tv The David Rubenstein Show Peer to Peer Conversations Bloomberg December 27, 2021 8:00pm-8:30pm EST
>> it is in :00 p.m. in new york, 9:00 am in hong kong. i am vonnie quinn. a quick check. china is typing -- tightening up the rules on sectors banned for foreign investment. starting january 1, they will have to seek a waiver from a list. the rule will affect listings using the variable interest. the move could plug louisville long used by chinese tech firms to raise capital overseas. the chinese central bank has repeated that the yuan exchange rate will be more flexible in 2022 well staying basically
stable. the statement from the 2022 conference promises management for property finance while meeting is noble housing. the central bank says it will ensure overall credit growth in 2022 without giving a specific target. japan's industrial production job by a record in november, pointing to evidence that the country's recovery is underway. that is the biggest rise in decades. analysts had expected 4.8% increase. manufacturers said they plan to raise production this month and next month. home rental prices in singapore have jumped to a six year high and analysts anticipate further increases as demand outweighs supply. ex-pats are among the hardest hit. authorities imposed a new round of cooling measures in early december, mainly targeting
purchases by investors and foreigners. goldman sachs is planning to make covid vaccination booster shots compulsory as the firm stand by its surging infection rates in new york. they must get a shot by february 1 if eligible. the cdc has cut the recommended. for covid-19 isolation from 10 days to five days. to the markets now in singapore and taiwan. they have just come online. their opening higher after yesterday's record. you can see the index is up about 25%. china futures are pointed to a higher open. china futures are up about .3%.
let move to some commodities. brent crude is trading higher as well. we also see a little bit of a downdraft for iron ore. this is bloomberg. ♪ david: this is my kitchen table and also my filing system. over much of the past few decades i have been an investor. the highest calling of mankind i have often thought is private equity and then i started interviewing. i have learned from doing my interviews how leaders make it to the top. quasi asked him how much he wanted. i said 250. i did no due diligence. >> i am wondering how they stay there. you don't feel in -- you don't
feel inadequate been the second wealthiest man in the world do you? >> as an entrepreneur, he helped to build paypal and he started linked in. as an investor, he has been an early investor in his book and airbnb and now he is a partner in one of the leading venture firms in silicon valley. i had a chance to find out what great qualities it takes to be a great investor and entrepreneur in my conversation with reid hoffman. the venture capital world today seems like it can never get any better. everybody seems to be making money. the values are high but the returns are very high. are you worried about this being a bubble not unlike what we have had in the tech bubble burst? >> you always worry about the markets getting overstated. i think there is some risk within the general market. that being said, technology is exhilarating the transformation
of all industries. there is what artificial intelligence can do. that is the leading edge of software. things happen with ar and vr, things happening with crypto and fintech. i think that is part of the reason why the venture industry has been so good. technology is important in redefining many key industries. david: silicon valley is not the only place where there are technology investment but it seems like silicon valley companies seem to be the most valuable and that is where the most activity is occurring. is there something about silicon valley that makes it unique and better than other areas? there is. silicon valley has a number of overlapping network effects. it has the network effect of being the hub by which a lot of english-speaking entrepreneurs from around the world come to start their software businesses,
key technology businesses, there is a hub for capital and the knowledge and investing that goes into it. there is a hub of talent for people growing these companies as a part of the reason i wrote this book about how you build technology companies at a global scale lightning fast. there is the network effect of learning, sharing information. it is part of the reason silken valley -- silicon valley has the whole area. and why half of the nasdaq emerges out of silicon valley. those network effects are what makes silicon valley great. >> is china likely to catch up and pass silicon valley? reid: i think it is one of the greatest concerns that silicon valley people have. china is amazing. it has a huge amount of tech talent.
everyone is acting like an immigrant with hunger. you are discoverable at your desk and that is like the tens of thousands of people and technology companies and they are doing a lot of innovation. there are things that we learn from china. i think china will have one very strong creation of the technological future. that is why we call it the land of blood scaling but i think silicon valley has some edges as well. i think it is very much in a game on circumstance. >> some people would say the technology world in the united states is dominated by a limited number of companies, google, facebook, apple, netlist, microsoft. -- netflix, microsoft. do you think the u.s. is dominated by two few -- too few companies and that something
should be done to weaken their power? reid: i think we are going from five massive tech companies to 10. i think we are already naturally headed in that direction. you can see it with things like netflix and salesforce. it is about creating a breath of additional global technology companies. when you go around and you ask what all of the -- the venture capitalist, it is like we are having more and more start ups, more ability to create amazing new tech companies. if anything, i think we are already on that trajectory. david: do you think alibaba tencent, baidu, can they have their technology become very dominant or important in the united states and around the world? are we competing for market
share outside of the united states and china? >> ethic we are already in that world. if you look at the things that alibaba is doing in terms of spreading the pay into south america and africa, i think the notion of the technological platforms of the future are in deep. there is a fast-moving competition between companies in silicon valley and companies in china. i think that is part of which systems will be the systems world operates in. i think that is in deep competition. i think we are already seeing chinese platform companies beginning to make strong headed roads into the u.s.. tiktok is an obvious one. i think you already see it in drone manufacturing and dgi. there are a whole bunch that are already gaining massive global relevance.
