Marc Stad, Founder of Dragoneer: Be Patient, Then Be Bold

0:00 ("Another Horizon" by Pierre Perez Vergara) Welcome, everybody. I am so excited for today's View from the Top, the first of the school year, of course. As many of you know, Marc Stad is an alum of the GSB from 2008, and as Min just said, of course, the founder and managing partner of Dragoneer Investment Group. Mark has been recognized on the Forbes Midas List and named to the Fortune's 40 Under 40.

0:34 And to me, this makes a lot of sense. So just a small personal anecdote about Mark. I started in this role 15 months ago, and one of the first people I met was Mark. Mark was at that time serving on our advisory council and was so willing to spend time with me giving advice personally about the school, about leadership, about any question that I asked him. He finished his term on the advisory council, But that's okay because we're involving him in helping us think about the Center for Investing, and so I'm excited that I get a chance to work with him again on that.

1:12 I'll say one or two more things about Mark. Many of you have read the news recently that he's become the controlling owner and largest shareholder of the NBA's Minnesota Timberwolves and the Minnesota Lynx, and so that's an exciting new chapter for Mark, and I hope we'll be cheering him on from the sidelines as we watch him succeed there too. He's also been a great servant to our community, serving as the president and commissioner of the City and County of San Francisco Finance Corporation, and he's just a joy, as you're about to see.

1:46 So please join me in welcoming Marc Stad. (audience applause) (crowd cheering) Mark, we are so excited to have you join us. Welcome back to campus. Good to be here. We didn't have this campus when I was here. (audience laughter) This is a lot nicer than I remember it.

2:17 Well, many of us just completed our summer internships, and after talking with my classmates, you'll be glad to know that I believe your record-breaking GSB internship is still intact. (chuckling) Could you tell us more about this mysterious internship? Well, it's good to be here. I remember when I was a first year at the GSB, the first View from the Top was Herb Kelleher, who was the founder of Southwest. And when Sarah called and invited me to share the same stage that he was on, is a real honor.

2:47 So thank you so much. It's interesting, Reese and Tim are here from IGSB, so they were the ones who recruited me out of this school. And yeah, you know, so much of my belief in life was you got to kind of obtain the unobtainable. And I was told by the one who ran campus recruiting here that the hardest job in investing to get out of the GSB was at IGSB, Investment Group of Santa Barbara. So challenge was on, and I remember I'd send him notes and ideas and emails and missed calls, and he never returned my call.

3:28 And then I remember we were on a student trip to India. And back then, none of us had cell phones, so we went to a cyber cafe, and I wrote to Tim, and I said, "I'm in a cyber cafe in India. The only note I'm sending is to you. Is there any way you would consider interviewing me?" And I think the reply was, "That's a good one. You know, Reese will be on campus in a week, and he'll stop by and meet you."

3:54 So ultimately, they gave me a summer job. But they weren't exactly sure how to organize it because they weren't really looking for a 20-something-year-old analyst. So the deal was they would give me a million bucks of their money. I would invest it in anything I want in the public markets, and I'd get half the profits. And they made it very clear that in 10 weeks we don't expect you to do much with the money, but we want to just make sure that you can make a decision, that you can kind of drive your own time.

4:27 So anyway, they sent me 30 books. That I received in my Schwab dorm room. I was barely going to classes because I had to read these books in the three months before I started. And when I got there, they just said, "Here's the money, here's how you spend it. Good luck." And there were lessons in those books. And I remember I was reading through prospectuses and everything else. And I'll always remember this.

4:57 It was a summer of '07. IPO market was hot, unlike today. And a company called MercadoLibre was going public. And it just had all the things you want in a company. It had a two-sided marketplace. It had a great founder who went to the GSB. It was attacking a big market, and it was coming out at like $800 million. And I remember writing Marcos, the founder, a note, and he agreed to meet me after Capital Group down in LA for dinner.

5:29 Because our AUM wasn't quite what Capital Group's AUM was. And we met, and it was so abundantly clear from that meeting that this company was going to the moon. So I ended up taking the million bucks and putting it into MercadoLibre. And I remember Tim comes in and he says, you know, "Diversification is a thing." But I didn't think I would find another good idea that summer. So I put it in. IPOs at $18, goes to $80.

