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Fireside Chat with David Fialkow of General Catalyst

There is no question that we are experiencing a dynamic market with unexpected impacts to our personal lives and to the global economic fabric. What does this mean to the venture capital ecosystem and the decisions VCs make?

We will hear perspectives from our guest David Fialkow, Co-founder of General Catalyst and an award-winning documentary filmmaker and philanthropist, who will discuss the current venture capital environment and what it means to venture capital’s role in socially responsible investing.

Speakers:

  • David Fialkow, Co-founder and Managing Director, General Catalyst
  • Christopher Wolfe, Chief Investment Officer, First Republic Investment Management

Read below for a full transcript of the conversation. 

Mike Selfridge - Well, good morning, good afternoon, everyone. My name is Mike Selfridge. I am the Chief Banking Officer at First Republic bank. And I want to thank you all for joining us today for a great discussion on social responsibility in venture capital investing. Let me start by saying, venture capital is vital to American innovation and we're pleased at First Republic to have a two-decade commitment to supporting venture capital firms, as well as the entrepreneurs that those firms support. And if you look at past research, you'd see that on a dollar basis annually, the amount of venture investing in America represents just two tenths of 1%, and yet the revenues generated from those venture backed technology companies, represents more than 20% of our gross domestic product. So, in other words, it's an astonishing impact to the American economy as well as innovation, and that's really due to great investors such as our guest, as well as the entrepreneurs that they support. So, our moderator today is Christopher Wolfe, he's our Chief Investment Officer at First Republic Investment Management. He oversees our research and investment strategy for investment management platform now that represents just over $168 billion, so welcome Chris. Chris is going to interview David Fialkow, I hope you know David Fialkow, if you don't, you'll know him by the end of this session. He is a co-founder of the very successful venture capital firm General Catalyst, and he is one of the great investors in America. He is also a well-known producer and filmmaker, have several very successful documentaries, that focus on healthcare and social justice. And so David is going to share his insights and parallels between what he sees in tech investing, movie making, creativity, and also our shared responsibility to foster social justice. So knowing both David and Chris, I know you're going to find this to be very engaging, optimistic and inspiring. Just in case you have questions, you'll see a small Q&A button, please submit your questions, we'll do our best to get to those. And without further ado, I'm now going to hand this over to Christopher Wolfe, Chris.

Christopher Wolfe - Great, Mike thank you very much. And I want to pick up on something that you said right away, because I think it's going to be one of the more important highlights for today's call. And it's something that goes like this. It's passion, plus responsibility, equals outcome. And that passion plus responsibility equals outcome's going to be something I think you'll see as a recurring theme in our conversation with David today. Now, before I get to David, I want to make a little bit of an introduction, David's probably got one of the more interesting career pathways that jigs and Jags over time in, studied at Colgate, a degree in Fine Arts, was a filmmaker for a while, went to law school, started a number of businesses in the travel and leisure sector, sold them, did very well. But I think probably the most interesting as I learned about David's background, is how General Catalyst got started. He was doing an Iron Man in Hawaii, and if I heard it correctly, David it was on a bet. So getting a very successful, like outrageously successful venture capital firm, started on a bet, sounds incredibly interesting. So maybe we could start there, in terms of how your career began and what you look for based on your experiences.

David Fialkow - Well, thank you for having me. I probably didn't expect that I'd be sitting here when I was younger, talking to a bunch of people who are probably more successful and smarter than me. But I have been very lucky, I've been very fortunate. And yes, the idea of General Catalyst, my co-founder, Joel Cutler, and I were in Hawaii. Joel has Crohn's disease, inflammatory bowel disease. We have spent a lifetime, I've known Joel not that many years, just since he was five since we were five years old. And see how we have lot of turned on each other. And we needed to raise money for The Crohn's and Colitis Foundation, and some folks were betting me on some ideas that we had one night in bar. And the bet was could I do the Hawaiian Ironman in 90 days? And the bet was I had to put up a million dollars, their million if I did it, my million if I didn't do it, and I did it. So, one to why I did it, and while we were there, Joe and I had just sold our company. And we were very fortunate. The buyers did not want us, kept playing them. And we said what could we do next will be really fun. And at the time, this is Boston 2000, and Boston had become somewhat of a second or third tier city for venture capital, and entrepreneurship for a whole host of reasons, we can talk about that, less interesting. And I said, "We really love starting companies, we really love being with founders. We love being founders ourselves, deeply passionate about the journey and the role of building a company. Why don't we," and we had done a good job ourselves. But there are a lot of smarter people out there, we thought we could be helpful to. So we had a very simple idea, let's start a little hatchery in Boston, that would help entrepreneurs start their businesses. And we came home from Hawaii, and that's what we did. And I would have never anticipated that it would ever turn into what it is today, nor have as much fun as I would. But Joe's a brilliant guy and a great partner of mine, and we are very lucky, he knows a lot of things, cooperate at the same time, timing was just fortuitous, Boston ended up being a great place to start a business for venture capital. Today, we're in New York and Boston, Palo Alto, San Francisco, London, bunch of other cities. But at the time, Boston was kind of neglected, and it created an opportunity for us it was great.

Chris - So one of the things I really love about that story, and how it builds up is a wonderful confluence of events that came together, number one, number two, it also shows that success can come from unlikely places. And I think as part of the--

David - Chris, wait, Chris, are you saying, that I was the least likely kid, in my high school classes with feet? I wasn't, I was the second least likely to succeed, but carry on. You got to bet creative bets in life and this may be one.

