AliPartovi

LubaAli, thank you so much for coming on the show.Link

AliMy pleasure.Link

LubaI'm curious, are you still rock climbing?Link

AliYes, I go fairly regularly. Yeah. Either bouldering myself or, like, top roping with a partner.Link

LubaTell me a bit more about how you got into it.Link

AliRock climbing for me was partly for fitness, but also actually very intentionally. I wanted to have a practice to overcome fear. So I guess this was about 15 or 16 years ago, and I had sold my second startup, and I was really introspective about different things that I'd experienced. And essentially it was actually a combination of things. One is, having gone from running a startup every day and all the ups and downs to then being done, I was actually missing the ups and downs. I was missing the thrill, and I was worried about whether this would lead me to, like, addictive behaviors. And I wanted to have something that would give me that thrill, but be healthier.Link

LubaA little more contained.Link

AliYes. But then I also really deeply felt like the worst decisions are decisions that come out of fear. And I just had decided fear is kind of a useless emotion that I want to try to get rid of in my life, and, like, learn how to at least separate fear from danger. Like, danger is not good. But most of the times in today's life that we encounter fear, it's not actually related to any sort of danger. It's more related to uncertainty or, you know, anxiety, but not actually, like, mortal danger.Link

And rock climbing for me is a great metaphor for that, because you're generally not in danger. You could be, like, one foot off the ground where there's no danger at all. You know, if you fell, you won't get hurt, but you still feel very insecure because your stance isn't completely stable and your next step isn't obvious and your balance is off. And you can experience this extreme feeling of fear when there's no danger at all. And you can kind of practice ignoring that fear until it completely goes away.Link

LubaIt's like exposure therapy. Yeah, yeah, I really love that. I'm actually, for the past year probably, I've been on this train of really recognizing when I'm making decisions out of fear and trying to pause and unpack it, and then figure out how I can make decisions out of genuinely what I want, what I like, and being completely honest with myself, versus doing something because I'm scared, you know, I'm, I don't know, like, not going to be able to pay my bills, or I'm scared that this person will dislike me, and so on and so forth. I think it's such a powerful practice to spend time on, and to even have the awareness of when you have fear coming up.Link

AliYeah. And I would say it really is an applicable metaphor to the startup world. I think generally speaking, a lot of people don't realize their full potential because they hold themselves back from taking moves that may have some risk but also have some upside. And, you know, I think human nature tends to be more afraid of the risk. And I definitely had regretted decisions that I'd made in my... this was my second startup, that was iLike, that wasn't very successful. And I felt like I would have probably been more proud of myself if I had made more bold decisions. So, yeah. So that was part of it as well.Link

LubaTell me a bit more about what were those decisions that you regret not making, or making out of fear?Link

AliI mean, I can come up with specific ones, but generally speaking, when you're running a startup, there's just this ever-present fear of failure, and it's very personal, because as a founder, your identity of who I am is...Link

LubaVery tied.Link

AliTied to whether that startup succeeds or not. And other people may not see it that way, but you see it as, oh my gosh, if this thing fails, that means I am a failure. Sure. And that generally causes you to look for ways to try to make it keep surviving, rather than things that could be existential, all or nothing, you know, risk.Link

So in the case of iLike, we had a number of places where we were facing a situation where we could have, like, gone all in and either failed miserably and instantly or won some outcome. And so we were often resistant to that, or we were in situations where it just seemed like we're not going to make it, but we kept finding ways to extend survival. Yeah, yeah. And I mean, the company ultimately didn't succeed, but in hindsight, I wish it could have...Link

LubaYou'd spent less time on it.Link

AliYeah, it would have been nicer to fail after less time. This dragged on for many years. But the most high-profile case of this, I've posted about it on Twitter, was, we were in the music industry, and... you know the story? Yes. Yeah.Link

LubaOh, please. Please tell the story.Link

AliI mean, it's got a few layers to it, but our company was using music in a way that was actually extremely respectful to rights holders. We only played 30-second clips of songs, and we paid a license for that. So we did not do anything even close to crossing a line as far as copyright issues. Nevertheless, the record labels were pressuring us and saying we should give them equity in our company, purely, I think, almost as a mafia tactic. They're like, let's see what we can get by threatening this startup. And we were resisting this.Link

And in the midst of this period where we were having this very stressful, threat-driven clash with these rights holders, we were courting the musicians directly to see if they would place original music on our site and grant us the right to do so, as an alternative source of content, and of unique, exclusive content. And my dream was to get Bono and U2, and this is back in 2007. At that time, Bono and U2 were probably the single, like, most famous, most highly regarded band or musical group in the world.Link

And it's very funny. We approached lots of other less famous bands, and they all said, well, who else is doing it? And we'd say, no one else yet. And they're like, well, we don't want to be first. So we were getting rejected a bunch. When we finally pitched the U2 people, they said, who else is doing it? Because we want to be first. So it's really interesting.Link

LubaThat's very lucky.Link

AliYeah, well, it just speaks to the courage they show, and...Link

LubaTo take a bet on you.Link

AliOn us. And just generally, that's a group that is not very afraid of things, I've also learned. Yeah. And then in this particular case of this piece of content, we had a meeting with Bono, and unexpectedly, he started singing a song that he had just recorded, that he hadn't even played for the other members of the band yet. He was playing it for us. And I was like, do you mind if I record this on my phone? And so I recorded the song, but he was, like, singing along to it himself and explaining the lyrics. It was just a very artistic recording. So it wasn't just a produced song. It was, like, a video of him explaining the meaning behind the lyrics. And it had to do with the famine in Ethiopia and starving children and references to the Bible. It was very poetic, and I captured this whole thing, and I couldn't believe it. I mean, my hands were shaking recording.Link

LubaBut you were there recording it.Link

AliYeah. And I mean, he's kind of, like, my favorite musician. So I was also, you know, like a fanboy. Heart beating fast. So we had this recording, and then it took some period of time to get the artist, meaning, like, his management and so on, to say, okay, it's cleared to be posted on our platform. We wanted to make sure that they were granting us those rights. And we posted it, and our platform was set up so that it would send out notifications to millions of people who liked U2, saying, check out this new song and new recording. And it really became a centerpiece for this album release they had at the time in 2007, and it blew up.Link

This was all positive, an album release that would benefit the record label, but the record label was pissed, because there was also this indication that the artist can, like, do their own digital strategy without permission. And it has more to do with, like, power and control than what's good for their bottom line at the time. And part of what's at stake here, going back to then, record labels, all the US record labels were having kind of a battle with all their artists over who has permission to do digital strategy of different sorts and who has what rights. And so I think from their perspective, if U2 did this thing, it would set a precedent for all their other bands as well.Link

Regardless, they basically told us, look, if you don't take that down, then we'll take all of our music off your service. And essentially, this was Universal Music Group, that represented nearly half of all music at the time. So they were threatening us with essentially, like, a total blackout of content. And, you know, something that, if we wanted to fight, could have led to a lawsuit and so on. So yeah, it was pretty terrifying. And it really felt insidious, because this wasn't, like, rampant piracy. It was a video that I myself had personally taken, and that the band and their management said is cleared for us to post. And it was about starving children in Ethiopia, you know, in a famine.Link

So, I mean, this was just, like, that evening, within our company we had a whole debate and called up different members of the board to talk about it. And I actually wanted to tell them, fuck you, we're not taking it down. But some of the other board members said, you know, we shouldn't say that to Universal Music Group. And what we ultimately decided to do was this kind of half measure where we cut the video in half, like, omitting the music, because there was also some conversation part. And so we, like, left the conversation up and maybe a few seconds of music, but basically it lost the soul and the true magic of it. And it was like this weird thing where now we were compliant with anything that they could claim some kind of copyright over.Link

But essentially, I guess I would say we avoided all risk, but in doing so, also, I would say, kind of avoided the potential upside. Now, I will grant that the upside was questionable. The upside would have been we end up in a nuclear war with the most powerful record company, and no idea where that would end. But at least the band would have known that we had cojones and that we were loyal to them. And again, this was a stage where I think a lot of bands were looking for digital allies against their own record labels, because there were, like, tensions between them. And also, I'm not sure if the record label would have followed through with that threat, because it would have been kind of embarrassing for them to take down...Link

