--:-- Host: Instagram gets acquired for a billion dollars by Facebook with 13 employees, and then now it's worth $100 billion on the medicine balance sheet.
--:-- Salim Ismail: When a big company tries to do anything disruptive, they get an immune system response from the rest of the company and they get attacked.
--:-- Peter Diamandis: The challenge is that the day before something is really a breakthrough, it's a crazy idea. If it wasn't a crazy idea, it wouldn't be a breakthrough.
--:-- Salim Ismail: We have now a dozen technologies that are accelerating all of them individually. And where they intersect, that adds a whole other multiplier to the equation.
--:-- Peter Diamandis: And you're not working to dematerialize, demonetize, and democratize with products and services. Someone else will, and they'll put you out of business.
--:-- Salim Ismail: If you had a billion dollars, what problem would you go solve with that billion dollars?
--:-- Peter Diamandis: The asteroid that's striking the business world.
--:-- Salim Ismail: And we look around the table, and we're like, well, there's the five of us. And you can see his mind break.
--:-- Peter Diamandis: We all have 24 hours in a day, seven days in a week, no matter who you are on the planet. And it's how you use that to make a dent in the universe.
--:-- Host: Welcome back to the A16Z podcast. Look, many companies today are grappling with just a few things. One, an economic downturn. Two, potential layoffs and restructuring. Three, trying to keep up with all the latest tech trends. And doing all of this while still maintaining a growth trajectory. And look, not every company will make it to the other side, but some are uniquely designed to weather this storm.
--:-- Today, you'll learn exactly what those attributes are of exponential organizations and how exponential technologies from exponential compute to exponential connectivity to even exponential talent have fundamentally changed company building. You'll learn how companies can adopt these technologies from dashboards and automation to emerging technologies like AI, allowing you to do more with less capital required.
--:-- Joining us to discuss are Peter Diamandis and Salim Ismail, co-authors of Exponential Organizations and very soon Exponential Organizations 2.0. They actually wrote the first version in 2014, but felt the need to come back with 2.0 because technology had fundamentally changed company building. Peter and Salim are both serial entrepreneurs, both well-known for their involvement in XPRIZE and Singularity University, among so many other companies.
--:-- So today you'll hear stories from two sides of the disruption coin, from Kodak to Instagram, BlackBerry to Apple, and a lot more. The first voice you'll hear is mine, then Salim's, then Peter's. With technology moving so quickly, let's not wait any longer. Let's dive in.
--:-- As a reminder, the content here is for informational purposes only, should not be taken as legal, business, tax, or investment advice, or be used to evaluate any investment or security, and is not directed at any investors or potential investors in any A16Z fund. Please note that A16Z and its affiliates may also maintain investments in the companies discussed in this podcast. For more details, including a link to our investments, please see A16Z.com slash disclosures.
--:-- I think the best place that we can start is by explaining what an exponential organization is and maybe what aspects of the organization are exponential. Because I assume we're not talking like exponential headcount, exponential capital raised. How do you think about that?
--:-- Salim Ismail: So the definition we have for an EXO or exponential organization, as we call it, is that it's delivering 10x better, faster, cheaper than its non-EXO peers. A great example is TED, which is just a nice conference, a thousand people a year. Chris Anderson takes it over. He establishes a massive purpose, ideas worth spreading. Then he puts all the TED Talks on YouTube, leveraging rich media. Then he allows anybody to go create a TEDx event, leveraging community. And boom, he has a global media brand.
--:-- Peter Diamandis: Yeah, Steph, I think we're living in a very different day and age. I've been an entrepreneur now for 35, 40 years. I'm like 25th or 26th company. At the end of the day, it's very different right now. The ability to go from an idea to a billion-dollar startup in record time with a really small number of individuals, there's something different. And it really is the digitization of every aspect.
--:-- Both of us were involved in the starting of Singularity University and started studying all of these companies. And why was Uber, Airbnb, different elements of Google and Tesla? What was going on that was different? And there really are unique attributes that make a company capable of scaling massively. At the same time, you're not scaling headcount.
--:-- Host: Right. You mentioned several of these companies, and I'd say those were companies from maybe a decade or in some cases, even two decades ago. But here we are in 2023, and both of you felt the need to come back and say, you know what? We want to discuss exponential organizations 2.0. We think there's something new here, right, in 2023. So could you maybe touch on what you think maybe is fundamentally new today?
--:-- Salim Ismail: Everything. Everything, right?
--:-- Peter Diamandis: Yeah. I mean, it's interesting. You can realize that the technologies that are only available to the largest corporations that required tens of millions of dollars to get going are now completely demonetized and democratized. I mean, obviously, unless you're hiding under a rock, it's all about generative AI right now, which is a tool that's spawning not thousands, maybe tens of thousands of new startups, individual single-person startups out of no place. But then it's massive compute. It's 5G capabilities. It is access to not a few thousand individuals, but the ability to go global instantly and touch the lives of tens of millions, hundreds of millions of people. All these things are just accelerating.
--:-- Salim Ismail: You know, when we were building a Singularity University, we had this amazing experience when the dean of one of the top business schools in the world came to visit. And after trying to understand the model for about an hour, he goes, how many people are you? And we look around the table and we're like, well, there's the five of us. And you can see his mind break. Like literally he left the building. Five minutes later, I kid you not, he was like, can I play Frisbee outside? And that was it, he was gone. He needed to process.
--:-- And I was like, what happened there? And it wasn't like we were doing anything special. We were using Google Docs for everything. One person was wearing four hats, website developer and this and that, just the normal startup stuff. And I brought him back and I tried to query this. And he goes, you know, my personal staff at my university is 12 people. How are you building a university with five people? And I realized something fundamentally changed between the way we used to build companies and the way we were building companies going forward.
--:-- Peter Diamandis: We have now a dozen technologies that are accelerating all of them individually. And where they intersect, that adds a whole other multiplier to the equation, right? We went back when we first wrote the book and put the model together for what we call an exponential organization. It was kind of a hypothesis. We're seeing this company do this, we're doing this. Now we have 10 years of data, case studies, et cetera.
--:-- Host: I love that example because sometimes it really is like brain breaking when you're like, this is a reality that I just didn't know existed. And we saw little inklings of this. Instagram's a great example where we saw, I think when they sold, there was 13 employees, right? People always cite that. But we're seeing that more and more and more, these tiny teams with outsized returns or outsized impact. But the Uber example is also interesting because it maybe is obvious. Uber is an exponential company. The taxi medallions are not. You guys even use the term linear organizations. Yes, right. How do you differentiate when it's maybe more gray? Maybe it's somewhere in between.
--:-- Salim Ismail: Well, I think what we found is there's a set of techniques. And if you're using more than about half, then you're clearly over that line and you're scaling very, very fast. And the key is that you can keep a very small resource footprint and use a set of externalities to scale very quickly.
