wrote in January. I wrote a number of pieces in January, early February. I testified. I testified at the first hearing Congress had on coronavirus on February 5th. So, to me, it starts with putting science first. People always think that's odd coming from me as a non-scientist, but when President Obama brought me in to run the Ebola response, his first directive to me was, "There are the scientists over there. They're going to make all the strategic decisions. Your job as a policy person is to figure out what government policies will take that science and turn it into action and implement their scientific and medical directives through this complicated government we have of federal government and state government and local government and private health-care systems and public systems and so on and so forth."<br /><br />That's where policy people are needed, but the key strategy of the response has to come from science and medicine. And I think the number one problem we've had in the U.S. is the continued effort to either silence, quash, bend, ignore the scientific and medical advice when it came because it was inconvenient or unpleasant or whatever or because we have, also, this cultural trope for some political movements in our country that, like, "Science is bad," or, "Science is elitist," or, "Silence is liberal," or any of these crazy-<br /><br /><b>Eric Ries</b>: But they've had a lot of practice on climate change.<br /><br /><b>Ron Klain</b>: Practice on climate change and all kinds of things.<br /><br /><b>Eric Ries</b>: Tobacco, I remember the fight over tobacco.<br /><br /><b>Ron Klain</b>: Tobacco, all these things, right. So I think that's where you have to start. You have to start with the idea that: where are the answers going to come from? They're going to come from science. That's the first thing. The second thing I would've said is, "You have only two choices with an epidemic. You over-respond or you under-respond. This isn't like a business problem where you can do just in time, just enough inventory, just the right way. You are either going to wind up with too many test kits or too few, but never the right amount. You are going to wind up with too many hospital beds or too few, but never the right amount because epidemics are unpredictable, because there's uncertainty. So, to quash these things, you have to overdo it. You have to just imagine the worst-case scenario, deploy against the worst-case scenario, and then, if you succeed, you're going to have overspent, over-deployed, over whatever. And people will criticize you for it, but what they're criticizing you for actually is the success of your response."<br /><br />And here, I think there was an effort early on to just do just enough. Maybe we won't need so many tests. Why should we spend all this money and do all these things to make all these tests? Maybe we won't need that many hospital beds. Maybe we won't need that much PPE. Let's just see. Let's just see. Let's just see. Right? And the problem is we got behind on all these critical things. We got behind on tests. We got behind on beds. We got behind on PPE. We got behind on critical equipment. We got behind on critical chemicals and reagents and things like that. And once you're behind, catching up is super, super hard. It's an exponential problem. And it's not just that. Also, because you're behind, it keeps getting worse. And so you get further and further behind.<br /><br />So, if, in fact, we had woken up in late December, early January and ordered millions of testing kits and begun to test people early and appreciate it early on, just how widespread the virus was, we would've then surged contact tracing and identified who has the disease and where is it, and who are they having contact with, and isolated chains of transmission. And we would've surged protective gear to the people on the front lines so they wouldn't be spreading it or getting the disease. And so front-line workers who were doing the deliveries and the groceries and all those things wouldn't be getting it and dying and spreading the disease and all these things that are happening.<br /><br />If we had done all that, Eric, in January, in February, we'd be having a conversation. Some people would be saying, "Oh, my god. You spent $1 billion on buying gloves that were never used. What an overreaction," and so on and so forth. But I'll tell you what. We would've saved a lot of lives, and the money we spent on things we didn't need would be dwarfed in comparison to the economic losses we're suffering because we didn't do that. So I think those are really the key pieces that were missing here: a lack of science, a lack of real intensity and effort on the response.<br /><br /><b>Eric Ries</b>: I was involved tangentially in a number of the relief efforts early on, especially around PPE and education and hunger. So I had indirect contact with the government at various levels and got to see more than I ever wanted to see, believe me, but I'm sure quite minor compared to what you've seen in your career. I just got a little bit of a taste of the dereliction of duty that has happened here. One of the things that really struck me among advocates, though, especially early on, was that there really was a no-recriminations policy. Almost everyone I talked to said, "Look. Look forward. Don't look back. The fact that mistakes were made... We'll obviously need to have a truth and reconciliation commission at the end of this. But right now, we need to focus on getting the right thing done, and that means working across the aisle. That means working with people who made mistakes. Everything is forgiven if people will make the right decision now."<br /><br />I think that was really admirable, and it took a tremendous amount of forbearance on the part of these advocates and the folks working in the field. But one of the really maligned consequences of that is that the public is not really properly informed about what was happening as it was happening, even though we who were working on the problem had this idea that we understood that this had been incompetently handled or maliciously handled in some cases. We all nonetheless had this collective delusion that this was going to be a short-term problem. We said, "In a few weeks, when people finally do wake up to the reality of it and start addressing it properly, then we could deal with everything else later." Now later has come, and it seems to me like the collective delusion is still operative. We're still not taking the problem, even right now at this very moment, seriously enough. Talk a little bit about what worries you the most at this point, what our response is now as we enter summer with cases spiking again.<br /><br /><b>Ron Klain</b>: Yeah. It's an interesting point. I certainly agree with the idea that early on, a no-recriminations approach was the right approach, but I think that became kind of a no-accountability approach, which bled into the wrong approach. So I would go, and I would speak up publicly, and I would say, "We don't have this testing problem fixed." And people would say to me, "Well, don't point fingers." And I would be like, "Okay, but we don't have this testing problem fixed." I'm not saying we didn't have it fixed in January, though we didn't, and I'm not saying we didn't have it fixed in March, though we didn't. But it's April. We still don't have it fixed. And I think it was fair for the advocates, the people who had this view, to assume a very reasonable thing, which was that the Trump administration would wake up and start to do stuff. So, leave aside how angry we should be about their failures on testing in January and February, there's a sense that by March they were going to get it together. They were going to do it. We could worry-<br /><br /><b>Eric Ries</b>: You're going to laugh at this, but I had two or three weeks of my life where I was told every single day that someone had it on good authority that tomorrow FEMA was going to make the mass order of PPE, and therefore we could all stand down. I actually heard that every single day for like 20 days in a row. I felt like the people that I was hearing it from sincerely believed it. It was like Lucy and the football over and over and over.<br /><br /><b>Ron Klain</b>: It is Lucy and the football. So I think that's a real thing that happened here, which was just a reasonable disbelief by reasonable people that things wouldn't reasonably change, and they didn't. So what concerns me as we sit here today is that none of these things are still done. And I'll tell you, what concerns me the most, I suppose, is a certain kind of defeatism. I saw someone who I really admire and respect, I'm not going to name him, but who's a real progressive leader, tweet today, "Well, it's too late for testing and tracing now. It's gotten out of control. We've lost control of it. We need to figure out what to do now," so on and so forth. Look, it's not too late for any of these strategies. The countries in Europe, if you look at what happened in Europe... I mean, I mentioned Korea early, which got on top of this early and did a good job of not letting it get out of control.<br /><br />But look at what happened in Europe. They did not do a good job of getting on top of it early. It did get out of control there. They did suffer losses of life, but they never gave up on getting in the game. And ultimately, in March or certainly by early April, they had robust testing regimes. They had robust contact-tracing regimes because I think, in our country, we're a little focused on this testing thing, as we should be. We don't talk about contact tracing enough. Testing makes tracing possible. Tracing extinguishes threads of transmission.<br /><br /><b>Eric Ries</b>: I will put a link to testandtrace.com in the show notes. It's the definitive resource. This is very important.<br /><br /><b>Ron Klain</b>: I appreciate that, yes. So Europe not only tested. They traced, and as a result, yes, way too many lives were lost. Yes, it was too late, but they now have the epidemic down to... not wiped out, but down to a far, far, far, far lower level than we have in the U.S. The other day, the entire continent of Europe, 450 million people had fewer new cases than the state of Arizona, which has about 7 million people in that. So the point is the basics here remain the basics. I worry that we're just at a place... We know that, as a political strategy, the Trump White House is selling, "Hey, you know what? Nothing you can really do about it, just going to have to learn to live with it. This is just one of these background risks we have in society. Just everyone go on with their day." That is them. What I worry is that the people who are fighting this start to give up or start to think, "Well, I guess there's nothing we can do," and we just throw up our hands. There is still something we can do. We can test. We can trace. We can provide PPE for people, people in the healthcare system and also the people we're sending back to work.<br /><br />I mean, I saw an event at the White House yesterday, I think it was, on how all the K-12 kids should go back to school, and they should all go back to school. Well, okay, that's a plausible position, but only if you're going to mask and face-guard the teachers and glove them and protect them. And if the White House's position is, by the way, "Teachers, you know what? You have to go to the five-and-dime store to buy your own chalk because we don't give you school supplies. And now, by the way, teachers, you're going to have to figure out how to get your own masks, how to get your own gloves. You're just kind of on your own," that's not a strategy. So I do think a concerted federal effort on testing, on tracing, on equipment, on clearer guidance on what should open and when it should open and how it should open safely... I think all those things would obviously save lives.<br /><br />I think, ironically, Eric, the other thing about it is better health strategy here would also be better economic strategy. The president set up this thing where he says basically, "You know what, a bunch of scaredy-cat liberals want to see us focus on health. I'm saying we need jobs. Let's reopen as quickly as possible. Let's reopen without standards. Let's reopen willy-nilly. Let's reopen without protection for workers and customers. Just open." Not only is that approach going to cost lives... That's pretty obvious to people, I think, but that approach is going to wind up hurting the economy even worse because we know what's going to happen, which is... America's a consumer-driven economy. We don't make people shop. There's no law that says, "You must go out to eat." There's no law that says, "You must go into the dress shop and buy a new dress. People consume when they think it's safe and smart to consume. And when they see their government throwing up their hands and doing nothing to make it safer, they're not going to consume. So you see all the data starting to come in now that restaurant usage is actually going down, not up, in these early-open states. Bricks-and-mortar retail are going down, not up. Why? Because consumers don't feel safe. I think that's the economic flaw in the president's thinking.<br /><br />One last thing on this point, when President Obama hired me to be the Ebola Response Coordinator, I obviously knew very little about diseases and response and these kinds of things. I knew how to coordinate government policy but didn't know about the substance. So, of course, the very first phone call I made was to Dr. Tony Fauci. And we talked at great length about a lot of the current issues and the things where he wanted my help in terms of getting the government to do better and whatnot. And I asked him, "Give me just some general advice, Tony. Give me some way to think about this." What he said was fear was a really important thing to think about. He talked about the early days of HIV/AIDS where Dr. Fauci was one of the real leaders from the start trying to fight this horrible disease.<br /><br />And he said that people had all kinds of fear about getting HIV/AIDS in all kinds of ways, and that fear really impacted certain kinds of businesses, certain neighborhoods, so on, so forth. And he said, "Look, the thing about fear is the worst way to deal with it is to tell people they're being stupid or to deny it or to tell people you have absolutely nothing to worry about because when you say you have absolutely nothing to worry about, people think you're lying because they have something to worry about. So the most important thing is just to be honest with people, to tell people honestly what's riskier and less risky, how they can be safer, how they can manage risk in their lives."<br /><br /><b>Eric Ries</b>: Which we didn't do with masks, for example.<br /><br /><b>Ron Klain</b>: Like we didn't do with masks. His point was, if you're honest about what makes people afraid and tell people the truth, that is the best way to manage the social and political consequences of fear. And I've thought about that countless times over the course of this COVID epidemic. You see Dr. Fauci staying true to that advice repeatedly in public, when he's allowed to speak publicly by the Trump administration, telling people how things are, what's working, what's not working, so on and so forth. And I think the American public is incredibly generous in their willingness to accept that not everything is going to go right, as long as you're trying to make it go better. Instead, Trump stands up there and goes, "Nothing to worry about, nothing to see here, nothing to be afraid of. It's a hoax, whatever." That just makes people's fears worse, and I think, in the long run, that obviously has big health care consequences. It also has big economic consequences because people just aren't fooled. They know what's going on, and unless they believe their government's really addressing it, they're not going to respond economically, as well.<br /><br /><b>Eric Ries</b>: I really appreciate you saying that the pandemic both causes problems and reveals problems. I think that's really right on. If you think big picture now, what are some of the things that have struck you? What do you think the pandemic has revealed about our civic fabric, about the institutions that govern American life compared to, for example, what we've seen in other countries or compared to the image we had of ourselves pre-crisis.<br /><br /><b>Ron Klain</b>: Yeah. I think three things. I don't think any of these things were unknown before the crisis. It's not that we didn't know these three things, but I think the nature and extent of them have really come into sharp relief. The first is the disparities we have in this country by race. We've just seen a huge disparate impact of this epidemic on people of color, particularly Black people and Latinos. I think that disparate impact, again, not a surprise to anyone who's looked at any other public health issue in this country. That's always true, but I think it's just really come home in a really powerful moment.<br /><br />Of course, it also overlaps with the murder of George Floyd and the Black Lives Matter protests and whatnot. It's obviously a coincidence that George Floyd got killed in the middle of this. It's not a coincidence, though, that the reaction to the murder of George Floyd is infused with this sense of a life-or-death moment for people of color in this country around COVID. It's just a lot of things that have always been there but really heightened and dramatized by this epidemic. So that's one thing that it's revealed.<br /><br />I think the second thing it's revealed is this great disparity in our economy, and not just between rich and poor, which we always knew was there, but between the kind of work that people can do at home and the kind of work that requires people being out in the world and working that way. Obviously, I worked for a long time for Vice President Biden. I'm a big supporter of his. I'm working on his campaign, and he's got a TV ad now where he says, "The delivery workers, the grocery store workers, the warehouse workers, we've got a new name for them. We call them essential workers. We praise them, but we have to do more. We have to pay them." And it's not like they weren't essential before. It's not like people were out there hunting and gathering their own food before. We were beneficiaries of the convenience of either getting it delivered to your house or, before COVID, the convenience of walking into a grocery store and seeing a billion choices all perfectly stocked on the shelves when you wanted it, where you wanted it, and all these things.<br /><br /><b>Eric Ries</b>: Never mind the people that actually grew it.<br /><br /><b>Ron Klain</b>: Never mind the people who grew it and the people who picked it and the people who then got it from the farm to the processing wherever, and all these steps in this whole process. So this all existed kind of behind the scenes. Now I think the fact that these men and women who do this work are the least paid in our country, very often, are the ones who've been at risk of getting the disease, I think it's really driven that home.<br /><br />Then I think the third thing that, again, we all knew was just how polarized we are as a country around some basic things. One thing that's been different about America and other countries has been the fact that this has been kind of a polarized response in our country, the idea that we have people... Every day, you go on social media. You see some video of some person yelling at some other person about mask-wearing, and people with these crazy conspiracy theories that, even though their doctors have been wearing masks for like 100 years, that they're going to die from CO2 poisoning because they wear a mask or whatever, that polarization, which, again, everyone who's followed this knew existed before. I think people had maybe this optimistic hope that in a moment of national crisis, you might be able to set that polarization aside, that when really life and death stakes turned on it, people would set it aside. But I think people know that that is true now, and we're seeing the grave, grave consequences of that in a really painful way.<br /><br /><b>Eric Ries</b>: It's so interesting going back to your experience with Ebola because it's not like polarization was low at that time.<br /><br /><b>Ron Klain</b>: No.<br /><br /><b>Eric Ries</b>: And people made an attempt to polarize that issue politically, of course, and yet you had leadership who was willing to put that aside and do what was in the interests of the nation. Is it right to call this polarization, or is there something else here? How do we make sense of the fact that there's an asymmetrical nature to this?<br /><br /><b>Ron Klain</b>: Yeah, it's a really smart point, Eric, and having said my little polarization speech, I will also say I give the opposite speech at times. Ezra Klein had a great piece out in Vox last week along these lines, which is that it's kind of partly polarization, and a lot of it's just Trumpification. I mean, what's interesting about the mask thing is that, while there are differences among Democrats and Republicans on masks and Democrats are more likely to Republicans to wear masks and feel more likely there should be mandatory mask rules than Republicans, it's also fair to note that, in fact, a majority of Republicans do wear masks. A majority do think there should be mandatory mask laws. The big difference here isn't really a classically polarized difference but a difference between maybe 80% of the country, members of both parties who say, "This is what we should... and 20% that's holding out.<br /><br />So I think it's important not to conflate this fact that we do have 20 or 25% of the country that's following Trump, to not conflate that with broad, just general polarization like, "Oh, we have different views on tax policy. We have different views on... This is something where... One reason why Trump is unpopular right now is he is pursuing a view of this that is a distinctly minority view. So I do think it's a fair caution to be careful about how even I use phrases like polarization and to be a little more precise in how we see this moment. There is no question that we are divided, but the division is more like an 80/20 division, not like a 55/45 division.<br /><br /><b>Eric Ries</b>: It really reminds me, and you were there so I'm really curious to hear your perspective of it... It reminds me of the early days of the Obama administration in 2009. The president had run on a desire to bring reconciliation and bipartisanship back to Washington. I remember reading his book and the way he said, "We're going to incorporate ideas from both sides." The political opposition at that time had a conscious strategy that if they opposed something, then it couldn't be bipartisan by definition, and therefore he couldn't be a success by that metric that he, himself, had laid out as a marker. I remember feeling frustrated at the time that the press went along with that, rather than saying, "Wait a minute. Shouldn't the test of whether something is bipartisan be not whether politicians of different parties sign on because that's easy to game? But shouldn't it be based on the polling data, based on the evidence we have?" There are policies that command a bipartisan majority across the whole nation.<br /><br />I think it's meritorious, and we should give politicians credit when they do something that is bipartisan. But even if they have bad-faith opposition that decides to oppose it even though, just a minute ago, they had been for it, and if we had made that choice as a society then to view issues through that lens, wouldn't we be reaping the dividends of that right now?<br /><br /><b>Ron Klain</b>: Well, hard to know, but I think it's a very good point. And what I'll say here is this actually goes one step further because let's give some credit here. Mitch McConnell wears a mask in public, publicly says people should wear masks. Kevin McCarthy, the Republican Leader of the House, wears a mask in public, says people should wear masks. So, particularly on this mask issue, this isn't like 2009 and Republicans versus Democrats and so on and so forth. You even have many elected Republican leaders joining Democrats saying, "This is what we need to do," so on and so forth. And really, Trump and his most core identifiers are really out there on their own on this. They're really the outliers. That's, I think, what's so striking here, which is that even Trump's more traditional political allies like McConnell, like McCarthy, others, aren't willing to walk down the plank with him on this mask thing.<br /><br /><b>Eric Ries</b>: Funny that they would draw the line there.<br /><br /><b>Ron Klain</b>: Yeah. Well, thank goodness.<br /><br /><b>Eric Ries</b>: Thank goodness. That's right. They're probably saving lives right now.<br /><br /><b>Ron Klain</b>: Absolutely.<br /><br /><b>Eric Ries</b>: What do you think we have to do to regain trust in our institutions? I mean, it's a catch-22. Right now, some of the very people that are actively damaging these institutions are on TV saying, "See? This is proof that you can never trust institutions. You can never trust elites to run them because we ourselves screwed it up." And you know for sure that many of them are going to be on cable news next year saying that exact same thing, probably on January 22nd. What do we do about that?<br /><br /><b>Ron Klain</b>: Yeah, I think it's a hard problem. Look, I think, in the end, the government and its leaders need to do the right things and hope that people see that they’re the right things, hope that they see the results, hope that they follow along. There's often an answer to that, and then there's a political answer to that. The problem with that is that politics exists in real time, and it takes a while for reality to be proven. So I think about health care reform as a good example of this, which is that 2009, 2010, President Obama, Vice President Biden, Democrats in the House and the Senate put a lot of capital and energy into passing the Affordable Care Act and providing health care to tens of millions of Americans and protecting people from pre-existing conditions and protecting young people that could stay on their parents' program, policies and whatnot.<br /><br /><b>Eric Ries</b>: It helped a lot of entrepreneurs, by the way...<br /><br /><b>Ron Klain</b>: Helped a lot of entrepreneurs.<br /><br /><b>Eric Ries</b>: ... because so many founders cannot get health insurance.<br /><br /><b>Ron Klain</b>: Yeah, a lot of ways to really... positive for, obviously, health care, but also positive for the economy in all kinds of ways, and paid a huge political price for that in 2010 because the benefits weren't really baked in by that stage in time, and the costs were very apparent. Now, 10 years later, President Trump's effort to roll all that back is a political liability for him. And 10 years later, the people who made those decisions in 2009, 2010 are the political winners from having been on that side. But in real time, it was a big political problem. So I think that's unfortunately the nature of our political life right now. I don't know what will change it. I just know that this is the most important thing. President Obama always believed, and I agree with this, that the most important thing you can do is just do the right thing. I do think progressives need to do a better job of explaining to people why they're doing the right thing and explain to people what they've done and try to do a little better job in the realtime of winning the political battles over these things. But you got to do the right thing and then try and tell the story on that.<br /><br /><b>Eric Ries</b>: Let's talk a little bit about the long term. What are the steps we should be taking right now to build a more resilient, more fair, equitable, just society on the other side?<br /><br /><b>Ron Klain</b>: I think clearly we need to act on all three of the most obvious crises and a fourth lingering crisis. So we need a meaningful economic policy and economic policy changes. And that means creating jobs for people who have suffered permanent job losses as a result of this. There are going to be millions of people who have lost their jobs for good as a result of this. We need to create jobs for them. We need to raise incomes, both the minimum wage and other things that raise people's incomes. We need to help families cope not only through this crisis, but to be better off after this crisis is over. There's a whole series of economic measures that need to be taken. Obviously, health care reform is part of that.<br /><br />Secondly, we need to really still address this COVID crisis. President Trump keeps saying, "It's going to go away. It's going to go away like a miracle. It's just going to disappear," whatever the formulation of the day is. It changes, but it's some version of that almost every day. We're going to need a lot of government action to do that. We are going to need to vastly ramp up testing and tracing and get to a place where we get this under control until we have a vaccine that's widespread and widely administered and whatnot. So that's the second thing.<br /><br />We have a racism crisis still in this country, and we need to address that. We need to address that with criminal justice reform policies. We need to address it with policies that address all forms of systemic racism and housing and employment and the ability to start a business and to grow a business and all these things. Then we have the climate crisis, which has kind of slid off the front page because of those other three crises, and that's the nature of the climate crisis, unfortunately, which is it's always not on the front page because other things take its place in terms of the day-to-day news. But I think it's really important that we address it.<br /><br />COVID is a really interesting metaphor for the climate crisis, or a comparison or whatever part of speech you want to use to describe this, which is that there's a crisis that people ignored early on, kind of thought it would go away. Trump even used the word hoax to describe it, like he's used for the climate crisis. Scientists were disparaged. People who issued warnings were considered to be negative Nancies or whatever you want to call them, and so on and so forth, alarmists. And then, all of a sudden, it was here. And we're seeing the death toll and the devastation, the economic consequences.<br /><br /><b>Eric Ries:</b> Well, to your point about the defeatism.<br /><br /><b>Ron Klain</b>: And the defeatism: "Nothing we can do about it."<br /><br /><b>Eric Ries</b>: Nothing we can do about it now that it's so bad because we didn't act before. Therefore, we don't need to act now.<br /><br /><b>Ron Klain</b>: Act now... Again, I think climate's a more slow-moving version of COVID but, in some ways, even more drastic and dramatic. So we need to really address that, also, as a country and as part of a global community.<br /><br /><b>Eric Ries</b>: So, to me, the comparison point that keeps coming up from history is the WPA and the effort to put the unemployed back to work doing socially useful things. The need for that scale of investment keeps coming up in these conversations again and again and again, just the really obvious stuff. We have idle factories right now in this country, and we can't import enough PPE. How is it not the most obvious thing in the world that we need to have a mass effort to retool, re-skill, retrain, insource production of essential items? And, although it's masks and gowns right this minute, the production of melt-blown polypropylene, in the future we'll need to be manufacturing new items. So we need to have a WPA for manufacturing.</div><div style="text-align: left;"><br />But shouldn't there also be a 21st-century digital WPA? We have millions of working families who can't work and send their kids to school. So we need to have a mass of investment in online education and tutoring. Well, good news. There's millions of people who are out of work. There's college students who can't go to school. There's retirees. There's knowledge workers of every kind who are not as busy as they used to be. Those people could all be online tutors for kids. We could be investing in mastery learning and supplemental education, closing the digital divide in education, making sure we don't have a lost year for students if we can't reopen schools. We could be doing that for every working family in the country.<br /><br />It's so obvious in hunger. We have restaurants closing and going out of business. We have farmers plowing over crops at a time of unprecedented hunger. How is it not the most obvious thing in the world that the government should be funneling money to those private enterprises to keep them open, keep those people employed, getting the macroeconomic boost of that, and using that to feed the hungry. I feel like we're tackling many of these symptoms individually. There's plenty of nonprofits and people advocating for their one issue. But what do you think the prospects are for us to zoom out and say, "Okay, hold on. This is a massive societal-wide disruption with second, third, fourth-order effects that are all of a similar form"? Do you think we could do that coordinated response like our grandparents had to?<br /><br /><b>Ron Klain</b>: Yeah, I certainly hope we're going to see that. As I mentioned before, I support and am working with Vice President Biden. He's got a big speech coming up where he's going to lay out his economic plan he calls Build Back Better that really addresses a lot of what you're talking about, Eric, that addresses the need to retool our supply chain, first and foremost, to start there, to insource the production of a lot of these key goods that you're talking about and the other things we're going to need down the road: medicines, treatments, therapeutics, ultimately vaccines, things like that. We should be insourcing as much of that as possible to create more security and speed in our supply chain and create more jobs, right? We need to really ramp up the production of all the PPE you're talking about.<br /><br />The president has a tool, the Defense Production Act, that he could use, that Governor Abbott wouldn't have to send the National Guard to make masks. We could send workers, people whose job it is to make stuff, and they get paid, and we get the stuff we need. President Trump's been unwilling to use that authority for some reason. Vice President Biden says he will as president. But I think we also need to think bigger, as you're saying, which is... One idea the vice president's had specifically is to create a contact-tracing core of 100,000 people to take a lot of those young people who are out of work, who can't get jobs and let them do something really important, which is to help them run down this disease, learn skills in public health and community health and may wind up being great careers for them. Once this is all over, we could redeploy them to fight opioids and other great public health crises we have. These aren't just one-time things.<br /><br />Then we also need to really ramp up our caring economy. We need to really increase the number of people you were talking about, providing care for the children, for the elderly, doing the kinds of teaching you're talking about, doing all kinds of online opportunities you're talking about. I think one thing that's been a weakness, aside from all the other weakness, but one other thing that's been a weakness has been a perspective that this COVID crisis is a short-term thing, that it's like a really bad blizzard, that, "Oh, if we wait a couple days, it goes away." We plow up the streets. We all go back to our normal lives by Thursday, by Friday, by next week, so on and so forth. And I think that's led us to ignore these larger solutions that will take longer to ramp up. I mean, the WPA is a really interesting metaphor, everyone loves the WPA. It's a really interesting story. It took two and a half years before it started to employ people in significant numbers. I mean, this was not a short-term answer to the Great Depression. It was a long-term to the Great Depression.<br /><br />I think, here, while certainly I hope we get COVID under control way before two and a half years, and I do think we could stand up some of these larger things much more quickly than the WPA was stood up in the 1930s because we have a lot of tools... We have a lot of advantages over the 1930s, no question about it. But I do think, look, it'll take longer to do some of these bigger things you're talking about. But I think, sadly, the effects of this disease are going to be with us for a long time. And as we talked about earlier, Eric, the effects of some of the underlying social problems the disease has laid bare are definitely going to be with us for a long time. So I think a bigger solution to this around insourcing, around manufacturing, around dealing with the climate crisis by creating jobs and building a cleaner energy economy and around really beefing up our caring economy, these things will pay benefits for the COVID response. There's no question about it, but long-run benefits for our country, too.<br /><br /><b>Eric Ries</b>: I want to run an idea by you.<br /><br /><b>Ron Klain</b>: Please.<br /><br /><b>Eric Ries</b>: Because one of the themes in these conversations has been to inspire people to take action. I've been in dialogue with a lot of philanthropists and nonprofit leaders and, frankly, tech leaders who have not historically had a lot of interest in philanthropy who are getting in the fight right now, some of them for the first time. But this defeatism and sense of despair that has been so much a part of the messaging around the crisis has created a lot of confusion. What good could it do? What can I do?