LubaA small startup, or...Link

AliTo take down a small startup, and to take down a piece of content by their top musician. That was content about, you know, the Ethiopian...Link

LubaYeah. Children.Link

AliChildren suffering from famine. So I don't know how it would play out, but this is just one of the high-profile cases of many cases where we chose a path that would let us survive, to avoid going all in. And, you know, in hindsight, at least some of those cases, I think we should have taken the bigger bet, even if it risked losing everything.Link

LubaWhat was it like, or what is it like for you, to sit with those decisions? Do you experience a lot of regret? Do you look back at them a lot? Or is it, you know, in passing you reflect and you decide you should have done that differently, but it's not like a constant rumination over how things could have been?Link

AliWell, first of all, this story is now, like, 18 or 19 years old. I've definitely had a lot of time to ruminate over this and other things like this, but now it's a little more abstract. I mean, at that time, it definitely was a deep, like, wound, essentially, that I would replay a lot in my head. And like I said, after we ended up leaving this company, I mean, we sold it. It was, I would say, a relatively small sale, like a $25 million sale, which might sound like a lot of money to some people, and it is. But given my first startup had been more than ten times that, this was a relatively unsuccessful outcome. And, you know, investors barely got their money back.Link

And after we were done, I had, like, more than a year of, you know, time off to just think about these things. But I started rock climbing in part as, I guess, a meditative practice, but also as a way to make myself both physically stronger, but also mentally more able to decide things without the influence of fear.Link

LubaWhat did that failure tell you about yourself at that time?Link

AliSo what did it tell me about myself at the time? I mean, I think the main wisdom I got wasn't right away. I mean, for a period I really felt ashamed, because, like I said earlier, the idea of a startup and my identity were fused together. And so I felt like I'm a failure. And tied to this was this feeling that probably all my investors think I'm a failure, and other people think I'm a failure. And we had been a high-profile startup, so it wasn't just, like, some startup that never succeeded and then died. It was a startup that got a lot of press coverage, that had, like, many of the top musicians in the world involved with it, and then failed. So I really assumed that everyone must be judging me and thinking I'm a failure.Link

And I think the biggest wisdom I got, after some period of time, was realizing that no one else cared nearly that much, and that a lot of this was just in my head, and that everyone else has their own demons, everyone has their own sources of anxiety that they're grappling with, and doesn't really have time to be judging whether I'm a failure or not. Yeah. And so it took me a long time to get to that point. I don't know if I could pinpoint a specific moment. I also got divorced during this period, so it was mixed with a lot of personal, yeah, feelings of personal failure. But a year or two, I guess.Link

But what I really realized is that the most important thing is to just start doing good work, doing something else, and whatever is next is what you'll get your self-esteem from, and what other people will start associating you with. And yeah. And one failed project does not need to be your identity. So yeah.Link

LubaThe identity piece is crazy, actually. So I recently shut down my startup, and it took me some time to come to that decision, where one of the biggest obstacles to deciding that was identity. Like, my identity was so roped into being a founder, and then, you know, announcing to the world that this didn't work out would make me feel like people would see me as a failure. And, you know, I failed my investors, I failed people that I've employed, and all the friends or whoever supported you along the way.Link

And then I came to this conclusion that, okay, this identity piece is totally driven by fear. Like, fear that people care so much about what I do and they associate me with that work. And once I came to that conclusion, I was like, well, I can be kind of wasting more of my life and time on trying to survive this, knowing that it's not going to go anywhere, and, like, kind of, again, having this huge opportunity cost to doing that. Or I can make the courageous decision of saying that, hey, this didn't work out, I'm so sorry, and, you know, hope for the best. But the identity piece was the hardest to deal with. And kind of detaching yourself from that work.Link

AliWell, I know exactly how it feels. So, yeah. And I think it's pretty common for startup founders in general, especially anyone who's been, like, a high-performing student or high-achieving. And, you know, it's the downside of if you had all good grades in school or other things like that. If you haven't experienced smaller-stakes failure, then a high-stakes failure feels existential. Yeah. It feels really, really scary.Link

LubaAnd to your point, people don't care as much as you think they care about your story. And we live in such a beautiful place that is Silicon Valley, where you can fail and still kind of, you know, learn and fail upwards in a way. And people will be like, well, at least you tried.Link

AliAnd I think especially in the tech industry, there's total forgiveness, I'd say, actually, as long as you gave it a real try. You know, if someone fails because they just don't work very hard or so on, maybe it's different. But if you fail because you took a big swing and you attempted something risky and it didn't pay off, I think that earns respect, actually. And yeah, there's a little nuance there. Other parts of the world may not all be as forgiving. Like, other cultures tend to kind of, I don't know, condemn failure quite a bit more. But the Bay Area tech industry is, I think, very successful in that. Yeah. And very much, I'd say, encourages people taking bold swings, whether they succeed or fail. And I think tech has also just been on a multi-decade growth path.Link

LubaAnd so people recognize that you need to take big swings, and some of them will not pay out, but the upside and the payout will be quite large if it does happen.Link

AliYeah. And you could have a total failure, but if you get back on the track, given how fast things are growing, you might come out far ahead anyway.Link

LubaSo do you think founders should actively practice detaching their identity from their startup?Link

AliOh, interesting. I'd have to think about what that means. I think I would say, I'm not sure about that. I think the emotional part of it, they should perhaps separate, of not being too hard on themselves. But I guess the reason I'm pausing is, at least, like, the public face of a company is better to be a person. And, you know, I guess specifically the CEO has an important role to play as the spokesperson. And even for a very large corporation with a lot of distributed responsibility, there tends to be a connection to one person. You know, like, Elon Musk is the face of SpaceX, which, you know, he doesn't even really run it. It's, you know, Glenn Shotwell, I think.Link

LubaYeah. Gwen.Link

AliGwen Shotwell. Sorry. Did I say Glenn? Gwen Shotwell. But in some ways, the public wants to associate him with it. And if you're the CEO of something and you're trying to resist that, I feel like that would be holding back at least some element of the public recognition and brand for the company. I would say it's better to just learn how to not be afraid and how to ignore fear.Link

LubaHow has your path to not be afraid panned out since that failure? So you started rock climbing to...Link

AliOh, I've had so many other failures. That's just one of many. I think I would say, actually, for as long as I can remember, I tend to flirt with danger anyway, so that wasn't the start. I've generally, when I see a few different options, pushed myself to... yeah, I tend to choose whatever path I most...Link

LubaDo you choose it rationally, or do you actually have the desire and the drive to test out the fire?Link

AliI think more the latter. But I think I also at some point, I don't remember when, came to the realization that usually the thing that seems scary is probably the thing that's the correct thing to do. And yeah. And so it's actually been a guidepost for me. And this is true for lots of things. It's also true for, like, relationships, like difficult conversations. Whatever path feels the most intimidating is probably the appropriate way. If you're giving someone negative feedback, or breaking up with someone, or, you know...Link

LubaYeah, there is this way to look at it, that things that require resistance have the most growth in them. Yeah. A good parallel is strength training. You know, you go to the gym, you exhaust your muscles, but then they grow. So if everything was really easy and we didn't have to work for it or feel fear or feel discomfort, then those things are maybe not even worthwhile.Link

AliYeah, yeah. Well said. So yeah, I think I would say I've always had this natural aspect of, you know, given a choice, to try to push myself to do whichever option I was more scared of. And yeah. And I like danger. But I think with that experience with iLike, there was more of a sense of, like, an existential, all-or-nothing feeling. In hindsight, it wasn't really. Since I had already had a successful startup, I didn't have, like, my entire net worth on the line. It was more my reputation or self-esteem. But it definitely did feel existential.Link

LubaWhere do you think your flirtation with danger comes from? Why do you like danger?Link

AliI don't know. I think it's, like, pretty far back in my upbringing, or I don't know if it's in my genes. My dad was a bit of a daredevil, I think, when he was a boy. At least from the stories I've heard.Link

