20VC Leadership Lessons from Bill Gates and Steve Ballmer, The Early Days of TheFacebook Advising Mark Zuckerberg and Why Now is Not the Right Time For Startups to Stockpile Cash with Hadi Partovi, CEO @ Code.org

In this episode of 20 VC, Harry Stebbings interviews Hadi Partovi, a seasoned tech entrepreneur, investor, and CEO of the education nonprofit Code.org. Hadi discusses his journey from co-founding startups like Tellme Networks and iLike to advising tech giants such as Facebook and Dropbox, emphasizing the importance of education in preparing for a technology-driven future. He reflects on his decision to prioritize societal impact over personal wealth, leading to his work with Code.org to change the global education curriculum. Hadi shares insights on leadership, the value of quick decision-making, and the need for a modernized education system that includes computer science to equip students for a world of automation and AI. He also touches on the role of generative AI in the future of coding and his ambition to make computer science a high school graduation requirement in more U.S. states.

• The world has experienced an era of zero or negative interest rates, leading to a lack of concern about being overweight in investments.
• With the sudden rise in interest rates and inflation, people are compelled to rethink their approach to spending.
• This shift indicates a significant change in the economic environment, requiring new strategies for financial management.

"In a world where interest rates are zero or even negative, nobody was overweight. When suddenly interest rates go up and there's inflation instantly. When that changes, people needed to think. Our approach to spending is for a world that no longer exists."

The quote highlights the abrupt transition from an era of low interest rates to one of rising rates and inflation, suggesting that previous spending and investment strategies are no longer viable.

• Harry Stebbings introduces the podcast and expresses his passion for storytelling and learning from industry leaders.
• Hadi Partovi is introduced as a successful tech entrepreneur, investor, and CEO of the education nonprofit Code.org.
• Hadi's background includes founding startups such as Tellme Networks and iLike, and advising and investing in companies like Facebook, Dropbox, Airbnb, and Uber.
• Hadi also serves on the board of directors for Axon and MNTN.
• Acknowledgment of contributions from Alfred Lin, Sequoia, and Jeff Wilke for their question suggestions.

"Welcome back to 20 VC with me, Harry Stebings, and for me, storytelling is a passion, and so is learning from some of the grace in our industry."

Harry Stebbings sets the tone for the podcast, emphasizing the importance of storytelling and learning from successful individuals like Hadi Partovi.

• Hadi Partovi's entry into the startup world was influenced by his brother's venture, LinkExchange, and his own experience at Microsoft.
• Hadi left Microsoft at 26 to start Tellme Networks with former Netscape colleagues.
• His shift towards angel investing and advising startups began around the age of 30.
• The founding of Code.org was motivated by the realization that the education system was not adequately preparing students for a technology-driven future.
• Code.org aims to change global school curricula to better equip students for technological advancements.

"I got into the world of startups first, honestly starting my own or watching my brother start LinkExchange... The reason I started Code is... I realized every single company struggles with the challenge of hiring great talent."

Hadi Partovi explains his transition from working in tech to investing and advising, leading to the creation of Code.org to address the talent gap in technology.

• Hadi reflects on his childhood experiences of revolution and war in Tehran, Iran, and the subsequent financial struggles as an immigrant in the United States.
• His early desire for financial security was driven by a need to escape poverty and achieve stability.
• Now, as a successful investor and entrepreneur, Hadi aims to fix the broken American Dream by making opportunities accessible to everyone through Code.org.
• Hadi's work with Code.org is driven by his belief in equalizing the opportunity system globally.

"I grew up in Tehran, Iran... And what I'm running towards now at this point in my life... is really creating a world where that american dream works for everybody."

Hadi Partovi shares his journey from a challenging childhood in Iran to pursuing the American Dream and his mission to extend those opportunities to others through education.

• Hadi acknowledges that growing up in a poor family instilled in him grit, hunger, and ambition.
• The loss of family wealth during the Iranian Revolution contributed to his motivation to succeed and restore what was lost.
• Hadi attributes his entrepreneurial drive to his family's history and the desire to overcome past injustices.

"Absolutely growing up with a poor family gave me grit and hunger and ambition."

This quote emphasizes how Hadi Partovi's challenging early life experiences fueled his determination and entrepreneurial spirit.

