Thirty Minute Mentors Podcast Transcript: Software Pioneer Mitch Kapor
I recently interviewed Mitch Kapor on my podcast, Thirty Minute Mentors. Here is a transcript of our interview:
Adam: Our guest today is a pioneer in the fields of software, personal computing, and the internet. Mitch Kapor is the founder of Lotus, and the creator of Lotus 123, the killer application that led to the widespread adoption of the personal computer in the business world. Mitch co-founded the Mozilla Foundation, best known for creating the popular web browser Firefox. Mitch is also a leading technology investor and is the author of the new book, Closing the Equity Gap: Creating Wealth and Fostering Justice In Startup Investing. Mitch, thank you for joining us.
Mitch: It's a pleasure to be here.
Adam: The pleasure is mine. You grew up in the ‘60s, the world was a different place, to say the least. The world of technology was a very different place than it is today. Can you take listeners back to your early days? What experiences and lessons were most instrumental to shaping your worldview and to shaping the trajectory of your success?
Mitch: So early on, I was a math nerd in high school and graduated at 16. This is all way before the internet. So there was just nothing cool about being a nerd back then but I had always had a fascination with technology. And when personal computers came along first as a hobbyist thing and kits that you would assemble and play with it didn't do too much. I was completely compelled and fascinated. And I had really been going sideways in life after college. I was a radio disc jockey, I was a meditation teacher, and I worked in the psychiatric unit of a community hospital as a mental health counselor, a kind of a lost soul. But when I bought my Apple computer, something just clicked and I just loved it. And I taught myself programming. And I actually became a consultant writing little programs for other people who are very, very early adopters. And I got the conviction that these devices were going to be very important in society, even though it was a day and age when people just did not use computers, there were these big boxes that filled an enormous room and you had to speak a specialized language to talk to them and ordinary people just didn't interact with them. But I had conviction. And the world was very, very skeptical. Businessmen didn't type, they would never use a keyboard, and computers were wimpy and underpowered compared to real computers. So those of us who were in it early had to face this overwhelming skepticism that they would ever be useful or interesting. And the thing that I learned was perseverance, that sometimes the crowd is just wrong. Sometimes the conventional wisdom is just wrong. And you have to have the courage of your conviction to stay with it. And sometimes that is borne out. But if you look for validation too soon, or in the wrong places, or if you're not willing to place a bet on yourself, you're going to miss out on huge opportunities. And as we know, in the past 30-40 years, there has been successive technology, revolutions of the personal computer and the internet and you know, the iPhone, and now we've got AI and virtual reality, and each one brings just a wave of new opportunities. But at first, there are only a few true believers who really kind of get it.
Adam: Once you got it, once you establish this conviction, once things clicked for you, what were the most significant challenges and obstacles that you faced before things completely took off and became an enormous success? And how did you overcome them?
Mitch: Well, it was not clear what to do. I mean, I felt like personal computers had enormous potential. But to do that, there needed to be applications and these applications weren't built. And so the challenge was to sort of figure out how to do that. And you have to remember this today the world is very different in that there are a million resources for entrepreneurs, there are books, shelves of books, there are courses, and there's a wealth of material on the internet. But back then none of that existed. So once I had the idea, oh, I want to write applications that are going to increase people's productivity, knowledge workers, things like word processors and spreadsheets and so on. But how to go about doing that, then the biggest challenge was, how do you do a startup? Nobody knew because there weren't any, and there wasn't a culture of startups. And so really, the biggest challenge was to sort of learn by doing and not make a fatal mistake along the way. And so that was my early experience in the late ‘70s and early ‘80s is the whole field was just getting organized.
Adam: What were the best lessons you learned as you were growing and scaling Lotus? And more broadly, you've been involved in so many different businesses over the years as an investor and an advisor, how can anyone grow and scale their business?