Chris - But, so that's exactly the point, is the creativity that can come from a lot of different places, like, you started successful businesses just to stay on that business side of it. And when you think about it, the translation of how you look at beginning a business and the things that you do and what made you successful, how does that carry into the way you think about venture investing today? What defines success or what do you think define success in the future for people you want to back, how you fund them, how you evaluate them?

David - Great, it's a great question. First thing is, it's very different. We don't call it investing. And the reason why is the data analytics, around investing in early stage companies is somewhat irrelevant. There's very little team, when people start a new company, in a new industry, there isn't a team, total addressable market, number one. Number two, a lot of our founders are young, they don't have resumes, they've never done anything before, their last job was being a bartender, or working as a product manager in a company. So much of what we do, is about creating an opportunity for young people in particular, to realize their dreams and build companies. And in doing so, you need a lot of different skills that are different than in other industries. As I said, analytic is helpful when a company is older, when it's early, it's not. You got to be agile, you got to listen. But more importantly, you have to be a believer, you have to believe that the companies that people are going to start don't have any kind of roots in what's real today. Maybe even markets that are today, so the best companies are often done in markets that are emerging, or they haven't been started or they're created. And you got to bet on people that are young. So you got to trust young people, and you got to really understand that not all of these are going to work out, even in a firm of our size, 10 deals will define the success of General Catalyst. The 250 deals we've done so far, and you don't know which 10 of those are, and oftentimes, they don't all start out as being the best ones. And you got to have confidence that the decisions that you make and your intuition. And I look at kind of this way, and I'm not an investor type, so bear with me. Let's use a sports analogy. If I'm running a large pool of capital, where the bets are interrelated, or the investments are interrelated, that's a little bit like golf. One bad shot, two bad shots can lead to 10 bad shots, and your whole round is screwed up. I look at venture a little bit more like tennis, every shots important, but no one shot is going to lead to the failure of another shot. One shot may be more important than another shot if it's at a time in a game. So we have to be comfortable making bets on young founders or on entrepreneurs, and understanding they're not all going to work out and knowing when to double and triple down on the really good ones, and when you got to have empathy and help an entrepreneur through a process because you're not going to do something in the future. So as a result, unlike a lot of other businesses, you got to be comfortable being wrong, and you got to be having enough kind of modesty and enough self confidence at the same time, that being wrong isn't necessarily bad. Being wrong just means, that one didn't work out, let's focus on the ones that work.

Chris - So I think you're highlighting an interesting quality there. Maybe it's humility as part of that in terms of how you look at things but also, let's take that and put it into the founder mentality that it's you're explaining, the idea that somebody here needs to be agile, somebody needs to be kind of in an emerging market, it sounds like youth is also very important, but is humility one when you think about the people that you want to fund and invest in? How do you take that focus on founders and what are you looking for when you're investing in them? Because it's really investing in those people to capture those opportunities.

David - So let's look at maybe three or four different areas of investing. So let's say I'm investing or we're, again, not using the word investing, we're helping an entrepreneur build their business. And in certain industries, pattern recognition, and kind of domain expertise matter, in areas that are deeply scientific, certainly around pharma and healthcare. And on large analytical businesses, you want people to have some experience in doing things because they're entering into an industry that requires some domain expertise. Some other industries are brand new, so domain expertise is actually value less. On the contrary, most disruption comes from outside of the industry, not from inside. We made a mistake once, this kind of a off the cuff thought, we saw a payment company, that we really liked. And we bought it and this was early in our careers in GC. Everybody three or four folks from the payment industry to advise us.

And of course, they were naysayers, because they were kind of an incumbent. And we got it wrong, we did not make the investment and we ended up missing a good opportunity. So what we learned is yes, sometimes it's good to get some advice from the outside, but most disruption is going to come from the outside. So you really want to find people, and I would describe most founders, either in terms of characteristics is one they have to be curious, they got to want to learn, they're starting down a path of thinking they know what they want to do. And it may morph, they may need to call an audible along the way and change the business because the market have change. The second thing is they have to know how to sell, then may have to sell, you seel like, why do you have to know to sell? Well, you need to hire people and that's selling, because the best talent in the world, has a lot of different options. You need to sell because you got to raise money, usually, unless you're a First Republic client, and you have enough money to fund your own business, so a little ad for you guys. And in particular us Gym Outward you maybe have more market, so a little ad for you. But you want people that can sell. And by sell, I mean, whatever they need, they can get. They can raise the money, they can get the landlord to give them the lease for free, they can hire the right kind of people. But more importantly, they can get clients. So you need people that are curious, they listen, they got to know how to sell. The third thing is you have to be a visionary. Because everybody's going to be a naysayer against them. You know, for example, most good ideas are the confluence of a lot of people telling you you're wrong, right? And you can't be dissuaded by that. And you can go through almost every great company that's been built, there are always a naysayer. Maybe naysayer internally, maybe naysayer an incumbent, maybe a naysayer, early people involved with you, whatever it may be. So being a visionary gives you the luxury of not listening to everything that people say. Now, you want to be curious and listen on the right time. And then the last point, which is a little bit more of a nuance. Most great founders are product centric people, they love the air. They love the pen, or the bottle of water. More importantly, they love the solution that they're trying to provide. And when they're with people, they're captivating, they talk about that product like, "Wow, that person really cares a lot about that solution." And the reason is, they're not doing it because they're trying to sell you, they actually care, about you as the client, or you as the person that they're trying to recruit into the company, or you as the investor, they care so much about their product, that they're going to run through a wall to get that product into people's hands. Those are kind of things you can't test, that there's no test you can give people, but you can spend time with people, and you can gauge them along those metrics.