--:-- When you're building a business, you worry about demand and supply and very specifically the cost of demand and the cost of supply, right? Hopefully on the right side of that equation. When the internet came along, it allowed us to drop the cost of demand exponentially. Online marketing, referral marketing, every one of your portfolio companies is trying for the viral loop, in which case customer acquisition costs go to zero, near zero. And for the first time in business history, you could acquire customers at very low cost, right? Amazing.
--:-- What we find with exponential organizations, they found a way of dropping the cost of supply exponentially, right? So you think about Airbnb, the cost of adding a room to their inventory is near zero. If you're Hilton, you have to build a hotel. Same with Uber and same with taxis, right? Same with Waze. So there's now this whole category of companies that are building with an almost zero cost of supply. And if you take out the cost of supply, you take out the denominator, your market cap explodes.
--:-- And so therefore now you have this incredible environment that we've never seen in the history of business where you can acquire customers at low cost and you can supply those customers at low cost. And that's just a magical thing to be able to do. And that's the economic thesis and basis for what we call these EXOs.
--:-- The challenge is if you're a large established company trying to retrofit your organization to become an exponential organization is almost impossible. And there's lots of reasons for it, right? You're basically fighting everything you've been doing for the last 5, 10, 20 years. And the only way to do it is to rebuild an organization outside of your organization, sort of on the edge.
--:-- The difficulty is we're going to see such massive disruption in this decade, right? So if you're a large organization with layers of management and a massive lead keel of assets and resources that you can't offload during ups and downs, you're likely not to be around by the end of this decade.
--:-- Peter Diamandis: Absolutely. It's a real disruption. The analogy I used, Steph, is 65 million years ago, an asteroid hit the Earth, a massive 10-kilometer-sized asteroid. And it changed the environment so rapidly that the slow, lumbering dinosaurs all died. They went extinct because they couldn't adapt to the rapid change. And it was the furry little mammals, our ancestors that survived. They were able to be agile enough to change with the environment and become the dominant kingdom, if you would.
--:-- And it's the same thing going on today. The asteroid that's striking the business world, the entrepreneurial world, are these exponential technologies. They're changing the game so rapidly that large corporations are sort of deer in the headlights and they're not going to stick around. And it's the entrepreneurial companies that are the ones that are rapidly iterating.
--:-- One of my summer interns, he started and he's been working on three startups and generative AI on his own. It's incredible. It's insane.
--:-- Salim Ismail: I mean, we interviewed someone who has done maybe six projects in the last few months, all revenue generating, all doing very, very well. And so we are seeing this phase of the truly independent entrepreneur.
--:-- Host: But also tacking on to your dinosaur analogy, something even more recent. I saw this infographic that basically showed the largest companies in 1989. The top 10 or top 20, none of them are in the top 20 today. And maybe to some people that's not surprising, but these are the same companies that people back 30 years ago were saying they're too big to fail. Yes. These companies have this huge moat, all the talent, all the capital. The same story being applied to some of the companies today. But to your point, we're seeing massive shifts in the market. It sounds like you think that the incumbents can't transform or it's incredibly hard to transform into an exponential organization.
--:-- Salim Ismail: Case in point, Microsoft bases everything they're doing now on OpenAI. OpenAI is a 130-person company. Why didn't Microsoft do this?
--:-- Peter Diamandis: At the end of the day, it was Google buying YouTube and shutting down Google Video.
--:-- Salim Ismail: Right. I think in that case was more the lawyers that were causing the issues. But that's a different story. But it's going to be that the larger corporations are going to be surviving by buying innovation versus creating in-house.
--:-- Peter Diamandis: Yeah. When a big company tries to do anything disruptive, they get an immune system response from the rest of the company and they get attacked.
--:-- Salim Ismail: I was the head of innovation at Yahoo running their incubator before we started Singularity University. And the more disruptive an idea we came up with, the less the company could handle it. I'm like, wait, my job description is to do disruptive things and you can't handle what I do.
--:-- And what we found is three possibilities for a big company. Either they spin off that new code into a completely separate entity like Nestle spinning off Nespresso. And leave it alone is so very important.
--:-- Peter Diamandis: Very important.
--:-- Salim Ismail: The second is buy them like Facebook bought Instagram and WhatsApp, et cetera. And then they couldn't have the discipline to leave it alone and they got into a mess there. And the third option is to turn into a platform. And you look back on the internet, Yahoo, BlackBerry, Nokia all failed to become platforms, right? Google, Apple, Facebook, Amazon all successfully became platforms. And that business model basically carries you through because now you wire yourself into the infrastructure. And essentially, the future of an exponential organization when it gets big enough is to basically be a platform and be a coral reef and have other things built on top of you, which is where they're all trying to get to.
--:-- Peter Diamandis: One of the things, Steph, that I point out when I'm in the boardroom of large companies or speaking to a group of CEOs is we're living in a time of such rapid, accelerating change that we're going to be seeing these disruptive breakthroughs all the time. And you've got to be incorporating them. You've got to be experimenting. The challenge is that the day before something is really a breakthrough, it's a crazy idea. If it wasn't a crazy idea, it wouldn't be a breakthrough. It would be an expected incremental improvement.
--:-- So I turn and say to these individuals, where's your crazy idea department? Where are you trying crazy ideas, embracing them, trying them, and allowing them to flourish and fail? And if you're not, then you're stuck in incrementalism. And if that's the case, you're moving backwards. You're not going to be around 10 years from now.
--:-- Host: Yeah, you're in a protective phase instead of an innovative one.
--:-- Salim Ismail: Peter uses the asteroid hitting and dinosaur. I use a slightly different framing where we have all these technologies converging. And I say that we have 20 major Gutenberg moments hitting us at the same time. Just solar energy changes the world. ChatGPT completely changes the world. Blockchain completely changes the world. And we've added up to roughly about 20 of them. It took us 100 years just to absorb the printing press, right? So now we have 20 of these things. How are we going to absorb that in society? And big companies, I think, have a very, very difficult time dealing with this.
--:-- To support Peter's analogy, the reason for big companies is an old economic paradigm called Coase's Law. This fellow in the 1930s wrote a nine-page paper for which he won the Nobel Prize in Economics saying that big companies exist because transaction costs are lower on the inside than the outside, and you can get economies of scale. And that's essentially the rationale, the thesis behind big companies. Well, today, neither of those two are true.
--:-- So in the book, we actually declare Coase's Law, which has been very touted for 100 years, essentially gone. Because the need to control a big company makes it too slow to navigate all these massive changes that are happening. And B, the transaction costs are actually cheaper on the outside than they are on the inside today with all the web services available. And you don't need a big company. And so we think small companies offering powerful services and then scaling to become platforms is going to be the default modality for business building in the future.