<br /><br />I helped start this hunger-related nonprofit, and we're just trying to turn philanthropic dollars into food at the most efficient rate possible, feed as many people as possible. And I was talking to a philanthropist about it, and he was like, "What's the point? The government should be doing this, and they're not. So what if you fed an extra 100,000 people?" He was very dismissive about it. And of course, I was like, "Tell that to the 100,000 people who wouldn't have had a chance to eat." Yet I also understand his point. So I feel like what we're missing is a bigger vision of: what can people do to lay this groundwork? So I want to run an idea by you. Just tell me if you think I'm out to lunch here, no pun intended.<br /><br />If there's going to be a delay before the government really is going to take this seriously and make the investments that are needed, hopefully... It's an election year now, but there'll be a new Congress soon. And so hopefully it could be early in the new year. If there's a possibility that it could happen then, don't we have an urgent need for shovel-ready projects? I know that would be a phrase near and dear to your heart because I remember how important it was in 2009. We didn't have enough shovel-ready projects, and that inhibited our macroeconomic response.<br /><br />Should we be building pilot programs right now using philanthropic money, state and local money, whatever resources we can get our hands on to demonstrate their scalability, especially given that we have digital technology our grandparents didn't have? I feel like in the next six months, we could have 20, 50, 100 pilots in these different areas at relatively modest cost that would show that there is a way to spend this kind of money responsibly and effectively, the kind of money that's going to be needed to reverse the depression once it's available. So say a little bit about what you'd like to see the private sector, the NGOs, the tech community... What should we be doing now to prepare for this moment of shovel-ready action?<br /><br /><b>Ron Klain</b>: Yeah, I think it's a great point, Eric, and I think that these philanthropic efforts are both meaningful in and of themselves... You feed one person, that's one less person that's hungry, let alone 10,000 people or 100,000 people. I mean, that's meaningful change. But also, as you say, they're really important for what they can teach an incoming administration about the way things can be done. And I'll use a very concrete example on this, which is my... I'm very proud to call him a friend, José Andrés at World Central Kitchen, who not only is feeding a ton of people in all kinds of parts of the country and the world in response to COVID...<br /><br /><b>Eric Ries</b>: Millions the last time I checked.<br /><br /><b>Ron Klain</b>: Millions, millions of people. If you go back to what he did in Puerto Rico after the hurricane, if you go back to what he did in Haiti and other places, what he did is exactly what you're saying, which is he found ways to feed people so effectively, so efficiently that they are now the standards that the government increasingly uses when it responds to a humanitarian crisis. I mean, his philanthropy both saved a lot of lives and innovated about creative ways to use existing kitchens and existing resources, how to feed people efficiently, how to get them hot meals, not just some prepackaged thing that had been sitting in a warehouse for nine years, that now FEMA uses some of his techniques when they respond. So I think this needs to be a dialogue.<br /><br />I mean, I think that one thing that frustrates me as someone who's been in venture capital, in the private sector world is sometimes business people have a view that they have all the answers, and the government's filled with stupid people. And then sometimes government has a view that it has all the answers, and these business people are all wrong. The fact is there's smart people in both sectors, and there's stupid people in both sectors. And there are good approaches in both sectors, and there are bad approaches in both sectors. And if government's working well, it's learning from private models. It's hopefully also then regulating and providing direction to private players, and hopefully you get the best of both.<br /><br />I mean, I think the COVID response is the illustration of the worst of both in the sense that the government did a really shitty job. Then, in the middle of it, Jared came along and said, "These government people are horrible. I'm going to bring in a bunch of private people. And instead of using my government tools, we're going to build a completely separate task force that uses only private-sector solutions to solve COVID." And that completely failed. We were going to have testing in every single big-box store parking lot. We have them in less than 1% of the parking lots right now. The people who were making the test chemicals didn't know if they were supposed to ship them to Jared's testing centers or government testing centers. It was just a complete mess.<br /><br />Instead, we really need a whole-of-society response to this. We need a unified response where government is leading, it's working with private-sector models, it's drawing the best of all worlds, and it's willing to use the tools at its disposal. So we'll use the Defense Production Act. It's willing to use the authorities it has to leverage the resources we have as a country to help solve these problems. So I definitely think, I definitely hope that philanthropic leaders, business leaders will develop solutions in the months ahead, and those solutions will be leverageable by government and certainly learnable by government, and hopefully will lead to better policy in the future.<br /><br /><b>Eric Ries</b>: We haven't really had a chance to talk about your work with startups, but your day job is actually at Revolution, started by our mutual friend, Steve Case. Do you want to talk a little bit about the role you see for startups to play in this recovery? I think something that's not super well understood on the policy side is that net new job creation fundamentally comes from entrepreneurship. And when people hear the word startup, they think San Francisco or Silicon Valley, and they have a very stereotypical image in their mind. But actually, entrepreneurship is critical to the growth of the economy all across our country.<br /><br /><b>Ron Klain</b>: Yeah. I mean, I think entrepreneurship plays a critical role in creating jobs, not just in San Francisco, not just in New York, not just in Boston, the big venture and startup hubs in our country, but throughout the country. One thing we do at Revolution is we believe there are great startups all over America. We back them all over America. We backed hundreds of startups outside of Silicon Valley, outside of New York, outside of Boston, in every part of the country, and also diverse founders. There are many great women founders, people of color, founders of color that we've been able to back outside these three big hubs. So I think that, as we go to tackle this COVID crisis, we're going to find that startups are a key part of it. They're a part of innovating and developing responses to it. They're a part of building back the economy better after this has all gotten under control, part of really creating the kind of resilient economy of the future that is less impacted by things like that. So I think there's a lot of reasons to really focus on startups.<br /><br />Our policy, the government policy thus far hasn't been that focused on that. The government policy's really been focused a lot of money to big businesses like airlines and things like that and then a good amount of money to traditional small businesses: pizza parlors and restaurants and dry cleaners and things like that. They're vital, and they definitely need to stay open. Of course they should've been included, and of course they need help. We really haven't thought much about, hey, what's it going to take to really get the kinds of startups you need coming out of this crisis to help provide solutions to the crisis and to really create the real job growth we're going to need? Because, look, one thing we know is going to happen is the economy on the other side is going to be different than the economy that went in.<br /><br />Probably, there's just going to be less brick-and-mortar shopping. If you've ordered stuff online for six months, maybe you don't go back to the store in month seven, maybe less in-restaurant dining, just a lot of habits, less viewing of movies in movie theaters. There's displacement in the economy. We're going to have to fill that gap with a bunch of new jobs, and startups are a big part of creating those new jobs.<br /><br /><b>Eric Ries</b>: I feel like I'd be remiss if I didn't ask you at least one political question while you're here.<br /><br /><b>Ron Klain</b>: Fire away.<br /><br /><b>Eric Ries</b>: Because compared to all of our guests, you must be the one closest to Vice President Joe Biden, who is one of two people who is overwhelmingly likely to be our next president. Will you talk a little bit about what it's been like to work with him? You talked a lot, especially the work on the Recovery Act and the work that you did with him out of the spotlight. Then what's it been like watching him ascend to the center of international attention and helping with the campaign?<br /><br /><b>Ron Klain</b>: Yeah. So I first went to work for Joe Biden 30 years ago. I started working for him in the 1980s and had the pleasure of working on his Senate staff, worked on the judiciary committee staff in the 1990s. So he's been a mentor and a friend for a very, very long time. The thing I always tell people about Joe Biden is what you see is what you get. He is a very down-to-earth, very nice person, a giant heart, compassionate, decent person. And I think that the presidency and presidential campaigns don't change you. They reveal you. We've seen over the past three years the kind of person Donald Trump is, and I think we've seen, over the course of this campaign, the kind of person Joe Biden is, someone who always has that moment to talk to people, tries to reach out to people, really worries about the consequences of things on people.<br /><br />I think that great presidential campaigns are the combination of a great candidate and the right moment. While I think Joe Biden would've been a great president for this country at any time, I think he's especially the president we need at this time to restore just some sense of decency and honor to the presidency, to try to show some compassion and understanding and to explain to people that experience in government is a good thing. Government's a hard thing to run. You need to know what you're doing. Just his background, his success in getting bills passed and working with Congress, getting things done, I think are the kinds of things we need. He's got the right values and the right experience.<br /><br />It's funny. If you showed up tomorrow morning in New York and said, "I've got an idea. I want to build the most complicated skyscraper ever, but I've never worked on a job site or a building before," people would laugh you out of the room. And yet, Donald Trump showed up and said, "I've got an idea. I want to run the most complicated enterprise we have in America, government. I know nothing about it other than that I hate it." And we're seeing the consequences of that. I mean, we're seeing the bill on that has come due in a really powerful way. I think Joe Biden's experience, Joe Biden's character, Joe Biden's kindness and compassion, I think those are the things we really need in the Oval Office right now.<br /><br /><b>Eric Ries</b>: I've got to ask this because, although people may not know it, you've been in charge of debate prep, I think, for every Democratic nominee since Al Gore, right?<br /><br /><b>Ron Klain</b>: Yes, exactly.<br /><br /><b>Eric Ries</b>: How on earth do you do debate prep under these circumstances? I got to know, what on earth do you do? How do you do it?<br /><br /><b>Ron Klain</b>: Well, I think we'll see when we get there in terms of... I'm not going to lay out our strategy here on the podcast. But, look, I think it's really important for Joe Biden to be Joe Biden in these debates and to tell it like it is and to stand up for himself and to make it clear he's not going to take any gruff from President Trump. But he's not going to be Donald Trump. He's not going to be rude and mean and whatever. I think he's going to stand tough and be tough but be a tough Joe Biden, not a Donald Trump imitator. That's for sure.<br /><br /><b>Eric Ries</b>: One last question on the politics, if you don't mind.<br /><br /><b>Ron Klain</b>: Sure.<br /><br /><b>Eric Ries</b>: What are the lessons that you hope the vice president and everyone who works in his incoming administration, if it comes to pass... What are the lessons from 2009 that you want them to learn? Because it seems to me like so much of the world we live in now was shaped by the consequential choices that were made by the president and others in responding to the last financial crisis. Obviously a lot of things went well, but I'm sure you would be the first to admit there were some things that we couldn't have foreseen and didn't go as well as you would've liked. Well, we're living in that world now and, to me, one of the major appeals of Joe Biden as a candidate is that he was there. He was in the room where it happened, so to speak, when those choices were made. So what are the lessons you hope he's taken away from how things unfolded over the past 10 years?<br /><br /><b>Ron Klain</b>: Well, look, I think that... I want to start with the fact that he's very proud of his role in making those things happen. I think that the policy solutions weren't perfect, but I think America's a lot better off because of the Recovery Act. I think America's a lot better off because of the Affordable Care Act. I think America's a lot better off because of Dodd-Frank. I think that it's important to understand that every day in the White House is precious, and every day in a crisis is critical. And it's really important to muster the largest possible response you can as quickly as possible to address as much as possible. And the vice president, if he becomes president, is going to have a very, very full plate of dealing with all of the things we've talked about in this conversation, Eric. And I think he's just going to have to throw everything he has at it and fight like hell to try to get as much of this done as quickly as he can. I think if he can get bipartisan support for that, that's great. If he can't, he has to do it, anyway, and he has to understand that time is of the essence.</div><div style="text-align: left;"><br />I know there are critics of the 2009, 2010 record, but I'm really proud of my experience, and I know Joe Biden's really proud of his experience in it. I think a lot of Americans were helped. You can't let the perfect be the enemy of the good, and you can't wish for things that you can't have. I hope that, if he becomes president, he's able to deliver on the same scope and nature of changes. I hope, obviously, they're going to go farther on health care, they're going to go farther on jobs, they're going to go farther on climate change, they're going to go farther on race, father on immigration. At least, that's what he's going to try to do. He's running on a bold agenda in all these areas, and then just getting done as much as he can. That's definitely the goal.<br /><br /><b>Eric Ries</b>: Ron, I really want to thank you for taking the time to do this. I feel like there are 100 more questions I want to ask you. You have had a front-row seat to so many of the important episodes in American history, certainly in my lifetime. So I really appreciate your perspective and especially appreciate the work that you're doing now to help us build the new normal that we all want to see. I want to ask you one last question.<br /><br /><b>Ron Klain</b>: Please.<br /><br /><b>Eric Ries</b>: Simply, how do we get out of the crisis?<br /><br /><b>Ron Klain</b>: We need leadership to get out of the crisis. Look, obviously, I'm biased. I think part of this is getting Joe Biden elected president. But I think what we're seeing is two big things. The talent, the resilience, the determination of the American people is really impressive, but without the right leadership, you can't really fight something like this pandemic and all the consequences it's inflicted and all the problems it's revealed. So I think, in the end, we need better leadership in Washington to fight this crisis.<br /><br /><b>Eric Ries</b>: Ron Klain, this was a pleasure. Thank you so much.<br /><br /><b>Ron Klain</b>: Eric, thank you so much.<br /><br /><b>Eric Ries</b>: This has been Out of the Crisis. I'm Eric Ries. Out of the Crisis is produced by Ben Ehrlich, edited by Zach McNeese and Sean Maguire; music composed and performed by Cody Martin; hosting by Breaker. For more information on ways to get involved, visit helpwithcovid.com.<br /><br />If you or someone you know is leading an effort to make a difference, please tell me about it. I'm @ericries on Twitter. Thanks for listening. Please rate and subscribe wherever you like to listen.<br /> <br /><br /><br /></div>Startup Lessons Learnedhttp://www.blogger.com/profile/16441445454879378457noreply@blogger.comtag:blogger.com,1999:blog-7533727264507128560.post-28626753286957312562020-09-02T12:20:00.000-07:002020-09-02T12:37:05.313-07:00Out of the Crisis #21: Tomas Pueyo on the hammer and the dance, political polarization, and how the pandemic will affect the way we live and workIn mid-March, as the coronavirus was sweeping through Asia and Europe, Tomas Pueyo published a piece on Medium titled <a href="https://medium.com/@tomaspueyo/coronavirus-the-hammer-and-the-dance-be9337092b56">"The Hammer and the Dance: What the Next 18 Months Can Look Like if Leaders Buy Us Time."</a> One of a series he wrote after starting to analyze pandemic data in mid-February, the piece was shared by millions in multiple languages. It turned him instantly from an education technology expert--his day job is as VP of Growth at Course Hero--into a leading voice for how to move forward.<br />
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For many people, "The Hammer and the Dance" was their first introduction to the epidemiology of how to defeat a pandemic. It lays out, in clear and concise terms, a two-part strategy: first the hammer to flatten the curve as fast as possible. And then, once that curve is low enough, governments can dance, testing and tracking cases until the virus is eradicated or we develop a working vaccine.<br />
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Had we been able to apply this strategy simultaneously nationwide, the U.S. would be in a very different place than we are today. Instead, as Tomas told me, "every state was forced to behave like a country, but it was not equipped
to behave like a country. Many
had no idea how to deal with a pandemic. They didn't have
experience buying bulk from the government things like masks or
ventilators." The effects of that approach are ongoing and will be long-term. "If you can't even control the virus during the hammer period, it is unlikely that you can control it during the dance," he explained. "The benefit of the hammer and the dance is lower, and also the cost is higher."<br />
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Now, six months in, the virus looks different in every part of the country and the world. But one thing holds true everywhere: "Normal will never come back. The world that existed is not coming back."<br />
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Tomas and I talked about how political polarization has affected virus response, the best ways to approach the dance, strategies for countries that can't apply the hammer and the dance method, and why it's not possible to approach other catastrophes, like climate change, in the same way he's analyzed the coronavirus.<br />
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You can listen to our discussion on <a href="https://podcasts.apple.com/us/podcast/tomas-pueyo-the-hammer-and-the-dance/id1505392824?i=1000486280469">Apple</a>, <a href="https://podcasts.google.com/feed/aHR0cHM6Ly93d3cuYnJlYWtlci5hdWRpby9mZWVkcy8xMjg1NDEyLnJzcw/episode/aHR0cHM6Ly93d3cuYnJlYWtlci5hdWRpby9vdXQtb2YtdGhlLWNyaXNpcy9lLzY4NjIzMDQw?sa=X&ved=0CBEQzsICahcKEwiY16nH38rrAhUAAAAAHQAAAAAQAQ">Google</a>, or wherever you like to get podcasts. <br />
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A full transcript is beneath the show resources below.<br />
<br />
<h2>
Highlights from the Show:</h2>
<ul>
<li>Tomas introduces himself and discusses his quarantine set up and experiences so far (2:22)</li>
<li>Readership for "The Hammer and the Dance" (5:10)</li>
<li>How Tomas came to write it, and his other writing (7:22)</li>
<li>How he decided which data to look at as the virus spread and what it told him (9:56)</li>
<li>What Tomas was doing at the time he began his coronavirus research and why he took it public (14:18)</li>
<li>His first Medium article, "Why You Must Act Now" (16:44)</li>
<li>The argument it made for the seriousness of what was coming (18:18)</li>
<li>Understanding which virus management strategy would work (20:00)</li>
<li>The early debates about how to handle the coming threat (21:32)</li>
<li>Tomas's call to action and how it felt to have it read and shared by millions (22:44)</li>
<li>"The Hammer and the Dance" (25:33)</li>
<li>How countries who applied the hammer brought the virus under control (29:18)</li>
<li>Moving forward into the dance (30:32)</li>
<li>The ways to unpack and read the data (32:21)</li>
<li>Herd immunity vs. hammer and dance (35:19)</li>
<li>Denying that the economy is made up of people (36:51)</li>
<li>The importance of incorporating new information with speed (38:20)</li>
<li>Avoiding mental pitfalls and confirmation bias (41:31)</li>
<li>Tomas talks about what he got wrong (45:29)</li>
<li>Key points in how the virus travels and how to say safe (48:43)</li>
<li>The politicization of the virus and the advice surrounding it (49:56)</li>
<li>Patterns in effective vs. ineffective government management of the virus (50:56)</li>
<li>On forcing states to behave like countries (52:40)</li>
<li>His assessment of the state of California (54:13)</li>
<li>On "Out of Many, One", Tomas's article on political polarization in the US (57:11)</li>
<li>What Tomas is working on as he looks at the next phase of the virus (1:03:02)</li>
<li>Strategies for countries that can't do the hammer and the dance effectively (1:05:10)</li>
<li>What Tomas wants to see both for the world and himself once this pandemic passes (1:09:17)</li>
<li>How he thinks the pandemic will affect urban living, education, and work (1:14:32)</li>
</ul>
<br />
<h2>
Show-related resources:</h2>
<ul>
<li><a href="https://medium.com/@tomaspueyo/coronavirus-the-hammer-and-the-dance-be9337092b56">"The Hammer and the Dance" </a></li>
<li><a href="https://www.coursehero.com/">Course Hero</a></li>
<li><a href="https://twitter.com/paulg">Paul Graham on Twitter </a></li>
<li><a href="https://www.worldometers.info/">Worldometers</a></li>
<li><a href="https://medium.com/@tomaspueyo/coronavirus-act-today-or-people-will-die-f4d3d9cd99ca">"Why You Must Act Now"</a></li>
<li><a href="https://www.kxan.com/news/local/austin/will-sxsw-2020-be-cancelled-mayor-says-organizers-will-do-what-city-recommends/">"Will SXSW 2020 be cancelled?"</a></li>
<li><a href="https://www.nytimes.com/2020/03/11/business/media/tom-hanks-coronavirus.html">"Tom Hanks says he has coronavirus"</a></li>
<li><a href="https://www.imperial.ac.uk/people/neil.ferguson">Neil Ferguson</a>, Imperial College London</li>
<li><a href="https://news.berkeley.edu/2020/04/24/study-challenges-reports-of-low-fatality-rate-for-covid-19/">"Study challenges reports of low fatality rate for COVID-19" </a></li>
<li><i><a href="https://www.amazon.com/Thinking-Fast-Slow-Daniel-Kahneman/dp/0374533555">Thinking Fast and Slow</a></i>, Daniel Kahneman</li>
<li><a href="https://www.preprints.org/manuscript/202004.0203/v1">Face Masks Against Covid-19: An Evidence Review</a></li>
<li><a href="https://medium.com/@tomaspueyo/coronavirus-out-of-many-one-36b886af37e9">"Out of Many, One"</a></li>
<li><a href="https://lambdaschool.com/">Lambda School</a></li>
<li><a href="https://twitter.com/tomaspueyo">Tomas on Twitter</a></li>
<li><a href="https://www.facebook.com/tomaspueyo">Tomas on Facebook</a></li>
</ul>
<br />
<h2>
Transcript for Out of the Crisis #21: Tomas Pueyo</h2>
<b>Eric Ries</b>: This is Out of the Crisis. I'm Eric Ries. You remember The Hammer and the Dance? If you're one of 50 million people who read that article, you probably do, but who wrote it? For the past few years, there has been a trend of decreased trust in our public institutions. This shouldn't really come as a surprise. We have been busy chipping away at the foundations of our simple society.<br />
<br />
Getting clear, unbiased reports has been challenging, even for simple problems. So how are we supposed to get information out in the middle of a pandemic? How do we cut through the news in the disinformation campaign? Some of you may remember a series of articles that made the rounds in the early days. The most famous was titled The Hammer and the Dance, and for many people it was their first introduction to the epidemiology of how to defeat a pandemic.<br />
<br />
These articles laid out in clear and concise terms the available strategies that would allow governments to deal with the spread of coronavirus. The article advocated for a hammer at first to flatten the curve as fast as possible. And then, once that curve was low enough, governments could dance, testing and tracking cases until the virus was eradicated or we developed a working vaccine.<br />
<br />
These articles had an outsized impact on the public's understanding of what needed to be done and I think helped speed the adoption of shelter-in-place orders. And even though at least in the United States we never quite made it to the dance, tens of millions of people read them, and it shaped their understanding. It helped them to come to grips with what was happening and hold their leaders accountable for action and inaction.<br />
<br />
So when a fractured world where the media is as politicized as it has ever been, who managed to get this message out? His name is Tomas Pueyo. He was not a famous author. He wasn't a media star. He worked at an education startup here in Silicon Valley. So how did he do what so many others struggled to accomplish? Here's my conversation with Tomas Pueyo.<br />
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<b>Tomas Pueyo</b>: Hi, I'm Tomas Pueyo. I wrote a few articles around the coronavirus that got viewed by over 60 million people, and that pushed me from really not a person very well known in the coronavirus world to appearing on the news and in different newspapers. Before that, my day job is VP of growth at an online education company called Course Hero.<br />
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<b>Eric Ries</b>: Thank you for coming on. Thanks for making time.<br />
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<b>Tomas Pueyo</b>: Thank you.<br />
<br />
<b>Eric Ries</b>: This has been a pretty stressful time for all of us. Let's start with how are you doing. How long have you been in quarantine? You saw this coming, so you must have a pretty extreme quarantine setup. Just tell us about how you're doing. How's your family? How are you hanging in there?<br />
<br />
<b>Tomas Pueyo</b>: Yeah, I started figuring out it was going to happen around the middle of February, and I was waiting for the cases to really start appearing in Silicon Valley. When the first case appeared in Santa Clara, I pushed really hard for my company, for myself to work remotely as much as we could. So even before the shelter-in-place was announced, my company announced remote work.<br />
<br />
And so, by now, we've been out, or we haven't been going out for more than two months. Both my wife and I work full-time. We haven't had the schools for the kids. We haven't had a nanny at home, and we have three kids below four years old, which has been quite trying for us and to juggle two jobs at the same time while also kids without help. And that's especially true since besides my day job, I had then to work on the coronavirus for a couple of months.<br />
<br />
That was around six, seven hours a day. As a result, I didn't sleep for a couple of months, and my wife had to work two times as hard helping at home, but thankfully even with all of that, I'm in a better position than many other people who have suffered during this crisis in terms of people who have lost their jobs, but I can't complain in spite everything.<br />
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<b>Eric Ries</b>: I appreciate you saying that, and we should certainly reserve a moment to say thank you to all of the spouses and supportive partners that have made possible so much of this relief work that we have been talking about in this series of conversations. I'm in the same boat as you, not getting as much sleep as I would like, but cognizant of how much better we have it than so many who are struggling right now.<br />
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<b>Tomas Pueyo</b>: Yeah, absolutely.<br />
<br />
<b>Eric Ries</b>: I had to do the math, and it's dangerous to do the math live, but I had to look up on Wikipedia the number of English-speaking internet users, which is about 1.1 billion.<br />
<br />
T<b>omas Pueyo</b>: Yeah.<br />
<br />
<b>Eric Ries</b>: So if I'm getting it right, 60 million people is something like 5% of the possible audience of people who are on the internet and speak English.<br />
<br />
<b>Tomas Pueyo</b>: That's funny, so a couple of things. Actually, the article was translated. The articles were translated to over 40 languages each.<br />
<br />
<b>Eric Ries</b>: Oh my goodness.<br />
<br />
<b>Tomas Pueyo</b>: Yeah, I'm counting some of these other languages, and it's not always easy because I control, for example, the Spanish and French versions of the article. And each one of these was seen by more than a million people. Whereas, for example, I don't control the German one, which a newspaper published, but when I check in with them, more than two million people had read it. So really it is not just the English-speaking, but since you're talking about addressable market, I had a thought about it.<br />
<br />
And really the addressable market is not just the people, English-speaking, connected to internet, but rather I would say whoever is willing to spend half an hour reading an article about the coronavirus. I think that addressable market is probably, maybe, in the tens of millions, maybe hundreds but definitely not in the billions. So I think the most interesting aspect of this article is how just mind-blowing that distribution is.<br />
<br />
I was talking with a journalist that told me that, "When I read your very successful article, it gets seen by two million people at most," but having 20 times that is just ridiculous. It's crazy.<br />
<br />
<b>Eric Ries</b>: It's a remarkable thing, and I hope you have taken a few moments to appreciate the scope of it. We've had the chance to work together a little bit in crisis. And when I've been trying to recruit folks to help you with things, I don't have to say anything except for, "You remember that article, The Hammer and the Dance?", and everybody's heard of it. Everyone remembers reading it.<br />
<br />
It was a seminal moment for so many of us, and it's remarkable to me. I think you're right. Among the audience of people who are educated, who are interested in data, willing to read a lengthy and in-depth article about the coronavirus, it has unbelievable mind-share and it was such an important part for a lot of us of crystallizing our understanding of what was to come. Tell us, just walk us through the story of how you came to write that article and how you even had the imagination that you should be the kind of person who should become almost the spokesperson for the crisis response.<br />
<br />
<b>Tomas Pueyo</b>: Yeah, it's funny, because you mention The Hammer and the Dance. It actually was the second piece, but I think that is the testament of the craziness and the blurriness of all these events that have occurred over the last two or three months. So I think it's good to take stock of what has happened. Around the middle of February, I caught from Twitter from people like Paul Graham who had been tweeting about this coronavirus epidemic for some time, I identified the problem and I started looking at a little bit of data and posting it on Facebook.<br />
<br />
<b>Eric Ries</b>: To be clear, you were not a published author or a scientist. This is not your background to be writing these things.<br />
<br />
<b>Tomas Pueyo</b>: I am a public author but about a completely different topic. I have a book about storytelling structure, and I'm also not at all professional at storytelling. It's just one thing that I do that I take complex problems, and I go deep in understanding them and trying to solve them, and then trying to communicate about that problem. So the same thing really happened with the coronavirus.<br />
<br />
I had no idea about the coronavirus. I just started looking at the data and trying to understand, make sense, of what was happening based on the data. And initially that was just on Facebook for my friends, but very, very quickly because the world was not aware of what was going on and all of the data was public, you could make your own decisions, reach your own conclusions based on that data.<br />
<br />
And I think through February, one of the things that was obvious is that that had become a pandemic. By the end of February, the virus was in over 60 countries, and many of them had thousands of cases. And if you remember, Wuhan closed the entire region of actually Hubei when they only had less than 500 cases. So you knew by the end of February that this was a pandemic and that it was going to be catastrophic.<br />
<br />
<b>Eric Ries</b>: Well, you knew. You knew actually. Look, first of all, in these conversations, the number of times that the story begins on Twitter is remarkable. So first of all, what a testament to social media and its power to reach-<br />
<br />
<b>Tomas Pueyo</b>: Huge.<br />
<br />
<b>Eric Ries</b>: But a lot of us were on Twitter in February, and a lot of us were looking at headlines and follow Paul Graham. So you went deeper than the average person. First of all, what was the data you were looking at, and how did you even decide what data was good and what was bad, what was legitimate, what was worthy of analysis? How did you figure that out?<br />
<br />
<b>Tomas Pueyo</b>: Yeah, that's fascinating. One of my jobs in the past was consulting measures and acquisitions. And in that when you do that, within weeks you need to get very, very deep, become an expert in a new discipline without any previous background in it. And you need to look at the data very critically, because the other side of the merger or acquisition is actually trying to frame all the information in a way that is beneficial to that side and against your side.<br />
<br />
So you learn to really look at the data and also in tech, you also know this, it's very, very hard to figure out the truth from the information you get, the signal from the noise. And in fact, The Lean Startup is very much that. It's focused on how to learn as fast as possible with as little cost as possible. I think for me, the first course was Worldometers in that it was a day-to-day report on the cases.<br />
<br />
And one of the first things that you saw is that you had daily cases being exported from Italy, especially from Italy but also from Iran but especially from Italy, to all the corners of the Earth. So you're starting to see that, and you realize one healthcare system or two healthcare systems may be able to respond to a crisis successfully, meaning maybe South Korea and China, but once you have 60 countries that have cases, the odds that at least one of them fails in the containment is huge.<br />
<br />
So that's the first hypothesis there. There's many, many data points there that are imperfect, but you can start triangulating from them. One of the key points was China is lying on this data. Well, if they were lying, they did an amazing job, because if you looked at all the ratios, such as deaths over cases and things like that, all of them were pretty reasonable and consistent.<br />
<br />
If you only have one data point though or one data source, like China, that's not very reliable, but as soon as you start having South Korea and Iran and Italy, now you have four sources from different countries, different organizations. And if you see that these ratios are converging in the same direction, now your confidence is dramatically higher. So really, a lot of what I did was that.<br />
<br />
It was looking around the world, where do we already have the data, comparing these ratios and reaching a conclusion. One of the key examples is the case fatality rate, right? At the beginning, still today but at the beginning even more, people said, "This is like the flu." Okay, let's look at the flu. The case fatality rate, the number of people who died, divided by the people who officially have the flu in the US, we can look that up. It's around 0.13%.<br />
<br />
