# Uber's Journey to Becoming the Most Valuable Private Tech Company in History

Raising $3BN From Saudi in Just 60 Days, Uber's $30BN Mistake in Food Delivery, Why Recent Uber M&A Will be the Worst in Tech & Mastering Negotiations and Deal-Making with

20VC · Oct 24, 2022 · 63 min · 13,518 words
Speakers: Harry Stebbings, Emil Michael
Source: https://www.996.fm/episodes/20vc--ep-e7c4e233/

## Cold open

**Harry Stebbings** [0:00]:

This is 20 VC

## Intro

**Harry Stebbings** [0:00]:

with me, Harry Stebbings. Now the show state is one of the greatest storytelling shows we've ever done. Some of the tales in this episode are just incredible, and so I'm thrilled to welcome Emil Michael, former Chief Business Officer at Uber and commonly referred to as Travis Kalanick's right hand man. At Uber, Emil was instrumental in raising nearly $15,000,000,000 from some of the largest investors in the world, making Uber the most valuable private tech company ever. Emil was also core to Uber's China strategy and led deals with Didi and Baidu. And before Uber, Emil spent nine years at TellMe Networks, where he was central to Microsoft and Steve Ballmer, raising their acquisition price from 300,000,000 to $800,000,000 in one single weekend. Emil is also an adviser to some of the best, including Raf at GoPuff, Zach at Codeacademy, and Jared at Fundera to name a few. I wanna say huge thank you. This show was a team effort. Shaq, Alfred Lin, Ali and Hadi Partovi, huge thanks for the incredible questions, suggestions today, and really did make such a difference. But before we dive into the show today,

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**Harry Stebbings** [0:59]:

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## Conversation

**Harry Stebbings** [3:15]:

Emil, this is such a joy to do. I've heard so many wonderful things. I've you know, I've referenced the shit out of you with, like, you know, 20 people. But it was incredible to hear the depths of your relationship. So thank you first so much for joining me today.

**Emil Michael** [3:27]:

Great to see you. I've been a fan of your podcast for a long time, and I was wondering when my invite was gonna come. But here we are in 2022, and it's come. So I'm here.

**Harry Stebbings** [3:35]:

And we actually have to thank Raf or GoPuff for this one, but I'm so excited to make it happen. I wanna start with a little bit of context. So we see kind of the OG of negotiations and dealmaking today in Emil. But just walk me through, like, how did you make your way first into tech and then into investing? What were those two entry points?

**Emil Michael** [3:52]:

So I went to college and graduated in 1994, which if you remember the time there, that was the very beginning of the Internet businesses starting to come out. In my same class at Harvard, Partovi, Ali Partovi, David Wyden from Coastal Ventures, Alfred Lin, Tony Hsieh, all graduated the same year. All of us sort of decided, hey, well, this thing is happening in the economy. We go do an investment banking job, a consulting job, or figure out what this tech thing was all about. So I moved to California. I went to, unfortunately, Stanford Law School, but at least I was in the middle of what was happening in the Silicon Valley. And then Partovi, if you know who runs code.org now, was cofounding a company called TellMe Networks. And Ali Partovi was founding Internet Link Exchange with Alfred Lin and Tony Shay. And so I was working at both. And so it was at the very beginnings of the new Internet entrepreneurs were feeling around for something important in the Internet in 1994 through 1998.

**Harry Stebbings** [4:54]:

I have to start with actually one from Dave Clark, but Dave Clark highlighted the breadth of your experiences pre really diving into being the OG that you are today. We have Harvard, Stanford, Goldman, lawyer, department of defense, And he asked, which of these best contributed to your success today, do you think, on reflection?

**Emil Michael** [5:11]:

I mean, sort of none of them. The best one was the Bill Campbell thing. When I got to the Valley, Bill Campbell was associated with Kleiner Perkins. And Kleiner Perkins back in that day was the VC. They did Amazon, Google. John Doerr was the man. There was no one. And when he touched, turned to gold. And he was buddies with Bill Campbell, and he invested in TellMe, that first company I was telling you about. And Bill took a liking to me when I was 25, and he became my mentor. And he's the one who sort of propelled the future startups. He's the one who propelled working at the White House for secretary Robert Gates. Their education stuff didn't propel me for much of it except meeting the guys, Hadi, Ali, David, Alfred. So those are the two sort of influence I'd say that got me there.

**Harry Stebbings** [5:51]:

You mentioned TellMe a couple of times. I wanna dig in on that because Jared Hex, actually, one of your friends, said it was such a transformational time for you, obviously, very early in your career as well. He asked what were some of the biggest lessons or takeaways for you from that experience with TellMe?

**Emil Michael** [6:07]:

That's, I feel like, where I got my first grit. We had to have a lot of grit for Uber later on, but we started TellMe in 1999. So if you think about the timing of that, we were unbeknownst to us eighteen months from the world coming to an end from a technology investing standpoint. So we had done the things. Four rounds in twelve months raised a $150,000,000, which was a lot of money in the late in the late nineties, a lot. I think more than Bezos had raised in his first couple rounds. And then the business model didn't work, and the Internet economy blew up, and we had scaled to 300 people. So we went down from 300 back down to a 100, tried to refigure the business model. We had to reconfigure from what was a consumer model to an enterprise model. So you know those phone trees you call now that say, hi, speak your name at American Express? Well, that still tell me. We built those enterprise systems at Fidelity, American Express, American Airlines, and so on.

**Harry Stebbings** [6:59]:

So so it's you I have to blame. You you

**Emil Michael** [7:02]:

when you're yelling and it doesn't understand you, yeah, it's me. And so imagine twisting that business around and then spending seven years building it customer by customer, enterprise by enterprise, trying to get them on the platform. And then we got to a $100,000,000 in revenue. In 2007, that was a lot more than it seems like today. And I was able to help get it sold to Microsoft to be the base of their speech recognition technology today.

**Harry Stebbings** [7:26]:

We're gonna talk about the acquisition. It was actually Hadi that said, there was a competing offer on the table at a fire sale price. Drop the mic and ask him what happened then. That was his words. He was like, he didn't give me any more, so I don't know.

**Emil Michael** [7:39]:

So we had gotten this acquisition for, call it, $300,000,000. Would have been a fine outcome. But, you know, this was my last shot. And one of the things Bill told told me is like, when you're selling the company, it's sort of all bets are off. This is your last chance to create value for shareholders, employees, and so on. So I begged Hadi for one hour with Steve Ballmer at Microsoft. One hour. Everyone thought I was crazy. You'll never get a deal done. They don't know us. So I flew up to Seattle to see Steve Ballmer, and Hadi went jogging with him once a month or something. So I begged him for this meeting, and I said, every minute you talk to Steve is gonna get me a 100,000,000 more dollars for the company. He's like, So he made him talk to Steve, got the meeting, flew up there. I rolled into a meeting with the BlackBerry. Steve Ballmer purposely pours his water on my BlackBerry because it wasn't a Windows OS phone, kinda as a joke, but my phone was ruined. We we do this negotiation. He likes us, and he says, you know what? You guys stay the weekend. We're gonna do this deal over the weekend. By the end of the weekend, three days later, had a term sheet for $760,000,000 plus the cash and balance sheet, so just about $800,000,000. That was it. It was sort of like having the gumption to go there and not relent until we got that deal.

**Harry Stebbings** [8:51]:

What did you do that made you so successful in that and get another 500,000,000 in enterprise value? What specifically do you think it was?

