Mike Schroepfer: Former Meta CTO on "Why The Best Leaders are Like Music Conductors" | E1158

Intro (0s)

• Mike Schroepfer compares building a company to a game of inches, emphasizing the importance of consistent effort rather than relying solely on big moments.
• He describes effective leaders as conductors of an orchestra, requiring the ability to harmonize the efforts of talented individuals towards a common goal.
• Mike Schroepfer's growing understanding of climate change leads him to recognize the critical role of affordable clean energy in driving human progress.

Background (55s)

• Mike Schroepfer reflects on his childhood and how he might have been described by his parents and teachers.
• He recalls an incident during a trip to Disney World where a cartoonist depicted him as a nerdy kid with an interest in computers.

Memorable Yes & No Moments (1m35s)

• Mike Schroepfer's most memorable "yes" was his wife agreeing to marry him.
• His most memorable "no" was the series of rejections he faced while raising money for his startup in 2000.
• The repeated rejections reinforced Mike's intrinsic motivation and determination to prove his belief in the potential of his idea.
• He focused on first principles and his firsthand experience to validate his belief, disregarding opinions that contradicted his core understanding.
• Despite numerous rejections, including someone falling asleep during a pitch, Mike persevered and eventually secured funding from Sequoia Capital.

Meeting with Sequoia Capital (4m41s)

• Mike Schroepfer met with Mike Moritz, a legendary investor from Sequoia Capital, for a one-on-one meeting.
• Moritz asked deep and investigative questions about Schroepfer, his team, and the problem they were trying to solve.
• After several meetings, Sequoia Capital invested in Schroepfer's company due to the solid prototypes, customers, and a clear explanation of the problem they were solving.
• Schroepfer felt like the meeting went terribly, but Moritz turned out to be an incredible board member.
• Great board members push entrepreneurs to think critically and explore possibilities they might not have considered.
• They ask questions like "Can we ship the product earlier?" or "Can we do this faster or cheaper?" to encourage innovation and efficiency.
• Building a company is a game of inches, and great board members help entrepreneurs focus on incremental progress every day.
• Schroepfer uses his experience as a board member to learn and improve his own skills.

What Makes a Great Board Member (7m49s)

• Effective boards are viewed as resources with diverse perspectives, rather than reporting or evaluation bodies.
• As a board member, provide critical advice while supporting and elevating the entrepreneur.
• Transition from operator to investor and board member requires a "nose in, hands out" approach, providing guidance without direct involvement.
• Effective leadership involves recognizing the importance of a great CEO and supporting and empowering them.
• Effective leaders guide and support teams without micromanaging, like music conductors.
• Leaders identify areas where teams need assistance, such as changes in strategy or team composition.
• Leaders recognize when teams are functioning well and step back to avoid unnecessary interference.
• Leaders focus on identifying and addressing the most pressing challenges or opportunities within the organization.

Common Destructive Elements in Teams (12m52s)

• Inertia can hinder organizations from pursuing larger market opportunities.
• The most effective leaders excel at coordinating and optimizing team efforts, akin to conductors of an orchestra.
• A well-organized team often outperforms individuals of higher caliber, emphasizing the importance of creating an environment where everyone can excel.
• While speed and activity are crucial in the initial stages of a project, strategic thinking is essential for long-term success.
• The best leaders adapt their approach based on the problem they face, prioritizing speed in urgent situations and careful planning when necessary.
• Successful leaders understand the nature of the problem they are dealing with and optimize their processes accordingly, demonstrating flexibility and adaptability.

Best & Worst Decisions (18m24s)

• Some of the best decisions Mike Schroepfer is proud of fall into three categories:
  • Betting on people and having an intuition about their potential.
  • Creating a culture that values open source, such as React, PyTorch, and Llama.
  • Roughly calling technology trends, such as investing in AI in 2013.
• The best decision he specifically made was buying the domain name for 20 VC, committing everything he had, and leaving no way out.
• Hiring transformational people at Meta, such as Yan LeCun, and building the culture of open source are some of the best things Meta has done.
• The decision to focus on AI in 2013 was made after considering the shift to mobile and having time to think about the future of computing platforms.
• Meta decided to focus on AI and VR, believing that computing would become more integrated into the real world and smarter with AI.

Lessons from Misprediction (22m36s)

• Timing is crucial for predicting technology shifts, as being too early or too late can lead to missed opportunities or wasted resources. Startups face greater challenges with timing due to limited budgets and the need for quick success.
• Market disruption creates opportunities for new entrants, making it an exciting time to start a company. Efficient use of capital and a clear path to revenue are essential for successful startups.
• In climate tech, balancing philanthropic efforts with capitalist investments requires careful consideration of the market and potential returns. Most companies focus on the benefits of their products, such as cost-effectiveness or environmental friendliness, rather than solely emphasizing their commitment to sustainability.
• When investing in climate tech, it's crucial to consider the time to revenue and set realistic milestones to reduce risks at each funding stage. Some climate tech companies, like Mill and Di Cycle, have achieved early revenue by selling out their initial product runs or securing offtake agreements.
• The biggest challenge for climate tech companies in the early stages is often the "valley of death," where they need to build and prove their technology without significant customer validation or financing. To address this challenge, investors look for technologies that require lower capital, are easier to scale, and can quickly reach proof points, reducing the risk associated with building and commercializing the technology.
• Horizontal scaling is an effective approach for hardtech because it decouples risks. Instead of building a single large data center, it involves building many smaller units, reducing the impact of potential issues. This approach allows for incremental growth and flexibility in resource allocation.