Chris - David, you mentioned a lot of, I think incredibly important qualities that somebody in the position that you might look at and would want to fund needs to exhibit. But there's one you didn't say and I would be curious if you had some thoughts around it. And the idea is, that somebody in the position that you would find attractive need to have a level of empathy, I'm just keeping up with that kind of passion and responsible outcome. And, to the extent you can be wonderful in all those things, completely lack empathy, maybe you can't sell or how does that play for example, in the way that look at in funding somebody.

David - So let's look at empathy in two ways, I've always looked, yes, it's a great character, it's a hard one to test, when you're doing an evaluation of an entrepreneur, you may not know for a long period of time, you can see it, maybe in the way they treat other people, I was going to use more empathy toward us, as the partners of the entrepreneurs. And the reason for that is that for a venture firm, regardless of how big or small it is, each investment that they're making is one of several. For founders, it's one of one. So, if this deal with this water company, which I didn't invest in, but it's a good company, doesn't work out, there's my pen company, or there's my organic snack company, there's something else as much as I'll be upset that it didn't work out, I move on, that the growing entrepreneur can't do that. So, they have to have a mentality that this is the most important thing in the world, and they're going to treat it like that. So, when I think of empathy, I think of our empathy, they can certainly have empathy. But we have to have empathy and understand that this is the most important thing in the world to them. And while we have other things going on in our lives, we need to make sure that that entrepreneur feels as they're backers, or investors, that this product is as important in their company, is as important to us, as it is to them. And empathy also means in their journey of building their business, many things are going to happen. If they're young, they may get married, they may have kids, they're going to experience personal issues, they're going to have to part companies with their co-founder, or somebody on their team. And we don't want to go back to them and say, "Oh, don't worry about it, those are easy, I've dealt with that already." We need to understand that those are the things that may define that leader. And their ability to have empathy is going to be directly correlated, to the way we have empathy with them. So, understanding their journey, and understanding how hard it is to build a company, and it is really hard, we need to make sure that they are the rock stars of our world. And our ability to be able to pour our attention and capacity to them is so important.

Chris - David that's wonderful because it does two things, I think it sets a very clear stage that this is so much more than the numbers. And as you kind of highlighted earlier, getting hung up on the numbers in the wrong place of the investing environment could just lead to disaster. But you also highlighted how much you need to care and nurture and invest in people. But, maybe if I extend those two thoughts a little bit further, are there differences in industries? As you mentioned, some are more numbers based but are difference in qualities of people that you look for is, somebody who is going in, say the real estate industry different than someone who's developing a consumer product, or versus somebody that's very tech oriented, or the many of the qualities you described, just broadly similar, and they're just table stakes, you got to have them?

David - Yeah, I think the companies that require less capital have a different journey. For example, if you can like, we don't invest in biotech. But you can invest 50 or 100 million dollars before there's a product. Therefore, you don't get a lot of feedback early on. Whereas if we're doing a consumer product, we going to know very quickly, who likes, who doesn't like it, what changes we can make to it. So, a big part of our role, working with a team, and often we're doing this with other investors, which is a whole other thing, is rarely the companies get funded by one firm. Sometimes that would be easier, sometimes it's harder, but usually we do things in collaboration with others. And I can talk about the reason why we do that. It's not capital, sometimes it's learning, and it's listening, and it's our capacity to help, our horsepower to help. So sometimes if a company requires less capital, or can be in the market quicker, you have a very different experience, because you can say, "Okay, let's bring that software to market or that consumer product to market or that application." And we very quickly get feedback, the market tells us are we doing a good job or bad job as a company. And that's when you can double or triple down. When the product takes a lot longer to develop, and you're in a much longer development cycle, you don't have that, and that can be frustrating. And oftentimes you have to put more money into it. So directly interview question is, that may require a different type of founder, or as luck would have it, founding teams can have a variety of different people on. They can have deeply technical product people, they can have people that understand the market well, they can have salespeople. So, building the kind of a fabric of an organization, is one of the things that we, when we do our job well, do and help founders do.

Chris - Outstanding.

David - Here's a great line for you.

Chris - Yeah, I'll write it down.

David - One of my... We love all of our companies. However, one of our seemingly more successful companies is a company called Stripe. And Stripe is the payment business that has been very successful. And I know there's a lot of people on the phone, but there are times when I think I'm doing the right thing, and sometimes I get put in my place. So, we're in the meeting, the Stripe guys are pitching us to do their series A and, well they weren't really pitching us, they're telling us they did need the money, as oftentimes investors. And I, we were pitching because we really want to get in, and I'm glad we did end up being a wonderful investment. And I do what I often do, which is I try to figure out what that founder needs. So in this case, Patrick and Jonathan, the two founders, I say to them, "Listen, we can provide some introductions to you." And in their very heavy Irish brogue accents at the time, because they both just moved from Ireland, one that dropped out of Harvard, one that dropped out of MIT, smart kids, they said, "Like who?" And I came through with a couple of names of companies I thought I'd introduce them to. And Patrick, the CEO puts his hand in the air, great line. He says, "David, by the time we're successful, virtually all the companies who are our clients would not have been started by today." Meaning that virtually all of their clients that they are going to build their businesses for in the future, many of them haven't even been started yet. And it was like, wow, I'm in the right business. I mean, where else could you realize that you are in the inception stages of see, yeah, Stripe is a very successful company, but they had it, they were clairvoyant, they knew that the product that they were building, and the opportunities that they were addressing was for companies that hadn't been started then. Amazing, huh? That maybe tells it all.

