[David Senra]
Tell me what it was like starting a16z with Ben and Mark.

[Scott Kupor]
It was interesting. So let me give you the backstory if I can. So,

[Scott Kupor]
we had sold our last company to Hewlett-Packard, right? So we sold in 2007, and a bunch of us had basically indentured servitude to HP for

[Scott Kupor]
12 to 18 months. And then the summer of '08, and mind you, right, you know your history, right? So in March of '08, basically, Bear Stearns disappears, right? So it's summer of '08, and Mark and Ben are like, "Yeah, we're going to do this." They've been doing angel investing for a long time. We threw our money, and they said, "Look, it'd be a lot more fun if we institutionalize this and went out and raised money." We were literally having this conversation summer of '08, and then September of '08, of course, Lehman goes bankrupt like overnight, and so the world seems to be coming to an end. So I go home one day to my wife, I'm like, "Good news. I'm going to quit my job at HP, which is probably the most stable job you have, and join these two guys." And we were actually living in North Carolina at the time because we had acquired a business out there, and Ben and Mark had asked me to go move out to run it, so I was already, I was not in California even anymore. So, it took me a long time. I hemmed and hawed on it, and these guys joke to this day, which I don't know if it's true or they just like to razz me, is had I agreed to actually join them sooner, that it would have been

[Scott Kupor]
Andreessen, Cooper, Horowitz instead of Andreessen Horowitz. Now, I don't know if that's true or not, but so my official title was first employee, not actually co-founder of the firm. But they started, so I finally kind of Christmas,

[Scott Kupor]
I still have these emails, I look back at them. Mark and Ben were like, "Look, you got to get off the dime. You got to figure out what you're doing." And I finally said, "Okay, like, I'm going to go do this." But it took me a long time to figure it out.

[David Senra]
But what was the job description? What did they say?

[Scott Kupor]
There was no job description. This was part of the problem was that, yeah, my wife's like, "What are you doing?" I was like, "I had no idea." So this was basically, so remember, it was just the two of them, and the job description was actually Mark and Ben said, "Look, we're going to invest, and you need to figure out everything else we needed to build a firm." And I didn't know what that was. So, in the early days, it was literally like going to Costco to buy furniture and make sure we had food in the office, and then doing things like opening bank accounts. And then we closed the first fund, and the way the funds work is, or you may know this, but for your listeners, is the investors sign up for what's called a commitment. They say, "Great, like, I'm going to commit 10 million dollars of a larger fund," and then we call the capital as we go. So it's literally called a capital call. It's what you do when you decide to invest in a company, and you actually need the money so you can make the investment. So, my very first day on the job, they're like, "Great, we made an investment in this company. Can you please call capital from our LPs to get the money?" So, I didn't even have an email yet, so I used my personal Gmail. So I send out this notice to like 50 different LPs. I'm like, "Great news. Like, wire me a million dollars basically, because we need money for this thing." And I immediately get an email back from one of our LPs, who I won't name, who's like, "Who the fuck are you? Why are you sending me this email?" And then he calls Mark and Ben. He's like, "Somebody's impersonating you guys. Like, somebody's literally trying to shake me down for money." So, I finally realized I probably should actually get an a16z domain and set that up. So that was kind of the

[Scott Kupor]
impetus I needed to actually get an a16z domain to do stuff. But that's what it was. It was just like we were figuring out as we went, and these guys obviously, look, they knew what they were doing because they were investing, and they knew what their primary job was. For me, it was the whole goal was like, how do we actually create a firm? And so, most of my initial days were hiring people basically. So, basic stuff like we had to hire finance people, for example, so that I wasn't doing stupid things like capital calls for people from my Gmail account. But then we always had this theory, right, which has panned out, which was, how do we build a services component to the business, right? So how do we basically create a system where we can take everything that an entrepreneur might need and develop kind of concepts of networks and relationships around that? So talent networks,

[Scott Kupor]
business development networks. And so a lot of the early days was hiring people who were domain experts in those areas so that we could actually start to build this team. And we went from three of us to probably close to 100 in the first year, and today I think we have like 700 people or something in the firm. So it's evolved over time for sure.

[David Senra]
Was Michael Ovitz around a16z at this time?

[Scott Kupor]
He was, yeah. So, Michael had been on our board actually at Loudcloud and Opsware, so that's how obviously Mark and Ben knew him, but that's also how I got to know him. And, yes, he was very, very influential, as you probably know, and I'm sure Mark told the story just about the founding of the firm. And so he was very helpful. So I would call on him a lot and be like, "Look, this is what we're thinking about doing," and he would kind of recount to me how they did things at CAA. But essentially what they did, which is what kind of a lot of what a16z was built on, was kind of disaggregate the job of what back then was the agent, right? And then we basically did the same thing for what was the general partner job, right? So, in the old days, and we actually pitched this in our first LP meeting, we were basically trying to institutionalize John Doerr. And so for your listeners who may not remember John Doerr, he was one of the very, very famous founders of Kleiner Perkins. And you go to John, and he knew every salesperson, he knew every CFO, he knew every political stuff. So John was like this ultimate uber connector for entrepreneurs. And our basic idea was, look, could we basically institutionalize that and not have every GP have to learn all those things, but could we basically

[Scott Kupor]
effectively disaggregate that from the GP job and hire professionals who could do talent networks, who could do political networks, who could do sales and marketing, and all the other things that ultimately came to be the platform for a16z?

