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work, learn more about how on boy can help their workplace at envoy dot com, I was sixteen in India when I heard about intact, read in a two year old magazine that are used to rent once they were all they came to India and you could brent them for the weekend that eighty grove, a hungarian immigrant, had come to Silicon Valley and started in town took. That became a dream for me if that Immigrants can do it. Why can't I but didn't you start a sweet milk company in Delhi? I did try and start to soil melt company. I never got it started. There was never any funding available. There wasn't a non, no real culture there and I still remember vividly I called the phone company and they said seven years to get a phone.

I said, I'm coming to Silicon Valley, that's renewed Koestler, he did come to. Silicon and in nineteen eighty two, he cofounded the technology firm Son Microsystems today He runs one of the biggest venture capital firms in the: U S and therefore one of the biggest vc firms in the world. It's called coastal adventures since to them and for it has invested in nearly one thousand start up companies coastal often in ass in little more than an idea back Brown was professor stained and he came to us said I want to change animal husbandry on the planet. Tat was his entire picture. Pat Brown was very well regarded biomedical researcher now you want to do something different. He had come to believe that the production of meat was really bad for the planet

and that's what Brown would tell the venture capitalists by push them was very naive from fundraising standpoint. I just told these eyes look. This is an environmental disaster. No is doing about it. I'm gonna solve it for you at ridiculous, as that sounded it took us half hour to say, loved the passion, loved Commission, Lop Pats credentials. Are we so would back you Koestler and Other VC firms did back Pat round after several years and more than a billion dollars in venture money, his company because a sensation, it's called impossible foods and it makes plant based substitutes for meat products. It is still privately held and it's already thought to be worth around. Seven. Billion dollars. Eventually, the venture capitalists will get their money back and,

More now, what would have happened to pat Browns idea in a different time we're different place. I mean a time and place without venture capital. access to that kind of money for nothing more than an idea is decide. The american phenomenon. If you look at the ten, companies in the world as measured by market capitalization, seven or american in six of those raised venture capital, Apple, Microsoft, Amazon, Tesla, Facebook and alphabet apparent of Google. The seventh is Berkshire Hathaway Warren Buffett holding company, which essentially gobbles up existing firms. That is a much safer way to extract billions of dollars. Venture capital is inherently risky, especially at the early stage of start up for every apple or impossible foods. There are thousands,

failures, so you need a temperament that can handle it. The note Koestler has it I don't mind and ninety percent chance of failure. If the consequences of success are consequential, like changing animal husbandry on the planet are making fusion reactor is possible. If ten percent of time you make a large, multiple, then you'd in pretty good check. Do you You were born with that ability to see that losing one times your money was really not that big a risk. If the upside was fifty exe Where did you learn that? I think there is a whole lot of nice day on? My part can probably afford buncher hubris, but nice day you press trying time passed. Both is very much Silicon Valley culture. It makes for a great story when you learn must consent in a way that General Motors King today I'm for economics, radio, the? U S, economy is

the most dynamic economies in the history of the world is venture capital, the secrets, in societies where there's a larger risk capital market we are going to more radical risk taking innovations. How do venture capitalists, find a signal in all that start up. Noise might first LE venture capital is at all. Entrepreneurs lie it's the ones who don't know they're lying that really get. You want to try and what's it like to be on the receiving end, whenever things feed upon. They submit a deposit to your bank. Account and then you have a lot more. Money also is venture capital, good for society, or is it just about making rich people a bit richer, everything you always want to know about venture capital, but didn't know who ask that starting right now,. I'm here

this is, Bree Economics, radio, the podcast, but explores the hidden side of everything with your host Deb we ve, been running a series of episodes lately about what makes Amerika so American, we ve looked at cultural differences, political differences, and given the nature of this show, we have looked at a variety of economic differences, but if you were to ask a very basic question about the: U S: economy, something like one Why are so many of the world's biggest and most innovative companies? American companies? The answer might well circle back to two little letters BC, venture capital. Imagine

you have got what you think is a great business idea, but you just don't have the money to scale up to see if it really works. Consider Jonathan relative as we didn't have any extra capital we were making fear cells we were delayed, the food. We were a customer service. You might think register one of the many meal kit companies you ve heard about, but not quite co, founder of the farmers dog, which is what exactly the farmers dog is an online pet food company that make It really easy to feed your dog, something fresh and healthy, which is entirely different from the typical pet food you'd find in retail store. Reg have started a company in twenty fourteen with his friend Brett penalty month, or so they ship customers, a container pact on dry ice with the specified amount and flavour of food. Based on your breed of dog, one of the most significant parts of our journey was that decision to go from.

