Mark Pincus: How to Build Billion-Dollar Products

28:07I don't know.

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29:38Mark Pincus:Yeah, that's really fascinating. It's really fascinating to hear you break it down from your brain because you clearly look at the world with this framework and just dissect each company you see in terms of like how they're going at it differently what they change slightly like I can see that like you look at the world and like these very small nuances and you're like oh well that's different and they did this and it's scientific yeah in fact I think for all of us to get good at this we almost need to or we not almost we need to look at ourselves in the third person because you've got a focus group of one with yourself.

30:15And the more that you start to be a student of what resonates for you and why, and what doesn't, then the more you'll actually get amazing data from that. So every time I try a new mobile app, I'm noticing, like, what's the onboarding experience? Ooh, I don't like this product, but this onboarding experience was so much slicker and better. and those things really really matter with mobile right you you lose people with every click so the whole off of how are they going about having you set up an account and off you in the account is it's evolving and it's getting better and smoother and if you go backwards and now you're like oh shit they want me to like create a password and go back and verify my email like forget it like you've lost me i'm never gonna see your innovation because your first time user experience your fatui sucked um and that could be an opportunity what if they have a really good innovation you can learn so much from a failed product that has a great idea buried in it because they didn't do proven better news so they had a shitty on board that the the founder of uh tbh had that experience.

31:32I interviewed him in the book that he said there was an Arabic language product that was doing this honesty box. Like get your friends to anonymously.

31:42Mark Pincus:It was Nikita Beer. Nikita. Thanks. Yeah. And he was a perfect example of proven better new because he actually found a proven concept. I mean, I mean, it had heat for him and he saw it in the reviews, but it was buried in a very very narrow niche product and he said great I'm just gonna take that idea copy it and make it front and center so I'm so like so I think there's there's like a couple there there's so many questions I'll also add um walk over from my phone that um I really am a student of myself. Sounds very self-involved, but I'm doing it in order to create products for other people.

32:30Mark Pincus:It's okay to like yourself. Yeah. And get more self-aware. And my experience is that any app that makes it to the front of my iPhone. Oh, this is one of my favorite parts. Yeah. So that's my iPhone homepage. That's it. Yeah. And I'm very careful to only put apps that I really use every day. And so I really, really pay attention. And so very few apps make it to the front of my phone. But when they do, I notice that and say, okay, I used to say I had a stick value of a billion dollars. Now I think maybe five billion or something or more. But that's, in this world, such important information for you.

33:17If you also can tell who do you represent, and I seem to represent the early majority 18 months later. And so I've just figured out, okay, if I'm using this every day, a huge percentage of the early majority in the world are going to be using this in 18 months. And I've just calibrated that and seen that that's true over time. And we should all do that. Like, who do you represent? You know, we kind of do it in our minds with a new movie. You're like, I loved it. Was it a hit or not? You know, or a new song. And, you know, whatever products you're into, and that's what I love about consumer, you could start to do the same thing.

33:58And I've even invested off that. I think I mentioned in the book, I was using Raya when I was single after I was divorced. And I found myself really having fun with it. And dating apps are so painful. My experiences are so painful. And Raya actually made it kind of fun and interesting and they kicked you out. They'd only let you look at 25 profiles a day. Then you're done. And so smart and so well done and different that I just cold mailed the company and then I invested and put up most all their money.

34:36Mark Pincus:Wow. I didn't know that. oh yeah i'm curious because there are like a couple different angles on this because we're just in such a weird period of time right now so dylan field actually he reposted this post a couple days ago um which will be a while from when we release this but dylan field recently posted because right now you know like figma is battling the headline wars of anthropics new model releases but like if you look at figma's earnings they're doing just fine they're doing great like people love their product and so one of the the post that he reposted was this chart of new app launches and like actual adoption and they were just like they were just completely separated yeah so we're in a moment in time right now where you can create literally anything you want whenever you want.

35:31Mark Pincus:So like, how do you determine and how do you actually create something that sticks? And then secondary to that, I know this one will be like a real good one for the audience. How do you make sure it's a business? Yeah. It's, you know, it's the best of times, the worst of times. It's so often that it's just so true today that on the one hand, AI, like you're saying, is just magical. And I do talk about in the book that are compressing the time to get to something you can test with people is amazing, right? It's so much less capital. At the same time, what's so hard from a consumer point of view is that AI itself isn't a new platform.

36:17So when you think about new platforms, like that used to be a new mobile game console, but the web and the web in a browser was a new platform and mobile was a new platform. We all move into a place of discovery where we're talking about the new apps and services and we're downloading them. And now we don't download new apps. I mean, we download an average of zero new apps a month. So that, to start with, just makes it brutal. On top of that, we don't stick to anything new when we do try it. Like you said, I believe last year there was 40 ,000 games launched in the App Store and 0 % of them sustained a top 25 position.