[David Senra]
Was this around Michael Ovitz's idea of the phalanx? Where it's like, before that, it's like, he's your agent, but really it's like, no, you have all of CAA-

[Scott Kupor]
Yes

[David Senra]
... and you should tap into every single resource.

[Scott Kupor]
Yeah, so his theory, and I know you're friends with him, you've had him on many times.

[David Senra]
I'm having dinner with him tonight.

[Scott Kupor]
Okay.

[David Senra]
As a matter of fact.

[Scott Kupor]
Tell Michael I said hello. I haven't seen him in a while. But look, he'll tell the story much better, but my recollection of the story is, look, they start CAA in, I think, 1975. And the whole industry was, which was very similar to how the venture capital industry was, you had an agent, right? So you're Robert Redford, right? And you have an agent, and that agent comes to you and says, "Great, I'm going to help you do this, right? I'm going to help you get movie deals. I'm going to help you get book deals, radio," whatever the stuff is. Which was great, but the model was basically a one-to-one model, which was your agent- ... to actor. What Michael did in CAA was they said, "Look, we're going to basically maintain the relationship context between agent and actor." But when you would go show up for a pitch at CAA in 1990, where I think they had 90% market share, they would sit around a table, and Michael would introduce you as Robert Redford and say, "Look, meet my colleague who does nothing other than radio deals. Here's my expert in radio deals. Here's my expert in international. Here's my expert in books." So you had this whole idea that you were surrounded. Yeah, phalanx maybe is the right way to think about it. You have this whole firm as opposed to an individual who's responsible for your career. And we basically took the same model to the VC world. The VC world was a lot like that, was you had a one-to-one relationship with John Doerr, who was fantastic at what he did. The problem with that inherently was, number one, it just wasn't scalable. At some point, John has so many board seats that you time out from a GP perspective because you can only take so many board seats on. And then two was you had to get everybody to invest in all that same amount of relationship development work across all these domains. And that might have worked in the days John Doerr did it when basically we invested in enterprise software companies. That was essentially the domain of VC. But if you believe, which I do, Mark's software ate the world or is eating the world, as the domains grew, the expertise needed just continued to grow. So the fundamental theory that Mark and Ben had was, let's hire GPs who are functional domain experts in the particular areas of investing they want, and then let's surround them with this phalanx of somebody who all they do all day long is manage CFO relationships or CEO relationships or VPs of engineering, somebody who all they do does government relations or business development or other stuff like that. So again, our pitch to an entrepreneur when they came in, we used to do this thing, we called it the reverse pitch actually, where an entrepreneur would pitch us, and then we would bring the team in, and we would do the reverse pitch to them to say, "Hey, look, if you work with Andreessen Horowitz, not only do you get me, Ben Horowitz, as your board member, but you get this entire table of people whose job it is day in and day out to figure out how do we institutionalize a set of relationships and networks that'll make you successful." So that was the key application of what Ovitz did to how Mark and Ben adopted it to the VC world.

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[Speaker 2]
Before you left a16z to go to government, you were there for how many years?

[Scott Kupor]
16 and a half years, so '09 until...

[Speaker 2]
What are some of your most memorable stories from the very early days, first year, two, three years?

[Scott Kupor]
Well, there were some fun ones.

[Scott Kupor]
We had a little bit of our "Mad Men" episode during the firm where in the evenings, we would go sit around and drink bourbon at the time. This was when Mark actually used to drink. I think he doesn't drink anymore.

[Speaker 2]
No, he said that, I think he was on this show earlier-

[Scott Kupor]
Yeah

[Speaker 2]
... and he said he thought the best day was 12

[Speaker 2]
hours of caffeine followed by six hours of alcohol or something like that.

[Scott Kupor]
Exactly. He was great, right? Yeah. Mark would drink a lot of coffee. He always had sushi for lunch. I don't

[Scott Kupor]
know how well you know Mark, obviously, it sounds like you know him now, but Mark gets very deep in things. So, if he gets excited about sushi, quite frankly, he'll eat sushi for every meal for a six-month period of time, right? So, he would do that, and then, yeah, we would sit around his office at the end of the day and drink. And I remember very distinctly because we had to buy a special ice cube maker that actually made the square ice cubes.

[Speaker 2]
Yeah.

[Scott Kupor]
And Arsho, who's his assistant, was incredibly generous with us, but she would basically come in at the end of the day and make sure the ice machine was right. So, that was fun, and it was just-

[Speaker 2]
Hold on, you got to bring me-

[Scott Kupor]
... no one knew what we were doing.

[Speaker 2]
Let's get more of this. Bring me to this. Okay, so "Mad Men" style, we're working all day, now we're hanging out-

[Scott Kupor]
We didn't drink during the day.

[Speaker 2]
Of course.

[Scott Kupor]
So I would say "Mad Men" style maybe is overrated because nobody was smoking cigarettes.

[Speaker 2]
So now it's nighttime.

[Scott Kupor]
Now it's nighttime.

[Speaker 2]
Nighttime.

[Scott Kupor]
Yes.

[Speaker 2]
Workday's kind of over.

[Scott Kupor]
Right.

[Speaker 2]
But we're going to keep it going, and we're going to drink.

[Scott Kupor]
Exactly.

[Speaker 2]
What's happening?