Mitch: So that's a really interesting question. And I have to say that I learned an enormous amount while Lotus was scaling. We went from literally $0 in sales to $53 million, this isn't the Lotus 123 spreadsheet, in 1983, and into $156 million, and then $200 million, this is in three years. And that's all 40 years ago, currency, so multiply it by three or four to get equivalent values for today. And we went from that time zero to 2000. People, this was like hyper-scale, it was explosive growth. I learned a lot, mostly by making a set of very serious mistakes. But failure is the thing that teaches you the best. So one of the things that I learned very importantly, is the importance of knowing what your own skill set is, what your own desires are, and what you want to do. Back then you didn't hear the term serial entrepreneur, I turn out to be the kind of person who likes to start things. But I don't like to run things. So in hindsight, the smart move would have been to figure out how to build a management team and to hand things off, to grow the company and to manage it as it grew so that I could continue to do new things. But that idea didn't even occur to me. And so I was in my early 30s, with no management experience, and sitting on top being the CEO of this company with 1000 people. Another thing that I learned, which I wish I had done better, is to hire people, particularly managers, and executives, partly on the basis of having shared values of seeing the world the same way of thinking, the same kinds of things were important, not to the point of conformity, but to the point where you could trust when the company was small, I could kind of know everything that was going on. That was important, but you quickly as you grow, of course, you can no longer do that and learn to hire people in a way that when they come to work, you can genuinely delegate and feel comfortable that they would make good decisions without you hovering over them because you trust them. That was an incredibly important lesson that I learned in an incredibly painful kind of way. So if you want to grow something big, you have to build a team. And it becomes less about your own individual genius, and your own individual talent and more about how you build that team.
Adam: A couple of really interesting points for listeners. First and foremost, know thyself. It all starts with self-awareness. And, Mitch, you have the self-awareness today clearly, to recognize that if you could turn back time, you would have exited as CEO because that wasn't your superpower, your superpower wasn't being a superlative manager, you're a really good manager. Your track record speaks for itself. Your success as a manager is better than 99% of the people out there. But your unique contribution to the world was before the management even took place. And when you understand who you are, when you understand what it is about you that is truly unique, truly differentiated, and what you enjoy doing, what aspect about work really fuels you, really gets you going, really excites you. You can create something that really centers around that. The second point you made which I love to hire people on the basis of shared values, is you fundamentally need to trust the people on your team. And you need to trust their judgment. And if you know that you have people on your team, who you could fundamentally trust, who you just instinctively know that they have it in them that they could do it, it makes your life it makes your job a lot easier.
Mitch: Well put, thank you, I appreciate it.
Adam: You were peers with Bill Gates and with Steve Jobs, and you got to know both really well. What was the best lessons you learned from your time spent with Bill Gates and your time spent with Steve Jobs?
Mitch: So I would say with Bill, there are two important lessons: one positive and one negative. On the positive side, he had mastery of a kind of big picture of how all the pieces fit together. He understood, if you will, the physics of the personal computer ecosystem, the relationship between the chips and the system software and the application software and the customers. And so he was playing three-dimensional chess, with this very, very big picture. And I learned a lot from that because I thought a lot about applications and what end users would want to do. And I could see very well, this doesn't exist, but I think people would want it. And that's a power move. But it does not in and of itself. Having the big picture and understanding where things are likely to go and positioning yourself to take advantage of that. He was really great. At that no question about it. He was also I think, an extraordinarily ruthless competitor, who was interested in winning. And let me put it this way, wasn't particularly concerned about committing fouls, as long as the referees weren't watching. And that eventually actually caught up with him with the antitrust suits. But it was a kind of a negative lesson to me in, you just don't want to conduct your business that way. But if some of the players are doing that, and there's no ref on the field, calling fouls, that presents a strategic challenge. And I have learned a lot since about things I would have done differently in the face of that. I think Microsoft was an incredibly strong company, they got to a dominant position, in part by playing fast and loose with the rules. And I think we've all learned something from that. So positive and negative. Steve, was really as brilliant in a deep genius sense, as people say he was. He really saw what could be. And he had a way of helping teams get there. And when I counsel and mentor entrepreneurs, though, they say they attempt to kind of justify something that they want to do by saying, well, Steve Jobs did it that way. And I go, yeah, but you're not Steve Jobs. If you don't have that level of genius. Maybe you shouldn't do something that is just as crazy sounding. The thing I learned though about Steve was he loved to challenge people. He was extraordinarily willful, and he wasn't particularly polite. He would say that's the stupidest idea I've ever heard. You have to learn to push back if you were going to engage with him. If you weren't prepared to stand your ground and make your argument about why such and such was the right thing, you shouldn't try to be around him because he would just mow you down. So then not my style, but worked effectively.
