61. Barry Eggers on The Power of Trust and Leverage

Speakers

Greg McKeown, Barry Eggers

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Greg McKeown     

My guest today is Barry Eggers, venture capitalist and Silicon Valley pioneer with a long history in its tech and venture scene. He’s a founding partner at lightspeed Venture Partners, one of the premier funds on you know, really from the last decade, homerun investments including Snapchat, Affirm, Mulesoft and Nutanix the Stitch Fix. But prior to lightspeed Barry was at Cisco Systems, establishing several of the company’s largest distribution channels and developing the initial merger and acquisition process. More recently, he was the former chairman of the National Venture Capital Association, where he successfully guided the NVCA and its members through the pandemic, set up the VC community to lead the recovery. Barry has been named multiple times to the Forbes Midas list of top venture capital investors, meaning that everything he touches turns to gold. He holds a BA in Economics and Business from UCLA and an MBA from Stanford University, my own alma mater. You can find Barry on LinkedIn and Twitter at Barry Egger. Or though LSVP.com forward slash team forward slash Barry. Barry, Welcome to the What’s Essential podcast

Barry Eggers     

Thank you. It’s a pleasure to be here. I’ve enjoyed reading your book. I know you have multiple books, but you sent me after less than I read it.

Greg McKeown     

Well, I appreciate you reading that. I I’m glad for that. And maybe we’ll get onto some of those themes. But you said something just before we went live. You were talking about having done some personal experiments with when you are most energized, how did you put that?

Barry Eggers     

In reading your book, I was struck by the fact that here’s someone who’s writing a book on stuff I’ve been trying to figure out for 58 years. And I’m sort of a, I guess I would call myself an efficiency junkie. Because I’m always trying to figure out how to do things better and faster at the same time. And that’s taking me on this journey of how I sort of managed my day to day execution or action items, whatever you want to call it. Yeah, to a place more recently, where I’ve, you know, understood that, you know, as you get older, your brain isn’t always, you know, you know, clicking on all cylinders. And so what can you do to have good brain days versus bad brain days, and maybe I guess you could have it when you’re young too, but it just didn’t seem to be so obvious to me back then. So, I do spend time thinking about the things I do that make my brain sharper, make me more articulate, creative, all those kinds of things. And I try to try to do it more, right, obviously, getting a lot of sleep. That’s job one, plenty of sleep. I find in the morning that if I fast in the morning, I’m really a lot sharper. If I fast, then if I eat a big breakfast. It’s also diet, and the stuff you eat. It’s how you think about stuff. And so I’d love to see your next book address, sort of brain health and how to be at peak performance. Because I think when you when you are at peak performance, you do things a lot more efficiently.

Greg McKeown   

Yeah, I mean, I’m with you 100%. on that. I mean, just one point of overlap, you don’t call a company lightspeed without thinking about it. You know, that’s what, that’s what you called it, because presumably, in working with Silicon Valley companies where speed is literally a competitive advantage, even a little faster than your competitor can make a huge difference in your innovation cycles. So I assume that, you know, that’s why you call it lightspeed. Well actually why don’t you weigh in on that.

Barry Eggers     

Turns out it was a company in our portfolio that we sold to Cisco, and we were trying to come up with a name and we hired a marketing consultant. And they, they came up with all these fancy names, and this was in 2000. None of them were really liked. And I just had Well, we had this company called Lightspeed, and we just sold it to Cisco and they’re not going to use the name so why don’t why don’t we use Lightspeed. It had multiple connotations, one of which being we were doing some investing in the optical space. But more importantly, it was about how we prided ourselves in moving fast. And we our tagline back then was Think Big, Move fast.

Greg McKeown     

Think big move fast. And just building on that I mean the whole theme within effortless on the effortless state, it is really about this is about how your, your brain gets so cluttered, it starts to run slow, just like a machine has suddenly, you know, all of this, this browsing data that slows down the processing speed. Similarly, our brains get so cluttered, cluttered with bad paradigms, outdated assumptions, cluttered with exhaustion, cluttered with emotional scar tissue, from grudges that we hold, all of these things, get in the way, slow us down, take the mental acuity that we have and use it on non-essential activity. And so my primary argument in Effortless is, if you can remove that clutter, then then you’re going to run much faster, you’re going to be able to actually both add items of your tagline, you’re gonna be able to think bigger and move faster. Tell me a little about your journey. Give me like the Reader’s Digest version of how you came to do what you do and be where you are. Start from the beginning, if you don’t mind, but just a full, quick overview.