5:58 And I remember telling Marcos, you know, we're gonna own the stock forever. So I call him three days later and say, "Can I sell your stock?" Because the million was now four million, so my net worth four days ago was negative, and now I was actually a wealthy man. So he agreed, we sold, and it was definitely one of the better GSB internships you can imagine. Just like that, that's how it's done. That's how it's done.

6:27 Well, Stanford and that incredible summer were just one stop on a long career of achievement for you. Harvard for college, top consulting and investing experiences, Stanford MBA, of course, and eventually founder of your own firm. How did this journey all start for you? There are those—we're all students of Buffett if you're in the investing world. So I wasn't buying stocks at 13 years old and knowing what I wanted to be.

7:01 You know, I've said this before, but my four older siblings, my parents, everyone, none of them finished high school. So I was just trying to survive a lot. I mean, my wife and I joke about a story that I've never said publicly, but I remember we had a car in our house, and but at one point my dad stopped paying for the car. And we would park the car a mile away so the collection people wouldn't find it.

7:30 And I always remember telling my dad, I said, "Dad, we live a block from a police station. That's the last place someone's gonna think you hide a car that hasn't been paid for." So that was that. There was no "One day I'll be an investor." It was just putting one foot in front of the other. But I was good at school, and high school was a great experience for me. So I applied to, I think, 21 colleges, and When you get into Harvard, at the time I thought that was a no-brainer, so I went there.

8:04 I wanted to go into politics. I wanted to go save the world, whatever that meant. And I remember I had this opportunity when I was 20 to write Bob Rubin's endorsement speech for Al Gore. And Harvard's obviously close to New Hampshire, it's the first primary state, so he was doing it up in Nashua, New Hampshire. So I picked him up at the airport. We rehearsed the speech, he gave it, and on the way back he asked some questions.

8:33 And he said, "Whatever you do, do not be a poor kid in Washington at 22 years old. Go make some money first and learn how the economy works and how business works." So he ultimately got me a job. He was the CEO of Citigroup at the time, so I worked at Salomon Smith Barney, and then leveraged that to get a job ultimately at McKinsey and went from there. You brushed right by it, but in case anyone missed that, here you were 20 years old, an intern working with the head of Citi.

9:08 How do you create opportunities like that? It's a good question. I guess, I think if anything, it speaks to mentorship. I find, unless you have a parent who's done something that you want or some family friend, which I didn't have, you need to go seek people out who can guide you. There's a misconception. I get a lot of notes every week from people.

9:40 I wrote a piece about mentorship in Time magazine after David Bonderman passed away because he was a great mentor of mine. You know, you can't just write to someone and say, "I want you to be my mentor," and they're going to miraculously be your mentor. It has to be a symbiotic relationship. It could be about money. It could be about bringing youth and joy to their life. It could be about fun. Whatever it may be, can't just be out of obligation.

10:04 No one's gonna mentor you out of obligation. But I think, as I've gone on this journey and come across people like Tim and Reese and David and others, if you find the right person who's kind of got a big heart, and sees a lot of hope in the next generation, they spend time with you. And then you make it interesting for them. You make it symbiotic. And it doesn't become an obligation, hopefully, for them or for you later in your life.

10:35 It brings great joy. So, I don't know. I guess I was just a really precocious young kid with a big personality who convinced people to spend time with him. That makes sense. So that's how you sort of look for mentors. How did you end up meeting some of the mentors and figure out who to target for that strategy? I think the idea of targeting would be a mistake. I think it needs to be very organic.

11:05 You know, David... So David ran TPG. He was the oldest, most senior person there. I was the youngest. I was 26 years old or 25 years old at the time. And I always remember... I always wanted to find an opportunity to talk to him, but never had a chance. When there's 11 layers between you, it's hard. And I remember we were at an offsite in Aspen at the St. Regis, and he was using the restroom and talking to another guy on the other side of the restroom about a hotel he wanted to buy, which was interestingly announced today that the hotel got sold.