>> one of them is cryptocurrencies. are you a cryptocurrency aficionado or not? >> i am. if you go to youtube and search for bitcoin rap battle, this is inspired by alexander hamilton the musical. ♪ i funded and produced a rap battle between alexander hamilton and -- i think there is a real world for cryptocurrencies in helping this evolve. >> do you invest in cryptocurrencies yourself? >> i do. >> what about transportation? are you a big believer in autonomous vehicles? >> i am. i have vested -- i invested in aurora. it is about when.
it is about how soon. it will serve tens of thousands of lives. it will enable a huge amount of increase in productivity. i think it is a great thing we should be accelerating to as a society. >> have you been in one of these cars where you are not the driver and you feel safe? >> i do. i think that all of them, not just aurora, not just neuro-, safety is their main thing. when i have been in these cars where there is nobody in the driver seat, it has been good and fine. >> do you wear a crash helmet? >> no. >> what about flying taxis? >> it has moved the transport grid from 2d to 3d. it should make commute much less onerous, it will help in getting
to the airport on time. and also being able to live physically remote to come into the city. the jetsons is no longer science fiction but almost science fact. david: what about space? do you invest in outer space investments? reid: not as intensely as my friends like elon. elon has been helping the transformation of the world. it is an important area. i have ended up in it sometimes just by who i know. ♪
david: let's talk about how you became an investor and entrepreneur. you said i am not going to be an academic, i am going to be something more import than academic, i am going to be an investor. crisis did not start with investor, it started with product creator. it was how do we think and speak better? how do we make ourselves better as individuals? this medium of software, this medium of constructing new product, i was just being -- beginning to get the lens of what does the internet mean and how do we all work together and play together and live together using the internet to redefine our space and network in order
to do better and i should cook create that. >> you are invited to join a company that was called paypal. paypal turned out to be a gigantic success and later sold to ebay. what was your job at paypal? reid: when they started paypal, they invited their friend who most understood and had entrepreneurial excuse to get on the board. that was me and peter. after a year of being on the board, i was thinking about starting another company. peter said come join paypal full time and help us because you have been helping us so much on the board and you understand the stuff. we have so much to do. paypal was -- it's theory was that it would be a bank and that was not a workable theory. we had a great customer acquisition engine but how do you redefine the payments with something that was in front of it?
>> paypal was eventually sold to ebay. you got your share of the profits. he then became an angel investor. for those not just that don't know what an angel investor is, what is that? reid: sometimes there may be investors -- angel investors are individuals with some expertise in this area or some area that tend to invest in the early stages of a company. whether it is an idea on the back of a napkin or an entrepreneur just thinking of doing something. all investment is professionally scaled and done so individually. the platform, the network that a firm brings. that is what i started doing because i was interested in
other. who were building these great projects i wanted to help out with. what did you see in the young mark zuckerberg? >> facebook had already successfully launched a product that when it opened up the campus -- when i did the investment, it was strictly only a university campus network. not the whole world. but when it opened up a campus, in six weeks, 80% of the campus was using it six times or more per day. you could just look at the usage curve and go this is interesting. even though mark was very quiet
back then so he had a tendency to not talk very much, long pauses. minutes long pauses in conversations, you can see that he was very smart and you can see the trajectory of what facebook was on was very interesting. >> your angel investor is doing pretty well. people coming to you all the time with deals and although you miss one or two, basically doing pretty well. why did you need to be joining a venture capital firm? you're already your own venture capitalist and you had enough money to start your own firm. >> i think in networks. i think of networks as platforms. i think that small number of very elite venture capital firms within silicon valley -- i was originally thinking about building my own and then david z
and neil were both general partners and they said we are in the process of moving the firm from boston to silicon valley. it is kind of a rebirth of the firm. it had this great set of investors, a culture of learning's. all of these things that would be very helpful. also, this idea of a network amplifier for venture capital. we will have to do it with you. i said i would be delighted to be partners with these people. let's build a firm here. >> when you are starting there, even though you already had a career as a venture -- an angel investor. one of the things you wanted to do was airbnb. a senior partner at your firm said that is a terrible deal, it is going nowhere. were you intimidated by that because he had a lot of experience? how did you push that through? >> there is even more drama than