[Scott Kupor]
Yeah. In our original office, and actually in our new office too, but Mark and Ben had these very spacious offices, which was very nice. And Mark literally had a bar. Mark had one of the most amazing bourbon and whiskey collections that I've ever seen. He probably still has it, although he's been generous with my birthdays over time. He sends things to me now since he's less of a drinker. I pick up most of the stuff. But yeah, we would sit around and talk, and it was like the one part of the day where there was no formal agenda. And sometimes we just bullshitted about whatever was going on. Sometimes we were actually talking about an investment or something in the company. But it was fun. It was a time period where you felt like-

[Scott Kupor]
I mean, number one, for someone like me, even though I'd been around Ben and Mark already for almost 10 years, they're just like the kinds of people where if you have time to sit down with them and just shoot the shit, like outside of work hours, you always learn something. And so, that was always fun. And it just felt like we just had this sense of camaraderie that we were trying to build something. So, there was no agenda. We would sit around, and sometimes it would go for 15 minutes and we'd all disappear, and sometimes we'd sit there for an hour. It never turned raucous. We all had families and kids to go home to, so it wasn't like we were going from there to a bar somewhere else. But it was just kind of a relaxing way to, quite frankly, end the day and have some fun and/or intellectual conversation about stuff we were doing.

[David Senra]
What do you think those versions of you three back then would think about the outcome that played out over the next 16, 17 years?

[Scott Kupor]
When I did the math for myself and I was trying to convince my wife why, in the middle of the global financial crisis, we should pick our family up from North Carolina, go back to the Bay Area, and do this thing, my math was like, "Okay, I'm pretty confident they'll raise the first fund." No idea, quite frankly, what happens after that, but my general calculus was like, "Worst case, these funds take a long time. We'll kind of weather through the financial crisis." And

[Scott Kupor]
these guys had always been very good to me in terms of taking care of me, and I was like, "Look, I'll find a job. I'll find another job, basically, if this thing just doesn't pan out." That was kind of my general back-of-the-envelope calculus. I never imagined we'd get to where we were, and nor did I actually imagine we would get there as fast as we did, and I think that was the big thing. So, Mark's talked about this, but in literally the first couple months after we closed the first fund, we invested in Skype. And yeah, if you remember, Skype was part of eBay, right? Skype had been bought by eBay, and it was completely neglected inside of eBay, and yet amazingly, it had this incredible network effect. If you looked at the numbers, the numbers of subscribers just kept growing and growing. So, we joined with Silver Lake at the time, I don't know if you know Egon Durban, who runs Silver Lake.

[David Senra]
Michael Dell, I just saw him a few days ago.

[Scott Kupor]
Yeah.

[David Senra]
He speaks very highly of him.

[Scott Kupor]
Yeah.

[David Senra]
Actually brought him up the other day.

[Scott Kupor]
Exactly, yeah. And Michael Dell was part of that too, but it was literally like we did essentially a buyout. It was a crazy thing to do. We had just gone on the road and told all of our investors we're doing early-stage venture investing. And we hinted, by the way, this Skype thing was going, so we pretty much said it was going to happen, but we couldn't say it was going to happen because it hadn't been done yet. So, it wasn't actually a surprise for our LPs, but it was clearly very different than the strategy we had laid out. And so, we did this thing, and immediately, of course, everybody attacks us and says, "These guys are crazy. What the hell are they doing doing a buyout? It'll never work." And there was all kinds of stuff at the time. If you go back and read the stuff, you'll see it. There was this big IP dispute with the original founders, like Janus and Niklas, and eBay about who actually owned the fundamental underlying IP. And so, a bunch of people looked at buying Skype, but nobody could get comfortable because they're like, "Gee, if we buy it, what if Janus and Niklas come out of the woodwork and say they own it, and so do you really own the IP?" Egon's genius was, "Let's actually figure out a way to work with these guys." So,

[Scott Kupor]
our bids came together, and we actually worked collaboratively with these guys as a way to moderate this IP question. But anyways, everyone's like, "Look, this is crazy." But the beauty of it, literally 18 months later, we sold to Microsoft for four times what we paid 18 months before. And so, the news cycles were just unbelievable. And look, part of this business is momentum against momentum, right? Which is true of so many businesses. And so, we were able to actually raise our second fund well ahead of what we had planned doing, in part because the Skype thing just worked out so well. We returned literally half of our fund to our LPs within 18 months, which these days is obviously completely unheard of, and even back then was unheard of. And it just completely changed the narrative. We also had a company called Nicira, which was in the networking space. Martin Casado, I don't know if you know Martin, he's one of the partners there today. His company got sold to Cisco early on in the first fund. So, we had these very quick early wins, which basically potentially could have gone the other way, but they didn't. They went in our favor, and they basically just dramatically accelerated the progress. And key to our business model, right, to do the Michael Lewis business model, we had to have enough of a fee stream to be able to hire all these other non-investing people, right?

[David Senra]
Yeah.

[Scott Kupor]
And Mark's talked about this before, but what Mark and Ben did, they were very magnanimous. The two of them took no salary right at the beginning of the company because they wanted to basically take as much of the fees as they could to give it to me to go hire other people to build this thing out. But we needed another, in order to kind of continue that build-out, the second fund gave us a

[Scott Kupor]
stacking fee stream that allows us then to say, "Okay, now we can actually double down on this strategy." So, it was one of these things where

[Scott Kupor]
we had early success. It was also 2009, right? So again, middle of the global financial crisis. You know this, but the Sequoia guys put out this RIP presentation. Have you seen this?