We're doing this ourselves, we're gonna. Take it slow to this needs to be the way that pet food works. This needs in industry, changing company, and we should bring on some help, which is how the farmers DA, has come to raise more than a hundred million dollars in several rounds of venture capital financing, making it one of the most successful pet related start. Ups in history how does all that money make ragged feel interesting? It felt nice and vindicating that he had sophisticated investors that saw what we were doing that understood the opportunity, so trajectory saw the future in the way that we saw it and where to go along the right, so that part was nice, but whenever we raised around its like ok just get this increase and seriousness now have a lot to do now. Imagine,

reggae and Petoskey had the same idea, but didn't have access to venture capital. Where would the farmers dog be today? That is a fun question. I think we'd be going in the same direction, just not at the pace and certainly not at the scale that we are today. I dont think every company needs to God and raise venture capital. The big difference for us is speed Our quality is something that we would have been able to achieve so quickly. Obviously, there are a lot of anecdotal evidence showing that venture capital batch firms are performing very well. That is a fuck archie, an economist at the University of Chicago. But the question is where they also going to perform that. Well, if there were no venture type of financing, that is a question that actually tried to answer in a recent paper. Really, the question is

does venture capital work or our venture capitalists just good at backing. The companies that were already going to succeed, Archie and his co authors gather data from a variety of sources that let them compare. Companies that took venture capital to those that did the key was to make sure the two sets of companies were really similar, so they started them by location, size, industry and what vizier like to call year of birth, the date accompany started as if it were a baby. I know it's a little weird anyway Aki and his colleagues compared thousands of companies that were similar.

each other, except for the fact that one batch went the VC route and the other didn't. So what did their results? Show? Our results show that indeed, VC funded firms are performing a lot better than none VC funded firms. The firms it got venture capital did better on several dimensions: for instance, job creation ever employment increases by. Approximately four hundred seventy five percent by the end of the tangier horizon for VC founded firms bears growth, is much or modest for none Vizier funded control group about two hundred thirty percent. They also looked at how many patents the firms created, especially high quality, Pat

as measured by number of citations. Once again, the BC firms did better. We find that up to sixty percent of the patent growth after the funding can be attributed to the treatment by ventured chapters, so this evidence suggests venture capital essentially works that it gives young companies a booster shot that helps them thrive. What's in that booster shot money for starters, thirty percent of ups fail simply because they run of cash. Jonathan ragged, again first thing First about bringing investor is its mainly for capital right. That's the main benefit venture capitalists also provide Council. One of the reasons that we were excited to bring on our investors was notion that they have been around the block. Consider the birth of Microsoft. back in the mid nineties, seventies, bill Gates, says, run,

initially founded the company, they were doing just fine, they didn't need money, but they didn't know what to do with their idea, how to bring their company to the next level. they realise that they needed some adult advice. So that's why they approached VC firm. They never use that money, but they needed the guidance of venture capitalist upkeep found this guidance also matters and especially experience He and his colleagues split the vc firms into two groups based on number of past transactions, a high quality group and the low quality group. The researchers then looked at patent creation for the startup firms, funded by the high and low quality venture capitalists. What we find is that patent stop grows nearly fifty fault for high quality group and only by twenty fold for low quality, so who are,

these wizards these experienced investors who can turn an entrepreneur with just an idea into a billion or even trillion dollar company, how exactly? Do these venture capitalists get paid and where did they get? the money to invest. Let's start with that last question: the source of venture capitalists investing funds, the bulk of it comes from big institution like pension funds, university, endowments charitable foundations, insurance companies and the like. You might easily characterize this as the rich getting richer and you won't be wrong On the other hand, they are funding ideas that billions of people may benefit from an there is an inherent risk in funding an idea,

