The power of storytelling in VCs, with Jeffrey Katzenberg and ChenLi Wang

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1:39Steve Jobs, one of the great storytellers I've ever come across. He was a storyteller and a marketer and could share his dream with all of us in a way that we could connect to, relate to, and understand something that we didn't really understand until it was in our hands. That's Jeffrey Katzenberg, the legendary movie producer, co-founder and former CEO of DreamWorks, and today, founding partner of Wunderco. It's an investment firm on a mission to build world-changing businesses in the tech and AI space. He believes a good story is at the core of any successful business. You know, storytelling is an essential, fundamental ingredient every step of the way, from the smallest little company to NVIDIA or Apple or Walmart or, you know, the biggest company in the world.

2:33Storytelling is part of their everyday business, and the better storytellers are the bigger winners. On this episode, we'll learn about how AI shows up in Jeffrey's work today. And we're also joined by his partner at WonderCo, Chen Li Wang. He's one of Silicon Valley's leading product thinkers and was previously the second business hire at Dropbox and led the creation of the Dropbox app. They're applying their combined experience in storytelling and tech in surprising and unique ways. I'm Rana El-Khalyubi, and this is Pioneers of AI, a podcast taking you behind the scenes of the AI revolution.

3:22Jeffrey and Chen Li, thank you for joining us today on Pioneers of AI. Thanks for having us. Appreciate being with you. Glad to be here. So first of all, you have some exciting news to share. You announced an investment in Kimball Musk's NovaSky drones light show company. Tell us more. Jeffrey, I'll start with you. Kimball bought this company from Intel about three years ago. It really was very extraneous to their core business. and Kimball saw a real opportunity there, bought the company. And I saw, you know, sort of amazing art exhibit of this at Burning Man. Yes, I go to Burning Man. So I know it's hard to see this person, you know, as a burner.

4:10But there I was on the, on the playa and, you know, at one o 'clock or two o 'clock in the morning, this, you know, drone art because it was more than just a you know a fireworks or any of that it just blew me away i mean it was so beautiful so creative and artistic and so i sought out and uh met kimball for the first time um lost track and then uh earlier this year we reconnected um on a new piece that he did actually for something I had been working on. And I just seen how far it had evolved in just a short period of time. And what a great entrepreneur he had been and how he had very methodically and organically built this into a very creative enterprise, but also a very smartly built business.

5:09It was a cash positive business, bootstrapped, never taken outside capital. And the more we talked about his ambition and his vision, he understands technology deep in AI for many years, the software itself, which AI is essential to in terms of how to create imaging and programming, moving thousands of drones around, you know, simultaneously to create these visual experiences. And then, you know, the big idea, what could this be over the next couple of years? And it just, it was just very, very exciting to me. Chen Li, you, is there an AI play in these AI powered drone stories? Well, certainly in the technical execution of how he pulls off the storytelling, these drones use AI to autonomously fly to create this.

6:10I think it takes three or four engineers to control and manage these thousands of drones. And you couldn't have done this if it was obviously all individually human controlled. Is the idea to make this platform available to creators and marketers and event organizers, or you have to go to Nova Sky? No, it's meant to be proprietary. Now, here's the analogy I would make. In 1990-ish, I saw this short film called Luxor, the lamp that was made by John Lasseter and Steve Jobs. and I was mesmerized and blown away, frankly, in much the same way. And it really, to me, showed just the extraordinary innovation and new opportunity for a different type of film and storytelling, very, very different from anything that had come before, certainly anything I had been involved with.

7:16And that led to Toy Story, which led to what was a revolution. Today, four of the 10 top films globally are CG animated movies 30 years later. Today, I believe what Kimball has created and shown us is the equivalent of that short film. And the promise is as grand, in my opinion, as what he has done. You know, people keep thinking of this as a movie, but it's not really a movie because a movie is is a sort of flat screen, whereas drones are multidimensional. And so the opportunity to have Tinkerbell come literally fly out and down to the audience and touch a kid or Toothless the dragon to actually fly around the audience and over the heads of them.

8:11There's so many innovative things that could be done with this that are unlike any experience. I think Kimball has done something brilliant and much bigger than he even recognizes yet. So I'd love to hear the origin story behind WonderCo. And Jeffrey, you've had a 40 plus year career in Hollywood and then decided to transition to Silicon Valley and explore kind of tech a little bit more. Why make that transition? Well, you know, I had, again, 45 years in the movie TV business. And, you know, they were great years. And I was, you know, blessed to be involved with hundreds and hundreds of movies, 41 animated films, more than 100 TV shows, five Broadway plays.