37:06Some might have made it to top 25 for a minute and left. And the top 10 games and probably top 10 apps haven't changed in probably five years. because we're not waking up looking for something new. And it's why I think we have to have a mentality investing in consumer and building that is around the day 365 retention. And it's thinking, it's really hard, but it's thinking, what can I build that not only can I imagine my users using a year from now, but they, when they first try it, can picture themselves using it a year from now. Think about when you try a new TV show. You're watching the pilot, even if you're thinking about the pilot, you're not just thinking, am I going to like this one episode?

37:53You're like, is this a show I could get into? Like, is this a book I can make it the whole way through? And it's kind of the same mentality when we think about our apps or digital services. Does it fit in your digital life stack? It's very hard to get people interested in a new behavior. So all these things make it very difficult. And even if you get to something that does fit in the digital life stack, it turns out we need something that you're going to use every day and frequently or you're going to forget to come back to it. And so you have to do all those things. Or the way that I built Zynga was find a place that people are already hanging out.

38:38Like everyone was hanging out on MySpace and Facebook. Today, everyone's hanging out on GPT or hanging out on X, Twitter. If you can create a service that is core to that experience where they're already hanging out, then they'll be reminded to keep using you every time they see it. The core point of this is that you have to be thinking about this distribution and mindshare lockstep as you try to invent your product. The idea that you're just going to make a better mousetrap and the world is just going to come to you, it might work. It's just extremely low odds.

39:17Mark Pincus:Just to be clear, you did this extremely well at Zynga. Can you explain some of the cohorts and what you did with each game? They had crazy record-setting retention and growth. Sure. What we figured out trying to survive in this, in a lot of ways, this app ecosystem, these app ecosystems that evolved on MySpace and Facebook and the other social networks were a precursor to what mobile is today. So there was an app economy and you were trying to live and survive on someone else's platform as just an app. And it was fleeting. And what all our competitors at the time, like Max Leftchin, who was on, you know, I'd slide.

40:02They were the big dogs on these social networking services, and they had huge virality. And games weren't viral, okay? And in fact, I remember Dave Morin sat down with me before they launched their app platform. He and I had coffee in Coal Valley, and he said, Mark, anything but games, they're just not viral, and there's so many viral things people are launching on our platform, pokes and wall apps. But I want to see you succeed, just don't do games. I was like, well, I had a feeling based on my failure of tribe that everyone's hanging out at this cocktail party with nothing to do. So I had this instinct that people wanted something more fun to do while they were having their social networking.

40:51And then I put this idea of a variant of a social game. What I quickly realized was games were not viral. We couldn't keep up with the virality of these apps that we're doing. They were doing hundreds of thousands of installs a day. But we had the chance to have better retention. And there was a reason to come back, where the other ones, there wasn't. So we built every game against this retention idea. and we used the social loops to remind you to come back. And that was core. And the way we thought about it is on the one hand, we wanted to innovate on how could we help you improve the relationships in your life?

41:35How could the social interaction in Farmville make you more likely to cross the street and say hi to somebody that you just knew online? Were there real acts of friendship like gifting or heroism that we could do in a game? um and then on the other hand we thought how do we build game mechanics that remind you and your friends to come back through these other channels the feeds and requests and things like that and so we got better and better at that and yeah so we we had huge day 365 retention and that's why our you know original games like zynga poker and a couple years later words with friends are still some of the biggest games at Zynga, the company, however many years later, it's getting close to 20 years, 19 years later.

42:29And every new genre of games we built, what we did was we built new social gaming mechanics. And I had a whiteboard originally, I just leaned against a wall in one of our studios, and I just wrote the name of every game mechanic I'd ever heard of, and I just would try them and cross them out as we did them. And every single one of them worked. And then we, but we didn't just do a game mechanic, like there's XP, achievements, co-op play. There's all these things that are in like MMOs and like a World of Warcraft. We would turn it into a social game. So we wouldn't, I like to think of it that what we are doing and often we're doing with consumer and even enterprise apps is we're kind of in the candy business and in the hoop jumping business.

43:18And it's kind of go to Dave and Buster's or whatever the variant of Dave & Buster's is to do your market research, which my four-year-old wants me to take him to these arcades where we play these games, put$50 into these games to win tickets, and then we go to a vending machine and we can buy junk, like a bouncing ball, a whistle. It's not worth$50, but he's excited about these things. And so on the one hand, we're trying to come up with candy, like what are things that people want? And we're evaluating those rewards. And the highest reward for most people is social status. So can I actually move your social status?

43:59And in a lot of ways, the biggest reward socially we could get to in a game was a marriage. So we counted the number of marriages that happened through our games. That's like real life candy.