Jonathan ragged again from the farmers dog. When it comes to venture capitalists, they aren't looking for small returns. They want invest in something they can produce extraordinary results in return for them. Most VC firms cover their operating costs by charging a two percent fee to their investors, those pension funds and endowments, but the big money comes at least potentially, when startups they have invested in are either acquired or go public after The original investors are paid off. The VC firm will typically grab twenty percent of any profits. Disk, now too many millions, perhaps even billions of dollars. That's the happy ending version of the story the reality is not always so rosy out of twenty one thousand start ups funded by venture capital from two thousand and four to two thousand fourteen. Sixty five percent lost money. Another twenty five percent returned lesson five times the original

spent, which might some pretty good. But in order to balance out all the losers, vizier need their big winners to return twenty or thirty times the original investment. Only one or two per cent of start ups generate this kind of return and it takes a while the typical funding cycle seven to ten years, which is substantially longer than other sources of private funding, Johnny levy is an historian at the University of Chicago. The culture of venture capital. and more towards having a law view of potentially disruptive

innovative companies which might not be able to make profits early on, and that provides time for companies to develop their business models to develop technology without having to worry about immediate financial pressures levy. Is the author of a book called ages of american capitalism? A history of the United States: it divides american capitalism into four eras. He calls our current Ura the age of chaos. He says it's been marked by an extreme investor preference for cash and liquidity, rather than long term investment. This can mean, as we ve seen these past few. decades, volatile market trends and the occasional bubble. So how does? your capital fit in. It might help to first think about the size of your capital in relation to the economy board. You guess

Considering the massive upside of VC investing you could imagine. withdraw trillions and trillions of investing dollars but consent the risk and them timeframe. You could also imagine Not many people are willing to invest. So what's the reality, the best estimates show that? U S, venture capital firms have five hundred and fifty billion dollars under management, the stock markets. Meanwhile, the sum total of public equities are worth an estimated forty eight trillion dollars, so venture capital accounts for a bit more than one percent of that investment pool making it rarefied air. It's also concentrated air, the fifty largest BC firms or about five percent of the market,

quickly. Raise about half of all venture funding. So venture capital is not very representative of the U S economy, but it does play an outsize role, especially when it comes to innovation. since innovation and also in pension take time long term invest It is a necessary component of an economy, the breeds innovation. What an example of this kind of innovation. If you look at big tack, venture capital was willing to take a risk and to give those companies time and space to develop without having to worry about short term profit criteria. Kind of criteria that stock markets ever since the nineteen eighties have prioritized vetoed Koestler again in the forty years. since I've been in the start up ecosystem better. On the start, I found a side or on the venture capital investing side. I have

I find one large innovation tat came from institutions of any sort isn't gonna invent it being be odd. Avis is not can invent Goober unlucky, in boiling Anthony Invent space, Sexton Rocket LAB, no matter where I looked, there was no large innovation that came from the institutional side of the house, and I point this out because the rest of the world is institutionally driven and we have this individualism culture in the. U S, you need unreasonable people to foist not only believe something else is possible, but then to go out and try it in committee, life, do it and I think actually again. So that's why in societies where there is a larger vc, capsule market is much more likely that we are going. observed more radical risk taking innovations auction

has analyzed how different countries pursue different growth models based on their own technological prowess and how Venture capital, please, into that there are some countries that are at the World Technology frontier likely. U S or many european countries like Germany, France and there are some other countries that are very far behind. So a country should decide what kind of growth strategy it will adopt. Philippine innovation based growth, or will it be an imitation based growth if it's based on imitation, where you're trying to import the technologies from frontier countries, maybe bank financing could be sufficient because there is less uncertainty around those technologies. But if a country wants to grow through innovation by producing path, breaking

radical technologies that are risky you do need to rely on venture capital. What if you ve, been an imitator and you want to evolve into an innovator? That's a very good question. The capital markets have to change the legal rights, the property rights. If the change and debts, which is not very easy, but do they have any example, of a country that close the gap? The answer is yes, China is a recent example of the China used to be far behind a frontier, but recent the China managed to close the gap with the frontier, and at that point we start to see some new technologies emerging from China. You also have to consider the role of government in financing these radical technologies. In the. U S, you often hear entrepreneurs and investors complain that the federal government isn't much of a partner that is more fond of regular.