**Emil Michael** [8:59]:

It was just about showing sheer determination that come hell or high water, we were gonna win inside of Microsoft, inside of another company that may have made that offer alone. No matter what, we were gonna win. And he asked us, are you guys gonna stay around? And without blinking, we said, hell yes. Because we believe in this vision, so we're gonna stay around wherever as long as it takes to make this work. And when you say that as an entrepreneur, a guy like Steve Ballmer, and he believes you, he's like, okay. Well, look. Like, if you're gonna stay and we're gonna do the schedule, let's do this. There's other mechanics in between getting the number to that number, but that was the sentiment that got us there.

**Harry Stebbings** [9:32]:

Can I be so bold and ask, was that the first real money that you made? I think when you first have your big hit, it does change a lot mindset wise. Was that your first, and did it impact your mindset?

**Emil Michael** [9:42]:

Yeah. It was my first. So I used that merger proceeds to pay down my student loans. So I was student loan free in 2007. So call it I was 35. It changed my mindset insofar as like, wow. This is possible. Right? I was an immigrant from Egypt. My parents came here with nothing. It's a crap classic great immigrant story for America. It was sort of proof positive when you see that many zeros in your bank account. You're like, wow. This is actually the land of opportunity, and it really is. But I I was sort of still someone who didn't spend the money and was afraid it would go away at any time. So my lifestyle didn't change, but my attitude did change.

**Harry Stebbings** [10:17]:

I hope it's okay. But with the kind of downside protection, immigrant mindset that I have the same, my family lost our money when we were younger and I have the same, I worry that it actually makes me not so good investing because you sometimes are too downside protectionist and not upside. Do you ever think about that, and how do you prevent that from happening?

**Emil Michael** [10:33]:

I've got the opposite. I'm like, if I lose this, I'm gonna be okay. Now now to be fair, I had the Uber situation on top of that, so now I have a lot more cushion. But it didn't make me do that. Actually, in some ways, it made me invest in people who had similar chips on their shoulder in that, like, they were gonna win no matter what, which goes to an investment philosophy of how much do you bet on people versus ideas and in what order do you bet how do you weight them. Right?

**Harry Stebbings** [11:02]:

Well, I mean, Emil, listen. I told you this is like us having a chat with a bourbon. How do you weigh that? How do you think about centrality of founder versus market versus product?

**Emil Michael** [11:10]:

Yeah. So I'm founder first. I do believe, and I will say this, and I'll have this argument with anyone that a mediocre founder with a great idea in a big market might win, but it's also not that fun to be along the ride with because if they're mediocre. So if you're gonna work there now this is working versus investing. Right? Now if you're gonna work somewhere for me, the founder is, if it's you or cofounder, is the most important thing by far. Most companies pivot anyway. So what market you start in might not be the market you end in. But the product, what are they trying to do? Is it in a big enough idea, period? So as an employee, it was founder and then it was product and then it was market. As an investor, it's still founder for me, but then the market matters because the product, I don't know, the product's gonna it depends on how good the founder is. It depends on how competitive the market is, how much it evolves, how much money is going into it, the macro climate, all those things.

**Harry Stebbings** [12:03]:

We've spoken about investing. We've spoken about some of your old classmates. We've spoken about the acquisition. Bringing kind of all those together and shouted to Alfred Lin before this show. And he said that Emil is just the master when it comes to dealmaking. This was number one question for him. He asked, what is your framework for dealmaking and how has it changed over time?

**Emil Michael** [12:23]:

Framework for dealmaking. So I always tell people all those negotiation books and negotiation classes and the McKinsey stuff, throw it out. Just stay and stay with me in my Emil Michael mini lesson here. Number one thing in negotiations is outwork whoever you're negotiating with. And that means when I know that I'm negotiating with you, I try to know everything about you, Harry, before I get to that meeting, everything about your company, your industry, if you're having a rough quarter, your org chart, what your financial outcomes are looking to be like, how do you get promoted, how do you get fired, and everything around that because it brings the human dynamic and the real world dynamic into a negotiation. So BATNA, your best alternative to a negotiated agreement is a number or a level. It doesn't account for the ins and outs of how one defines their own bad now or even gets something done within their org. So that's framework piece number one.

**Harry Stebbings** [13:14]:

Okay. Can I just ask a question on that? Yeah. Do you let your not opponent, but do you let the person on the other side of the table know the depth of information that you have, or do you wanna keep it in wealth of reserve?

**Emil Michael** [13:25]:

Framework number two is the less information you give and the more you get, the better. And so none of this is sinister. It's just if they haven't done the research, I'm not gonna do it for them on me. If I've done the research, this is just trying to put a picture around someone. If you had to write a chapter on Harry's life, I wanna be able to write it before I get in the room with you. Whether I told you I wrote that or not is my advantage to keep if I can do that. And information is power, and people don't realize that enough, That the more you learn, the better you're gonna be at these things, even about your own company.

**Harry Stebbings** [13:55]:

I'm so enjoying this. Tell me, what do you do if you have someone who's highly emotional? They really let emotion, not rationality, govern their responses and decisions.

**Emil Michael** [14:04]:

Yeah. So So you there's a couple of different strategies. One, I'm typically and this may not work for everyone, a shock absorber. Meaning, I can absorb the shock of someone else's emotions on my side, on their side, and kinda be okay with it. I'm like, hey. This person's having a moment. I'm gonna go take a drink. Or let them yell and scream, and then I'll say, are you done yet? Because when you're done, we can start again whenever. So depending on the context, I never get emotional back, and that gives me power. It gives me power to because I'm regulated. They're unregulated and uncentered, and that means they make more mistakes than I would. And so if you could be a shock absorber to emotion in negotiations, that's a winning strategy in general in my view.

**Harry Stebbings** [14:42]:

The hardest thing that I have is I most often whenever I'm negotiating intense tough times, and believe it or not, despite my youth, it's happened many times. These people lack self awareness very often, and so they struggle to see their own weaknesses and my strength and ability to crush them for them. That is annoying because it means I don't have the fucking leverage that I want to get the deal signed because they're too lacking in self awareness to see it. What do you do when they don't even see or lack such self awareness that you don't have the leverage?

**Emil Michael** [15:10]:

That they think you don't have the leverage. Yeah. This is where sometimes it helps to use your network to whisper to this person, hey. This person might might have some leverage here because they can go do this other thing or that. You know? And this is part of the research. It's bringing every tool to bear. Your network, their network, how is it connected to whom? How deeply? Red, yellow, green, how deep the ties are to this person and this company. So that if you can't communicate that in the minute because it'd be awkward to do so, you communicate it after. And that is the whole I call it a whole of deal approach. It's not just a negotiation. You go in for a room and come hours come out three hours with a handshake. This is a whole approach of winning in negotiations.

**Harry Stebbings** [15:51]:

What are the biggest mistakes that you see people make in dealmaking? Where you're like, ah.

**Emil Michael** [15:55]:

I used to joke upside down, so leaving papers on their side that I could read. Mhmm. I'll come choking on that. No. The biggest mistakes people make, the emotion thing is it's just a massive tell. And this is why being a shock absorber is better. Even if you are emotion, try not to show it. And then there is this eagerness you detect in people, where is it it is the leverage point. It's like, do they think they have leverage? And you were talking about it before, but they show it in different ways. It could be that they think you don't have leverage and that gives them leverage. Or it could be that they actually have leverage, and they know they have it and they're gonna use it, or they don't know they have it and gonna use it. So which of those combos is it? Something I look out for for the second I walk in a room. Who stands up to shake my hand versus who sits down? Who offers coffee? Who pours it? Who set up the meeting on whose turf? All the signals show you who has leverage and paying attention to those things as sort of like a a CA agent paying attention to a subject. And if you do that over time, you do your ten thousand hours negotiation, it kind of it becomes sort of innate.