11:44 And I remember I went up to him afterwards and I said, "David, you know, I'm Mark. I love hotels. Can I do the deal for you?" I didn't know anything about hotels, by the way. But I just figured I'd go learn about it. And Colony Capital and Tom Barrack owned the hotel, and I spent the next year Kind of, you know, I had a day job, so nights and weekends. I remember Elise and I were on Valentine's Day, and I was in a really good date because I was, like, reading documents for this hotel the whole weekend.

12:16 But I ended up buying that hotel, or representing David in the purchase of that hotel. And I'll always remember at the end of it, he's like, you know, "I need to give you something." "Can I give you some money?" "Can I..." You know, I said, "No, I'll just take an IOU." Because I figured there's not a lot of people David owed anything to. And many years later, when Reese and Tim allowed me to bring in another partner of capital, I always remember calling David and saying, "You know, you've been saying that you like what I've been doing and investing in some of these companies, and the folks down at IGSB have agreed that I could bring on your capital."

12:55 And he goes, "How much are you thinking?" And I said, "5 million bucks." And he said, "Sounds good." And then I was super pissed. He's like, "What's wrong?" I go, "I clearly didn't ask for enough." But again, from that moment for the next 20 years until David's passing, we were just friends and partners. So I love hotels and IOUs. I'll tuck those two away. I love whatever you need to love.

13:26 Many people would see like a TPG on a resume and assume that you went through the normal process, that someone smart like you, it was easy to get in, it was smooth sailing, and it was almost an afterthought that you would end up there. Was that how the process went for you? No, it was interesting. When I was at McKinsey, I decided I wanted to go into private equity. The problem back then was you basically had to come out of Goldman or Morgan Stanley, particularly for the bulge bracket PE firms.

14:00 So I tried them all. I got like 25 rejections. I couldn't get a job. Everyone thinks it's always easy, but I would keep coming home to my Elisa. We were dating at the time, and I was like, "They all rejected me." Blackstone, TPG, CD&R, you name it, they said no. I don't know. They would use the excuse, "We want people who know how to model and came out of investment banking." So I ended up taking a job at a middle market PE firm and got really great experience there.

14:32 And TPG had a policy that if they rejected you, they wouldn't hire you. But I remember it was at lunch break, and I kept reading about all the cool things they were doing. They'd just bought Burger King and J. Crew. And so we were at lunch, and I was like two blocks from their office. So I ended up just going there and asking Bridget, I remember, who was at reception, saying, "Who's in charge of recruiting?" It was a guy named Tom Reinhart.

14:59 And Tom came out, and I said, "I'd love a job here." And he goes, "There's a process for this." And I said, "I promise you I can model as well as anyone two years younger than me. I've just spent the last two years in private equity. Would you give me a shot?" And he brought me to his office, and next thing you know, I spent six hours there. It ended with an interview with Jim Coulter, and he gave me a job.

15:24 And that's how I got a job at TPG. So again, you could follow the rules or you can come up with your own rules. Throughout our conversations, your ability to get things done, to turn a no into a yes, it came up again and again. And obviously, with your internship experience, that was never more on display. I want to touch on Investment Group of Santa Barbara. It was a place that you found instant success with that internship, but continued to thrive after graduation.

15:57 How did those experiences at the firm shape you and your investing philosophy? What was so great about IGSB is first, they took the time to teach me the elements of a great company and a great investment. And if there's one thing, if you want to be an investor in this room, to take from this conversation, other than what we've talked about so far, which is hustle, It's actually what makes a company great.

16:31 I have young people coming to me all the time talking about wanting to start investment firms, and I always focus on their mentorship and what they've learned. And most of the time they just haven't learned the right things. IGSB taught me, first and foremost, you look for companies that have wide moats, real— we call them natural monopolies or sustainable differentiation. Second, you look for companies that will produce great free cash flow over time, who have great financial models.

16:59 Third, you back wonderful founders. And what I've learned on this journey is the delta between one in a million and really, really, really good is everything. And the great founders create the great companies. Fourth, you look for companies that have big addressable markets. You look for companies that you can understand and analyze, and then you buy them when there's good upside, but you feel there's a margin of safety.