44:09Mark Pincus:That's wild. Yeah. So we had strangers who met in like Words with Friends or Poker, Farmville, and built relationships online and then met and got married. There was a couple with a woman in England and a man in America, and they eventually met in person and got married. So that's like the best candy. And then we have hoops. Like what do you have to jump through in order to get that candy? And the key is that the jumping hoop should feel fun. If it feels like drudgery and not fun so that Dave and Buster's like the skeeball and the games you play should be fun. But we're giving them more purpose and reward because you're trying to earn these tickets.

44:54And you can actually do those same principles in any. Maybe you can do this with this podcast.

44:59Mark Pincus:I want to ask this because. So you do both building and investing. you see many categories over and over again i've been an investor my whole career there are categories we will not touch like and firms that i've worked with who like that's not a viable business model and they just kind of shun it and that's kind of the thing is that similar for you like do you are there certain categories you just won't touch is there sometimes always an anomaly will you where you're going to take a chance because you know dating apps like they do have some of these have life cycles and certain points where they do peak I think Nikita is a really good example of this he knows how to build things to a peak user max and like yeah thing but like how do you how do you think about that it's such a good question so at a at a really high altitude like 100 ,000 foot level I think kind of enterprise versus consumer or b2b versus consumer And I always start with consumer.

46:02It's just what I know, what I'm passionate about. But a few times I've founded enterprise companies by mistake. One support.com went public the last week of the dotcom IPO window, but it was like a hardcore enterprise software company. but I started it originally trying to do something for consumers. But then the tech we built really applied and had core value in the enterprise. So it wanted to be an enterprise company. So I just went with it. I just recently co-founded an enterprise AI company called Hivemind. Again, I was trying to pursue what I call the social membrane and just thinking like, how will we do social networking in an AI agentic world?

46:50And I teamed up with Reid Hoffman and with a really brilliant ML engineer and founder, Ratankar Das. And Ratankar said, these ideas that you want to do for consumer apply right now in the enterprise. And he said, are you cool if we brainstorm and go that direction and I was like okay and so he ran with it and we founded this company that now is in four or five enterprises and is delivering a lot of value because really it was getting to the messiness of the human part that the first and last mile of AI in your enterprise is a human and anyway we could go deeper on like what that company is doing But there aren't good solves in enterprise software and in AI and LLMs for the human part.

47:50And the fact that the human still has these edge cases and this judgment, and you just can't ever get it into your system of record fast enough for it to work on its own, as we realized you needed a continuous learning system that is, it's dynamic and living, and it's actually always interacting with everyone else in your company. And so that was High of Mine, which is shockingly doing well really quickly. I guess not shocking because everything AI is selling out. But that was 100 ,000 foot level. When I go deeper, like how do I think about things? I'd say I personally, there's like another paradox is that on the one hand, I really, my North Stars, I want to create an internet treasure, a service we can't remember life before or imagine life without.

48:47Like it's part of our life stack, indispensable. It's like the iPhone or Google. That's really, really ambitious. And I know you can't start with that ambition. you have to start with a really narrow use case. And so how do you do both? It's really hard. But so I'm willing to start with really small ideas. Like Zynga started with a really small idea of one poker game. But it pointed at a huge iceberg of, can we get the mass market to play games? Like busy adults to play games. And can we do it by playing on a different dimension that we're making these games, we're letting you justify it more in your life because it's not empty calories because it's social and it's a better use of your time than just pure entertainment and then also Emmett Shear told me I interviewed him for the book that it's good to be a little twitchy you know that the idea of just am I into this idea because the other thing that happens to us so often on this founding path is that we get, we're so excited, the team's excited, but then we go into kind of the despair or the just painful part where you're working on this product and it's like this death march and it's not fun and you kind of lost the excitement.

50:10You're not even that into your product. You finally produced the prototype and it just isn't that good. And you're just, Now what do I do? I've got investors and a team. And I like to think that I love the concept of founder mode. And for me, the real gestalt of founder mode is can you have enough faith in yourself and your instincts to take these really hard positions that are really unpopular? Not just with your investors, but how about with your team? I mean, I think one of the most courageous things Jeff Bezos did was in that book. It was so good. Brad Stone's book is called like the Un-Store, the Un-Anyway.

50:59But Brad Stone had a great book. Everyone should look it up and read it. But the most courageous thing, the story from that was when he had this instinct to launch Amazon Prime and he wanted it to be this subscription service. But his CFO and everyone said it doesn't make sense. Like the numbers don't work. But he had this instinct, which he built by seeing the way people were addicted to Costco. And he said it was a leap of faith for him. And he had to go against really his whole company just based on his own instinct. And I think that's actually the hardest thing for a founder to do. Like you can have a$2 stock.