**Harry Stebbings** [16:56]:

What's been your when you look back at the many deals you've done, what's been the best that you've done or maybe one that you're most proud of, and why that one?

**Emil Michael** [17:03]:

Yeah. I always talk about this one, and it was the hardest one I've ever done. The most fun one I ever did was with Steve Ballmer doing a deal over the weekend where he broke my BlackBerry. But the the hardest one, doing the Uber China acquisition with Didi, the Chinese counterpart, because there's a lot of suspicion just we were death competitors. The woman on their side who was my counterpart, Julie, was fierce operator. I put her toe to toe to me as like anyone I've ever seen from business and negotiation standpoint. And she'd come to San Francisco, and she'd invite to the hotel room with her colleague and one of my colleagues. She didn't trust any of my colleagues to come, so I had to go there alone with five Chinese business people, the shades drawn, my phone put in the bathroom so they didn't think I was recording them, and then tried to charm them into buying my company for $7,000,000,000. And all the while, Travis not really wanting to sell the company, but I knew we had to because of the regulatory heat and how much money we're spending in China. So the art of doing that

**Harry Stebbings** [18:01]:

Take me to that. How do you do that? Is it small talk? Is it, oh, have you had a nice trip?

**Emil Michael** [18:06]:

It's exactly not that. When people go, how was your flight? Where did you come in from? Where are staying? The small talk stuff is fine, but it sort of betrays a little naivety like that you care or they care. Because if there's you're in a serious negotiation, no one cares about that. They just care about, like, what you're trying to do. It was more about trying to build some trust. One of the ways I built trust with Jean Lou would say, hey. I'd be interested to hear your perspective. We were in this competitive battle here. Here's how I saw it. What did you see? Something that wasn't sort of central to a negotiation, but try to establish a rapport about how both of us saw the same incident so differently. And she's like, oh, we didn't shut off all your phones or send spam text messages to your drivers saying they weren't gonna get paid. I was like, you didn't? Who did? And then we'd have a joke about like, well, who was trying to sabotage both of us? And it took me four days of going to that dark hotel room until she allowed me to bring one of my colleagues to at least take notes so that I wasn't overmanned here. It was that kind of rapport that started it. So rapport matters, and knowledge of what their problems were matter. And sufficient humility, but sufficient strength projection showed them that they were dealing with Travis and me, and I had the sort of that authority. So it was those combo of things.

**Harry Stebbings** [19:14]:

What do you think got them over the line on that deal?

**Emil Michael** [19:17]:

Besides the industrial logic, I really believe it was mine and Jean Lou's relationship. We spent a week together in Dark Hotel negotiating this, and she trusted me at that point. And then we flew to Macau, and we flew to Macau because she was well known in China. She was a family of a politician. And if they saw her with some American, they'd be like, oh, there's this Didi Uber merger happening. So we flew to this hotel room in Macau for another four days with lawyers and the whole thing. And we really just pushed it through, she and I. We got our teams on board, we got our CEOs on board, we got our lawyers on board to accounting. This is a cross border m and a, China, US consumer. It was so complicated. And every day, I made sure at the end of the day, said, Jean, how are we doing? Are we how are you and me? Did I say anything that you didn't like that you thought was wrong? Let's clear it out. Sort of like a marriage. Before you go to bed, you clear your air. And then we closed the deal, and I remember going in. She asked me to go to dinner the day after the deal closed, and she's like, I heard you were such a tough negotiator. I was like, I am tough. I don't know. She said, no. But you're fair. You told me what you're gonna do, and you did it every single time. No matter what it was, no matter what clause, you said, I'm gonna get this done. You did it. And I trusted that, and that allowed me to do the deal. How

**Harry Stebbings** [20:29]:

did you get Travis over the line on the flip side?

**Emil Michael** [20:32]:

Travis and I worked together so well. The thing that we had lots of discussion about was m and a. Should we buy Lyft? Should we not buy Lyft? Should we merge with Didi? Should we not buy Dish? We sell, buy Grab, all the different ridesharing companies around the world. I was always for it before he was for it. But the China thing was so unique, Harry. Think about what consumer tech companies operate in China. Zero. There's enterprise tech like Hewlett Packard and IBM and all those guys, but no one else had done that. And we didn't ask for permission. We just did it. We showed up in Hangzhou and in Hunan province, and and we just launched Uber. So there was some amount of risk to that. Yeah. If you don't sell it, it might just not exist one day given sort of how the government rolls. And we were spending $100,000,000 a month competing there. This is the biggest market in the world, 1,300,000,000 people, and we were gonna win. And I just raised 3,500,000,000 from the Saudis, and so we were gonna win. So the combo of those things made the industrial and and when I handed the deal on a platter, was like, this is done. Let me start. This is finished. Forty five days from beginning to end. He agreed.

**Harry Stebbings** [21:36]:

I'm sorry. I've gotta ask one more, but you mentioned I mean, another insane deal at Brilliant that you did was the $3,500,000,000 that fueled so much of Uber's trajectory. How did that come back? How was that? It was just like, take me there. Story time. I'm loving this.

**Emil Michael** [21:49]:

So the Public Investment Fund in Saudi, as you know, when the new crown prince sort of took over in Saudi, his thesis was we're gonna modernize this economy. We're gonna take fossil fuel revenue. We're gonna start investing in tech companies. He'd appointed Yasser Al Rumian, who is a friend of mine, who was head of the Saudi Stock Exchange, had a deep financial background. He said, go find some companies to invest in that'll put us on the map so that people know if they want money, they could come to Public Investment Fund. And David Plus, who is our head of government relations, met him at a conference. He said, heard a lot about Uber. My son used it. I'd love to come meet them. And from that, we took the meeting. Sixty days later, $3,500,000,000 in the bank. Lots of meetings in New York and in Riyadh. Travis had to attend one meeting to get it done. So I prided myself by how much money I could raise with the least of Travis' time. And this guy, Fraser Robinson, he led that deal. So I credit him with that Saudi deal as much as me, and it was the largest amount ever invested in a startup. That was the biggest round and highest valuation ever done in a startup. It was the next day that I called Gene Lu at Didi and say, okay. Now I think I have a lot of ammo. I think now we should negotiate a truce, and that's what's kicked off that. So it was all this happened in the summer of sixteen, and it was an exciting time.

**Harry Stebbings** [23:00]:

I do wanna flip though. What was the worst deal you've ever done? We've all made mistakes. What was the worst that you've done, and what did you learn from that?

**Emil Michael** [23:07]:

They have to be material to be bad. Right? So I'm not gonna tell you about the small we call them SLD's, shitty little deals. I'm not gonna buy that because every company sort of does deals. They make mistakes. I'll talk about big one. The deal that was under my watch, I didn't like it at the time, but it got done, was Uber acquiring auto, which was the autonomous car division that gets started out of Google guys. And I didn't like it for different reasons. It turned out to be a bad deal because of that ended up in that lawsuit with Google, but it was so complicated. As a lawyer, I come from a little bit start with simple and then complicate if you have to. And it was this complex thing where it was a sort of separate company, and I didn't like the ideas of other employees having different motivations at my company about what they were gonna do. I want everyone to be motivated the same way. So I tussled with Travis on it. He won. We did that deal. We got some great people that that are now running Uber Freight. So there was, like, a great talent migration there, but it ended up in in destroying our relationship with Google. So the cost to that was quite significant. That's a tough one.