Investing in Consumer Hardware & Managing Market Demand (31m12s)

• Building consumer hardware requires extensive planning, testing, and careful consideration of factors like drop tests, production line setup, and capacity planning. Mistakes are costly and the industry is less forgiving compared to software.
• Experienced teams that have shipped consumer hardware are valuable due to the lessons learned from overcoming challenges.
• The biggest concern when investing in consumer hardware is market risk, where consumers are unwilling to buy a product or pay the desired price.
• When evaluating a business, the most important factor is the team and whether they have a unique angle or approach to succeed in a competitive market.
• Every business should be evaluated with the potential to become a multi-billion dollar business.
• Mike Schroepfer, former CTO of Meta, transitioned from philanthropy to investing in climate-related ventures, believing that climate change is a $10 trillion problem that requires market-based solutions.
• Schroepfer advocates for making clean energy cheaper than dirty energy to drive investment and adoption.
• The availability of clean energy at a low cost is a significant limiting factor to human progress, as many technologies become viable with cheaper electricity.
• The US has experienced relatively flat to declining energy demand for the past two decades, but there is a sudden increase due to the establishment of new factories, battery factories, chip factories, car factories, AI, data centers, and electric vehicles.

The Importance of Cheap & Abundant Clean Energy (45m57s)

• There is a confluence of new technologies and increasing energy demand.
• The ability to ramp up clean energy production is growing but still limited.
• Solar and wind power are becoming increasingly cheap, but storage is still a challenge.
• Battery prices are declining rapidly, making solar plus battery storage a viable option.
• Fusion energy is a potential game-changer that could provide unlimited clean power in the future.

The Potential of Fusion as a Clean Energy Source (48m33s)

• There are over 45 startups working on fusion energy, which is now a well-understood and credible science.
• Several fusion machine designs exist, with some based on decades of plasma research.
• Commonwealth Fusion Systems (CFS) in Boston is building a first-generation fusion machine and holds the world record for the most powerful electromagnets using superconductors.
• CFS's approach involves using powerful magnets to create a donut-shaped magnetic field and burning plasma hotter than the sun's center to generate energy.
• The National Ignition Facility (NIF) in the US uses a different approach, where a small target is hit with a massive amount of power, creating enough energy to fuse atoms and generate a fusion reaction.
• Both CFS's and NIF's approaches have been proven to work, but the challenge lies in making fusion commercially viable by achieving cost-effectiveness and sufficient power output.
• The timeline for commercial viability is estimated to be in the 2030s.

Urgency & Rapid Action in Addressing the Climate Crisis (51m13s)

• Despite the urgency of the climate crisis, some argue that it's too late to prevent significant consequences.
• Positive feedback loops in the environment, such as melting glaciers, will cause sea level rise even if emissions are stopped today.
• Sea level rise projections range from 1 to 6 feet by 2100, which would have catastrophic consequences.
• Humans can move quickly when necessary, as demonstrated by historical examples like rapid shipbuilding during World War II.
• Instead of dwelling on the past, it's important to focus on solutions and take action to mitigate the harmful effects of climate change.
• This includes increasing clean power, electrification, efficiency, and carbon removal.

The Role of Brazil, India & China in Climate Change (53m52s)

• Climate crisis is a humanitarian crisis, not just about the planet.
• Prosperity and energy availability for everyone on the planet are essential.
• Technology can change the rules of the game and make clean energy and resources affordable.
• We should invest in making technologies that reduce the need for sacrifices rather than asking affected people to make sacrifices.
• A future with cheap clean energy, clean water, and affordable housing is possible through the deployment of solar batteries, fusion, and electrification.
• This future is compatible with the entire world.

Navigating Clean Tech as a Venture Investor (56m5s)

• Venture investors should approach investing in hard tech with humility and intellectual honesty, focusing on understanding the market, entrepreneurs, and sales rather than just the technology.
• Mike Schroepfer, former CTO of Meta, emphasizes the importance of high-frequency learning and experimentation in venture capital, spotting outliers, and diversifying investments to increase the chances of success.
• Schroepfer highlights the significance of people, technology, and building companies, emphasizing the value of strong relationships and being present in one's personal life, especially with one's children.

Quick-Fire Round (1h5m47s)

• Solar and storage will become significant parts of the energy grid, but incumbents may hinder their progress by manipulating economics.
• Dealing with the stress of leadership involves acknowledging its challenges, prioritizing self-care, and avoiding neglecting personal well-being during stressful times.
• Money can alleviate basic needs-related stress but is not the primary determinant of happiness. Fulfillment comes from within, and externalizing it can lead to unhappiness.
• Raising children in an affluent environment presents unique challenges, such as managing expectations and ensuring they understand the value of hard work and gratitude.
• Everyone experiences suffering, so it's important to approach others with humility and understanding.
• Mike Schroepfer, former CTO of Meta, emphasizes the importance of balance and stress management in leadership positions.
• Schroepfer highlights the significance of recognizing exceptionally unique and special situations, drawing from his experience working through multiple companies and the dot-com boom and bust.
• He envisions a future where diesel school buses are replaced by electric buses, prioritizing children's health and the environment.
• Schroepfer predicts the widespread adoption of self-driving cars within the next 10 to 15 years, revolutionizing transportation and potentially reducing climate impact.
• The development of cleaner technologies like fusion power plants will make burning fossil fuels for energy feel strange and obsolete.
• Gas stoves, gas cars, and smoke stacks will be seen as outdated and harmful to human health.
• Induction stoves, electric cars, and heat pumps offer faster, more efficient, and pollution-free alternatives.
• Rebuilding the industrial economy with these cleaner technologies presents an opportunity to improve human health and the environment.