--:-- Host: Let's jump into how companies either start as or transition to EXOs. If you are this big company, this incumbent, you're listening to this, I feel like even if it sounds like it's impossible, they're going to try, right? They know that they need to innovate in this new environment. There is a path. And there are examples, by the way. There is a mechanism and a means to do that.
--:-- Salim Ismail: The way we came up with this was in 2012 to 2014, we analyzed the 200 fastest growing unicorns in the world and said, how are they doing this? How is Uber scaling so fast or Airbnb or TED or others? And we found that all of these organizations had what we call an MTP or a massive transformative purpose. Google, organize the world's information. Uber, everybody's private driver. And it was this tagline of what fundamental problem are you trying to solve? What purpose are you there for? It goes to the Simon Sinek question of why do you exist?
--:-- Peter Diamandis: Let me go a bit deeper on this because MTP is core. It's the first step. If you're a large corporation, you're going to adapt an MTP if you don't have one. If you're an entrepreneur when you're starting out, it's that massive transformative purpose that you need to begin with versus a cool technology.
--:-- And I think the thing for folks to realize is doing anything big and bold in the world is hard and it's going to take time. And unless you've got this emotional energy, and an MTP is driven by an emotional energy. It's like the awe of wanting to go and make this beautiful thing that you envision to happen, or it's the pain of seeing something that exists that needs to be disrupted or changed.
--:-- Like for me right now, one of my MTPs is decimating and reinventing the healthcare industry. I think it's pathetic how expensive it is. But it comes with this emotional energy of desiring something extraordinary. And classically for SpaceX, it's making humanity multi-planetary and going to Mars. And when you've got a powerful MTP, it brings people to you. It brings the smartest talent on the planet. And still, until we have AGI, having smart humans on your team is really important. And it brings those people to you in a way that bonds you and you're driven by something greater than just making money. Making money is fine, but it's got to be secondary to a huge service to humanity in some fashion.
--:-- Salim Ismail: And we found that when we analyzed these 200 unicorns, all of them, without exception, all of them had this tagline, huge problem that they were trying to solve. It became an attractor for talent. It generated a community around that startup. It attracted other developers that wanted to solve the similar problem. And when you're growing very, very fast, it provides focus.
--:-- Host: How can you tell a good MTP relative to a bad? Because I can imagine a company with maybe some very inspiring MTP, but at the same time, if it's not grounded in reality, if it's something that people don't resonate with, how can you tell? I can imagine many companies have, quote unquote, inspiring taglines.
--:-- Peter Diamandis: Well, A, it's got to be massive, right? Elon, let's make humanity multi-planetary. B, it's got to be transformative. It has to be fundamentally different from what we were doing before. And finally, it has to be very purpose-driven. It has to be going after some problem that really is out there to solve.
--:-- And fortunately, we see historically a lot of the traditional blue chip companies are like, to provide outsized shareholder return. I'm sorry, that's just not going to cut it today. A lot of the smartest, gen whatever you want, are looking for purpose in life, not to give a better shareholder return at the end of the day to the investors. Both can come together.
--:-- Salim Ismail: Let's give the viewers a couple of quick heuristics here. One, if you had a billion dollars, what problem would you go solve with that billion dollars? To make the world a better place, right?
--:-- Peter Diamandis: Yeah.
--:-- Salim Ismail: B, what problem would get you up at 6 a.m. every day for five years to solve? That would get you so excited. And if the problem you're going after doesn't hit those criteria, then it's not your MTP. So iterate on it, figure out what deeply are you here to do on the world? What problem are you there to solve? And that's the one to go after.
--:-- Peter Diamandis: And out of that MTP is also going to come the moonshots, right? Your moonshot is going to drive a lot of what you're doing. And these moonshots are going 10 times bigger in the world, 1,000%, where the rest of the world is going 10%. And it's these combinations of an MTP and a moonshot together that really wake up the entrepreneurs in the morning, keep them going.
--:-- And inside a large organization, that's where the problem occurs. These crazy MTPs, these moonshots, is the CEO, is the leadership team, is the board prepared to stand up and say, this is what we're doing. This is why we're doing it.
--:-- Salim Ismail: Yeah, I think Netflix is the canonical example, right, where they disrupted themselves.
--:-- Host: Can I just ask one question related to some of the kind of last generation defining companies? We mentioned Instagram. Like, what would Instagram's MTP be? Because SpaceX, I'm like, okay, yes, multi-planetary species, disrupting healthcare, multi-trillion dollar industry that's totally broken. What would something more like Instagram be, which also was like, obviously massive company, now touches billions of people?
--:-- Peter Diamandis: Sharing memories? I do want to say there is a point at which, and I joke about this all the time, I'm saying, let's go do something big and bold in the world and not build another photo sharing app. At the end of the day, the first time it's done is great. Now, when it's working and working well, the idea of incremental improvement on something, the question is, do you want to spend your time doing that? And we have a limited amount of time on this planet.
--:-- A lot of the work I'm doing right now is in longevity and age reversal. So I hope we will extend that. But until then, we all have 24 hours in a day, seven days in a week, no matter who you are on the planet. And it's how you use that to make a dent in the universe.
--:-- Salim Ismail: When we wrote the first book around 2015, Paul Pullman, who was CEO of Unilever, asked me to come and talk to his top 200 executives. And after that session, he ordered every brand in Unilever to take on an MTP. And every brand had to be purpose-driven from then on. Four years later, the five most profitable brands were the ones that were adopting it the most.
--:-- Host: Can you share an example of one of those brands and their MTP?
--:-- Salim Ismail: They took their soap brands and made them all completely sustainable and using only recycled products. All their packaging was created with recycled plastic, for example. And so they were able to kind of live the brand promise of solving for the planet and not just selling more packaged goods.
--:-- Host: And as people develop these MTPs for their brands, their companies, what do they do next? They've got this great transformative purpose. It's potentially, hopefully, attracting talent who also believe in that. And then what comes next?
--:-- Salim Ismail: So we found that the MTP was the most important. Then we found after studying these 200 fast-growing companies, there were five externalities they were all using one or more of, and then five internal mechanisms that they were all using in order to manage the control framework and drive culture.
--:-- And the first one is staff on demand, like Uber. As much as possible, have a workforce that's external so that you have high flexibility because that's a very important heuristic.
--:-- Host: Can we smash that with COVID-19?
--:-- Salim Ismail: I mean, listen, if you have a huge workforce that is on your salary base and you don't have any agility to flex up and flex down, you can be bankrupted by an externality like a pandemic or like whatever it might be. So staff on demand gives you that flexibility. And by the way, what staff you need is going to be constantly changing faster and faster. We're in this period of massive rapid change.
--:-- Peter Diamandis: Yeah. So you have companies like GigWalk and TaskRabbit and Fiverr and all of these that are now offering platforms for folks to be available to companies.
--:-- Salim Ismail: Right. So that's number one. The second is community and crowd. That's the C. So TED uses community. XPRIZE is famous for taking incentive prizes, and incentive prizes turn crowd into community.