**Harry Stebbings** [24:04]:

That's good and bad. You you can't have them all. We mentioned, like, acquisitions would tell me. We've mentioned m and a. We've mentioned fundraisings. We're in this very kind of weird new world where and most of us actually haven't kind of seen a recession or, you know, downturn like this. So I wanna ask, how do you analyze fundraising and m and a in the current market today?

**Emil Michael** [24:21]:

Yeah. So I'm deep in the capital markets now with a lot of the companies I work with. I'm on the board of an adviser. And I say last year was FOMO. You want to create FOMO with investors if you're trying to raise around or merger partners. This year is JOMO. Joy of missing out. They are happy to miss out on whatever deadline you put on them for whatever round. They're happy to not take a look if you've got something in hand. So that whole strategy of FOMO and creating pressure in dynamics is over. Don't try it. Stop. You are going to be disfavored. And people are gonna say, thank God I didn't have to look at that company and say no. The humility factor from entrepreneurs has to come back in terms of what's realistic. We're getting there because you're starting to see some of these rounds not happen or you're starting to see things creak. I think we're at the end of the beginning though, not the end of the end. The next phase is structured rounds, down rounds, true down rounds, and then sales were companies sort of not making it. And I think that'll happen in q one you know, the phase two will happen in q four q one, and then q two to q three will be phase three.

**Harry Stebbings** [25:26]:

How do you advise founders? Because I I hate changing your fundraising plans to align to markets. Yeah. We don't know what q one or q two is gonna look like. Raise when you need to. Do you agree with that statement, or do you actually think no if there are things that you can do to elongate or alter, try and find leverage?

**Emil Michael** [25:42]:

So let's talk about it in three parts. Revenue cost and market. And market is where the fund of the dollars are. On the revenue side, where we were valuing growth market on revenues, I'd say like, put that second for a second. It's been first for ten years. Put that second. Put first your net burn. You have cash in the bank. What is your net burn? And David Sachs tweets about this a little bit, and it's sort of my derivation of it. But it's make sure that you know what you're burning. And if your growth has to come down from 80% to 30%, that is okay in today's market. In 2021, that was not okay in order to reduce your burn. So but it is oh, 30% growth versus 80 is okay if you're gonna buy yourself another year of burn. Right? So just start there. And unfortunately, that results in some rifts almost certainly. So all the bloat that we built over the years because it was a high war for talent, war for talents necessarily lead to too many warriors. So you have to sort of slim down to your fighting weight. You're now a welterweight again, hopefully. And then then you go, I have to put out numbers that I'm gonna hit for years. And here's the thing, Harry. You know this. Entrepreneurs, we put out numbers that we may or may not hit, and it didn't matter because it was enough money out there. And you're like, whatever. Someone's gonna take a look at the new numbers and decide. It doesn't matter. Up is up.

**Harry Stebbings** [26:56]:

Emil, let's be honest. 5% of our companies hit their numbers in '21.

**Emil Michael** [27:00]:

Yeah. Right. At all. So this year, I'm telling people, be the company that hits the numbers even if the numbers are anemic or low. Even if it's 15% growth and 10,000,000 burn and you were gonna do 80% growth and 30,000,000 burn, hit your goals. Because at the end of this year, when all this dry powder is sitting there, they're gonna go, where can I put this money? It's been a year I haven't put anything to work. They're gonna put it in somewhere where CEOs hit their goals, that they have growth levers that they've proven, that they know and and are smart enough to have transformed their business and meet the market environment, and those are the ones who are gonna be the survivors in my view.

**Harry Stebbings** [27:33]:

You said there about kind of the down rounds. I think the down rounds come from this kind of value reshuffling of realizing that actually Twilio is worth 13,000,000,000 at 4,500,000,000 of ARR. Well, fuck me. That's hard to build a deck of corn. So my question to you is, like, as founders approaching these down rounds, what advice would you have for them specifically? Because it is very disincentivizing for teams.

**Emil Michael** [27:56]:

Yeah. It's tough. It's super tough. And that's why I say there's the time before down rounds is structured rounds. Same valuation, higher LIC preps, more protection for the investors, optically close to what you did before the same, but the investor has better downside protection essentially. Right? Employees don't fully get that, but at least it doesn't feel like a bigger loss of momentum as a down round. The problem with the structuring rounds is that it's hard to do the round after the structuring round. Because once that investor has protection, well, the next one wants it, and the next one wants it. So your two x lick prep starts to eat the whole cap table for every investor down the line.

**Harry Stebbings** [28:34]:

And you don't think we'll have pari passu and for, obviously, the audience pari passu is when everyone's equal in the lick pref stack. You don't think we just see the equalization of lick pref stacks?

**Emil Michael** [28:42]:

You do when things come back, but if your company thought they needed to raise a 100,000,000 this year to keep their growth and they didn't hit their growth and that 100,000,000 went away, so now they need 50. But that's 50,000,000 investors going like, well, you gotta kinda sweeten it. Right? Some warrants or some lick prep. They're gonna ask for potentially more lick prep, which sort of is the bastardization of peri passu. Because if I get two x lip prep and you have one, even if it's peri passu, I get more. Right? Yeah. Or or senior preferences, which are, I am senior to you, so that's not peri passu. You will definitely see more of that in the next two quarters.

**Harry Stebbings** [29:16]:

To me, the people who get fucked, honestly, is the early funds who have no lick prefs and are not in any way structured to win when they get these down rounds and when liquidation events do happen. Do you think that's how it plays out then and the later big guys are the ones who get it?

**Emil Michael** [29:31]:

Look. The early round guys and gals, because their basis are so low, unless they wanna put up money to help bridge the company, that's the life you picked. As a series a fund, that's the life you picked is in downtimes, you don't have to pony up because you don't have it. You're smaller funds by definition. You don't do these late stage rounds. But then in these environments, you get a little crushed. But since your base is low, you should be fine.

**Harry Stebbings** [29:53]:

I think it was Keith Raboy when I had him on the show. He said, pay to play rounds. I've never ever made my money back from them. Would you say the same, and how would you approach pay to play as an investor?

**Emil Michael** [30:03]:

I don't like pay to play either, man. I I Lime had to do one a couple years ago, the scooter company. Uber put in $100,000,000, and I and I told her, I was like, this is not a good idea. These pay to play things never work. It didn't work at Bird. It didn't work at Lime. And it was for somewhat Spectre specific. I've never seen them work, but I'm sure there are examples. If you do your homework, Harry, like, if we were negotiating and you study this, someone has made these work. I just haven't heard of them myself either. And pay to play is different. That is a recap. That's stage three category four hurricane, a recap. Structure, down round, recap. Those are kinda different things in my mind in the spectrum.

**Harry Stebbings** [30:41]:

I'm seeing recaps already. Oh,

**Emil Michael** [30:43]:

yeah.

**Harry Stebbings** [30:43]:

Yeah. Such exciting times in '22. I remember in '21, was like, god, there's too much money. Now I'm like, I miss

**Emil Michael** [30:49]:

'21 so much. We all miss '21. We all miss '21. Are you kidding?

**Harry Stebbings** [30:54]:

The title for this episode, we all miss '21. There you go. You mentioned Darren that I obviously spoke to so many of our friends about Uber, and I know we've touched on aspects before. Dave Clark started and he said, you've just got to ask him, why were you taken out of Uber, and was it fair?