LubaAnd what are some of the stories?Link

AliOh, that he would, like, climb on the roof, or things like this, and just do crazy things. I mean, he's a physics professor, so I think most people, if they heard that story, would be really laughing. But yeah, I guess it's also that since I was a baby, I've just always had a level of confidence that everything will work out okay. I've pretty much always been a happy person, and a pretty confident and calm person. So a lot of this, I feel, for me at least, is...Link

LubaNature.Link

AliIs just my nature.Link

LubaWhat about your twin brother?Link

AliWe're not identical in every respect, but we're pretty similar in this aspect. He's probably taken more risks than me in some ways, and less in other ways, but overall I think pretty similar.Link

LubaSo I do want to spend some time learning about your upbringing. One thing that was interesting to me is that since you were a little kid, you had the dream to be in America.Link

AliYeah.Link

LubaWhere did that dream come from?Link

AliWell, so I experienced being in America, so it was more like a dream to return. So when we were two years old, we moved to Boston for about two years. My mom was getting her master's in computer science, and so my mom and dad and brother and I moved to Boston. I actually went to MIT daycare. And, you know, I often joke that I loved being surrounded by people smarter than myself. Even the daycare center was the MIT daycare center. So, but it wasn't just...Link

LubaBut I feel...Link

AliLike the language of America, the TV shows, like, just the experience of being here was wonderful. And we returned to Iran at around age four and a half or so, almost five. And pretty shortly after that, the revolution happened, and life became much harder and lonelier. And so for us, it might be a little hard to separate what was good about America from what was bad about a revolution and a war.Link

But I would also say, like, I preferred reading American books. And, you know, for the next five or six years living in Iran, we learned Farsi and we went to school, you know, like a regular school in Iran, but at home I would read American books. Or read in English.Link

LubaWas that encouraged by your parents?Link

AliI don't know if they had much specific say in it. I guess my mom would buy it. Yeah, there were, like, bookcases full of books, and we basically devoured all of it. And then my mom would continuously go to the bookstore and try to find more books. And I remember it was actually a struggle for her, finding books that were, like, child-appropriate that we hadn't already finished. We kind of exhausted everything she could find at the time in an Iranian bookstore. And we were reading, like, Shakespeare and Dickens. I read *The Odyssey*. Nice. This was all when we were, like, eight years old, just because of lack of material.Link

LubaDid you watch the movie?Link

AliNot yet.Link

LubaNo. Same. Me neither.Link

AliYeah. So, but through reading, I was keenly aware of, like, the life in the West that I was excluded from in Iran. And so that was why it was really a dream to be able to come to America. And, you know, I would read about baseball and be like, oh, baseball, how do you play it? And I'd never seen it on TV. I mean, I first encountered baseball from *Peanuts* comic strips. So, you know, Charlie Brown and Snoopy playing baseball, which never shows the whole game. It just will show, like, one moment where he dropped the ball or he threw the ball. But then I wanted to learn the whole game.Link

Our mom bought us a baseball official rulebook. Oh, wow. Which is, like, a dense thing with, like, every single rule for Major League Baseball. And we were reading it, and it described, like, what's the regulation ball itself? What is the ball made of? It's, like, a cork wound with some kind of, like, cord around it, and then leather that's stitched. And we're like, how are we going to make one of these? You know, you couldn't just buy a baseball. That was not something that was for sale anywhere in Iran.Link

I think we ended up using a tennis ball, but we basically started, like, a neighborhood league. Yeah, a neighborhood baseball game. It's really what I think you would now call stickball, because we had one glove that was a real glove, and then the rest was stuff that we, like, put together. But we had learned exactly, like, the bases, and we didn't have a field big enough, so it was just in the street. But we somehow convinced, you know, a dozen kids to play this game. That's funny. Yeah.Link

LubaAnd so it sounds like America was this representation of calm, prosperity, good vibes. And then the Iran Revolution started. So you were obviously yearning for that more peaceful and fun time in America?Link

AliYeah. And you're right. I couldn't claim anything much loftier, right? I was, like, eight or nine years old. There was an element, though, of, I was also really aware that my mom was stressed all the time living in Iran, and that the rules there were not fair to women. And, you know, as a child, you can sense if your mom is anxious or unhappy without her saying anything. And so I was very, very sensitive to that tension. And I read things about how, you know, the premise in the United States is that all people are equal under the law. And that was very attractive to me. I mean, it's such a powerful concept, but it's also such a simple concept that even a seven-year-old can understand that, and understand the difference between that and how things felt for my mom in Iran.Link

LubaSo then you guys do end up immigrating to the US. Did your dad get you a computer while you were still in Iran, or did it already happen in the US?Link

AliNo, it was in Iran, which was a whole challenge. He occasionally traveled for work, because he was a very prestigious physics professor, and he was invited to conferences to, you know, present his research and things like that. And he read about the emergence of the personal computer, the Apple, and so on. And he knew computer programming. He had actually personally written a lot of the, like, computer systems for the university where he taught.Link

LubaAnd did he start that university too, or...Link

AliHe helped start it. There's another, like, primary founder who really was the main founder. And then my dad was the first person to join him, and was the first faculty member, and recruited the rest of the faculty, and wrote the, like, scheduling computer system, for example. So my dad loved computer programming, and had used it for physics as well as for this administrative stuff for the university.Link

He read about the personal computer. He described the concept to us, but we didn't have access to one in Iran. We did have this, like, handheld Texas Instruments TI programmable calculator. So he taught us how to program that, which, the only things you can do are mathematical calculations. But we started programming that with this basic logic of how to do, you know, basically calculations with this PostScript-type notation.Link

LubaAnd were both your brother and you as into the computer? Yeah. Wow.Link

AliYeah. So then over a period of time, my dad would read magazines and compare the different new personal computers' capabilities and prices, and finally chose the Commodore 64, because it had, like, the lowest price and the most...Link

LubaCapabilities.Link

AliCompute and RAM. And so I think he ordered one when he was on a trip to Italy and then had it shipped, and then it got stuck in Iranian customs for months. Oh, wow. And I remember going together to this, like, customs warehouse to, like, argue for, like, please give us our computer. And we finally got it. And I still remember, like, unboxing it when we got home. We were nine years old at the time, but it was such a magical experience.Link

And the way it worked then, a computer didn't have its own monitor. You plugged it into a television. So we had, like, the regular television, and, like, figured out which cables to plug in to turn it on. And the computers of that era, when you turned it on, it just turned on to a blinking command line. There was no mouse, there was no graphical user interface. It was like, start typing commands. And so basically the only thing you could do with it was to start programming. And yeah. And so I think my dad gave us, like, a few initial tips, and then there was, like, the book, and he was like, you can read that and learn how to program. And so we just, like, read it and learned over time and practiced.Link

LubaAnd that kicks off your passion for tech and computer science.Link

AliNow, I'd say the main thing, though, is that my dad continuously would give us ideas of what else you could build, and some planning on how it would work. You know, because computer programming is so much more in the mind, and it's much more about planning. Like, the actual coding part, if you've done it well, is not the main thing. It's, like, the planning, which is on pen and paper perhaps, of, like, you know, what should you do in this situation or that situation?Link

LubaIs that where your obsession with pen and paper for coding perhaps...Link

AliYeah. Comes from. Yeah. I think my dad really imbued Hadi and me with the sense that, like, if you've planned something right and designed it right, then it shouldn't have any bugs. And the actual code should be short and simple and elegant, because, you know, well-built software, it's more about the architecture and the design. And this was even for, like, really simple games and things that we were creating. He emphasized those principles for us, and would spend time with us, like, going through the pen-and-paper diagrams of how it's organized and things like that.Link

LubaAnd that's amazing that he spent so much time with you guys teaching you.Link

AliYeah. And he would also then delegate and say, okay, you guys write this part, you write that part. He wrote certain parts.Link

LubaDo you do this with your kids now?Link

AliA little bit. Yeah.Link

LubaWhat are you teaching them?Link

AliOh, so I have three older kids who I would not pretend to teach things to, but my nine-year-old, I've done a lot of coding with her, but also doing math with her a lot. Yeah. Algebra. And I'm always trying to teach her a little bit of math ahead of where she is in school.Link

