Excellence Is the Capacity To Take Pain | Travis Kalanick, Founder of Uber

The meta problem

I want to start with Atoms. You have this great line on the website that I actually love. It's this awesome sentence. It says, "Physical world autonomy requires AI for the physical world. This kind of intelligence requires computation we haven't invented, at an efficiency we can't yet fathom, with deep learning models to understand and act in the physical world that don't yet exist." Tell us what you're building.

Let's start with the mission. It's easier that way. Physical automation to transform industries. So you start there, and it's almost Socratic: what does that mean? In the terms that people use today, it's physical AI and robotics to transform industry. And you go, "Okay, well, so what is it, a humanoid?" And no, it's not. I wouldn't call myself anti-humanoid. It's just that what we're doing is not that. It's specialized robotics. It's not like we make robotics and anybody can have some. It's more like robotics and AI that go after an industry, one industry at a time. And in those industries, we think it makes massive moves, big moves. And once we get our sea legs, we go to the next and the next. If you're doing it really well, I like to say that the only constraint on our imagination is management capacity.

What does that mean?

We're solving problems every day. If I have to solve lots of small problems because I don't have a lot of management capacity under me, we're not going to do very much. I'm going to be constrained in what portion of my imagination can become real. But if you have lots of management capacity, lots of problem-solving capacity, then those constraints unwind.

So how do you broaden and expand the management capacity you have?

Okay, so why don't we step back. I have a lot of frameworks for this kind of stuff. One of them I call the meta problem. Imagine you had this equation: the derivative of problem solving, dt, must always be greater than or equal to the derivative of problem creation, dt. And if that's ever not true, you have a real problem. I call that the meta problem. If you are creating problems faster than you can solve them, then you're kind of F'd.

But you create problems. In an Uber context it would be, "Let's go to China." That's creating a problem, right? Now, I don't think about problems in a negative way. I think about problems the way a math professor would think about a problem: a math professor without interesting problems to solve is a sad math professor. So it's a good thing. You want to create interesting things to solve. You want to create problems to solve. But you have to predict well the nature of the problem and your ability and capacity to solve it. You create a problem today, and you may not understand the nature of the problem-solving you're going to have to do. You have to predict it. And those problems start coming ashore in a real heavy way in six months, maybe even longer. So you have to be good at predicting the nature of that problem and saying, "Okay, well, what is my management capacity to solve it?" If that equation gets out of balance, then you have to stop problem creation while you get the solving going, so that you're not drowning anymore.

Starting over in China

Can you give us an example of what happened in China then?

China was amazing but very difficult, and in some ways impossible to predict. "Let's go to China. Sounds like fun." It was a super awesome adventure, because I was like, "Sounds cool." It was probably 2013, early '13. Uber started in 2010, so it was still the early crew. I got a crew of folks, super OG guys, and we stayed in an apartment in China for a week and a half, two weeks, something like that, and met with everybody we could. It's actually when I first met Wang Xing at Meituan. And he told me I was crazy. "Don't do it. It's the worst idea ever."

What was your response when people tell you, "You're crazy. It's not going to work"?

That's the best thing ever. Okay, so there's many threads here. We're already cooking through a bunch of them.

We're going to go everywhere, man. Let's go.

Okay, so in engineering, we call this BFS, breadth-first search. We're painting the breadth of the tree before we go deep. We had a cultural value for this at Uber, and I've pulled it into my value system at my current company. It's called super pumped, which is about infectious enthusiasm about the hard things. The harder it is, the more weird, gnarly, whatever superlative you want to put in front of it, the more awesome it would be to solve it, the more excited I get. And the problems that are most awesome to solve are the ones that people think are impossible. Sometimes people think something is impossible, they perceive it that way, but it's very possible; it's actually easy. And there are other ones that people think are impossible that are super difficult but possible.

That's how you think about Atoms now, right? When I hear you speak about it and when I read about it, you're like, "This is going to be super difficult, but it is possible."

So Atoms is the name of my company. We just named it this. It came from a crazy obscure name that was done on purpose; we basically went ultra-stealth. But the real question is, coming out of Uber, what was the next thing and why? And it is Atoms. We just started calling it that now. I had a penchant for, an affinity for, something that's super hard, super complicated.

Have you always been like that? Or was it the experience of Uber that crystallized how important that was?

It's always been this way. And I think it's funny how you got there, because it's that feeling when somebody tells you something is impossible and you're like, "Is that right? Watch this." I've always had that. Even when I was a kid, I'd always have a sparkle in my eye to do something where somebody was like, "Shit." That kind of thing.

When you started it, there's no way you could have known how difficult it was, right? Did you think, "This is a hairy problem. I'm going to be fighting with everything regularly"?

No, there's a complexity to it that was part of the attraction.

And you saw that from the first spot?

Yeah, from the very early days, I knew it was complicated. I didn't understand exactly how it was complicated.

I'm very curious. What you said was very interesting. You're creating all these problems, and some of the problems you're creating are not coming ashore yet, I think is the word you used.

It takes time to see what the nature of the problem is that you created.

So can you give an example of a problem you're creating when you start in China, how long it takes to come ashore, and what happens when it does?

Okay, so what you learn when you go and do what we did in China is that when you take your business to China, you have to start over. So many people think you can take your business and take it somewhere. Which, by the way, Uber kind of trademarked, if there's such a thing. We made that a thing, where cities and countries didn't matter. We created a system that was inevitable. But China was different. Because of how that country works, everything's different, and that means you have to start from scratch. Something as simple as the phones, or let's say maps, GPS. There's a different GPS system in China than there is here. What does that mean? Well, it's different. So if I want to understand how cars are moving through space, I have to change my GPS system so I can do that. And that's one of a hundred things that are different in China, which means you have to start over. You're starting a new business when you take it to China, and you have to be very receptive: "I am going to learn how to do things differently in this very different place." And be excited and interested in how different it is. Whereas most Western entrepreneurs that go to China, almost none succeed.

Have any succeeded?

At the time, Apple. I'd say the two that you would come up with in our neck of the woods, and there are others, but in our neck of the woods: Elon definitely did, right? And Apple definitely did. Tim Apple and Elon. Those are the two guys.

Uber versus Didi

So you started getting in this war with Didi. Was there anybody else? Were there multiple competitors?

So Uber Black was one thing, much smaller than a Didi thing. There was another company called Kuaidi. And we were just in this corner doing a niche thing, a super high-end thing in China, which is so niche, right? An S-Class in China at that time is very... It's thin. We were growing, it was fun, but it was thin. But I think it was 2014, I believe it was '14, where we basically said, "Okay, we're going to do ride-sharing in China." Nobody had done that. Didi was taxis. And anybody who's used a taxi app with taxis knows the problem is you're a second-class citizen, meaning taxis want people to wave them down. They don't want to take rides from an app where they have to give a percentage of the revenue to some middleman. So it will fill in the gaps, but it's not their main jam. But we went to full ride share, peer-to-peer ride sharing, where anybody driving a car could offer a ride to a citizen in the city.

Which before you did not exist at all in China.

Certainly not coordinated by an app. This is what was at the time called peer-to-peer ride-sharing. Some people would think of Lyft or UberX in the US context. But what we called it was the People's Uber. You'd open the app up, and it was red cars. We became Chinese. We had a massive, awesome brand there, because we cared and we were passionate about the user, the customer, in ways that these other companies just weren't.

But what was interesting about what was going on with Didi was that while we were inventing, innovating, they were copying. And these guys were so good at copying, it was almost an art form. To be able to copy as quickly and fiercely as they did was warrior mentality in its own right. I like to say the place to be is Braveheart, the warrior poet. These guys were just pure warriors. There was no poetry. They weren't creating a new thing. They were copying. But almost to a level of poetry, in their ability to copy and the speed at which they were able to do it. What we were doing was a very wild sort of half technology, half regulatory arbitrage. Very bold. It took them a while to copy, and while that happened, it went vertical.

Uber did.