If you then looked at different areas in the world, at the time in South Korea, it was 0.6%. In safe areas of China that didn't get overwhelmed, it was 0.9%. And in Hubei, it was 5%, right? And you can actually see these numbers converge in different directions, and you can make extrapolations on what is going to be the range. So I think that, by the way, is one of the key, key highlights of that is in order to predict something in a chaotic world, you can't jump straight into models, into theoretical models.<br />
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You can only model something theoretically, if you really deeply understand the mechanism that underpins it, because a model is a simplification. And you don't know what to simplify and how to simplify it, unless you've really understood it, but something like the coronavirus crisis is a very complex one with a lot of different reactions that governments or populations can have. So you can't really jump into models.<br />
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So I really didn't rely a lot on models. I relied mostly on what happened in other countries. What did China do? What did South Korea do? What did Taiwan do? And then, based on that real-life experience, extrapolating what will happen in other countries.<br />
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<b>Eric Ries</b>: Explain a little bit about what you were doing at that time, because you're an amateur sleuth. You're pulling data from public sources. You have a day job here in Silicon Valley at an education technology company. So just talk a little bit about the reality of your life at that time as you were starting to post on Facebook and get a sense of the dawning... You had this dawning realization that this was going to be bad in the US.<br />
<br />
Why did you decide or why did you feel an obligation to do more than just look at the data and share it with friends? What drove you to take this next step and go public, if you will, with the data?<br />
<br />
<b>Tomas Pueyo</b>: Initially, it was again just on Facebook, and that was still going public because my Facebook is open. And the level of reactions that I had to that content is about anything else that I've ever shared. Not every one of my friends, but lots of my friends every day when I posted something engaged in debate, thanked me for the analysis. And so, that kept me going, and that became actually more and more urgent and important as days passed, because on one side the fact that this was a pandemic was becoming more and more obvious.<br />
<br />
And the people in my environment and my group of friends were realizing that, because they were following the data, but people outside of that were not. My family didn't believe me at the beginning. My company was cautious about this. They were not moving forward very quickly towards remote work. And so, I was seeing this reluctance to take this extremely seriously everywhere around us, even in Silicon Valley, right?<br />
<br />
A few companies ordered a work-from-home early on, but most of them didn't and people were waiting for the politicians to take decisions, right? For example, Santa Clara had a community-spread case early in March. If something like that happens, you want to close everything, because it's a community spread. It means that you just don't know what's happening.<br />
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<b>Eric Ries</b>: That's right.<br />
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<b>Tomas Pueyo</b>: But people were not, yeah. And so, I first started focusing on the Bay Area. Okay, at what point should you close your office? I explained it to Washington State, because that was ground zero of the United States at the time until it was New York. And then, what happened is all of that analysis was convincing my friends in Silicon Valley but not outside of it. So a friend of mine said, "Hey, I'm here in Paris. I understand what you're saying. People outside of Silicon Valley don't understand this, and you put together an analysis that is relevant for Paris, too. So I can share with my CEO friends, and they can close their offices."<br />
<br />
And I just took all my analysis and put it in one place, and that was my first Medium article is the Why You Must Act Now article that got 40 million views, but I really didn't think about it. My previous most successful article ever had 250,000 views, so I thought it could get up to that maybe but not that much more than that. The fact that it exploded to 40 million was completely a huge surprise.<br />
<br />
The goal of that article was to wake up a lot of people and to have so many people around the world really realize this is a big deal. The problem is once people realized that, they didn't know exactly what to do about it. And one of the first things that different countries were thinking is, "Hey, maybe we should just let this thing run, this herd immunity concept, this mitigation idea of maybe-"<br />
<br />
<b>Eric Ries</b>: It feels like a lifetime ago, late February, early March, as least for me. And I think it's easy for us to lose sight of the fact that these prescriptions were very controversial, and the public was very confused in those early days of the pandemic. So walk us through the argument and what the data was showing at the time of that first article.<br />
<br />
<b>Tomas Pueyo</b>: Yeah, and I love what you say around the mindset that people had, right? The mindset that most people had was, "We've seen this in the past. It happened with SARS. It happened with MERS. It happened with the swine flu. It happened with the avian flu. It happened so many times, and then nothing happens. This is the same." And so, people were feeling very safe that this was not going to happen to them.<br />
<br />
They saw it happening in China, but then it stopped. And then, they were seeing it happening in Italy, but it's just Italy. It's not me. So really, people were not realizing that this is going to come to you, too. That's the mindset that people had, and the mindset is that, "Oh, there's not that many people dying. The flu is something that's pretty bad too," and that we shouldn't be concerned.<br />
<br />
And so, I think that's what this first article of Why You Must Act Now really, really achieved at drilling this idea that this is really bad. And if you don't act right now, you're going to have bodies piling up in your country, the way that it was happening in Iran which was digging, the way that it happened in Hubei where the fatality rate was around 5%. So I think at that point, in fact I've started looking into this and you actually can see the mobility in different Western countries dramatically go down after March 10th.<br />
<br />
And it might completely be a coincidence, but that's right around the time when people really realize, "Oh my God, this is bad." Now the fact that it's bad doesn't mean that we know how to react. At the time, the story that was most well known was the story of China, and China is basically a dictatorship. So the number one argument in Western countries was, "Well, this is bad, but it's not extremely bad. And then, you have China and we're a democracy. So we cannot just contain this."<br />
<br />
<b>Eric Ries</b>: Yeah, and the presumption with whatever China did was bad.<br />
<br />
<b>Tomas Pueyo</b>: Exactly.<br />
<br />
<b>Eric Ries</b>: We're not going to copy what they did.<br />
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<b>Tomas Pueyo</b>: Exactly, exactly. And so, thankfully we have in that corner of the world a few countries that are very strong democracies who did a very good job, and Taiwan is a good example but South Korea is the best, because not only were they able to control the virus, but they were able to actually control a full outbreak without a hammer.<br />
<br />
<b>Eric Ries</b>: Was that clear to you, even at that point, that their strategies were going to be effective? I'm trying to put the chronology together in my own head, and I'm realizing I can hardly remember what happened when.<br />
<br />
<b>Tomas Pueyo</b>: Yeah. So for sure by then, which is March 18th, we knew that South Korea had controlled it. And actually, I'm looking at the data right now in my first article, and we knew it. I just did not call it out very specifically in the analysis. I'm just confirming right now. No, I did, yeah, yeah. So I did.<br />
<br />
<b>Eric Ries</b>: But in that first article, the case was really that Western countries need to take this seriously and take urgent action.<br />
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<b>Tomas Pueyo</b>: Yes.<br />
<br />
<b>Eric Ries</b>: That was the message. I don't know how other people are feeling about this, but it's hard for me even to remember that there was a time when that was controversial and that was a case that needed to be made now that we've gotten used to this pandemic, but before the NBA shut down, before we had those first confirmed cases of community spread, before... I can't remember which it were that tested positive in the early days, it seemed like a problem from over there. And I think we were all in a very severe form of denial about it.<br />
<br />
<b>Tomas Pueyo</b>: Yeah, and I think those small data points that you share are the ones that help us go back in time, right? So for example, I don't know if you remember, but there was a massive debate on whether South by Southwest should happen or not.<br />
<br />
<b>Eric Ries</b>: Right, isn't that wild?<br />
<br />
<b>Tomas Pueyo</b>: Right. And so, so many people were angry about this, and so that's one. And then, the second one was Tom Hanks I think was the first famous person to--<br />
<br />
<b>Eric Ries</b>: Yeah, that's right. That was the celebrity I was thinking of.<br />
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<b>Tomas Pueyo</b>: And just the fact that we thought this was a debate, I think highlights how we're thinking about it, yeah, at the time and how misinformed we were.<br />
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<b>Eric Ries</b>: How did it feel? How did you actually get the news that your article had traveled so widely and had been read by so many millions of people? What was it like being in the eye of that storm?<br />
<br />
<b>Tomas Pueyo</b>: So the first is I pushed the article very, very, very hard and I've never done that in my life. Obviously, I release products at my job. I write articles, but usually I limit myself to making a post maybe on Facebook and that's it. This one was different, because I did realize how misinformed the public was, and I also knew that it was all coming from the right side for me.<br />
<br />
I was not trying to make money out of this, and it was all about the message. So it's the first time in my life that I pushed this to all my networks as hard as I could, and I was also very aggressive on the viral mechanics that I plugged into it. Why You Must Act Now is a call to action. At the end of that article, I use a couple of sentences that say something like, "Sharing this document or this article is one of the few times in your life where you can actually save lives by sharing an article. If you agree with it, you should share it," or something like that.<br />
<br />
That's a very, very strong call to action to put at the end of an article, and I knew that would dramatically increase the virality. The only reason why I added it is because I felt very, very strongly that, indeed, that message needed to be told. In fact, I have not used that again in my latest articles, because I didn't think the message was as urgent and needed to be as widespread, but I was very, very conscious on pushing it.<br />
<br />
Even then, I didn't know it would be so successful. And so, what happened is the day after when I woke up, my phone would be buzzing every three or four seconds with Twitter notifications, with Facebook notifications. And it was literally three or four seconds for two or three days in a row, and then I started receiving messages from friends who were saying, "My father sent this to me. My group of friends from Russia sent this to me. I've received this from three different sources."<br />
<br />
That really creates this image of, wow, this is really going widespread. And then, obviously I have the statistics from Medium.com, which lets you know how many people have viewed your article, and I could see it. Oh, I wake up and it's 10 million people. Three hours later, it's 11 million people. It's all very virtual. It's in the numbers, but that's really, really, really absurdly crazy.<br />
<br />
<b>Eric Ries</b>: Tell us about The Hammer and the Dance.<br />
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<b>Tomas Pueyo</b>: When I published Why You Must Act Now, that was a Tuesday. And by the weekend, a few countries had already started taking measures. The debate after that, that's around the 15th, March 15th was really, "Okay, what should we do? Should we actually close the country, or should we do something different?" And one of the key debates there was led by the UK. The UK had a very strong team of epidemiologists from Imperial College.<br />
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Neil Ferguson is a famous one from them, and one of the main debates was around herd immunity. In fact, I went on TV the Friday around March 13th or something like that with one of these epidemiologists, John Edmunds, and his recommendation was basically, "We should not do anything too aggressive right now. We should wait a little bit, little by little increase our measures."<br />
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And it wasn't clear whether they wanted to just flatten the curve, whether they want to completely contain the virus, whether they were going for herd immunity. It wasn't really clear. And for me, it was crystal clear that if you waited a single day, the crisis would be dramatic. The other thing that I knew that maybe they didn't know is because of my job in product and in marketing, and my experience in storytelling, I have a sense of what you can tell people to influence their behavior.<br />
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And I knew that if you were very, very clear and you told the story well, people would listen and people would stay home, which is not what the team of epidemiologists and clinicians in the UK were thinking. So you had this very dangerous trend of maybe a lot of countries are not going to take the measures that they need to take. And so, I spent the following few days putting all the information together on why I thought you absolutely need to be very aggressive early on.<br />
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It's a deep analysis of what do you do if... What happens if you don't do anything? What happens if you just do enough to mitigate the virus so that your healthcare system doesn't get overburdened, and what happens if you actually go much more aggressive and you really contain this? Then, you crush the virus, and then you start handling the virus after that. By that time, not only did we know what China had done and we knew that China had controlled the virus, but we also knew that South Korea had done it too, and they had done it within three weeks.<br />
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So we knew we had at least two examples of the fact that we can do this, and we can do it also like South Korea, which is a democracy. I think the last thing that people didn't know is just how to think about this. What measures should I take, and how should I think about each one of them? And I think the key additional factor that I added to the conversation is, like nearly all decisions in life, this is a cost-benefit analysis.<br />
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Just look at your measures in terms of cost-benefit. Your benefit is the reduction in the transmission rate. The cost is the economic cost, and just try to optimize these things. Right now, you don't know what you're doing. So just completely lock down the entire country, and now you buy yourself time to figure out what to do properly. What are the optimal cost-benefit measures to start dancing, to start opening up the country, in a way that the virus is not widespread anymore?<br />
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<b>Eric Ries</b>: But what has worked well? What approaches are working and what hasn't?<br />
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<b>Tomas Pueyo</b>: Yeah, it's still early and we don't know all the details, but what we see is a lot of countries apply the hammer and the dance, mostly the hammer first. And now, we're starting to dance, and nearly all of the countries in the Western world that applied a heavy hammer have been able to control the epidemic within a matter of weeks, between seven and 12 weeks.<br />
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<b>Eric Ries</b>: And the hammer is the lockdown, the shelter-in-place-order strategy.<br />
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<b>Tomas Pueyo</b>: That's right, very aggressive, exactly, part of you don't know what's going on. You have a virus that's widespread. You don't know where it is. So you just shut down the country. You make people stay home while the caseload goes down, and you buy yourself time to figure out what to do. So you have countries like Australia, New Zealand, Estonia, Lithuania, Latvia, Iceland, Ireland, Spain, France, Italy, Germany, Norway, Denmark, Finland and many, many more.<br />
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All these are countries that have applied a hammer and really got the caseload to a level where they can start thinking, "Okay, it's time to start reopening the country." And then, many of these countries realized what they needed to do to move forward into the dance, this phase where you don't need these aggressive measures anymore. You can replace them with intelligent and much cheaper measures but still contain the virus.<br />
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For example, instead of locking everybody out, you might be able to identify who is infected and who might be infected, and and you only isolate those people, right? So that's one of the core measures to control the virus. So many countries were able to figure that out and start playing with it, and as a result started opening the economies.<br />
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And you have most of Eastern Europe, for example, that has been able to start reopening the economy without severe outbreaks. Countries like Spain have started opening up again. Many of these countries have ordered masks, for example.<br />
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<b>Eric Ries</b>: As you got into all this data, what's been the most interesting, surprising or shocking? You've unpacked it all.<br />
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<b>Tomas Pueyo</b>: One of the most fascinating debates has been the people that still push for the herd immunity case, and I think it's a very interesting and fascinating conversation to have. It highlights the only country that has really decided to very officially form a strategy that doesn't lock the economy down, that's Sweden. Sweden decided, "You know what? This is not as bad as we think, and we cannot contain this virus. So let's just keep it open and try to limit the number of deaths."<br />
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So that is really a debate that is anchored in data, even if unfortunately Sweden didn't make that data explicit, but really the debate that you're making here is, A, doing a lockdown is not better for the health, because regardless this is going to become endemic anyways and everybody's going to catch this. And, B, it's not as bad as we think and then, C, also locking the economy is very bad for the economy.<br />
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These are three statements that you can look at data to decide whether that's true or not. For example, in the argument of you cannot contain this, well, I think empirically that you can look at countries like China, Taiwan, Vietnam or South Korea who have been able to contain this. So when you're making that statement that you cannot contain this, I think there are examples, empirical examples, where you could if the burden of proof is on your side and Sweden didn't say anything about this.<br />
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The second argument was, "I don't think many people will die from this." And the argument there was the case fatality rate, the number of people who die divided by the official number of cases, is high but the true number of death is going to be low. The infected fatality rate, so the deaths over the truly infected, not just the official cases is going to be very low and is going to be similar to the flu.<br />
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That statement is another one that's based on data. You can go into the detail of the data, if you read whether that's true or not. And you can see for case fatality rate for the official death, you can see that the flu is 15 to 20 worse. And because the flu is such a low-fatality illness, there's no numbers on the infected fatality rate. There's no number on the true number of deaths [crosstalk 00:34:11]-<br />
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<b>Eric Ries</b>: We don't know what to compare it to.<br />
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<b>Tomas Pueyo</b>: Exactly, we don't know who to compare it to, right? So there's two things that you can do there. One of them is let's look at the studies on infected fatality rate as they come in, and the Santa Clara one was a famous one, which was suggesting that the infected fatality rate was very low, 0.1%, that it was very flawed and there was a lot of problems with bias. And the people were assembled and false negatives and things like that.<br />
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So you want to look at all the data from across the world and pick the best examples. And so, for example, one of the best ones is the Diamond Princess cruise, because it's nearly a perfect test. You have 1,500 people locked in one place, and you let these run loose. And what happens? Well, it happens that the lowest threshold there of deaths was around 0.7, 0.8% infected fatality rate, and that was the very lowest possible but you know now you have a lower bound of a fair amount of deaths.<br />
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And that's how you pick a little bit of the data to figure out what's true and what not, and then the same thing happened with the economy. One of the bets there that Sweden is making is doing a lockdown is too bad for the economy. And so, the question you can ask yourself is, okay, how can I look at data in the real world to figure out whether that's true or not? There's not a lot of data about this, but the one data point that we could look at is what happened in the 1918 pandemic and what we saw there.<br />
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<b>Eric Ries</b>: Which has been well-studied in the intervening years.<br />
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<b>Tomas Pueyo</b>: Exactly, and the US has been amazing at studying it. It was a big continent where there was enough different cities that were distant enough that you could isolate the epidemic in each one of these cities, but all of them in the same country so we have proper data about it. And you would assume that the cities that have higher mortality because they had weaker measures are the ones who'd have a better economy one year later.<br />
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<b>Eric Ries</b>: If it was true that lockdowns were harmful to the economy.<br />
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<b>Tomas Pueyo</b>: Exactly, but what you found is the opposite. The cities that were the hardest in the lockdown for the longest period of time were the ones who had a better economy one year later. And so, out of all the data that exists in the world, very little supports one case or the other of herd immunity versus hammer and the dance, but the one data point that we had was that hammer and the dance was actually better, not only for the health but for the economy.<br />
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<b>Eric Ries</b>: Well, and this is the thing that has been hard for me as a bystander, as an observer of all these debates. One of my old Lean Startup sayings is that metrics are people too, and it came up in my conversation with Brian Chesky, too. It's a very common confusion people have when you reduce people to numbers, like in the economy. You have this idea that, well, if we protect the numbers by sacrificing the people, then that will somehow work, forgetting that an economy is made up of people.<br />
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And if the people are dead, that's not actually very good, very healthy for the economy, not least of which as many of the people are educated and will refuse to transact economically, even if you do reopen. So it seems like there's been this mass denial in certain countries, in certain states, driven it seems like by political leadership that somehow we can avoid these hard decisions, and it will somehow work out.<br />
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What's it been like to be on the other side of that? I was going to call it an abyss. I don't even know what to call it. How do you even begin to make the case against such a bad idea?<br />
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<b>Tomas Pueyo</b>: It's funny, because you remind me a lot of the conversation around two decades ago when Daniel Kahneman wrote Thinking, Fast and Slow making people realize that, well, maybe economics is all behavioral economics. And so, if everybody is homo economicus, then you're never going to figure out the truth of the economics. So yes, I agree with you that you need to understand the psychology of humans to really understand what's happening.<br />
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And for me, I think the number one mental pitfall here is the speed of incorporating new information. The same thing happened with the entire crisis. People did not incorporate the new information that was coming, that was telling them, "Hey, this is something serious, and the world is going to change." And I think that's very natural. You know this, because you've shaped products too, where your intuition as a human is going to be very frequently wrong, and you cannot assume that what you think is going to be the right product that you put in the market is going to be what people want.<br />
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In fact, you have to eliminate your preconceived opinions, and you need to listen to the data and incorporate that data in shaping products. That experience that is so humbling about the fact that you know nothing about the world is not an experience that most people have. For most people, they're allowed to have confirmation bias in their daily lives, because the world doesn't change fast enough to prove them wrong.<br />
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They can keep their same stories about how the world works, and that keeps them safe and it takes them a long way. Here, you have a situation where that's not valid, where the world as you knew is gone forever and that is a very hard mental jump for people. Whenever they say, "Reopen the economy," what people mean is, "I want to go back to where we were." That's why they're saying, "We don't want to close the economy."<br />
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What they mean is, "Okay, this thing is going to pass and we're going to suffer, but then then that way we can have back the economy that we had," but that's not true, because now you have this new element that completely changes the world. The world will never go back to normal. And you need to understand, okay, what are the ramifications of this new virus coming? And the key ramification is people are going to be scared as hell to go out.<br />
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Some people will want to do it, but many won't. And those who don't want to go out because they don't want to infect themselves, because they don't want to infect their partner who has diabetes, because they don't want to infect their grandparents who's 90 years old in a residence. These people are not going to go out for months or even years, and that's going to be depressing the economy much more than if you do a short-term aggressive hammer, and you contain the economic downturn to a few weeks. And then, after that, you can open up the economy.<br />
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<b>Eric Ries</b>: I've been really shocked how many people I know educated, wealthy, privileged who have convinced themselves that they're an exception to the rule. So they nominally support the lockdown. They think it's a good idea to act aggressively, but they have to be able to go out and just do this one thing, or there's a party that they want to go to. And they'll find a way to make it social distance and the motivated reasoning that is driving that behavior, I wonder are we seeing that in the data on a societal level? We're not really taking this, even now, as seriously as we need to.<br />
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<b>Tomas Pueyo</b>: I love that one, because that's the typical conversation that you're going to have about others is, other people are always going to have these biases, but I'm a pure person. For me, what that means is I actually watch myself constantly to be sure that I don't fall into these pitfalls. And for me, one of the key ones has been avoiding the human tendency, again for confirmation bias and proving that it was right. So if you go very publicly saying, "The hammer and the dance is the right way to go-"<br />
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<b>Eric Ries</b>: You're committed to that.<br />
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<b>Tomas Pueyo</b>: That's right. And how do you look if suddenly it turns out that it was wrong, and you are the person who caused the trillion-dollar impact on the world economy, right? And so, that is actually a mental pitfall, and I have caught myself trying to do that, looking for data that would confirm my bias. And so, as soon as I did that, I established what are the numbers that would convince me that, indeed, that was the wrong strategy.<br />
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And so, the number that I put myself is on the infection fatality rate, you would want that to be close to the flu, so maybe 0.1%. If only 0.1% of people die, then that's good. The other argument that you could use-<br />
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<b>Eric Ries</b>: And multiple countries, you were looking at if their fatality rate had converged on that number. You would have said, "My hypothesis was falsifiable."<br />
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<b>Tomas Pueyo</b>: Yeah, exactly, exactly, right? And it doesn't mean that the decision was wrong at the time based on available data, but at least this is a factor that says, "My conclusion is now different, because my data is different." That's one. Another one is the ability to isolate old people, and one of the variants of herd immunity, which I think is a very valued one, is let everybody catch this except for old people and people with comorbidities.<br />
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And those people, you're going to isolate for a month or years until we find a treatment and vaccine. The problem that I see with this is, A, in countries like the United States, there's 45% of the population that is either of old age or has a comorbidity like obesity or heart conditions, right? So you can't isolate 45% of the population. Even if your country's healthy, like Sweden, can you actually isolate old people in residences for two or three years?<br />
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And the answer, their belief was, yes, you can, but then more than 50% of the deaths in Sweden have been people in residences. So far, you cannot do this. It's a bit like communism. It sounds really, really cool, great idea, but in practice it's really impossible to isolate so many people for so long, but that would be a falsifiable claim. You could prove that people can be isolated successfully.<br />
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And then, the last one is the economy, right? You can actually prove whether a hammer and the dance or herd immunity strategy are more reasonable, and you can prove that in retrospect, in a year or two when we have all the data. In the meantime, you want to look at all the leading indicators that you can find. And the best one that I think you can find is the markets. The markets predict whether, or try to predict, how the economy's going to fare.<br />
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And what you see is that in Sweden, right now the main index is actually equal or worse than the main index in other Scandinavian countries. So the markets don't believe that Sweden is going to fair economically better than other Scandinavian countries, but these three are data points that actually can end up being different, and as a result prove that my strategy ends up not being the right one. And if that's the case, then you want to shift your conclusion despite your confirmation bias that's going to try to support it.<br />
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<b>Eric Ries</b>: Tell us about something you got wrong.<br />
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<b>Tomas Pueyo</b>: So many things. One of them was a suggestion that the speed of viral mutation was going to or could be very fast. There's a lot of actual early indicators that the virus is mutating, right? It's an RNA virus versus a DNA virus, which tend to mutate very fast. The RNA are faster than DNA, and it's also in the family of influenza viruses. And as we know, influenza mutates fast enough that within one to two years, you catch a new one and you're not immune against it.<br />
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So the hypothesis there was if you go for herd immunity, maybe in a few months or a year or two, it was worth it because you don't catch this again. That was very well-stated as a hypothesis, a fear, but it turns out that the level of mutation is not as fast as we feared. So it is likely if you catch this, you will be immune for some period of time. We still don't know whether it's one year, two years, five years, but at least it looks like it's safer than we feared at the beginning.<br />
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And there's many, many more things like that. I think another one was for masks, right? There's been a lot of conversations around masks. Are They Good, Are They Bad is an amazing paper by Jeremy Howard and all the co-authors.<br />
<b><br />Eric Ries</b>: It was Zeynep too, co-authored-<br />
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<b>Tomas Pueyo</b>: Yes, that's right.<br />
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<b>Eric Ries</b>: Going to their op-ed and to the paper.<br />
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<b>Tomas Pueyo</b>: Amazing paper looking at a dozen of those other papers, gathering all the evidence around is a homemade mask better than the alternative. So that was a very sturdy article, but then there's always some potential areas where these can be flawed. And one of them can be, well, if the masks are not properly put and as a result, people are not very well protected, but that makes them feel safe and they go out, then maybe that's actually counterproductive.<br />
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And so, there's always these debates, and I think these debates are crucial because it helps us reach better conclusions. I think in the case of masks, just to be clear for your audience, they're absolutely great and we should absolutely be wearing them, especially to protect others because we never know when you're sick. So we need to prevent others from catching this, but these debates keep happening all over the place about all the data points, and it's very important that they do.<br />
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<b>Eric Ries</b>: What's your advice for people who are having trouble wading through all this disinformation so that they know what's safe for them to do, what's right for them to do, for them and their family?<br />
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<b>Tomas Pueyo</b>: Yeah, I think you're actually touching on two very different points. One of them is just an individual person's ability to see through this, and then there's the other issue of political polarization actually that I think we should touch on. On the individual side, the interest in coronavirus has subdued compared to what happened a couple of months ago, and people are tired of reading all this information.<br />
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And the key takeaway is this. The virus spreads mostly when you are in a confined environment with a lot of other people singing, touching and talking to each other for a long period of time. If you avoid all of these factors, you are probably safe. So for example, being at home with your family, that's a confined environment when you speak with a lot of different people, with your family members for a long period of time.<br />