Adam: Those are such interesting points on both leaders. Really interesting takeaways. And something that I've heard a lot of people ask, well, as Steve Jobs led this way, and it defies all of the fundamental principles of effective leadership that I talked about that so many great leaders talk about, what is the meaning of these fundamental principles of effective leadership? And to your point match, when you have a certain level of genius, you can excel despite breaking the rules. But that doesn't mean that the next person is going to be able to excel despite breaking the rules.
Mitch: Let me put a stake in the ground about one more thing to be clear. They were both obviously enormously world-changing and world-defining successes as we look at it. By my standards, when I talk about leadership, when I talk about starting and running things, to me the people dimension is as important as the products you make and the financial success you achieve. Which is to say, do you treat people well? Is it an inclusive environment? Can people flourish in that working environment? And I have to say that there are significant negatives for both of them by that scorecard. If you talk to people in and around, especially in the early years, of Apple and Microsoft, they may say, well, I wouldn't give up the experience for anything. But actually, a lot of it was pretty horrible. It didn't feel good. And they weren't trying to optimize for people feeling good. So I think where you are coming out on your own values about the work environment and corporate culture is very, very important. And you'll look at a Steve or a Bill differently, depending on how you value the kinds of things that in daily practice, they didn't, not to take away from their genius.
Adam: Well, to that end, what do you believe are the key characteristics of a great leader? And what can anyone do to become a better leader?
Mitch: Well, to me, I want to see a leader who lifts people up. Who brings out their best. Who brings people together and helps them unleash their potential to contribute to some kind of greater good. That's the kind of leadership that I think is the most important and the most valuable.
Adam: What can anyone do to become a better leader?
Mitch: Well, as we were talking before, I think a lot of it has to do with self-awareness of understanding your own strengths and weaknesses, of playing to your strengths, and of building a team that can complement you in your areas where you're not as strong. And also understanding the impact you have on other people. So not simply being willful, but understanding, particularly if you're the leader, you have just this enormous amount of power relative to other people in your organization. And so being thoughtful about how you exercise that power, in ways that are respectful and uplifting. Yes, you hold people accountable all the time, you have to make tough decisions that not everybody is going to agree with or like, but at the end of the day, I asked whether you may not agree with me. But do you think the process was a fair one? And if the answer to that is yes, then I think it's an instance of good leadership. So being tough on yourself, I think is essential. Not to the point of masochism. But holding yourself to a high standard is also part of leadership, and challenging yourself, to improve as you challenge others to improve. That's also part of the package for me.
Adam: Mitch, I like that a lot. And something that I think about is, on the one hand, leaders need to lead with care, with love. If you don't love people, you're not going to be a great leader. You could be a great entrepreneur, you could be a great innovator, you could be a great accountant. But to be a great leader, you need to fundamentally love people. On the other hand, you need to lead with accountability. And, as you said, it's accountable accountability toward those around you and accountability toward yourself.
Adam: I want to go back to something you said that really jumped out at me. You brought up the fact that when you were competing against Microsoft and Bill Gates, you felt like you were playing on an asymmetrical playing field. The rules weren't fair. Your competitors weren't following the rules. And you said well if only I would have known then what I know now, I would have done things very differently. What would you have done differently? What were the lessons that you learned? How can ethical leaders compete against unethical competitors?