17:30 So there's these seven rules. I remember I had them on this whiteboard. And the problem is when you look at a company, they always violate one of the rule, usually. Not the right founder, you can't really understand the business, it's too expensive. But once in a while, all seven things are there. So the first thing was it really taught me what I'm looking for and when. The second thing was it was just a strategy. It was first, was a flexible pool of capital.

17:59 So much of money management, you're kind of pigeonholed into a certain strategy or approach. But when you had permanent money that was totally flexible, you learned your only job was to make money, was to compound capital. The second was in a real belief in a tiny number of companies will drive all the returns. So when you're there and you're in no rush, they never come to you and ask, "How are you doing this week, this month?"

18:30 It's funny, when I started Dragoneer, we had a policy that we would not report monthly numbers, even quarterly. We're just like, "Come back and check in in a few years." That didn't work so well. But with Reece and Tim and David, they never asked about the performance. So when you have this flexible pool of money, kind of an infinite horizon, you're trained in what a great company looks like. It leads you to just wait for a fat pitch to come across, and I think the reason in all those years there wasn't a single big mistake, but also some really great investments was the model— the foundation IGSB laid, which is what we built Dragoneer on top of.

19:10 So know what you're looking for, but then also be patient enough to not jump at the first thing. Really make sure that you win. Or the twentieth thing. Yeah. It's hard. Investors want to invest. They want to put money to work, but people always talk about this diversification point. But if you're patient and you wait for— go look at the best investors. It's always very, very few things that drive the return. What's interesting is Remember, we're not venture capitalists.

19:37 At the stage in which we invest, where the model is proven, you often know at the time, you feel it in your bones that it's gonna be a good one. You would eventually leave, as you mentioned, to start Dragoneer. Many people in the crowd today will consider whether to stay where they are or leave to start their own thing. How did you think about taking the leap and making that bet on yourself? Yeah. You know, the reality is you have to be honest with yourself.

20:10 Do you think you're the best in the world at something? It kind of requires a certain bit of arrogance, But you gotta do it with some humility as well. But if you believe you are, then go do it. If you don't believe you are, and you can be honest, then go find someone who is and team up with them. So I think first you have to say, for me, I got lucky that I had this incredible training and I was able to develop a track record.

20:32 In those first few years, we backed, Palantir and Facebook and DeepMind and anyway, a handful of companies that went on to be quite successful on the private side, and then we had the public portfolio. But fundamentally, the idea was... I always remember it. I was with Bonderman. Half my money was David's and half my money was IGSB's, and we were running around in Asia. And we had done, I think, seven privates and a dozen or so public investments, and he said, "I'm gonna run out of liquidity.

21:07 I don't have more money. So if you want to keep doing this, it's time to go out on your own and develop a brand, hire a team, and raise capital." But the fundamental idea was to continue doing what we're doing, but with three ideas. First, small number of companies are going to drive all the returns, so we'd be highly concentrated. There will be volatility with it, and we were honest about that, but we're going to focus on few things.

21:35 Second, we would just hire the best, best people to work here. And I remember in the early days, we would hire one person a year. Sometimes we would interview a hundred to find one. There were a couple years we would even hire zero. We wanted to find the right type of person for this model, and my belief is you don't need a lot of people. So, that was the second. And the third, we wanted to have limited partners that bought into this idea that a small number of companies will drive returns.

22:06 There'll be volatility, but the long-term compounding would be really high. And we launched with $180 million, and today we're maybe $45 billion or something like that. And it was just sticking to those three key things: great people, great companies, and great limited partners. And I'm hearing the common theme across all those is being patient, know what you want, and not settling for less. Whether that's hiring or people or the investments, you continued to follow that strategy, it sounds like, in every aspect of your career.

22:42 Yeah. So, you went to Dragoneer, and it obviously seemed so apparent now, looking back. We've seen incredible growth through investments in both Spotify and Airbnb, but then more recently as well, leading rounds in both OpenAI and Anthropic. Much of Dragoneer's continued success has been due to breaking the mold. How do you approach creativity in finding investments? I mean, that's core to the model.