Chris - That is amazing, and it's actually a really considerable.

David - I climbed underneath the table, because I realized I needed in the market.

Chris - That's a good, it's a good story. But I think it's also a good segue, because it gets to the idea that you also have to be as an investor in this space, a bit of a forecast, or at least an understanding of what the trends are, or even an evaluator of how a founder looks at trends. So from a standpoint of what do you see going on in the industry? We're not to talk about specifics about where you're investing, but what are the big trends that you think are out there, particularly with respect to technology, and then maybe, to that responsibility point, there's technology may be a neutral, but sometimes it can be used for good and not so good things, and particularly as it relates to society, so that's a big question. There's a lot of stuff there, but maybe big trends, and then how is it going to affect people?

David - Well, let me answer that in a couple of different ways if I can't, one is, we don't do a good job predicting the future. We need to listen and play the alchemy game. People lead to the ideas, markets don't, products don't. So if you're somebody like me, since you've already said that I was the least likely in my high school to succeed. And I said I was a second likely, second most like, the least likely, you got to listen, what are people telling you is happening in their world? When I come in, and I talk to First Republic, what are the technologies that you're using?

When I go to my doctor, I'm like, what are the tools that he or she are using? And you got to pay, you go to a restaurant, you see what tools are they using, right? We didn't invest in Toast, okay? And probably many of the people on the phone didn't invest in Toast, I should have invested in Toast. Toast is a good example of one where I saw it, I loved it, and I just blew it, okay? So what did I see? It's easier to talk about a deal I didn't do, what I missed about Toast is that, I have the love affair of loving food, so I'm an investor in a bunch of restaurants. By the way, you got to love it, because it's not always the most economically rewarding business, but it's a fact, it's a part of art, and I like art. So, when I saw Toast, the reason why I saw Toast is I never saw the deal. I was going into restaurants and I was seeing what a pain in the butt it was to make reservations, keep track of your employees time, order food, pay for food, and then do inventory management of the food that was being depleted. And Toast came up with a simple solution to do that. What it was, was a point of sale, but what I missed is that if own a restaurant, you know anybody in your restaurant that knows anything about IT, so and you really don't love, all respect to the banks, the payment processing part of your business because that's kind of an analog business.

So when we saw that Toast was doing, which I just missed, was it was kind of an IT solution in a box for restaurants, usually smaller restaurants. So sometimes the most obvious things are right in front of you to be able to do it. So being able to predict is hard, listening much easier. The third thing is the humility that goes with being wrong. Sometimes you're in a business, and you made an investment, and you see the way that investment is moving away, or maybe growing in a different area, but there's another subset that's coming in underneath it. For example, we made an investment in a company called Index, which was doing on-prem payments. And we were with the Stripe guys one night, and they were saying on-prem is such a pain, how are they going to solve it? And it gave me more confidence that we had made this bet. And then of course, two months later, Stripe came along and said, "Well buy it." Which ended being great for everybody. Now, that's just pure luck. But luck making the investment and then having a little luck to listen, created an outcome. So sometimes we see things, and then you listen, and you hear the way other people are responding to the same problem. That kind of alchemy with people and ideas is brilliant, stunning when you do it, stunning.

Chris - So, that's a really good point. And I guess to the idea that forecasting probably the hardest thing to do, but in a sense maybe what you're highlighting is this follow the entrepreneurs, follow the ones kind of sussing out the ideas, the opportunities, and there are an aspect, there is aspect of what you said it, necessity is the mother of invention, the big pain that you were talking about in the restaurant industry, somebody somewhere came along, inventor of Toast, and said, "I need to fix that because  that is a problem."

David - So you asked your question, so maybe I can here, what are some areas that may be dynamic right now, okay? Now, don't take these and invest in him, Because I may be wrong.

Chris - Big idea.

David - I just gave you the numbers, that people asked like out of a venture capital fund. So our current fund is two and a half billion dollars, okay? And we'll make, I don't know, 80 investments in that fund 75. Some will be 500,000, some will be either 100 million or larger. How many of those will be wrong? A lot, hopefully the smaller ones not the bigger ones. So, the reason I say that is because whatever I say I already given you the disclaimer, that a lot of what we do is wrong. Okay so, it's hard not to think that at the top of our list, this is a note, I'm not making this weighted around returns, I'm not weighting this around life form, whatever it is, but there's some obvious things that really do matter. To start with health and wellness are at the top of everybody's minds, now how that plays out is many, you know, sure. By the way if I was that good an investor, while I was the chairman of the Pan-Mass Challenge, which is the biker that, how good investor I'm I, that in being the chairman of the Pan-Mass Challenge, I did not do Peloton?