**Emil Michael** [31:10]:

I was taken out with Travis because Benchmark Capital lost their nerve. Bill Girlie, who was on our board, lost their nerve. The reality is there's another economic principle called loss aversion. If you invest $33,000,000 in Uber and it looks like 10,000,000,000 four years later, 10,000,000,000 on a 33,000,000 investment. And a 500,000,000,000 fund, which is crucial. Right. So you're to say, well, how do I protect that? Forget about the next 10 to 100,000,000,000 and, you know, or 10 to 20 or 30,000,000,000 in value. That read some fear anytime something happened or every time something happened, this whole thing was gonna come apart, which was dead wrong. Company's doing fine. Travis went on six months later to start a grand new company, CloudKitchens. I went on. So it sounded like this count like, we're incapable as leaders.

**Harry Stebbings** [31:55]:

Will's a smart dude. There must have been things that led him to losing that nerve.

**Emil Michael** [32:00]:

Yeah. You see, there's certainly mistakes there. So make no mistake that we didn't make mistakes, and I'm not saying that. But in retrospect, when you look at them, there's no honest person who looks back at them and goes like, oh, yeah. There was the the driver video thing, and they seem a little quaint in retrospect. Not all of them, but they seem mostly quaint. I believe he's a catastrophist. Catastrophists are one who the sky's always falling. I'll I'll give you two examples. In 2014, in the middle of the bubble, we were raising the first round I did at Uber. And I was kind of doing negotiation, and Bill called me. He said, Emil, take $8,000,000,000 valuation. I've never been more certain of anything in my life that the economy is crashing. Now in mid two thousand fourteen, I was like, Bill, like, I'm gonna run this auction one way or the other, and if that happens, it happens. So instead of eight, we got 17,000,000,000 two weeks later. And then the next six months, we got 40,000,000,000, and the next year, 50,000,000,000, an extra 62. So even then in '14, he was predicting a bear market in '14, which didn't show up till 2022. So I learned that there are people who a bear market is always around the corner, always lurking behind the door. And for an entrepreneur, that's kinda cancer because you're like, ah, you can't wake up every day thinking the world's gonna end. Because if you do, it actually is gonna end like it did for Travis and I because one time or another, we're not you know, there's gonna be enough fires burning that he's gonna convince others that death is right around the corner.

**Harry Stebbings** [33:25]:

I'm going for it, but I'm too interested. I think I've heard other people say it was when Travis lost the support of the team that it it made it impossible. Is that fair or not fair?

**Emil Michael** [33:35]:

Ben Post is a sophisticated organization. You can imagine them asking some subset of the team to tell the board that they weren't satisfied with the team. You could imagine them hiring a PR person and a law firm and a strategy consultant, all the things that come with with the scorched earth tactics they used, and that being the outcome people saw. But the reality is, yes, he's lots of support. But remember, and here's a critical fact, Travis agreed to take a leave of absence after his mom died. And after we had that board meeting, he said, I'm gone. I need to go take time to button up leadership, family, and everyone agreed on the board. Unanimous board vote. Ten days later is when they cornered him in a hotel room in Chicago and gave him the I'm gonna smear you letter or you're gonna quit without counsel in an hour letter. So anyone who says that it was the support of the team that caused that, he agreed to take a leave of that. But he was the in a hotel in Chicago interviewing a COO candidate to take the job so that he can have some time to go do what he needed to do. So just think about that when people, you know, bring up this He

**Harry Stebbings** [34:37]:

then he then calls you, tells you, but how do you respond to that?

**Emil Michael** [34:41]:

So I'd gotten tossed the week before, and that was purposeful because I'm a lawyer. I knew all the investors. All the investors wanted us to stay at that late stage because investors who invested at 40,000,000,000, they weren't looking for it to stay at 40,000,000,000 like where it is today. They were looking for it to trouble, triple, quadruple. We'd made a lot of promises, so they wanted Travis and I stay. So I was an impediment to benchmark's strategy here. I was a lawyer. I was in a boardroom, whatever. So I was out on whatever technicality they can find, some expense report that someone else on my team submitted six years before to my assistant that I never saw. Total BS.

**Harry Stebbings** [35:15]:

You're like Al Capone with taxes. Yeah. Right. Right. It was just

**Emil Michael** [35:18]:

it wasn't even me. It was someone else. It was totally pretax. One of the things I I really dinged them on that they never apologized for that. They were they knew it was unfair. But anyway so I didn't talk to Travis that day. Had I talked to him that day, I would have said, Travis, walk out of the room. If you want to rip up the papers in front of them, and we'll get, you know, get a lawyer and whatever. This is ridiculous. This is unfair. This is coercive. And we need to have a negotiated discussion about what happens to the company in your absence and how we run it and what things we have to improve. And that's not what happened. And then Benchmark sued the company and just, you know, all the nastiness of 2017 continued.

**Harry Stebbings** [35:53]:

Alrighty. You've done Julio just listening to that. I do want to ask though, and moving on from the benchmark side, Dara today, what do you honestly think of Dara's management? How do you feel? Good, bad? What are the thoughts?

**Emil Michael** [36:06]:

Just let's start at a factual basis. The company's valuation is lower today than it was when Dara took over. Even if you account for the macro environment, the Nasdaq's still up 50%. He's down 50%. So it just is. Then you're like, oh, what about ride sharing? Ride sharing is down. Well, what about ecommerce? Amazon up and wix.com and Overstock are down. So Uber should have been the leader in this category and brought everyone up and showed them how to make an efficient business model. There's been an enormous talent train. The company is loaded with debt right now. It's one of only ride sharing companies in the world with net debt. It lost in food delivery to DoorDash, big. We went from a 60 gap to being the opposite. And that's a $30,000,000,000 mistake if you think Uber could have been DoorDash. So by all objective measures, it hasn't succeeded from a financial standpoint. He's a nice guy. He cleaned up the company in terms of things that were sort of excess from a culture standpoint. He was a diplomat. He was able to get the company public. But in terms of hiring talent, innovating, and succeeding from a financial standpoint, it hasn't happened. It's an f. Other than that, he was great. Look. I will like, Larry, here's all takes f criticism. We were aggressive barbarians at the gate trying to make ride sharing work because we had to because of whether regulations and all that. That couldn't have gone on forever.

**Harry Stebbings** [37:22]:

Are we gonna go back into that time though of aggressive barbarians at the gate and not the ping pong off-site retreats, yoga, and kombucha bullshit that we've been living in this

**Emil Michael** [37:30]:

last night? I think there's a reversion to that. Yes. But Uber was first. Uber's problem started sort of in 2017 right after Trump was elected, there was a lot of anger in the electorate, especially in California, about what is happening in the world. And it was starting to turn on corporations who didn't previously wanna be in politics at all. It started with Travis sort of being invited to a business council with president Trump along with Elon Musk and Mary Barra from GM and whatever. Somehow we got the tainted with that, and that sort of led to a cascade of events. And then the whole for the last four years through 2021, kombucha, where's the quinoa? There's not enough quinoa in the salad line when I get there. And I think austerity turns us back. I think investors are gonna say, look. I need someone who's gonna go through the hard times. Their appreciation for an entrepreneur who has to be bullheaded goes up, but I don't know if you

**Harry Stebbings** [38:23]:

call it I think this was a job security. When you see half of your, you know, friendship group lose their jobs, your desire for quinoa goes down a little bit with the realization that you actually have a job. Yeah. Maybe. Maybe. Final one on Uber, I do just wanna ask is and, again, I can't remember who it was. Here you go, Emil. Travis, I knew you are back running Uber. You said before about lost opportunity in food. You spoke about Uber Freight. What are the opportunities that you would have jumped on? What would you not have jumped on?