Mitch: Well, first of all, let's acknowledge that is a big challenge. But I think creating a call it an island of safety, I'm going to be specific about this. If we had focused, this is at Lotus, on being very close to our customers, and really embracing them and being embraced by them, that bond and that loyalty is something that would have helped us develop better products, would have helped serve them better, and would have provided insulation against the competitive forces that are always just trying to disrupt things. We have a dominant chair in spreadsheets trying to tear the customers away from you. So if your competitor is changing the systems in the infrastructure, and you don't have control over that, and they are doing it in a way that is intended to be disadvantageous to you, you just want to get close to the end user. And that is going to provide some protection. The other lesson that I've learned is sometimes and this is so painful for me, I love the innovation part, I love the idea of new products in the next generation. And what else can we do? And where can we go with this? But sometimes, that's not the business reality, customers and end users can only absorb new technology so fast. For the first time, your workforce has 10s of 1000s of personal computers, you actually don't want a new release of the spreadsheet every six months, the wisdom would have been to slow down, and not do so many crazy innovative things, but focus on blocking and tackling and doing the obvious things even though they didn't seem to be glamorous at the time. And had we done that, I think there would have been Lotus Office, not Microsoft Office. It could have been not just a spreadsheet, but a really nice word processor. And that was a very mainstream thing. And that actually would have provided a bunch of competitive protection. But I was so jazzed with, oh, technology is going to save the world. And I can see all these new things that we're going to do that we didn't, we didn't have that focus, and it hurt us competitively.
Adam: Focus on your customers. Focus on the fundamentals. Yes. Both great lessons. You mentioned that fundamentally you're a person who's passionate about innovation. And you're one of the great innovators of our day in the field of technology. In your experience, what are the keys to engendering innovation? And how can leaders build and foster cultures that drive disruption and innovation?
Mitch: That's a great question. And I will illustrate by telling your story. We have this hugely successful spreadsheet. And one of the engineers came to me and said, “I have this idea. I want to do something very different”. And this is the idea for corporate email, Tennessee, and this is the 1980s. This is still more than a decade before the internet. But this is Ray Ozzie who went on to create Lotus Notes, which was a multibillion-dollar product for Lotus and the reason IBM bought the company in the ‘90s. What we did was in order to provide a good and nurturing environment for this very embryonic idea about connecting computers by networks, exchanging information and sending mail, and building other applications, none of which existed then we created a series of firewalls between the main corporate body and this little effort that became a load of stumped because we knew that if we didn't do that, it was never going to get the attention or the resources that it needed. People always would be saying, no, the main line of business we have now is much more important. They would starve it of resources, they would demand to see more results sooner. And so they were located 30 miles away, which could have been on the moon then again, no internet, so in their own space, and we sent back and forth diskettes the delivery trucks that was the way we're exchanging versions of the product. And it took a long time, it took like seven years before notes were actually mature enough in its first version and this is on Microsoft Windows. It was a killer app for Windows in the early 1990s. But the firewalling the protection, the patience, sometimes that is what you need to do in order to give the innovation a chance to mature. I just read today that Apple is this is a leak has a non-invasive real-time glucose monitoring system that is going to put into the Apple Watch meaning, if you're a diabetic, and that's 10% of the population, you're not gonna have to stick yourself with a needle to read your numbers. This is like a holy grail within health. They've been working on this from back when Steve Jobs was still alive. So more than a decade and hundreds of millions of dollars, but it appears to be paying off. So that's one thing. Also, say something else, you want to give people with crazy ideas a chance. And this has to do with how if you're an investor of any kind, what I want to say is it's difficult for real innovators, has been to get the funding to do the next big thing. So I was one of the first investors in the internet in 1993, and one of the first angels in doing streaming media in the mid-90s. And that's continued onward. I think there's a kind of herd mentality, both in the investing world and to an extent in the corporate world, that just has a hard time imagining that things could be really different. And the ability to see around corners, which is something that innovators have, that's a precious commodity. And so we need institutions, and systems in our society, whether it's in a marketplace for angel investors, or in the corporate world that can support those kinds of experiments, and then also held them accountable because they don't all work. The other part of it, so sometimes you just have to say, no, this didn't work, we're stopping, we're gonna go do something else.
Adam: I want to dive deeper into the topic of investing. In your new book, Closing the Equity Gap: Creating Wealth and Fostering Justice In Startup Investing, you challenge people to really rethink how they evaluate what companies and what people to invest in. What do you look for in the companies you invest in and in the people you invest in?