9:00I mean, it was fantastic. But I had done that. I, you know, there's a, this moment came a decade ago when, you know, Ryan Roberts showed up at my doorstep on, on, unanticipated. It was a moment where it was very clear that the media industry, movie TV industry was going to go through major, major changes. I can't I don't want to say I had a crystal ball and saw all of this coming saw a bunch of it coming for sure the idea that an independent animation studio even if we were the biggest animation studio in the world wasn't going to be able to be competitive in the long run that was clear Ovid came along and obviously changed you know sort of I think took the timeline which may have taken 20 years and collapsed it into three or four.

9:51But for me, every step along the way in my movie career, I always saw technology as a competitive advantage and used technology. I wanted the people that were working for me at the studios that I was running to have the latest and greatest. And so I would go on these migrations to Northern California pretty regularly looking for what would be the greatest, you know, hardware and software to make great movies. And so there were many, you know, Pixar being a perfect example of that. But, you know, DreamWorks had a studio at Redwood Shores with 800 employees. And the first Shrek movie was made up here, not in Burbank.

10:40So my connection to here, although not very obvious from the outside, has been pretty deep over a very, very long period of time. And I very much admired, even though I'm not a technologist, I don't read code. I used to say that I don't write code, but actually anybody can write code now. So I don't get to say that anymore in this, but I certainly understand the power of it and the application of it. So that was the idea is that I wanted to start over, wanted a new career. wasn't scared of a blank slate i've done this other times and uh you know i have a mission statement that i have uh sort of two of them that have framed my life my career my you know both in work and in play and in life and in family uh and so there are two of them the first which is the most personal to me is never let your memories be greater than your dreams.

11:51And what that means, right, is that every day I get up and look for what's in front of me. And I'm excited by the challenges, by the opportunities, by the things that go right, the things that go wrong, you know, the roller coaster of it all. But, you know, metaphorically, I'm in a car driving 120 miles an hour, and I cannot look in my rear view or side mirrors because it would be fatal, right? And then the second one, which is a different conversation, we don't have to have or we can have, which is, you know, I've always tried in everything I do, everything, this is as much personal life as it is professional life as it is friends as it is family two very simple words which is exceed expectations my hope and ambition and everything that i do is can i just do a little bit better than what is expected of me whatever the circumstances whoever i'm with so anyway 10 years ago, I set out to find people who know what I don't know, who had many of the same ambitions, which is to both build companies and also invest in the best of them in the tech world.

13:14And I would say one of the greatest and most fortuitous things that has happened to me in my life is that I met Sujay Jazwa and Shen Li, who had been together for many, many, many years. So they had sort of been, you know, Batman and Robin. And, you know, I joined up and we became the three musketeers. I love it. So Chen Li, how did you cross path with Jeffrey? And you have a very different background. I think your background is more technology. Yeah, I, on the opposite of the spectrum, picked up coding and programming when I was 13 and have loved it ever since. Those were ancient days in terms of how hard it was to get going compared to what we have now.

13:54So very jealous of what AI has accelerated. But that's really carried me through coming out here to the Valley in 2002 and being fortunate to be at a school like Stanford, which really encouraged both the technology and pushing forward on the technical side, but also how do you build products and companies that have an impact on the world. and through that ended up at Dropbox with Sujay. We were both actually in venture at NEA before joining Dropbox and that was really just a wonderful platform and a journey to be on to see how a piece of software could create magic to move files around to then keep individuals, families, and later companies in sync across organizations, across geographies.

14:48it takes intuition and vision and craft to turn pieces of technology into products that are accessible by the rest of the world. And much of the value is created in that second part, as much as in pushing the technology forward. We're just at the beginnings of this next AI, and there's going to be a thousand, a million wonderful products to be created. And we have the privilege to be building and partnering with founders on that journey. When we come back, we'll get a peek behind the curtain at WonderCo, diving into the philosophy behind the company's strategy. Stay with us.