• Hadi played a key role in initiating the conversation for Microsoft's acquisition of Tellme Networks by leveraging his relationship with Steve Ballmer.
• The negotiation was significantly driven by Emil Michael's skills, while Hadi facilitated the initial meeting with Ballmer.
• Hadi's history with Microsoft and his competitive recruitment of talent for Tellme Networks were factors in sparking Ballmer's interest in the acquisition.

"I went jogging with Steve, and I told him about the opportunity he was already familiar with... So he basically said, get me connected and let's have the conversation."

Hadi Partovi recounts how a casual jog with Steve Ballmer led to the pivotal meeting that initiated the acquisition of Tellme Networks by Microsoft.

• Hadi reflects on the rigorous product reviews with Steve Ballmer and Bill Gates, noting their deep involvement and understanding of details.
• Both executives were known for their sharpness and thorough preparation, setting high expectations for their teams.
• Hadi believes that Ballmer is underappreciated for his contributions to Microsoft's earnings growth during his tenure as CEO.

"You knew going into a review with either with Steve or with Bill, there's a huge risk that they know your stuff better than you know it yourself and you better be extremely prepared."

The quote captures the intense scrutiny and high standards set by Steve Ballmer and Bill Gates during product reviews at Microsoft, which demanded exceptional preparation from their teams.

• Hadi discusses the challenge of balancing being detail-oriented with trusting his team to handle responsibilities.
• He admits to leaning towards being involved in details rather than fully delegating tasks.
• Hadi points out that many successful consumer technology leaders, such as Steve Jobs, Mark Zuckerberg, and Elon Musk, also tend to be involved in minute details of their businesses.

"It is definitely a tough balance. And I got to say, as a leader, I struggle with that myself."

This quote reflects Hadi Partovi's personal struggle with finding the right balance between micromanagement and delegation as a leader.

• Steve Ballmer is known for his attention to numbers and sales, as well as his motivational and charismatic leadership style.
• Bill Gates was more focused on technology and products compared to Ballmer.
• Ballmer's approach could instill a sense of accountability and inspire team members to be thoroughly prepared and knowledgeable about their business areas.

"Steve was far more into the numbers and I think the sales. Steve is also just a motivator. He's an incredible cheerleader."

This quote highlights Steve Ballmer's focus on financial aspects and his ability to energize and motivate his team through his charismatic presence.

• Hadi Partovi sensed a serious drive and far-reaching vision in Mark Zuckerberg during their first meeting.
• Zuckerberg's perspective on Facebook differed significantly from Sean Parker's, with Zuckerberg expressing a sense of manifest destiny about his company's future.
• The meeting with Zuckerberg left a strong impression, leading Partovi to compare him to Bill Gates in terms of vision and determination.

"We are building the future of identity. We're building the future of connection. We're building a platform for everything on the Internet."

This quote encapsulates Zuckerberg's ambitious vision for Facebook, which went beyond a college socializing site to a comprehensive platform for online identity and connectivity.

• The first few hires in a startup have a magnified impact on the company's future culture and performance.
• It is crucial to hire individuals who are not only talented but also passionate and committed to the mission.
• Founders face the challenge of attracting top talent, which involves selling the vision and potential of the startup to prospective employees.

"In every single role you should aim to get the best of the best people, because then when that's who you start with, that group won't allow in much more mediocre and just dispassionate people."

This quote emphasizes the need for startups to strive for excellence in their early hires, as these individuals set the standard and influence the quality of future team members.

• Founders often focus on fundraising, but attracting top talent is equally, if not more, important.
• Convincing a stellar employee to join a startup is a significant investment decision for that individual.
• The skills used in fundraising can be applied to the hiring process to sell the startup's vision and potential to candidates.

"The first five or ten prospective hires are at least as important as the first person writing a check."

This quote suggests that the impact of early hires on a startup's trajectory can be as critical as securing initial funding.

• Changes in interest rates and inflation can necessitate a reassessment of workforce size and spending strategies.
• The concept of being "overweight" in terms of staff depends on the economic context, with low-interest rates previously justifying larger teams.
• Rising interest rates impose financial discipline and accountability.

"When the interest rates go up, it forces accountability on financial rigor."

This quote indicates that an increase in interest rates can compel companies to make more prudent financial decisions, particularly regarding their workforce and investments.

• When reducing costs, it is recommended to make deep cuts once rather than multiple small cuts.
• Continual reductions can harm morale and cause uncertainty among remaining employees.
• It is better to rebuild from a smaller, more efficient base than to continuously downsize.