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So that is very highly likely to create infections. A meeting is very bad. You are talking for a long period of time with other people. A music concert is very bad. A choir is very bad. Conversely, if you are walking outdoors with friends and you're talking to the wind, and you're two meters apart, that is not problematic. So understanding these rules of thumb is very important.<br />
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Obviously, also masks and hygiene is a crucial thing. If you only do these things, that is a way that you can protect you, or yourself and your family members and your loved ones. And you don't even need the government to help you there. I think the other topic is on polarization and the fact that in this country, more than in any other country that I've seen, you have a different opinion on what to do about the coronavirus that is based on the party that you're in.<br />
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I don't have a solution, but I think it is very difficult to only rely on people there, because if the leaders consistently share a message, usually people who follow those leaders are going to follow that message, because the herd mentality and the us versus them is such a strong psychological factor that you will listen to whatever your leader says. And so, there, I think we can obviously appeal to people's reason through science, but I also think that for a big chunk of population, this will not be possible, if the leaders are not also brought in.<br />
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<b>Eric Ries</b>: What are the patterns you've noticed in terms of which governments, both nationally and at the state level, have been effective in their response, and which ones have not been?<br />
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<b>Tomas Pueyo</b>: Yeah, one of the things that I love is comparing the US with Europe, because in both cases you have a lower sovereign level and then a high sovereign level, the states and the federal government in the US, and the countries and the European Union in Europe. Interestingly, the default sovereign level in the US is the federal government, whereas in Europe it's the countries.<br />
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And so, usually in every other country in the world, what you see is the higher sovereign level is the one that take ownership of the problem and tries to solve it. And it makes a lot of sense, because in a pandemic like this one where you need to make a lot of decisions really, really fast, you need central coordination. Otherwise, you end up having, for example, what we saw in the US is states fighting against each other, competing against each other, for ventilators and masks and things like that, but you want the high level to make the decisions.<br />
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In the US, that was the federal government, but the federal government relinquished power. In Europe, the default of sovereign level is the countries. So even if it would have been better for the European Union to do it, that was not the default. The countries did it, and that worked because each country was equipped to do it. They had epidemiological centers. They had plans to this.<br />
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Yeah, so that probably worked. Because they're sovereign, they can close the borders with each other. The problem that happened in the United States is that every state was forced to behave like a country, but it was not equipped to behave like a country. Many didn't have equivalence of the CDC. Many had no idea how to deal with a pandemic like this one. They didn't have experience buying bulk from the government things like masks or ventilators, because they're states.<br />
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They're not used to the mental concept that, "Oh, I can close my borders." Even today, many states have been able to do that. Hawaii and Alaska defacto have closed borders. Everybody that comes in needs to have a two-week quarantine, and it's enforced but most other American states haven't done it. Many have a two-week quarantine encouraged, but not enforced. And so, that's a problem, because you have a state, for example, like, I don't know, Idaho which is doing really, really, really well.<br />
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And maybe there's people from Georgia who are traveling to Idaho, and they are seeding the coronavirus in the community. And you definitely don't want to do that, if you've done a good job at controlling the virus. And so, I think the main struggle has been that one in the US. The higher sovereign level has relinquished its power.<br />
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States have been left to fend for themselves, and they don't have the mindset or the experience to do it. So they've had to learn as fast as they could. And given that, I think they've done a reasonable job, not all of them but many.<br />
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<b>Eric Ries</b>: Give us your assessment of how we're doing here in California.<br />
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<b>Tomas Pueyo</b>: Yeah, I think we forget now, but it is incredible how fast politicians were at taking measures. The one that should be called out the most is probably London Breed. She was relatively newly elected, and she took a massive stance of calling the emergency before there was a single case in San Francisco and before any other-<br />
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<b>Eric Ries</b>: We're very grateful to her for that.<br />
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<b>Tomas Pueyo</b>: Yeah, yeah. And before I think most or any big leader in the country did it, and now it looks obvious, but at the time that was a huge political bet that you're making. If it turns out that it's not a big deal, then you don't look like an intelligent leader. So very, very big kudos for her. And then, Gavin Newsom very, very quickly also reacted to this. I think a couple days after I published Why You Must Act Now, the measures were starting to be taken in California.<br />
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There's a couple of interesting things that happened. First, the population was already reducing its mobility before there were official measures. So I think the population there helped. The fact that, for example, in Silicon Valley so many people are informed helped a lot, and we have to remember that this is especially bad in urban areas, right? So the fact that the Bay Area, one of the two or three big urban areas in California, was already staying home before the shelter-in-home order, I think that was good.<br />
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The same thing I think happened in LA. I think with the measures, they were regressive and relatively early, and I think that was good. One of the problems I think is that it was a one-size-fits-all, and I think that's problematic because you have, for example, areas in Central Valley where people depend mostly from the work that they do outdoors and where you have communities without a single case, and they had to follow the same order as the people in big cities like San Francisco where many people can work from home anyways.<br />
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And so, they're not as impacted. So I think that one-size-fits-all was a bit problematic. It's understandable, given that it's very hard to make very intelligent decisions without a lot of data and without a lot of time to think about it, but that was a bit harsh. And I think all in all, the state is making reasonable decisions on how to open, in what order, and more importantly under what conditions, for example, right?<br />
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The cases need to be at X level, and they must be going down and you need enough testing, and that means X numbers of tests, and you also need enough contact tracing. So all these conditions I think are exactly the way you'd want to be ending the epidemic.<br />
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<b>Eric Ries</b>: Do you want to talk a little bit about your political article, the U.S. divided and all that?<br />
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<b>Tomas Pueyo</b>: I'm happy to do that.<br />
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<b>Eric Ries</b>: One of your more recent articles has been about the political polarization in the US and about the need for us, as a country, to pull together. That's a pretty brave topic to address so openly. Not everyone who has been involved in the corona response has been willing to address the politics of the situation. Why did you feel compelled to write that? And recap your argument for those who haven't seen it.<br />
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<b>Tomas Pueyo</b>: Yeah, I think it's interesting. It's actually connected indirectly to the question that I get a lot, which is, "What you did for coronavirus is amazing. Can we do that for climate change?" So I'll talk a little bit about that, and then I'll go back to your question. And my answer to that is no. You cannot do the same thing for climate change. The reason is because there's a few factors that make the coronavirus very unique.<br />
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One is it affects the entire world. That's like the climate change. And two, the consequences are dire like the climate change. In fact, the consequences of climate change are much worse than the ones for coronavirus, but the two factors that make the coronavirus different is one of them, this is light speed. Within days, the entire situation happens. So the urgency is dramatically higher than it's in the decades.<br />
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And then, the last factor is nobody knows about this. There's no stance on this. And so, as a result, everybody is open to learn as much as possible. These four factors, you only have two in climate change, and the other two you don't. Climate change, it's in the decades, and also you have a lot of people who have already found their opinion, and then you have confirmation bias leaking in.<br />
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Many people already have a conclusion, and they're feeding the data to the conclusion. In the U.S., what I saw after the hammer and the dance is that most countries were taking the right decisions, but the U.S. wasn't yet. And we had this key window in March and early-April where nobody, either at the federal level or the state level on the democratic side or the republican side, had a very definitive position about it.<br />
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You already had Republicans on the republican side leaning towards more openness to the economy, and the democratic side more towards the health and lives. That was not a crisp delineation. My goal there was trying to make this a data-driven nonpartisan argument, and the reason why I thought that was not only desirable but more currently achievable is because Republicans actually have the most to lose by this, by the coronavirus.<br />
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The default response of a Republican usually is going to be more freedom, less intervention from the government, but also they default to the economy's really, really important. So one of the things that I wanted to highlight is this is bad for... If you let this go and you don't control it, it's going to be really, really bad for the economy, not only for health but also for the economy.<br />
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So if you really care about the economy, you should control this. The second argument that I wanted to make is one around how self-serving fighting the coronavirus could be. I realized that Republicans had not yet realized how bad the coronavirus could be for their constituents. Republicans are in general older, and they are in general also less healthy than Democrats, not because of who they are but rather the fact they're people in more rural areas and to also be older and also have more comorbidities.<br />
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And so, I wanted to highlight the fact that, well, it's going to be worse for you, Republicans, if you don't control this. You're going to have more people dying, both because they're older and they have comorbidities. And the impact in the elections could actually be dramatic. For example, just straight deaths for Pennsylvania could account for 30% of the gap between Trump and Hillary in 2016, right?<br />
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So 30% of the elect rate that pushed Trump in Pennsylvania, which was a swing state, could die directly from the coronavirus, right? I think that's huge, and then the last thing I would try to do there is just explaining the early polarization to a very reasonable fact, which is the fact that urban areas are both more connected and dance than rural areas. They also tend to be more democratic.<br />
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If you're more urban and more connected, you also will have more coronavirus cases earlier on. We saw that in New York, for example, very connected to Italy and a lot of cases very early on. So there was a correlation, but not a causation between the fact that you will be hit early by the virus and being Democrat. That did not mean that as a rural state you would not be hit, because what we see in all pandemics is that they take a longer time to reach rural areas.<br />
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And when they do, they hit hard. And so, for all of these reasons, the economic reason, the self-serving reason and the fact that this was not as much ideological difference but a more rural-urban difference, I thought we had this narrow window of time where we could write an article to influence politics at the national level in the US. I tried, but I think if I succeeded, it was more at the state level but definitely not in all states and definitely not at the federal level.<br />
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<b>Eric Ries</b>: What's the data showing right now? What are you working on these days to look forward towards the next phase of the pandemic?<br />
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<b>Tomas Pueyo</b>: I'm working on three different things. One of them is finalizing the dance. What are the recommendations for dancing properly? And one example of this is you have many states and many plans that recommend a number of contract-tracers based on the population of the state, right? For example, I need, I don't know, 10 contract-tracers per 100,000 inhabitants, which makes no sense, because if you have two states that have a million inhabitants and one of them has 10,000 cases, and the other one has none, should both of these have the same number of contact-tracers?<br />
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No, and so being clever what are the different metrics that you want to follow and what are the different goals that you should achieve, I think that's the most urgent thing, given that so many states and countries are moving into the dance without being properly prepared. That's the first one. The second one is updating the debate around herd immunity versus hammer and the dance.<br />
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And I think it's a very important one, because we're not in this for a few months. We're in this for maybe years. And so, it's always going to be tempting to say, "We give up and we're just going for the herd immunity." That's in fact what we're seeing in many states in the United States, whether Georgia, for example, or Florida, admit or not.<br />
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<b>Eric Ries</b>: Been really painful to watch.<br />
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<b>Tomas Pueyo</b>: Yeah, it's painful to watch, but that's the de facto strategy that they're following. They are basically saying, "You know what? I didn't control this. I don't want to go through the problem of controlling this, and so I'm just going to open up the states." And the result is going to be bigger outbreaks, bigger maximum number of cases, collapsed healthcare systems, a lot of deaths.<br />
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This is a constant debate, and I think it needs to be updated all the time based on available data. So I'll be looking at that. The last one is the hammer and the dance only is relevant if you can do the hammer, and you can do the dance. It is not the case for many countries. For example, both Peru and India have had a pretty dramatic hammer applied, but in both cases, the number of coronavirus cases has been going up during the hammer.<br />
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So if you can't even control the virus during the hammer period, it is unlikely that you can control it during the dance. And also, not only the benefit of the hammer and the dance is lower, but also the cost is higher, because fewer people can work from home. More people depend on a daily income to eat. And so, you can't assume that what's valid for Western countries is valid also for developing countries.<br />
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And so, I'm looking into what are the right strategies for them. In fact, it is depressing. I talk with people in Kenya, in Peru, in Mexico and in Bangladesh, and it is just so hard. They are in this bind where it sounds like they're forced to go for herd immunity, but they don't want to. In fact, you do need to look at the details, because the details matter. And you look at an example like Kenya, for example.<br />
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Kenya did not brush the curve, but in fact they've been pretty stable at a quite low number of cases, but the economic toll has been very, very heavy, right? So they're wondering, "Okay, did we succeed or did we not, and should we open or should we not?", with interesting facts such as, for example, Kenya has experience with Ebola contact-tracing. And so, they can use that to reduce the epidemic in the dance and moving to the dance faster than Western countries can.<br />
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You also have natural AB tests there where, for example, Rwanda, Burundi have been pretty good at also applying a hammer and having very few cases. Whereas, Tanzania, which is another neighbor of Kenya, did not apply hammer and very few people hear about this, because the official data does not show deaths and cases and all that thing, all that stuff, but anecdotal evidence shows a collapsed healthcare system and people dying on the streets.<br />
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And so, this is an interesting situation where you have a completely different set of data points that you need to process with a completely different cost-benefit for you to know what is the right solution. And the stakes are huge, because here we're talking about Kenya and Tanzania and all these countries, but what about India, 1.2 billion people? If they get it wrong and they go for herd immunity, what happens with 1.2 billion people, coronavirus running wild?<br />
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Is that then containable into only India, or the entire world gets affected? I think these are some of the very hard decisions that we need to make, and it's a bit unfortunate that we are still in a world where there's 200 sovereign countries, and there's only very few overarching organizations that help, because if the World Health Organization, for example, had been better organized, not as politicized and had had more power, there's a world where the coordination across countries could have been substantially better.<br />
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And we could have taken the right measures. For example, if it turns out that the right thing for the entire world is for India to contain the virus, but India cannot afford to contain the virus, there's an argument to be made for Western countries to fund India to contain the virus, but you just cannot even conceive that, because we don't have an organism that is multinational that can have that level of coordination and transfers of wealth.<br />
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And so, I think that is one of the things that I want to see happening and I believe are going to be happening over the next few decades, the same way as in the past, for example, you have the IMF or the World Bank that have emerged as stronger multinational organizations that do influence decisions across the world. There might be a World Health Organization or another type of organization that might emerge for health, for pandemics, for health in general and hopefully for other types of disciplines in the world.<br />
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<b>Eric Ries</b>: What do you hope this is going to mean for you? Do you think when the crisis passes, you're going to go back to the life you had before?<br />
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<b>Tomas Pueyo</b>: I've been very, very, very careful to separate these two things. One of the things that drives me the most in life is to generate love with my friends, with my family, with society in general. And the way to generate love in society is to have as big an impact as possible. And so, thanks to this, I've had more impact than I could ever dream of having. So I'm just pushing that as much as possible, and I've been very careful to keep that very separated from my personal gain, because I did not want to have misaligned incentives.<br />
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If something was right for the world and for the impact, and that was bad for me, I did not want that to influence my decision-making. So I really separated these two things, and I'm pushing as much as possible the message as much as I can. My goal was as I push this, the world is going to catch up, and I will have very little to contribute anymore. And so, I can start thinking of, okay, what does this mean for you, and what can I do about it?<br />
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And so, I think we're right at that phase right now. So right now, I'm thinking, okay, is there something that I can do that aligns with what I want to do in the long term? Thankfully, one of the things that I always wanted to do in the long term was what I've done for the coronavirus, taking big problems, understanding them, breaking them down, finding solutions and communicating about them.<br />
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And so, that's what I'm exploring right now. Can I use what happened with the coronavirus to replicate this? So I have some thoughts. I had a few offers for books, something that's interesting. I work with a group of volunteers that is super, super strong and super energetic, and they want to go into the direction of building a philanthropy to pursue these goals.<br />
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And I'm in general just talking with people like you and with other people who have experience in having a career around content and ideas that they have. So if you or anybody in your audience has ideas on how to push that, I think that's definitely something I want to explore.<br />
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<b>Eric Ries</b>: Where do we go from here? How do we get out of the crisis?<br />
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<b>Tomas Pueyo</b>: The fear that I have when I hear that question is that there's an undertone. There's an underlying question, which is when do we go back to normal, and I know that's not what you mean but that is how many people are going to interpret that question. And so, I think it is very important to state that normal the way you conceive it, which is how people might conceive it, which is going back to how the world was in the past.<br />
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That normal will never come back. The world that existed is not coming back. And so, there's two different terms here. There's the two short-medium terms, and there's the long term. And the divide between them is the discovery of a vaccine or a treatment. Short-medium term is before that, and long term is after that. So in the short to medium short, what's going to happen?<br />
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Each country will be making different decisions on how to handle the coronavirus. Some of them are going to be successful at the hammer and the dance, which means that in a matter of weeks, they will be back in the world where things are relatively like they used to be. They will be able to go out and do most of the activities that they used to, not all of them. For example, business fairs might be very problematic for a long time.<br />
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For example, traveling internationally for tourism might be very problematic for a long amount of time, but broadly if you use a mask, if you use physical distancing, if you're careful and if there's not a lot of cases in the community, we will be able to do most of what we used to. There's going to be outbreaks. For example, there was another outbreak last week in South Korea based on a guy who went to a few clubs one evening.<br />
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France reopened schools a week ago, and 70 of them have already closed out of tens of thousands. So very few, but they've already closed. So that's going to be the new normal, being careful for months, working from home as much as we can, hoping that outbreaks don't happen in your area. And if they do, then potentially having a small local hammer applied. The long term I think is the most interesting one, because the world will change.<br />
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We will all have had a common experience for months, for years, that will have changed our habits. And that's the hardest thing to change for humans, habits, but if the entire world suddenly changes their habits and adapts new habits, that is going to have a long-lasting impact. There is an obvious way where that's going to be true, which is the ability to work from home.<br />
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As you know, companies like Twitter have decided to be full-remote from now on. Companies like Facebook have decided that people are not going to come back until September or some until 2021. More remote work will mean also less business travel, and it will also mean a change in the real estate industry, because suddenly the benefit of living in cities is lower. Whereas, the cost is the same.<br />
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And so, I do think unlike in other crises, there will be an exodus to outside of big cities. I don't think it's going to be dramatic. I don't think 20% of the population's going to leave San Francisco, but it might be enough to actually tilt the real estate industry. And then, there's more industries that are going to be impacted, and it's harder for others to know exactly what it's going to be, but you can explore what it's going to be like.<br />
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And I think for me, one of the ones that is top of mind is universities and colleges. My job at Course Hero is focused on helping students study, especially college level. And universities right now are in a bind, because colleges that have a campus, what they do is quite bad for the spread of the virus. You have a bunch of adults that are co-mingling in parties, in dorms, in classrooms.<br />
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It's different networks mixing with each other and talking a lot. They're touching each other. And so, all of that is really, really bad for the spread of the virus. So campuses are a bit dangerous right now, but there was already a fight between campus schools and online schools happening, online schools growing. You have something like Lambda School, right? Yeah, that's very, very important and a very interesting trend.<br />
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And traditional schools who defend the campus experience is unparalleled. If that's true, then very few people are going to sign up in September, because why would you sign up if you cannot go to college, to campus? If that's false, then it's also bad for campus colleges, because it means that their education is not much better than online education. I think something is going to-<br />
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<b>Eric Ries</b>: Have it both ways.<br />
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<b>Tomas Pueyo</b>: Yes, exactly. And so, I think that's a very, very difficult situation, and we'll be talking with university presidents and educators to figure this one out, but that's what I'm close to. And I'm sure there are dozens of other industries that are going to be like this.<br />
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<b>Eric Ries</b>: Certainly. Tomas, I want to thank you for taking time. I know this has been a incredibly busy whirlwind experience for you, and I don't know how you have time to eat or sleep with the volunteers, the incredible output and the research and just the depth of care that goes into each of the articles that you publish.<br />
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<b>Tomas Pueyo</b>: Thank you, Eric. In fact, I want to say one of the biggest positive surprises of all of this has been actually meeting people like you, where I obviously had heard your name working in Silicon Valley. And so, thanks to this, I've been in contact with people like you. And one of the things I discovered is how careful and how thoughtful and caring you are, and people like you are, in not only everything you do and you say, but also in just making the world a better place.<br />
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And I'm really not saying that for pandering. You really were super supportive early on with me and just reaching out to say, "Hey, how can I help? No strings attached, just how can I help?" And that level of generosity, I had not been frequently exposed to, and it definitely was true for you and for people like you. So thank you for that.<br />
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<b>Eric Ries</b>: Oh, well, thank you for saying so. That's incredibly kind and I want to make it super clear the debt still runs the other way. You've done so much for so much of us. So we're all standing by to help, and I hope that many of the people who are listening to this will take inspiration from your example and get in the fight, think about how they could use their unique skills and background to be of service at this time. If folks want to get involved with what you're doing or get in touch with you, what's the best way?<br />
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<b>Tomas Pueyo</b>: The best is actually both Facebook and Twitter. My Twitter is @tomaspueyo, T-O-M-A-S P-U-E-Y-O. And I tend to listen to both DMs and engagements in my tweets. On Facebook, I have actually a pretty, pretty intense community and I post nearly everything I'm going to publish later on, on Facebook.<br />
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And I found that debate to be more intelligent and thoughtful actually than on Twitter. On Twitter, you get a lot of random people who want to score points. Whereas, in Facebook, because you have this personal relationship, people are much more thoughtful.<br />
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<b>Eric Ries</b>: Awesome. Well, we will put links to both things and to a few of your articles for those who want to learn more and get more involved.<br />
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<b>Tomas Pueyo</b>: Awesome.<br />
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<b>Eric Ries</b>: Thanks so much for your time.<br />
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<b>Tomas Pueyo</b>: Thank you.<br />
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<b>Eric Ries</b>: This has been Out of the Crisis. I'm Eric Ries. Out of the Crisis is produced Ben Ehrlich, edited by Jacob Tender and Sean McGuire. Music composed and performed by Cody Martin. Hosting by Breaker. For more information on the COVID-19 crisis and ways you can help, visit helpwithcovid.com. If you are working on a project related to the pandemic, please reach out to me on Twitter. I'm @E-R-I-C R-I-E-S. Thanks for listening.<br />
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<br />Startup Lessons Learnedhttp://www.blogger.com/profile/16441445454879378457noreply@blogger.comtag:blogger.com,1999:blog-7533727264507128560.post-11923008572909590532020-08-26T14:05:00.000-07:002020-08-28T12:52:35.772-07:00Out of the Crisis #20: the founders of Bitwise on the role of technology in empowering people, spreading benefits to underserved communities, and the creation of OnwardUSJake Soberal and Irma Olguin started Bitwise in 2013 with the idea that the technology industry could be used to fix a city--in their case, Fresno, CA. "Our fundamental thesis is that people of color, women, communities of
concentrated poverty, have immense talent to contribute to the
technology industry," Jake explained to me. "In addition, those humans, collectively, are the
majority of America and they reside disproportionately in non-primary
markets. That thesis to us, doesn't feel controversial. It feels really,
really obvious."<br />
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In order to do that, they decided three things were crucial: teaching people to code, creating a sense of place around the tech industry, and proving it's possible to build and ship world-class software from places like Fresno. Seven years later, they've trained about 5,000 students and created over 1,000 new technology jobs in Fresno. 200 technology companies have chosen to locate in the city's downtown, occupying 250,000 square feet of space. In other words, they've more than proved their plan can work--so much so that Bitwise now operates in two more cities and plans to keep growing. <br />
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When the pandemic hit, Irma and Jake turned their attention to another problem. They founded Onward, a platform that matches displaced workers--usually, hourly workers--to industries that are hiring rapidly right now. The goal, Irma said, was: "Let's answer the requirements of this moment in helping people
survive. And let's do that in a way that feels genuine to us." Onward provides "life essential services: food, shelter, money, childcare, training, and jobs" really running the gamut of what people need to move through the pandemic's impact on employment. The platform is currently in ten states and serving hundreds of thousands of people.<br />
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The three of us spoke about the role of technology in empowering people, spreading its benefits to historically underserved communities, our currently broken employment system and why they believe it can be fixed, and more. As Irma told me, "We don't have to wait for serendipity. We can be deliberate about these things. We can get folks to see their lives differently." <br />
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You can listen to my discussion with Jake and Irma on <a href="https://podcasts.apple.com/us/podcast/bitwise-retraining-and-reemploying-american-workers/id1505392824?i=1000485531109">Apple</a>, <a href="https://podcasts.google.com/feed/aHR0cHM6Ly93d3cuYnJlYWtlci5hdWRpby9mZWVkcy8xMjg1NDEyLnJzcw/episode/aHR0cHM6Ly93d3cuYnJlYWtlci5hdWRpby9vdXQtb2YtdGhlLWNyaXNpcy9lLzY4MTU2NzYz?sa=X&ved=0CBEQzsICahcKEwjo0K6IobnrAhUAAAAAHQAAAAAQAQ">Google</a>, or wherever you like to get podcasts. <br />
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<a href="https://podcasts.apple.com/us/podcast/bitwise-retraining-and-reemploying-american-workers/id1505392824?i=1000485531109" style="background: rgba(0, 0, 0, 0) url("https://linkmaker.itunes.apple.com/en-us/badge-lrg.svg?releaseDate=2020-04-21T00:00:00Z&kind=podcast&bubble=podcasts") no-repeat scroll 0% 0%; display: inline-block; height: 40px; overflow: hidden; width: 165px;"></a>
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A full transcript is beneath the show resources below.<br />
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</h2>
<h2>
Highlights from the show:</h2>
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<ul>
<li>Jake introduces himself (2:58)</li>
<li>Irma introduces herself (3:13)</li>
<li>Irma discusses quarantine and finding the equanimity to lead a company right now (3:33)</li>
<li>Jake's quarantine and perspective on the pandemic and where we are (5:48)</li>
<li>The current situation in Fresno (8:31)</li>
<li>Why they chose Fresno as Bitwise's headquarters and Irma's background (10:34)</li>
<li>Why she went back to Fresno after college (14:28)</li>
<li>The choice of entrepreneurship instead of the corporate ladder (17:31)</li>
<li>Jake's background in Fresno (20:46)</li>
<li>Irma's first entrepreneurial steps and how Bitwise came to be (22:56)</li>
<li>How Irma started a software competition in Fresno and met Jake (26:37)</li>