Barry Eggers     

Born and raised in California, I’m a fourth generation Californian and there aren’t many of us here. And I grew up playing water polo. I went to UCLA to play water polo there and I was an econ major, I really wanted to be back in the Bay Area and in tech had really started to boom. And I figured, well, I need to get into tech. So I took a tech job and learned how to talk tech, right as an econ major, figure out how it works and all that kind of stuff. And that led me then to say, Well, if I want to take the next step, I ought to go get an MBA. So I went and applied to Stanford and some other places and got in and went back and got my MBA at Stanford. I joined Cisco out of business school, it was growing so fast, it was a different job every year, which for me was excellent. I really liked the variety and I’d never thought about venture capital. I didn’t take the class in the GSB, Business School at Stanford, and one of my classmates called me and said, Hey, have you ever thought about venture capital, I said, I haven’t. But I know that I enjoyed Cisco a lot more at 400 people than I did at 12,000 so tell me more about venture capital. And I want to hear more. And after about six months, decided it was the right thing to do was to go into the venture capital industry in January of 97, which happened to be the sort of the beginning of that bull market, if you will, sort of the bubble as we used to call it. And been there 25 years, started lightspeed in 2000.

Greg McKeown     

One of the interesting things in your bio is you lead with this, that whatever else I’m doing, whatever I’m doing, I’m creating leverage for my founders, and that’s a word that means a lot to me. And I explore in effortless, a whole final section on it, The power of leverage, the importance of it. Could you just speak to this for a while, like, why do you see your role as is maybe primarily around creating leverage for your founders?

Barry Eggers   

Your book, effortless, seems to be all about how you make yourself more efficient. And when you’re a VC you’re investing in a company, you’re usually sitting on the board and you’re working with the team and trying to help them. The problem is, I think when you’re early on in your career, you can’t tell the difference between overhead and leverage that is overhead is I’m making an introduction, I’m creating work for you that’s not going to actually impact the company in a positive way. Whereas leverage is I’m doing something that’s going to help you do What you need to do faster, and it’s going to impact the company took me a long time to figure that out. But the way you figure it out is you got to put yourself into the CEO shoes and figure out what they’re doing day to day, and what their routine is, and how do you help them do something faster? Right, get to where they need to faster and that’s leverage.

Greg McKeown   

That’s so interesting that the before and after is interesting to me. In the first instance, you’re trying to create value so it’s not a motives problem. But somehow, what you are doing is, is not relevant to them. So your efforts come with a bit of a tax, you know, they look at what you’re doing, they’re like, well, that’s not really so useful to me so they devalue, you know, they, your work is not as valued. But also what you’re doing can actually interrupt them making them a little slower, even though your intent is good. That you said the distinction, the difference. I mean, you didn’t use the word, but it’s empathy. It’s listening. It’s really genuinely understanding, not just in an emotional sense of feeling their world, but it’s like, really, genuinely understanding where they are, what they’re doing, what they’re trying to accomplish. Did I get it right?

Barry Eggers     

Yeah, that’s correct. And I think when you’re a younger VC, it’s, it’s hard to figure out what questions to ask to hear that. And sometimes a lot of CEOs just won’t talk about, you know, what they do day to day, and what really is on their mind, you have to give them a safe place to do it. And as a VC, you can introduce them to people and they feel compelled to have to go after those introductions. And, and so you can be in a place where you’re providing overhead to it to a management team or CEO. And so, and I find that just sort of listening, sometimes the most, most leverage I can give someone, sometimes it’s just being on a phone call with them, and basically listening the whole time, right, and telling them what they’re telling me or sort of rephrasing and summarizing what they’re telling me. So it’s almost like being a sounding board. And people should understand this, being a CEO of a private company is probably one of the loneliest jobs out there. There’s really no one to talk to. And if you’re talking to your investors and your board, you might feel a little bit vulnerable in doing that. So you have to give them a really safe place to talk and then just listen.

Greg McKeown     

I’m gonna be Captain Obvious for a second. Why is he so important to get them to be willing to share with you so that you really understand what their real world is. Why does that matter so much?