[David Senra]
What does RIP, good times?

[Scott Kupor]
RIP, good times, right. It's literally like, "The world's coming to an end. We're all going to die." Sounds a little bit like today, actually, now that I say it. "No one will ever raise any money. Put all your money under your mattress." And so, we were this shiny gold object in 2009 when everyone else was hunkered down and worried about their portfolio companies. So, we had this enormous advantage, which is we put a shingle out and we say, "Hey, we're open for business." And every other venture firm, and rightly so, I understand it, they had these enormous amount of portfolio companies that they were very worried about whether they would survive or not. So, so much of all that early momentum accrued to our benefit, which enabled us then to go raise the second fund, which gave us the funding to build out the services strategy, and that really kind of compounded in a way that I don't think we expected. Now, Mark and Ben may tell the story differently, which is they always knew it would be a success. And I'm sure, I believe that, right? I mean, these guys are entrepreneurs for a reason.

[David Senra]
Obviously, entrepreneurs are going to be self-confident, and they don't wake up thinking they're going to lose, but they're always surprised. There's no fucking way if you build something that they're confident they're going to succeed, but they can never predict the degree

[David Senra]
to which they do succeed. It's funny that you say that they might tell the story differently, because one thing I love talking about Mark, and it's obvious if you watch the episode him and I did together, is the amount of business history that's in that guy's head.

[Scott Kupor]
It's unbelievable.

[David Senra]
I'm just constantly prompting, and it's like, I don't tell people, you know this, we don't know what we're going to talk about before we talk. There's not a list of questions.

[Scott Kupor]
Right.

[David Senra]
I surely didn't say anything to him other than we're both psychopathically obsessed with business history, entrepreneurs, and all this other stuff. We're impossible not to have an interesting conversation. But I'm like, "Damn it, I should get Mark on, and I want him to..." Instead of telling the history of other businesses, I should get the history of- A16Z from him.

[Scott Kupor]
Yeah.

[David Senra]
Like, while you're speaking.

[Scott Kupor]
It's amazing, yeah. And look, as you know, the guy is encyclopedic on so many things. And that's the other thing, by the way, that he and Ben both were really, really smart about, which was, and I know he talked about this on your show, but just to double down on it, this concept of marketing generally in the venture business, right? So, it was considered verboten to market in the venture capital business. And I don't know why that was, and I don't know, it was probably just, I think it's mostly a historical reason, which was you didn't need to market because there was, in the old days, capital was scarce, right? So the derivation of power for venture capital firms in late '60s, early '70s, until probably close to the 2000s was money was scarce, the VCs had the money, and so therefore, if you looked at the balance of power, the VCs were up here and the entrepreneurs were down here. And that was sufficient, right? And a lot of great firms, and many of which still exist today, were incredible in that era, right? Obviously, Sequoia has been and continues to be incredible. But all the existing firms that you see there at the top of the game, like Sequoia, Accel, Greylock, even Benchmark, right, which was a spin-out of Merrill Pickard, all these guys lived in that era, right, where nobody marketed, I believe, just in part because they didn't have to market. Like, you went to them because they had the money, you needed the money. That was what the marketing was. When we came along board, look, we didn't know anything, and we didn't know anybody. And so part of what Marc and Ben rightly said was just like we came out of the enterprise software business, and we know in the enterprise software business, just because you have a good product, nobody gives a shit if you don't actually tell them what it is, right? And so they're like, "Look, we got to go tell people who we are, what we stand for." And so we did. We told the story, which is, "Look, we're going to do things differently. We're going to build this whole services part of our business, and we're going to market on that basis," because what we didn't have to market on was we didn't have the long history of a track record in the business, right? So, to this day, right, if you go to Sequoia, who's an amazing player in the space, if you go to their conference rooms, you'll see

[Scott Kupor]
a poster of Cisco and Apple and Google and all these other things. We had none of that, right? Mark and Ben had done their own angel investing, and of course, the two of them had had success as entrepreneurs, but we couldn't compete against that. So, what they rightly did was they said, "Look, if we can't compete on what people are competing on today, we have to change the rules of the road and go compete on something else." And so they created this category was, okay, the new venture capital firm is going to be not just capital, but it's going to be capital plus plus, right? It's going to be plus this whole network of people whose job it is to help the entrepreneur.

[David Senra]
It's in service of the entrepreneur.

[Scott Kupor]
That's exactly right. And so that was a huge, major, major difference that they did, which also played out really well. And we got a lot of shit from all the other VCs on Sand Hill. They're like, "Look, it's verboten to market," and all this other stuff. I remember because I was talking to all of our LPs every day, and they're like, "Oh, so-and-so, we heard this from one of your competitors." And it was always, "Look, these guys talk a big game, and they tell people stuff before they've done it." And we're like, "We're doing exactly-"

[David Senra]
It sounds like an entrepreneur to me.

[Scott Kupor]
Yeah, we're doing exactly what any entrepreneur would do, which is, we were trying to create a category. You have to tell the category, you have to actually tell your narrative. And look, we had to deliver on it at the end of the day, which we did. It was just such a unique way to approach the business, not just the foundations of the business model, but the idea that we were going to actually create a marketing strategy around that, that enabled the firm to kind of grow at a pace that I don't think any of us ever anticipated.