asian than innovation, and therefore the best thing government can do is get out of the way the economist, Marianna Mazzolato at University college. London does not see it like that, what I say to those who say that we need less state in order to be were innovative, more dynamic and say well, let's look at one of the most innovative parts of the: U S, economy, which a Silicon Valley did that come from the free market or form an active, visible hand. The state we spoke with Mexico a few years ago for an episode called, is the government more entrepreneurial than you think? My point is actually the state was involved in almost everything in Silicon Valley not to exclude them all of the private sector. Of course, we all know the very important companies in that area, but the role that public actors plate was really across the whole innovation chain. So you're talking about

agencies like DARPA Nasa and the National Institutes of Health, and so on? Yes, exactly I'm talking about agency, that do basic research like the National Science Foundation, but also agencies. we're downstream, doing applied research like DARPA and the National Institutes of Health which continue to spend more than thirty billion dollars a year and the most radical uncertain high risk research. These public institutions have absolutely who created value, Monte, Carlo also argues. The government should be getting up, their share of the return on these investments, especially when you consider the reach of government funded technologies like the microchip GPS, the internet. That said, there is nothing new about the? U S: government funding big risky projects. This begins with the

nails and railroads at the first industrial revolution, extend through the construction of the electricity grids, the second industrial revolution and then, of course, goes on to the internet and the computer networks that define economic space today, creating a platform for entrepreneurs and benchmarks. Powerless to dance on that is Bill Janeway. He is a long time venture capitalists who now teaches at Cambridge University like Mexico Janeway points out that start up. Companies funded by venture capital have the luxury of innovating. On top of the platform technologies that were often state funded in the twenty tens, roughly thirty percent of U S, patents could be linked to research funded by the federal government. Back in the nineteen seventies, that number was roughly ten percent

But that trend may be slowing or even reversing. Government funding of r and D has been falling from about one point: two percent of GDP: in the nineteen seventys to just point eight percent. Now, if this trend continues, venture capital will become even more important as a dry of innovation. Janeway worries this won't be sufficient and that the government needs show more interest in some key areas. I'm talking about the greek revolution that we desperately need in time to respond on the climate change once upon a time. Fifteen years ago, a few leading venture capitalists to me, the most noteworthy was the note kosher

tried to promote a green bubble, and there was a little surge of venture capital investing in the mid two thousand. It failed. It failed because government was missing in action. There was no state support for the programmes. The projects that would have created the platform, as the defence Department had done, for I t as the National Institutes of held two dead for biotech. That's what we need now, so it may be that the government doesn't always focus on the most pressing problems, but the same could be said for ventricle lists. In one recent year there were over fifteen hundred BC, investments in software start ups and how many in renewable energy startups forty seven a fuck octree again buncher topless do conscience

But I should also mention that, while they are contributing to the ineffectiveness of the start up their funding This does not necessarily mean that this is good for the society, its highly likely that this is good, because their funding radical taken policies, but efficiency is a different question saw. This does not mean that venture topless are providing the right amount of money into the right side. There's coming up after the break venture capitalists are okay with failure, but what's the difference between failure and fraud and how did an obscure change to pension laws, help drive the BC boom in the first place. I'm Stephen Governor- and this is for economics, radio, which is funded not by venture capital, but by advertising, which sounds like this