Barry Eggers   

Because I mean, I work across, you know, a venture capitalist will work across called eight to fifteen companies. I’m eight right now, I sit on eight boards, seven boards, sorry, I work with another company, but and so, you know, they’re in this thing, day to day, they’re in this thing 24 by seven right? I talk to them maybe once or twice a week, I parachute in, you know, to a board meeting every four or six weeks, and I’m trying to be able to help them. But the only way I could help them if I know what’s on their mind, and what’s going on. And so it’s really hard to get them to say, I’ve been working. And I’ve been working 24 by seven days over the last week before I’ve, you know, last time I talked to you. And I’m going to try to condense what’s happened in that period into a 30-minute conversation. So how do we do that? Right. And that’s, that’s where you just have to, it takes a lot of practice, what you’re still not going to know some things, and there’s still going to be something that they’re probably not going to want to talk to you about yet. But that’s where the trust factor is really important.

Greg McKeown     

How long did it take you to transition from a role of hey, I’m going to try and add value but maybe really just be adding overhead versus I’m really going to spend the time listening, understanding, identifying deeper, deeper levels, what really is essential? What was the what was the length of journey?

Barry Eggers     

You know, I think it’s a realization that in our business, sometimes the best CEOs need the least amount of help, or the best companies need the least amount of help. So you end up spending a lot of time helping companies that need it. That’s not that much fun, by the way, but sometimes, doing less for a company is more, right? Just getting out of the way, figuring out what are the very, very top priorities, helping there and not feeling like he got to spend as much time with that company because things are going well as another company. I don’t know what when the point I realized that but I think you just look around and you look at the CEOs that have, you know, been really successful that we’ve worked with them, a lot of them just are pretty self-sufficient CEOs. And you can just do little things to help them along the way. But you don’t have to engage with them a lot.

Greg McKeown     

What I heard you just say was that you realize that creating value for a highly competent CEO looks different than creating value, as a first line employee, or as a first time manager, or as even a manager of managers like, it looks different as you go up the ladder.

And it takes a certain kind of experience, and then confidence, I think, to realize, Oh, my value isn’t created by how many things I do for this person, how often I’m on their calendar for how often I’m sending them an introduction. Like I can create genuine value without doing any of those things. The best people don’t even want me to do any of those things. They want me to create space, listen, help them to be able to get clear themselves on what their top problems are. Because in the speed of their work that may not be completely clear to them. And you discovered that there was a different way to create value than earlier in your career.

Barry Eggers   

That’s a good summary of that. I think when you get to that place with someone you’re working with a CEO or management team They will ask you for what they need. And you sort of have that understanding that just ask, when you need something, just ask. And it doesn’t come very often. But when it does, you know, this is something important. Let’s figure out how to get it done. And that’s a good place to be, I think in a relationship between an investor and an operating executive.

Greg McKeown     

We’ve been talking about leverage, in a particular way, how you create leverage for your investor, well, for your portfolio CEOs. But there’s something you just said there that looks at the other side of leverage, which is that you said, when you’re working with the highest performing CEOs, the people that you’ve had the most success with, you’ve actually spent less time there’s less drama, there’s less intervention. And it reminds me of Warren Buffett, who, who said, a few counterintuitive things around this, we have one of the most successful investors in history, certainly in the world today. And he says these things like our investment strategy, borders on lethargy. He says, I’m not looking for seven-foot fences, I can leap over to be successful, I’m looking for one-foot fences I can step over. And so he really is basically saying, I want to find the managers of the world class managers, who are already running world class ventures. And I want to trust them. You know, I want to I want to invest in people I trust, and then I trust them completely. All have that feels similar to what you’ve just described. And I wonder, what is the criteria that you have learned over time for finding these high trust CEOs, the ones that really are so competent, and you’re able to work with them and trust them in this way. What’s the criteria that you now look for?

Barry Eggers     

You know, the, the challenge is that we all want to work with people that we think we can help, right? And so sometimes when I’m looking at a company, you have a CEO asking you a lot of questions, and, you know, using your experience, to be helpful, and you’re drawn to that, and so on, maybe I should be working with this CEO, want to invest in them that we have a great, great chemistry, right, I have a lot to bring to the table. But yet there might be actually adverse selection with that. And sometimes you have the CEOs that, you know, sort of like, hey, they pitch you and, and they don’t really have a lot of follow up, they don’t really ask for anything from you. And you’re thinking, Well, I’m not sure I’m going to be value add. Well, the job is not to be value add the job is to pick the best CEOs, companies. And like I say, the best CEOs of companies tend to not use or need your help as much, we can almost tell which companies are going to be successful very early on by how much effort you have to put into helping them now we do stuff like customer introductions and stuff like that for everybody. And that’s across the board. But I’m talking about, you know, the day to day operational stuff, the strategic stuff. Decisions, you know, hiring, sometimes CEOs are really good just in identifying the people they want to hire and bringing them in, and you get to see them towards the end of the process and that’s great. Other CEOs want you involved right from the beginning. And you know, you’re integral part of the process, and the second one feels better, but the first one yields better results.