[David Senra]
So it sounds like at the beginning, you were much more operational.

[Scott Kupor]
Yes.

[David Senra]
As your tenure continues-

[Scott Kupor]
Yeah

[David Senra]
... did you switch over to investing, or you always were operations? Like, how did you-

[Scott Kupor]
I did, yeah. So I remember when I first came,

[Scott Kupor]
I was like, "What do you want me to do?" And they're like, "Well, we're going to invest, and you're going to do everything else." And I have to admit, my ego for a little while was kind of hurt. I was like, "Okay, well, why can't I also invest," right? What I came to realize, particularly what they were, at the time, they were doing early-stage investing, was I'm not a deep technologist like these guys are. And so much of that game, I believe, is your ability to actually understand the technology at a way more granular level. So, we sit in pitches all day long, and if you don't understand databases, for example, you can hear 10 pitches about database companies, and unless you have that depth of knowledge, the honest answer is you have no fucking clue which one is the right one to invest in. And so I ultimately assuaged my ego by saying, "Okay, look, that's not my strength, basically, and so I need to focus on the stuff that I think I can do." What happened over time was we changed the nature of the firms. This is another thing that I heard Ben talking about this on another podcast not too long ago, which was we started with a centralized firm, right? So, everything reported to me. We grew that for about 10 years till about 500 people or something. So all of those operating functions reported to me. Even the investors essentially reported to me. Marc and Ben didn't really have any direct reports. What they realized over time, which was brilliant, was you can't scale a venture firm in that fashion. So there were two reasons. One was they said, "Look, we can't have 20 people sitting around when we're doing software in the world, and we've got crypto and healthcare and bio and American dynamism and all these other things going on. You have to specialize." And so we started a process 10 years into the firm where we basically decentralized the firm. And we said, "Look, we're going to have smaller investing teams that are going to be domain-specific. So we're going to have a crypto fund that Chris Dixon runs, and we're going to have an American dynamism fund that David Ulevitch runs, and we're going to have AI infrastructure that this guy Martin runs, and on and on." And then we said, "Look, in order to do that right, the needs of the entrepreneurs are different." So all of these answer layer operating services we built, they all also need to feather in into these different verticals so that we can do the things that are appropriate for the entrepreneurs. So, what a gaming entrepreneur needs in terms of business development support is totally different than what a life sciences entrepreneur needs. And so we went through this process of basically disaggregating everything into these structures, and we just kept a few things centralized that made sense, so legal and finance, right, core compliance functions. Look, you don't necessarily want people doing those separately on their own. Let's keep those centralized. Investor relations, right, from an LP's perspective, their view is, "Look, I want to interact with Andreessen Horowitz as a firm. I don't want to have to build completely independent relationships." So we kept a few things centralized. And so what that did for me, which admittedly I will say, and Marc and Ben know this, I fought initially because when you go from owning everything-

[David Senra]
You liked it.

[Scott Kupor]
Right. You go from owning everything, you're like, "Wait a second. I all of a sudden feel like my domain got a lot smaller." In fact, actually, Ben, I heard him talk about this on a podcast. He said exactly what I felt, which is true, is anytime you do a reorg in a company, you always get a lot of hurt feelings, right? Because by definition, somebody in a reorg has fewer things than they used to have, basically. That's just the nature of it. And it took me a while before, again, this was another one where my ego got hurt. I was like, "Wait a second. I thought I was doing a pretty damn good job managing these things." And Marc and Ben, to their credit, were like, "Look, we're not saying you're not doing a good job. We're saying the needs of the business have changed. The needs of the business demand that we do this, and so let's go find other ways in which you can add value to the business." And so that was kind of when I finally got an opportunity to start doing some investing. And what I recognized again was, look, I can't do early-stage tech investing because I'm just not a domain expert. And so we started a later-stage fund, we call it- ... later stage venture, for lack of a more creative word.

[Scott Kupor]
And we started that in 2019. We brought in a guy named David George from GA, General Atlantic, who had been doing this. He was great. And so, I basically started working with David and kind of carved out more of doing stuff on the healthcare side. So by the time I left for government, I had about 15 companies that I had invested in, about 10 of which that I was sitting on the board of. But doing stuff where the evaluation of the company was more about the operational successes and kind of the opportunity for the company from one to infinity, as opposed to the zero to the one side of investing, which I just didn't feel like I had the right skill set to do.

[Speaker 2]
Deel is how the best founders turn the world into their talent pool. I've been studying how history's greatest founders operate for a decade, and one thing they all have in common is they understand that recruiting and hiring the very best talent is your most important priority. A players recognize other A players, which is why top companies like Ramp, Shopify, ElevenLabs, Uber, and DoorDash all use Deel. Many of the top founders I know have personally invested in Deel after using their product. And what they discovered is that Deel is the best company in the world at building infrastructure for global hiring. Deel will help your business hire, pay, and manage any worker anywhere in the world so you can retain the best talent anywhere and spend the rest of your time focusing on what you do best, delivering value to your customers. The founder of ElevenLabs has a great description of the value Deel can give your company. He said, "We built ElevenLabs to break down language and communication barriers. With Deel enabling us to hire and support exceptional talent anywhere, we can accelerate our innovation and bring more voices, stories, and ideas to every corner of the world." Deel is trusted by over 40,000 companies and growing fast. Learn how they can help your business by going to deel.com/senra. That is deel.com/senra. So you just mentioned it, then you decide to leave after 16, 17 years-

[Scott Kupor]
Yeah

[Speaker 2]
... and you take a hard turn-

[Scott Kupor]
You think so?