23:15 What we figured out early on was this idea of sitting behind a model or a desk and waiting for an investment banker to bring you an idea, which just wasn't going to work. The other thing we figured out was when we started, whether it was '07 and IGSB or 2012 with Dragoneer, At that time, growth was kind of a four-letter word. People were really excited about venture capital because there was these big outcomes that firms like Accel and Greylock and others had, or they were really excited about private equity, and they wanna work at firms like Blackstone, et cetera.

23:52 But we saw that there was a tide changing. If you look, Right around that time is when PCs were ubiquitous. The web was connecting everything. Compute costs were going down. Storage costs were going down, and we thought that there would be a number of companies that would go on to be really generational companies, but you would have a period of time to invest in them while they were still private.

24:23 That didn't happen before 2009, 2010. And I mean, you talk about creativity. I'm trying to think. One story I remember is Uber, and there's someone in the room here who I remember calling. We were investors in Uber, and there was a lot of chaos going on at the company, and there were a lot of people who worked at Uber whose entire net worths were in Uber stock, and they were seeing a lot of the volatility and news stories.

25:00 So... I remember going to the head of business development and the CEO and saying, "Is there an opportunity for us to come in and do like a big cleanup round, like a secondary round, a tender?" And we thought it could be really large. I mean, there'd probably never been a tender at that point of a billion dollars. And he liked the idea, but I couldn't get much traction. About a month later, I get a call from him, and he goes, "I have good news and bad news."

25:32 I go, "What's that?" He goes, "The good news is we're gonna do a tender." We like your idea. The bad news is we're going to do it with SoftBank, not with you. And they had just raised that big $100 billion fund, so it was hard to compete with. And I said, well, this is crazy. I've been talking about this for a month. They said, listen, they have unlimited money. They could speak for the whole thing, and if they don't invest in us, maybe they'll invest in our biggest competitor.

26:01 So I remember I went to bed that night. And I woke up around three in the morning, just really upset by the situation. And I decided that in the next few hours, I would try to assemble the five billion dollars they were offering. And I remember it was three o'clock a.m. Pacific time, but Asia was up. So I called a few friends in Asia, a big strategic in Asia, a big sovereign in Asia, a few investors in Asia, and then I remember calling General Atlantic when New York was awake, and then Tiger, and TPG and a bunch of firms.

26:37 And by about 9:30 in the morning, we had indications of interest for $6 billion. So wrote a letter, you know, "Dear board of Uber, this esteemed group of eight or nine investors would like to make an offer to lead a tender with $6 billion." And at the last minute before I sent it, I remember I'd met Buffett about two months prior, and he said, "If you ever have a great deal, call me."

27:09 So I called up a friend who'd connected us and say, "Can you give me his assistant's phone number or email?" So I send Deb a note, and I say, "Dear Deb, I have a deal for Warren." Two minutes later, my phone rings, and it's, "Hi Mark, it's Warren." (audience laughter) And I was like, "Oh my God." So I walked him through the situation, and he said, "Look, I'm not interested in doing a deal that eight other investors are doing.

27:36 Let's do a convertible that just Berkshire can do with Dragoneer. And in addition to that, you can do your tender piece." So we changed the letter from six and a half billion to ten billion dollars, and we included them. So we sent the letter over. And I'll always remember Masa, who's become a dear friend, calls Yuri Milner at DST and says, "You know, who the hell is this guy Mark?" And ultimately, the board had our offer, their offer.

28:08 They had to take a little bit of time. So we added a sentence to the term sheet that said, "This offer expires in 24 hours, but if you sign it and SoftBank gets there, we'll agree to split the deal." I think it was 70-30, may have been 80-20, but I think 70-30. The board ended up signing our offer. A week later, signed with SoftBank, and we became partners, and we ended up doing I think it ended up being about a $12 billion tender between the two of us, and it's a great example of just kind of inventing as you go along led to such an interesting, successful deal.

28:47 And talk about turning a no into a yes. Right. Of all the big bets and winning names that we talk about, were there any investments that didn't go according to plan? So if you take a minute and you think in 2000... So when in 2009, '10, the iPhone came out in '07, the App Store in '08, so right at the beginning, I think the cumulative market cap of all consumer internet companies was about 500 billion dollars, and that was...