51:40You can have your board disagree, your investors disagree. But I think actually going against your team, your own team don't believe in this, but you do. I think that might be the absolute hardest thing. And so a lot of this is about the courage to stand by your own conviction and go with your commitment to intellectual honesty and it's so what do you do when you come in on Monday and you're not that into this podcast and it's not and it's the second Monday and you're not that into it you're like I'm just not feeling it like I'm not having fun anymore or I'm watching the versions come back and they're not that great um you know you don't have a big team but if you're building a product you're supposed to convey confidence to your team and you know you don't want to feel like third grade soccer that every Monday you flip the board and go a different direction.

52:37And at the same time, I think the power of the best founders is the willingness to, like Elon, I think just lost like his whole founding team from XAI, right? Probably because he came, and I think it is that he went in and said, we built this wrong. We got to start over. That's really, that's founder mode to me. That's really powerful. And so I think your number one job as a founder is to be right. What do you do with it though after you're right? After you see the truth about your product that it's wrong, what are you going to do? Are you going to take a month to try to like slowly bring your team there and let them spend the month building a product you know is going to fail and then you're going to slowly tenderize the meat to this idea that there's a new product we should do or do you build a culture with them saying you know what until we lock on we're gonna go through a lot of painful disruption that's just our normal and and you have to set that culture

53:42Mark Pincus:ahead of time because otherwise your team will just leave yeah they'll probably still leave even if you set that culture well because they'll get worn out and that's happened to me and that's part of people's complaint about working with mark is he he changes his mind all the time and often that's been true and i i change my mind as often as i think i need to for us to win and i'm just we have to be a heat seeking missile and we have to be guided by this pursuit of the truth and this intellectual honesty. And that ultimately matters more than just team cohesion. And do you want to be most efficient execution or do you want to navigate to the right place?

54:32They're often at odds. Your factory running most efficiently means you don't change it very often. No change orders. But it doesn't mean that it's producing a winning product. And so I like to say hopefully your mission doesn't ever change and your vision maybe rarely changes. And your strategy changes as often as it needs to. And your tactics probably change every day in order to win. And that amount of variation is just a lot higher before you've gotten to product market fit. by necessity and I almost would have less faith. It's kind of like going to doctors. I have actually two children who have rare medical conditions.

55:25And my son was born with a gene deletion. And my daughter, my fifth child's baby, she was born with a rare gene mutation. And the odds of both of those happening de novo are like impossible. So I think, okay, I'm meant to, I don't exactly believe in fate, but I do believe to like listen to what you see going on in the world. And like, okay, I want to do more things for people with neurodivergence. My experience going to many specialists for both of my kids is that I learned the more confident the specialist was in the diagnosis, the less I trusted them.

56:11Mark Pincus:Oh, wow. and the original doctor, the just general practice, you know, pediatrician for my son, this amazing Dr. Chin, his diagnosis, the very first diagnosis I got was, your son is on a slower train. He's going to hit every station. You just don't know when. And that's been true. And that's the only thing that's been consistently true. But the doctors who just had this deep conviction that they knew what it was were just wrong. And the same was true with my daughter that we finally figured out that she has this rare mutation. But up until then, every doctor that confidently told us what it was, you know, was wrong.

56:59So similarly, when people are that confident in their product, but they don't have product market fit, your bullshit detector has got to be higher. You're like, okay, this is hope. There's a difference between hope and belief, right? Belief is rooted, hopefully, in something. I hope. Hope is just rooted in hope. Hope is just, hope is not a strategy. Hope kills a lot of companies and founders. Until you have kind of built a legal case, a factual case that beyond any reasonable doubt, you have product market fit, you need to be open to a lot of possibilities.

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59:19Mark Pincus:Deal takes care of onboarding, HR, IT, ER, benefits, and compliance, so your team can grow without borders. It's why more than 37 ,000 fast-growing companies trust Deals to move fast. Visit deel.com slash sorcery. That's deel.com slash S-O-U-R-C-E-R-Y. This is like slightly tangential, but it is definitely on the topic of as a CEO, you must be right. When we were having breakfast earlier, we were talking about technical assistance. And there was one particular one who you said was hitting some speed bumps over and over again. but you were really like you had faith in him and so I could you talk about that story with Ian Cinnamon yeah and could you also what I thought okay so this was my favorite chapter in the book it was fuck scale you had so many great principles and so many fun stories in that one so I definitely want to talk about that one first but um could you just like like lay out what technical assistance are and how it's happened over history and then how it leads to Ian Cinnamon, who now is Apex and just crushing it?