[Speaker 2]
I sure as think so. Into government. Why?

[Scott Kupor]
Yeah. My wife asks me that a lot too. So look, the-

[Speaker 2]
This seems to be a reoccurring theme with your wife questioning your decisions.

[Scott Kupor]
My wife is way smarter than I am, and her job is mostly, yes, to question, like, "What the hell am I doing?" So, the historical reason was I had literally done policy stuff starting in, literally in high school actually. I worked for a group back in high school that used to do healthcare policy research. So, we were trying to figure out, because we were doing breast cancer screening stuff, right? Like, what do the economics look like? And then when I went to Stanford, I worked for a professor, this guy named Alan Garber, who's actually now the president of Harvard, doing stuff around prostate cancer, right? Which is, okay, like, does it make sense to screen large populations of men for prostate cancer? And I won't go into details, but it turns out there's these weird nuances of prostate cancer. The basic answer is most men die with some form of prostate cancer. Very few men die of prostate cancer. And so, screening broad populations can be problematic because you will catch a lot of stuff that never would have actually had health outcomes. Anyway, so I'd been doing that, and then when I

[Scott Kupor]
went to Stanford through law school, I actually worked for another guy whose name is in the news today, a guy named Jay Bhattacharya, who now runs the NIH, if you follow that. Jay was a researcher at Stanford. I was his grunt. I used to do modeling for him for this policy group that worked on. So, I always had these interests in policy, and then whenever life kind of intervened, and I ended up obviously going in a different path and going to the private sector. But at some point in my bucket list, I always thought I'd do policy stuff. The reason now was really a couple things. One was just from a personal perspective, like, it was the right time in my life to do this. So, my kids were all out of the house at this point in time. Mark and Ben were incredibly gracious and said, "Hey, look, if this is what you want to do, we're happy to support it." They enabled me to kind of transition my stuff off, and gave me the freedom to do that. And obviously, I've been very lucky just financially along the way to have the means to be able to kind of take a break from the business. And then the second thing was, look, I really believe that what I learned in venture capital might have some applicability to what I would do in government. So, the job I have is this, I run this group called the Office of Personnel Management. Essentially, you could think of us as we are the HR/talent agency for the two million civilian federal employees. So, we are responsible for making sure we have the right people coming into government, and then all the policies that govern talent, essentially, in the government.

[Speaker 2]
And why did you think those, there were skills transferable from your previous job to this one now?

[Scott Kupor]
Because what I learned, and particularly, through all the stuff I've done with working for Mark and Ben and companies and managing people, is something very simple, which will sound so obvious, but I think it's really true, which is, look, organizations are pretty simple. It doesn't matter if you're a government organization or a private organization or a not-for-profit, they're all the same, which is all an organization is, it's a collection of people who are just aligned around a similar set of objectives. Like, it's no more complicated than that. The question is, do you have the right set of objectives? Do you have the right people? And then do you have a set of incentives that track to those objectives so that when people do the things you want them to do, they get rewarded and recognized, and you can then kind of do 10 more great objectives? Or when they don't do that, do you have a mechanism to either correct that behavior and/or remove them from the organization? And so, when I looked at that, I was like, "Okay, I'm going to come to government, and it's a totally different set of objectives," which I agree. But the fundamental question is, do we have the right people and do we have the right incentive structure to actually enforce the behavior we want? And the short answer, particularly on the latter side, is the incentive structure is completely screwed up from my perspective.

[Speaker 2]
Before you move on-

[Scott Kupor]
Yeah

[Speaker 2]
... let's describe this. Why is the incentive structure completely screwed up from your perspective?

[Scott Kupor]
So, a couple of things. Number one is,

[Scott Kupor]
it is an incredibly legal, regulatory, compliance-related culture, basically. And so, everything that happens basically in government is for fear of doing something wrong, we do the same thing we've been doing

[Scott Kupor]
all along. So, the idea of innovation, any kind of innovation, is very much difficult to do because the better thing to do is keep doing what you're doing, don't take risks. When I first came in, one of my reports said, "Look, our job is to keep you out of the news," basically. And I was like, "Well, okay, well, tell me more about that." And they said, "Well, we don't want you to get hauled in front of Congress for doing something that they don't want you to do. We don't want you to get a report from the GAO," which is basically this compliance organization. "We don't want the inspector general doing stuff." And I was like, "Okay, like-"

[Speaker 2]
Okay, so then let me just send her and be done with it.