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16:13so let's talk about wonderco for a second because you both incubate companies and also you invest directly in companies like say kimball musk's nova sky i want to dig into the incubation part first what criteria do you use to decide on whether i imagine you come up with hundreds of ideas so what does it take to actually incubate an idea and form a company around it there's usually a couple things that come to mind. One is by the time we started WonderCo, all of us in our individual journeys have been part of prior scaling and building experiences. It takes just as much work to build a million-dollar business, a$10 million business, a$100 million business.

16:53Building is just hard. And so there's a lot of deliberateness in identifying the markets that can be massive in having an impact. And secondly, having some sense of our core competencies and our right to win. And it doesn't mean that you should also be exceeding expectations and pushing the frontiers. There's a big difference between jumping into a circle that you have no clue about versus it's adjacent to areas that you already have had experiences building and scaling. So those two things of go after giant markets and where your core competencies are, those kind of come part and parcel in that initial process.

17:40The second element is we do come across both in terms of just our ordinary day. One of the things we say is we think at the end of the day, every company is a consumer company in the sense of being able to articulate what is the end user pain point or problem. If we can't explain that to a lay person, this is one of the reasons why I think Jeffrey and Sujay and I really have clicked is some of the underlying technology is so esoteric, but at the end of the day, what it's delivering, it's just got to be easy to understand and get. If you can't achieve that, it's probably not for us. So one is understanding that kind of final basis.

18:22And two, we will do a market map. We will talk to people in our network, our ecosystem and people will introduce us to other people. And sometimes we'll find an exceptional company that's actually already been created tackling this vision. In that case, those are the times we invest. It's way more exciting and less work to be the rocket fuel when somebody else has already built the rocket and it's already in flight than to get something off the ground. But there are times we don't come across anything. We have canvassed the market and have a pretty prepared mind about the size of the opportunity, the pain points facing customers or consumers at the end of the day.

19:05And in those cases, we'll seek to build a company, incubate a company. Jeffrey, many of WonderCo's investments are AI-driven, and we'll get to that in a second. But before that, I just want to zoom out. What are the industries where you see the most disruption happening because of AI? It's probably easier to ask what's not. True, right. I think for all of us today, we are aware of the implications of this. When you look at things that are revolutionary, not evolutionary, particularly in the early phases of it, there's for sure going to be good and bad believers and doubters. If there weren't, it wouldn't be that really actually revolutionary.

19:47And so the fact that we're, you know, coming up on year three of the introduction of ChatGPT, it's a baby. Just so we're clear, AI's been around for 10 or 15 years. Machine learning's been around and we've been involved in things. They didn't call it AI, but that is, in fact, what it was, is. But there's no question this has really fueled things, these LLMs and the, you know, investment that these companies are pouring into just the sheer scale of compute and, and the application of that. Um, I, I'm an optimist, um, you know, I have a bottomless well of optimism. And so, uh, I'm attracted to those things that I think, um, can add to the quality of life.

20:36You know, we, we, we focus on the consumerization of software. How can software be deployed to make people smarter, better, faster, healthier, just anything at all? Like, how can we do good while doing good? And so that becomes our sort of mandate here in this. We're not trying to figure out how to put people out of work. We're actually trying to figure out how to put them to work in better, smarter, more rewarding ways. There's this company we just recently invested in called Granola. It's magical. Like, I don't understand how this thing does what it does because it's just so cool. It's so smart.

21:19Granola is an AI-powered note taker that listens in on your meetings, provides real-time transcription, and combines that with your manually typed notes. It's pretty cool. I'm a compulsive note taker, and it saves me so much time. I have found for me, my ability to go off and engage and take meetings sort of solo without a wingman woman along with me, where NOLA has just empowered me to be able to be much, much more effective and be able to come back and to share with the team something that, you know, I was otherwise not able to do before. You know, the essence of when you sort of said what's being changed by AI and what's not, what we're finding is that professions, jobs where the human relationship and trust building exercise is critical to whatever needs to get done, that's not being changed.

22:17in fact it's radically over corrected post-covid where no big enterprise deals not is getting done without an in-person meeting no venture financing is being done without a handshake like it's all being radically done in person you build authentic relationships in person not over zoom and as much as granola is a productivity software what it's doing is it it frees us as humans to focus on that human connection because you don't have to worry about oh did i get all the take you know the to-dos after the meeting and all that. And you're like, yeah, that's taken care of. I could just focus 150 % of my energy on inviting with the person that I'm speaking with, which is one of the best parts of our job is in those conversations with founders.