<li>Jake's take on how and why Bitwise came to be (29:26)</li>
<li>Why Irma wants to empower others and staying true to that mission (33:51)</li>
<li>Bitwise's growth trajectory and where it is right now (35:23)</li>
<li>The creation of Onward California (41:03)</li>
<li>What OnwardUS does and how it works (45:29)</li>
<li>The surprises in building Onward and the disconnection in unemployment services (47:29)</li>
<li>Irma gives an example of the kind of person they aim to help (51:54)</li>
<li>Their hopes for the future of Onward (53:34)</li>
<li>On how present circumstances have revealed a broken system and why Jake is optimistic (55:51) </li>
<li>What success looks like (57:54)</li>
<li>The importance of universal basic income (UBI) (58:09)</li>
<li>Irma's hopes and dreams for what's next (1:00:24)</li>
<li>How to ensure we don't waste this opportunity to rebuild something better (1:04:12)</li>
<li>How we get out of the crisis (1:06:22)</li>
</ul>
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<h2>
Show-related resources:</h2>
<ul>
<li><a href="https://bitwiseindustries.com/">Bitwise</a></li>
<li><a href="https://onwardca.org/">OnwardCA</a></li>
<li><a href="https://onwardonair.com/waking-up-in-a-pandemic-how-communities-and-companies-are-responding-to-the-age-of-covid/">Onward On Air</a>, James Fallows episode</li>
<li><a href="http://www.stocktongov.com/government/council/mayor.html">Mayor Michael Tubbs</a>, Stockton, CA</li>
<li><a href="https://www.bostonglobe.com/2020/06/15/opinion/stockton-has-been-testing-universal-basic-income-since-2019-its-working/">"Stockton has been testing a universal basic income since 2019--it's working"</a></li>
<li><a href="https://www.kaporcenter.org/">The Kapor Center </a></li>
<li><a href="https://onwardus.org/">OnwardUS</a></li>
<li><a href="https://www.gov.ca.gov/2020/04/17/governor-newsom-taps-california-business-labor-health-care-and-community-leaders-for-new-task-force-on-business-and-jobs-recovery/">Governor Gavin Newsom's Task Force on Business and Jobs Recovery</a></li>
</ul>
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<h2>
Transcript for Out of the Crisis #20: Bitwise</h2>
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<b>Eric Ries</b>: This is Out of the Crisis, I'm Eric Ries. We are still reeling from the first order of consequences of the pandemic, but we are also starting to see the second and third order effects, unemployment, hunger, mass bankruptcy, and the inequity and injustice of this crisis. One of these effects that we are just beginning to understand the magnitude of is unemployment. It's becoming clear that there are two types of unemployment rippling through our economy. There's unemployment caused by the lockdown and unemployment caused by the recession caused by the lockdown. The scale of the problem is immense. So what are we going to do?<br />
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To me, it is clear that we need widespread retraining to make sure no one gets left behind in the new world that we are building. Jake Soberal and Irma Olguin are the founders of a company called Bitwise. They have been working on this injustice for a long time. Since 2013, Bitwise has supported people learning new skills in what they call underdog cities like Fresno, Bakersfield and Merced. Bitwise was shaping up to have a great 2020. Their programs teach software programming and IT proficiency to people who have historically been excluded from those fields, and connects their graduates with tech companies around the country. When COVID hit, Jake and Irma jumped into action. They created a program called Onward California in partnership with the State of California and with the support of governor Newsom.<br />
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The program puts displaced workers in contact with resources for essential life services, retraining opportunities and new employment. Their model in California was so successful they eventually created a new organization, Onward US, dedicated to putting American workers displaced by COVID-19 back to work. They are now operating in nine States. Their efforts in this crisis have been admirable, but as Jake and Irma made clear in our conversation, this is not enough, we need a widespread, fully funded WPA scale effort to put Americans back to work. Job retraining, up-skilling, in-sourcing manufacturing, these are necessary components, but they are not enough. What is needed is a commitment that nobody be left behind in the new normal we are collectively trying to build.<br />
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I'm grateful to programs like these that will help get people back to work, but by themselves, they will not solve the inequities of the old system. For that set of challenges we will need to be even more ambitious and determined. We will need to take inspiration from people like Jake and Irma. Here's my conversation with the founders of Bitwise.<br />
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<b>Jake Soberal</b>: Hi, my name is Jake Soberal. I am the co-founder and CEO of Bitwise Industries. We're a technology company headquartered in Fresno, California, and together with the Kapor Center in Oakland have partnered to deliver Onward US, which is an initiative to put thousands of Americans back to work.<br />
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<b>Irma Olguin</b>: My name is Irma Olguin, I'm the co-founder and CEO of Bitwise Industries. A company headquartered in Fresno, California. Grew up here in the Central Valley of California, left for early work and career in college, bounced around North America for a while, returned home to start this company.<br />
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<b>Eric Ries</b>: How are you doing, say a little bit about how you're handling the quarantine and what life has been like since we all started sheltering in place?<br />
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<b>Irma Olguin</b>: For my personality, sheltering in place and staying home and sort of nesting and those types of things, it's actually really natural for me and I don't miss as many things as one might think. And I certainly don't feel the same as folks that are on my team, but I definitely am disturbed by the world around me at the moment. So from a very, very personal micro level, I'm doing great. I'm healthy, I've got everything I need. And I don't mind staying home, on a macro level and just looking at what is happening in the world around us, that is hard to take.<br />
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<b>Eric Ries</b>: I think a lot of us are feeling that way. This is the contrast for many of us, between kind of being safe and cozy and warm at home and consuming this bad news. You read a newspaper or go on social media, the headlines are just apocalyptically dark. How have you managed your own psychology and how have you managed to kind of maintain the equanimity that's needed to lead a company during these times?<br />
<br />
<b>Irma Olguin</b>: I think the good news in this time of rare uncertainty is that the decisions are relatively black and white in terms of what's good for the health of human beings, that of course sort of clashes with what's good for the health of a company. It just so happens that my disposition will always lean toward the health of human beings, it is part of who I am. And so decision making still feels very black and white. I think where things become disturbing or unsettling is when you watch what's happening in different areas of the country with leaders who are making decisions that you wouldn't make, and I think that that becomes hard to watch over and over and over again. Or maybe they're not leaders, right? Maybe we are talking about community servants or folks we previously thought were community servants. And that disappointment, I think that is the biggest lift for me right now is to manage my own disappointment.<br />
<br />
<b>Jake Soberal</b>: So I feel like I'm in a pretty privileged spot. We've got a wonderful home just North of downtown Fresno here and are safe and have room, and the like. That being said, like it's just such a weird time. And so, I think I entered shelter in place believing that, well, I was just going to do my work from home and Sarah, my wife was sort of just going to do what she normally does. I don't think I realized how dramatically her world would be impacted. And then in turn, like things would just shift for our family. Like the absence of school, the absence of activities has, I think just turned up the volume on everything. And as a family, we've had to find new rhythms and figure out how to be sort of the best version of ourselves in this moment. And that's, I think been like, the six weeks or so have been a big adjustment on all fronts, but starting to find something of a rhythm in this really weird time.<br />
<br />
<b>Eric Ries</b>: Can you share just from your perspective where we are in this crisis?<br />
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<b>Jake Soberal</b>: Oh gosh, I think we've barely left the batter's box, particularly as it relates to things like economic recovery, if we can even begin to talk about that as something that has begun. I don't think we have from my vantage point, not a medical perspective at all, but I don't think we have our arms around the health crisis, and I don't think we are talking even honestly about the depth of the economic crisis.<br />
<br />
<b>Eric Ries</b>: It seemed to be my experience talking to folks and seeing our leaders, it just seems like we are in complete denial about the severity of what has happened and the scope of the response that is going to be required to begin the recovery process.<br />
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<b>Jake Soberal</b>: Yeah, I think that's right, realizing that we have a third of Americans that are out of work and the impact that that has in virtually every direction means that we've just got work to do with almost every area of society, whether that is how we think about going back to school, how we think about putting people back to work, the reality that most of us are thinking that we're going to put people back to work in the same or similar jobs when that's not going to be the case. I think that there is just quite a lot to figure out and we are getting ready to launch a podcast next week called Onward On-Air and Jim Fallows, a reporter for the Atlantic was on and one of the things he kept emphasizing is at a leadership level we need to provide empathy, hope and a plan. And I don't think we have anything resembling a plan.<br />
<br />
<b>Eric Ries</b>: So let me get this right. Empathy, hope and a plan.<br />
<br />
<b>Jake Soberal</b>: Yeah.<br />
<br />
<b>Eric Ries</b>: Yeah. Oh my God, that shouldn't be such a high standard to hit and yet here we are.<br />
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<b>Jake Soberal</b>: No, no. And for me, I mean, it's putting words to something that you feel and Jim is just a super wise dude, but it felt right, and it also felt like it exposed a glaring void or vulnerability.<br />
<br />
<b>Eric Ries</b>: Talk a little bit about the situation in Fresno. How are things there?<br />
<br />
<b>Irma Olguin</b>: Fresno has always been this challenging place. We don't live on a coast, we live literally in the middle of the state, the driving industry here and since always has been agriculture. And so in the best of times, if you're responsible for feeding between 20 and 30% of the world's population, that's going to consume your thoughts and consume the economy, and you've got to put people to work to do that specific job. In a pandemic when the food supply chain, and really just like the way that people get food, even if you don't think about their consumption is not just critically important, it's life or death. And so I think that you see lots of protections and lots of effort being put into protecting that food supply chain. But I think it's also exposed places where it is weak and where there's opportunity to make life better for a great number of people.<br />
<br />
That's really sort of off to the side of what we do at Bitwise, which is we're focused on the technology industry or have been focused on the technology industry and providing opportunity to folks who came out of other places, usually from a story of poverty and sort of provide them that upward mobility. And so I think the question for us in this moment is like, how do you marry those two things together? How do we keep providing opportunity, but also really pay attention to where and how people are able to eat and where and how people are getting their jobs. So I think Fresno being that challenging place, oddly enough, has sort of prepared us for this moment, because it's never been easy. There has never been a day in our company's history or even I think in our personal lifetimes, when you think to yourself, man, Fresno is the place to be because this is the lap of luxury.<br />
<br />
<b>Eric Ries</b>: Why'd you choose Fresno, given the challenges of so many things, including running a company compared to some of the other more famous cities in the world?<br />
<br />
<b>Irma Olguin</b>: I think choosing Fresno as home base is--it really like gets to like a very personal question for me, at least. I was through no fault of my own, through no grand plan of my own afforded a number of opportunities to go to school and to do some really neat and interesting work as a computer engineer and then start a bunch of companies and have some success there. And that is very, very solidly not the story of folks who grow up the way that I did and like many of our citizens have. And so for me, this is home. I want to make my home better, but I think even a layer deeper is I want people who have that story to have this outcome as well, or at least for this outcome to be possible. If we can get more young people who grew up in rural California to imagine their lives just a little bit differently, I think we actually do create a better world. And so that's why Fresno, I think we can do that here and it would be hard to make the case somewhere else.<br />
<br />
Leaving Fresno was unexpected for me. It's not what I saw for myself that wasn't part of my life's goals, but going and seeing a completely different culture and sure it's still in the middle of the United States, which there's an argument to be made that it's not that different, but going from Fresno, California, or really more specifically Caruthers, California to Toledo, Ohio, for me for a West coast girl was culturally shocking. And it was really, really noticeable and there was this like layer of discomfort all the time, knowing that you are the only one like you in the area and being sort of faced with that again and again and again. And I think a lot of people experience some version of that, right? Where you're the only woman in a boardroom or you're the only woman in your technology program, your degree program or your training program, or, and on and on.<br />
<br />
I think for me, like I was so used to hearing different languages spoken and for instructions from my mom and grandmother to be half in English and half in Spanish and for dinner to regularly consist of tortillas and beans. Like to go from that, to experiencing none of that, really, almost ever, you notice it, you never really lose your awareness of that. And so you're always trying to consciously or subconsciously figure out like how to work this new system. What does it look like to look like you belong in this different culture and not signal to everybody that you don't have the same background, the same story. But it was also wonderful, while that was challenging and new and in some cases frightening, it was a wonderful experience and I got to do all kinds of things, including study alongside of some of the smartest people I've ever met and learn under some folks who've done wonderful, wonderful work in the technology industry and to experience weather that I would never otherwise experience.<br />
<br />
Like all of these new things, it was a rush. It was the most difficult period of my life bar none. But I think coming out the other side of that, I'm so, so grateful for that experience. I think it has shaped the way that I approach life and work today. And yeah, I'll never let that go.<br />
<br />
<b>Eric Ries</b>: You graduated with a tech degree?<br />
<br />
<b>Irma Olguin</b>: I did. I have a bachelor's in computer science and computer engineering.<br />
<br />
<b>Eric Ries</b>: So talk about what you saw as your choices at that point. You must've felt like there was a world of opportunity in front of you. How did you sort through what you wanted your next step to be?<br />
<br />
<b>Irma Olguin</b>: Planning my next steps has never actually been a strength of mine, it's a little bit more animalistic, I think, than that, whereas I know and respect people who have this grand plan for their lives. And in fact, my co-founder is one of those, right? Jake is absolutely the young man, the six year old boy who knew exactly what he was going to be doing when he was 36. That was never me. I think I'm very much like there's a bone over there that I want and I'm going to go and get it with my teeth. Right? And it's hard to see the next bone and the next bone when you don't really sort of think about it in a long term trajectory sense. And so when I went to school, it was because school had become an option suddenly, it wasn't part of a plan.<br />
<br />
And then when I was leaving school, there were a certain subset of jobs that were then available to me. And then, there was a tragedy in my family and I ended up wanting to come back and be around family and realized that the best version of my career and whatever was going to happen next was going to be nearby them and affecting their specific lives. And when I say family, of course, I mean my biological family, but I also mean my chosen family, my community and the folks that I grew up with. Maybe not by name, but archetypally, that was the family that I wanted to affect. And so those choices, it feels like life has almost made those choices for me. And I feel as though every time a new opportunity is presented, it just makes crystal clear sense in the moment and it feels obvious and right that I do that thing next.<br />
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<b>Eric Ries</b>: When you made the choice to live elsewhere, did you feel like you had to give something up career wise?<br />
<br />
<b>Irma Olguin</b>: Well, when I originally left California, you're giving up all of that community and support for sure. And for someone who grew up around a lot of people that are kind of--you miss your pack. You're a litter of puppies and then suddenly you're not with your litter any longer, so that was hard. And then leaving, going and experiencing the wider world, getting an education, doing computer engineering work in a bunch of different places, there's momentum that's built there, you're gathering connections and your network and experience and job opportunities and et cetera. So sure, to return home was in every way, starting over again from a professional lens. I had no network on the West coast. I had no job prospects on the West coast, I was going back to my litter, but I was not bringing any of that professional help with me. And so yeah, I think I gave away probably what could have been a lifetime of climbing the corporate ladder and traded that instead for entrepreneurship.<br />
<br />
<b>Eric Ries</b>: It's such an interesting example of how privilege operates in our society, where some folks have the opportunities and family and all those conveniences. It's kind of all wrapped up into one and it creates this kind of glide path for them into conventional kinds of career success. And others are forced to make really difficult trade-offs like that. But what I think is so interesting about it is I've gotten to meet many people who have been on that glide path, who climbed the corporate ladder. And of course that many of us who are more of the misfits who have wound up in entrepreneurship, and there's actually a kind of a rich reward that comes with being off the beaten track and away from those centers of power. So you made the choice to go into entrepreneurship, to abandon those kind of professional supports. What was it like?<br />
<br />
<b>Irma Olguin</b>: It felt natural. It was as though I figured out what I should be doing with the experience I was so recently afforded because I think that designing my own life, but also getting to figure out ... getting to determine how I was going to participate in the world, felt natural. Whereas, taking the job at X company, advancing to Y position, attaining Z salary, didn't feel natural. It felt as though I had become part of a machine and couldn't really find myself in it. So entrepreneurship while extraordinarily difficult from the perspective of like what it takes and what it asks of you is its hard to see a different version of my life anymore, because it's so much a part of like who I am to be able to say, we're going to go after this kind of business or this kind of deal, because it has a profound impact on lives. And getting to say that, and not having to sort of triple check that with everybody around you is worth it. It's worth how difficult it can sometimes be.<br />
<br />
And I think too, the transition into entrepreneurship also lends itself to a mindset of like, you've just got to put down things that don't work a lot faster than in any other version of your professional life. And so that, again, that too feels natural. This thing is not working, we're not going to do it anymore. Let's try another thing, that changes the way that you look at success and failure and goals and shapes it into something I think is more attainable for the vast majority of us. So even though, again, this path is difficult from a personal emotional level, from the flexibility it affords a person to try things. And if you can really sort of sit in that mindset, and I think Eric, you know this. You wrote the book on this, literally. If you can do that, if you can put yourself there, you can bring other people with you into that mindset. And I think that there's a great power in that.<br />
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<b>Eric Ries</b>: Yeah, it's an incredible feeling when that team kind of comes together in defense of a common vision. What were you doing before the pandemic? How you came to run a major technology company in Fresno. That's not exactly people's first association they have with Fresno.<br />
<br />
<b>Jake Soberal</b>: Yeah. So I actually grew up here in Fresno. And actually in a suburb just to the north and east of town. Like a lot of kids who grew up here, you begin to think the best and most exciting version of your future exists somewhere else. And that is what guided me, like many others, to pursue school and early career elsewhere. Bouncing around the country, went to school at the University of North Carolina, Chapel Hill. Did law school in Southern California and had no intention of coming back. I did though cherry pick an externship opportunity during law school for the court of appeal here in Fresno, which was a good gig, but candidly I thought the kids from Stanford and Berkeley won't apply.<br />
<br />
So it would be easier to get the good externship in Fresno than it would be in LA. And so I did, and I landed the gig and came back and started digging in. And I shared a number of times that the work was fine. What was the most impactful piece of that summer was the realization that I was deeply drawn to this place. And I felt as though the most impactful best version of my story of myself was here. It was the place where I can do the most good. I didn't know what that would look like. Then came back as a sort of a young intellectual property attorney, working for a wonderful firm here in town. Dug in and not so long after that began representing this upstart five foot nothing Latina founder from Caruthers, which is a rural town to the south and west of Fresno. That of course is Irma Olguin, who is the co-founder of Bitwise.<br />
<br />
We very quickly realized that we had a shared vision for something better and different in Fresno. And I think in each other, found not only that high ambition, but somebody that we believed could pull it off. And began dreaming around what that might look like.<br />
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<b>Eric Ries</b>: What was the first thing you tried? What was your first entrepreneurial steps?<br />
<br />
<b>Irma Olguin</b>: Well, it's not glamorous, but the first I tried as an entrepreneur, it was out of necessity. When I first returned to California, I was, again, without job prospects, without a network. And I lived in rural California. I was not in a city center, and so things like internet and reliable vehicles, all of those things were hard to come by at first. And so my first entrepreneurial experience, returning to California, was cleaning out pantries and garages of other people, and then selling the wares; the crock pots, the guitars, the leather jackets that you find in those places. Selling those things at the flea market on the weekend. And trying to figure out sort of one nickel at a time, one quarter at a time, what your profit margin is going to be for the week. And whether or not you can turn that into lunch, or can you turn that into a tank of gas? And can you turn that tank of gas into an interview?<br />
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It was a journey, but that was my first entrepreneurial experience. Was selling sort of thrift store level things at a flea market.<br />
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<b>Eric Ries</b>: How did that lead ultimately to starting Bitwise?<br />
<br />
<b>Irma Olguin</b>: Gosh, I mean, when you're scrounging and scraping for your tank of gas. The victory that you feel when you realize that you're in a position to not scrape and scrounge for those things any longer, I don't think... I'll never forget what it feels like to not count the change. And to be able to give that feeling to other people or help them find that feeling. That's what Bitwise is about. Sure, we use technology as the tool to make that possible, but ultimately it's about agency. And I can't see myself living my life in a way where my time is not directed in making that possible for other people.<br />
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The path to Bitwise was not a straight line, for sure. It went from selling things at a flea market, to picking up some side jobs, building websites, to sort of accidentally accepting a challenge to start a nonprofit in the coding competition.<br />
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<b>Eric Ries</b>: Well, how did you do that accidentally?<br />
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<b>Irma Olguin</b>: I was earning these contracts, these web development contracts, and then being relatively desperate and new, building out my network. If somebody asks me to connect a printer, I would take that job too. And ended up building this client base and a reputation for doing almost anything that touched electricity. Right? I would pull cables, I would connect networks, I would build websites, I would form teams. It was just all over the map. And I remember what ended up happening was that I was doing that for this... It was an incubator. It was a very small incubator in Fresno. All of those different jobs, connecting printers and what have you. And the CEO of that place, at the time, comes to me one day and he says, "Irma, why are you the only person that I've ever met in Fresno who knows how to do these things?"<br />
<br />
And I remember looking back at him and saying, "Because you don't hang out in the right places. The folks who do these things, they're wearing hoodies and flip flops and they have their heads down in Starbucks for four and five hours at a time, and they're writing code for eBay. You don't know them because that's not your crew." That statement was met with disbelief, and basically he said, "Prove it." And so I did. I set out to prove it. Started a software competition to draw folks out of the wood works, that I knew were doing this work silently, quietly, their own sort of single-person technology industry in the heart of California. And wanted to bring them together in a very public way. And so offered cash prizes and got a bunch of sponsors. And through this competition, it was a raging success.<br />
<br />
And in a single day, something like a 100 or 150 new technologists were exposed to the world that didn't know they were there. And that was cool, that was a cool feeling. And ran that competition for, want to say five years. And it was actually at that competition and the nonprofit that ensued, that was my first touch point with Jake, who is my co-founder. It was a recent transplant back into Fresno. As the story goes, he was looking around for "Who's doing the technology stuff in Fresno?" He kept hearing my name and he reached out one day and said, "I want to sit on your board. I want to sit on the board of this nonprofit." And yeah, can't say that it was smooth sailing from there, but that was the very first interaction where I thought this is an impressive man.<br />
<br />
I disagree with his choice of career. I think being an attorney is maybe not the lifelong sort of goal for this guy, but I'm interested to see where this relationship goes. That led to a fast friendship, honestly. We got into great and wonderful fights together. It was a ride, and here was this person who is at least as smart as I am, if not more, who just wants to disagree with everything that I said, but would actually listen when it turned out that I might be right. And I thought that that was refreshing and different and challenging for me to have to deal with somebody who could be wrong. He ended up becoming my representation for a different company that I started. He was our IP attorney. And again, we were friends through that process. We ended up sharing our frustrations around what was not happening in our city. This really, really challenged place. Like why couldn't we be something else or become something else. In pursuit of that answer, we started Bitwise.<br />
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<b>Jake Soberal</b>: I have so many things to correct.<br />
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<b>Eric Ries</b>: Yeah, Jake.<br />
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<b>Irma Olguin</b>: Oh, I dare you.<br />
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<b>Eric Ries</b>: I was going to ask who wins most of the arguments?<br />
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<b>Jake Soberal</b>: Irma. That's not a good question.<br />
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<b>Irma Olguin</b>: I thought I was going to get through that whole thing unscathed. I couldn't even hear you breathing.<br />
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<b>Jake Soberal</b>: Yeah, where do I begin in correcting the record here? First of all, Irma is a genius. I talk nice. And so the intelligence question is not in play, but I think the most important thing substantively that I think was sort of glossed over there is we tend to... Even as entrepreneurs, fundamentally we're disrupting something, we're trying to do something in a way that it hasn't been done before. We tend to get locked into, "Well, this is the way things work." And what I think you heard in that, like "I accidentally created a software development competition," is actually not quite right. I think that one of Irma's real gifts is that... What was being said there by the CEO she was speaking to, is that, "We can't do technology in Fresno because we don't have the talent." And Irma's response was, "No, no, no. The problem is you don't know how to find the talent. One, and you haven't done anything to create the talent. Two. And we can change that, we can build a system. We can build pipes for that."<br />
<br />
And I think that becomes so profound, in that, Bitwise here is this big company now that is somewhat flashy and making meaningful amounts of money and having big investors and all of these sorts of things. But if you rewind the tape to the day that I was seeking out Irma, what Irma was doing is she had a software company where she said, "Well, I'm going to grow. And so I'm going to also sort of teach a cohort of people around me how to do the things I do." And so she had an Academy. "I need community in order to support those people and the idea that tech could thrive in Fresno." So she started a co-working space. "And then I, of course, need revenue for this." And so, as she described, "Fixed everything that touched electricity."<br />
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Irma had built the ecosystem that is Bitwise in it's sort of beta version just because it was natural to her to fix the whole problem, and not just a piece of it, that made things better for her. And I think that's a really, really big deal. And so much of what we do today at Bitwise was really where... And in my role, I was a very useful microphone to the work that Irma very naturally came to, and happily so. So really what you've just heard is the origin story of the work that today is Bitwise.<br />
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<b>Eric Ries</b>: That is actually a common trait among the very best entrepreneurs. You know, there's certainly people out there who are very self-aggrandizing and think everything they do is brilliant, but a lot of the really great entrepreneurs that I've had the chance to meet, they don't see their work as a big deal because they can't imagine doing anything else. So they can't imagine the world in any other way. And it's actually a common finding in the entrepreneurship literature, that people think of entrepreneurs as risk seeking. But actually, if you genuinely believe in your vision, it doesn't seem risky to you at all. It's the people around you who see it as risky. And so the attribute that is needed is the ability to help them cope with the stress and the anxiety of what they perceive as risk, but in your heart, if you see that Fresno can be a different way, the fact that that vision has not been realized for, I don't know how many decades you want to count it as, but for a very long time, it doesn't really matter.<br />
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And so I really appreciate both of you kind of sharing that prehistory of how this came to be, because I think it's important for people to understand how change actually happens in the world.<br />
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<b>Irma Olguin</b>: That's a really strong point, Eric. I got to say the idea that you really can't see it a different way, and it feels... Not to sound condescending, but in many ways it feels like this is an obvious next step. And we must do this if we're going to change X. I feel convicted by that every single day. Every single day, I feel like we must put this foot in front of the other in this direction, or we are not going to have the effect that we said we could have.<br />
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<b>Eric Ries</b>: What did you want to change with Bitwise?<br />
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<b>Irma Olguin</b>: I wanted folks to feel that same sense of empowerment that I currently feel in my life. And in my life story, I come from a family of field laborers. What I saw for myself was more field labor, right? Or the highest and best getting that job at the Texaco or the ACE Hardware and climbing the ladder to be management, right? Like that is what I saw for myself. And it didn't turn out that way. And when you look in the rear view mirror, the fact that it didn't turn out that way had nothing to do with this master plan that I had laid out for myself.<br />
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And it was really these moments of serendipity that continued to pop up. Certainly, I had to take advantage of those moments of serendipity, but it wasn't... Again, I did not puppet master myself to this place. Instead, I feel like life sort of shoved me at these opportunities. And that feels like a fixable thing. We don't have to wait for serendipity. We can be deliberate about these things. We can get folks to see their lives differently. We can get the training into their hands and provide the reliable vehicle, so that they can arrive at that training. We can help them get that first job. Like all of the things that led me to that moment, where I realized I was no longer counting the change, we can do that on purpose. So that's what we set out to do, and every day we have to ask ourselves, "Are we still doing that? Or are we just getting big?"<br />
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<b>Eric Ries</b>: Tell us a little bit about where Bitwise is today. What's the growth trajectory been like?<br />
<br />
<b>Irma Olguin</b>: I believe the world thinks that we are growing quickly, Jake and I feel as though... If Bitwise lives in dog years, can we do that twice as fast? We are impatient, and in some cases, petulant and would like to do a lot more of the things that we are working on. We'd like to try a lot more things that factually won't work. When we set out to grow this thing, we wanted to build something that Fresno itself was going to be proud of. And then when we realized the impact that all of these moving pieces were having in Fresno, we had to ask ourselves from a moral obligation, "Is it on us to take this to other places that faced similar challenges and see if it works there as well?"<br />