Mitch: The premise that we operate under is conventional wisdom about investing in startups. In tech startups, this is exactly wrong, because the conventional wisdom says that if you attempt to have any impact, social impact, improving the world in any way in the company, or if you explicitly are trying to foster diversity, your financial returns are going to be less you're being concessionary. And if you talk to anyone who is steeped in Wall Street, that's the church that they worship, in our view, which a dozen years ago when we started was a radical hypothesis, around which we decided to do an experiment was that you could invest in companies that have an impact, and at the same time produce top rated financial returns. And by impact, we mean something very specific, which is the company's close gaps of access or opportunity or outcome in low-income communities and or communities of color. So it could be edge tech, FinTech or workplace, or health. But when you look at the company, and this is what we look at, we say, well, if this thing succeeds, who is going to be better off in the world? And who's going to be worse off? And if the product or service brings the top and bottom together, or uplifts people at the bottom of the ladder, fantastic. If it's a product or service is successful, that simply makes the lives of affluent people better. To us, that is not gap closing, that is the gap widening. And so we've developed an investing discipline over the years that looks at these questions of well, what's the core business model? Is it closing gaps? Who is it serving? Is the founder committed to this? If so, why are they committed to it? Is it in their life experience? And surprisingly, two things so first, when we started doing this, I was skeptical, but Freda my wife, and partner at Caper Capital, urged me to consider it. I was skeptical, oh God, if I have this extra lens for investing, then I'm going to miss out on all the good deals. But you know what? It turns out, there are a ton of entrepreneurs that are actually looking for investors whose values are aligned with theirs and they are starting their businesses, not just to make money, but because they want to make a difference in the world. And if you plant a stake in the ground and say, This is us, this is who we are, this is what we believe in, they will come flocking to you. And so we've punched above our weight, as it were all along in winning deals that we wouldn't otherwise because entrepreneurs like us. But the other thing is, it works. We've produced top-quartile results, meaning we're in the top 25% of all venture capital firms of our size, regardless of what the investment thesis is doing. So we've been that way for a decade. So it's been the most rewarding, professional experience of my career, because it's a way of bringing together my love of innovation, being steeped in the tech world, but also being able to, you know, bring my values to it in a way that every day we can say, okay, we're actually helping these founders build companies that are improving people's lives and dealing with social problems.
Adam: Mitch, what can anyone listening to this conversation do to become more successful personally and professionally?
Mitch: Well, I would suggest taking a values inventory. What do you really believe in? What is important to you? And once you understand what that is, then ask yourself, how is my work, my life, my startup, my investment portfolio? Does it reflect that? Or am I simply doing things because that's the way they're done? And how do I buy a life course that brings those two things into more alignment? Now, obviously, we don't have full control by any means over our lives. But we do have more control than we think. And if our Northstar is that alignment of our own values with what we actually do day to day, in life and in work. That's a kind of approach that I think is going to help people be more successful and happier.
Adam: Mitch, thank you for all the great advice and thank you for being a part of Thirty Minute Mentors.
Mitch: You are so welcome. Thank you for having me.
Adam Mendler is an entrepreneur, writer, speaker, educator, and nationally-recognized authority on leadership. Adam is the creator and host of the business and leadership podcast Thirty Minute Mentors, where he goes one on one with America's most successful people - Fortune 500 CEOs, founders of household name companies, Hall of Fame and Olympic gold medal-winning athletes, political and military leaders - for intimate half-hour conversations each week. A top leadership speaker, Adam draws upon his insights building and leading businesses and interviewing hundreds of America's top leaders as a top keynote speaker to businesses, universities, and non-profit organizations. Adam has written extensively on leadership and related topics, having authored over 70 articles published in major media outlets including Forbes, Inc. and HuffPost, and has conducted more than 500 one on one interviews with America’s top leaders through his collective media projects. Adam teaches graduate-level courses on leadership at UCLA and is an advisor to numerous companies and leaders. A Los Angeles native, Adam is a lifelong Angels fan and an avid backgammon player.
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