"It is far better to build back from an organization that's too small than to just continuously whack till shave your organization down to the right size."

This quote advises that a single, significant reduction in workforce is preferable to gradual downsizing, as it minimizes ongoing uncertainty and can lead to a stronger organizational rebuild.

• Holding large reserves of cash during times of high inflation and interest rates may not be advantageous.
• Startups should consider the timing of fundraising and the actual need for cash in relation to their growth plans.
• The value of cash decreases with inflation, so raising more funds than necessary can be counterproductive.

"You don't need next year's cash this year."

This quote advises against raising excessive funds too early, as the devaluation of cash due to inflation means it is better to raise funds closer to when they are needed.

• High performance, to Hadi Partovi, involves both working smart and working hard.
• Partovi acknowledges the need to balance work with physical and mental health to maintain high performance.
• The definition of high performance may evolve over time as one's personal circumstances and perspectives change.

"For me, high performance comes from both working smart and working hard, giving it my all, literally all the time."

This quote reflects Partovi's personal commitment to achieving high performance through intense effort and dedication to his work.

• Engaging in work that one loves and finds inspiring can protect against burnout.
• Burnout is more likely when work is imposed by external pressures rather than driven by personal passion and motivation.
• Partovi emphasizes the importance of selecting projects that are personally inspiring to sustain energy and avoid burnout.

"If the work you do is something you love and something that inspires you, it isn't really work."

This quote suggests that aligning one's work with personal passion can transform the nature of work and reduce the risk of burnout.

• Speed of execution is critical for moving a startup from concept to reality.
• There is a balance to be struck between moving quickly and taking the time to perfect certain aspects of the business.
• Partovi admits to favoring speed over perfection, especially in the early stages of a startup.

"I'm far better at going fast to get something from zero to one."

This quote reveals Partovi's preference for rapid progress in the initial development phase of a startup, prioritizing momentum over meticulous perfection.

• Importance of making decisions quickly with partial information.
• Suitable for decisions that are reversible and can be adjusted after implementation.
• Contrast between startup culture (action-oriented) and large corporate culture (over-planning).
• Necessity of balancing speed with caution in larger organizations with significant impact.

"When you have 60% of the information to make a decision, especially with decisions that aren't one way doors, decisions where you can do it, and then if you got it wrong, you make adjustment, and if you got that wrong again, you can make another adjustment."

This quote emphasizes the value of decisiveness and the ability to pivot when a decision doesn't yield the expected results. It highlights a flexible approach to decision-making that is particularly effective in dynamic environments.

• Documenting the thought process for decision-making to guide team members.
• Creating a shared framework to ensure alignment within the team.
• Using play-acting scenarios to test the application of the decision-making framework.

"So one of the things I've been doing@code.org is to actually put into writing what I think is the thought process I go through so that I can pass down the framework I use rather than making a decision."

This quote explains the process of formalizing a decision-making approach so that it can be shared and understood by others, ensuring that team members can make decisions that align with organizational values and strategies.

• Focusing on long-term impact over short-term gains.
• Emphasizing return on investment, even for nonprofits.
• Understanding the ecosystem of partners and delegating roles effectively.
• Balancing various factors in a comprehensive decision-making document.

"These are specific to the business of code, but one of them is aiming for the long term, doing what's right for the long term, not just the short term."

The quote outlines the principle of prioritizing long-term benefits in decision-making, which is a key element of a strategic framework that guides choices and actions within an organization.

• Choosing societal impact over personal wealth.
• The importance of self-worth over external measures of success.
• The struggle with ego and societal expectations.

"The biggest one was the decision that I wanted to take a backseat from the corporate rat race, that I didn't want to aim to be the wealthiest I could be, but that I actually wanted to optimize my impact."

This quote reflects a profound personal decision to prioritize making a societal impact over pursuing maximum personal wealth, indicating a shift in values and life direction.

• Questioning what to teach instead of just how to teach.
• Considering the relevancy of traditional subjects in the future.
• Advocating for a curriculum that prepares students for a rapidly changing world.

"The world is changing so quickly that teaching the same things that we taught 100 years ago no longer makes sense."

This quote highlights the necessity to reevaluate educational content in light of technological advancements and changing societal needs, advocating for a more future-oriented curriculum.