**Emil Michael** [38:50]:

Yeah. I think instead of buying Kareem in The Middle East, Postmates, Jump Bike, I think all of those will be a 100% write downs. Those are some of the worst acquisitions done in tech. Postmates may be the worst acquisition done in tech in the last five years. So it's for a $3,000,000,000 company that was, like, gonna be a zero within three months. We got nothing out of it. No market share gain. Nothing. And I think Dora was trying to repeat the Expedia thing, which is like buy all these random things, like stitch them together, and that's a platform. Kinda not how it works. We would have beaten DoorDash. Guaranteed, we were ahead by 30 points when Travis and I left. So letting that atrophy was not an option. I think we would have had an Instacart competitor way earlier, and we would have been, if not ahead of Instacart by now, but neck and neck with them in every continent, just not one continent like Instacart since. So even if you think Instacart's a $15,000,000,000 business, I think we could have built a $60,000,000,000 business globally on that. On top of Eats, which was another 60 to 100,000,000,000 if we'd won DoorDash, and we were gonna beat Deliveroo. And then the rides business where Uber, to Darth's credit, is winning in The US against Lyft, another 60,000,000,000. So you're talking about a $200,000,000,000 business without any creativity. Is it just winning where we should have won and beating Instacart when we should have beat Instacart?

**Harry Stebbings** [40:02]:

I'm still astounded today. Deliveries market cap, I think, is about 1,500,000,000. Astounding. Right? Unbelievably well run company. Phenomenal team. Not a bad one. Multinational.

**Emil Michael** [40:12]:

Yeah. I like Will a lot. I think he's you know, he came up with CloudKitchens ideas. Actually, he was a banker you know, more easily banker, but he's quite good as a Oh, he's entrepreneur.

**Harry Stebbings** [40:21]:

But I do wanna move to my world, which is obviously venture. You decided to go full time investing with Codeacademy, and then you decided to go back to being an operator. What was the thinking behind that move back to being an operator?

**Emil Michael** [40:32]:

The Codeacademy guys did me a great favor. They said come in for six months, see if you like being an investor, and we'll see if we like you. And they're some of the best in the business. Philippe Lafont, Thomas Lafont, Daniel Sant, Chris Frederiksen when he was there, Dan Rose. They are pros, and they have built incredible franchise in China in late stage. They're just very innovative, and I like them a lot. So I love doing the China stuff. So I said, okay. I could do the China stuff. I could do late stage stuff. I am not built to oppose an entrepreneur in a negotiation. I know that sounds crazy, but I can't sit in the investor seat and not empathize with the entrepreneur I'm negotiating with, which is what you do when you're an investor. I can help the GoPuff guys go up against Masa, Tiger, you name it. Me bearing down on Raf and Jared Hecht and these guys is just not in my DNA.

**Harry Stebbings** [41:19]:

It's funny. I've spoken to a lot of the best investors and they're like, oh, there really should never be investor found a misalignment in the best relationships. And I think there are unavoidable misalignments that even if you're both phenomenally good human beings, there are times and situations where if I have a 100,000,000 fund and you're giving me $10,000,000,000 back from Uber, it makes more sense for me to have some protection mechanism or whatever that is. Do know what I mean? Yes. Are there any glaring misalignments that you see that you think more founders should be aware of?

**Emil Michael** [41:48]:

Totally. So when early stage investors get to this point where there's just a lot of paper gains, there should be sort of term limits on board seats. Like, term limit out. If I get to a 10 x return, Ben can get you some liquidity, you can move on because the early board members who sit on late stage companies, sphere based naturally. They're again, the natural incentives are not to do what the company needs to do next to grow the next 10 x. That natural misalignment is not wrong. It's just how it is. Those things could be jiggered a bit. And so more the thing we I wish we did more of Uber is give more investors liquidity when they get scared. I'd be like, VentureX, sell. I'll find you someone to sell to. Sell. Go get the second g six and the whatever, the Discovery property in Wyoming, and then leave me alone, and let me go build a business. And I wish I'd done that. So early stage becoming late stage is where there's a real disconnect still.

**Harry Stebbings** [42:40]:

It was actually fascinating. I was speaking to someone from, like, one of the best funds, they said, when we invest, the most difficult people are the early stage investors. I was like, why? And they said, because now x brand tiered firm is in. That's their golden goose, and they just wanna protect it. They don't wanna see the upside because it's like, Sequoia did it. It's gonna be our special one. Do you see what I mean? Yeah. Totally. Who's the best board member that you've sat on a board with or seen at a board level?

**Emil Michael** [43:03]:

Well, I'm gonna brag about my friend David Wyden from Coastal Ventures. Under the radar, BC, in terms of being a Vinod Vinod Coso, it's it's his firm, and David's been a partner there for about fifteen years, has made some of their biggest wins in Okta, RingCentral, all these $10,000,000,000 enterprise companies that you didn't know that Cosa was a big investor in them and did Square, and David was a big part of all those. I'm on board with him now. And he is the polite contrarian, which I love. And especially in this environment, he's like, well, what if blank happened? What would we do about it? And it's not in a way to scare. It's just to push the thinking to the edges. And if you believe in small l liberal thinking and a little bit of Socratic method of what ifs in scenarios when companies deciding whether to pivot, to raise money, whether to sell, He has the contrarian polite approach. I had never seen an entrepreneur and gone and go, I hadn't thought about that. Let me think about that and be better prepared for the future after that. So he's a sleeper hit, my view.

**Harry Stebbings** [44:01]:

Can I ask you, we mentioned kind of co two earlier? We've seen many firms come in, whether it's your altimeters, d ones, durables, and then obviously, soft finance slightly before that. But, this explosion of capital, what does that mean for the founders? Is this a great thing? Is this a bad thing? How do you analyze that?

**Emil Michael** [44:16]:

For founders, it's more a good thing than a bad thing. There's more capital out there. So if your business model requires more capital, can get it. And look. People are gonna say, oh my god. Lose capital, free money, blah blah blah. Companies like Uber, like Airbnb started in that era for a reason. It's because we could raise a lot of money and, like, try a bunch of stuff. And if money's too tight, maybe we wouldn't have gone into Uber Eats. We just would have, like, Lyft stayed in our lane. So the boost money cycles, actually have a purpose, and they're an example of looser money policies, the d ones and tigers of the world. So is the overvaluing they created great? I don't know. It's not great for other investors who want to get in cheaper, I guess, It's great for entrepreneurs. And I do worry that because many of them are crossover funds when their public market portfolio goes down, they get fearful of their private market portfolio, so they're not as consistent. But then you have Bond Capital who I love. Consistent. They're not really in the public markets or in between the late stage. Those kind of companies have been great additions to the ecosystem that didn't exist ten years ago.

**Harry Stebbings** [45:17]:

I totally get you. I think also the thing that people forget is just like your tigers as well. They have so many hungry mouths to feed at scale. Yeah. And that's the challenge. Okay. Well, let's analyze. Which VC brands I love this question. So tell me which brands are winning in your mind and why, and which losing their prominence and why?