I mean, the most obvious deal in the world for somebody like me as a biker who runs a bike event to do so, my disclaimer is I'm wrong a lot, so take that as a thing. So health and wellness is huge right now, why? Well it's obvious, it's front and center on everybody's minds. And by the way, the systems were broken. So let's take healthcare, we're going to regardless of politics, there's going to be a complete redo in many areas around how many things are done, but let's talk about a few. One is around drug discovery. Regardless of what happens with the vaccine coming, fourth quarter, first quarter, second quarter, we will cut cycle time by 80%, how do that happen? Part of it is money, part of it is computing power, part of it is focused, whatever happened, we now know we can develop drugs and pharmaceutical drugs much quicker, okay? So that's just one area, and that's going to attract a massive amount of investment, because so much of the success of that, came from the ability to use software, okay? Computing power. So, the second area is how healthcare is delivered. Telemedicine is, it was a major success, going, starting and going forward during COVID, okay? People couldn't go to the hospital, they couldn't go to their doctors, they wanted to do this. Now, Zoom, we're all Zoomed up, okay? But the reality is we're lucky, we're not invested in Zoom. So here are the ones I've missed, right? Zoom was transformational, if we didn't have Zoom, or other products like this, I'm supposed to say, and we were dealing with COVID two years ago, I think people's lives would have been very different, better or worse I'm not sure you can make that qualification. But because we have the ability to talk to people in a very simple way, that's convenient, and it's real time, and it's very efficient, compared to going to a hospital or whatever, and you can actually see pretty well, I could show my arm up if I have a problem, et cetera, telemedicine is here to stay, micro or macro view, we got very fortunate we made an investment.

We hatched a company four years ago, called Livongo Health, it was done by a great entrepreneur named Glen Tullman, and my partner, Herman Tennessean. And we went public last summer at a $2 billion valuation, and we sold it for 18 billion a month ago. Now, and that's one of the good ones, right? But, a lot of that value creation came from three different things. Number one, their micro focus on a very big problem, which was diabetes, and diabetes, anybody that has it knows it's a chronic illness is going to last your entire lifetime. And the cost structure around fixing it is enormous. Well, part of it is also you need to see a doctor a lot one, and two, you need to have your insulin focused around how you eat and when you eat, and how you doing things versus just a standard one size fits all. So, here's a company before COVID, they came up with a bunch of solutions that were really wonderful. And then got really, grew very tremendously in the last six months because, it delivered a lot of its solutions to telemedicine. And there's a lot of other companies that are going to use solutions around telemedicine, which are very important. So that's an area that we've got to look at the entire cycle of how we're using data and data analytics for diagnostics, enormously powerful before, now is a must to. Around wellness, certainly fitness is a big deal. We can talk about Peloton; we can talk about all the other things at home. That's one thing, but the other thing is how we're going to eat differently. Most people ate, especially in this group ate probably a third of their meals in restaurants, over the last 10 years. For the last six months, they've eaten zero percent in restaurants, they've had to eat at home, how did that change? We have companies like Instacart, you know Deliveroo, which is our delivery company in Europe, food companies that are making fantastic frozen foods that you can buy easily. All of the delivery systems and services, and all the real time capacity to do that are tremendous.

You look at an Amazon getting into the healthcare business. And they're delivering everything to your house now, before COVID, now during COVID, even more so, now they have a great pharmacy offering and they'll do more things like that. So, we got to look at these areas as not only just convenience, but also the quality of life. The quality life is going to be how we work out, how we meditate, how we get our health care delivered to us in a way that makes our lives both convenient and healthier. That's a huge area. Soon the ed tech, ed tech had been kind of a tough space, prior, but everything got changed, right? How many millions of students, probably many of the kids, the parents on the phone here, are now going to be educated now and in the future through a variety of different vehicles. And one of it being this way, or a combination or hybrid, that really changed. E-commerce is obvious, but e-commerce is going to change. With this success certainly of Walmart and Amazon and Wayfair and a lot of the other bigger companies, also spawns a bunch of smaller companies that are more niche and more creative, which can't be filled by the big companies, yet the demand is going to be there, and the supply used to have to be delivered in an actual retail store, now that can't be for a whole bunch of reasons. So we're going to see a whole slew of different ideas and solutions and products that are going to be delivered directly to you in a way that you never thought you'd get them, meaning the experience of buying is going to be, tremendously valuable, even have three dimensional. Our focus around human capital and training, which is very obvious, no longer when we say, "Hey, I want you to meet Chris, he is in our San Francisco office." I don't know who you are. Well, in the future, you may be in the San Francisco office, but working out of Aspen, Colorado, and that was weird six months ago, but now it's normal. People are going to be where they want to be.