1:00:26Yeah. So tech assistants, I think the first CEO to have a tech assistant, I think, was Andy Groves. I've never actually fact-checked myself. But then Bill Gates did it, and then Jeff Bezos did it, and I got this as a hand-me-down secondhand because Bing Gordon was on the board of Amazon, and he would give me all of these great management principles secondhand that he saw Jeff Bezos do. Another one was never have one-on-ones with anybody. And I would hear them and say, oh, shit, that's right. And then I would just adopt them immediately. And then luckily, at some point, I got to sit down with Jeff Bezos, and he spent a couple hours generously talking me through his whole approach to this.

1:01:09And the entire C staff at Amazon had started his tech assistant. And Andy Jassy, the CEO now, was. and it's it actually it's one of these examples of a totally non-leveraged idea that gives you leverage down the road and what it is is that the idea is that you pick someone from the ranks who you think has high potential and and is motivated and usually they're not it's not their first year in they actually have already been trained on a bunch of stuff and you just have them follow you around and shadow you and just go to every meeting you go to and mostly listen and learn and take notes. And what you're really doing is transferring your vampire blood.

1:01:57So there's something that got you to your unique mix of right, like right for this exact product and business and customer and time in the world. And it's almost impossible to write that down and to just train that into people at an institutional level. And so, but what you can do is train one person and have them get it, like just get it. And they're just following you around, you know, just taking notes, doing things. But they're a product tech assistant. They're not a chief of staff. Their job is not to manage your schedule or manage you or anything. But as you go, you start to hit places that you wish you could spend more time on, but you can't.

1:02:43Like maybe you see, you know, Clawbot come out and you're like, oh, if I had an extra 40 hours, I would just go deep on that and build my own and play with it. That's your tech assistants for. You give them these projects and let them go deep on them. And what happened at Amazon is Bezos ended up giving, I think it might've been Andy Jassy who, it might've been Andy Jassy that he had just go off and do Alexa. And so after this tour of duty as a tech assistant, they're actually trained to go be a mini CEO like you of a project. And Jeff Bezos said, I also loved, I don't think it was in my book.

1:03:24I stole a lot of his ideas, not 100 % of them. But he said the way he thought about a manager, he said the number one job of a CEO is they have to be right. And he said, this is what he said to me he said i'd like to think that if this was the 1600s and i was the king of spain i'm handing a chest of gold and silver to this captain and they're going to go off and explore the world for a year and i believe they're going to come back with a ship intact and more bounty than the gold i gave them and so the point is this relates also to the fuck scale is how do I get people to do the right thing when I'm not in the room?

1:04:07Like that's to me the whole point of management. Tech assistant is one of the scalable, non-scalable ways to do that because you're passing your vampire blood. You're hopefully taking someone who has huge potential and you're teaching them how to be right the way that you're right. And then you're sending them off in the world with the confidence that they get you. They get like, what would Mark do? What would Reed do? What would Jeff do? And then they have their version of that over time, but they're doing your right over time. And to Ian Cinnamon, I had a whole bunch of amazing tech assistants who all went on to, have gone on to amazing things.

1:04:53Ian was a star recruit. He was graduating from MIT early. He had already built a successful mobile app or game. And everyone was recruiting him. And my recruiter said, we'll never get this guy. He's going to be a top recruit for Meta or Google. And so I personally recruited him. And I said, if you come, I'm going to manage your career personally at Zynga. I'm going to make sure that you're challenged and that you grow more than any other company you could go to. And he said, great, I'm on. I'm signing on. I put him in poker, which was like the best training grounds in the company. And within one or two quarters, the poker team was pipping him out.

1:05:33So they were marking him as a low-low, like low value, low potential. And usually that's also the sign. You want to look at people who are low lows because there might be organ rejection like there was with Ian. And sometimes you can find this real gem in the rough there. Even if they're failing in your organization, it might be for good reason, or it might be for completely wrong reasons that you need to know about. And that was the case with Ian. I talked to the team. They said, he's too entrepreneurial. He just wants to do what he wants to do. He won't do what we tell him to do. And I talked to Ian and he said, they're doing dumb ideas, right?

1:06:14So he was what I call an expert witness, the person who's closest to the data and the answers and furthest from the decision. It sounds like you were an expert witness. I was an expert witness. Most of us working for other people have that experience. And Ian did. So I plucked him out early, much earlier than I would normally made him my tech assistant. And I said, great. They don't know what they're missing. And he just followed me around and worked on everything I did, built cool shit. then I left being CEO, started Incubator. He worked there. Then I came back as CEO. I think he came back with me, or maybe at that point he ejected and started founding his own companies.

1:06:58Mark Pincus:Before we leave this chapter of the book, there's one section that I brought up earlier as well, and you were like, oh, this happens with every cycle. And that was don't be a fake CEO. And I was saying, it seems like there's a lot of fake CEOs right now. But could you distill what that means? Yes. I would say there probably are a lot of fake CEOs. I also think we have more real CEOs, what I call real close to the metal product CEOs. I think with every cycle, we get more of both. And I think when we hit, I'm not saying that, I don't believe AI is a bubble, but I think that we, when the financing spigot gets turned on, we do get bubbly things.