Yeah, Uber did. So vertical it almost leaned to the left. The curve almost bent to the left, okay? The opportunity was massive. At some point, probably our top ten cities were all Chinese cities.

That's wild.

In rides. Not in revenue, because instead of, in my day, 13 bucks, 15 bucks, these were three bucks, two bucks type stuff. I remember we were doing this fundraise in China. We had to raise money in China, because it was just pulling a huge amount of money.

You mean you were burning a ton of money?

We were burning a lot of money. But also, we needed a partner. When we first went to China, everybody told us that we needed a partner. And we're like, "What is a partner?" They're like, "Well, that person or that entity has 50% of your company in China." I go, "Why? Is this a law?" They're like, "No, but if you don't do it, you're totally screwed." And I just never got it. Nobody could tell me why I had to. I just said, "I'm going to just try. Screw it." Which is, again, what Apple and Tesla did. These guys said, "Screw it," and they just did it. And we eventually did get a partner, but instead of giving up 50%, we gave up, I think it was 7%, and it was to Baidu. It was because we were getting massive regulatory heat, and as long as we had a partner by our side, we could be Chinese. When you start meeting with ministers in China at the highest level, you have to be vouched for by somebody in China, or things start to get weird.

And that's what the 7% is for?

That's what the 7% was for. We needed a partner inside China that was trusted, essentially. But I remember right around the time that we got that partner, there was a strike, a pan-European strike of all taxis in all European cities. I think this is 2015, July, I believe. There were vehicles being lit on fire in Paris. But it was every major city, and they just tried to shut the shit down.

What are they protesting?

Progress.

So I'm going and meeting with the transportation minister in China, and he throws down three Western newspapers, top of the fold, old-school newspapers, right? Remember those? Pictures of this chaos across all these cities. And he's like, "This is a problem. This is not something we're okay with." And I said, "Why?" I knew what he was going to say. And I said, "But this is all Western democracies. In Western democracy, we know it's a popularity contest. What that means is that the politician succeeds by being popular. He doesn't succeed when progress comes. The only way to get progress in a democracy is when that politician, who seeks to be popular, is under threat. When there is a threat of disruption or instability is the only time you'll get progress in Western democracy. But so what? We're here in China, and it's totally different."

He goes, "What do you mean?" And I'm like, "Well, the only time I'm able to get progress in China is when stability is in harmony with progress." Those two must be harmonized. You will only get progress when it is in harmony with stability. And I said it in that way, those three words, and that was very Chinese. Totally different. I'm like, "If there was ever any hint of instability that we were to bring to China, we would be shut down immediately. But as long as we create a foundation of stability, progress is super welcome. Progress must be in harmony with stability."

The efficiency edge

So when did they take the viewpoint, if they took the viewpoint, that Uber is injecting instability into their cities?

They never did. But at some point they felt like we may win. For the most part, we were treated fairly in the cities. Not completely, but for the most part. But what happened was, what I'd say at the time, is that the China war went global.

So we were spending, let's say, tens of millions of dollars a month fighting Didi in all these cities. And the fight was: I need to subsidize rides to gain market share. When I gain market share, there's network effect, because if I'm bigger, then my system is more efficient. And if I'm more efficient than them, they have to subsidize more than I do to compete with me. So how do I subsidize, where, when, how, to get that network-effect efficiency edge, so that I subsidize less than them? This is why Lyft is smaller than Uber: because we were better at this part of the thing. And people don't really know that's what it takes.

But how do you get the efficiency edge? The efficiency edge starts when somebody even downloads the app and signs up. If it's easier to sign up on one versus another, you have an efficiency edge. If it's easier to call a vehicle and get it to you without problems, you have an efficiency edge, because you'll have less support and higher completion rates. If the cars are moving to where the demand is, because the driver app has good ways to point drivers to the right place, that means you have shorter pickup times: efficiency edge. Efficiency edge means you get bigger faster. Getting bigger faster means you have a bigger network of drivers, which means wherever you are in the city, you are going to get a faster pickup. And it will be cheaper, because if there's less dead time for the driver to pick you up, and he's generally trying to optimize for dollars per hour, the whole thing just starts working better. That's the network effect.

So you're like, "Okay, how do I get bigger?" Well, I'll make the rides really cheap. That's one way of doing it. And if your rides are cheaper than theirs, then all of a sudden your network gets bigger. Your network gives you efficiency, which then means you can get to a lower price point without subsidies, where the competitor still has to subsidize.

You'd make a profit at a place where they would make a loss. And the robber barons all understood this.

Yes. This is like, you can go...

Rockefeller, Carnegie.

Absolutely.

All of them did.

100%.

When you're talking, I'm like, "Shit, this is Rockefeller."

Totally. So I read, I think it was a Chernow biography.

Titan? Okay, there's actually a better one I'm going to send you. It's this book from 1970 by David Freeman Hawke called John D.: The Founding Father of the Rockefellers. Titan is 800 pages, and you get a lot about his family history. This is like 250 pages of how he built Standard Oil, and it's this shit. It is exactly what you're describing.

I want to interrupt you one second before you go back to China. My question to you now is, I spend thousands of dollars a month on Uber, and I only use Uber Black SUV. It's insane. In a mature market in the United States, in these big cities where I'm using Uber, how would the network effects of Uber be reversed?

Okay, so there's a couple things. First, a small player competing against Uber has certain advantages. Let's say a small player said, "I'm going to have cheaper rides than the big player." The small player, let's say, is one-tenth the size. Their subsidies on an absolute basis are somewhere around one-tenth as much. So if I am the small guy and I go and subsidize rides, I'm going to gain market share unless the big guy is spending ten times as much as me. Now, the efficiency edge can make it, instead of 10X, 7X. But ultimately, with a well-funded competitor, you have to let them grow to some degree, so that they feel the weight of their size, so that when they're subsidizing, it becomes a problem.

It hurts them more.

I like to talk about situations where we had a competitor and weren't exactly sure what was going on. Because what happens is you have to guess. When you're subsidizing, you have to guess, "Do I have an efficiency edge on them or not?" You try to make yourself as efficient as possible, but you don't know if you are more efficient than them, so you need signal to determine whether you're better. One of the ways you could totally do it is let the competitor get to 50%, so it's 50-50. You have the same network size. Then you start to see: is my price lower than theirs while maintaining a 50% market share, or is my price higher than theirs while maintaining a 50% market share? If I can maintain 50% market share while having a higher price, then my system is more efficient than theirs. Then I can start dialing, because I know they'll lose.

Why? Because at some point, efficiency outstrips subsidy. What I mean by that is, when you're subsidizing, you go through huge growth, and at some point you get so big that you can't really subsidize a lot. If you're doing 10 billion rides a year, you can't subsidize two bucks a ride.

Because you run out of money.

That's 20 billion dollars a year. Nobody's going to fund that. So as you get bigger and bigger, the amount of subsidy you can actually put to it is smaller and smaller. And at some point, the amount of subsidy you can realistically put to it is smaller than your efficiency gain from just being better. And so then efficiency outstrips subsidy. Anybody who's a small player in a market, if they're well-funded, has a natural advantage: you can gain market share very quickly and you can force the big guy to burn money.

But why wouldn't the big guy be able to drown the smaller competitor faster?

Well, there are ways to reverse it. Where it's asymmetric going the other way is recruiting drivers. If I'm the big guy, I can give subsidies to drivers, like $1,000 if you join Uber and do 100 trips in that first week. I could suck up that supply. The only way they're going to be able to keep those drivers is to subsidize across all of their drivers, even though I just took a small number of them. So I'm going to suck up all of their drivers unless they defend their driver base. There are a lot of little things like this. It's been ten years since I did any of this, so I'm trying to remember all the ways where it's asymmetric one way versus the other.