**Emil Michael** [45:34]:

Yeah. So I'll give you some recognizable names. Obviously, there's a lot of solo or small founder funds that I love. I love Brian Kimmel's Work Life Fund. I love Richard Kirby's Equal Fund. I love Lucky Grooms Fund. I love a lot of these little ones that are not institutions yet in my view. The world doesn't know about them. But if you wanna talk institutional brands, in recent words, it's certainly on the way up despite whatever's happening crypto. And I'll tell you why. Because they're innovating. They're innovating on how they communicate their PR stuff. They're innovating on the type of funds they do. What Mark and Ben are doing, they're being entrepreneurs in venture, and they're trying a bunch of stuff. All of it may not work, and they maybe they overhire or whatever. Some of it's gonna work because those guys are good. And they may be going through this period now of having overdone a bunch of stuff, but they are gonna be winners. And they look at what Sequoia is doing. Sequoia is doing something similar. They're building multiple products, and they're trying to figure out what a venture capital looks like in the world. So there's real competition for Sequoia now. And how do they win? Well, they're gonna build all these other things, and I think they have to. And that's why I think Benchmark ultimately has no innovation. Forget the reputation, which most entrepreneurs, if they do their dealings, will find out about. But just not innovating stuck at 435,000,000 for the next ten years is not gonna

**Harry Stebbings** [46:47]:

Is it stuck or is it sticking to your knitting? The USV do the same, but there are a laugh in Israel who I rate a lot, Michael Eisenberg. Is it sticking to your knitting or is it just being behind the times?

**Emil Michael** [46:59]:

I mean, Lyft stuck to their knitting, and they're they're getting crushed. They're not changing with the world. You gotta play the game on the field. And the game on the field is different than it was, and I'll tell you why, Harry. There are going to be fewer tech acquisitions in this antitrust environment. Much fewer. So your outcomes for middle companies like TellMe are gonna be fewer and farther between. So there are gonna have to be the returns coming from the big winners. And to win big, you've gotta try to invest across multiple stages. That's what Sequoia can do. That's what Ah can do. That's what Rivet can do. That's what DST can do. And I think if you can't, you just have to get lucky because there's gonna be fewer and fewer mid level winners to return the portfolio. So you have to find the ones that are gonna 10 x it.

**Harry Stebbings** [47:40]:

So we've have Andreessen on the institutional side as pros. Anyone else that you're like, yeah, really impressed by them?

**Emil Michael** [47:46]:

I like Code two, like I said. I like Bond, like I said. Bond just occupies this non crossover territory. They have the patience of private market investors, but they're gonna come in at the stage that Codeacademy and Tiger are in.

**Harry Stebbings** [47:59]:

I also like their elasticity of mindset. You know, they don't need that obvious a deal. Yeah. What do mean by, like, on running? Yeah. Great deal, but not that obvious. And so are there any others where you're like, I would short them?

**Emil Michael** [48:10]:

What would I short? God, it's hard to say. There's so much money floating around. I think Excel's done very well in Europe, your hood. They've done so well. I like Blossom. So I'm thinking about your world a little bit. In my world, I haven't seen DST running around The US like they usually do, and they're really smart. I don't know what they're up to these days. But Yuri is always one of smartest investors in the world, but I don't know what he's doing. The fintech bubble has burst big time. So if you were long that, oof.

**Harry Stebbings** [48:36]:

Yeah. I think also emerging markets is just harder than ever now. You see the complete retrenchment away from them for sure. I do have to discuss two final elements before we do a quick fire. Number one is Alfred Lin told me about fatherhood and what a prominent part of your life that is now, which is amazing to hear. How did becoming a father change how you think both as an ambassador, as an operator? How did it change?

**Emil Michael** [48:57]:

Without being sort of saccharine about it. I just turned 50, so I have a 2.5 year old daughter. You know, I knew this intellectually, but now I feel at this rate. I don't know how I could have done the work that I would wanted to do at Uber seventy hours a week, and no was telling me to do it. That wasn't like hustle culture blah blah blah. This was Emil loving my job at Uber doing seventy hours a week and had a had a successful marriage and a kid. I just don't know how it's possible, and I don't think it is. So it changed me insofar as now I know why tech, whether I like it or not, is a young man's game, young man and woman's game, in that there is a certain reason that young people start startups. They have the time and energy to do it and the risk appetite that you don't have as much when you have other important things in your life like I do now.

**Harry Stebbings** [49:42]:

I have an interesting lesson though, which is actually that I prefer to back older founders for two simple reasons. One, when times are good, younger founders buy the hype. They buy the Gucci. They believe they're God's gift. Older ones go, I've seen this happen before. They hated me before. They'll hate me again. And then on the flip side, when times are really bad, young ones really feel it. The emotion really takes over. Older ones, again, they have children often. They're aware that their children could get sick. That is much worse than my head of sales leaving or something happening, and they have this temperament that's much more calm. Do you agree with that?

**Emil Michael** [50:15]:

I think it's a fair comeback, And maybe the difference is this, hypergrowth versus non hypergrowth. And by non hypergrowth, I mean great growth, like venture backable growth, but hyper growth, what Uber, Airbnb experienced. That kind of situation where we grew faster than any company in the world, both geographically and revenue wise, including Google, I just don't think it was humanly possible to do that without that time in your life. For a company that has an industry where it doesn't permit that kind of growth, I think you're probably right. But there is different times for different kinds of companies. If you're building software that's like gonna be a better database and it's not hyper growth, sure. I may agree with you, Harry, that like somebody's more mature in the highs and lows when they lose customer contract or not, that that's better. But in some of this hyper growth stuff's a different ballgame.

**Harry Stebbings** [51:00]:

Emil, one of my biggest winners ever is a compliance management company. Like, I I think we have some different perspectives on pay what we like. Yeah. Yeah. Sounds like Give me a payroll mechanism, and I'll be all over you. Tell me, final one for you. You've done so many incredible things. You have so many incredible years ahead of you, I'm sure. What do you want the legacy of Emil to be?

**Emil Michael** [51:23]:

Man, if I could have a fraction of the impact that Bill Campbell had on 20 other people. That's my rule of figuring out kind of a rule of 20 to your 20 BC. Right? He probably mentored about 20 people, including the ones we mentioned, and made such an impact on all of us. And if I could do the same after all experience I've had and have people go when they do your 20 BC five years from now, if you're still doing it and be like, Emil helped me do this and help me grow in this company. I built this company and I made my impression on the world, that would be something I'd be proud of. Second, I went to work at the White House in o nine at the defense department. I was a worked for secretary Gates, spent a lot of time in Afghanistan, Iraq, Guantanamo Bay, Pakistan. So I did a lot of stuff where I got to see the real world. Not what the bubble in Silicon Valley or Soho in London is. Bringing a little bit of public service ethic back into business, not ESG. It drives me crazy when the tech companies won't support, like, the Defense Department software. Like, we won't rent to our cloud, things like that. Those notions of being patriotic and supporting a country that supported you and your business kinda drives me nuts. So if I can make an impact there, I'd be happy to do it.

**Harry Stebbings** [52:32]:

Having just come from the hospital where they still use the fax machine, I was like, a fax machine? Oh, this is so cool. I was like doing a b reel of the fax machine. Listen. I wanna move into a quick fire, my friend. So I say a short statement. You give me your immediate thoughts. Does that sound okay?