--:-- So just to define this, right, crowd is everybody. It's the world that you can reach when you have an article or a blog that goes out to a large group of people. That's the crowd that's being touched. And then how you convert that crowd inwards to you where you have a two-way communications with them and they become part of your community. For XPRIZE, the crowd was everybody who heard about XPRIZE, a community are those people who are helping us design prizes or are building teams to compete for prizes.
--:-- And these crowd and community, they're not paid, right? They're not on salary, but they can provide a massive amount of benefit to you, helping you shape your products and your services, giving you feedback, helping to promote your products and services. The more you can tap that, the more exponential you can be as an organization.
--:-- Peter Diamandis: Yeah, and they're all feeding into the MTP, like Wikipedia with all these millions of editors that help watch everything.
--:-- Salim Ismail: The second one is community and crowd. The third one is AI and algorithms. And all of these externalities allow you to keep a small footprint and use these to scale fast outside and upward.
--:-- Peter Diamandis: Yeah, especially in a world of massive amount of data and your crowd, your community can be feeding you all of this data, right? And we'll talk about experimentation later, but AI and algorithms are the means by which you manage that crowd and community, gather the data, make sense of the data.
--:-- Salim Ismail: The fourth one is the L, which is leveraged assets. So this is Airbnb leveraging other people's bedrooms, Waze piggybacking on other people's GPS devices, right? Bitcoin leveraging other people's compute power to do the nodes. Apple tapping into Foxconn as a manufacturing partner and not owning the manufacturing capability itself, but outsourcing it. Essentially leveraging assets that you don't own.
--:-- Cloud computing was probably the most relevant here. And we consider the birth of an EXO when Amazon Web Services launched, because now you can take computing off the balance sheet and make it a truly variable cost. And so now everything becomes scalable, which becomes really powerful. So that's the L.
--:-- And the final one is engagement. And this is where Peter talked about incentive prizes for XPRIZE, gamification in the community, all the digital marketing and digital connection you have with your user base. And now with crypto economics and token economics, all of these NFT projects are basically EXOs. They have a big purpose. They create crypto economics. And they reach multi-billion dollar ecosystems incredibly fast just by incentivizing them in the right ways.
--:-- Peter Diamandis: We're entering a massive attention economy, right? The more and more information we're generating on the planet, the more and more we need to be able to get people's attention.
--:-- Salim Ismail: Yeah, Gary Vaynerchuk is running his VCon conference right now. And the best description I've heard about him is he day trades attention. It's just amazing that people can navigate that world.
--:-- So those are externalities that most of these EXOs use one or more of. It allows us to keep a very small resource footprint and very quickly scale outwards. And then we identified five internal mechanisms that mapped to the acronym IDEAS.
--:-- The first of those is interfaces. Apple's interface to its App Store developers or Uber to its drivers. It's actually a form of IP allowing you to automate the interaction to Google's AdSense, whether you're the demand side or supply side. You can automate both sides. You can scale very, very fast. All platform businesses are basically fat protocols in the Web3 world. They're essentially interfaces.
--:-- Peter Diamandis: APIs is the classic example.
--:-- Salim Ismail: Yeah, APIs would say, how do you allow individuals to build businesses on top of you in a way that utilize your services without humans in the loop? Let's get those pesky carbon life forms out of the way, so to speak.
--:-- Peter Diamandis: Well, I was just going to say, it may sound silly to some folks, but you can imagine the human equivalent, right? So for Uber, it was literally calling up someone who then would dispatch a taxi, right? Or, even Google Maps way back in the day, before we had digital maps, you might even call someone or look up a physical map and say, hey, how do I get here?
--:-- Host: Steph, one of my favorite examples is I'm a pilot and I fly a few different airplanes. A dear friend of mine, Richard Kane, built a company called VeriJet and uses the VisionJet. The traditional aircraft chartering business is literally whiteboards and sticky notes, where I'm taking this pilot and this airplane here and the fuel is here. It's pathetic. So Richard, who's a brilliant computer scientist, built a platform on VeriJet where everything is optimized. He'll go to quantum compute later for doing it even faster. But the airplanes, the pilots, where the person is being picked up and dropped off, all of it is fully digitized. He used the VisionJet, the SF-50, because it is massively connected. When the airplane lands, it sends all of its data of its systems check back to the AI. So you get humans completely out of the loop. That's beautiful. It's efficiency, it's safety, and it's speed. God help us, whiteboards and post-it notes should be automated. Air traffic control is another amazing disaster.
--:-- So the first one is interfaces. We actually think it's one of the most under-recognized aspects of business in the world today. We think books will be written on the richness of what's needed there.
--:-- The second is dashboards. There are two types of dashboards: the external metrics you track your business on in real time, and internally, the use of OKRs to manage team and performance. We worked out that only three and a half percent of big companies around the world use OKRs. So there's a long way to go to do better team and performance management. Using dashboards to track everything becomes absolutely critical. If you're an EXO and something's going right or something's going wrong, you want to know very fast. Having real-time feedback is key. In fact, we have a whole section in the book called "Death to the Five-Year Plan" because for big companies, by the time they finish their five-year plan, it's out of date. Big companies now operate on an MTP and a one-year operating plan with a dashboard, using that to steer the company.
--:-- Next is experimentation. For me, this is one of the most critical and important. Entrepreneurs building any kind of company today, especially if they're part of the Andreessen Horowitz community, know this. You begin from the beginning as an experimental-based company. It used to be the tyranny of confidence, where you'd hire an expert or a consultant to tell you what it should look like, the marketing and such. Today, I don't care about human opinion. Show me the data. Run the experiments. Iterate on everything from taglines to colors to font sizes. Build from the beginning. Jeff Holden was a friend of mine, the chief product officer at Uber and at Amazon. He talked about this experimentation engine they built called Morpheus, teaching your team how to run experiments. If you're starting a company now, you need to begin from inception as an experimentally minded organization. When someone raises an idea, it needs to be, "Here are the experiments we're going to run," not "This is what we're doing."
--:-- The problem is large corporations are terrible at this. They have a hard time navigating it.
--:-- Salim Ismail: Yeah. If you run an experiment and you fail, your career is over. There's every disincentive to do that.
--:-- Host: When we think of experimentation, it has two pieces. One is the lean startup, constantly testing assumptions and running them. The other is inculcating a culture of taking risk so the organization is constantly learning. On Amazon, every team is measured on how many experiments they ran this quarter, how many succeeded, how many failed. If you're not running enough experiments and not enough are failing, your bonus gets dinged. They're constantly learning on a nonstop basis what pricing models, what customer, what return policies work or don't work. That's always going to keep them ahead of the game.
--:-- Salim Ismail: Like you both said, it's a cultural thing. It is also an operational idea. Most people listening have probably been in different companies, some with an experimental nature. To your point, it's like we are open to other ideas. In fact, we want to be wrong. We want you to bring a new idea that proves our assumptions incorrect.