1:07:46There are lots of bubbles, meaning lots of times that we see things getting funded that shouldn't, or things getting funded at much higher valuations than they should. And we always live in the age of nuance. We're just not very good at spotting the nuance. And so it gets really hard. And this is what happened in the first bubble, by the way. The first dot-com bubble, it always starts with something real. And there was eBay. And eBay was a phenomenal business. And it was massively profitable and growing and went public. And that made investors believe in the dot-com boom. And then we got pets.com.

1:08:26Then we got spa.com. Then we got stupid-ass dot-coms. And we got Amazon dot com, right, which wasn't stupid, but was seen as stupid. So it's just so hard to be discerning in the middle of these things. And again, now we have amazing, amazing, breathtaking businesses, right, that are getting to 100 million ARRs faster than we've ever seen in history. And that also creates an investor froth wanting to find the next one that funds dumb businesses. The idea of a fake CEO, Bing and I started saying it to each other early on with Zynga. It was a mantra, don't be a fake CEO. And to me, I had to keep reminding myself what my job was.

1:09:14Like, okay, my job is to work with great product teams on great products that our users love. That's my job. Nothing else is my job. It's not my job to talk to investors. If I do the first thing, the product, team, and customers well, it turns out it doesn't matter if I do any of the other things well. It's not my job to go talk at conferences. It's not my job to talk to the press. It's not my job to be a beloved CEO and manager of people. Those might help, but that's not my core job. And literally, Bing and I would have my assistant track my calendar and say what percent of my hours went into my real job versus all the fake shit.

1:10:03And so I tried to really stay grounded. I always wanted to be at least 50%. And it's amazing that it's a struggle to be 50 % on the real shit. That takes a real act of will. And the more successful your company gets, the more you're invited to Davos and everything else. and so often when I'm sitting in the audience and I'm listening to a CEO or I'm watching a podcast like this I'm thinking what's this person's agenda why is Mark on this podcast right now I'm trying to sell my book and I'm trying to want my book to you know hopefully a lot of people to connect with it so I think I have a clear agenda but if I wasn't you say well why is Mark on this podcast right now, why is he spending the time doing this versus other things?

1:10:52And, you know, I remember the MySpace founders when MySpace got hot, just doing the worldwide circuit. I remember Jack Dorsey and Evan Williams when Twitter got hot, they were all of a sudden on the world circuit. And I thought, okay, this is fun for them. And this is the first time in their career they've been recognized this way. I doubt that that relates to their product and their customers. I don't think they're getting more users from this PR tour that they're on. And so it's a great thing to always ask yourself, like, am I being a fake CEO right now? And fake CEO is just, I like to think, I don't mean to dish on anybody, but when I hear people giving talks about culture, especially when they're currently CEO my fake CEO meter goes up my alarm bells go off because I'm like okay if you're out lecturing about culture to people I kind of doubt that you're actually doing things that are actually working on and helping your culture I also think culture is one of those things that's like fight club like you don't talk about it like it's you I'm really skeptical of people who are intentional scientific and intentional about their culture like to me that's kind of a fake CEO thing.

1:12:07Like having a strong culture is a real CEO thing. Trying to manufacture a culture to me is a fake CEO thing. Does that make sense?

1:12:15Mark Pincus:Yeah, that makes sense. So before we close out, I really wanted to talk about this and go deep because I think it's something that I missed, but it is still so core to the Silicon Valley culture. You were also on the Silicon Valley show, which I learned about. But what was it like when you first founded Zynga in 2007? Like who were the characters that were around? Were you guys all going to lunch together? Did you never see each other? Like did you bump shoulders? Like what was it actually like? Did you have spies? I love that. I don't know. It was, I would say that there was this period from like 2002 to 2008, at least 2007, that was the first part of it for sure.

1:13:03I call it the nuclear winter for the internet. I mean, here in San Francisco, it was like they'd burn the boats and there was like, it was a ghost town. Even more, I mean, on the level of like COVID, but it was, there was just nobody left. Like all the MBAs and VCs came and they left. Like this town was the consumer internet capital. and then it was just, you know, the post-gold rush, sad, dark, empty place. And it was in that period that a small group of us realized we still carried the flame. Like so many of our friends actually got out of the industry and went into real estate or other businesses completely.