29:27 Netflix and Tencent and Booking and Amazon and Google pretty much made up all publicly traded internet companies. And then at the same time, about 500 billion dollars in SaaS, you know, made up of Salesforce and a few others. By 2021, the value of all consumer internet and the value of all SaaS was about 14 trillion dollars. So we'd never had a period.

29:57 If you think the entire US stock market's about 75 trillion. So 15 trillion, that must be a third to half of all incremental market cap was just this wave of consumer internet and SaaS, and including the Chinese internet growth. So what happened was all the investors, because there weren't really growth funds at the start of that, and in just 11 years, a lot of growth funds emerged. VC firms now had growth funds. PE firms now had growth funds.

30:27 Folks like us showed up. And lots and lots of big funds were raised at exactly the wrong moment. The reality is by 2021, it was over. There were no new SaaS companies to be had. There were no new consumer internet. I mean, you could have an app walk your dog by that point, order you your food, get you a car, get accommodations, whatever it may— communication was all happening already. It was pretty mature. But the memo, people didn't get that.

30:57 And remember back to all the books at IGSB, be patient, Fear, greed, et cetera, but people couldn't help themselves. So they, in that period, including us in 2021, was the only period where I think we broke from our lessons and what we set out to do. We didn't get it totally wrong, but we did make some investments that we look back and regret. So the point is... When there's tons of optimism and euphoria, and you're at the end of a cycle like that, and there's so much money, and no one has done wrong for 12 years riding a trend, things are gonna end badly.

31:39 So I think the lesson learned was in 2021, we were in a bubble, and that bubble ended, and now we're at the start of a new era, which is called AI. Thinking about this new bubble, how does this moment compare to past disruptions? Did I say new bubble? That's what I heard. How does this moment compare to past disruptions that you've seen? Yeah, you know. If you talk about that cycle from 2010 to 2020, it actually started way earlier.

32:15 I was thinking about this a few days ago, and ChatGPT and I spent a couple hours together, and we're looking this up, and I found it fascinating. So the Mag 7, which makes up about $25 trillion today, so a third of the entire U.S. market cap. I look at it as six of the seven companies were founded within about ten years. So NVIDIA was '93. You had Google, you had Amazon, you had— I'm gonna call Apple when Steve Jobs came back in '98.

32:48 You then, a few years later, had Tesla and Meta. So all of them but Microsoft. It's fascinating that six of the seven effectively most valuable companies on the planet. There's a couple, there's Aramco. But of the Mag Seven, six were founded in effectively 10 to 11 years, which is kind of amazing. And the reason is that was the start of this tech wave, of the last tech wave. But the problem with investing in that period is it would be very hard to invest in Nvidia.

33:18 You couldn't predict what was currently happening. You had to predict what would... One day there'll be AI, chips will really matter, they're gonna develop CUDA and have a moat around their business. Or this guy Bezos seems really incredible. This book idea, it's not about the book idea. It's about starting with books, getting density, ultimately selling you everything you want quicker, cheaper, more conveniently, and that would be the future of Amazon. And then later comes AWS or Google.

33:49 So it was an incredibly profitable period if you picked those handful of companies, but really, really difficult. So that's if you want to be early in the cycle. If you want to wait and you want to buy DoorDash, when we did it at, let's say, $6 billion, you could already press a button and food shows up your house. You just had to believe that Tony was going to win, and you had to believe that a lot more people like you would buy food.

34:14 Well, both of those seem pretty good bets. Spotify, you had to believe Daniel. Remember, there was Rhapsody, there was Rdio, Grooveshark, iHeart, Pandora. There were a lot of music streaming. You had to believe in streaming. Not hard, but you have to believe Spotify would win. Different part of the cycle. I think of AI right now, we don't know what it will be. Will it change the way we communicate? Certainly. Will it change the way we shop?

34:40 Certainly. Will it change a lot of things? Yes. Could there be huge changes that we don't currently anticipate? Definitely. But we're early in the cycle. So the question will be, what companies that are being founded now will endure? Can you predict them? And the ultimate determinant will be which ones will have moats. And that's an open question. We don't know which ones will have the moat. It's going to take some time. So you could take some early bets.