And they're going to work where they want to work. And we're going to have to accept that. And I think that the enormous amount of tools that it takes for a General Catalyst or, a First Republic or a bunch of the other companies to operate in a distributed environment is both a positive and a challenge, but if we get it right, people can be happier, because they're going to be doing what they want to do. And that's an enormously complex area, right? Media entertainment, okay, so in sports, I had the fun of sharing an office with my son for six months, who works at DraftKings, and watched his DraftKings, did his SPAC, and went public. Well, even most sophisticated people here on the phone today, many of them that never thought about SPACs the way that we think about SPACs, I can answer that later. But all of the sudden, you had a company that a year ago was worth a billion today were 20 billion in the form of DraftKings, why? Because nobody could have ever anticipated that the sports field would change as tremendously as it did, and they could focus on fan engagement, because there was no lives, there was nothing live anymore. So here's a business that was built to do one thing, that changed it to do something else in a very interesting area called sports. We have media and entertainment too. Yes, Quibi failed yesterday, Quibi was a short form video. It was a date, we didn't invest, but I'm a filmmaker, we certainly used it, it was an audacious bet, it was a big bet. It was a really good idea, people wanting to consume media, in smaller segments as they commute. The problem is over the last six months, that word commute doesn't mean anything, people don't commute anymore. So their timing of going up against Disney Plus, and HBO Plus, and Peacock and all these things, I mean, their timing was just bad. But we're going to see a lot of different changes. Even the way Netflix, who we do a lot of business with, they're developing a lot of their own content, so is Amazon, so as HBO, the bigger players, this is completely changed it's probably off topic. But for what this conversation is, but those are massive changes in how an industry gets turned around. Because people aren't going to go to movies, probably for the next year, six months, we need to go to the movie theaters.

Chris - That's right, well some are opening, but it's not the same. It's just the COVID has changed so many things. So David, what I really appreciate that you described and I'm glad we took a lot of time on that question is, the world of opportunity for a lot of different reasons is outstanding. I think the passion you've talked about both here, and I know you talked about other forums, for investing in those opportunities is very clear. That other word we mentioned in the beginning called responsibility, I want to shift gears a little bit to that. So, there is in a lot of different conversations around this country, a conversation about responsibility that investors may have, that companies may have. And it's really around things that relate to an equitable and inclusive type of environment. So, I'd love to hear how you think about that, both from your perspective at your company, how you think about it in the investments that you make in the companies that you make, and maybe that ties back to the founders, and what does it mean for you? How are you fostering that?

David - So, I'll begin with a important distinctive line, that or comment that I make, which is everybody, if you're on this phone has the same opportunity. With power comes responsibility. All of us have the empowerment and the responsibility to really be impactful. And it almost doesn't matter how you do it, as long as you do it, because people's capacity is different. Part of it is supporting entrepreneurs who are going to create businesses that are going to be transformational for healthcare or for the environment, et cetera, that's one way to do it. The second way is to focus on giving people opportunities that they otherwise don't have. In the DNI in focusing, obviously around areas of diversity and inclusion is critical today. Never before, like, here's a good example, yeah we've developed a close relationship with the HBCUs, Historically Black Colleges and Universities, a lot of these schools have been putting out an enormous amount of talented people. But the tech world and probably the financial world, probably overlooked a lot of those resumes, because they weren't from the Harvards and the Stanfords and the MITs, that a lot of people we're accustomed to hiring from. I think what we're all realizing is, that was a huge mistake, it is a huge mistake, and it's totally fixable. Talent comes, really good talent comes in a variety of different sizes, shapes, and colors, and in the entrepreneur world, and in our world, nothing could be more true than that. That a great education and a great background, doesn't necessarily translate into the most empathetic, curious, visionary people.

So you got to find people who are truly driven, who have passion about what they're doing, and they come from a lot of different places. So our ability to reach further and wider, probably always, but now more than ever, creates a net positive for everybody. Because the needs our talent needs are extraordinary. As a society, it also is a tech industry, and we need to find more really great people. So let's open up that aperture and by doing so be more inclusive. More inclusive in the boards, that the people we bring on our boards, more inclusive in the entrepreneurs we back, more inclusive in the investors that we take into our funds, because we can create returns that way, but most importantly, more inclusive in the ideas and the problems and the opportunities that we want to try to resolve. So that's one area. The other point, which may be leading to is how can we help because we sit in a good position in the food chain, how can we help people live a purposeful life? And I'm not part of the course is the work, player, the work, non-work combination, I think that's important. But the other piece of which I think is equally important, is how do we take advantage of the opportunity that we have people that we work with, and encourage them to engage in things that can be transformational in our industry, but more importantly sometimes, transformational in our community? And that can mean, mentorship, that can mean, providing opportunities for people in areas that otherwise weren't being addressed. Putting your office or your hiring in places that will be really good for you, but great for the communities that you're doing in it, taking risks that aren't really risks on making decisions on investing in people that may not have the same, gravitas but are much hungrier, and more possibly creative in doing things. These are the seismic changes that we can make as a tech industry. And we're making but lot of, I'm really happy to say the needle has moved. Part of it is just an understanding that the world has changed. It shouldn't have taken stuff where we're going through the world to make us aware of that, but clearly now it's undeniable that the world going forward, has to be different and we as leaders, have to lead in a very different way.

Chris - That is absolutely wonderful to hear, absolute wonderful. David, maybe just a quick follow up on that, as you think about the investments you're making, does technology, we mentioned this before, is there a way to make that help or even accelerate, whether it's through data collection, analysis, whatever it is, the trends that you were talking about being more inclusive?