1:13:49I was like, really? Like, it's not over, folks. Like the dogs are still eating the dog food. They're just not I'm getting pet.com dog food. And it was in the fall of 2002 or the Q4 of 2002 that I remember like Reid Hoffman and I looked at Amazon's numbers they printed. And we're like, holy fuck. Like they just grew everything 25 % year over year. I'm like, this shit is not over. It's just starting to happen. And I always try to remind people and myself, we got to look at the underlying. What are the consumers doing? That's what matters, not what does Wall Street care about. I was there for the beginning of the mobile phone industry.

1:14:31I'm that old. And I saw the price per pop, the valuations of the companies went like this, but the usage went like this. And the internet was pretty much the same thing. It was a little slow and it had some, but then the internet was like this at a consumer level. And it just e-commerce took a while to figure out how to do it profitably and realize it didn't have to give it away for free. But we really saw it first in the numbers from Amazon. But there was a small group of us kind of centered in San Francisco. There was Evan Williams and Jack Dorsey. There was Reed. And we still were all passionate.

1:15:09And we would get together, especially Reed and I started hosting brainstorms. in, I had this one bedroom house in Coal Valley and I would put these, I lived there alone. I'd put these sticky white 3M sheets on the walls from each brainstorm and I covered all the walls and we would have these brainstorms and Reed came up with the term web 2.0. And it was, came from this, you've heard of that, right? I'm like, I don't know if that's still a thing. So it came from these fundamental beliefs. We had principles like rules of the internet, like if it can be free, it will be free, especially around data.

1:15:50And we said data at the time was locked up. And we said there was a new concept to APIs. We said, wow, the data can be free. The data wants to be free. It's the business model at the time was pay for access to a database. and this idea that led to the start of a Napster and led to Friendster and LinkedIn and Facebook and this and Twitter was okay what would it look like if we just enabled that all about the people to connect to each other directly and even if there's a database involved it's the friction just goes away completely there's no business there's no hard gate or paywall like monster.com or dating apps because it can be free it is free.

1:16:36Mark Pincus:Were you also investing in these companies at the time? Yeah yes so Reed and I put up all the original money for Friendster as like a science experiment. We didn't think it would work. I put up all the original money for Napster because Sean Parker worked for me as an intern when he was 16. But what was great about that moment like 2005 2004 to 2007 was that even though by you know 2006 Facebook was clearly kind of breaking out and getting hot hot meaning it was worth a hundred million dollars that was hot it still was like kind of inside baseball and and around that time in like March of 2006 I hosted this Think Weekend at my ranch in Colorado.

1:17:23And I say ranch loosely. It's like a ranchita.

1:17:26Mark Pincus:It's three acres. But it was this beautiful, broken-down old Colorado ranch. And I hosted this Think Weekend, and I had Peter Thiel and Reed and Zuckerberg and Sean Parker. Basically, I just had the smartest group of people I knew who were all kind of interested in these topics that nobody else was. Consumer internet, macro investing. Peter Till gave a presentation on the housing bubble that he had bet his whole hedge fund clarium on too early. He ended up doing fine. It turns out in that fund, he had Palantir, which was a stub that he gave out to everybody at the end. But it was like 35 people and it was our own little like think weekend unconference and it was just you know all of us just sharing big ideas and stuff but I wouldn't say that was the industry but it was you know it was it was like this kind of club but it wasn't an exclusive club it was like in a way we were all outsiders like I know now it seems like the insiders but you know none of us were part of like a branded venture fund none of us were like part of a Sequoia Koretsu or a Kleiner Perkins or none of us were like at the Allen conference or it was just like we were all turned on by these same ideas and we all believed in consumer internet at a time that nobody else did and that was in 06 and then and then I launched Zynga in the spring of 07 just as a project I was living in an apartment in New York City and kind of nobody believed I was going to go back to work.

1:19:12I was like retired, rich guy, kind of rich, you know, not like by these standards, but I'd had a bunch of successful companies. I was in what I call the abyss. And, but, but I wanted, I deeply, I had a passionate hunger for these consumer products and I wanted to get back to it, but I needed to, I needed to get to product market fit. It's like, which comes first? I start things as projects. And then once they catch on, I dive in. But it was funny because when I went to VCs in the beginning, I went to Fred Wilson, who's backed everything I've done. And while I was in New York, I said, Fred, give me a million dollars.

1:19:53I'll give you 25 % of the company. He said, Mark, you know I love you. I'd back anything. But I just have a tough time believing that you're really going to go back to work. And I'm like, OK, all right. Damn. And then I met with Josh Koppelman, and they had this deal at first round that they would give any second-time founder$250K bridge note with a$10 million cap, sight unseen. And I met him at Penn Station. I said, I'm here for my money. Can I buy$250K? He's like, Mark, I just have trouble believing that this will be like your company. Like, you know, I just don't think you're going to do this.

1:20:32And so.