LubaSo my understanding is, when you guys immigrated to the US, you came from a pretty wealthy family in Iran, but then everything was confiscated.Link

AliPretty much correct. I don't know the exact stages, but the actual 1979 revolution, I think all revolutions have an aspect of the poor taking money from the rich, which, you know, is very understandable. For us as little kids, it was still traumatic. It was also, at the same time, all of our family members left the country. So I wasn't actually so aware of wealth. I was just aware of going from, you know, life one day in this huge house with huge gardens, filled with family members and other children and just toys and playing all the time, to then moving to a very small house with just my mom, dad and brother and me, and all of those family members and other children were gone.Link

So money was a part of that, but I'd say the bigger emotional part was feeling alone. And, you know, also, this was long before email. It was even difficult to have phone calls with our family members. We'd maybe schedule a call once a month, you know, if we could get a long-distance connection or something, and just talk to them. So it really felt isolating. But, you know, I wouldn't want to say that we were poor. We just took a step down from ultra-wealthy to probably still fairly... yeah, fairly well-to-do.Link

And then coming to the US, though, required convincing the American immigration system that we did not intend to stay. And part of how my parents accomplished that was, there was truth to it. They didn't tell me that they had any thoughts of staying here. So we didn't know that we might stay. And my mom and dad actually didn't stay. But also part of it was leaving all of our belongings in Iran, to kind of prove, like, look, we have no way to stay here because, you know, we don't have any...Link

LubaAny...Link

AliSustenance.Link

LubaSo how long were you separated from your parents for?Link

AliAbout, I think, a year. Oh, wow. So we lived in my grandparents' condo. My grandparents had been part of the family that had moved here, and they had a three-bedroom condo. One was for my grandparents, one bedroom was for my great-grandma, who was living with us, and then one bedroom was for me, my brother, mom and dad.Link

LubaWould you say that everyone in your family had the mentality of rebuilding their life in the US, or did some of them stay in this kind of sour mindset of things being taken away, and kind of putting a lot of weight on that unfairness event?Link

AliThat's a really insightful question. In my close family, definitely this feeling of rebuilding. But I don't think I can speak for everyone. And I think, I mean, I guess I'd say I know a lot of people from Iran, and when someone goes through a traumatic loss experience, I think you can have very different ways of reacting to it. And for a lot of people, it's really natural to stay stuck in the past and unable to move on and unable to readjust.Link

LubaWhat do you think...Link

AliAnd that also... sorry, sorry. That also applies to, like, lifestyle. So my mom and dad made, like, a sudden switch to a very austere lifestyle of, like, saving money and not spending on anything. And they're still like that, even though we're no longer, you know, as worried about money. So they switched to that and haven't been able to switch out. I think there are other people who had trouble switching to that, and continued spending money more than their means. I think these are all kind of very typical different ways of adjusting to, you know, major change.Link

But yeah, I was having dinner with my mom and dad not long ago, and, you know, with paper napkins, my dad was taking the napkins and separating the plies, to be like, hey, look, you can use half and I'll use half, to save on the napkin. And I was like, what are you doing? But, you know, when somebody has a habit or pattern, sometimes it's hard to get out of it. But I guess I would say I'm proud that, for my mom and dad and Hadi and me, we were kind of quick to adjust to having less money, and then really focused on rebuilding and the future rather than dwelling on the past.Link

LubaSo what do you think separates families and people who decide to be stuck in the past versus being focused on the future?Link

AliI don't know if I can say the answer to that. I mean, I don't have a really good sense. I have to say, I don't know if there's some deep, inherent strength or weakness. I mean, it could have easily been, if my parents had role-modeled a different behavior, that I would have done however they behaved, you know? So yeah, these things might not be that deterministic. Yeah.Link

LubaIt's just the choice that you decide to make in that given moment.Link

AliYeah. Yeah. I wish I had a stronger answer. I will say, for me personally, maybe, like I said, I've always been, ever since I was a baby, very confident that things...Link

LubaAre going to work out.Link

AliYeah. So I think maybe that led me to not have as much insecurity or anxiety, and just be happy regardless.Link

LubaDo you think one can foster that confidence throughout life if they weren't born with it?Link

AliI hope so. Yeah. I mean, I think anything is a matter of practice.Link

LubaYeah, I can relate, though. I feel like I was also born with confidence that things are going to be okay. And sure, there have been, like, fears here and there, but overall, I've been a lucky and positive and happy person, where I'm like, okay, you know, things will work out. And I think that even that focus on things will work out gives you the optimism that you'll pick yourself up, versus, like, well, if you're anxious...Link

AliYeah, I think if you assume the worst, you may cause the worst to happen. Yeah. You can't guarantee good things to happen. But if you really act as if bad things will happen, I do think that makes them more likely.Link

LubaSo you've worked with some incredible people throughout your career, and then you've made an intentional choice to be a people picker. I'm curious, what was the moment when you realized this is something that you want to get better at and do?Link

AliI was 23. I was running LinkExchange with my co-founders, and there were two specific role models that I realized had this superpower that I didn't have, by far. The main one was Mike Moritz, legendary VC from Sequoia. He led our first round and was on our board, and he was very actively involved. None of us was the CEO, and we thought we wanted to bring on an outside CEO, but in the meantime asked him to spend a lot of extra time with us. And we were specifically...Link

LubaOh, well, what do you mean by none of you were the CEO?Link

AliSo, you know, 20, 30 years ago, it was common for founders to bring on a more, like, experienced CEO. That was the natural path. Like, Yahoo was founded by two Stanford kids, and they brought on Tim Koogle as CEO. Google was founded by Larry and Sergey, but they brought on Eric Schmidt as CEO. Like, the standard option was, founder is cool, but bring on someone who knows what they're doing to be the CEO. Yeah, that was totally the standard path. It shifted completely because of Mark Zuckerberg and Facebook, and because of Y Combinator, with their emphasis on founder-led companies. So in our case, it was three people. I don't think we could have agreed on one of us being CEO. And we sort of, like, asked Mike to be our acting CEO until we could recruit an older, experienced CEO. A lot of this, in hindsight, is not what I would do today.Link

LubaWhat would you do today?Link

AliI would have picked somebody to be CEO.Link

LubaWho do you think would have been the CEO, Tony? Or were you...Link

AliTony or me. Either is better than none. But yeah. When trying to hire people, we knew how to interview engineers, because that was, like, what we ourselves were good at. But I remember, like, trying to interview, I don't know, a marketing or a head of sales or even a head of engineering, and we would ask Mike Moritz to join the interview cycle. So I would interview the candidate for an hour, Tony would interview them for an hour, Sanjay would interview them for an hour, Mike would interview them for, like, ten minutes. And then we would sit down together and discuss the person.Link

And it was so funny. We would go around the table, and Tony, Sanjay and I had really no strong opinion. We'd be like, yeah, they seem okay. What do you think? Oh yeah, I guess. What do you think? Like, no signal at all. And Moritz, from, like, ten minutes, would be like, absolutely no, or absolutely yes. He had this, like, really strong conviction around whether the person was good or not. And we'd be like, how do you know this? And so he would actually teach us. I remember him, like, walking through the resume and being like, even before I met them, this, that, the other thing, and then this or that. And so I just realized he had a level of just confidence and calibration and, like, speed in assessing people that I didn't have. And I really distinctly remember thinking this was the ultimate superpower. Because any challenge you're facing, you could try to solve it yourself, or find someone else who can solve it. And if you can always do that, then you can overcome anything.Link

And that was one. And the other example, same time, was a different VC who didn't invest in us, actually. But it was this firm called IDG, and the partner who was pursuing investing in us was interested in investing, but he said, before we can invest, you need to meet the head of the firm for ten minutes, and he's just going to give you guys a once-over and decide. And we were like, what do you mean? That's great, but ten minutes? What's he going to do in ten minutes? And he said, well, you know, Pat McGovern has this ability to judge people in, you know, five or ten minutes, and he just wants to meet you and, you know, like, check you out and make sure before we invest. And we were like, is this a joke? Is this real? And he said, oh yeah. You know, for example, he said, we were planning our expansion into Asia and had several candidates to run the Asian business. And, you know, there were four or five candidates, and Pat met with each of them for 15 minutes and chose one. And we were like, oh my gosh.Link