David - Sure, well a couple of different ways. One is the realization of what we don't know. So, if I began by saying the number one thing you want is curiosity. We have to be curious all the time. So, looking at some of the challenges that we have, I think in particular in healthcare, and how data analytics are going to change, how, like for example, we went to one of our companies called Color Genomics, which is a really great company that's doing genomic testing. And Othman, the founder, and Hamad and I, had a conversation with him in May, and we were approached by a state, we'll leave the name of the state out, that wanted testing. And contrary to what the President was saying, testing wasn't really available everywhere and this date said, "Darn it, we're going to get ahead of it." And they asked us to figure out the solution. The best company we knew that did testing, did genomic testing. Because there weren't really a lot of companies that were doing the kind of COVID testing that we know about. And, although before I go further, I do want to say, Quest was a really good old school testing company. And under the leadership of Steve Rusckowski their CEO, they completely transformed that company in March, to provide the the backbone for doing a lot of the testing that got done in the United States, huge public company, etcetera. But it does prove that, really good leaders who have a really good focus on what is needed right now as a society, put their companies a little bit behind what a society need is, create an extraordinary outcome. And Quest is absolutely an example that, and I don't think Steve's on the phone here, but I don't really know him that well, but bravo to him. But go back to Color, which is our company. So, Color, we went to the code team and said, "nobody really cares about genomic testing for the next foreseeable future, how do we take all of our capacity and turn it into COVID testing. And since we're operating at the top of the food chain, in terms of our technological capacity, because we're doing genomic testing, we can do a very high level of COVID testing as well." And off man, yeah literally turn that company on a dime, partnered with the Broad Institute here in Boston to be their service provider, and is now providing, Color is providing, testing for a lot of the largest states in the United States. That's just a great, empathetic CEO.

Chris- That is outstanding, what I've been--

David - Really nice guy.

Chris - But, well that doesn't matter. So let me just switch gears, I'm going to just bring this whole thing full circle, before we have a few questions that I want to take from those that have.

David - Are we covering all the stuff you want to cover?

Chris - Well, we have one more thing. And it's, I just want to hear a little bit more about you. But I think our audience does as well. So there's a little piece that you hinted at the very beginning, which is filmmaking. And so we highlighted in Fine Arts degree, etc. So besides winning an Academy Award, which is amazing, definitely not least likely to do that, we've made a lot of other kind of award winning things you have the number one show right now on HBO this little bit of a plug there. But what does that mean in terms of filmmaking? It's a lot of what you focused on this documentary, kind of bringing, truth to power or light, enlightening situations. Just share a little bit with that, and then we'll take some questions that have been coming in.

David - Great, thank you. You reminded me to say something that I should have said at the beginning. One of the great talents of a great founder, is the arc of his story. How that story gets told, and I don't mean, the words, but I mean the passion, and why that product matters, why our team is going to be able to do it. So if you think about the classic 101, 102 idea of you create a business, usually because there's a problem that needs to be solved, and the solution has to be better, cheaper, faster than what exists, and then a team has to be able to do it. So it's not good enough to identify the first two, you actually have to produce with the third. All that requires the ability to understand, identify, and tell the arc of a story with a C, A-R-C, as compared to A-R-K, okay, the arc. And in order to do that, you got to understand storytelling. So, one of the great joys that my wife Nina and I have had is that we created a program at MIT called the Center for Transmedia Studies. So it's kind of ironic, because  if there was ever anything I was going to do at MIT, it was going to be around storytelling, because it sure as hell, there wasn't anything else at MIT that I was going to be qualified to do. But the feeling was tech founders, needed to be able to do the arc of the story. So let's get back to story time, filmmaking. So to me filmmaking is just telling great stories, and documentaries don't make money, we've chosen to use documentary filmmaking, is a way to tell stories around social justice. And by that, I mean, how do you tell people something about something that they didn't know? That's my test when people say, "What's the test of a great documentary film?" It's, I want you to know, I want you to be inspired, I want you to be entertained, but I want you to know something you didn't know about. And that's really important. And that's what makes a good documentary. So, some of the ones that we've had the experience to work on, so the one you talked about is my wife's show, on HBO its called "The Vow."

So that movie started out as being a 90 minute documentary, we sold it to HBO, and HBO liked it so much that they asked us to make nine series, so instead of it being one 90 minute movie, we made nine 60 minute shows that just ended last Sunday. And then HBO gave us the order to do six more in 2021. So that's a story where somebody brought us a really bad situation, we created the alchemy story with filmmakers, and we made it into a digestible, interesting, hopefully entertaining mini doc series on HBO. "The Great Hack" was our movie in 2019, it chronicles how Cambridge Analytica utilized abusing data and stealing data from people to rig the elections. And it was a movie that got nominated for an Emmy Award didn't win, got nominated for a BAFTA British Academy Award, and did really well, on one of the best... All right, probably one of the best films we've ever worked on. "Bending the Arc," again with a C, is coming out next month. It's a story of Paul Farmer, Paul farmers is the doctor from Partners In Health, who cured Ebola in 2014. Tuberculosis, was also the first responder unit in Haiti after the earthquake, and we've chronicled him and his team, as they've taken on these major challenges that moved this man before COVID, but they've been very active in COVID too. And this is really a feel good story. But it has even a better ending. It's a feel good story because it shows' how super well intending smart young people, Ophelia Dahl, Jim Kim, who have gone to the president of the World Bank, and also Dartmouth College, and Paul Farmer, how the three of them collaborated. When Paul and Jim were in Harvard Medical School to create an organization called Partners In Health, very heavily supported by a lot of people here on the phone, I know. And they brought you to justice by being able to do something extraordinary, providing a community health care in really deep developing parts of the world. Now, what makes this story even better, is last fall we showed the movie before it came up to folks at Intermountain Health, which is one of the great health care systems in the world, in Salt Lake City and Google. And we wanted their opinion. And their opinion was, "We'll buy it from you, and we will globally distribute it." Which is coming out when? Two months, as a global platform to teach the value of community health care. In our world, this is probably the biggest one, where this even bigger than winning an Academy Award to me, because what this says is we made a film, we're supposed to do one thing and just like venture capital or technology, October 22, it's coming out on Netflix. Fantastic, thank you very much, I'm really excited. But instead, this movie that we thought was a limited group of people that were going to want to watch it, everybody loved it at Sundance, everybody loved it, at all the film events that we did, but what ended up happening is by luck, our friend Mark Harrison, who runs Intermountain Health, says, "I'm going to buy this, uses this as my global platform to teach community health care." So this is exactly the dream, when you make a film, how do you really impact social justice? One more?