--:-- Host: Peter tells a story of Astro Teller at X, where he says, "Show me the assumptions you've made and pick the ones that you think will have the product fail. Let's do those first. Let's learn whether it works or not. Then cascade down the list." I think that's a great way of thinking on a nonstop basis.
--:-- So that's experimentation. Then we have A, which is autonomy. This means decentralized org structures, decentralized decision making, leading all the way to DAOs, where you programmatically have everything completely decentralized. In a highly flexible, volatile world, you want as much decision-making done at the edges as possible. Empower the individuals and employees. Valve Software in Seattle has no CEO, reporting lines, job descriptions, or management meetings of any kind. They're like a beehive. More and more companies, we think, will be taking on this attribute. This is very hard to implement in legacy organizations.
--:-- Salim Ismail: Autonomy requires having a really clear massive transformative purpose in an organization so everybody knows why they exist and why they're doing something. It requires having dashboards. If you have an MTP as your North Star, a dashboard measuring how you're moving in that direction, and you trust your employees and they're brilliant and they care about this, let them go and let them do their work. Really hard to do in a large organization.
--:-- Host: You guys are both speaking my language. I've worked remotely for almost a decade now and I completely believe in this idea. But you're also noticing right now through this downturn, many companies are laying a lot of people off. They're removing that manager layer. Any thoughts at this particular point in time on this idea of autonomy setting organizations up for success? If you have proper dashboards and motivated people that believe in a big purpose like an MTP, you essentially can just let them do their thing.
--:-- Salim Ismail: I'll give you the most extreme example we ever came across. This is a Chinese company called Haier. They're an appliance manufacturer. They make 55 million fridges and ovens a year. There were 80,000 people in a classic pyramid structure, command and control, top-down. The CEO one day wakes up and says, "Can't meet my corporate goals using this structure." Blows it up. Turns 80,000 people into 2,000 teams of about 40 people each. Each team has a P&L target. Each team elects their own leader. Each team decides to do whatever they want to do. You go to any business school in the world and say, "I want to set up a structure to make 55 million fridges," and they'll design an incredibly centralized supply chain, product definition, demand forecasting. Here, this guy is doing it on a decentralized basis. The quality suffered for the first couple of years while they got their act together. But once they got the machine working, GE actually gave up and sold GE Appliances to them because they couldn't compete. When they want to decide what features should go into the new fridge, the teams vote. Because you have 2,000 teams interfacing with vendors, customers, and suppliers, they do a much better job and get a much better result than some product strategy team hunkered away with market forecast and market research.
--:-- Host: With four layers of managers.
--:-- Salim Ismail: We're seeing the power of this to an incredible degree. There's a Canadian bank called Tangerine Bank, which used to be ING Direct, that operates like this. In a regulated bank, there's no CEO, reporting lines, job descriptions. You think, "How is this working?" When they do an online promotion, everybody goes to the phone banks. When it's regulatory reporting time, the chief risk officer says, "Hey, I need help," and everybody floods to help him. Everybody has a ton of fun. They naturally find where they fit the best in the organization. They have more of a say and feel more control. They feel more ownership.
--:-- Host: During this time of rapid change, including downsizing and competition coming out of nowhere, your competition is no longer the company you thought it was. It's a startup coming in with a crazy idea that's now a breakthrough. That agility is key. Going back to your question around the downturn, if you're going to reduce your headcount and flatten your organization, you need these tools. You need the dashboard. You need to give autonomy to your group. You need to fully incentivize them with clear objectives tied back to your MTP. Sometimes you'll see massively increased performance. But the CEO and the board of directors, if they're doing something different than what they've done for the last 10 or 20 years, especially if they're a public company, they need their board to give them top cover. It's a choice to transform throughout the organization.
--:-- You've had companies and incredible leaders like Jeff Bezos, Elon Musk, or Larry Page who from the beginning had this vision. Jeff Bezos' classic shareholder letters in the early days said, "Listen, I don't care about profitability. I'm talking about scale. If you don't like that, don't invest in us." The cojones to say that. But that's what it took. And he was right.
--:-- Salim Ismail: If you build the right MTP, the right goals, the right dashboards, that's effectively what a manager does. They're checking to make sure you're working on the right things, that you are experimenting towards those goals, and then you're meeting them. That's represented through the dashboard. We find that the culture of trust gets built in as an intrinsic outcome of building an EXO.
--:-- Host: So that's autonomy. The final attribute, which is S in IDEAS, is social technologies. These are all the peer-to-peer collaborative technologies like Asana, Slack, Zoom, Yammer, Chatter. We have really good evidence today that peer-to-peer collaboration and communication is much more valuable than traditional top-down management. The more you can enable that with technology, the better.
--:-- If this is of interest to you, if you're an entrepreneur at the beginning of your journey building your company, or if you're a large corporation trying to figure out how to make sense of this, our new book is coming out and it's going to be available for free. It's called Exponential Organizations 2.0. We're going to be doing a three-hour workshop on June the 6th, and it's a free workshop. Salim and I are going to show you how to build and create your MTP and your moonshot. We'll talk about each of these 10 attributes. It'll be interactive. We'll be answering your questions. If you go to dmandis.com, my last name dot com slash EXO, you can register.
--:-- There's another part we built in: a generative AI overlay. We have to eat our own dog food. Over the last three months, we've been building an AI chatbot to interface with the book. You can literally go to this chatbot and type in, "Here's what I do with my company. How would I turn it into an EXO?" or "How do I apply dashboards because this is what I've got right now?" It literally researches the entire corpus of the book and all the interviews we've done and all the tapes of recordings we have. This is now a living book. We're going to load up into it 700 case studies that we have of EXOs.
--:-- Salim Ismail: I think the AI is so important because we've talked about how the world is changing. This is maybe one small example, but the idea of a book itself is changing, how you can interface with it, how you can have it customized to your specific questions related to your specific organization. Any business book today is pretty much out of date by the time you read it.
--:-- Host: That's so true. It's so difficult to write a book. It's like the difference between a traditional car and a Tesla. If you had a Honda Civic, it was engineered 10 years ago, designed seven years ago, built two or three years ago. By the time you get it, the design and technology is 10 years out of date. A Tesla is up to date on the spot because they're constantly updating the software. We think the future of books is going to be like this. A book that took a few years to write will be out of date if it's not being constantly updated and refreshed.
--:-- I want to give you some data we just came across, Steph, about the validity of this. When we first came up with the model in 2013, 2014, we did an initial test. We ranked the Fortune 100 by this model. We looked at every one of the Fortune 100—IBM, Hewlett-Packard, Walmart—and said, "To what extent, one to four, are they purpose-driven? To what extent are they using lean startup thinking? To what extent is their decision-making decentralized?" We came up with an index. I did a segment on CNBC Squawk Box presenting the index: the Fortune 100 ranked by the flexibility, agility, and purpose-driven nature of the org structure. That was 2015.