So we did do this meeting, and they did offer to invest. But my main takeaway was, maybe there's some magic power that this person has that I wish I had. And so I definitively started telling myself, I need to practice whatever's involved here. I want that. And it's weird, because I don't believe in magic, to be clear. I think it's, you know, more about pattern matching. And, you know, people say things like gut feel or instinct and so on. But at the end of the day, I guess it's an aspect of pattern matching. And it's also an aspect of tuning into signals that maybe previously you might have ignored, and really paying attention, and putting any feelings you had about somebody into some language, so you can also name it and articulate it and express it. So yeah, but I became very intentional about it, and looked for every chance to practice this new skill that I lacked, that I wanted to get better at.Link

LubaAnd were there specific moments where you started feeling like, okay, I'm getting it, I'm getting better at this?Link

AliYeah. So there was one failure, which was also kind of tied to this. We had this younger guy who was our peer from Harvard, who was a friend of Tony and Sanjay, and he was part-time. He wasn't part of the team. He basically showed up once a week for a few hours to do our accounting. He was pursuing a stats PhD at Stanford, and so working for us was, like, a few-hours-a-week thing. And Tony was close to this guy and said, hey, I think we should have Alfred join as our CFO. And I was like, no way. We don't need a CFO. We're only, like, a 20-person company or something. And second, if we were to get a CFO, we would get someone who has done that before, or at least done any finance before, not somebody who's our age and is a...Link

LubaPhD.Link

AliOr doing a PhD at Stanford. It felt idiotic to me. And for a very long time, Tony and I clashed over this, and Alfred was reporting to me, because I was in charge of a lot of the non-technical parts of the company at this time. And so this was definitely a source of friction, because I think Alfred wanted to have a bigger role in the company, and I was kind of keeping him down. And eventually, Tony and Sanjay sat me down and said, like, you're making a mistake. Alfred is brilliant and hardworking and might be smarter than all of us, and we should bring him on full-time and take a bet on him. And I agreed, and it was the best decision ever.Link

And for a period of time, first of all, finance at a startup isn't that important. But just the presence of this ultra-smart, hardworking person lifted up everybody else's game in the whole company. Because he would go and ask other teams what they're doing and explain to me how it works, and maybe a little bit of financial questions, but also just, everyone would be like, we need to do better, because, you know, Alfred asks piercing questions. So it really lifted the collective performance of the whole company. And then when we were preparing to go public, we did what most companies, you know, would do at that time, which is bring on a new gray-haired CFO. And we demoted Alfred. And the change was also noticeable. So I had a very clear lesson in, I guess, betting on the raw ability of a person rather than their resume. And this, by the way, is Alfred Lin, who's now co-head of Sequoia, and, you know, still a good friend of mine.Link

The other really noticeable exampleI was in charge of business deals for LinkExchange. And, you know, by now maybe I was 24 or 25, and I was looking for companies to partner with in different ways. And I decided this is a chance to use this new superpower that I'm practicing. I decided I should try to evaluate these companies based on evaluating the people, not just, you know, whatever their technology or business is. And so even from afar, I would try to, like, look at a website and then try to find out who the people were, and follow those links to learn about the people, which was difficult, because this was before LinkedIn existed. There just wasn't as much. But I just viewed this as an exercise. I've got to get better at this.Link

And there was this one company, Viaweb, that was a natural strategic fit for us. And I remember just feeling, even from the design of their website, it was clearly beautifully crafted. And it's hard to put into words, but just visiting the homepage, the elegance of it, you could tell smart people built this thing. And then I would read their bios, and the head of it was this guy Paul Graham, and, you know, Trevor Blackwell, and I'd follow, you know, whatever links I could find to learn about them. And I remember thinking, these seem like exactly the smart people.Link

And then there was one who was, RTM was his name, and had this kind of weird bio that didn't seem to fit. Like, it had some stuff, but I remember thinking there was, like, some puzzle there. And this was back in the days where each name would also then have their email address. And his email address was RTM, initials. Yeah. At Viaweb. And I remember thinking, I wonder if RTM isn't his actual name. You know, RTM is a weird name, and his email is the letters RTM. And I thought maybe he has a different real name. And so I did all this research, and I figured out, what if he's Robert T. Morris, who was at Harvard and seemed to perhaps be connected to the others? And Robert Morris was infamous for having created the internet virus that, like, almost broke the whole internet a year earlier. And I was like, I wonder if that's the guy.Link

So when I went and visited them, first of all, I knew very quickly, these people are smarter than I am. And they were brilliant. But I also asked about this guy. Yeah. And I remember Paul being like, how did you figure that out? And I was, like, so proud of myself. And yeah, for sure, I remember feeling, I'm in the presence of true genius. And we tried really hard to actually merge with that company, largely because of the people.Link

LubaAnd what do you think made you so driven towards being great at the skill? Like, were your co-founders, Tony and Sanjay, taking it as seriously? What was the pull?Link

AliIt was not from them. In fact, I would say I clashed a bit with Tony, because he didn't seem as serious as I was about that. I think Tony realized a little bit later, during his next startup, Zappos, how important your people are. And I learned lots of other great lessons from Tony. But I think this was really more my personal interest.Link

LubaIt's interesting that there is this parallel between, you felt like Alfred Lin was too junior to be the CFO of the company, or even be hired full-time. And now, obviously, you're making bets on very young people based on their pure...Link

AliOh, yeah. This is no coincidence. This is a direct through line. I went from believing that, like, I might be super smart, but for anything that I haven't done before, it's better to hire experienced people who have experience in that. And to be clear, experience is good. I'm much wiser today because of my own experiences. But I didn't quite appreciate that, no matter how old somebody is, the first and more important thing is how smart they are and how hardworking they are. And that a young, ultra-smart, ultra-hardworking person who's hungry and, you know, willing to do all the work might outperform someone who is older and has that experience, but who is not as smart or as hardworking.Link

And so betting on young people was not part of my ethos until after this experience with Alfred, and I made a hard shift. There was another, or two people, actually. We had a sales team where the first two salespeople we hired were basically our age and had very little or no experience. And then over time, we hired much more experienced salespeople. Yet, strangely, Dennis and Kevin, who were the two young ones, remained the top two salespeople, despite being ten years younger and much less experienced. And, you know, you could visually see, at, like, 9 p.m., all the older salespeople had left the office, and Dennis or Kevin was there, like, prepping their calls for the next day. So it was partly just how hard they were working. You know, it might also be that we were selling this new internet product that had never existed before, so maybe it was their flexibility to learn new things. But I saw many proof points that betting on a young person who's smart and hardworking is actually, you know, better than the experienced person. So that's definitely now deeply...Link

LubaThe ethos of...Link

AliYeah, I mean, my whole firm, Neo, is based on that.Link

LubaOne thing that stood out to me about your story starting Neo is that you yourself exhibited that hunger to do the work and be on the ground to find talent, because you were flying from campus to campus to try to meet the best students. Because technically, you know, you sold two companies. Sure, the second one maybe was not as successful as you would have wanted it to be, but you could have hired someone else to do the thing, so that you could be, you know, managing and just coming up with strategy and vision, and meeting the people once they're already sourced for you.Link

AliYeah, this is very true. I mean, I really respect Paul Graham's point of view: do things that don't scale. That doesn't mean forever, but, like, when you're starting something, you should have a finger directly on the pulse of whatever's the critical lifeblood of your company. And to me, I deeply knew that whatever students we chose to be the first class of Neo Scholars, if they were awesome, would set us on a trajectory that would kind of self-perpetuate. And if they were weaker, we're fucked. And, like, it would be harder to, you know, change that. So this was something I took very seriously.Link