23:01So I think there's many categories of technology where it's going to take away the judgery or the other parts of it and maximize that magic, the humanness, and that's gonna be amazing. So I want to switch focus to storytelling because I really like drawing from my personal story. My personal kind of journey was very intertwined with the company I started Affectiva out of MIT. And I actually wrote my memoir on this juxtaposition of the two journeys. So I think the founder journey, a startup's story is so important. Jeffrey, what role does storytelling play in kind of what you do today? Obviously, you've spent many, many years in the storytelling space, but what does that mean for you today?

23:47It's everything. I mean, I don't think you can succeed in business. I don't think you can succeed as a, you know, a company can succeed. I don't think an entrepreneur can succeed without storytelling. And the greatest and most successful ones, it's not an accident. when Jensen Wong started NVIDIA, you know, it was a little graphics for, you know, gaming. And he was an amazing salesman then. You know, when you think about what you have to do, he had to like convince people to come work with him. He had to convince people to invest with him. You could just go through every step and then ultimately he has to go sell his product.

24:30And in his case, you know, he was a direct to consumer product as well as a B2B product. And every step along the way, he had to be a great citizen. He's a phenomenal story. Steve Jobs, one of the great storytellers I've ever come across. You know, he was a storyteller and a marketer and, you know, could share his dream with all of us in a way that we could connect to, relate to, and understand something that we didn't really understand until it was in our hands. And so, you know, storytelling is an essential, fundamental ingredient, you know, every step of the way from the smallest little company, you know, to NVIDIA or Apple or Walmart or, you know, the biggest company in the world.

25:17Storytelling is part of their everyday business. And the better storytellers are the bigger winners. I meet a lot of startup founders, especially in AI. And I find that a lot of them are stuck at the technology level or at the feature level of whatever they're building. And they're not bringing that story to life. So I want to make it actionable to any of our entrepreneurs who are listening. What are the elements of a great either founder story or company story? Well, always, in my opinion, is something personal, something you can connect to. I mean, you just asked me about, you know, how did I get involved with Kimball?

25:57I started out by grabbing your attention why because I told you I went to burning man you went what I don't imagine you Jeffrey Katzenberg at burning man now already it's like okay now I'm picture yeah you try to figure out okay well what were you dressed up in and what right what outfit were you wearing and you know you know where were you sleeping and who were you sleeping with and all those things right so it's just like your mind goes I don't want the answers I don't want Of course you don't. Of course you don't. But my point is, how did I get your attention? How did I get your attention to think about and imagine what Kimball was doing?

26:39So I'm able to give you a journey. Coming up, I asked Jeffrey and Chen Li about two areas where Wunderco is investing that may seem far apart from each other. Creativity and cybersecurity. Stick around. We'll be right back.

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28:33So Chenli, you are invested in a company called Creatify, which is basically the way I think about it is it's trying to democratize access to storytelling with AI. So tell us more about that. Well, it's really about democratizing video storytelling. Before, there's obviously been platforms that help you. Well, Chatshpt is pretty good at writing for you. But really, the next frontier is for many emerging brands. How do you tell the story on social platforms? That's where the audience is now at. To me, it's still a creator tool. That core spark and idea and authenticity is still going to have to come from a company, a person.

29:18And what Creatify is, as Steve Jobs would say, it's the bicycle that lets you go from zero to 60, at least zero to 20, much faster than if you would have to go hire a crew, hire contractors on Upwork and manually have to create this content. You know, my company, Affectiva, we sold the company, but we still do this. We basically use computer vision to analyze people's facial expression responses when they're watching video ads. And we could see moment by moment, like, are they laughing? Are they confused? Are they bored to death? A lot of ads are boring, of course. One of our key insights was the things that resulted most in like virality and sharing the content and like purchase intent and whatnot was the emotional arc of the story.

30:03Like, could you take people on this emotional journey, even if it's a 30 second ad? How does Creatify kind of encapsulate that kind of like emotionality in the content? So this is what's also really amazing about large language and large vision models is there has been many incredible ads that's been created through the generations. Both brands who spend millions of dollars, but also more grassroots, you know, the Dollar Shave Club ad that kicked off that, right? And what you can do is actually, there's public directories of the ads that have done well or that are shown a lot. These are the transparency efforts that Meta and other have done.