--:-- A few months ago, we did a seven-year trailing analysis. How did these companies do over seven years? We tracked the top 10 that continue to use the attributes the most, and the bottom 10, the least linear, the least flexible, that use the attributes the least. We compared the top 10 and bottom 10 in our index and how they did over seven years. Over a seven-year period, the top 10 did better than the bottom 10 by 3x on revenue growth, 6.4 times on profitability, 10.9 times on return on assets. But shareholder returns, compound annual growth rate: the top 10 outperformed the bottom 10 by 40x over seven years. 40 times. You think, "I should have created an index fund." We looked at it and said, "We've got to see if the R-squared correlates here." And it absolutely does. Now we have a very clear, data-grounded thesis that if you're not architected in this way, you just won't deliver the returns going forward. It represents that order of magnitude, just like your earlier story about five employees versus 50 or 500 or 5,000.
--:-- What was really incredible was when the pandemic hit, the top 10 did five times better than the bottom 10 in responding to the pandemic. As the external world gets more volatile, your ability to adapt drives market value. Now we can measure that. It seems obvious in retrospect, but it's incredibly important.
--:-- Salim Ismail: The challenge is the majority of our large corporations are built for building a walled garden. It is a scarcity mindset: "We're going to own this asset and piece it out a little bit."
--:-- Host: One of the concepts we talk about that was in an earlier book I wrote called Bold: How to Go Big, Create Wealth and Impact the World is the six Ds of exponentials. Your job as an entrepreneur is to digitize any element of your business that you can. When you digitize something, the growth is slow and deceptive. Digitization is the first D. Deceptive growth is the second. When we double something 10 times, it's a thousand times better. Double it 20 times, it's a million times. Double it 30 times, it's a billion times. It becomes disruptive. It dematerializes, demonetizes, and democratizes.
--:-- The classic example is Kodak. In 1996, at the top of its game, a $28 billion market cap, 140,000 employees. What people don't realize is that 20 years earlier, Kodak had invented the digital camera in their labs. A guy named Stephen Sasson invented it. He brings the digital camera into the board of Kodak and says, "Here it is, the future of Kodak." It takes 0.01 megapixel images in black and white on a tape drive. Kodak laughs and says, "No, no, no. We're in the paper and chemicals business." That was their profit area. This is a challenge because companies forget their purpose versus their profit centers. George Eastman, the founder of Kodak, didn't build Kodak to be in the paper and chemicals business. He wanted to preserve memories. That was his mission. Rather than hopping on the digital camera, they didn't. Twenty years later, they were bankrupt by the technology they had invented.
--:-- The same year they go bankrupt, going back to our friends at Instagram, Instagram gets acquired for a billion dollars by Facebook with 13 employees. Now it's worth $100 billion on Meta's balance sheet. It's this notion that as an entrepreneur, you need to digitize, dematerialize. Cameras have gone away. They're now an app on your phone. The marginal cost of replication of that app is zero. So it's demonetized and it can go everywhere. It's democratized. This happens over and over again. If you're not working to dematerialize, demonetize, and democratize your products and services, someone else will, and they'll put you out of business.
--:-- Host: Let me ask a question on that. I feel like a lot of companies listening are probably thinking, "Yeah, okay, I should probably get some shared assets. I should probably get rid of some W2 employees and have more flexibility in my workforce. I should probably automate a dashboard. I should probably build a platform so I don't have humans in the loop. Instead, the algorithms are running things." Some people are like, "Music to my ears." Other people are probably like, "But what about my employees? What about the humans I've employed for years, if not decades?" My question is, is this just the reality we're in? Or how would you think about some of that pushback as people think about the transition to an exponential organization?
--:-- Salim Ismail: It's a combination of both. It's the reality we're in. It's like if you were in the 90s and you didn't adopt cloud computing, you're not going to last very long. You have to take on the changing world. If you're not building generative AI into your products and services going forward, you're not going to last. This is a fundamental reality of adapting to the new world.
--:-- The second part is how you transform the legacy organization into something different. We've now worked with dozens of big companies from Procter & Gamble to Unilever to TD Ameritrade to Black & Decker. We found a threefold path. Step one is run a 10-week what we call an EXO sprint, which hacks the immune system and hacks culture at scale. The default answer in a big company if you're trying to do anything disruptive is no. How do you switch that to a yes? Step two is do not do disruptive things in the core organization because you'll have this immune system response. They're geared and architected for efficiency and predictability. Just keep letting them do that. Take the crazy people in your company, the edge, and let them build an EXO off the edge. Google X does this.
--:-- The master of this technique, by the way, is Apple. Apple has a great technology supply chain and a great design capability. I will argue that Apple's real edge is organizational. They will form a small team that's really disruptive. They put that team at the edge of the company. They keep them secret and stealth, and they say, "Go disrupt another industry," whether it's payments, watches, or retail. They have a portfolio of teams looking at different industries. When they think something is ready for disruption, they go into it and fold it into the broader ecosystem. There's no limit to their market cap. As we move forward, more and more companies will have to adopt this type of model because doing disruptive things at the edge gives you the upside. Then you fold it into an ecosystem and a platform play. We're starting to see that happen. Most big companies won't make it, but there are companies learning.
--:-- Look at the recent ChatGPT thing. Google was basically the foundation of LLMs. They were too nervous, careful, and risk averse to launch. They got careful. Microsoft went, "Let's just go for it." They did it and boom. You can't afford to sit back on your laurels today, especially if you're a big company.
--:-- Host: Salim, let's talk about the humanitarian side of this. People are saying, "Hold it. You're talking about having my company disrupt and reduce the number of jobs. What about my family I have to feed?" First of all, the reality is this is going to be happening. What you really need to do is make sure your company is going to be able to survive and thrive during these times. It's not like if you choose to employ everybody and not change the organization, you're going to lose your job anyway because the organization is going to be bankrupt soon enough.
--:-- We have another tsunami coming. I track these 20 metatrends of what's happening. AI is one of them, but humanoid robotics is another. We have at least a dozen humanoid robot companies in development. People might know about Optimus from Tesla or Figure, but they are coming. They're going to become a massive workforce. There's going to be a transformation in culture and employment. We have to be ready to deal with this.
--:-- Salim Ismail: I want to touch on this because I go crazy when I hear this. When we've looked in the past at disruptive technological innovation coming in and completely cleaning up, we found that we don't lose jobs. What we do is increase capacity. I'll give you a very clear example. In the 70s, we created bank ATM machines and automated banking to a large degree. There was lots of hand-wringing: "Oh my God, what will we do with millions of bank tellers? They'll all be out of work." What actually happened was the cost of running a branch dropped by 10 times. The banks went and created 10 times more branches. The number of bank tellers has not changed at all since the 70s. Same thing with truck drivers. When we automate trucking, we'll just be doing a ton more trucking because we don't have drivers right now. When you automate, for the most part, you increase capacity. The most roboticized countries in the world that have the highest penetration of robotics are South Korea, Sweden, and Germany, which have the lowest unemployment. It's very clear from the data, but our minds go straight to, "Oh my God, we lose all the jobs." We've never seen that happen.