35:12 The other thing about this cycle, unlike the last cycles, is it's very CapEx heavy. So... And we already have big companies that are very innovative with great founders that have distribution, like a Meta, like a Google, like a ByteDance, like a Tencent, etc. So it's an interesting question, when you have a CapEx-heavy cycle, will the winners of the next generation just be the incumbents getting bigger, or will it be new companies that emerge like we saw in the last cycle?

35:44 Like I said, that's a question that nobody knows the answer to. But look for the moats. It's all that ever matters. So taking all that, if hypothetically you were a grad student considering career options, How would this moment influence your decisions? I'm curious if I ask this crowd, raise your hand. This is a business school crowd. Raise your hand if your number one most desired job is to be a consultant, McKinsey, Bain, BCG.

36:21 Isn't that amazing? That would have been pretty much number one when I was here. Not one hand went up. Raise your hand if it's banking, Goldman Sachs, Morgan Stanley. One. Okay, good luck. I mean, one of one. I feel for you if you don't get the job. That was insensitive. Good luck. Number third, what about you wanna be a founder of a company?

36:54 Great, quite a bit. And then what about you wanna get a job at OpenAI or Anthropic? If you could all get that job, who would take that job? Okay, decent number. And then how about if you want to start an investment firm? So it's interesting, right? So many people want to— I didn't say work at an investment firm, I said start an investment firm. So I think the lessons are the things we've talked about here. First of all, seek mentorship.

37:27 Make sure you're trained. Don't go start it unless you know what you're doing. So I would seek mentorship. And the other thing is, I was told early on. I remember when we were running around, and I see Christians here and others, and we're trying to raise money. Everyone wants to put you in a bucket. You need to be the hedge fund bucket or the long-only bucket or the private equity bucket And I remember we always got no's.

37:59 They didn't understand. You're going to do public, you're going to do private, you're going to be long only. We can't really get money back from you. It's kind of going to go into a black hole. And I just remember always going to the CIO and saying, let's create a bucket called miscellaneous. And as an investor, you actually make the most money when you invest in companies when they're in the miscellaneous bucket. So I would try to convince these allocators, if all you're doing is putting money where there's already a lot of it, you're probably not going to do great.

38:31 So I guess what I would leave you with on that question is seek mentorship and don't necessarily just go create something that already exists because odds are what already exists is probably pretty good. And on that note, we're now going to turn to the audience for Q&A. Hey, I'm Ned, an MBA 1. You mentioned putting all of your $1 million allocation into one company as an intern. Many of our classes, and Tim, as it turns out, would mention diversifying to reduce risk.

39:05 Did this feel like a big risk to you at the time? I think diversifying is—it feels like a big risk. If you're trying to beat the market, how are you going to do it by diversifying too much? As we've analyzed things at Dragoneer, the answer has always been it is better to wait until you have very high conviction, and when you have high conviction, swing really, really hard. Than it is to do a bunch of low and medium convictions.

39:34 So when I was here, remember I only had 10 weeks. We were convinced, Mercado Libre at $18, the sixth best idea wasn't going to be better than that one. So I think it is a lot better to swing hard than it is to diversify for diversification's sake. My name is Steph Huang. I'm an MBA 1 and a huge Olivia Miles fan. So you touched on this a little bit earlier. Many are speculating that with the rise of AI, it means the end to software as a service business model.

40:07 I'm curious about what is your perspective on the future of SaaS? Our view is, we're trying to look forward at where the next great big opportunities lie, and it's interesting. In the US, private equity has, I think it's 13,000 companies are owned by private equity. If you add up the value of all 13,000 private equity companies, And you add the debt, it's about $5 trillion.

40:38 It's a massive number. Nvidia is worth $5.7 trillion. I still don't think people appreciate how big these next generation of growth companies can become. And so my view is SaaS, I'm now not entirely, largely putting into that bucket of the $5 trillion. Shouldn't we go use our very scarce capital on behalf of our limited partners and try to go find the next Uber, the next Robinhood, the next Airbnb?