Chris - Get what, I have a couple of questions from the audience. So, go quick on that last one, if you don't mind, and I want to ask some of the things out.

David - The most powerful movie that we've ever made is coming out in December.

Hillary Sieber - December 18th.

David - What?

Hillary - December 18th.

David - December 18th, and it's called "The Dissident." It's a story of how the Saudis killed Khashoggi. And you know it, but wait till you see this movie. So ironically, "Icarus" is the movie that we're the most known for, because it won the Academy Award. That's the nature of venture capital, we started out doing one thing, making a film about doping, and it end up having a transformation that we could have never dreamed it would, which is, outing the Russians for their bad behavior. So, it's just like venture capital, you surround yourself with good people, you go after this with passion in the right direction who knows? Okay, that's it.

Chris - But that's outstanding.

David - Wait, try with one more plug.

Chris - Okay, go ahead quick.

David - Okay, the greatest one of the best movies I've ever seen this year, I suggest you all see is called "Crip Camp." And it's just this, just watch it. Just we didn't make, it was made by our friend Jim, just watch, okay, no fun fill, yeah you still I like that.

Chris - Alright, so a couple things from the audience. And I'll rifle shot them a little bit. So what kind of advice would you give to somebody just starting out a couple years out of school, very interested in impact investing venture, etcetera? What would you tell them?

David - That's a good one, go work for a company, go get mentored, work for a great founder, go get mentored. Young VCs are kind of an odd, I mean, we don't hire a lot of young people becasue they just don't have the pattern recognition, the empathy yet, and skills yet. So I think young people often will come to us and say, "Hey, I really want to work in VC." We say, "No, go in a company, get mentored, learn what it's like to be on a product team.'

Chris - Awesome, what are your two favorite books you would recommend for people to read?

David - I get to fear, all right, the best book I've read in five years is "Caste."

Chris - "Caste," I'm just saying that.

David - C-A-S-T-E, I think as a human being it's a must read. I of course, didn't read it, I listened to it. I remember that learning disability thing we talked about that put me in the bottom of my class, I listen to books better. It's mind blowing that in 1916, 30 states in the United States, it was illegal to have a mixed marriage. I mean, you just got to read this book and understand, because if you don't understand history, Chris, we don't know where we're going.

Chris - I totally agree.

David - All right, the second book is, I don't know if people can see this.

Chris - I can't quite see it.

David - Is a friend, Andrew McAfee, who's a professor at MIT, wrote a book "More from Less." And I think that this is just a fabulous, quick read, understanding how to simplify your life. It's not a self help book. It's more of an understanding the world you do. So those are two, neither one are business, neither one really business books.

Chris - They're not business and that they're actually about, learning something more about the world and the people around you.

David - I'll add one more. An absolute must read for any entrepreneur, any entrepreneur is to read a book called "The Billion Dollar Coach." And Bill Campbell was the most epic coach mentor for all of us. And I got very blessed that even though I live in Boston, he agreed to mentor me for a long time. And he was like, on a different level in terms of having empathy for understanding. So maybe those three are a good start.

Chris - Okay, those are outstanding. Well, look, we're a little bit over on time. So I'm going to do--

David - I'm sorry.

Chris - No, this is outstanding.

David - Cut my pay.

Chris - Let's do it, that's impossible but okay. Let's do the following, Dave we have some other questions we didn't get to, we're going to come back and do a little bit of a follow up around that. But the first and most important thing I want is that-

David - You can always invite me back.

Chris - Thank you, because this was outstanding, I learned a lot. I love the breadth of the thinking of the discussion that you illuminated for everybody on the call. I'm going to close our portion here and turn it over to my colleague Mike Selfridge, to actually bring our call to close today. David, thank you so much.

David - Hey, thank you Chris, it's been fun.

Mike - And let me just close by first of all, Chris, great job, always entertaining. And David, you are an inspiration. What you and General Catalyst do for entrepreneurs in America is extraordinary, I had a couple of takeaways, be curious, be willing to learn, know how to sell, learn the art of storytelling. And then most importantly, David, I think the work that you do for being inclusive and creating a dialogue around social justice is extraordinary. So, thank you so much for that.

David- Thank you.

The guest speaker(s) is neither an employee nor affiliated with First Republic. Opinions expressed by the guest speaker(s) are solely their own and do not necessarily reflect those of First Republic. This information is governed by our Terms and Conditions of Use.

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