--:-- Host: This is where Peter talks about scarcity versus abundance. The idea that these specific jobs potentially being automated adds more productivity to the system, which then allows more to be created.
--:-- Salim Ismail: Exactly.
--:-- Host: I run a program every year called Abundance 360, and I coach 360 CEOs and entrepreneurs throughout the year. This year we took a look at UBI. We probably will have some version of universal basic income coming down as more robots and AIs come online. There will be jobs disrupted. But what we're going to enable is for people to level up what they do. A lot of people who have jobs didn't dream about waiting tables or cleaning bathrooms when they were a kid. What did they dream about? You're going to all have an AI co-pilot that helps you learn and do and actually pursue your dreams. We'll probably end up splitting work for income and work for purpose in the future. That's not the subject of the book, but from a societal standpoint, we need to be thinking about it. Companies have an obligation to fulfill their massive transformative purpose and to do it in the most efficient way possible. All of this uplifts humanity. That's the ultimate game here.
--:-- Salim Ismail: It is just the reality. It is the market dynamic that exists. If you don't innovate, someone will out-innovate you.
--:-- Host: Since we've been touching on AI, I'd love to hear from both of you interesting ways you've seen companies start to integrate this new technology. It is so ground-shaking and impacts just about everyone. A lot of people are familiar with ChatGPT and using it on an individual basis. How have you seen this really be deployed effectively within exponential organizations?
--:-- Salim Ismail: For an EXO, there's a very clear place. You say to a generative AI, ChatGPT equivalent, Stable Diffusion, whichever, "Here's my MTP. Here's what I'm currently doing. What experiments should I be running?" The AI will come back with, "Here are the 55 things you should be considering." That performs a great checklist to go off and think about. There's a clear, huge area in education and training: go learn this job, go learn this function, go learn how to program. The best benefit is we'll replace most of the lawyers. There are a lot of lawyers out there. You can just say, "Generate me a contract that has these characteristics," and it'll throw in the clauses. We'll go, "Wow." That's the most exciting one for me.
--:-- Host: One of the things I advise and talk about a lot to a company is every company needs to have what I call a chief AI officer. This is not someone in the organization who is writing code. It is someone who understands what's going on in the AI universe and is sitting next to the CEO as a strategic advisor to say, "We need to be injecting it here, here, here, and here, and partner with this organization and this organization." The challenge is, and I talk about this openly, there are going to be two kinds of companies at the end of this decade: companies that are fully utilizing AI and companies that are out of business. It's that black and white. If you are a large company CEO or an entrepreneur and you're not sure how to be utilizing this, it's even more reason to go and hire someone who's going to sit next to you. It's like a chief strategy officer, but it's your chief AI officer. Their job is to be injecting platforms, partnerships, and capabilities at every level.
--:-- I talk about at every board meeting, every management meeting, I want ChatGPT open as another member of the team. When I'm asking questions, I want people using it as a thought partner. We don't know how to think other than the way we know how to think. When you bring in this other perspective that is bringing in the world's knowledge, you get orthogonal thinking. That's where breakthroughs come from. If you limit yourself to your leadership team, you've got a very narrow window.
--:-- The last four presentations I've done to big CPG boards and C-suites, I've said, "How would I disrupt this company?" It gives me a list. I show that on a slide. The looks on their faces. I go, "That took two seconds to generate. How would I attack this company if I was a startup?" What's really powerful about today is when we were having this conversation when we first put this model, Tesla was nowhere, Uber and Airbnb were just getting started. Now we can point to 50 things and say you have to adapt.
--:-- Salim Ismail: My favorite thing about interfacing with these AIs is exactly what you said about it extending your own ideas. I had an experience yesterday where I was thinking through a tweet. I was thinking, "Cities are designed around cars, offices are designed around meetings, our current society has been designed around things of the past that are changing." I asked ChatGPT, "Can you come up with a few more of these?" I just wanted to see what it came up with. The fascinating thing was not only did it come up with a bunch of them, it had this altruistic view where my original ones were a little more negative.
--:-- Salim Ismail: Like, "Oh, you know, we need to rethink cities so they're not designed around cars." And they were beautiful. They were like, "Parks are designed around families." And I was like, "Oh, I never really thought about that." It was so surprising.
--:-- Salim Ismail: And then I said, "Hey, ChatGPT, thank you so much for this. But these are really altruistic. Could you give me a few that I think are maybe more grounded in reality?" And it also spat out the exact same 10 things, but with a totally different viewpoint. And I was like, "Oh my gosh, this is so clever."
--:-- Salim Ismail: And I guess to that end, I agree with you that having someone within the organization who is solely focused on this is so important. And we're seeing that across other dimensions. As you mentioned, Peter, maybe 20 metatrends that are happening. I wonder, we've seen a couple companies hire a head of remote who are thinking about what staff on demand should I be bringing in? How do I incorporate async into my organization? Are there other roles that you both see emerging due to these exponential trends?
--:-- Peter Diamandis: One of the things I think about, Steph, is a head of mindset in an organization, which is a really weird and woo thing to talk about. But your mindset is the single most important thing any entrepreneur or any organization has. If I said to you what made Steve Jobs, Jeff Bezos, Mahatma Gandhi, Martin Luther King successful, was it their money, their technology, their network, or was it their mindset? I think everybody would argue it's their mindset.
--:-- Peter Diamandis: And if, in fact, your mindset is the most important thing that makes you successful as a leader or an organization, my next question is: what mindset do you have? And I list off a number of mindsets that I think an EXO needs to have. It needs to have a curiosity mindset. It needs to have an abundance mindset, exponential mindset, a moonshot mindset, a gratitude mindset, and a purpose-driven mindset, most importantly. These are mindsets that drive behavior.
--:-- Peter Diamandis: And here's the thing. The world is speeding up. As a result, the way you react to problems and opportunities is instantaneous. It's instinct. That instantaneous reaction is shaped by your mindset. If you have a dystopian negative mindset and you see a problem, it puts you back on your heels, cowering in fear and scarcity. If you've got an abundance mindset and you see a problem, it's like, "Oh my God, what opportunities are coming out of this? How do we navigate this? How do we bring in new capabilities?"