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ten percent of their first month of online therapy at better help dot com, flash for economics, that's better. Each e lp, dot com flesh Greek o nominees. the notion of venture capital using invest. There is money to fund big risky ideas is as old as investing itself. The modern three venture capital meanwhile, has two notable birth moments, both of which took place in Massachusetts. The Harvard Business School, Professor Tom Nicholas in a recent book on the history of venture capital, traces, its origin to the New England wailing industry in the late seventeen hundreds wailing was a dangerous difficult endeavour that required a lot of front capital. It also carried huge upside a successful voyage

could produce in today's dollars about three million dollars in Wales, oil, sperm oil and whalebone to hedge against the risk, individual investors, most Lee wealthy doctors and lawyers would pull there. Sources and invest in a share of every voyage, relying on the few successful trips to cover the costs of all the failures Well, over a century later, back on land, a Harvard professor named George Durio, use, a similar risk sharing model to create a new kind of company. This is one thousand nine hundred and forty six in Boston the company was called the American Research and Development Corporation or a r and d it took in my from institutional investors like endowments and family estates and funded early stage companies, with the promise that one or two mega successes would again balance out all the

failures. Dismayed are indeed the first modern be safer if it hadn't been for digital equipment, no would really remember are indeed because it wasn't very successful. That again, is long time, venture capitalist bill, Janeway he's also the author of a book called doing capitalism in the innovation economy, but it demonstrated the enormous skew in return. because Digital Equipment Corporation, the many computer manufacturer, was such a huge success. But again it took awhile in nineteen. Fifty seven, a r and d gave digital equipment. Seventy thousand dollars building computers. This gave a are indeed nearly eighty percent ownership of the company. It was more in ten years before Digital went public that seventy thousand, dollar share was ultimately worth more than three hundred and fifty million dollars a nice little. Five thousand percent return

regional investment, a r and D had shown that one successful voyage could indeed cover the cost of multiple shipwrecks, but the venture capital industry was still just a blip when the dash of Venture Capital Association was found. You could probably have had everyone around a dining room table, there's only about twenty five participants, that was in nineteen seventy three, a few years later, things started to change it. One thousand nine hundred and seventy nine intense lobbying from the venture capital industry had led to amendment of the regulations of the employment Retirement Security ACT Orissa which allowed fiduciary to meet their obligations while still putting a portion a small portion of their assets into the kind of high risk investments represented by better.

Capital, in other words, it is now legal to take some pensioners pension funds and send them to be like you, venture capitalist, exactly to speculate with them before nineteen. Eighty Pension regulations included a so called prudent man rule this required. Pension fund managers to act with skill, prudence and diligence or beheld personally liable for losses. as you can imagine, an investment in venture capital at the time wasn't considered super prudent, but, as Bill Janeway told us, the VC industries lobbying got the Department of Labour The shift, the regulation so that pension managers could invest as much as ten percent of their money in riskier asset classes This meant that pension managers could put as much as ten percent of their fund into venture capital and still comply with federal Rizzo regulations, but the relaxation

the prudent man rule was hardly the only factor. The apt up interest in venture capital can look at the ninety. he's economy, there's a boom that brings confidence back into financial markets and used to see money and investment moving across asset classes and movie across markets in ways that you haven't seen before. That again is Jonathan Levy the historian of american Capitalism, every day trip in of dollars or sloshing around the world, digitally really just sloshing. Where do I put out my bucket to grab? Some slosh is probably the wrong word. Ok, still all these trillions looking for somewhere to land. There were a number of factors driving this in nice Seventy eight Congress had steeply cut the taxes paid on investment gains. That would happen and watch it

Bill Janeway again, what happened in Wall Street was that when the bulk or shock ended, inflation was defeated. Interest rates came down. The vulgar shock was fed chairman Paul vultures campaign to tame inflation by pushing interest rates to his high is around twenty percent, but now, with interest rates down, investors we're looking for other ways to make money. For instance, initial public offerings or IP owes when a company first makes their shares available for sale to the public in nineteen. Eighty three, the IP market opened up and there was a backlog of really good companies that had been growing quietly in nineteen eighty, there were two ideas, the kind of pointed the way

before vulgar smashed the market. One was a company called Apple computer and the other was a company called genetic. I t and biotech, and there was a hot ip market and eighty three and venture capital is started realising these profits. Then there was a flow of money, but it's worth noting that even ten years In the early ninetys nineties, Thatcher Capital was a very small segment of the financial system. It was the great tech, internet, dot com bubble of the second half of the nineties. That turned what was still a pretty marginal activity. into an industry. In two thousand, a hundred billion dollars was invested in venture capital firms.