Greg McKeown     

Yeah, it’s really interesting, what you said a second ago about there being possibly adverse selection relationship between the people that kind of make you feel good, because you’re needed, or they want to ask you, they want to know what you know, and gather that from you, you feel useful. But actually to learn over time, that, that, that is a bit of a red flag, because what you really want is for them, to know how to go through that process, individually with their own team, have that competence, and to know how best to utilize you. But it takes the sound of it as sort of discipline, and maturity really, to go, it doesn’t matter whether I feel useful. It’s whether I am useful. That matters.

Barry Eggers     

And we all want to feel useful. And I think that I think there’s a moment and a lot of young venture capitalists’ lives when they realized that they just had a great outcome, but they didn’t want to do much to help the company. But that’s okay. You know, because the great outcome for their investors, shareholders is what’s important.

Greg McKeown  

Yeah, I think there’s something here, well beyond Silicon Valley, and investor relationships. And the specific situation that’s really portable. An example that comes to mind is someone a friend of mine, who, after reading Essentialism, the book I wrote before Effortless, one of his points of feedback, that he plenty things he liked, but one of the things that he wasn’t in love with was, was the idea of effortless. Because he said, Well, I don’t want my job to be effortless. You know, he’s like, if I get my job to be effortless, it was just his language. He said, he said, then a monkey could do my job. I don’t want that. And I thought that was a really interesting observation, maybe a little revealing even. Because it, it’s saying, my job needs to be hard, because then I’m useful, then I need it. Rather than well, no, of course, you want the job to eventually become effortless. So that’s how you can then operate at the next level of contribution, you can do something else, you can work on the business in a different way or you can move on to a new business, or a business, a new stat, you know, a new level of contribution. I obviously didn’t follow his advice, because I doubled down on and wrote a book on that precise word and subject.

Barry Eggers     

And you can substitute the term, you know, can be done by monkey, too, it can be done by a robot or a computer.

Greg McKeown  

That’s it precisely, isn’t it.

Barry Eggers     

And, in fact, in venture capital, you know, there’s a lot of data science happening in venture capital, and a lot of the signals of what is a good company, you know, is done by the data scientists, by the computers, not by individuals, I think there’s going to come a time when you might be able to replace venture capitalists with computers, at least to identify which companies to invest in, how much to invest. And then if you’re not adding value a lot after you make the investment well, you know, who can be a venture capital, anyone can be a venture capitalist then in that case, so I agree that everything doesn’t have to be, you know, full of effort. That there are smart ways to do things. And there are ways that just make you feel good but don’t produce the results.

Greg McKeown     

Well, and I think this is the this is the idea here is the difference between being useful and feeling useful. Those are two different sensations, two different experiences. And I can see parents sometimes who like the feeling of being needed of having their children come to them, oh how do I do this, and oh, I’ve got this problem. And I need to be sort of rescued. And in that moment, a parent feels useful but that’s not the same as being useful. Being useful might be really teaching your children initiative, and really putting it back on them. And creating accountability so that they are responsible for more and more over time, again, doesn’t necessarily feel that great at first, especially if you have a lot of self-worth, tied up in feeling useful.

Greg McKeown     

Barry, what question Did you hope I wouldn’t ask today?

Barry Eggers   

Oh, you wouldn’t ask? Oh boy.

Greg McKeown     

First thought.

Barry Eggers   

Do you ever have regrets about your career choices? Well, I’ll answer it too. I have enjoyed my career, I still have some years left, despite I haven’t done for a long time. But it’s been very rewarding in many, many ways. But I think as you get older, you then think back on what, what really was I made to do here. And I would say that I love venture capital, but I don’t feel like I get to use the creative side of myself. And I thirst for that. So more recently, I’ve been trying to use the creative side more learning how to play the guitar, doing some writing, you know, stuff like that, that really allows me to sort of exercise creativity. But, you know, in any way, you always start to think back and say, well, gee, what could I have been, that might have been more fun and rewarding, because at the end of the day, it’s how you spend your days, you know, this is at work, but it’s, it’s maybe just a period of my life and just sort of going through and thinking about it. Yeah, everyone looks at and say, Wow, you’ve had this great successful career. Yeah, it’s been wonderful. But you know, was it really what I was meant to do? I never took the venture capital class in school, but I ended up doing it.