--:-- Peter Diamandis: So I haven't really thought about this before, but a chief mindset officer that's really training your employees and your organization. How do we train ourselves? Same way an AI does. A neural net is trained by showing it example after example after example. I train my own neural net, my own brain, by not watching the crisis network CNN and getting dystopian news all the time. It's by the books I read. I built an AI called Futuroscope that searches the world's information and brings me the stuff that's within my parameters of positive, abundance-minded, exponential in all of these industries. The news is out there. It's just filtered by editors who want clickbait for their advertisers, or filtered by what actually serves me.
--:-- Host: There's a company in Australia that I came across. They read the book a few years ago, and they have every quarter 10 projects running on the 10 attributes: staff on demand, autonomy. Every quarter, they just re-up the projects. Everybody has to pick something they're going to drive the initiative for. Somebody picks, "I'll drive dashboards this quarter and figure out how to implement dashboards into some new domain." And they just keep doing that.
--:-- Host: If an organization is at a place where it's assessing these different attributes, the 10 attributes, is there a framework or a way of thinking in terms of where to start? Because I assume not just large companies, but some startups would look at those 10 and say, "Oh man, there's like eight of these that we are not doing well or we are not tackling."
--:-- Salim Ismail: We actually have a diagnostic survey where you can score yourself and see where you're weak or strong. Once you have the "as is," you can go, "Okay, how strong do we need to be in AI, or in autonomy, or in community and crowd?" For example, most big companies in the world don't leverage community. They build the products and try to push it into the marketplace. Then you have Xiaomi in China, the second biggest phone company. They're successful because they have a thousand super users that vote on what features should go into the new phone. They get the phone early and can boast to people, "Look, I voted." All their word-of-mouth product development is taken care of, and they have no marketing or promotional costs at all. That allows them to keep the cost low just by leveraging community.
--:-- Salim Ismail: So once you know this is the baseline—and the diagnostic is also free to take, as is how we scored the Fortune 100—you can then say, "Where do we want to be?" And then start filling in the gaps and building that capability. Every attribute you add moves you in that direction. It's important to realize you don't need to do everything at once, but you need to have clarity on where you're strong and what to add next.
--:-- Salim Ismail: It's easiest, by the way, when you're doing this at the beginning, when you're a guy and a gal and you've got your MTP. One of the places I've seen people fail is when they start with a massive transformative purpose, then they bend to the marketplace and deviate from it, following the path of least resistance. You end up with something that maybe has some revenue in markets, but it isn't inspirational anymore. And it's going to die a slow and painful death.
--:-- Peter Diamandis: Guilty as charged. We've done it a few times.
--:-- Salim Ismail: Yes, exactly. We've all done it.
--:-- Host: Kodak's a great example where they literally got lost. They had an MTP, but based on their killer product for a period of time, they got lost in what their MTP was. Look at BlackBerry as well. BlackBerry became the biggest phone company in the world. They didn't have an MTP to sustain what they were going to do next, and eventually they just imploded.
--:-- Host: Also a great example of building a platform that other people can build on top of. That's one of the ways that Apple has succeeded. I had a BlackBerry back in the day. I remember they had maybe one or two games on the phone, and anything that went on a BlackBerry had to be built by BlackBerry. It wasn't scalable, wasn't exponential.
--:-- Salim Ismail: Biggest problem. You really want to create your APIs, your interface that allows the world to build business on top of you. The most successful companies in the world do that. If you have something extraordinary, open source it to share the cost of the operations, which is what Amazon did with their cloud services. That was so brilliant.
--:-- Salim Ismail: I want to hit again on Google. Google had Google Videos. I remember meeting Chad Hurley after Google bought YouTube. It was like, "Why did they buy you? They had Google Videos." And it was like, "Well, Google Videos had a whole bunch of lawyers approving what could go on, what could be done. YouTube just had none of that. And it just took off." It gets bought for $1.65 billion 18 months after startup. This agility of a small, nimble mammal compared to the large lumbering dinosaurs is going to only be amplified in the world ahead.
--:-- Salim Ismail: You'll have companies like Disney that have an engine, and then they'll buy Lucas and Marvel and put those creative products through their engine that goes out to movies and theme parks. For large companies, what we're finding also is that this EXO model is extending way past just companies into government departments, nonprofits, impact projects, etc.
--:-- Salim Ismail: I came across the Minister of Oceans in Mauritius. I was really happy to meet him at an XPRIZE dinner that Peter put together. He goes, "I run my whole ministry based on your book." I'm like, "Wait, what?" He goes, "Yeah, we have a massive ocean area that we can't possibly cover effectively using old style thinking. So we built a community and all the fishermen tell us what's going on. We gather all the data. We have dashboards." I'm like, "Wow, this is nuts."
--:-- Peter Diamandis: Let me just say again, please, if this is of interest to you—if you're a large corporation that wants to understand how to implement this and hopefully slow or prevent a disruption, or you're a startup at any stage—this is a three-hour workshop to access this. It's diamandis.com/EXO. We're bubbling with excitement to share what we've been working on here and get it out to the world.
--:-- Host: Yeah, and I think it's worth mentioning again, you guys wrote this book originally in 2014, right? Maybe we could just close out with one question. We've talked a lot about finding a big moonshot, a big purpose that others can buy into. Given that both of you have been in technology for so long, are there any large grand challenges that you'd just love to be solved or have founders take a stab at? What's kind of catching your eye in terms of potential MTPs?
--:-- Peter Diamandis: So I do this for a living with XPRIZE. What we do is launch XPRIZEs. We just launched an XPRIZE for wildfires. You can monitor 1,000 square kilometers, detect a wildfire, add ignition, and put it out in 10 minutes automatically. We're getting ready to do an XPRIZE—my biggest area right now is reinventing, disrupting healthcare. A healthspan XPRIZE: reverse your biological age or your functional age by 20 years. Those are areas I care about.
--:-- Salim Ismail: I think there are two or three big areas. One is education, which desperately needs a massive transformation. But it turns out our institutions have their own immune system. God help you if you try and disrupt academia, journalism, et cetera. We have institutional immune systems that need to be disrupted.
--:-- Salim Ismail: I think the biggest and most important one is that in our general institutions, we don't have a feedback loop. There's no mechanism to update the UN, the healthcare system, the legal system, or the education system. We need to build those. I know many of your companies attack those areas, but we need to figure out a way of jumping past all of that and going to a completely new model that's actually working for people.
--:-- Salim Ismail: I think this is where AI can really help. For example, we've been chatting with Imad Mostaque of Stability AI and Stable Diffusion. We're like, "Why can't we just use an AI, load up all the data in a country, and give every child a tutor, a doctor, a lawyer, and an assistant, and a link for each one, and just let them go nuts?" You'll instantly transform that country. I think that's the kind of thing we're really excited about seeing tons of.
--:-- Peter Diamandis: Yeah. And by the way, Imad is working on that right now. He's looking to provide every child in the nation of Malawi with a countrywide experiment.
--:-- Host: Amazing. And imagine the data you get from that. It's just fundamentally different. And it's diamandis.com/EXO, or check out the link in our show notes.