I think you hit on it: it's this paying attention to every single little detail. When you were speaking about even the sign-up flow, and how fast the ride comes, and how easy it is to put in your credit card information and everything else, what I'm sitting here thinking about is not necessarily you and Uber in China. I'm thinking about Rockefeller walking by and saying, "Hey, you guys are putting 50 drops of solder on these barrels, and you're doing that because you think it takes 50 so it doesn't leak. Try 48." They try 48. This is in fucking Titan. They try 48, it leaks. "What about 49?" 49 doesn't leak. And he says, "The first year, that only saved us $2,500, because we got one drop. But we were tiny. Now it's hundreds of thousands of dollars." And he did that with a thousand different things. So by the time he got to his scale, you're not competing at all. It's impossible.

And so that's super important. Now, I read Titan after Uber. And I'm reading it going, "Holy shit, this dude was way more hardcore." But the reason why is because we had antitrust attorneys at Uber, and they're making it very clear there are certain things you can do and certain things you can't. They're training me and educating me on antitrust law. Now, at first, when you hear that and you're just a startup kid, you're like, "Antitrust law? What are you..." I can't wait to have that problem. But it ends up being obviously very important. And Rockefeller didn't have that.

No. The laws were passed because of him.

Of course. People use "OG" the wrong way. It means original gangster. He's the OG.

The taxi cartel

I think the other thing about monopolies, too, is that there are different kinds. Sometimes the monopoly emerges because the company is so competitive. Sometimes the monopoly emerges because the company is anti-competitive. And they're different.

That's interesting. Say more about this.

Where I ended up at Uber, the motto was more like, "The one who serves the customer best gets all the customers."

Very Bezos.

That's where we ended up. You can be highly competitive. And look, at Uber we never got a regulation passed that would hurt a competitor. We never would do that. That's just not how we rolled. We never donated to a campaign, ever, to try to get something passed.

You wanted to win because you built the best service. I'm reading this biography right now. It was published in 1975, and it's on the founder of Honda. He founds Honda in 1948. Japan's in ruins, and the technology in Japan is really low at the time. And all the people that are building motorcycles and cars are like, "Let's get together and petition the government to not allow imports." And he was the only one that voted against it. He goes, "No, no. The way to win is to build the superior technology. If we have the best product, that product won't just be profitable in Japan. It'll spread throughout the entire world." Very much like what you're saying here. It's like, "No, I don't want protectionism. I want to win because I built the best product and customers are choosing it."

And also remember, what we were overcoming to do what we do was a system that was perfectly anti-competitive. A government-condoned monopoly, or a government-condoned cartel, called taxi.

People don't understand this. Can you explain the environment in which you started Uber?

Let's start with: what is a taxi? We'll do New York, because it's the best way to tell it. In the early 1900s, there were people picking up other citizens that needed a ride across town and charging them for it. And eventually the city decided, "Hey, look, we want this to be licensed and controlled in some way," or certainly rules of the road. Just rules of the road. So you'd get a license, but anybody could get a license. You'd get that license for free, and they would make sure you weren't a felon and different things like this. And you'd go, "That sounds great. Good idea." Anybody could get a taxi license in New York, and get it for free. And eventually that number got to somewhere around 13,000.

And then those 13,000 people who had licenses (this is now, let's call it, the 1920s, the 1930s) decided that they would lobby the city to give no more licenses out. And the city did some deals. Who knows how that went down in that era in New York, but: no more licenses. And of course, that was great for the people who had them, because as the city was growing, there's more and more demand to get across town, but there are a fixed number of licenses, a fixed number of people who were allowed to do it.

Then the taxi guys go to city council and they lobby again. And the next version of the lobbying is, "We want to be able to sell the license to somebody else." So now it's known as a medallion. Now it's artificial scarcity, and I can sell it to somebody else who wants a cash flow that's artificially high, because nobody's allowed to compete, essentially. And then they went to city council one more time, and they said, "We want to be able to lease out this license to an individual on a daily or weekly basis." And that is the modern taxi system today. When Uber rolled into New York, the driver was getting a 12-hour shift, seven days a week, and there are two 12-hour shifts. Each of those drivers was paying $40,000 a year to rent a car for half the time.

Insane.

Which means the guy who has the license, whose grandpa got it for free, is getting $80,000 a year renting a car to taxi drivers. And that taxi driver, who's paying $40,000 a year for 12 hours a day, for that privilege, gets to be impoverished. That is the taxi system. And it's over 100 years old, so the Stockholm syndrome, or the regulatory capture, is so fricking tight that the difference between the regulator and the taxi company is almost indistinguishable.

And it had to be jarring for you to walk into a system like that. You're just describing corruption.

Legalized corruption.

Legalized corruption.

So what is the taxi system? It is a government-condoned cartel that outlaws competition.

But it had to be jarring for you, because you come in with a better product at a cheaper price that customers love. I've never taken another since I had Uber. You caught me in 2010, whenever you opened up in New York, and you've kept me since then. I've never opened up another app. Sixteen, seventeen years, however long it's been. I'm choosing to do that, and then the governments are like, "No, no, this legalized corruption is good. You, Travis and Uber, get the hell out of here."

So what happens is, being anti-competitive is illegal in the United States, unless you get a government official or regulator to do it for you. Then it's legal. Pretty interesting.

What capitalism is

We were talking before we started recording about capitalism, and you had some interesting ways to describe it. I would also say this show is a love letter to capitalism. It's very pro-entrepreneurship. I'm the son of a Cuban immigrant. I grew up meeting people that came over here on rafts. From the time I was nine years old, I knew I was obviously born into a very special place, if these people risked their lives to get here, and the wealth that this country has created. What I think also has to be called out is this crony capitalism. I like the Hondas of the world: no, I want to win because I'm the best, not because I gave you a bunch of money and you shut down my competitors. That shit should be called out.

So it's super interesting, because in this case, Uber was the symbol of hypercapitalism in many ways. It was embracing all of the values and principles of capitalism. But it started with the most important, which is that an individual has a right to choose between different suppliers of a good or service. It's a pro-competition thing. The consumer has a right to choose between different offerings. The other side of that is that an individual can start a business to provide that service or offering. So capitalism at its foundation is: somebody can start a legal business, make a product or a service, and offer it to people, and the people have the right to choose which one they use. That's capitalism.

So the question is, what's anti-capitalism? Anti-capitalism is the constraint on people being able to start a business or have a vocation that they choose, and/or individuals not having the right to choose which service or product they buy. At the core, that's what it is. Now, people get confused. Sometimes they think something is capitalism that is not. For anybody watching any part of this conversation on taxis, it's super clear that taxis are definitely not capitalism. And it's why they are not very good, and it's why they are more expensive than they need to be.

And if people are taking Ubers today in New York and wondering why it's so expensive and why it's getting more unreliable, it's because after I left Uber, they started passing a bunch of laws that are turning Uber into the taxi system.

I didn't know this.

They have a limit on the number of drivers that can be on Uber. They've turned it into a medallion system that cannot be traded. And as people retire out of driving, the number of Ubers, I believe (I may have this wrong), is either fixed or shrinking right now. And that is why the prices are going up and the service is going down. Uber's thought of as a capitalist thing, but actually the government is constraining it. And why? Because of the taxi owners who want their medallion prices to go back up.

This is madness. Have you ever read Atlas Shrugged?

Of course. A lot of people are saying, "What's happening now feels like the scenes from that book."

It was recommended to me a thousand times. There's a bunch of guests that have been on this show that have talked to me about it in private. And finally I was like, all right, the twelfth fucking person recommended it, I finally read it. And then I went and looked it up. I was like, wait, this was written from like 1946 to 1956, I think, the ten-year period she was writing. The people in this book are the same kind of person today.

Yeah, for sure. I agree with that.

Because the whole book is: we have these prime movers, and then we have these people that are just trying to restrain them. I love what you said: what are they protesting? Progress. But what happens when the people building the progress go on strike? That's a very fascinating theme throughout the book.

Yeah, we get to some pretty interesting places with this kind of thing.

In your career, did you only run into this government corruption at Uber? I know you started City Storage Systems. CloudKitchens was in City Storage Systems. Now you renamed it Atoms. What I love about you is it's all physical world. I think you said you consider it a calling, to digitize...