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And so we set out to do that. I think that our lives and the trajectory has been interrupted by this pandemic, but largely we're making that same effort. "Can we change things for the folks among us who are the least advantaged, and help get them into positions where they have that agency in their lives? Onward was born out of that. onwardus.org is the platform we built to help shorten the time of displacement for folks who were being laid off in really great numbers in one industry. While we're watching these announcements on the news that other industries are surge hiring, can we matchmake? Can we put those things together? We wanted to accomplish that but then if you think about how that actually has to happen? A person needs dollars in their hands. Right?<br />
<br />
They need food on the table. They've got to take care of these immediate needs even before they think about a replacement job, at whatever hourly rate or salary they were at before. That became Onward. Life essential services, job matching training resources. What we're doing with Onward, is the same thing that we were doing with the Bitwise ecosystem. It's just taken this format during a pandemic. When the world stops being on fire, do we want to go back to sort of the more, maybe not traditional to everyone but traditional to us, format of we ran in-person classes and we build wonderful buildings and we put those people into jobs, and we have this sort of ecosystem effect where the technology industry is activated in places where you don't expect to find it in the United States. Yeah, we would love to do that, but let's also answer this moment. Let's answer the requirements of this moment in helping people survive.<br />
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And let's do that in a way that feels genuine to us. So while our growth trajectory in the way that we announced to the world we would grow, is probably delayed a couple of months. We haven't stopped growing and executing on our mission during this time, and it's probably important now more than ever that we do that. So I think shooting the moon, we get to do this. The world stops being on fire, we go back to growing and we're across the United States changing lives and helping people get to that moment where they're not counting the change either.<br />
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<b>Jake Soberal</b>: I think there's something so important and strange about where Bitwise is at in its growth trajectory. Our fundamental thesis is that people of color, women, communities of concentrated poverty, have immense talent to contribute to the technology industry, which... Oh, by the way, sort of is the industry of our age. We're creating more opportunity and wealth than any other industry on the planet. In addition, those humans, collectively, are the majority of America and they reside disproportionately in non-primary markets. That thesis to us, doesn't feel controversial. It feels really, really obvious. The strange thing is that Bitwise is in three cities today. And in those three cities, we are the largest actor in the United States that is doing this work that is advancing this thesis. And so the world is beginning to say, "Man, you really did it." And Irma and I are looking at each other, and saying, "That's not even a rational statement." There is so much more work to be done. It's so profoundly obvious that we are neglecting the majority of talent that could be leveraged to grow prosperity on the planet, it just feels like this gigantic disconnect.<br />
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And so while we might be making venture capitalists quite happy in terms of our growth and return profile, et cetera, it doesn't feel as though the world really understands the work from an impact standpoint, or from a size of opportunity standpoint.<br />
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<b>Eric Ries</b>: So I'd like to get some more specifics from you, because I feel like we've been talking about this very conceptually but we're losing the human beings behind the story. So could you tell us about what actually happened behind the scenes that led to Onward California?<br />
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<b>Jake Soberal</b>: So we were, I think, just a couple of days into being fully remote as a team, and our thought process had been that step one was to get our team home and safe, and step two, and there were literally hours in between, was to think about what is our role in meeting this moment, particularly set against the context of Fresno. We're a venture-backed technology company with a bunch of cash, a bunch of really smart people. We've got a degree of privilege and influence, and we felt obligated to put that to work in a moment where there were needs emerging around us.<br />
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And so we tackled a couple of different things. We started a grocery program that ultimately grew to be one of the largest in the state. And then we began to think also about the fact that fundamentally in a non-pandemic setting, Bitwise is about helping folks without opportunity get opportunity. And what we were watching, here in Fresno, were our friends and neighbors by the hundreds lose their jobs, watching individuals literally in the buildings beside us at Bitwise, where we've got four downtown buildings, be laid off in the dozens.<br />
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And it felt as though the world was talking about unemployment as something that was coming, and it felt very present for us. And so we had not long after that a session set aside with Mitch and Freada Kapor of the Kapor Center, who are also investors in Bitwise, Mitch serves on our board. And I think it was a day or two later, we had been wrestling with these things, and then that conversation surfaced them and their hearts were in a very, very similar place.<br />
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And so in that conversation, I think we spent two or three hours together over Zoom, we began to not just say, "Okay, well, this is a big problem. We should do something about it." But to really like get tactical and well, "What could we do about it, and how would that work?"<br />
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And before you know it, we're sitting there with the founder of Lotus 1-2-3, architecting a system for putting America back to work. And it was pretty amazing. And then in their trademark fashion, without more, said, "We'll put up the seed donation to accomplish this, and let's call this person and this person and this person to see if they want to participate."<br />
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And all of a sudden Eric Schmidt is at the table, and MasterCard is at the table, and the folks at McClatchy, and on and on, and now we've got this coalition built. We are connected with the governor of California, who's saying, "Let's deploy this at the state level." It felt like it really gained immediate and fast momentum, but was born out of something that weighed heavily for us, and it weighed heavily for Mitch and Freada, and fortunate to be sitting in a spot in the world where there were enough resources in the room to begin to do something about it.<br />
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I think that what shouldn't be lost in there is that Bitwise's model fundamentally is about how do we raise up folks from a story of poverty, folks from communities of color, women, to be software engineers. And we do that via apprenticeship. So when we're talking about building all of these things, we're not talking about your conventional team that was ultimately responsible for building and deploying Onward. We're talking about folks who had come up in that apprenticeship model, women and people of color in Fresno, and in Oakland, and in Bakersfield. That because of the model that unearthed them, we're in a position to build a software platform in 11 days that will ultimately put tens of thousands of people back to work.<br />
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And that's a pretty profound circle of life, if you will, that was realized in such a short loop.<br />
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<b>Eric Ries</b>: Talk a little bit about what the platform does.<br />
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<b>Jake Soberal</b>: Yeah. OnwardUS is a web-based platform. At its core, it's built on Salesforce and WordPress. And what a user experience is for somebody coming to the website is hopefully it's communicating to you that this is a resource to help you find the things that you need on your way back to work, in addition to getting back to work. So the site takes in a little bit of information about the user, their identity, their preferred industry, their desired earnings, their education, et cetera. All of that is voluntary. But then what it uses that information to do, is dynamically then return the resources that are most relevant to you, the user. You, the job seeker, across three categories. Life essential services, so food, shelter, money, childcare, training, and jobs. And the idea is that one of the things that we do as a society, and it's well-meaning in a moment of crisis, is that we throw information, and lots of it, at the individual who's experiencing trauma.<br />
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And what Onward is endeavoring to do is both aggregate that information, but also organize it for the individual who's living through traumatic unemployment. And so that ability to match the resource to the human, based on the human's unique attributes, is really the fundamental functionality of Onward. And the hope is that Onward is... It's not an endpoint to anything. Onward is not the one hiring the individual, Onward's not the one training the individual. Onward is not the one providing groceries to the individual, but we want Onward to be a beginning point to everything that is necessary for the wide variety of stories and journeys back to work that are going on across our state and country today.<br />
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<b>Eric Ries</b>: Tell us a little bit about what surprised you in building this so far.<br />
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<b>Jake Soberal</b>: I think one of the things that was most surprising with Onward is the number of actors in this space, broadly workforce and systems of unemployment, and the like, and one, how much, really, really good work has been done in thinking about how we serve unemployed people, but two, how disconnected it is from one another.<br />
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And so you have this agency in this state, or this secretary of labor in this state, or this foundation in this other state that is thinking deeply about training, and how we match a person to training, or jobs and how we surface them to a job seeker, and on and on. But so terribly disconnected. And that was I think, somewhat alarming, because we're spending these same resources over and over, essentially 50 times across the country, to solve the same problem.<br />
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And I think that then the thing among that that stands out the most is just how complicated, and just how early days we are in in how match we human beings and people to training, to the training that is going to help them get to the thing that they want. Our system for doing that is really, really bad.<br />
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If somebody wants to get into say a construction job, how do we tell them what to do? Is there a pathway to go and try and get a job with a construction company, because there are construction companies that will hire them? Is it a better pathway to get an apprenticeship with a union, because that's a pathway into a really good paying job? Is there a pathway to go and get a degree in construction management from Fresno State University, because that's a good degree? Is there a pathway instead to go and get a two-year degree that's going to communicate that they have a base level of soft skills that are going to ready them for a wide variety of jobs potentially within the construction industry? All of those are viable paths. We have virtually no ability to help an individual make that decision. We simply leave them to it.<br />
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<b>Irma Olguin</b>: I'm laughing to myself over here because you are so much more muted about your opinion than... We're trash at this, like as a whole, we are bad at this. There doesn't appear to be one working system that is helpful in the way that you could talk about this makes sense to do this at scale.<br />
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<b>Jake Soberal</b>: It's absolutely true. So we drop folks off at the end of high school, if we are able to get them that far, and then we hope to meet them on the other side. That's literally our plan. And that I've given the example of a construction industry, now let's imagine any other industry. Software development. There are as many, if not more pathways. A career as a medical technician, same story.<br />
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Now throw a pandemic on top of that, and I have begun down my pathway and landed a job in the restaurant or food service industry. And now I'm not fresh out of high school, I'm not still living at home. I do not have a safety net. I've got to not only build a track, I don't have the option of going further in the industry I pick, I've got to build a track out of that industry and into a new one. The standard, we'll go to community college and then get your four-year degree, and then maybe get a master's degree, and then do this other thing, is gone. Your life has already spent those days. And so the problem of not being able to chart humans to training is exposed in a really profound and tragic way by the state of things today.<br />
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<b>Irma Olguin</b>: I think if you imagine a, and this is not any particular person, but I'm just building an avatar on my feet here, a 49 year old woman who has been a waitress at a diner for the last 28 years of her life, and maybe has raised a kid or two and they've recently flown the nest. In the pandemic, in this pandemic, she's lost her job. She's not looking for a re-skilling opportunity, she wants another waitress job. She's looking to recuperate lost income one-to-one, or as close to one-to-one as possible.<br />
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And we hear that story, the world at large I think hears that story. And we think, "Ah, let's get her into training so that she can become something else." I think we really need to take a long look at how we are thrusting that viewpoint onto other people, that that's not always what they're looking for, nor is it their life's goal.<br />
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I think the diner waitress at 48 is thinking, "Can I get something to do at roughly the same hourly rate and tip structure for the next four or five, six years of my life, and retire?" And I think that that for me, is a surprising piece in this process of building Onward, and deploying it to all of these different places, is how much we want to inflict that viewpoint onto other people, that they should up-skill or re-skill, or retrain into a better paying job. I would like for us to stop doing that, and instead make it possible for folks to meet their goals where they're at, in the way in which they want to meet them. That feels profoundly important to me.<br />
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<b>Eric Ries</b>: What do you hope for Onward going forward? How do you see it growing?<br />
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<b>Jake Soberal</b>: I think that we see two threads for Onward. The first of them is that we want the tool to continue to reach more people in more places, because we think it has great value in helping them get back to work. And so that is continuing to lean in to the present rollout. But I think that as important, particularly with our entrepreneurial lens on, it's revealing all of these gaps in things that are problems we're really interested in tackling. So for example, this surfaced a conversation with a good friend of ours, Michael Tubbs in Stockton, the Mayor of Stockton, who rolled out a couple of years ago a pilot program in universal basic income. And that's deeply related obviously to the idea of being a displaced worker.<br />
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And so we've been collaborating and in conversation around might we be able to accomplish a software platform that made the work that he's done with UBI in Stockton, and which is fundamentally getting dollars to financially poor people. And that's the challenge. Can we make that plug and play, such that if another mayor or county decides to adopt that, we can have a system ready to help them do so. And that's just one example of about a dozen, where the work of Onward has revealed gaps and problems that we're interested in solving.<br />
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And there's a broad coalition attached to it, where we're now thinking one-to-one conversations with a wide variety of them of, well, how can we do that? And that's really, really exciting, but it exposes a great depth of need.<br />
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<b>Eric Ries</b>: Has building this, I don't even know what to call it, it's a platform, it's like a part tech platform, part social service agency, quasi-public private model for what a 21st century response to a crisis might look like. Has building it made you more optimistic, or less optimistic about our situation?<br />
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<b>Jake Soberal</b>: It has made me less optimistic about the system that is in place. What I think present circumstances are revealing is not just a hard moment, but a broken system. The systems we have set up for putting people back to work, for serving them while they're out of work, for making sure that people get a proper wage in the job that they're in, for any number of different things, are broken. They're not working well. What leaves me though optimistic, are the human beings at work on the problem. And so what I mean by that is you have Joe Barilla, the secretary of labor in Colorado, who is coming at this work in a holistic way, and engaging community partners to think about, openly, about how they make their system better. You have Schmidt Futures that is just pouring out money to solve problems all around them.<br />
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And you have the Kapor Center which is stepping up to the plate in about 100 different directions to do something that matters in a difficult moment. And so the human beings that we're interacting with. Governor Newsom in California, they're the right people, we have the right stuff to solve this problem. So we're optimistic that this is a moment where we can begin thinking differently about how we rebuild these systems, and not just rebuild the same systems that advance the same inequities.<br />
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<b>Eric Ries</b>: Just move them into the cloud, and make them 20% more efficient at producing gravely unequal opportunities and outcomes.<br />
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<b>Jake Soberal</b>: That's exactly right. I'm optimistic that we can make different decisions in this moment that is measured by, I think, a reality that there's a window in time in which we get to make a decision about whether we're going to rebuild the inequities, or build something new and better.<br />
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<b>Eric Ries</b>: So what does success look like? What do you hope will happen if we build a new set of more just and sustainable institutions as part of the new normal, on the other side of this?<br />
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<b>Jake Soberal</b>: Oh gosh, I've got a list.<br />
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<b>Eric Ries</b>: Let's hear it.<br />
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<b>Jake Soberal</b>: I think that cities around the country begin adopting universal basic income.<br />
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<b>Eric Ries</b>: Talk about why that's important to you.<br />
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<b>Jake Soberal</b>: It is because of something that is an often refrain for us. And that is that there is something magical inside of every human being wandering around, we only get to experience that magic if that person feels as though they're secure enough to have food today, water today, a place to sleep today, and those require dollars.<br />
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And so if we can get everybody enough dollars for that base set of things, we get to experience their magic. If we do not, then we do not experience their magic. And we choose over and over again to not give the majority of human beings that opportunity.<br />
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I think that we need to lean in heavily in this moment to apprenticeship models, as a way back to work. Where we are doing something... Irma just put forward the commission around jobs recovery that was convened by Governor Newsom. It said, "We have been lamenting for decades, the need to rebuild the state's digital apparatus. This is the moment to do it, and it should be accomplished by thousands of apprentice software engineers that we're readying for industry when they finish that work." And in the process of doing that, could create tens of thousands of jobs. And you could take that same model and apply it to any number of different industries. I think that we have not thought deeply enough about what a proper minimum wage looks like. And as we put people back to work, why not pay everybody $20 an hour instead of what felt like a radical conversation around 15? And any number of different things in that category that think deeply, not just about how we get people back to work, but about how the work that we put them back into is something that could sustain the quality of life that any one of us would be satisfied in.<br />
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<b>Eric Ries</b>: Irma, what are your hopes and dreams for the new normal?<br />
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<b>Irma Olguin</b>: I'd like to take down some of the expectations. So we have been so ingrained in our culture. This is very pie in the sky, and it's hard to imagine....<br />
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<b>Eric Ries</b>: Well, so is building a major technology company in Fresno not that long?<br />
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<b>Irma Olguin</b>: I'm not without hope, but undoing some of those things that have become part of the fabric and fiber of these barriers to entry that we have stood up in a person's life journey, in some cases, that's college, in some cases, that's the ability to afford a home. There are lots of places... The ability to bank, honestly, let's go all the way to whether or not a person has access to a bank so that they can do normal things like have a legit cell phone, right? Or apply for a credit card, these things that we have stood up over time as barriers to entry in the way of life that I currently enjoy, now, to me, it feels like the moment to tear them all down. Why wouldn't we? They've been broken. The world broke them for us.<br />
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So I think that this is an opportunity to enact a bunch of different things. UBI, or universal basic income, is a really wonderful example of a thing that solves, could potentially solve a lot of those issues at once, if you sort of spider out from it. Where do folks bank if they are... if UBI exists? And what are the requirements for that? That's just one simple example. Look at the school system, right? Nothing about our school system works right now. It was built 100 years ago in a world where, literally, the time in the seat was the most important thing. And now, we're in a position where time and seat does not make sense. Can we rebuild that so that there's a different, important thing that we are watching or set of things that we are watching?<br />
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And if in fact, 50% or more of your schooling is going to take place online, then does it matter which district do you live in, or can this become a system for choosing where you go to school differently, such that you can enjoy the same benefits as the person on maybe the affluent side of talent or in the school district that has a reputation for doing a great job? Now is the time to rebuild those things and to rethink those things. But I think what we are facing is a world that's waiting to go back to normal. We long for that normalcy. Great chunks of that normalcy were trash.<br />
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<b>Eric Ries</b>: How do we make sure that we don't waste this opportunity? One of the recurring themes in conversations that I've been having has been the consequences of past crises, not just past epidemics, but past crises in education or in finance, and the times in history when we have reacted to crisis as an opportunity, and really used the facts of the crisis, the fact that there is tremendous labor and raw materials that are suddenly available, where the economy is no longer putting the pressure on every company, every organization to deliver everyone's 2020 plans. Everyone's 2021 plans are totally blown to hell. So sometimes, we retrench and retreat in the face of fear and despair when those things happen. And occasionally, it becomes an opportunity to lay the foundation of a more equitable, more sustainable future. So what's your view on how we make sure we don't waste this opportunity this time?<br />
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<b>Irma Olguin</b>: I think if we're not going to waste this opportunity, we have to get a lot more creative about what acceptable looks like, looking at things like training programs and what were the gates before to creating a training program that was recognized, being able to tear some of that down and say there are a lot of opportunities right now. It doesn't look like what the world used to look like. That mindset of the thing... the world that this thing was built in doesn't exist anymore is a complete mind shift. So I think in order to not waste this moment, we have to do a lot more letting go, a lot more saying this doesn't work anymore. It didn't work before. Let's not return to a thing that didn't work. Let's get really, really creative about what we think works now.<br />
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And really, I think adopting a lot of what you've been saying for years and years and years, which is we got to try some stuff, we got to do it quickly. We don't need to build out the whole thing to know whether it works. We just got to get to that, that MVP, that version that tells us enough data before we can make a new decision, I think we have to do a lot more of that. And I think that, thanks to your work and the work of others in the technology startup space in particular, that mindset is easy to come by. But I think when we were talking about systems that have been in place for 60, 70, 80, 100 years, those things, it's going to be really, really hard. So I think if we can adopt more of the mindset that we have to try and fail and try and fail until we get to a new MVP, it's going to be really hard to change anything. So, that's how I think we make the most of this moment is encouraging the folks who have power, decision making power, to try new stuff.<br />
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<b>Eric Ries</b>: Where do you think we go from here? How do we get out of the crisis?<br />
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<b>Irma Olguin</b>: I think the most sort of level headed version of this crisis is to accept that its ramifications will be with us for a long time in that folks who were recently laid off, it will take them a while to get back into jobs. We need to accept that school will not look or feel like what we expect school to look like. We have to accept that things like life events, right? Weddings, funerals, those types of things, it's going to look and feel different than before. But I think if we're ever going to get to a place where we recognize something that's normal, we have to give scientists time to do work. I mean, we've never experienced anything like this in our lifetimes, at least, where we're relying on one profession to sort of save the day.<br />
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But I think that this is it. We've got to give them time to come up with the therapies, to figure out whether or not a mask works, to come up with a vaccine that is not harmful. And that profession, we have to buy them time, and that means changing what we do for longer periods of time than we are comfortable giving them. On the other hand, on the other side of the coin, I think that they are working at light speed. We are seeing unprecedented announcements and the time to trial and all of these things that are really, really impressive. Meanwhile, we are at home, making our 17th batch of Rice Krispies treats and wanting to go back to normal where we can see our friends and have coffee together. We've got to buy them time. I think that, that's ultimately how we get out of this thing is if we can all be responsible citizens and give our fellow human beings who are doing the super hard work time to save us.<br />
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<b>Eric Ries</b>: Irma and Jake, I want to thank both of you for coming on and taking time out of what I know is such a busy time. And just, thank you for the work that you do. If we're going to get out of this mess, if we're going to have a better future, it's going to be thanks to entrepreneurs who build those new 21st century institutions. So, thank you.<br />
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<b>Irma Olguin</b>: Appreciate you, Eric. Longtime admirer of your work. Everybody in my industry of course knows who you are, and so it's an honor to have this discussion with you and to be able to just share thoughts.<br />
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<b>Eric Ries</b>: Thanks. That's very kind of you to say.<br />
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<b>Jake Soberal</b>: Thank you so much for having us. Really enjoyed the conversation here, and appreciate the work that you're doing with this podcast.<br />
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<b>Eric Ries</b>: This has been Out of the Crisis, I'm Eric Ries. Out of the Crisis is produced by Ben Ehrlich, edited by Zach McNeese and Sean Maguire, music composed and performed by Cody Martin, posting by Breaker. For more information on ways to get involved, visit helpwithcovid.com. If you or someone you know is leading an effort to make a difference, please tell me about it. I'm at E-R-I-C-R-I-E-S on Twitter. Thanks for listening. Please rate and subscribe wherever you like to listen.<br />
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<br />Startup Lessons Learnedhttp://www.blogger.com/profile/16441445454879378457noreply@blogger.comtag:blogger.com,1999:blog-7533727264507128560.post-49119070555874745962020-08-20T09:16:00.000-07:002020-08-20T09:16:28.844-07:00It's time for lean philanthropy: a case study<div class="separator" style="clear: both; text-align: center;">
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I’ve long been an advocate of using Lean Startup principles to advance non-profits and philanthropic organizations, whose work is so urgently needed at this moment in history. <br /><br />As in many areas of the crisis, I have seen a number of new organizations founded to help alleviate hunger and food insecurity in the wake of COVID-19. <a href="https://www.startuplessonslearned.com/2020/07/out-of-crisis-15-lenore-estrada-on-her.html">SF New Deal</a> and <a href="https://www.startuplessonslearned.com/2020/06/out-of-crisis-9-founders-of-frontline.html">Frontline Foods</a> were early leaders. In this blog post, I want to share the story of a lean pop-up organization called HelpKitchen. Its creation was a chance to see how Lean Startup principles can be applied to philanthropic work as well as high-growth startups. <br /><br />Early on in the crisis, I recruited Justin Mares to build a team to run this experiment. Below, you can see how he and an all-volunteer team quickly validated a need, tested assumptions, and built a lean, fast-moving organization that has served over 170,000 meals in the weeks since it was founded. I hope the lessons he shares here will help others involved in philanthropic work during these challenging times.<br /><br /><div style="text-align: center;">
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<br />In April, the world was about a month into the COVID-19 pandemic. As workers were furloughed and laid off, millions of Americans found themselves newly food-insecure and hungry, without any idea of where to get their next meal. <br /><br />Lines at food pantries were <a href="https://www.motherjones.com/food/2020/04/these-photos-show-the-staggering-food-bank-lines-across-america/">hundreds of cars</a> and hours long, as the food security system struggled to keep up with unprecedented demand. Some food banks saw demand 3-4x normal, just as their volunteer base shrunk due to worries about COVID-19 infection.<br />
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<span id="docs-internal-guid-befdaaf9-7fff-88ba-22b4-dcb2cd9c2033" style="background-color: transparent; color: black; font-family: Arial; font-size: 11pt; font-style: normal; font-variant: normal; font-weight: 400; text-decoration: none; vertical-align: baseline; white-space: pre-wrap; white-space: pre;"><span style="border: none; display: inline-block; height: 416px; overflow: hidden; width: 624px;"><img height="416" src="https://lh3.googleusercontent.com/Dr8wMMioXVRepI7o_MgWuAWWko5oDw3ph9-MGcBPrRSt1wK2f1zHtn0cL5gUd7xKoL1QK3UaS0JxRg7uZD2OlHvNdG5hEsyglmp0kLv0h6GFaVnILsDfRsBdWsBv-NgUBSRaiRQk" style="margin-left: 0px; margin-top: 0px;" width="624" /></span></span><br />
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<i> Minneapolis, Minnesota: Cars line up at a drive-thru food pantry. Neil Blake/Grand Rapids Press/AP</i><br /><br />The food security system was (and unfortunately still is) completely overwhelmed and struggling to meet the massive influx of need. <br /><br />That set the stage for HelpKitchen - a non-profit organization we started in the last week of April. Since then, in about 3 months, we’ve fed over 170,000 people and injected over $1mm into the local economy in San Francisco and Detroit. Our goal is to try and ease the burden lockdowns have placed on both local restaurants and the food security system. <br /><br />We’re hopeful that by sharing our story, others in the tech and philanthropic world can get some ideas for ways they can use lean principles to help their communities through this trying time. <br /><br />
<h2>
How HelpKitchen began</h2>
The idea for HelpKitchen began with a conversation between Eric Ries and Jeff (founder and CEO of Twilio) and Erica Lawson. Jeff, Eric and Erica saw the massive increase in demand the food security system was experiencing, and wanted to do something about it. <br /><br />As soon as Eric and the Lawsons had agreed to tackle the problem, Eric began talking to people in the tech community who were willing to help.<br /><br />We connected in a WhatsApp group for tech people involved in COVID response projects. I was in the group due to my involvement (with Brent Summers) in launching GiveLocal, a site where customers could support their favorite restaurants through COVID lockdowns by buying gift cards. As soon as I saw Eric was looking for help with a food security project, I wanted to help. So did the two friends I looped in, Brent (again!) and Jeff Nobbs, who I’d worked with at Perfect Keto. <br /><br />
<h2>
Sketching Hypotheses </h2>
We began by creating a few hypotheses, based on what we saw happening in the food security system:<br /><br />
<ol>
<li><b>Restaurants</b> were hurting due to lockdowns: less foot traffic, less revenue, and facing the prospect of laying off many staff members. At the same time, they had fully licensed kitchens and access to purchasing food at bulk discount prices. After all, buying food in large quantities and selling it at a markup is their entire business. </li>
<li><b>Food banks</b> were seeing increased demand, but struggling to meet that demand. They were also experiencing a volunteer shortage due to concerns over the spread of COVID-19. To make matters worse, many food banks' sources of food supply (extra restaurant food, food company donations) were disappearing</li>
<li><b>Food insecure individuals</b> fell into two camps. In the first camp were those who had experience with the food security system and understood how to navigate it. The second was made up of millions of newly food insecure individuals who had no experience navigating the system and needed a meal. This second group included many people who had recently been laid off or furloughed.</li>