Greg McKeown     

You’re not complaining when you say it. But you are reflecting it reminds me of a phrase from the Quakers, which is let your life speak. And that’s what I think you’re doing. You’re looking at the, I think you’re saying something, you’re saying, I think I didn’t let my life speak fully. You’re not complaining about the experience you’ve had, you’re not, you’re not bemoaning the success and the successes, but you’re acknowledging or sensing that there was something more that didn’t get full voice or hasn’t yet.

Barry Eggers     

Absolutely, it’s not a regret, it’s just a Hey, there might have been some other stuff that I could have done with my life that might have been more interesting. or, or, or whatever, more you using my creativity and, and you feel a little bit of a void, but you know, you very few people have five or six careers. I’ve had one so I can be a professional baseball player, I probably want to do it, but I’m a little old right now. I could write movies or produce movies or, or be a comedian, I probably want to do that to play the instruments and have people come listen to me to you know, playing music, I’d probably want to do that too. But I took a different path in life. And that’s fine. It’s great. I have no regret. I think it’s okay to think that there might have been other paths that might have been really rewarding too. And that’s, that’s nice that you have multiple options.

Greg McKeown   

Well absolutely and and you’re coming at it from a from a safe and secure place. Because you say well, things have been fantastic. And I can sense something I can sense. You know, maybe the was a different part either. Or maybe there is something in me that still needs expression. But you said it a particular way or I heard it a particular way, which is not just was there another path course there were other ponds, or made other choices. There’s an almost infinite number of choices and paths and tradeoffs we can make. What the sense is, is have I done what I came here to do. It’s a mission question, rather than a strictly career question. If I’m hearing it right. If you could just do anything, right, wave the magic wand. You can you can do what you want. Now, you would do what? All jobs pay the same in this make believe

Barry Eggers     

Yeah, I don’t think I know the answer to that.

Greg McKeown     

But you have to in the next 10 seconds anyway. So with the current level of information, Ten seconds, nine, eight, seven, six, five

Barry Eggers     

I’d like to be a general manager of an NFL football team.

Greg McKeown     

Four, well that is interesting, three, two, one, and you got that. Does that surprise you? When you hear that answer, when you had to grab one, and just make a decision on it? You know, your answer?

Barry Eggers  

Maybe a little bit because I think I you know, why did I say you know, write movies? Or why didn’t I say you know, play, you know, play music. But I’ve always thought about the way I’m with people and venture capital in that. And I’ve been a football fan forever. Unfortunately, I’m a Raider fan. So I’ve had 20 years after I grew up with a bunch of Super Bowls, so but I’m still Raider fan. And wouldn’t it you know, I love being able to sort of talk about football and but there’s that human side of it, the chemistry of when a team comes together. And you look at something like Tampa Bay where that chemistry comes together, and they go farther than anybody else I, I just like to experience that sort of the EQ part of football, and I’m big on EQ. So maybe that’s why I said it.

Greg McKeown     

Well, and just coming full circle with it. Some of these more experienced leadership lessons, counterintuitive lessons like it’s important to be useful not to feel useful, surely can apply to a general manager of a major sports franchise. Also, really learning how to listen and create safety. For a coach, for example, who’s also in a lonely position, trying to make decisions that are high stakes and many outside of their own control. I mean, all those sorts of nuanced lessons seem potentially relevant. In the ways that we’ve described, portable lessons. Barry, it’s been a real pleasure talking with you today, to taking this journey, some of it down memory lane, and then evaluating and even now looking into the future. What is possible? I think the final thing I want to say is, if dreaming, isn’t possible for you? In a big and bold way, who is it possible for you to remember that just because somebody has developed competency in one area doesn’t mean that they can’t out, apply that somewhere else go off to something else bold to me is, would be would be quite a discouraging idea. And to believe, is mental. To me used to say that to live life in crescendo to believe that our greatest contribution always lies ahead of his or hers. Barry, give us the final word.

Barry Eggers     

I have enjoyed the conversation. It took me on a journey I did not expect. And I learned a lot about myself in an hour’s worth of time. So I really appreciate you guiding me through that. And I wish we could have more sessions.

Greg McKeown     

I’m sure I’m sure we can make that possible. Barry, it’s been an absolute pleasure. That is a great way to simply say welcome to the water central podcast and also thank you for being with us.

Barry Eggers     

Thank you. My pleasure.