The physical world.

I love that you use the word calling, though. I think that's really important. Have you run into other forms of it?

It's everywhere, but taxis is by far the most intense. We talk about anti-competitive things and antitrust law and Rockefeller and things like this. No, no, no. With taxis, competition is illegal.

But why do they still have power?

They've captured the regulators, through lobbying, through donations, through legalized corruption. And it's not the only industry where this exists. There are obviously many other industries. But in terms of what I've seen: competition is outlawed.

The China war goes global

How does the China story, Didi and Uber, end? Did the government put its hand on the scale and favor Didi over Uber?

They ultimately did. What happened is the China war went global. Their sovereign wealth funds in China started pouring billions of dollars into Uber's competitors in different regions, so that they would subsidize in those regions and drain my resources.

Wait, before you go there, take me into your mindset when you realize the game that they're playing.

You're like, "Damn. That's real."

Were you not sleeping?

Well, the entire Uber thing was a lack of sleep. So it wasn't like this was a new lack-of-sleep thing. It was a new thing, but lack of sleep generally was a thing, just because I had a global business that was really intense and very game-theory-oriented in the ways that I'm describing, which means it was always on. And crazy, weird things happen in cars at night. The first time I got woken up in the middle of the night because there was a drive-by shooting from an Uber. That's not good. The thing is, what happens in a city happens in an Uber.

And so you're exposed to all the vagaries of human behavior.

Yeah. The roads are the cardiovascular system of the city. There's nothing that happens in a city that the road doesn't touch. People are people. They do things they shouldn't do. Our goal was to make Uber the safest place in a city, and I think we got pretty close to that. And I know they take it pretty seriously today.

The capacity for pain

But go back to the stress. You wanted the stress, right?

It was fun.

Okay. So Herb Kelleher, do you know who that is? Founder of...

Southwest.

Southwest Airlines. Most successful airline in history.

For sure.

Forty straight years profitable. And he was a gangster, right? Would drink a fifth of bourbon every day. Smoked cigarettes on the planes. He was an unfiltered guy. I would love it if he was still alive; he'd be one of the top guests I'd want to talk to. He was doing an interview one time, and they're like, "You undergo a lot of stress. How do you handle it?" And he goes, "I don't handle it. I like it." I get that same vibe from you.

The lifestyle of an entrepreneur, I believe, at its core (there's a couple other things, but this is one prism, one pillar of it) is: I can take more pain than the other guy, and I'll prove it. Once you take on that lifestyle (and it's a real thing; it's not just that I choose to take it on, it is the nature of the thing that I am doing), you are taking on a life of adversity and overcoming, all the time. And once you are seeing adversity all the time and overcoming it, it just becomes normal. The downside of it is you can get used to adversity. It just becomes very normal.

Why is that a downside?

Because you almost start accepting it. Something bad happens, you don't even get mad. You're like, "Oh, that's interesting."

But wouldn't it be beneficial to be unruffled like that?

There are benefits. But you need to make sure you don't get so used to it that it doesn't even bother you. You can get so zen you're unbothered. Now, you still act, but there's something special about the extra fierceness of being bothered, of being upset about something that is wrong. What is adversity? Usually, adversity is some bad shit went down that shouldn't have, and it was done to you. For a farmer, it's a drought. It's terrible. Or it could be a lot of things. Could be somebody stole his crops. Could be pests. It could be anything.

Are you just getting numb to it? Is that what you're saying?

I'm just saying, once you fully embody the lifestyle of adversity and overcoming it, you have to be careful of the ease with which you walk through it, because there is an extra power in being bothered by something that is wrong. You can get too used to wrong things happening.

Have you reached that point in your career?

Well, I would say today, there are very few things that actually stress me out.

Are you worried about that?

Of course. So I remember the things that are important, and that's where I channel fierceness through: what is right and what is wrong.

You're almost telling me you've been inoculated from pain.

It's something like the zen that can happen when a warrior has fought for a long time. You can get used to it.

Yeah, but at least on the outside, you still have this crazy... I told you, you're the most intense person I've ever met, and I've met almost all the top founders in the world.

But imagine fierceness with calm on the inside.

That's what you want, or that's what you're working towards?

That's what I got. That's where I'm at.

You weren't calm on the inside when you were building Uber. That's what you're saying?

I'm just saying, as one entrepreneurs longer and longer, and does it properly...

I've never heard it used as a verb.

...you get to that place. You just get to that place.

"As one entrepreneurs for longer and longer." I'm using that line, man.

Well, I love what you said about the pain, because there's a bunch of maxims from the history of entrepreneurship that I love. I think something that we both support is trying to win based on providing the best service. One of my favorite maxims comes from Henry Ford, where he says, "Money comes naturally as a result of service." If you go read his autobiography, you see how he organized Ford Motor Company. He's just like, "We're going to provide the maximum amount of service, and the money will take care of itself." If I'm just delighting the customer, the bank account will be fine. But my favorite maxim from all of the history of entrepreneurship is: excellence is the capacity to take pain. Which is exactly what you said.

Oh, I love that one. That is 100% true. So once you say entrepreneurship is the lifestyle of entrepreneuring, the lifestyle of entrepreneuring is this pride: I can take more pain than the other guy. You go, "Why?" Well, the best example is a world-class marathoner on mile 21. You ever seen a marathoner on mile 21? Probably on TV. Is that dude smiling? Fuck no. Of course not. Why? Because if he were smiling, if he were just not feeling pain, there's somebody else who will. The difference between feeling pain and not feeling pain is that extra push. Without that extra push, he loses. If he's not getting into that pain, he loses. And that's what excellence is. Excellence is about pushing to the extent of what a human is capable of, the full potential. Because if you don't, somebody else does, and then that becomes the standard of excellence. And all of human progress is through that push towards excellence, which is a push through pain. If it is not painful, you're clearly not pushing hard enough.

And I love that you've tied this to: if you're doing something that's easy, you're doing something that's not valuable.

If you're doing something that's easy, it may be valuable, but you're about to get your ass whooped. Or it may not be valuable. It just depends. Easy could be sitting on the beach for six months. Now, it could be valuable to you. Respect. That's all good. Everybody has that choice. But you're not bringing human progress.

And then you go, "Well, that's interesting. So if somebody sits on the beach for six months, they're not participating in human progress?" I'm like, "Well, how could they?" You're like, "Well, what if they start thinking deeply about life and about philosophy and about society, and they have really amazing thoughts?" I'm like, "Well, did they write them down?" Okay, he wrote them down. So now he's on the beach writing it down. And I'm like, "Okay, but there's lots of people doing that. He's got to be better than those other guys if he wants to be about progress." So now he's really fucking writing them down, and he's honing those words to such a degree that it's beautiful and perfect, before somebody else has that thought and does it themselves. And now he's in pain.

Business became politics

How long did you take from when you left Uber, which obviously had to be fucking devastating and heartbreaking, to jumping into the next thing? Did you sit on the beach for a little bit? What did you actually do?

No. It was six, seven months, something like this. And most of it was fending off lawfare.

So wait, the lawfare, was it criminal?

It was civil and criminal, for sure.

So you're fighting that off.

Yeah. It's corporate cancel culture, lawfare, all the things, on the corporate side. Remember earlier we talked about how business became politics?

We were talking about this off camera. Can you talk about this now?

In the 2010s, there was something that happened in the media, and it was that business became politics. If you just think about your favorite politician and go on the internet today, do you think you're going to see a lot of happy-go-lucky stuff about your favorite politician? Of course not. We know that, because with politicians, just by the nature of what it is they do, there's a lot of mudslinging, and the vast majority of it is just untrue. Though I'd say with some of our politicians today, maybe a lot of it is true. But it's a dog-eat-dog, mudslinging thing, and the headlines are often not true. I think we know that in politics. What we didn't know in the 2010s, what was just starting to happen, was that business was becoming politics: that the headlines you were starting to read about business were just narratives, and often fabrications, with substantial material perversion of truth.