</ol>
<br />After looking at the various stakeholders involved in the food security system we had an idea: <br /><br /><i><b>Why not have restaurants feed people struggling with food insecurity?</b></i><br /><br />The model was simple: we’d build a SMS texting tool that matched the food insecure with a free meal from a partner restaurant, all covered by donor dollars. By doing so, we’d keep restaurants busy (and their employees working), inject funds into the local community, and ease the burden on food banks.<br />
<h2>
</h2>
<h2>
Validating Assumptions</h2>
Having come up with our hypotheses, we then created a series of assumptions to validate as we moved forward: <br /><br />
<ol>
<li>Restaurants would happily participate in a program that generated revenue and gave back to their community. </li>
<li>We could build a technical backend that matched food insecure individuals with partner restaurants. </li>
<li>Those struggling with food insecurity would be willing to share some information and text a phone number to get matched with a partner restaurant to pick up a meal. </li>
<li>This system would provide a scalable answer to the food security problem, which would resonate with donors. </li>
</ol>
<br />In the spirit of lean methodology, we set about proving these assumptions, starting with the restaurants. <br /><br />Fortunately, Jeff Nobbs (one of the pillars of the HelpKitchen team) is the co-owner of <a href="https://www.kitava.com/">Kitava</a>, a restaurant in San Francisco. He helped finalize our assumptions, and then went and interviewed several restaurant friends. After some positive feedback, we set a 24-hour goal to get 10 restaurants on board. If we couldn’t get 10 restaurants to commit in one day, the idea likely wasn’t compelling enough. <br /><br />Fortunately for all involved, restaurants responded extremely well - we had nearly a 100% participation rate for restaurants we reached out to. <br /><br />After getting 10 restaurants to commit to participating in a pilot, the next question was: could we build a system that matched those in need of a meal with a partner restaurant? <br /><br />The fastest way to get a system up and running was with a no-code solution. Brent, who previously founded a no-code education company, spun up a text-based intake system with Twilio. When a request came in, we used their Flex chat system to manage requests and responses. Then, we had an Airtable dashboard on the back end where we could manually match restaurants, manage capacity and pair individuals in need with a restaurant near their zip code for a meal. <br /><br />Though this V1 buildout was incredibly manual - as it required each of us to monitor the Twilio Flex chat for hours each day, and hand-match individuals in Airtable - it worked well enough for us to validate whether we could use technology to pair individuals with restaurant partners. Assuming it worked (which it did), we figured we could simply build software later to automate the matching and texting process. Fortunately for all of the founders’ romantic relationships, we automated this in just a few weeks. To see how the system evolved, Brent put together a full writeup <a href="https://launchingmyself.com/helpkitchen-tech">here</a>. <br /><br />Once we validated that restaurants wanted this and we could match individuals to a restaurant to get a meal, we decided to test our most important assumption - would individuals in need of a meal text a number and get matched to a restaurant near them? <br /><br />To make sure we were only reaching those who were in need, we printed flyers with the HelpKitchen number, compiled a list of food drives in San Francisco, and handed out flyers made to people waiting for food in lines that stretched for blocks. And on day one of handing out flyers, we managed to feed 50 people at our pilot restaurant! Assumption: validated! <br /><br />Lastly, we had to validate that this approach to building a scalable tool to address part of the food security program resonated with donors. After all, in order for this all to work it would require the generous donations of philanthropists and (ideally) the support of government programs down the line. <br /><br />In this regard, we were incredibly fortunate that Jeff and Erica Lawson agreed to donate $2mm to fund our approach and prove this out as a valid and scalable way to help those struggling with food insecurity. <br /><br />That was enough for us, and with those assumptions validated we went to work. <br /><br />
<h2>
Testing the MVP</h2>
We landed on the below MVP approach to roll out and test:<br /><br /><b>For those who need a meal</b>, they simply send a text to HelpKitchen and tell us what neighborhood they’re in and how many meals they need (up to a limit of eight if they have a large family). We then match them with a partner restaurant who prepares their meals for pickup. The individual then picks up the meals, gives the restaurant their name and last four digits of their phone number, and our work is done. .<br /><br /><b>For restaurants</b>, they agree to partner with HelpKitchen, set a price per meal, and tell us what they’ll be making for the individuals we match them with. Restaurants then tell us how many people they can serve each day and we match them with food insecure individuals. The restaurant gets access to a dashboard that shows them how many people are going to pick up meals each day, and marks meals as fulfilled each time one gets picked up. <br /><br /><b>For donors</b>, they donate to feed the hungry in their community while also keeping restaurants in business, and restaurant employees employed. They can be confident that each dollar of their donation goes directly to feeding a hungry individual. <br /><br />On the back end, we got to work building out the MVP matching tool: first by having me, Jeff and Brent manage and respond to incoming messages while manually matching individuals to restaurants in the Airtable sheet. As soon as we got to the level of hundreds of meals per day, this became all-consuming, literally taking hours of our time to manually match individuals to restaurants and manage restaurant capacity. To scale further, we built out a team of volunteers and built an automated system that balanced restaurant capacity, individual requests and zip code assignment. Before long, we were feeding thousands of people per week. As the system needs evolved, we built <a href="https://launchingmyself.com/helpkitchen-tech">more features</a> to make sure we were helping people and restaurants in the most efficient way. This included implementing a “learn phase” to complete our MVP, which took user feedback from those picking up meals, sent that to the restaurants and led to improved meal pickups. <br /><br />We also invested time in building out a set of Standard Operating Procedures (SOPs) for restaurant partners to use and reference as they worked with HelpKitchen. As the system scaled (and our tech back-end could match thousands of individuals daily to restaurant partners), we recruited more restaurants to the program and handed out more flyers at food banks. We also began to partner with organizations in San Francisco (like <a href="https://www.glide.org/">Glide</a>) to reach those in their community who were struggling with food insecurity. <br /><br />After just four weeks, we were serving nearly 20k meals a week. Pretty wild for an all-volunteer team that had hacked together a system with nothing more than Airtable, Zapier, Twilio and a bit of Javascript. <br /><br />
<h2>
Where we are now </h2>
After validating that the HelpKitchen system can match tens of thousands of individuals with restaurants each week, and after 170k meals served in the last few months, we’re now focused on scaling the HelpKitchen approach to more cities across the country. <br /><br />Today, <a href="https://helpkitchen.org/">HelpKitchen</a> is live in two cities (San Francisco and Detroit) and in discussions with several others about expansion. We’re incredibly proud of the progress we’ve made in a short period of time and eager to continue helping more people.<br /><br />If you think you can help us achieve our mission, please reach out or <a href="https://donate.helpkitchen.org/">donate</a>. <br /><br />Since our end-of-April launch, in just over 3 months (and with no budget and an all-volunteer team) we’ve served 170,000+ meals, contributed $1mm+ to the San Francisco and Detroit local economies, and raised $2.3mm in total for the HelpKitchen operation. <br /><br />Thank you to our core group of volunteers: <a href="https://www.linkedin.com/in/sarra-mumayiz-a4b686b/">Sarra Mumayiz</a> on the operations side, and <a href="https://twitter.com/_DavidHead">David Head</a>, <a href="https://twitter.com/jhdielman">Jason Dielman</a>, <a href="https://twitter.com/wgyn_">Ryan Wang</a>, <a href="https://twitter.com/TheTomMonks">Tom Monks</a> and Ahmad Khan on the tech side. We could not have done this without you all! <br /><br /><br />Startup Lessons Learnedhttp://www.blogger.com/profile/16441445454879378457noreply@blogger.comtag:blogger.com,1999:blog-7533727264507128560.post-91696433287070525602020-08-17T08:49:00.000-07:002020-08-17T08:49:18.577-07:00Out of the Crisis #19: Revolution Foods co-founders on feeding kids and families, being parent-entrepreneurs, and scaling food security innovationsIn 2006, <a href="https://www.revolutionfoods.com/blog/people/kristin-groos-richmond/">Kristin Groos Richmond</a> and <a href="https://www.revolutionfoods.com/blog/people/kirsten-saenz-tobey/">Kirsten Saenz Tobey</a> founded <a href="https://www.revolutionfoods.com/">Revolution Foods</a> to help ensure quality food access for all children across the nation. As Kristin told me, "every child deserves access to an incredible education and every chance in the world to build the life and career of their dreams. You can't do that without quality nutrition and without health."<br />
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When the coronavirus began to shut down schools, a major source of food for kids all across the country, the company's mission took on new urgency. Everyone involved with Revolution Foods swung into action. As she recalls, "once we as a team and ecosystem of stakeholders got our plan together--and a big part of that was our incredible school partners, who said, 'We are going to feed as many kids and families as we can,'-- within a week, we were building at light speed what would be the next iteration of Revolution Foods and our feeding system."<br />
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Because it's not only kids who are being affected by the pandemic, that new company has, as Kirsten explained, "developed new menus and evolved our culinary platform to include adult meals, senior meals, meals that can be consumed without being heated up because they're being delivered to people in homeless encampments and whole new ways of getting meals to people in need from a packaging and logistics standpoint." It's an enormous responsibility, and a crucial one.<br />
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In our conversation, we talked about the history and difficulties of school nutrition before the pandemic, scaling a company while having a young family, what's changed at Revolution Foods since March, and how investors and partners have supported and helped expand the company.<br />
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You can listen to my discussion with Kristin and Kirsten on <a href="https://podcasts.apple.com/us/podcast/revolution-foods-rethinking-the-food-supply-chain/id1505392824?i=1000484658282">Apple</a>, <a href="https://podcasts.google.com/feed/aHR0cHM6Ly93d3cuYnJlYWtlci5hdWRpby9mZWVkcy8xMjg1NDEyLnJzcw/episode/aHR0cHM6Ly93d3cuYnJlYWtlci5hdWRpby9vdXQtb2YtdGhlLWNyaXNpcy9lLzY3NjE3NjQw?sa=X&ved=0CA8QzsICahcKEwjozPGHvaHrAhUAAAAAHQAAAAAQAQ">Google</a>, or wherever you like to get podcasts. <br />
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A full transcript is beneath the show resources below.<br />
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<h2>
Highlights from the show: </h2>
<ul>
<li>Kristen and Kirsten introduce themselves and address the current moment (2:48)</li>
<li>The mission and history of Revolution Foods (5:42)</li>
<li>Turning a dire situation into a mission-centered opportunity to help (9:30)</li>
<li>How the product design class where they met led to Revolution Foods (11:41)</li>
<li>Why they were drawn to the problem of providing nutrition to kids (15:16)</li>
<li>Starting the company while also starting families (17:21)</li>
<li>Supporting and investing in entrepreneurs who are parents (21:19)</li>
<li>The early days and customers of Revolution Foods and how it grew (24:02)</li>
<li>Why school nutrition programs have been challenging (26:48)</li>
<li>A for-profit company doing public service (30:36)</li>
<li>Being a good corporate citizen (32:43)</li>
<li>The company's 2020 plans, pre-pandemic (35:16)</li>
<li>The moment they realized things had changed (37:15)</li>
<li>The first days and weeks of the pandemic (39:22)</li>
<li>The drive and imperative to feed people in a time of crisis (44:52)</li>
<li>A second founding and rebirth fueled by the passion of the whole team across the country (46:25)</li>
<li>Raising awareness about the scale of hunger and of the solutions needed (48:59)</li>
<li>Policy recommendations for getting through the pandemic in "a safe and stable fashion" (52:22)</li>
<li>Where philanthropy can have the most impact (55:57)</li>
<li>The silver lining of food security innovations (58:05)</li>
<li>How to help now (59:24)</li>
<li>Where we go from here (1:01:21)</li>
</ul>
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<h2>
Show-related resources:</h2>
<ul>
<li><a href="https://www.revolutionfoods.com/">Revolution Foods</a></li>
<li><a href="https://www.feedingamerica.org/research/coronavirus-hunger-research">The Impact of Coronavirus on Food Insecurity</a></li>
<li><a href="https://haas.berkeley.edu/">Hass School of Business, UC Berkeley</a></li>
<li><a href="https://bcorporation.net/">B Corporations</a></li>
<li><a href="https://foodcorps.org/">FoodCorps</a></li>
<li><a href="https://www.startuplessonslearned.com/2020/06/out-of-crisis-7-brian-chesky-part-1.html">Brian Chesky on Out of the Crisis</a></li>
<li><a href="https://www.fns.usda.gov/programs/fns-disaster-assistance/fns-responds-covid-19/child-nutrition-covid-19-waivers">USDA food waiver program</a></li>
<li><a href="https://www.sfdph.org/dph/comupg/oprograms/NutritionSvcs/FeelingGood/default.asp">Feeling Good Project</a></li>
<li><a href="https://wck.org/">World Central Kitchen</a></li>
<li><a href="https://www.shareourstrength.org/">Share Our Strength</a></li>
<li><a href="https://www.simplypsychology.org/maslow.html">Maslow's Hierarchy of Needs </a> </li>
</ul>
<h2>
</h2>
<h2>
Transcript of Out of the Crisis #19: Revolution Foods</h2>
<b>Eric Ries</b>: This is Out of the Crisis. I am Eric Ries.<br />
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Within a matter of days, the schools were shut down. We had no other choice. I've spoken before about the effect that this had on learning, but what about the other social services schools provide? Schools are about so much more than just education. For many students, schools are the one place they can rely on for a consistent meal. This structural inequity is truly awful and the schools being closed made it worse. But looking deeper, you can see that it isn't just about getting food to under-resourced children, our entire food supply chain in this country is fragile and unpredictable, especially for the most vulnerable among us. It's not like hunger is a new phenomenon. The tragedy of malnourishment was a regular feature of the old normal, but it doesn't have to be in the world we are rebuilding right now.<br />
<br />
Kristin Richmond and Kirsten Tobey have been working on fixing the problems with school food for more than a decade. Together, they founded Revolution Foods in 2006. Their mission is to build lifelong healthy eaters with kid-inspired, chef-crafted food. They were providing low-cost healthy meals for schools across the country and, before the crisis, were delivering two million federally reimbursable school and community meals per week nationwide. So when the pandemic hit and the supply chain began to unravel, Kristin and Kirsten jumped into action. They used their existing infrastructure to start getting meals into the hands of those who need it most. They found ways to support longterm care facilities, homeless shelters, and other locations serving those most at risk, all while schools, their main source of revenue, were closed.<br />
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Rev Foods rapidly scaled up. But as you'll hear, there is so much more to be done to stop the tsunami of hunger washing over our country. We need to turn our entrepreneurial talents to start solving problems of this size and caliber now. Mass hunger may seem like a problem too big for any one of us to tackle alone, and at some level it is, but every time we try to solve our major problems like food disparity or education inequity, we learn and get closer to a solution, so let's not wait anymore. Pretty soon it will be too late. This is still an exponential crisis and every day matters.<br />
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Here's my conversation with the founders of Revolution Foods.<br />
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<b>Kirsten Saenz Tobey</b>: My name is Kirsten Saenz Tobey. I'm the co founder and Chief Impact Officer at Revolution Foods. I got into this work with Kristin because I started my career as an educator and saw firsthand what it looked like to have both not enough access to high quality food, and also enough access to high quality food and how that impacted their ability to learn. I have long been an advocate of high quality nutrition and food access, and this has been a great journey in doing that at a large scale.<br />
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<b>Kristin Groos Richmond</b>: My name is Kristin Groos Richmond. I'm the co-founder and CEO of Revolution Foods. I co-founded Revolution Foods with Kirsten Tobey in 2006 to ensure quality food access for all children across the nation.<br />
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<b>Eric Ries</b>: So thank you both for coming on and for the work that you do every day, and especially in these difficult times. Before we get into the story and the company, how are you doing? How's your team been? How's everyone holding up in these dark days?<br />
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<b>Kristin Groos Richmond</b>: Well, it's certainly been a historic moment for our country in every way. We are dealing with a pandemic and crises that has left so many people unemployed and, especially relevant in our job, food insecure. And we've layered that with another crises of the exposure of continued racial injustice throughout our communities. So leading a team that is mission-driven, incredibly diverse, and incredibly committed to access across our communities has been both a challenging, but also a very motivating force for our team. So I'd say we're holding up, but we're being very honest about the pressure, challenge, fear, the questions that are on everyone's mind right now and trying to hold space for that.<br />
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<b>Kirsten Saenz Tobey</b>: I would agree that the team is working harder than ever and also in very different conditions than we've ever worked before, whether that's folks working at home or folks working as essential workers in our culinary centers. The emotional impact that that has on everybody, along with the sort of layers upon layers of crises that are happening in our communities, makes it not an easy time to be working on anything. But I think having the mission propel everybody's spirits forward and knowing that every day we're all coming in and doing what we're doing to make sure that people can get through this crisis, and potentially more crises, better nourished and in a better place is what keeps us all going every day.<br />
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<b>Eric Ries</b>: Talk a little bit about what the mission of Revolution Foods is.<br />
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<b>Kirsten Saenz Tobey</b>: The mission that we have held since day one, 15 years ago, has been to create access to high quality, and we like to say, it inspired chef-crafted food.<br />
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<b>Eric Ries</b>: I really admire the company, and I have for a long time, and in the interest of full disclosure, I'm an investor, so been on this journey with you for some time. But I especially admire the way that you have thrown yourselves into relief efforts very different from the product that you were building just a few months ago. So would you talk a little bit about the history of the company and what the product was pre-crisis. I think it would be useful for people to hear how the company came to be, what you were both doing before you started it, and what's been the journey till now.<br />
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<b>Kirsten Saenz Tobey</b>: We started out with a mission that was really focused around feeding kids in schools who had less access to high quality food because of the neighborhoods that they were living in, because of the communities that were in food deserts, and we looked at the rates of health challenges related to nutrition in those neighborhoods specifically, high rates of obesity, diabetes 1 and 2. Kids growing up in communities of color is at a risk of contracting type 2 diabetes. Even when we started, and some of these statistics have gotten worse, but one in three kids in America are overweight or obese, and a lot of this is because of lack of access to good high quality food and culturally relevant food in the places where these kids spend most of their time.<br />
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So in our early days, we were very focused on the sort of K through 12 education space. We started out serving charter schools, very quickly expanded our program to be able to be relevant for public district schools. Even up until this year, probably three quarters of our business was in schools and then the remaining part of the work that we did was in afterschool programs, preschools. We had just started expanding into some senior meal programs. But all of those meals that we have been providing for the last 14 years, qualify for the federal subsidy programs that are designed to increase food security for kids and families in low income areas. That's the national school lunch program, school breakfast program, after school supper programs, and then senior feeding programs that are all federal dollars that are going to provide meals to these kids and families.<br />
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When COVID hit, we saw that food insecurity was increasing rapidly, not just among kids, but also among adults and families, and there were people losing jobs left and right. I think we're now seeing, as everybody probably knows, just higher unemployment rates than we've seen since the Great Depression, so it's not just kids who are food insecure now, and so we've very quickly developed new menus and evolved our culinary platform to include adult meals, senior meals, meals that can be consumed without being heated up because they're being delivered to people in homeless encampments and whole new ways of getting meals to people in need from sort of a packaging and logistics standpoint.<br />
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<b>Kristin Groos Richmond</b>: I would say the three things, to build on what Kirsten just said, the three things that we were able to bring ourselves back to as leaders when COVID hit and we literally lost 50% of our business overnight on March 15th as schools shut down. So it was a dire situation for Revolution Foods as a company, as well as a dire situation for the communities we serve from a food security standpoint. So both of those things happened at once.<br />
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We looked at ourselves and we said, what are we best at? What is our super power? From a mission and purpose standpoint, we have always been about access and quality, so that was a natural place for our team to lean in harder to the support that we knew would be needed across our communities.<br />
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From a product standpoint, we have focused for years on culturally relevant product design, so not sort of sitting in an ivory tower and saying, "We know what kids in communities want to eat across America." These are incredibly diverse and proud communities with their own culinary legacy and pride, so we've focused demonically, I would say, on designing product that is respectful and appealing to a broad range of students and families, so we knew we had great product design to address diverse communities.<br />
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And then we also looked at our operations and said, "We have a footprint across the US that can produce and distribute millions of meals every week, fresh meals to 400 cities and towns at incredibly affordable prices given the way we have cost optimized our footprint and our program." So we looked at those three things and we, I would say, turned on the turbo gas, I guess, like you wouldn't believe, and due to an amazing ecosystem of team leaders and city leaders and school partners and investors, just catalyzed the message across communities to say we're here to serve right now and we can scale very quickly. That was a blessing for our team and for the communities we serve.<br />
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<b>Eric Ries</b>: So how did you two meet?<br />
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<b>Kristin Groos Richmond</b>: We met in Business School at UC Berkeley. We were at Haas School of Business. Kirsten and I met actually the first day of school and became friends, but became business partners in a product design class where each student was tasked to come to the table with a new product idea. We both came to the table with transformative vision around healthy meals in schools and the fact that the quality of meals that our students were receiving generally were not high enough and not respectful enough. We both had a vision, from slightly different angles, to start a company that would increase access to healthy, delicious, and very affordable food so that it could be accessible to all students.<br />
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<b>Eric Ries</b>: I think most of us, when we think of product design, we think you're going to reinvent the washing machine, or a phone app or something, why this?<br />
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<b>Kirsten Saenz Tobey</b>: So the class was a product design class, but I think that the question that was asked is, what's a problem that you see in the world that needs to be solved? So it was much less about sort of what's the next cool widget that you can design and more about, where do you see a need in the world around you? It was one of these really cool classes where we were encouraged to really think big about don't think of the solution, think of the problem.<br />
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I remember that day when we both came into class and each were talking about the problem of kids not having access to high quality food in their communities, probably because we both had come from backgrounds where we were working in issues of education, and nutrition, and food, and had sort of seen this really firsthand as a burning need in our communities, that there's a lot of work being done around, or at least at the time when we were both very interested in education, there was a lot of work being done around education reform, and what's the right way to teach the whole student and all of this work. But for people who are really interested at the core, I think, being involved in education in some way, we both saw that the sort of lack of nutrition and lack of culturally relevant food for kids who were disproportionately suffering academically and from a health perspective, that that was an enormous need that we both saw.<br />
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In some ways, at that point, we didn't know yet what the solution exactly looked like, but we saw this big sort of problem in society. The very cool thing about the program, and then some of the other business planning classes that we took afterwards, was we were really encouraged, I think, to look at the need and talk to the people who are experiencing that need most sort of dramatically out in the real world. For us, that was kids, and students, and teachers, and principals, and parents, and understand what the nature of that need is before you assume you know what the solution looks like.<br />
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<b>Eric Ries</b>: What was it about this problem in particular that you felt drawn to try to solve it?<br />
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<b>Kristin Groos Richmond</b>: From my perspective, I started my career in investment banking, completely different segment, but had a life-changing opportunity to help start a school actually overseas in Kenya and saw, day in and day out, the advantage that students who were well-nourished, and that could mean coming to school having eaten a good breakfast, coming to school with... In our case, we didn't provide lunches at this school, so coming to school with a healthy lunch. The difference that that made when we had morning and afternoon classes, their ability to focus, their ability to engage, their ability to certainly score well on tests. But it was in and out of the classroom. And so for me, I felt, and I think Kir and I both share this core belief, that every child deserves access to an incredible education and every chance in the world to build the life and career of their dreams. You can't do that without quality nutrition and without health on so many levels. And this was a gap that our friends in education, our teachers, our principals ... We had a superintendent at one point say to us, "Kris here, if someone can solve this and help bring a quality solution to the school space, sign us up. We'll be your first customer." And that kind of testimonial kept coming back over and over from our friends in the education space. And so I think we saw it and still see it as a core piece of whole child learning and really as a big social justice issue as well in terms of providing all of the levers and touchpoints for students to be successful.<br />
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<b>Eric Ries</b>: When did you start the company?<br />
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<b>Kirsten Saenz Tobey</b>: So we started the company in 2006. We literally started just as we got our first term sheet for investment on the day that we graduated from business school in June of 2006. And it was actually the same time that Kristen was giving birth to her first baby, literally the same day that we received the term sheet and graduated from business school. So it was a big day.<br />
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<b>Eric Ries</b>: Funny how life works, huh?<br />
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<b>Kristin Groos Richmond</b>: All at once.<br />
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<b>Kirsten Saenz Tobey</b>: And then we started serving our first meals in August of 2006. So after running a very small pilot program while we were in business school to kind of do some early product and concept testing and actually get food out into lunch rooms in public schools, we were able to use that pilot program as sort of a way to gain some visibility with potential investors and to bring a couple of our early investors on board to help us get started. So we opened our first kitchen in that summer of 2006 and started out serving 500 meals a day out of that little rented corner of a catering kitchen in 2006. And we finished that first year serving closer to 1,000 meals a day, which felt like a really big increase going from 500 meals a day to 1,000 per day in that first year.<br />
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<b>Eric Ries</b>: It all seems like it happened remarkably fast. And I got to ask actually, because you brought it up, what was it like to do all this and also be a new mom?<br />
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<b>Kristin Groos Richmond</b>: So the interesting fact is Kir and I, between the two of us, have had five children in the course of starting and building this company over 15 years. So I've had two little boys and Kir has had three little girls. So we are now very well-versed in being parents and entrepreneurs. And I once had an impact investor, who you know well, who said to me, "It's okay. You're going to be tired anyway. So you might as well be tired both as a mom and as an entrepreneur." And she's like, "The people I know who get the most done have the most on their plate." And we always hear that. But it's been very inspiring.<br />
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I mean, number one, having a co-founder who has always held that space of look, we've got each other's back, and that has been absolutely key. Number two, it's really amazing to be a parent when you're building a company and a mission that is all about quality access for children and helping parents, many of whom are working multiple jobs, frankly, both moms and dads and single parents and grandparents who are raising kids. To say, I actually feel a little of what these families are going through every day, and I can deeply empathize with a parent's desire to always do better by their child. And so that piece has been, I think, even more powerful as we've pursued the journey of being, in our case, moms and founders and CEOs. It's been a really powerful piece of the journey.<br />
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It's been great for role modelship on our team and for other leaders, women and men, frankly, who are looking to start families and always come and ask us, "How do I do it?" We can do a whole other podcast on that. But I think generally it's been an incredible experience. And the thing about it is when I asked my boys, if I ever say, "Oh, gosh, I'm sorry, I can't make this. Or I'm sorry, I have to work a little harder to do this," they say, "Mom, you guys are serving kids food all over the country. We know you can't miss this. We know you can't be late to this. We know you have to be there." So it's a pretty incredible kind of full circle.<br />
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<b>Eric Ries</b>: I appreciate you sharing those stories because it runs so contrary to what has become, I think, kind of a gross conventional wisdom that being a parent means you can't work hard enough or you're not productive enough, or I'm not even really sure what the theory is. But you can't be an entrepreneur and a parent at the same time, that just it's too difficult. And it's, I think, especially in the tech industry, part of a very family unfriendly set of beliefs about what's important about people's whole identity and bringing that to work. So I wonder if you have encountered resistance or confusion. You have investors from the impact space, but also some straight from the technology industry. Has that been an issue at any time in the company's history?<br />
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<b>Kirsten Saenz Tobey</b>: I think for us, what's been pretty interesting is we've had an incredibly supportive group of investors and board members and executive team members, many of whom are parents themselves. And I think maybe if we weren't being productive, we might get more skepticism. I think probably if you ask the people that we work around and work with, they would say that we are working and more productive than a lot of people that they know who aren't parents. I think that there's a lot of sort of proof is in the pudding in what are we creating and what's the outcome of what we have done that kind of impacts people's judgment of whether it's possible.<br />
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What I always tell people when they ask about how can you be a parent, especially people who are just starting to think about starting a family or what have you and being an entrepreneur at the same time, I mean, one of the things that Kris and I have always said to each other is, "There's never a great time to have a baby in your life. There's never a bad time to have a baby in your life." You sort of figure it out as you go and, if anything, and it's hard to tell somebody who's a new parent this, but I think it actually gets harder as your kids get older and become sort of closer to teenagers that you start to realize that you want to be around for them when they questions. You're not meeting all of their basic daily needs of making sure that they're fed all the time like you are with a newborn, but as kids grow kind of emotionally, their needs change too. And so there's never a great time, and there's not an easy way to balance it all, but there's also never a bad time.<br />