[Scott Kupor]
That's easy, yeah. It's pretty easy how to solve that, right? Which is, okay, we will just do nothing, right? And it's exactly right. That's what I said. I was like, "That's not your job." Like- Your job is to help us figure out, like, what can we do that's good? And yes, if we have a good reason for doing something and we screw it up, like, I'm fine getting hauled in front of some congressional committee and explaining that to them. Obviously, if our process was crappy, that sucks. We got to fix that. But what it means is basically it does not allow for any innovation, right? So, look, I come from, as you know, we come from this crazy world in venture capital where we take obscene amounts of risk, which is fine because you've got upside that potentially is uncapped, right? If you find Coinbase in 2012, as Chris Dixon and Mark did,

[Scott Kupor]
if it works, right, it can generate 300, 500 times your money, right? And that's a good thing to happen, and that can cover a lot of mistakes. We don't have that in government, but instead what they've had is basically the answer is, like, take zero risk, but that also means therefore, like, no consideration of upside potential for anything. And so part of the incentive structure that I think we have to put in place and we're trying to put in place is, I've been using this term permissioned risk, which is deliberately different from the permissionless risk that I think exists in Silicon Valley, which is we got to have this conversation and we got to be willing to let people take some risk, and that risk needs to be appropriately sized for the organization. So, if you're in Department of War and the risk is people die, okay, like, maybe we ought to have a really low tolerance for that. But look, what I do and what most people in government do, it's not life or death, right? So yes, we want to get people their Social Security checks. We want to get people their IRS refunds. If it happens plus or minus a day or two from when we expect it, most cases nobody's going to die. But if we could actually automate a system and figure out, like, how do you make it dead simple for people to get their Social Security checks or their retirement checks or anything like that, that has massive upside potential, but the incentive system has never allowed that. So, that's part of number one, like, that's part of the reason why the system's screwed up is there is zero, zero opportunity for innovation. As a result, therefore, you have slow and plodding and not great customer service from a lot of these organizations.

[David Senra]
Well, not only that, if there's zero possibility for any kind of innovation, like, what kind of talent are you going to attract?

[Scott Kupor]
Yeah. So here's the other side of this, right, which is,

[Scott Kupor]
then you have a performance management system that's also screwed up. So, I'll give you a story. I think you and I may have talked this a long time ago when we first met. Everybody gets ranked generally one through five at the end of the year in terms of their employee rating. Some organizations have a four-point rating, but just say one through five. One is the worst, like, you definitely should not be here. Five is like you're knocking the cover off the ball. And three means, hey, you know what? You're good. You're doing what we asked you to do. That's all fine. And every organization, quite frankly, needs a lot of people like that. Historically, in government, 99.7% of people are a three or above, meaning literally 0.3% fall below expectations. Now, in a population of two million people-

[David Senra]
Is that even possible?

[Scott Kupor]
It's not even mathematically possible.

[David Senra]
Okay.

[Scott Kupor]
It's not. So, you have one problem, which is we don't do anything on low-end accountability in the government.

[Scott Kupor]
I'll tell you about how we're going to change this in a minute. But, so that's a serious problem to your point, which is, look, how do I attract and retain great people when I'm sitting here busting my ass and you're dialing in and everyone knows you suck, but nobody actually wants to do anything about it? Like, that's a terrible place for high-performing people to be.

[David Senra]
So like-

[Scott Kupor]
Yes, exactly. And then on the other end, so four and five, right, those are the top ratings, mean not just you're doing your stuff, but you're extraordinary or you're outstanding, you're doing great stuff. In the senior... Just to give you an example, in the most senior side of government, which is 7,000 people that are senior executives, something like 90% of people get ranked a four or a five, meaning literally everybody's awesome.

[David Senra]
In an organization of 7,000 people?

[Scott Kupor]
Yeah. Again, it's just not possible, right? What it means is, like, we've gamed the system, and as a result, again, if I'm a high performer,

[Scott Kupor]
I want to be a high performer, and there ought to be smaller numbers of people who are high performers. And by the way, I ought to disproportionately get money for that. So when you have a system where 90% of the people get ranked at the top of the class, that means the bonuses make no sense, right? I give you 1,000 bucks and it has no incentive value, it has no retentive value. Instead, we should have a system where, which was what we're doing, is we've put a rule in place which is no more than 40% of the population can be at that top ranking, and 60 plus percent of the compensation pool needs to go to those 40% of the people. Now, personally, I'd like to do even more extreme than that, but we've got to crawl before we walk and run on this stuff. But if you want to attract great people, you have to hold people accountable on the bottom end, and you have to allow for differentiation. And the third thing you have, by the way, just you got me on my soapbox, is almost every promotion opportunity in government is gated by tenure. So, you have to be in the job for a certain period of time, typically at least a one-year minimum, before I can even consider you for promotion. Now, again, if I'm going to hire some person who's awesome in software development and they knock the cover off the ball and within six months, they demonstrate that they're better than I thought-

[David Senra]
They're essentially stuck in purgatory for six months.

[Scott Kupor]
Yeah. And then, by the way, if you promote them-

[David Senra]
And then what?

[Scott Kupor]
... they have to wait another 12 months, right? So, we're eliminating stuff like that. So these are all policy changes we're making, which is we're going to eliminate... It's called time-in-grade is the name for it. But what we want is a merit-based culture where you come in and we level you appropriately for what you can do. So, one of the programs we have is called Tech Force, just so you're aware, which is basically we're trying to build this elite corps. You and I talked about this. This is an elite corps of, like, we're trying to bring in 1,000 software engineers, AI experts, data scientists to serve two-year terms in government. We're hiring them at what's called the GS-14 level, which is pretty high. That's like the second-highest individual contributor level in government. And we're hiring that way because we are actually giving them assessments that technically analyze their skill set, right? So they come in and they have to do an actual test by a third party that is a code development test. Never before has the government done this, right? Instead, I would give you a questionnaire and you would self-rate your skills, right? You would say, "I'm a really-"

[David Senra]
It's one through five? Turns out I'm a five.