And you were exhibit A for this.

For sure. I would say so.

No, I would say so too.

Talk to anybody who knows me, and they would basically say that, especially if you're talking about ten years ago, the public persona and the actual person couldn't be more different.

Well, I can speak to this. I've been chasing you for a while. There was a dinner, and then I saw you at Michael Dell's house and everything else. Which was funny, by the way: when you walked up to us, I was like, "Do you remember me?" And you go, "Yeah." And I go, "It's time to do the fucking show." And you go, "It's time to do the fucking show." I love that. But what I would say is, in terms of founders that actually know their shit, your reputation is perfect. Sterling. If you're a killer entrepreneur, you say great things about Travis. The only shit I've ever heard comes from investors.

I don't necessarily believe it comes from investors.

I'm saying what I hear.

No, it's interesting. A lot of times it's from the gallery. Now, sometimes investors are in that category, but when I go and do pitches and fundraising, I don't feel like...

I mean, you're Travis Kalanick. Come on, bro.

I'm just saying.

Fucking Trav. Come on. Of course. You're basically unlimited.

Real founders don't listen to VCs

So I was texting Daniel Ek that I was going to see you, and he's like, "You've got to get him to talk about fundraising," which we'll get to in a minute. But I think we have to hit on something really important, because what I loved about our dinner is you just straight interrupted me. Which I loved, because you should have. I was trying to tell you, "Man, listen, there's just something weird: all the content and the podcasts that entrepreneurs and founders are consuming are created by VCs." And then I went to say another thing, and you cut me off. You put your hand in my face, which was hilarious. You're like, "Real founders don't listen to VCs."

We need to talk about this. Because if your friends are founders, you hear atrocious horror stories and bad behavior by investors all the time, that they will not talk about publicly. You went through one of the worst of the worst. Going back, when you were doing Uber, is it just that you raised money from the wrong people? How do you look at it now, and what would you tell a young founder now that has to raise a ton of money?

I've got to first shoot the arrow, which is: you definitely shouldn't raise from Benchmark Capital. Got to get that out there. And then, okay, let's get into the real stuff.

Look, I think it's really interesting to start with where it got weird. Basically at the peak. 2017 was my problem year, right? It was always hard, but this is when it got dialed up. And Benchmark was running a war room. They were an unspoken activist investor that was creating a once-a-week crisis.

Against you.

Yeah, against me. Without speaking of it. Again, there are some things I don't know, but the best I can see is that they wanted liquidity, and they felt like I wouldn't give it. We were already preparing for an IPO, but I didn't tell them that.

Why didn't you tell them that?

Because we wanted to make sure we'd done the right thinking and gotten prepared, so we could just say, "We're going to do it, and here's how we're going to do it." And Bill Gurley's a bit of a catastrophist. It's always the end of the world. And if you think the world is always going to end, that forces you to do really weird things, including trying to take me out. So instead of dealing with that catastrophism, let's just go do the damn thing.

I'll give you lots of examples. We had a fundraise in mid-2014. The last round we did was in August '13, at three and a half billion dollars. That's when we brought Google and TPG in. And then mid-2014, nine months later, we did a round. Gurley was convinced it was the end of the world: we've got to raise, just take your first term sheet. Just fucking take it. And I have a whole philosophy on this, which is: if you want a round to go well and to go fast, you have to have a process. If you just go take the first term sheet, getting the round done will actually take longer, because there are no alternatives. You don't have alternatives, and then it gets weird. The VC will just keep pushing, pushing, pushing, getting more and more and more, and it gets weird to a point where it actually becomes highly likely that the deal just blows up. So I like to say, I never get attached to a price. I get attached to a process. That process is about excellence in fundraising.

Can you explain that process, though?

We'll get there.

Don't let me forget.

I won't. BFS. You're going to have to sit here for ten hours to cover everything. But he was convinced: "Hey, just take the first deal. I think you could get a six billion dollar valuation done right now. It's nine months after the three and a half. Just go take the first term sheet, make it happen." Now, if you're a founder hearing that, you're like, "Dude, I hear you, but even if the world is about to end, the best thing you can do is have alternatives, and the deal will actually get done faster." So we got to a place where I just wouldn't talk to him. If he reached out to me, I would talk to him, but I just wouldn't try to engage, because it was always that. So Emil Michael would handle this part. He would handle a lot of the investor relations.

Shout out to Emil Michael. That dude is loyal as hell to you.

Well, he's just an awesome guy. Not because of loyalty, but because he's just an awesome guy. But of course, that too. And he would do it in a genuine, authentic way, try to handle the objections or whatever. Anyways, two months later, we got a round done at a 17 and a half billion pre.

Whoa.

So that's my point. When you want to do things right, you've got to do things right. And VCs, not all, but many, most, are worried about other things. We were already planning IPO stuff. They didn't know it, but they also never expressed the desire. "Hey, dude, you've got to IPO." It was never brought up. So it was this weird catastrophism, mixed with: if you think the world's about to end and you've got this thing that's worth a ton of money, you can get to a weird place, especially when you're a VC. You don't have any control. You're not running anything. So now your outcomes in life, holy shit, big outcomes, are due to this guy, and you think the world's about to end, and he doesn't. You could get into a place where you're running a war room to destroy him. And that's kind of what happened.

What's the alternative scenario, if you raised from somebody that wouldn't have done that? I'm just going to make this up, but Founders Fund says no matter what, they'll never remove a founder. They won't run a war room against them.

Well, I think there are two parts. First, I'd say a super high bar for a VC is actually: do no harm. There are a lot of reasons why that's hard for a VC.

Elaborate, please. This is important, man. No one talks about this shit.

Everybody wants to make a mark on the world. You might believe one thing or another, but you want to make a mark on the world. And the way I think about it is that an operator who's running a company, if they're good, is a grandmaster of chess. And by the way, that grandmaster of chess, this operator, this entrepreneur, is playing this chess match somewhere between 60 and 80 hours a week, and really knows this thing, and knows many moves ahead, and just sees things other people don't see, and they're in it. And the VC is a chess enthusiast, and they check in on the chess match once every three months. And they're trying to make a mark on the world. They have an opinion. "Hey, why don't you do this or that?" And you're like... Don't go to Jordan and tell him how to dunk, and definitely don't go to him and tell him how to dribble. But it's hard, because everybody has an opinion, and whatever you believe, you really believe it. But if you're not in the thing all in, all the way, every day, 12 to 16 hours a day on this game, it ain't a thing. That's a hard thing for most people to take who aren't running shit.

Why do you think it's hard for them to take?

Because VCs are glamorized, and they have a seat at the table in some fashion, and there are certain powers. You can make a mark. The way to think about it is, you're on the Serengeti, and if an antelope limps on the Serengeti, the lion will take it down even if it's not hungry. Can't even fucking help it. It's just what he does. And that's kind of the nature of most VCs. If you are on the Serengeti and limping, you will be eaten. It's just the nature of it. And the lion doesn't even know why sometimes. He's just like, "This is what I do."

So when you're talking to younger founders, you're saying priority number one is just to find an investor who does no harm?

That would be a high bar.

Achievable what percentage of the time, would you guess?

10%. And then 1% is helpful. But it's hard. How the fuck are they supposed to be helpful? There are different times to be helpful, though. Helpful is in hard times, when you actually need real help. Helpful is maybe personnel, when you need epic people. But it's still hard for them to participate, because they're just not in it that deep.

QED and the five-room auction

So can you explain excellence in the fundraising process, and how you think about it, the system you developed for this?

Yeah. It could be changing over time, but I certainly have my approach. It's interesting, because I'm just finishing a fundraise right now, and it's interesting to see the world change. I think part of what we're seeing right now is that we're in a super cycle. I don't want to call it a hype cycle, but a very bullish cycle, which means different things happen than if it's average. When it's average, it's super important to tell a beautiful story that numbers are woven through. A beautiful, entertaining, interesting story with analytical numbers woven through it. And you basically get to what I would call QED, which is: you've dissected the chess match to such a degree that it's very clear what it takes to win, and that you have the winning formula. And you get to the end of the thing and you're like, "It's just proven. It's not even a question anymore. It's QED."