41:18 So I'm sure there's tons of opportunities in SaaS and very smart people will figure it out, but that's not where we're focused. Hi, my name's Isabel Dibble. I'm also an MBA 1. My question's a little bit different. I'm curious to know what drew you to basketball and pursuing team ownership? Are there any Timberwolves fans in this audience? Okay. Hey, there we go. My kids, my best friend, my wife, and a few people from Minneapolis.

41:49 I think my childhood dream was to have eight bucks fifty cents to get into the Great Western Forum to watch the Lakers play and maybe get a Kobe autograph, which I never did get. So I think it goes back to just life, and it's just been putting one foot in front of the other. And what happened was I heard about Marc Lore and Alex Rodriguez buying the team a handful of years ago. I read about it in the newspaper.

42:17 I remember we were on spring break with my family, and I told Elisa, "Oh, you know, I met that guy, Marc Lore. I can't believe he's buying a basketball team." I go, "I wonder if they're looking for any partners." So I found his phone number and I called him, and they weren't at the time, but he said he would consider it. And in the meantime, he introduced me to Alex, and I went and met Alex, and the three of us got along great.

42:44 And as time went on, there was an opening, to invest as a minority in the team, at which point, we decided to do that. And then as time went on, Mark decided that he wanted to go focus on building his business, Wonder, and that he would sell his controlling stake. And my inclination was absolutely not. This was against so much of what I'd— staying quiet, being an investor, being super committed to running Dragoneer.

43:18 So it was kind of a quick no. But as it set in, first it did feel like one of those opportunities that would probably never come back again. Secondly, you know, as I talked to our family, we just thought it could just be so fun. And my wife's been begging me to find a hobby for years. And fun, fun is good, so I thought that would be a good thing. The third thing was I really felt Elisa would be an incredible contribution to it.

43:55 To both the city, the community, and ownership. I thought Alex would be an incredible partner in his ability to connect with players, and he's so bright and hardworking and positive and optimistic. And then I thought I had a skill set, and I thought the three of us could do something really special. The other thing is, as we're in this really tumultuous time in the world and scary time in the world, I just thought sports brings so many people together.

44:26 You know, when I sit around with my friends and we get into talking about the world and we all start yelling at each other and get bummed out or whatever it may be, then when a game comes on, we stop and we go cheer. And so I said, "It's such a positive force for good. It could be so fun." And reality is, I also thought Minnesota deserves goodness and has gone through so much. And sometimes in life it is about winning and losing.

44:58 The Timberwolves have never won a championship. So when I saw that, the city's not, no men's team— fortunately the Lynx have won, I believe, four times. But no men's team has won since 1991, since Kirby Puckett, which I was a big fan of baseball in the early '90s. So I just said it could be fun. It could bring my family together. My wife will crush it. It could be a force for good. It could be a good thing to use our capital, and ultimately...

45:26 I think we could go win some championships, and we could bring the ingredients together necessary to win. So I think that all came together, and here we are. But nothing's been approved yet, but we're giving it a shot. Well, Mark, we have one final question that we're asking all our View from the Top guests this year. Okay. At GSB, we talk about changing lives, changing organizations, and changing the world. As you look at the world today, what do you think future leaders, the people in this room, need to focus on to drive change?

46:07 It's one of those that now you're gonna ask everyone, but I have to go first with this question. I'm gonna maybe rephrase, answer it by rephrasing it. You asked the question, what does this group need to do in the future? I would encourage almost the opposite. What do current leaders What do current leaders need to do to change the world positively? And I have found as you go on life's journey, you often become highly realistic, sometimes pessimistic.

46:45 And I remember when I was a student here, or a student in college, just how idealistic I was and optimistic and hopeful. And I think when you go back to the idea of mentorship, why did Reese have me around, or Tim have me around, or Bondo have me around? And why did they like having young people around? It's because they bring hope and energy and optimism. So when I want to go get pumped up and excited about something, I usually go hang out here at Stanford on the advisory council or at high schools or even elementary schools with my kids.

47:19 So I guess I would say, why don't we say current leaders should come hang out with all of you and leave a little hopeful? Awesome. Well, this has been such a treat. Thanks. Thank you, Mark. (audience applause)