• The inevitability of betting on the future when making decisions about education.
• Emphasizing the need for computer science education.
• Suggesting a focus on statistics, financial literacy, civics, and citizenship preparation.

"Everything we do is a bet. Not acting is also a different bet."

The quote captures the essence of decision-making in education, where any choice or lack thereof is essentially a bet on the future, and the importance of being proactive in adapting educational content.

• The value of inspiring children's curiosity over formal homeschooling.
• Trusting children to seek out knowledge independently.
• Socrates' philosophy on education as the lighting of a fire, not just filling a pail.

"And so what I do as a parent is I don't homeschool my kids. I ask them questions or point them in directions that inspire their own curiosity."

This quote describes a personal educational philosophy that emphasizes inspiring curiosity in children as a means of self-driven learning, rather than formal homeschooling.

• Advocating for a shift in teaching methods to be more student-driven and project-based.
• Encouraging curiosity, creativity, and collaboration in the classroom.
• Aligning educational practices with the skills valued by employers.

"Education needs to both change what we teach and how we teach it."

The quote underscores the need for a dual approach in education reform, addressing both the content of what is taught and the pedagogical methods employed, to better prepare students for the future workforce.

• The current school system often relies on lectures and memorization, which is less effective for fostering problem-solving, creativity, and collaboration.
• Computer science is a better subject to teach because it is project-driven and encourages a collaborative, creative, and problem-solving approach.

"It is way better to say, instead of listening to a lecture, here's a blank canvas. What can you create? That is part of why computer science is a better thing to teach, because it is project driven."

The quote emphasizes the importance of hands-on, creative learning over traditional lecture-based education. It suggests that computer science is an ideal subject for developing crucial skills for the modern workforce.

• Coding has become progressively easier over time, moving from physical punch cards to languages resembling natural language.
• Generative AI will simplify coding even further, requiring education systems to adapt to higher-level commands.
• Understanding the fundamentals of computer science remains crucial, even as the methods evolve.

"So every decade there's a leapfrog in terms of how much easier it is to code."

This quote indicates the rapid advancement in coding ease and accessibility, highlighting a trend that education systems need to keep pace with.

• Jobs of the future will be digital and require creativity and problem-solving skills.
• Tech giants are spreading basic digital skills to accommodate the shift in job requirements.
• Automation will change jobs rather than just eliminate them, potentially easing current job shortages in certain sectors.

"It's hard to know what the jobs of the future are going to be, but what's very clear is that they're going to be increasingly digital, increasingly more creative."

The quote reflects the inevitable change in job nature due to technological advancements and the need for a workforce equipped with digital and creative skills.

• "Sapiens" is cited as a favorite book because it provides a new perspective on humanity's history and present.
• There is an openness to returning to the for-profit tech sector, though it is not a current plan.
• The importance of self-confidence and taking risks is highlighted, with reflections on past decisions and missed opportunities.
• The best board members are those who are available and guide through questioning rather than providing direct answers.

"The value of betting on myself, betting bigger. I started out with too much fear of failure."

This quote underlines the lesson learned about the importance of self-belief and the willingness to take more significant risks in one's career.

• Turning down the opportunity to be CEO of Facebook for family loyalty is acknowledged as a significant financial misstep but was based on personal values.
• The best board member worked with was Jeff Wilkey, praised for his availability and approach to mentoring through inquiry.

"The biggest. Oh, fuck. Was Mark Zuckerberg, at a time was recruiting me to be the CEO of Facebook."

This quote candidly expresses regret over a major career decision that was influenced by loyalty to family rather than potential financial success.

• Axon is admired for its societal impact through technology for law enforcement, with potential for significant growth.
• There is a belief that the next five to ten years will bring the best years for humanity, contrary to the prevalent negative news cycle.
• Great fatherhood is characterized by setting a good example and ensuring children feel loved and accepted.

"Axon is a technology company that's trying to use technology to improve how society works."

The quote highlights the desire to be part of a company that not only succeeds financially but also contributes positively to society.

• The primary goal for the next five years is to make computer science a high school graduation requirement in more states across the US.
• The aim is to reach a tipping point where the majority of states require computer science education, thereby influencing the remaining states.

"Five years from now, I hope that it's going to be 25 states and that we've tipped the point that the majority of states have this requirement."

This quote outlines the ambitious goal for code.org to expand computer science education requirements, reflecting a commitment to shaping future generations' skills and opportunities.