That's in normal times. And I think in super cycles, or whatever we want to call what's going on right now, that rigor is not as important. And if you go too far on that rigor, it could be too much.

Explain that.

You hear stories of entrepreneurs that just sit down around a table and have an idea and they get money. That's the opposite of QED. But if you have a two-hour-long presentation that goes QED, in a super cycle you probably should shorten that to 45 minutes.

Why?

I don't know how to put it. It just looks like too much. Like, why are you going so far, dude? Is something wrong?

You'll talk yourself out of the deal.

Why are you so detailed? It's this weird dynamic. It's very funny. "It's cool, bro." Maybe it's also because you're projecting many years out. The more super cycle you're in, the more into the future you are, and that future can't really be presented as tightly with numbers.

Yeah, so what are you talking two hours for? You don't know.

So then it's about the theory of the case. That's probably the way to think about it. With a mix of super cycle plus the speed at which technology is moving and the true exponential inflection that can occur, you're talking three to five years out. There's almost no set of numbers today that can QED the five-year thing in this crazy 100X situation that's probably going to occur. So you have to talk about the theory of it in many ways. And so maybe that's why it's a little bit different today.

What's common to your approach in a normal cycle and the super cycle you described? What is something that you'll use in both?

Well, I still do some version of it. My style is QED.

And then the multiple bids thing is mandatory, correct?

Yeah. So QED is the storytelling, and then there's an auction process that you hone when you're doing it. This has to be measured against how many resources you have to do QED and how much deal resources you have to manage a full auction.

Explain that part to me.

If I have five rooms going at the same time, I have to have... Five rooms, simultaneous, for an entire week.

Where did you even get that idea?

It was just the expression of the right thing. If you keep incrementing on something and keep making it better and better, you will end up there.

What was the quality of the business when you were running this five-room process?

That's peak Uber.

Peak. So nothing's even close.

No, there are other things, but it was peak Uber. But the point was, I did it QED. I showed, at the atomic level, how the whole system works, with a very analytical view, but also a bit of performance art, because you're storytelling.

Okay, explain what's happening in these five rooms, then.

Five rooms, 12 hours, one week.

Who's in the rooms? You don't have to say the people.

No, it's okay. So I'm in the $250-million-check-and-over room. Then there's a $100 million room and a $50 million room and a $25 million room. And there'll be a guy in the $25 million room who works for a guy who works for a guy who works for me.

And what are you guys saying in all these rooms?

We're telling the story. That story is the core. And now you have it being performed in four rooms at a time.

And there's a deadline, and the price is going up.

Well, no, it's not the price going up. That's the misunderstanding. The right way to do it is to start with a low price.

Explain that.

Remember I said, "Attach to a process, not a price"? A lot of entrepreneurs will get attached to the price and not the process. And you have to be careful. It's very easy to get sucked into that, where you get some signal of what the price should be, and you get attached to it, and then that becomes your price, but you haven't cleared the market. So you get attached to the price, and then when I throw a price out, you're on the other side of the table and you come in under it, and now we negotiate. It's a very bad place to be, from my perspective. Where you really want to be is to start at a low price and say, "Look, I don't know where the price is going to go, but I know it's at least here." And if it's low, the VC is like, "Okay." Once they give you that read, once they lean forward like that, you're like, "Okay, we're good. We have a bidder."

And then you go to the next guy. It depends on the nature of the round. If you're doing a winner-takes-all round, then you would go to the next guy and say, "Whatever that guy said, X plus 5." X plus Y here; just say X plus 5. And that guy does the same thing. And then you go to the next guy, and it's X plus 5 plus 5. And the next guy, X plus 5 plus 5 plus 5. And all the while, it's a winner-takes-all deal. You go back to the original guy and you're like, "Dude, it's going up. It's going up." And you're telling people it's going up. That's a winner-takes-all approach. And then you do a going once, going twice. When you start to peak out, when people are getting a little high altitude, sweaty, you're like, "Okay, going once, going twice, sold." And then you close it down, and winner takes all, and they take the deal.

But most big deals today are not working that way. When you're doing multiple rooms at a time in something like this, it's more like: how much would you put in at this price? How much would you put in at, I'm just making this up, eight billion? And how much would you put in at nine? And how much would you put in at ten? How much would you put in at twelve? How much would you put in at fourteen? Fill the sheet out. You decide how much you'd put in at any price that we end up at. And you do that across everybody.

Is that what you're doing now?

Hold on. Slow down. Slow down. Then you aggregate how much demand you have at every price. As the price gets higher, the demand goes down. You now have your demand curve. And you're like, "Okay, I want to raise a billion." At the really low price, I have three billion of demand. At the higher price, eventually I have a billion dollars' worth of demand. And I go, "Okay, that's the price that I could close at right now." Then you go and tell all the people that got cut out, because they didn't bid at that price (there's less demand at this price, which means there are certain people who didn't bid here), that they're out. And you're like, "But you could fill out another sheet if you want to make some moves." So they fill out the sheet, you do the demand curve again, everything moves a little bit to the right, and there are other guys that now get pushed out. You do it one more time, and then you clean it, and you're done.

So what are you doing now?

I'm about to close a deal.

Do you want to say how you did it, though? You don't have to say numbers.

I can't do that, no.

Okay, fair enough. Come back on in a few months and you can break it.

Yeah, in a couple years I'll go, "Here's how this one went." You've got to put time in between. You just did a deal, you know what I mean? But I would say I did it slightly differently this time around.

Chalk on the shoe

I'm very curious how you protect yourself from what happened with Benchmark and Uber ever happening to you again. How are you selecting? It's obviously not just the price. You're not taking the highest bidder. How are you picking your partners?

Yeah. You also have to be really careful not to get into victim mentality. What I mean by that is: what was my part in that dynamic?

I was thinking while you were speaking: what if we could ask them, what would they want you to do that you weren't doing? Maybe say, "Hey, we're about to fucking IPO."

That probably would have saved me. But also, I didn't kiss the ring. I think Gurley wanted to feel homie with me, and it just never was.

Homie to me is different than kissing a ring, though.

But it's similar. Okay, let's put it in that category. We don't have to fucking go there. So there's that. That's one thing I could have done differently, for sure. Would have changed everything. And there were people inside of the company who became his partners in the coup. Those individuals shouldn't have been there.

Did you suspect them at all before?

There was definitely something wrong, is what I would say. Let's put it that way.

Every decision I made at Uber, I defend to this day. I wasn't 100% correct, but always good intentions, always coming from the right place. Generally, just did the right thing. One of my lawyers put it this way. He made a sports analogy: "Do you have chalk on your shoe?" That would be going out of bounds, doing something you shouldn't have done. And I'm like, "Never had chalk on my shoe." But in order to know, you would need an electromagnetic scanning microscope, with a reverse-angle slow-mo replay, to verify that there's no chalk on the shoe. So the problem was that I ran too close to the line in too many situations. When you are big and important, the scrutiny and the expectation is that you don't run that close to the line, even if it's correct. And that is a thing I definitely did not understand.

And it comes from what I did before Uber, which was a really hard startup. First four years, no salary, ran out of money several times, super grind, lose all your friends. It was the hardest kind of... I like to say it's the non-luckiest entrepreneur journey of all time. You can't call it unlucky; I eventually sold. But you definitely would never call it lucky. That's for damn sure. It was so hard that I had to be epically precise and hardcore just to pay the bills and go to the grocery store next week. And that precision and intensity made Uber what it was. But I was running a 70 billion dollar company the way somebody who thought he was going to starve next week would run it.

That is fascinating.

Super-intense precision, perfection, obsession, because he's not sure he's going to be able to pay the grocery bill next week.

Did you understand that was your approach at the time you had that approach? Or did you have to leave and look back and figure it out?

It's probably a little bit of both. But I take pride in that. At the time, it was a pride in going all the way, but maybe not understanding it the way I understand it today.