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<b>Eric Ries</b>: So starting in that first year, you grew from 500 to 1,000 meals a day. Who were your customers in those early days? And how has that changed over the course of gosh, has it really been 14 years now?<br />
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<b>Kristin Groos Richmond</b>: It has been. We started with a group of charter schools in the Bay area, specifically in the East Bay, and they were great kind of pioneer early adopters, very flexible and they could easily implement a new program quickly. We got our track record down, I would say. We really focused on our meal design. We really focused on starting to build out that fresh food manufacturing and logistics capability at a very small level, and it's grown significantly.<br />
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So here we are today designing, producing, distributing close to three million meals per week across 400 cities. And our customer base grew probably ... It took about four to five years to really have school districts become a significant percentage of the customer base that we serve just because of scale needs, because of more rigorous procurement processes, just operating track record for the most part.<br />
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And we've been able to expand to some very large school districts, including San Francisco Unified and Boston Public Schools. As Kirsten said, we began serving city systems like the City of Houston, the City of Denver, where we have worked with mayors primarily and their mayoral team to implement quality feeding initiatives across afterschool programs, across parks and rec programs, across early childhood programs. And then moving into the COVID period, we've really expanded our adult and family reach.<br />
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So at this point, one of the things we're most proud of is creating and providing multi-day family meal packs of meals that we're distributing through COVID right now, 100,000 meals a day in New York City at this point. So it's been fast-scale. And again, our ability to expand and diversify our customer base and our product offering has been all about that combination of product design, manufacturing, logistics, and staying true to, in our case, the mission of a fresh, clean label. So all-natural, no-artificial-anything food, which has been a hallmark of our platform. And I'll tell you, it took us 10 years to really build that clean label supply chain for the community base that we serve.<br />
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<b>Eric Ries</b>: Talk a little bit about why historically school lunches and these kinds of programs have been so awful.<br />
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<b>Kirsten Saenz Tobey</b>: So I think, I mean, one of the things that's important to say is that there's been a lot of kind of challenge in the realm of school feeding for many, many years. I think for a long time it was just not an area that schools were focused on. It was something that they sort of had meal programs because they were supposed to, but it really wasn't until the last couple ... and in the early days of the national school lunch program, when it first was established in the 1940s, it was really a lot about hiring local people to cook onsite at schools.<br />
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And then as time went on and school budgets got more constrained, there was cost cut out of the system to be able to keep some kind of food coming into schools. And that kind of happened along with the industrialization of the food system. And the result was, when you looked 20 years ago at what was being served in schools, some of it was not what many people would choose or would design if they kind of looked at the problem from the ground up. But that wasn't to say that there weren't a lot of hardworking people doing the best they could with the resources that they had. I think there just wasn't a great awareness of some of the health impacts of some of the ingredients that were being served or just the fact that there wasn't a supply chain for school and more institutional feeding settings that could allow for higher-quality ingredients to make their way into schools.<br />
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And in many cases, there were facility challenges with what you can do with the equipment and the facilities that exist in schools or that had been maintained or not maintained in schools. And so when we set out, we looked at the fact that a lot of schools don't have the equipment and the sort of culinary capability to design and produce good high-quality food, kind of scratch style. And school systems don't have the resources to be going and doing extensive surveying with kids and asking them what they want to eat and doing taste testing and those kinds of things. And that was the approach that we have taken is like, let's bring the student voice into this. Let's make sure we're very familiar with what the kind of local culinary culture is in the places that we operate, whether it's in New Orleans or in New Jersey or in Southern California, where you have very different sort of culinary cultures.<br />
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And so I think that that's where we've been able to kind of take this approach that's just very different from what any individual school is able to do, because we can take kind of our culinary approach. We can bring in the equipment that's needed into our culinary centers that are operating at a scale serving hundreds of schools versus a school district that's serving just a few schools that can't afford to put in that kind of equipment. So I think we've been able to take an approach to sort of quality and cultural relevance because of our scale that individual schools or districts are challenged with doing. So it's not to say that schools have chosen to feed their kids bad food in any sense. It's really that the sort of resources, both human resources and kind of product design resources, that are available to schools were really and are really limited.<br />
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<b>Eric Ries</b>: What about those people who think there's something a little bit odd about a for-profit company serving public schools?<br />
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<b>Kristin Groos Richmond</b>: Well, this is an interesting topic. I believe that a company's core mission, and this is spoken from a mission-driven CEO and entrepreneur, I believe that the mission is in our DNA and that respect for quality food that has been really part of our governing principles, combined with the ability to raise capital and scale and access some of the operating knowhow that we've been able to do in a for-profit structure has been a very, very powerful combination.<br />
I can recall talking to parents across the United States when they were looking at a new partner for their district and saying, "This is a company that's been a B Corp certified company since that was an available option for us." I think we were one of the, at least, first 20 or so companies that was a B Corp. And we did that with our board and investors to say, "We're here to change a system and improve a system for kids and families, and we believe that by serving quality values-based meals, we will actually build a valuable, scalable, impactful company that can reach more students in the model that we're in. So from my perspective, I actually think if you build a for-profit company the right way, with the right governance and the right DNA and the right structure, you can actually have an outsized impact on systems. <br />
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<b>Eric Ries</b>: Well, I totally agree with that, of course, and yet one of the problems that so many mission-driven companies run into is it's hard for the public and customers and partners to evaluate who's serious about this. How can people know what the governance is, or how do you address that issue as it's come up, as you've engaged with your community stakeholders? How do you convince people that even though a lot of companies have this kind of high-soaring rhetoric about wanting to be a good corporate citizen, that there's something different about Revolution Food?<br />
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<b>Kristin Groos Richmond</b>: Well, in our case, our standards that we adhere to from a quality standpoint for students are written into our RFP and bid responses, and we have a very clear list of never, ever ingredients that we do not allow in our food under any circumstances. We are not a company that shifts up and down based on the socioeconomic status of the communities we're serving, and we have a multi-year track record in that. From a business standpoint, we've actually optimized a supply chain and delivery platform based on that so at this point we can deliver that level of quality more affordably than anyone else, debatably.<br />
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We write those standards and commitments into our RFP, and the same goes for the Crave surveys that we do with students. We are committing to do a certain amount of consumer-based design, so meaning we are not, again, creating our own what we think are the right menus for the community. We are creating our menus in partnership with the community, and we're committing to that, going in. That's a very important part of who we are as a company, and so we're not just saying it. We're actually writing that commitment into our partnerships.<br />
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The other thing I'll say is we believe it takes a village. I think you could probably gather that by talking to us. Whether it's as moms or as CEOs, we believe that food insecurity and quality access to food is a very, very large issue. We're addressing a $20 billion market just in schools alone, and there's room for a lot of players on the public and private side. So when we go in to serve a school district, for instance, we're bringing in nonprofit partners to work with in parts of the model. We're bringing in Food Corp to do food education. We're bringing in programs to do parent cooking lessons. We're bringing in programs that can partner on gardens.<br />
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But we also are, I think, humble enough to recognize what we're good at and where community partnerships, many times nonprofit, we have nonprofit suppliers of food in a similar fashion. We know where to complement what we're doing with, I think, the best and most high quality providers in the business, whether for-profit or nonprofit.<br />
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<b>Eric Ries</b>: So starting to bring it towards the present, what were your 2020 plans like as the new year dawned? Must feel like 100 years ago now.<br />
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<b>Kirsten Saenz Tobey</b>: I mean, I think, like everyone, as we were looking at 2020, that this is the year that's going to mark our 15 years of operating as a company and start the 15th school year of operating. We've been continuing to grow as a company every year and grow at a pretty rapid pace and expanding our impact in communities. So I think we were sort of looking at 2020 as being another year of growth, a year to really make sure that the company was in a place to be, long-term, financially sustainable and to really ... As the company grows, we've invested more in systems and processes and optimization, as Chris said, to make sure that we are able to deliver sort of the highest quality at the most reasonable prices for our partners.<br />
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We were, I think, preparing for 2020 to be just another great year of growth and kind of solidification of the foundation of what we were going to be able to deliver to communities for the decades to come. I think specifically we were seeing the opportunity to start expanding, kind of using our platform of fresh food manufacturing to expand into more channels, whether that be sort of convenience store, corner store fresh food or family meals in different forms. So we were kind of starting to think about those things and looking at how can we evolve our model to be relevant to even more kinds of school districts with different kinds of equipment and infrastructure and that sort of thing. But, obviously, 2020 has actually accelerated some of those ideas in some ways and has put others on hold because of the pandemic and everything else that we've been facing over the last couple of months.<br />
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<b>Eric Ries</b>: When did you realize the pandemic was going to close schools and effectively shut down all of your customers?<br />
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<b>Kristin Groos Richmond</b>: So we started having meetings with our largest partners about the potential of COVID shutdowns I would say March 1st. Some of our larger school systems, Boston and San Francisco, for instance, were, I think, incredibly on the pulse. They're led by really world-class operators, and I think they were very on the pulse of what might be coming, but very little activity across the nation.<br />
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So it was a very quick turn. I would say we started thinking hard in March about how to protect our employees. So we issued guidance around how we would think about safety guidelines in our facility, the importance of our GMPs, our good manufacturing practices, many of which cover the sanitation that's so critical for COVID, our deep sanitation processes of our facilities.<br />
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Obviously, for all of our employee base, hand-washing and staying home if you had any symptoms. I mean, one of our first thoughts was, "Gosh, we cannot afford to have part of our company, our drivers, our dishwashers, our production managers, our receivers, we cannot afford to have folks feel like they can't stay home if they're feeling like they might be sick or have symptoms. We have to let them know right away that they will not lose their job, that there is a plan to support them if they need to stay home, thereby protecting them and the rest of the company."<br />
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So we were starting to do this thinking kind of late Feb, early March, but the speed of the school shutdowns on March 15th I think took the company and certainly the broader nation by surprise with the speed at which they happened.<br />
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<b>Eric Ries</b>: What was it like for each of you personally, watching the pandemic kind of roll out and become this global phenomenon and having to deal with the loss of revenue, the need for urgent action? What were those first days like?<br />
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<b>Kirsten Saenz Tobey</b>: I mean, I think in those early days, like many people, I was certainly not seeing how long-term this was going to be. I think it was like as each day went by, you started seeing an understanding what was going on at a larger scale. So when schools first shut down, I think many of us thought, "Okay, well, this shutdown could be a couple of weeks. Schools could open back up after spring break, once we get a handle on things."<br />
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At the same time, we were kind of shifting the whole mindset of the company from going from what traditionally has been sort of an annual planning cycle where we're talking to schools in the spring about their plans for the fall and bringing that into the form of contracts that last for a full year or up to four or five years. Then all of a sudden, we were shifted into a daily to weekly sort of planning cycle, right, where it's like, "Okay, what's happening tomorrow? What's happening next week? What do we know is happening the week after that?" Then beyond that, we have no idea.<br />
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So, I mean, at least for me personally, it was this kind of day-by-day recognition that this kind of week-to-week planning is actually the new normal. It's not like, "Okay, well, let's get through these couple of weeks and then we'll start to see normalcy resume and we'll go back to an annual planning cycle." At the same time, on the personal side, with our kids' schools shutting down and all of a sudden having three kids distance learning from home and my husband and I both working from home, that shift has been challenging on so many fronts as well. But I think just on the personal front as well as on the work front, we've started to recognize this isn't changing in weeks or months. This really is something that we have to figure out how to kind of get to a level of sort of sustainability on how we're going to operate.<br />
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<b>Kristin Groos Richmond</b>: I would say for me, I was very, very concerned in the first ... I would say from March 10th through March 20th, I don't think I slept at night. I was probably most concerned about the students we serve. We know roughly 75% of the kids that we serve, and that's pre-COVID was 2 million meals per week, breakfast, lunch supper. 75% of those kids rely on school meals as a primary source of nutrition.<br />
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So it's not like a nice to have, "Maybe I'll pack my lunch. Maybe I won't." No. It is "I am going to school, where there's a reliable source of nutrition and it's something that I count on and my parents count on." So there was a huge, huge amount of fear that I felt around that. I think the second order of business was "What is going to happen to Revolution Foods?" I mean, we support roughly 2000 employees across cities in the US. Our parents we serve often are our employees. So we've got full families and community members working for us that are also family consumers of our product and our schools.<br />
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Like most food companies, we weren't running on an enormously cushioned margin and cash balance. So when you lose 50% of your business over the course of a week and you're not sure how you're going to build it back up, that is beyond concerning. I think for me, I was maybe paralyzed for a couple days there. "Just how are we going to respond?" Then once we as a team and as an investor and sort of ecosystem of stakeholders got our plan together, and a big part of that was our incredible school partners, who said, "We are going to feed as many kids and families as we can," sort of dam the torpedoes, a couple days later, within a week, we were building at light speed what would be the next iteration of Revolution Foods and our feeding system. From that point forward, it's been kind of sheer momentum and adrenaline. So that probably describes my journey fairly well.<br />
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<b>Eric Ries</b>: It sounds incredibly intense. I was talking in one of these conversations with Brian Chesky, who talked about the collapse of revenue and the dramatic effect that this had on Airbnb. He described it almost like a second founding, like you have to found the company all over again. It's a new product, new world, new economic reality. Was it like that for you, too?<br />
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<b>Kristin Groos Richmond</b>: Yes. Without a lot of runway, and I'm sure Brian felt the same, but, I mean, for us, I knew our runway was short and I knew our consumers were incredibly reliant upon the product. I would say the most motivating and inspiring thing that has happened at Rev Foods, and that's saying a lot, because there have been a lot of inspiring ... There have been a lot of hard days and a lot of inspiring days over the last 15 years. But at one point, I can recall a huddle, because we started doing team meetings every single day at nine AM and three PM Pacific time, and we said, "It is more important than ever that our team hears from us and that we are together in this. We are together in the ups, we are together in the downs, and we'd rather just put it all on the line."<br />
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At one point, very shortly into COVID, I can recall a very lovely team member saying, "Let's be honest. The fear of food security, the threat of food insecurity in our communities is far greater than the threat of COVID, as serious as COVID is. So let's get to work, people. We have families to feed, and we cannot afford to miss work." So that really has been the rally cry, and then, of course, the intensity of keeping the team safe, because feeling a tremendous responsibility to our team, who has worked days, nights, weekends, holidays, there has not been a break because of this rally cry of making sure that no family goes hungry on our watch, if we can avoid it.<br />
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<b>Kirsten Saenz Tobey</b>: I would just add I think that that concept of the second founding is a really interesting one that this is, in some ways, a moment of rebirth. The big difference is ... and, of course, we have so many amazing stories from our early founding days of working through challenges. But the difference is that today we have this incredible team of people all across the country who are going through this with us together, and the amount of sort of innovative energy and intellectual capacity and problem-solving ability that we have on this team across the country is 1,000 times greater than what we had in 2006, when it was just a few of us in a kitchen, right, in terms of how quickly can we solve problems? How quickly can we develop new ways of working on things? Plus, we have the whole foundation that we've built over the last decade and a half. So how can we use this platform?<br />
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Just seeing the problem solving happening in each of our regions and with each of our leaders across the different teams to say, "Hey, I talked to this community organization that's trying to get food to people in X, Y, or Z setting. Hey, the city of New York is trying to get food to homebound people across all five boroughs of New York, and they want to leverage their 12,000 underemployed taxi drivers to do it. Can we make this happen?" It was like over a couple of weeks, we put together a plan to make it happen. That wasn't Kristen and I putting together the plan. That was our incredible team of operators and partnership team members in the New York and New Jersey region. So I think having this incredible team that's working together on the reinvention and the regeneration of this next chapter just is so inspiring and motivating to all of us.<br />
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<b>Eric Ries</b>: In the conversations that I've been having and the relief work that I've been doing, I feel like there is still this sense, frankly, of denial about the tsunami of need that is going to crash over us as the human and economic devastation of now multiple crises come to fruition. And hunger is really one of the most basic needs that our food security system struggled to deal with even before the crisis, and now it's about to get potentially tens of millions of people worse.<br />
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So talk a little bit about... What have you encountered, what have you seen, in terms of raising people's awareness of the scale of the problem and, therefore, the scale of the solutions? And what do you think all of us should be focused on right now as we try to reconstruct the foundations of our society to cope with this?<br />
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<b>Kristin Groos Richmond</b>: Well, I'll give a couple anecdotes, and I think Kir and I both have a few very key policy recommendations that I'll let her speak about. We are seeing families and individuals line up at 3:00 AM and wait eight hours on a daily basis to collect food; whether it's at food banks or whether it is at school feeding sites across the country, from San Antonio, Texas, to where I'm from, to New Orleans, to New York City, to Oakland. So there's absolutely no doubt that the need is enormous. And I think everyone is trying to do the calculation of, "Okay, does reopening equal people coming back to restaurants, back to stadiums, back to airports, back to the spots where the majority of the 30 to 40 million people who have lost their jobs in the U.S. Work?" And I think the general consensus of those of us who are closest to food in those spaces is no.<br />
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There's a recent statistic that says that only 35% of Americans will go back to restaurant dining this year, and 50% of Americans will not take an airline flight until 2021, at the earliest. So think there's some pretty clear data now that says that a reopening does not correlate directly to these jobs coming back right away and that about 50% of the job loss is likely to be persistent job loss, which means that as a country, we have to continue to double down on food security as an issue. There's also a common acknowledgement that when a person or a family misses three meals, that is one of the highest indicators towards social unrest.<br />
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And so both from a compassion for our communities and an overall safety and security standpoint, no matter which way you look at it, we have to double down on ensuring that there is a safe path to recovery for millions and millions of Americans who did not expect to be here today. And that involves some really smart policy and continued efforts of people who are... We know that food banks and school districts, frankly, have been absolute central hubs of feeding across cities. These folks have been doing this for months at this point, and there's a lot of exhaustion and there's a lot of budget pressure. So the imperative to act in a smart way has never been higher. And I think, Kir, you can share a couple of the key policy recommendations that we believe are critical to kind of get through this time in a safe and stable fashion.<br />
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<b>Kirsten Saenz Tobey</b>: Yeah. I mean, there's clearly a big need for a public safety net around food and a bigger safety net than we currently have because of the food insecurity that will be incredibly persistent along with the joblessness that we all see currently and the very slow economic recovery that I think is likely to happen over the coming months and years. And so there are a few kind of specific things from a policy standpoint that are important just for, sort of, stability of the current food state safety net. The USDA has been putting out waivers that have been incredibly helpful for schools to be able to continue serving kids even with schools shut down. So those are waivers around meal service times, meal pattern requirements, ability for weekend meals to be reimbursed, ability for multiple days worth of meals to be distributed at a time to students and families.<br />
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And all of those waivers currently have only been extended through the end of this summer, where I think most people realize that come September, we're not going to be back to complete normalcy. So I think one really critical thing is just to have... The USDA needs to just recognize that those waivers need to be extended through the entire next school year, whether or not schools need them. They may not need to use them, but to... it's critical for schools to continue to have the freedom to distribute meals in the way that they currently have been because we know that school is likely not to be completely back to normal in the fall. I mean, we also think that even with the, kind of, economic collapse schools will continue to be an important hub for food distribution partly because students may be going to school, at least occasionally in the fall, but also because schools are sort of trusted and centralized community hubs already.<br />
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And it's important, especially as people are hesitant to go out and about too much, that schools can continue to serve the important need that they have been serving in providing a place where families can pick up meals a couple of times a week and bring them home. But we think that it's really important that meals be available and funded, not just for students as they currently are, but also for entire families. Because what we know now is that meals are being taken home by... intended for just for students and kids, but entire families are hungry. And so the food that's being distributed is not enough to ensure food security for everyone who is currently suffering and who will continue to suffer from hunger and food insecurity.<br />
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So we want to see those, those waivers continue. We want to see new sources of funding for family meals. We do think that there is a big place for philanthropy here that... Unfortunately, philanthropy is sort of the next source that's out there when there are gaps in what the government can provide. So I think it is critical for philanthropy to step up, not just for relief feeding in the next few weeks and months, but to actually think about longer term commitments around feeding families so that those gaps can be filled.<br />
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<b>Eric Ries</b>: What are the most impactful things that philanthropic dollars could be going towards right now?<br />
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<b>Kirsten Saenz Tobey</b>: I mean, from a food security standpoint, I think it literally is food. It's that there's a need to get food, whether it's prepared meals or family meal kits, out to families that need them the most.<br />
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And that clearly is... it's a bandaid solution, to just get food into the places where people are hungry. But I think that is important while we try to rebuild the economy. Actually getting food into people's kitchens and into people's homes is probably one of the most important things to ensure continued both social stability, health stability. And ideally, that will also contribute to people being able to contribute economically in the longer term.<br />
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<b>Eric Ries</b>: It has a historical parallel to me going back to the WPA where in depression circumstances, you have a credible number of people who are unemployed or underemployed at the same time that you have massive social needs far beyond what a market-based solution can quickly enough deploy. And we have to use philanthropic and government dollars to fill that breach, to put people back to work, and in this case, to feed the hungry.<br />
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And yet, I've had so many philanthropists that I've pitched this to over the past, I don't know how many months it's been now, who it's almost too simple for them to want to do it. There's no complicated theory of change. There's no 10-step program. It's just we need to turn money into food and feed it to people right now.<br />
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But on the flip side, this is one of the few truly scalable things you can do with philanthropy. There's only so many virologists and science labs, and they should be fully funded of course. But the next marginal dollar, you start to hit diminishing returns. Whereas with this hunger catastrophe, I wish it wasn't so, it's a tragedy that it's so, we can put almost unlimited dollars to use and we can make an immediate humanitarian impact incredibly fast.<br />
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<b>Kristin Groos Richmond</b>: That's right. And what I would say is with any crisis situation, there are a few silver linings. And a couple of the silver linings that have happened here in this world of food security is the innovation that's happened around city-wide distribution around, again, just I can't thank enough the schools out there who have become central feeding hubs for the community. And the infrastructure right now is there to provide to families. The innovation has happened very, very quickly.<br />
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I mentioned in New York City, we're dropping off 100,000 meals, and miles of taxi cab drivers are lined up to distribute these meals door-to-door to families. So in Boston, bus drivers are delivering meals to home-bound families throughout the city who are food insecure. So there's a lot of infrastructure right now that is allowing for scalable food security. And so we need to keep that going and leverage off the progress that has already been made and is set up.<br />
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And so, to your point, this is something we can build off of and keep going in a highly efficient way.<br />
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<b>Eric Ries</b>: What can people do to help right now? If there's anybody listening to this who's been inspired by your story and they want to be part of this fight against hunger in this era of crisis, how can they help?<br />
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<b>Kirsten Saenz Tobey</b>: Well, I would say there's a couple of things people can do to help. First, if there are either schools, school districts, or community programs in your community that need support in getting high quality food out to their families, they can certainly reach out to us. We have capacity to expand what we're doing. And particularly, if there's a need for safely packaged, unitized meals, we can certainly support schools and community programs with our wide array of food options.<br />
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I think if people have money to donate, they can donate to our non-profit Feeling Good Project, which is a fund that we've established where philanthropic donations can be turned directly into meals that we distribute to families in need. And so we can provide the link to that if folks want to donate directly.<br />
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<b>Eric Ries</b>: Yeah, we'll put a link in the show notes and definitely encourage those who are able to donate.<br />
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<b>Kristin Groos Richmond</b>: There's another group that I'd like to mention, World Central Kitchen and Jose Andres, who are doing just incredible work, too. We're working directly with them. They're also doing incredible work to revitalize restaurants and make sure that local restaurants are able to produce and feed in that local capacity as well on the adult meal side. And so they're pretty well-known now, but there are some great organizations doing work out there, The Red Cross, Share Our Strength. So very good partners in the community right now working very hard on this.<br />
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<b>Eric Ries</b>: All right. I want to make sure we get that call to action in. So finally, where do we go from here? How do we get out of the crisis?<br />
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<b>Kirsten Saenz Tobey</b>: Good question. I think what's going to get us out of this crisis is as a combination of confidence, public health intervention, and all of that while maintaining stability in that sort of Maslow's hierarchy of needs of which food, water, and shelter are the most basic. And so I think we see our role in that as let's make sure that food is not the limiting factor for folks and for economic recovery and for health recovery. We're clearly not going to solve the health situation in terms of what it's going to take from a public health standpoint to eliminate the pandemic from our country and the world, but I think we can do our part to make sure that while we're working through the public health side of things, that people's basic needs are being met through high quality food being reliably available to everyone who needs it.<br />
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<b>Eric Ries</b>: I want to thank you both for your work, taking care of those who are in need, and setting an example for how companies can be a force for good in this world. It's been an honor and a pleasure to be on the journey with you and especially to see you work with such urgency and just Herculean effort, your whole team really, in this time. So thanks for taking time out from that much-needed work to share the story. I just really appreciate the conversation.<br />
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<b>Kristin Groos Richmond</b>: Thank you so much, Eric. We appreciate being on the podcast and the recognition for the work and the need out there. So we appreciate you.<br />
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<b>Eric Ries</b>: This has been Out of the Crisis. I'm Eric Ries. Out of the Crisis is produced by Ben Ehrlich; edited by Jacob Tender and Sean Maguire; music composed and performed by Cody Martin; posting by Breaker.<br />
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For more information on the COVID-19 crisis and ways you can help, visit helpwithcovid.com. If you are working on a project related to the pandemic, please reach out to me on Twitter. I'm at E-R-I-C-R-I-E-S. Thanks for listening.<br />
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