One year later, the dot com crash would drive down. U S, venture capital investment around sixteen billion dollars, but a culture had been established, a culture that began the boom we see today, especially in Silicon Valley. The note Koestler Silicon Valley is a culture that gives you permission to try things and says it's. Ok, if you fail, will find you again that culture has been well established now in creating very large financed. It so happens that in Silicon Valley, you not only had the ant knows with crazy it is they could scale because investors but comfortable with this paradigm. These were investors who not only encouraged but practically required a certain level of boldness Jonathan Levy. You could never tell VC guy

can be profitable in three years, meaning when you actually says you can be profitable. Odyssey doesn't have a bold enough idea right, you got to say we're, never get to make any money. That's how radical increase the idea is at the frontier. Progress is made by trial and error and error and error Bill Janeway again, tolerance of error is essential and experts. The pursuit of efficiency is the enemy of innovation. That often why big companies fails. What happened to idea where we have been very good in the United States over a long period of time has been in making space for the entrepreneur whose characteristics first of all, enormous energy, which may or may not be well directed a willingness

when we allergy rejects the vision of going with the vision against the reality. That's why my first law of venture capital, as at all large producers, lie it's the ones who don't know they're lying that really get you into trouble. Every entrepreneur, you're saying, has a reality. Distortion field similar to Steve jobs or attempts to some are more successful at projecting it. Consider thoroughness Technology company that raised more than one billion dollars in private money, some of it from the biggest in venture capital cures, CNBC Jim Kramer, the western years, thoroughness has been viewed as a revolutionary company ceos

powders. Next, Steve Jobs copies convey this much nine billion dollars that Theo Elizabeth HOMES promised a new method of blood testing that sounded too good to be true, we ve made it possible to run comprehensive laboratory tests from a tiny sample or a few drops of what they could be taken from a finger, but the fair, no story was in fact too good to be true, Jim Kramer again, this was in twenty fifteen and This morning, the Wall Street Journal pretty scathing article about the company watching the country's proprietary testing devices may be inaccurate and basically accusing thoroughness of deceptive practices. Homes and fairness have been trouble ever since, with the ethics with the centres for Medicare and medical services and homes,

currently on trial for fraud, Jonathan Levy, again, traditionally in a capitalist economy, we think of the market as disciplining companies. They can't prove the worth of their existence by making profits right that capital markets have disciplining effect, part of the story of venture capital to me, which is admirable, which is the willingness to take long term risks in start up, companies that are innovate but kit necessarily show profits at what point is access to capital along those lines continue to prop up companies? They don't have a vibe business model. If you kid where the turtleneck sweater the right way talk the talk, walk the walk, you might be able to get access to capital historically venture cap, It has been a heavily american pursuit. Twenty

years ago, the? U S, accounted for roughly eighty percent of global venture capital with the vast majority in San Francisco Bay Area, New York in Boston. So if your startup company that's appropriately socially network in can valley and happy individuals who went to Stafford there's abundant access to capital, but you go to the other side of the tracks, not so much field is also very very male start. Ups, with exclusively female founders took in barely two per hence a busy funding in the U S in twenty twenty. This was like one reason that so many investors were so eager to believe in thoroughness and Elizabeth homes. It somewhat more diverse on the other side of the table about twelve percent of deceit makers at VC firms in the U S are women up from just under six percent and twenty sixteen

this change will likely mean more funding for female founders as well. Since female investors are much more likely to invest in female founders, an even bigger change is the amount of venture, pearl activity now outside the? U S, the eighty percent share from twenty years ago, since dropped to about fifty percent here again is renewed. Koestler Shanghais done a very good job in China. China now accounts for roughly twenty five percent of global venture capital from less than five percent in the early two. Thousands Europe hasn't done well because is to respect full of institutions, and you need much more disrespect for authority. I find many european start up said they have a big idea. They get turned into a decent idea, as opposed to amplified and said. Go for the moon. Coastal himself is definitely the type to go for the moon