1:20:32Mark Pincus:It's literally their mandate. Yeah, nobody was, you know, I was 41 and they kind of were like, you're still doing this? Like, why don't you go be a VC? Why don't you have any self-respect? Like, you're just, you're making dumb little apps on Facebook. Like, it was me and Max Lefgen and a bunch of college kids and people in China. Yeah, so it just seems so flaky. The whole thing, consumer, I think, always seems uninvestable. You know, it was like that then. And it feels like that again now. Damn. Well, as we close out, thank you so much for sharing everything. I understand now why we should probably have blocked off the whole day.

1:21:15Mark Pincus:Because I could keep on asking you questions and you just have deep answers for all of them. And it's really fascinating. And I have a lot more questions. You're a good interviewer because I have to say, like, sometimes I get kind of bored with my own shit. Oh, no. And sometimes I'm like, oh, you know, I don't know if I want to go into these stories again. But you keep it kind of fresh. And so I wanted to keep going. So that's a good sign. Good. Good. Okay. Well, then as we close out, one last question. What is your hottest take about AI right now? Well, it's nuanced. I'm an AI maximalist. And I'd say this.

1:21:57when we lived through the dot-com bubble in 2000, 99, 2000, none of us thought it made sense. We all thought that it had like lost touch with fundamentals. These companies were dumb, they had no business plans. And we were like, this is going to end badly. That's not happening now. For better or worse, I'd say all my smartest friends believe. and we're seeing AI deliver. It's not dark fiber. These GPUs are burning hot and people are getting real value out of it. So I'm an AI maximalist. I think the LLM companies are phenomenal and I'm bullish. I'm an investor in NVIDIA, a bunch of the AI companies.

1:22:48And I think on a public market point of view, I love the trade because they're at a peg ratio below a one. And when do we get that? The memory companies, I mean, I own those. I just think you just have to believe that this is going to keep playing out. And clearly investors, the market doesn't believe it. That's why they're trading below their peg. I think it is going to play out. I just think it's on a level that we have a tough time imagining. I think there's so many companies now that are building real legit businesses, getting to huge ARRs. I think consumer AI still feels uninvestable. There's no obvious distribution.

1:23:35There's been like two companies that make sense, like Sumo and Midjourney. There's like this prosumer place. But I think that the whole environment is amazing. But I also think gets like fraught with danger. Like investor beware. You know, there's there, I'm sure that there'll be a lot of carnage, but, but I really have this feeling like we're early in a cycle. And, and I think it's, I think it's going to be bigger than we can imagine. I think these two to$5 trillion companies are going to be 10 to$20 trillion companies or more. It's just hard for us to the numbers are too hard for us to imagine.

1:24:17Yeah, it was crazy

1:24:18Mark Pincus:We we talked about we both watched the all-in liquidity summit With Thomas Lafon and there was one slide where he said the rate at which you are going to grow more after a certain point increases yeah substantially and I think it was like after Maybe like a hundred billion dollars you're 30 % more likely to continue to scale something crazy like that And now it's like, all right, you see the trillion dollar company? Sure. Put your money in it. Yes. However, the danger of looking backwards at those charts is that's what was true, you know, in the last 10 or 20 years. And it just doesn't. So you can go to 2021 and he's right about that.

1:25:01It just doesn't mean that it's going to play out the same way. But the idea that scale right now is a real asset, is getting rewarded, does make sense. But on the other hand, this belief that the LLMs are going to eat up every possible business, I just don't think is true. I mean, cursor flies in the face of that.

1:25:25Mark Pincus:Yeah, we were just at Harvey, too, and that one was really obvious. Yeah, people have predicted the death of Harvey. I mean, so I think that what's happened is these wrapper apps found product market fit, made it into legitimate use cases and enterprises, and then they can go deeper and deeper and find more value. And I think that's just going to expand. So I'm not worried about those companies' investments. And I have to say, I'm not getting sent and pitched a lot of dumb ideas. I mean, like, signal seems pretty high. Yeah. Well, Mark, I have to stop us, but thank you so much. If this gets good numbers, let's watch and see if we get good numbers.

1:26:16Mark Pincus:Let's see if we get good numbers. If not, we can also make part two, make it spicier. Yeah. It started pretty spicy. Yeah. But getting back to the start, so if you haven't bought Mark's book yet, it's Life at the Speed of Play. It's a wonderful read. And thank you so much for taking so much time to create this book and do this podcast. Yeah, it was fun. Thank you. Hey, it's Molly. If you enjoy our interviews, check out our newsletter, Sorcery.bc, where we deliver a once a week top deals and tech headlines email and also go deeper on our podcast interviews. Subscribe to Sorcery today. And don't forget to subscribe to the podcast on YouTube, Spotify, Apple, or wherever you listen.

1:26:57Mark Pincus:Link in description to sign up. you