Outgrowing fear

I wonder how much of that is a benefit. You're one of the most aggressive founders in history. You're wiser, more experienced now, with more access to resources, a better network. I wonder if this version of you could compete with that version, or if that aggressiveness is just what the... You created the entire category.

Yeah, no, I understand. It would be super fun if there was a universe where I could compete with my younger self. That would be fucking awesome. I would love that so much. I would kick his ass.

Okay.

Now, there'd be certain things he's doing because he's younger, and there's a certain thing to that. Remember I talked about the passion for right and wrong? As an example. There's something to that. But also, what I notice today is that most of the things that would take me X amount of time ten years ago, I can do in X divided by three today. And not because I've got Claude over there. That's a whole separate thing. I'm just saying: you read my Atoms vision note. I don't even know if I could have written that back in the day. Not that good. I can just flow and get it done. The core of that was written in an hour and a half. That kind of thing.

What is it that caused you to accelerate now, though?

There are different things. A lot of early founders have a fear of failure. And what that does is create blockage around progress, because you're bogged down. The psyche around fear of failure fucks with your ability to get there.

Well, the fear of failure could either stand in your way, or it could push you from behind, right?

It could push you from behind, but ultimately, you will never be truly world-class if you have a fear of failure.

But how many entrepreneurs have you met who said, "The fear of failure is greater than the love of success"?

I understand that. I'm just saying it will get you places, but it won't get you all the way.

Okay, in that version of Travis, where you're running a 70 billion dollar company...

Well, no, I would say I was transitioning out of fear of failure.

Towards the end, in 2017?

We don't have to put a specific date on it. It's just a spectrum. I'm transitioning out of it, because remember where I came from, just before. So I'm transitioning out of fear of failure.

How old were you when you started Uber?

33.

33, and you had a couple million bucks, right?

Yeah, that I put all into my friends' startups. I had nothing. So it's kind of funny.

Did that work out?

So I was the first investor in Expensify. There's a healthcare IT company that still hasn't gone public. It's really funny.

Okay, so not a lot of resources, and still young. 33 is still young. So it makes sense why you felt the way you felt.

Yeah, but it's just about the background. It's about what the previous experience was, not about my age per se. It was just about what experience I had just come out of.

Specialized robots

I love where the conversation has gone, because what I'm hearing from you is that there's this theme that runs through you as a person, and then through your approach to company building, throughout these companies. But we barely touched on what you're doing now. Let's get into Atoms. You said you wanted to start with the mission, where it says, "Physical automation to transform industry and move the world."

AI and robotics to totally transform industries, but one industry at a time, and specialized robotics to do so. For instance, if you want to make 1,000 pancakes an hour, you wouldn't have a humanoid do it. If you wanted to get a car to move down the street, you wouldn't have a humanoid drive it. I think humanoids have their place, which is, let's call it, low-scale tasks in environments designed for humans. For example, you're in a house. Clothes need to be folded. But it's not like you're folding clothes all day long. It's one of the things. There's no way you'd buy a robot for tens of thousands of dollars to just fold clothes, because it's just not a big enough problem. So now you need a machine that can do many different types of things in the home. It needs to fold clothes, it needs to take out the trash, probably needs to wash dishes. There's a bunch of things. That's a very generalized thing. It has to be able to do a lot of different things, and it's in a very human environment. The best form factor for this thing is a humanoid.

But I'll bring up the 1,000 pancakes an hour. Imagine a humanoid making pancakes. Well, it would make them like a human. By the way, if you were just making pancakes at home once a week on a Sunday, because you need a machine that can do many different things, including make pancakes, it's all good. But if you needed to do 1,000 an hour, you'd probably need, I don't know, 100 humanoids in a row doing this, right? Versus a very simple iron apparatus where the batter gets pushed into it, it's hot already, and it's pushing out maybe even 100 pancakes every few minutes. So specialized robotics, machines that are specialized for the task at hand, is how I look at what we do. Industrial scale, where there's real change to an industry by automating the whole thing.

And so you go, "Okay, well, I've got a lot going on in food already." The idea is: can you get a meal that's prepared and delivered to you so efficiently that it starts to approach the cost of going to the grocery store? Pretty awesome if you could. And it's got to be a high-quality meal, of course. But answering that question, "Can you?", requires you to have what I would call industrial real estate for food e-commerce. What do I mean, food e-commerce? We know what e-commerce is. It's got Amazon warehouses everywhere, major hubs, big distribution centers, DCs. But food e-commerce is a little different. It is a warehouse type. You need to do logistics from it, but you also need to do manufacturing. There's no manufacturing that's happening at an Amazon warehouse, because everything's manufactured somewhere, it gets delivered to this big warehouse, and then it goes from there. But food has a 30-minute half-life. So the manufacturing and the logistics have to happen at the same place, and it always has to be 15 minutes from where you are.

So now you have a very different situation, where you have real estate in urban and suburban environments that's always 15 minutes from anybody. You have an urban production and logistics fabric across a city, which is: I have the real estate, then I have robotic food production, because then I'm taking the labor cost out, and then I have robotic logistics. Because right now your $15 bowl that gets delivered to you somehow became 30 bucks. It's of course expensive to produce, but every time there's a drop by a courier, that's another 12 bucks. Industrial real estate, robotic production, robotic couriers.

Finding your sport

Was there a specific reason you started with food, though?

It just caught me. I don't have a list. Well, first of all, of course I did Uber Eats, so I was very familiar with this part of things, but nowhere close to the atoms that are necessary to do what I just described. I like to say I have lots of ideas all the time. I'm an idea factory. But other people have great ideas too. An idea comes to you, if that makes sense. And I like to say you go out on a date with the idea. Was it a good date? Did it go well? How did you and the idea get along? And who you are is going to be a big part of which idea works for you.

You call this finding your sport.

Yeah, finding your sport, or your business soulmate. Be in touch with who you are, and then when the right idea comes your way, you just know. You just know.

I thought I understood how you thought, and now that we've been talking for several hours, I think I'm getting a little closer there. But then I read what you wrote, where you're just like, "Well, look around, dude. Everything that you see in a city, in a civilization, has either been grown, mined, or manufactured." And so I'm like, "Oh..." You're into details, like when you were describing the Uber sign-up flow earlier. But you zoomed all the way out. It's like: I'm going to start with the material constituents of everything that exists in the world.

So when you look around you, everything around you is grown or mined, manufactured, and moved. That's how we look at the world. And then, when you think about physical AI, the automation of movement and action in the physical world, you look at what I call the physical AI tech stack. Real estate's part of that, for the reasons I've described as it relates to food: the industrial scale, what I call high infrastructure, heavy-duty energy, heavy-duty mechanical systems, because you're extracting air and then tempering it and pushing it back in. Real estate is a big part. What is a mining company? It's actually real estate. So the ability to take land and turn it into productive progress, essentially, is an underappreciated and not-understood thing, and it is most definitely a big part of what I would call the physical AI tech stack.

Look at Tesla and all the things Elon's doing. It's obvious that real estate is his jam, or certainly his team's jam. He doesn't talk about it as much, but it's a big part of what happens. He's starting a fricking city, right? The head of HR is basically the mayor of a city that he's building, you know what I mean? So it's a really important thing. But you can also go further than that. Everything we're seeing in technology (a lot of times we talk about superintelligence) is a function of: I need to have energy and I need to have minerals at the very base. Lots of energy. We talk about data centers now in gigawatts or megawatts. So I need to have energy and I need to have the minerals, and then I have those two things, and I can get superintelligence eventually, working those things hard. But where does the energy come from? You're like, "Oh, it comes from the sun." Okay, but how do you capture it? It goes back to minerals. Land is the whole damn thing. So there's a really interesting perspective on how land plays a role in the future of physical automation, physical AI. Autonomy in the physical world is very dependent upon it, and that's why mining is so interesting.

You're not owning the mines, correct? You're just making them more productive with gainfully employed robots?