**Emil Michael** [52:46]:

Yeah. What's the favorite book, Emil? I'm sure you've heard of this before, but Sun Tzu's art of war. And especially one chapter in it where he talks about encircling your enemy. If you encircle fully encircle your enemy, they fight harder. So, like, always leave them a exit path. And I use that in negotiate I think about that negotiations. Actually, if you think about it as plus your Russia Ukraine war, it really matters. It's like, where's the off ramp? How do you get people safe face? If you don't let people safe face or have an off ramp, you can have some combustible situations in business and personal life and in geopolitical conflicts as well. What would it take for you to go full time in house again? Being invited to be a CEO of Uber. I don't know if you read the other day that someone's mentioned to Elon that I should be up for the CEO of Twitter. Some job where it's an important global mission that I really could dig into, not about the money, but about the global mission. Twitter, as much as I hate it, then it's a hellscape and all those things. There's a globally important asset, someone has to do something with it. And I'm glad Elon's doing what he's doing. I think Uber could be that asset. I think there's probably three or four other things out there I have to find so that I can actually choose and say, I'm doing this again.

**Harry Stebbings** [53:54]:

What happens in the Elon Twitter event, and would you want to be CEO?

**Emil Michael** [53:58]:

I mean, there's only one CEO in Elon companies, and that's Elon Musk. So let's start there. If I could be a part of it because it'd be fun to work for him, transform what is a hellscape into something that's better, sure. But what I think happens in this situation is I think they have a negotiate my number 160% chance they have a negotiated settlement at a lower price in the next thirty to sixty days. Scenario two, which is sort of 30% likely Elon's forced to buy it, and I think only a 10% chance that Elon wins and he doesn't have to buy it.

**Harry Stebbings** [54:30]:

Tell me, what's the best investment advice you've ever received?

**Emil Michael** [54:33]:

It's sort of the first question you asked is what is your ordering priorities when you're operating and investing? And for me, for both, it's been the connection with the founder. So I don't do investments where it's like, hey. Drop a check here. I need to meet the founder. It could be for twenty minutes on a Zoom. I need to look them in the eye and see if they have that thing.

**Harry Stebbings** [54:55]:

My biggest mistakes have always been when I relied on someone else. Yes. Even if they're amazing, never do that. What mistake have you made in hindsight you wish you hadn't made?

**Emil Michael** [55:03]:

I'd wished besides like wish we'd never had benchmarked as an investor at Uber. I wished one of the things that happened with these hyper growth companies is we should have turned the corner earlier because what I described companies when they're startups is tribes. And as your tribe gets bigger, you start to intersect with other tribes, and you better become a civilization or the tribes are gonna be at war. So you build these companies, they're actually really civilizations. They're not tribes, and you can't run them like tribes anymore. You have constituencies. You have politics. You have to have governance. You have to have clear transparent rules that everyone can follow. Uber, Airbnb, Lyft all became those things. You gotta turn from a tribe to a civilization. Had Uber done that a little earlier, I think we could have potentially avoided some of this chaos.

**Harry Stebbings** [55:45]:

When do think that is? Is that, like, 500 people to 200, a thousand?

**Emil Michael** [55:49]:

We went from 250 people to 20,000 in three years. It was so extraordinary. Probably no later than 5,000 employees because what happens at that point is you have no names for a while. But at that point, if you're not training managers on how to manage, having plans about how people get promoted and all the all the bureaucratic things that you hate as an entrepreneur, but you're that big, you're gonna make mistakes.

**Harry Stebbings** [56:14]:

Why do you no longer go for dinner with business contacts or friends?

**Emil Michael** [56:19]:

I mean, it's dinner at home with the fam, and I moved my immigrant parents who are living in New York in the cold weather. It's like, come on. You have your only grandchild down here. Come move to Miami with me. And so they live a couple miles away. So it's dinner with that fam that I haven't had because I was busting my butt at a startup from 1999 to 2017 and in the White House and all these places. So now I'm catching up a little bit. I try not to do business dinners. I'll do coffees. I'll do all the other things, but try not to do dinners.

**Harry Stebbings** [56:47]:

Dave Clark asked me a question to ask you, and I thought it was and he did a crying laughter emoji face. And I was like, well, that tells me that I should probably adapt it slightly. Are SPACs over? And what did you learn from yours?

**Emil Michael** [56:59]:

SPACs are over. What I learned from mine is that I am not a financial engineer. I'm a dealmaker. The SPAC world is not dealmaking. It's financial engineering. It's moving money around from one part of the ecosystem to another and trying to get the IPO out fast and about disclosures and what you're allowed to say in this situation versus not. And this is, I think, unfortunately, what Dara does at at Uber, what a company like Verizon does. They're all financially engineered. They're not innovating. And so when there's a market collapse, all these financially engineered Frankenstein products like a SPAC collapse, and that's what's happened. And it used to be a backwater financial product, and brought it to the mainstream, and I think it's just gonna retreat back to being a backwater financial product.

**Harry Stebbings** [57:48]:

Sorry. I'm naive here. Does not just make out like a bandit from it, though? Like, I'm not saying he's right or wrong, but, like, does he not like, does does everyone not just make a load of cash from it and then

**Emil Michael** [57:59]:

Yeah. I think you did from 2019 to 2021. But like everything else since 2022, that product is not a moneymaker. And all the people who started SPACs in '21 who didn't find a target, because you know these SPACs have to find a company to merge with, are dead. So the next eighteen months, you're gonna see dead spat. Literally, they're going to disband and give the money back to investors. Maybe 90% of them.

**Harry Stebbings** [58:25]:

We missed '21. Wait. Wait. Wait. That should be the title. You've known Shaq, and you've known Shaq for a long time. He's been one of the most important figures in my career. What do you think makes him so special?

**Emil Michael** [58:35]:

I've never met anyone who's as loyal as that guy was to Daniel and as humble and works harder than him. I met him, and and I'll tell you the story. Had to met him. I met him cause I was interviewing to be the COO of Spotify. I remember I had t u tea with Shaq, because it's tea with Shaq, near Soho House in London. And I I said, hey. You have this great partnership with Daniel. Is there room for a a third person to sort of do that? Because I'm looking for a team to work with. And he was so thoughtful. He's like, with me, there's always room for someone who wants to be part of this team because we're trying to build something special. And it was just you know, he's a killer on one side, but then a teddy bear on the other. So that's how I describe him. And I pick up the phone. He's there any hour of the day. He's on a plane whenever you remember when he was on a plane all the time.

**Harry Stebbings** [59:20]:

Listen. I wanna finish on the final one. What do the next five years hold for you, Emil? 2027, where are we at?

**Emil Michael** [59:25]:

Yeah. I need to be doing something important and singularly focused again. So I'm looking for that starting now. The SPAC is done as of last month, and now I am looking for the next challenge I could spend five to ten years on. That's taking a lot of forms. I'm talking to lot of people. Is it starting something? Is it buying something? Is it taking something private and running it? All those things, but I need to be running something because I'm 50. If we're gonna live to a 100, I may be on the back nine, but just the tenth hole, not the seventeenth. So I got I got a lot of time to go. And you wouldn't do venture again. It's just not my thing, man. I will always angel invest and I will advise venture firms, but I just don't know if I could sit around a table on a partner meeting on a Monday and be one of 10 other equals. It just doesn't it's not the leadership framework I operate in.

**Harry Stebbings** [60:09]:

Emil, this has been so much fun. I cannot thank you enough. I love this, and you've been a star, my friend.

**Emil Michael** [60:15]:

Awesome. Thank you so much, man. Great to see you.

**Harry Stebbings** [60:19]:

Now that was a fun show to do. I wanna say a huge thank you to Emil for being such an accommodating guest. You can, of course, find Emil on Twitter at Emil Michael. I'd love to see behind the scenes on 20vc.com. But before we leave you today,

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