your question suggests because the senior partner -- he was an amazing general partner with my board member from greylock at linkedin. i bring in airbnb as my first deal that i'm bringing to the partnership and david who i am super close to, i have the deepest respect for, has returned billions of dollars to the fund, he looked at me and says every vc has a deal that they can learn from and fail from and airbnb can be yours. i was like wow heart david is supersmart. ultimately i said i have to have the conviction. he gave me the hunting license, the permission to go do the deal. i did that. to his credit, the numbers had not changed at all. he came back to me. he said i have thought about a lot. you are right, i was wrong. what did you see that i did not
see? i said if you navigate through the risk factors, you would end up with a redefining company of an industry. it transforms the entire industry and that is the thing that i saw. >> you had some time. i don't know where you got the time to start a little couple to called linkedin. >> the goal was tilting something that enabled every individual and professional to transform their career by collaborating within a network. ♪
david: in addition to venture investing, you started a little company called linkedin. how did you have time to start a company called linkedin while you were a partner in a venture firm? >> i started it much earlier. that is how i met them. i was doing angel investing while i was the founding cl -- coo and cofounder of linkedin. david: linkedin was ultimately sold to microsoft for roughly $26 billion or something like that. did you ever anticipate something like that when you started the company? reid: one of the things to think about when you're strategizing. i had this framework called abc planning. think about the spread of outcomes. what is the great possible outcome, the worst outcome, the
intermediate outcomes, what are the things that changed the landscape of that? i always knew that lincoln could be a network as a platform that would be transformative and i knew it was the kind of thing that most aligned with microsoft's mission. did that mean that i knew that microsoft would end up buying it for -- it is the largest acquisition in its history. no. i thought it was a possibility. the goal was building something that enabled every individual professional to most transform their career by collaborating with network. -- a network. david: you went on the board of microsoft when you sold it. microsoft was a tech company that came out of nowhere and became a dominant software company. many thought it would go south as it was getting older and older and it transformed itself. were you shocked and surprised at how the company has become
one of the most valuable companies in the world again? >> no. microsoft has always had an enormous amount of talent throughout the whole company, the technology depth. microsoft has actually created a whole range of products. not just the research side but microsoft -- there is this amount of raw talent. just having things like windows and willing to be bold in the creation of xbox and the gaming franchise. that being said, the thing that was brought back with vigor to the company was a focus on earning that ability to build the next generation of products. also, transforming across the company -- we are only one company in this universe and we
are doing our absolute best to surprise and delight our customers. >> let's talk about the different skill sets. to be an investor, you need a certain skill set. what is the skill set? how is it different to be an entrepreneur. >> the game is hard but the definition is easier. that is having a vision for where the world is moving toward. where you can help toward. frequently and in the case of a new technology or market shift or something that gives you that market opportunity. you can assemble the assets. not just capital but talent, the ability to build new products or services. it was driven by the cadence of a complete focus on how you navigate that path. it includes risk management and a bunch of other things.
building something from nothing and then scaling and getting it really large really fast. as an investor, what you're looking at is judging on spin oriole talent in that same sort of circumstance. it is like can this set of people, she or he, is it better to have two or three founders run this race? the key thing that is the difference between all of this where it is the all in focus -- you are not running the race as the investor. the founder is the entrepreneur. they are running the race. we were helping as much as you can where you have to judge if they can do that and if you can help them as best you can to get there. but that is the key difference in scale. >> to make people feel good, do you have some failures you can
tell us about? where you made a terrible mistake, where you lost all your money? >> it depends -- i can go through the list. the interesting question about the announcers appear is not as much the companies that you invest in, there is a large list of those companies that did that. the real thing is the companies that you missed. missing twitter, missing snapchat, missing pinterest. those are much worse outcomes then if you put in $100,000 or a million dollars or $10 million. >> final question. if somebody says i want to be the next reid hoffman, a person who is starting companies, investing in companies, doing things for public policy, what is the best training ground to do that? how can some would prepare to be the next reid hoffman?
reid: i am still young enough that i am hoping to be the next reid hoffman myself. there are a number of people like this within silicon valley that bring an entrepreneur mindset and play a central role in the network. many of these people are people that i work with. i could spend another hour listing names. all of these areas by which we collaborate with these people. i think there is a lot of people out there. i think they will be there next themselves with this. ♪