I also, candidly, had some insecurity about it. You know, I had been successful. You know, I could brag about, oh, I was an early investor in Facebook, or this or that. But I was in my 40s and pretty far removed from college students, and I was a little insecure of, like, will I actually be able to identify the most promising college students? I'd been telling my friends that I would, and I'm starting to raise a fund around this. This is the core thesis, of identifying future leaders when they're still in college. But secretly I was like...Link

LubaCan I do it?Link

AliYeah. What if I can't do it anymore? Yeah. I mean, I had had some prior success, but I wasn't going to outsource this most critical thing to somebody else. And then pretty quickly thereafter, I realized I also just love it, so I wouldn't want to. There was this interesting shift where, before starting it, I thought, oh, this is the kind of necessary, painful process, to interview people and select people. And that's, like, the hard work, but it's worth the results. Then I realized the work itself is actually wonderful and is itself a reward.Link

And because of the relationships I built, and the people that we didn't select, many of them, I still have relationships with many of them. I'd say almost all of them were really impressive and amazing in different ways. And I would often, even if we were not choosing them as a Neo Scholar, refer them to some other opportunity, and, you know, introduce them to a startup where they joined. And I realized that by putting in the time to interview hundreds of college students, I was making myself more valuable, because now I'm the guy who knows...Link

LubaConnects everyone.Link

AliAll the smartest college students, and can connect them in different ways. I love connecting people. It's probably my favorite thing to do in life. But in this case, I was bearing gifts to any other startup. Oh, you need such-and-such engineer? I know two of them I just met at MIT or whatever, and I would introduce them. And so this was a way to make myself more indispensable, I guess. And yeah. So I quickly realized that the more interviews I do, the stronger I'm getting. This is not at all something I would want to outsource, per se. This year is the first year I have not been doing the interviews myself, but...Link

LubaFor the first time.Link

AliYeah, I mean, and I still plan to do them, just not the first-round interviews. So I mean, we now get thousands of applicants a year, and we have 50 or 60 volunteer interviewers, and we divide the work across a lot of people. So it's scaled into a much bigger process. That being said, you know, there's a lot of signal in reference checks and who recommends whom. And so it's not just interviews. It's, like, many different things that go into choosing Neo Scholars.Link

LubaNow, if you were to meet young 18-year-old Ali and were interviewing him for the Neo program, tell me how it would have gone.Link

AliOh, wow. It's kind of an embarrassing question. I think 18 is when I was a sophomore in college. Let's see, I probably would have said this person's a bit arrogant and doesn't know what he doesn't know. Yeah, I often think about, like, would I have been qualified for the thing I've created myself? Technically, I would have cleared the bar, like...Link

LubaAnd tell me a bit more about what the bar is. There's magnetism there.Link

AliSo for us, the starting prerequisite is technical abilities, and we're generally trying to find the absolute strongest technical people across the country. And I think, you know, back in that era, there just weren't nearly as many people in computer science. And I'd say in our class at Harvard, Craig Silverstein, my brother and I were the three strongest, probably. And I had a pretty good sense of who were also the strongest in the class beneath me and above. And I was a risk taker. And I think I was prone to organizing people, you know, like, not yet thinking of it as starting a company.Link

LubaBut you were kind of a community builder.Link

AliYeah. Community builder. And at that age, those are the raw traits that we look for. I mean, there are some kids now who have already had their own startup when they're a sophomore in college, which is awesome. Any sort of experience like that is great. But, you know, not everyone has the exposure or the initiative to do that. But the raw traits or temperaments that we look for are people who are risk takers, who are, you know, willing to do something entrepreneurial, people who are natural community builders and who, you know, draw other people to themselves. And we look for a little bit of mischief.Link

LubaHow do you define mischief? What is it that you're looking for in the interview?Link

AliI guess I would say willingness to challenge rules and challenge the status quo. It's not people who are, you know, immoral, or, you know, like, breaking laws is not good. But willingness to kind of ask, what's the point of this law? Is it a fair law or a rule? If something has never been done before, why not? You know, I'd say an inherent part of entrepreneurship is being willing to do something no one else has done, which requires, you know, some almost arrogance, of saying, I don't care if other people failed at this or didn't try it. I'm going to try it anyway. And yeah. So I'd say that's where the essence of it is, but also just people who, I don't know, have fun doing things.Link

I didn't actually know this about Alfred until much later, but I guess he got into trouble a lot when he was, like, in third or fourth grade, because he kept doing advanced math that the teacher didn't want him to do. Oh my God. Yeah, it's really funny. He was, like, in trouble because he was, like, doing the lessons ahead of the class. And, you know, the teacher would be like, you're not allowed to. And he'd be like, I'm doing it anyway. So it could be all sorts of things, right? But to me, that's a great example of rebelling against authority in a situation where he just decided this authority is BS. Like, why would I not learn the math I want to learn? So...Link

LubaSo you were famously the first check in Cursor and Kalshi. What was the mischief in Michael's, and then Tarek and Luana's story?Link

AliSo just to clarify, Kalshi had already gone through Y Combinator, okay, and actually had raised a little bit before us. So I would not claim...Link

LubaOkay.Link

AliBut we led the seed round, and it was a pretty seminal...Link

LubaBut they were part of it.Link

AliRight. They were. Yeah.Link

LubaOkay, maybe let me rephrase the statement so that I'm not mis...Link

AliNo, no, no. It's okay. It's okay. So with respect to Cursor, I mean, first of all, I don't think I would pick out that Aman's or Michael's most prominent trait is mischief. But I'll give you one example. You know, we had a lot of different social get-togethers or activities that we brought together our community for. And some of those were, like, fun competitions. And there was one contest where, you know, people were divided into teams, I think for a puzzle hunt or something. And you got to choose your team name, and Michael named their team The Winning Team. So that's a little bit of an example. You know, it's both a bit arrogant and mischievous, although arrogance is not something I would ever ascribe to him. He is actually the opposite extreme, incredibly humble. So I'd say this was mostly tongue-in-cheek on his part. I don't even remember if they won or not. But yeah, that's an example.Link

In the case of Kalshi, I mean, each of these founders, Tarek and Luana, is just formidable. How many sort of death-defying-type things they've done prior to Kalshi. But also the business itself was inherently, I wouldn't say mischievous, but it was inherently about, we think we can do something that everyone has told us is not legal.Link

LubaWhat were the things that they did before Kalshi? You said they did a lot of death-defying...Link

AliSo I mean, Tarek grew up in Lebanon, and, you know, his neighborhood had been bombed. So that's not exactly death-defying, but he had experienced a lot of danger. He had been a professional skier in Lebanon. Oh, wow. The Luana stories related to ballet are pretty extreme. She was an incredibly high-performing ballerina. And when she got into high school, she got accepted to the Bolshoi Ballet. Wow. Which, as you know, is a Russian school, but it has an outpost in the south of Brazil. Wow. Luana lived much farther north, but basically convinced her family to split. So she and her mom moved to the south of Brazil. Wow. Just so she could attend this ballet school. And, you know, I guess her mom and dad had a long-distance relationship as a result. And the ballet level of discipline and things that that school had, it's pretty insane. And then she had become a professional, I think, in Europe, and then had a really bad injury that caused her to stop ballet. And then she decided, I'll pivot to tech. So she got into MIT. It's just that the list of feats that this, you know, young woman, or girl really, at that age, had done was just impressive.Link

But the main point was, the business they were approaching was very ambitious. And it was interesting, because they never said once that they would do something that was not legal. It was more that they believed they had discovered a path that was completely compliant with the law, but that no one else yet agreed was compliant, you know. And so it was more like a proof: we're going to convince everybody else that this is legal and is compliant with all the laws. And it was this willingness to go against what everybody else was telling them that was attractive.Link

You know, one of the stories was, they had been rejected by 40 law firms before they found one who would represent them. Wow. And if you think about that story, like, I would probably give up after five or ten. You know. Yeah. Like, if I called five law firms and they all said, no, that's not legal, and I called five more, and, like, they all refused to take my money. I don't know how many, but I don't think I would get to 40 and keep going, you know. And in this case, yeah, it was a conviction.Link