What we call gainfully employed robots.

Which is hilarious, by the way.

Yes. Because right now... Look, I do think, of course, humanoids are going to be gainfully employed. They're not there yet, but they'll get there. But right now, the demos are dancing and martial arts. There's a humanoid Olympics in Beijing, and they're doing a marathon. You're like, "Okay, they're not quite there. They're going to get there." But I kept thinking, "Man, imagine if you put wheels on them." And this gets back to humanoids being good at certain things and not others, and having a purpose-built machine for the task being important.

So wait, you said two very interesting things. Your life's work is digitizing the physical world, and then you're saying that for Atoms, you're going to attack one industry at a time. The physical world far outstrips the digital world. So you didn't stumble into it; you picked an infinite game. There's no limit to what this company can expand into.

Look, I have a little bit of an issue with "infinite," but it goes very far. Look, the mission for mining is more productive mines to power Earth's industries. We can go to a gold mine CEO right now and ask whether he wants 20% more gold per year. Why? Because when you automate it, that's the output. And you make it cheaper to go to other places, and even to get more gold out of that mine than you would get before. So it's getting more per year, it's getting more than you otherwise would in the totality of that mine, plus being able to go and do more mines than you otherwise would, because the OpEx is so much lower.

But if you're increasing the raw materials, then you're also increasing overall industry in the world, period. And then you could go and automate and enhance those industries as well, right?

The point is that if you get really good at minerals and materials and land, you get good at automating, at making land productive, at powering progress with land. It's the lever that moves the world. So if you automate the thing that is the lever that moves the world, it's the ultra lever. And it's just kind of fun. It's just actually cool. If you see a picture of a machine that, loaded, is over two million pounds, and it's the size of a building, and it's autonomously moving around: pretty cool. The dream in this is, Elon willing, really, one day he's going to be sending missions to asteroids to mine them. Maybe we can help out in some way. That'd be a lot of fun.

You have mining, you have food.

Transport. And the mission there is wheelbase for robots. If you have specialized machines that act and move in the physical world, which is what we do for a living, you have to have wheelbase. You have to automate how they move. Some people think about ride sharing when they think about this, but there are just a lot of things you're not thinking about. I was talking to one of the large food suppliers in the US. They supply all the food to the restaurants. They're spending three billion dollars a year on the labor that moves the pallets on forklifts. And this is just a little drop in the bucket of all the things that are moving, right? What about freight? What about parcel delivery? What about food delivery? We talked about that on the food side. Once I knew I had to get into autonomy to complete the food story, that's when the Atoms thing came together, beyond just food.

Many companies inside one company

One of the things Daniel Ek was saying to me about you, that he finds most fascinating, is your propensity to build a ton of separate companies inside of one company. You did this obviously at Uber. You're doing it again at Atoms. Is that just your natural... Is that what you meant by your business soulmate? That you're just like, "I don't want to work on just one product or one business"? You want a conglomerate? How do you think about this?

No, that's not how it works. But remember: the only constraint to our imagination is management capacity. So then the question is twofold. Do you have an imagination, and is it any good? If you do have an imagination and it's good, you're going to have interesting ideas that should happen. There are many ideas that maybe either shouldn't happen or somebody else should do, but there are going to be many ideas that you should do.

So what does an actual organization inside of Atoms look like, with all these different businesses? Does every business have a CEO? Do they report directly to you? How did you actually structure this?

You have a business unit leader, and then you might even have sub-business-unit leaders as well. You really try to empower them to do their thing. I look at that as alignment up front, accountability on the back end. What are we trying to accomplish? How are we going to try to accomplish it? What do we view as risky, and what's a no-brainer? And how do we do accountability as we go? And then I approach it with a management style which I call problem solver in chief, which is: I spend my time on the most impactful problems that are not already being solved.

That's how you dedicate your time. Is that the directive that you give to everybody?

Yes. I've got a certain number of hours per day, but that's a tiny fraction of the problems that need to be solved.

Yeah, that's what I'm trying to figure out.

So that flows down. Now everybody's got their remit, let's say, and they solve problems in that area. It's flowing down, but they are the problem solver in chief, deputized for their area, all the way down to the bottom.

I've heard you speak in the past about an emphasis on hiring and empowering young people. Do you still put an emphasis on that? Is this business different than when you were launching new cities at Uber, for example, where you gave a lot of responsibility to aggressive young people?

Well, okay, again, there are really interesting ways to do it. I have this concept I call finding the line. So there's a line. On one side is order: lots of structure. As you pull further and further back into order, you have lots of rules, lots of structure, lots of process, and eventually lots of bureaucracy. And if you go too far back from that line, you're going slow and people are bummed. And then you go to the other side of the line, which is chaos: lack of rules, lack of process, lack of structure. And as you go deeper and deeper into chaos, you also get to a place where you're going slow and people are bummed. So that line between order and chaos is innovation at speed and at scale. And the job of every leader is to find that line. And it's not in two dimensions; it's in 80 dimensions. And the best leaders are able to find it. Probably the most approachable way to describe this is: the fewest number of rules while staying out of chaos.

But go back to launches at Uber. You could think of it as: okay, there's a bunch of 23-year-olds launching cities. What happened was, at the beginning, for the first 20, 30 cities, I was deeply involved in whether that city was going to get launched. Somebody would go out: "Hey, go launch a city. Make something out of nothing." And there'd be some kind of playbook there, but a lot of it was undefined. But nothing would actually launch until it got to a pricing call, because pricing in the transportation space is the sum of all strategy. And so the pricing call goes, "Well, what's the regulatory situation? What's the car type that you're going to use because of that regulation? What is the average wage in the city?" Because that's on the driver's side, and that's part of the cost, of course. You basically go through every aspect of the city that relates to transportation. How long does it take to get around? Where are people going? You ultimately get to a price, but it means you have to understand everything, and how you get to that price matters.

In the first 20 cities, I was on the pricing call. In some of those cities, man, it would be eight pricing calls. It could be eight hours, ten hours of pricing calls before we launched London, as an example. But I never solved the same problem twice. Once we solved it, it became part of the playbook, and eventually we get to city 20, and that pricing call takes five minutes. I stopped going to them. Didn't matter anymore.

But the key thing I was trying to get to is that you have a 23-year-old who can go and launch a city. Even at the beginning, when I was still involved in the pricing call, they wouldn't see me till the pricing call, but they knew I was going to be at that pricing call. The one rule was: you can't launch until I say yes at that pricing call. So they would come ready to play at that pricing call, and they knew that if they didn't, I'd be like, "No," and that sucks. And so they would put everything into making that successful, which means all the other things they're doing beforehand are going to be organized towards doing it right, because they want to win. And so now I've got one rule, which is that pricing call. The fewest number of rules while staying out of chaos. If you didn't have that one rule, you'd have 23-year-olds running around doing crazy shit.

Order against chaos

That's awesome. It made me think of another line that I love, that you put on the Atoms website, where you said, "Chaos was the law of nature, and order was the dream of man." My interpretation of that line now, having spoken to you about this, is that you're imposing order on the chaos of the physical world. That's what your company's trying to do.

I almost think of it as negentropic. You could get into a very energetic debate with certain people about negative entropy. But civilization is an attempt to locally slow down entropy, and maybe even go negative. It's building structure against nature's tendency towards chaos. That's what civilization is. And so Atoms is essentially the structure to defend civilization and move it forward into progress.

There's another line. When you speak, there are a lot of things that you say that remind me of Rockefeller. In the early days of the oil refining industry, he used that word: he thought it was a chaotic industry. It was. He's at the very beginning. This is when the entire oil industry is solely concentrated in Pennsylvania, for God's sake. And he goes, "I'm going to impose order on this chaos." That's the line he used.

Progress is the organization and structuring of the world towards human happiness and liberty and transcendence, in some fashion. That's how I view what we're doing, at maybe the very highest level.

I think that's an awesome place to close, Travis. It really means a lot to me, you taking the time. Really appreciate it, man. Thanks.

Great.