besides backing impossible foods, his firm has funded a variety of bleeding edge technologies and health care are mine, security and finance. One of his current obsessions is nuclear fusion, why did the global institutional effort to spend thirty billion dollars or worth thirty or forty years? We think we can prove it in five. His firm backing a company called commonly fusion systems. They recently announced they have created the most powerful magnetic field. Ever recorded on earth and magnet technology is seen as one of the biggest hurdles to making fusion energy a reality. The promise of fusion is that it could cleanly produce enough energy to power. A small city in a device the size of a shipping container commonwealth hopes to build a demonstration device by twenty twenty. Five. If I said to you are,

in your goal is to change all animal husbandry on the planet are built of fusion reactor in ten years. Instead of fifty with one fifty across the resources- you're crazy, I say you're nuts, you note society in general depends on five percent of the people doing things at the edges of society where most change happens. So I do think enabling more of those people to lead society in good directions is a good thing. Increasing the social safety net at the same time. So do you have any advice for someone who's listening to this and says you know, I'm definitely in the ninety five percent. I would much there be in the five percent. You have to be inspired by talks like this by podcast. Why my own disport costs- and I said this talk- I gave at Stanford Business School in twenty fifteen. There were five hundred mba no audience, and I said I'm not

king to ninety five percent. A few only reason I'm gonna waste another of my time and backward applied. This part gas is because I'm going to trigger some people to get enough self confidence to go twice. This other work of innovating making things happened that you believe in driving society, no matter how hard it is, how difficult it it's! Your goal is to go from impossible to implausible two possible to proper ball to making it happen. In fact, I'd like to tell you I didn't really hard thing said the only things were trying and they're the ones that most contribute to society, because most things that are easy either not worth doing or somebody else has already done it coastline is really hard thing was creating Son Microsystems, which wound up

give him a personal fortunes. In my forties, I realized I was way more successful and had more resources than I could possibly have imagined even fifteen twenty years earlier in so what I got was the freedom to indulge myself now I can get a yard or up ice inside the France, but I was always driven by learning. Can I said now who technologies great? What else would be nice, and I met professor units and decided poverty was a pretty interesting problem to take on mostly because it was hot he's talking about Mohammed Yunus, the Bangladeshi economist and entrepreneurs who won the Nobel Peace Prize for bringing MIKE

credit to entrepreneurs to small and poor to get the Standard bank loan hard problem, some more interesting than easy problems to the exact opposite of getting a yacht, and I remember when we started our firm. I act he knew somebody who had spent a hundred million dollars. Sunday yard- and I said that's a good yod for them. For me, thirty three million dollar bets is my young people. I wanna play. They learn from explore. Ideas, push them to think bigger, and so poverty was one and the other I started looking I was climate and so in some sense, taking on nearly impossible problems, make things more challenging, which meant to me more fun and so gave a bot impossibly hard problems. Neither one of them is sought today, but we are making progress on Bob.

this venture capital, the best vehicle for making progress on hard problems. Renewed coastal certainly believe so and it's hard to doubt his sincerity, others may hold different views. Others may feel that venture capitalists may talk of she was game, but that in the end, self interest will win out and in the end, it's just another investment channel. That grows the wealth of already wealthy, that it focuses too much and shiny new products and services at the expense of some of the less exciting problem our societies need to solve. What do you think? As always, we appreciate your feedback. Our address is radio at for economic Stock coming up next time. I'll show you ve heard the saying there are no short cuts in life. What if that saying, is way wrong? These are short cuts which get you

You'll go but without having to do a lot of laborious, boring, hard work, but next time until then take care of yourself, and if you can someone else too Four comes radios produced by stature and ran, but radio. This episode was produced by Ryan Kelly. Our staff also clues Alison, Craig Low, Gregg, ribbon, cyclopean ski married to Duke Jasmine, cleaner Osborne Immaterial Lyric about it and Jacob Clemente. Our theme song is MR fortune by the hitchhikers. All the other music was posed by Luis Gara, you can get the entire archive of economics, radio on any podcast app. If you would like to read a train, script or the show notes were. You can also find the underlying research behind every episode. That's at free economics, dot com, as always, thanks for listening

what do you mean when you say you couldn't teach it? I meant that I found myself incapable of attempting to pollute the brains of young students with the notion of efficient markets and perfect competition. the economics, radio network head inside of everything teacher.