And I actually remember asking Tarek, what gave you this motivation to, you know, keep doing it? And he said, look, if any of them had explained, based on the law, what is illegal about it, and if it made logical sense, we would have been like, oh, shoot, we're not going to pursue this if it's not legal. But every single one of these rejections had some, like, weak excuse, like, it's never been done before, or, you know, there's no precedent for it, or things like this. I mean, a lot of law is about not risk-taking, it's just follow whatever the people before you did. And so he said, like, every rejection actually made them more convinced that...Link

LubaThis is the right path.Link

AliNo one actually can explain what wouldn't be legal about it. They're just showing why no one else has tried it before, and we might really be on to something that is, yeah, that's legal and is the correct path. We just happen to be the only ones willing to try it. And so yeah. So they turned all these rejections into motivation.Link

LubaIs this level of conviction why you also decided to wire your own personal money to them in 2024 during the election?Link

AliThat was quite a while later. I mean, I'd say, so these earlier conversations were in 2019. And, you know, we progressively invested more in the company. So we put in a small check, and then the end of 2019 was a really kind of existential challenge for Kalshi, because they were caught in this catch-22. They couldn't proceed without hiring a few engineers, because each thing depended on the other. The regulators wouldn't clear them unless they had built some technology, so they needed to hire the engineers to help build it. And the VCs wouldn't invest unless they had cleared the regulation. And it was hard to hire people if they didn't raise VC money. So, like, each of these things was, you know, dependent on the other. And we introduced them to many of the top VCs, saying, these guys are awesome, and this is a huge opportunity. And they got rejected across the board. And that's when we said, okay, we'll put in more money ourselves.Link

And, you know, we were still a pretty young fund then. And at the time, this was one of the larger checks we had written. So it was definitely a big, you know, big bet for us. At the time, though, I mean, besides everything I already said, I had developed a level of trust that Tarek is not a bullshitter. And he was pretty confident that at this point, in the regulatory process, if we have the money and can hire the engineers, all we need to do is build certain things, and then we're clear. And that we had overcome the more kind of uncertain parts of it. At least that's how he felt. And I was willing to bet with him on this, and that, you know, did play out. So yeah. So we led that round at the beginning of 2020. It was then, you know, a year later that Sequoia led the Series A, which was Alfred, and they launched and had a decent amount of growth, but not really significant.Link

And then they had this two-year-long, protracted additional legal battle, not over the basic license to operate, but over whether they could offer trading on election outcomes. So that was a very exciting moment, because 2024 was just, like, it was like August or September, with only a few months left until the big election, Trump versus Biden. And we all knew that this would be one of, if not the, largest events they could offer trading on. They didn't yet have permission, but then we won the lawsuit, so now we had permission. But then the government appealed, so we couldn't. And then we won the appeal. So it was, like, counting down how many weeks we have left. And so once we were ready to go, the team was, like, pulling all-nighters to, like, build technology and just do everything and run marketing, to try to make the most of those, whatever, five or six weeks that were left.Link

And then I remember Tarek called me on a Thursday, about two weeks or so before the election. And classic Tarek, always, you know, like, he was like, Ali, we have a problem. And I was trying to figure out what was the problem. And he was like, the growth has been insane. You know, it's just growing, I forget what it was, something like 50% day over day. It was such ridiculous numbers that I thought, this can't be right. But then I was like, so what is the problem? This is the best news you could ever want as an investor or as a founder. And he's like, well, the problem is, it basically turned out, to support the level of growth, they needed enough cash in the bank for, like, two days' worth of deposits.Link

So essentially, like, when someone deposits money, until it clears, until it settles, they were kind of lending that money to that person from their own balance sheet, so that the person could start trading. I might be getting the details wrong, but if you think of the user experience, if you go and open an account and it says deposit money, then it says, okay, come back in 48 hours, you can start using your money, you would lose a lot of momentum, versus you can start right away, your money's already there. To do that, they needed to temporarily advance money into people's accounts. And the daily deposits were growing so fast, each day it was, like, sucking up more of their balance sheet. So Tarek was like, based on our numbers, do you know anyone who can lend us $100 million? Oh, wow. And I was like, what are you talking about? And he's like, well, if it keeps growing like this...Link

LubaYeah.Link

AliYou know, by two weeks from now, we might have a single day with that size of deposits. Wow. And I was like, have you tried calling the banks? And he's like, banks don't do this. And I was like, okay, I don't know. I guess we need to call some billionaires. And it was Thursday night, and I was like, all right, let's hang up. I'll get working on this. Wow.Link

And by Friday morning, actually, he was meeting with a billionaire in New York who was potentially interested. So I was like, okay, good. And then Saturday I checked in, and he's like, yeah, we haven't reached terms. I don't know if it's going to happen. And this person had 100 million he could have lent, but he was demanding, you know, terms that Tarek felt were unfair. Sunday rolled around. They still didn't have anything. And so I said, look, you know, what are other options? And he had a lot of people who were potentially each going to lend certain amounts, but no one was actually doing it. And I said, like, what's going to happen on Monday? And he said, well, if we don't have some money in the bank, we might shut off deposits on Monday or Tuesday, depending on the growth.Link

So I said, can you send me your wire instructions, just in case? And Monday came around. I remember, I think I was in bed, I woke up being like, has anyone sent you money yet? And he said no. And I was like, okay, we're wiring you money. Wow. And we agreed on text, like, some of it was personal money from me that would be treated as a loan and just paid back to me, and some of it was from the Neo fund and would be treated as an investment. And yeah. So on text, I was like, how's this? And he's like, cool. And so we wired it, and then figured out the paperwork later.Link

LubaDid you get the loan money back yet?Link

AliOh, yes.Link

LubaYes, yes.Link

AliYeah. So to answer your question, this was more, I had at this point utter trust in Tarek's integrity. Plus, I've been a founder. The big excitement of something that we had hoped for and worked on, at this point it was five years into it, and it's finally taking off in a way that you only dream of. There was no way I was going to allow them to shut off the growth because, you know, people wouldn't lend them this money. I basically felt that would be kind of a travesty and, you know, crush their dreams. I also was aware that by me taking that risk, it would precipitate...Link

LubaMore trust.Link

AliIn other people to do so. Other lenders or other folks, because he could call and say, okay, I have the first... There was $12 million, the first 12 million in. By the way, I had to borrow the money to lend it to them. So I didn't have cash sitting around like that. But, you know, I could borrow from my margin account, you know, with a click of a button. So yeah. So by sending it, I unlocked a lot more of other people also giving them the money they needed. And I don't remember exactly, but I think they got to 100 million.Link

What's crazy there, Luba, is on election day, they still didn't have enough. Wow. They maxed it out, I think, by 10 a.m. And so they still had to shut off deposits. So who knows how much better it would have been in terms of the volume if they could have kept it open that whole day. But it was still, needless to say, an incredible boon for the company. It definitely put them on the map. And I'm not sure without it that the company would be where it is today.Link

LubaThat's a crazy story. Thank you for sharing. Ali, you mentioned at the beginning, when you started Neo, that you were insecure about whether you would be good at picking young people and making these bets, and you told all your friends that this is something that you're going to do. Are you feeling more secure in your abilities to pick young talent now?Link

AliOh, yes. Yes, we've crushed that. Yeah. If there's one thing that I know I'm very good at, and that our organization is insanely good at, it's identifying superstars.Link

LubaWhen did you start feeling that?Link

AliI mean, I guess I should say I knew I had a personal ability or knack when I was starting it. It was more, will I even know where to start? Like, do I just show up at some college and be like, where are the smart kids, you know? Like, yeah, the insecurity wasn't about my abilities. It was more, I haven't done...Link

LubaThis.Link

AliWhere do I begin? But then I would say it was also, you know, things like, what if there's pockets of incredibly entrepreneurial people that somehow I never meet at all, and I miss the best person, or something like that? Or what if I find them, but they don't want to join? And, you know, I definitely felt some of the strongest students were evaluating me as well. And this actually led to, I would let them give me a coding test. Russell Kaplan actually was the one who proposed it the first time. He was like, I want to give you a coding test, which I loved. But that was very surprising for me. And then I started making that a kind of standard part.Link

LubaOh, so now every single student that you interview with the coding test, you get a coding test back?Link

AliNot every single, but if...Link

LubaIf they want to.Link

AliIf the first part is finished fast enough and there's time and so on, I might do that.Link

LubaHave there been a lot of times where you didn't pass their test?Link

AliQuite a few, or needed hints. Yeah. Yeah. I think actually the one Tarek gave me was not just about engineering. It was, like, very mathy, and I needed a lot of help from him to get through it. But yeah. So now I'm extremely confident about my ability to identify the best students. You know, the track record kind of speaks for itself on that front.Link

It's funny, because at Neo, we have two track records. There's, like, all the people we chose to be Neo Scholars, and separately the investments. And these overlap a lot, but they're not the same. There's a lot of investments we make in people who were not Neo Scholars, but there's also a lot of Neo Scholars where we either weren't invited to invest, or we chose not to invest. So they're slightly different, but I'd say across the board our track record has been pretty awesome. And if you look at the accomplishments that Neo Scholars have had, the founders are obviously amazing. But then on top of that, the number of them who have become just incredible leaders at Anthropic or OpenAI or other companies, it's really humbling and pretty astonishing, you know? I mean...Link

LubaWhy is it astonishing?Link

AliIt's like there's this invisible web of, you know, superstar talent that now permeates the tech industry. And for me, it's, like, pretty shocking that all of them have, you know, me in common, I guess, and that we identified them all and brought them together when they were college students. You know, I mean, it's a testament to how good we are at identifying future leaders. So I feel a little ashamed to be bragging about it. But it's really not bragging about us. It's more, I guess, bragging about them. But it's pretty cool that there's this common link.Link

And if you go to an organization like OpenAI, for example, they're well aware of who the other Neo people are. It's like this sort of, like, interesting subset there. I think they have their own separate Slack channel within OpenAI, because there's, like, 40 Neo people there. Yeah, and not quite as many at Anthropic, but a decent number, and same, you know, across other tech companies. And, you know, this doesn't inure to any sort of direct profit for us. We're not a shareholder in OpenAI or Anthropic. But our business isn't just about profit. It's, first and foremost, an incredible human accomplishment. I feel like we have helped many of these people aim higher and accomplish more, at least by increasing their personal networks and their personal...Link

LubaThey're great people.Link

AliYeah, exactly. And surfacing role models, and just encouraging them towards taking slightly more risky or more entrepreneurial career choices.Link

LubaWe started this conversation with risk and fear. Yeah. What are you still scared of?Link

AliNothing.Link

LubaNothing? Absolutely nothing? Zero?Link

AliNot afraid of anything? No. I guess, yeah. Nothing comes to mind.Link

LubaWhat was the last thing you were scared of?Link

AliIt's been a while. I mean, I will say, like, there's definitely, like, little things, where if, you know, if I'm, like, losing my balance or something. Oh, the last time I really remember being scared to almost paralysis, I was crossing a river in Oregon, actually, where it was, like, a tree stump. Or it was, sorry, a log across the river. And the only way to cross was to, like, you know, walk across this narrow log. And it was kind of wobbling, and it was, like, a river filled with rocks. So it was, like, not physical danger. Yeah. And I was paralyzed for, like, several minutes. I was afraid to go. And then finally I did, and it was fine. Wow. Yeah, that was three years ago.Link

LubaI was surprised that on X, you share so openly all these stories about your personal failures. Like the Steve Jobs story, the Yahoo, the Bono story. What led you to so openly share your own failures? Because not a lot of people do that.Link

AliWell, the first one was somewhat of just, say, impulse. It wasn't strategic. The Steve Jobs one was the first one. I was actually in bed. I had just woken up. I had checked my phone, and I saw other stories on Twitter about people saying, oh, today is the anniversary of Steve Jobs's death ten years ago. And people had different stories about how great he was. And I had this story of my own that was 13 years old, and I had never shared it, and it was not as positive a story. And I just suddenly decided, fuck it, I'm going to share this. And so I, like, wrote it on my phone while lying in bed still. And it blew up in a way that I did not expect at all.Link

I don't know why I posted it. It was just impulse. I thought it was a story worth sharing, I guess. But it went so viral for the next two days. Like, my phone just kept buzzing from other people sharing it. But I also got all this amazing inbound of people saying how it was therapeutic for them to read my story, and it helped them overcome some challenge of their own that they were struggling with. And I guess I should say, I had shared stories like this in small groups. It's a pretty intentional part of what we do at Neo, to give younger people the courage to...Link

LubaTo fail.Link

AliTo fail, or to take risks. I had already been in the practice of sharing my own stories, but privately. And so this was the first time doing it publicly. And then I decided, like, why not do more? Yeah. So it started on impulse with the Steve Jobs one. And then what I realized is, if you have a painful lesson, or you have something you're ashamed of that you don't tell anyone, you actually give that thing... yeah, you give it power over you. And it actually, like, makes you, in a way, weaker. Whereas if you confess it, basically, and put it out there...Link

LubaIt's almost like you let it go.Link

AliYeah. And then it no longer holds the same weight over you, and you feel stronger and freer. So for me, I definitely felt that with the first one. And so now I've tried to kind of adopt that policy in general, that if there's something that I'm ashamed of, it's better to just face whatever repercussions come from having it be known. Rather than, if you try to keep something secret, then, it kind of goes back to fear. Then you're afraid of what if people find out and so on, and it makes you weaker.Link

LubaAnd for anyone listening, the Steve Jobs story, you can find it on Ali's...Link

AliYeah, it's my pinned tweet. Yeah, it's my pinned tweet on X. I'm actually starting my own podcast.Link

LubaCalled...Link

AliCalled *Confession*.Link

Luba*Confession*.Link

Ali*Confession*, where I'm inviting different tech leaders to come and talk about a painful lesson they learned, or just an experience that, ideally, they haven't shared before. But with this overall theme of both getting something off your chest that you maybe haven't shared publicly, as well as giving more courage to the next generation in terms of how they think about risk and failure, and, you know, letting more people give themselves permission to take risks.Link

LubaI just want to wrap up with a few short questions. Lightning round. Yeah. If I were to shadow you for a day, what would be the thing I'd be most surprised by?Link

AliOh, interesting. Probably how much time I spend with college students and people making career decisions. I have probably, on average, multiple conversations a day with, like, someone who's thinking of joining a startup and, you know, needs encouragement to take that leap.Link

LubaDo you have any daily habits that some people might think are odd?Link

AliI can't think of anything.Link

LubaVery normal guy.Link

AliYeah. Yes, I'd say I'm a normal guy. But yeah, for someone whose job supposedly is investing, I spend very little time on investing. At least, depending on what people might think investing involves, meaning, like, seeing pitches and deciding whether to invest, that is not how I spend most of my time. Way more time is spent trying to convince, you know, this guy to take this leap and join this startup, or this woman to turn down her job at Citadel to join the startup. And, you know, the company is named Neo after *The Matrix*. Oh. And do you know the scene with the red pill and the blue pill?Link

LubaOf course.Link

AliThe blue pill is, go back to your safe job as a software engineer at a big corporation. That's literally what his role was. And the red pill is...Link

LubaTake the leap.Link

AliTake this leap and see how far the rabbit hole goes. And so for me, I'm helping people through that kind of a decision multiple times a day. Yeah, that's a lot of how I spend my time.Link

LubaThat's amazing. I love the story of the name Neo. Thank you for sharing. What's a trait you're most grateful to have inherited from your parents?Link

AliOh. I think I'd say my dad is an incredible teacher. And really, like, this man makes you realize that teaching is just an art form. It's, you know, not just a profession. It's like a craft, or a, you know, talent. He is so good at it. He's so good at taking really complicated things and making you feel, oh yeah, I understand that. And also making you feel less stupid if you don't understand it. And I love teaching, and I've definitely aspired to be as good at it as he is. So yeah. So that's probably...Link

LubaAnd what's your life philosophy in one sentence?Link

AliLife philosophy in one sentence. I think I have too many. I mean, the one that's most on brand is: don't minimize risk, maximize reward.Link

LubaLove it. Thank you so much, Ali.Link

AliThank you.Link