[Scott Kupor]
You're a five, right? You know this language, you know that language. And again, it's crazy, and there's a whole historical reason for it, which is, there was this lawsuit about disparate impact on these exams. But the point is, if we have a merit-based culture, we will bring people in at the right level, we will promote them at the right pace, and then I believe they will want to stay because they will feel like they're actually able to do what they want to do. Right now, until the changes we've made, historically we've had a system where it's very hard for you to break out of the pack, basically. And that's just not amenable to having a high-performance culture.

[David Senra]
In the most simplest description that you can muster, explain why you felt- It was like, what is the main problem as you see it,

[David Senra]
that you felt the need to, again, change your entire life, move again across the country-

[Scott Kupor]
Yep

[David Senra]
... and dedicate two, three, four years of your life to doing this?

[Scott Kupor]
Yeah.

[David Senra]
Is it the demographic problem? Is it we just don't... It's not a political thing.

[Scott Kupor]
No.

[David Senra]
But if you care deeply about America-

[Scott Kupor]
Yeah

[David Senra]
... you want the most talented people-

[Scott Kupor]
Yes

[David Senra]
... in the government.

[Scott Kupor]
Yeah. So, three things that motivated me, which we're trying to do. One is, do we have the right talent? Do we have the right people in the right seats? This is where, again-

[David Senra]
And the answer is clearly no.

[Scott Kupor]
So-

[David Senra]
And you can't say this, but-

[Scott Kupor]
Yeah, look, let me say this, because I want to be fair. There are a lot of very good people in the federal government. So, I think, and I'm going to come back to this, I think a lot of this is a systems incentive problem versus necessarily a talent problem. Now, there is a talent problem, which you and I talked about a little bit, which is we suck at getting early career people into government.

[David Senra]
Explain the demographics of who's working in the government right now, because this is a wild stat.

[Scott Kupor]
Yeah. So today, 7%, that's seven, of the federal workforce is under the age of 30, okay? So just so your listeners have a comparison, if you look at the total US workforce, 23% of the total US workforce is under the age of 30, okay? So, by a factor of three to one or more, the federal government is way under-indexed on early career people, okay? If you go to the other side, 44% of our population is over the age of 50.

[David Senra]
In the government or just-

[Scott Kupor]
In government, sorry. So 44% in government is over the age of 50. That compares with about 33% in the total US workforce. So we are three to one under-indexed, and then we are 11 percentage points over-indexed in the over 50 category in federal government. So, we talked about this, but look, I'm a small government guy. I won't presuppose your ideological views, but-

[David Senra]
I'm the son of a Cuban immigrant.

[Scott Kupor]
Okay, so you're more small government than big government. Okay, so that explains a lot. If we did nothing else, half of our workforce will retire over the next five or 10 years, and we are stuck with nobody to actually do the work, right? So, we need something more than zero people to actually work in the federal government. So, thing number one that motivated me is, can we solve that problem? And I think you solve that problem in two ways. One is, we actually have to go tell a story about why it's interesting to go to government. So, we've been talking about this, but one of the things I'm doing after I go here is, we're starting on a college tour, which we have never done at OPM. We've never gone out to colleges or where the actual young people are and said, "Let's go find you. Let's tell you what's compelling. Let's actually create programs around this." And so, we're going to do that. And you may not have seen this, but I do these stupid social media things on

[Scott Kupor]
Instagram and WhatsApp and stuff like that, because I've hired younger people who actually understand how do we get a message to people who are looking at this stuff, right?

[David Senra]
And your message is what? We need young-

[Scott Kupor]
Here's my message

[David Senra]
... technically talented people to just-

[Scott Kupor]
Not just technically talented

[David Senra]
... do a two-year stint.

[Scott Kupor]
Yeah.

[David Senra]
Did you not?

[Scott Kupor]
Exactly.

[David Senra]
Because I think somebody was saying, when you first came in, "Oh, you're kind of screwing things up because our pitch here is, you have a job for life."

[Scott Kupor]
Yeah.

[David Senra]
And you're like, "Yeah, but young people don't think that way."

[Scott Kupor]
Yeah. So I had a manager who told me that. They're like, "You guys suck because our whole pitch to people is, come here and you have lifetime employment." And I told her this, I'm like, "Look, that is the worst pitch I've ever heard." There's not a single person under the age of 30 today who is thinking about lifetime employment. And if they are, by the way, I hate to say this, but that's not the kind of person we want, because that's not the kind of self-motivated, driven person that we want in the government. So, my pitch to people is, "Look, come here. Do something, not just that's good for your country, that's fine, but do something that's actually good for yourself, which is come spend two or three years,

[Scott Kupor]
work on some of the most complex, hardest problems there are out there, right? If you're interested in space, go work at NASA. What Jared Isaacman and NASA's doing is fucking awesome, and you should be part of that. Or if you want energy stuff, go to Department of Energy. There's all kinds of cool supercomputer stuff and all kinds of things. Work on these hard problems. And then after that, quite frankly, if you want to go to the private sector, that's amazing. Let's help you go to the private sector." So this Tech Force program I mentioned, in addition to these two-year stints, we're partners with 40 private companies, right? So all the names you would know, right? Alphabet and Meta and Databricks and all these guys. And what they're doing during the two years is they're going to do training and career development for these folks in this program. And at the end of the two years, we're going to do a massive job fair. And if we've done our job right in the government, we have trained these folks so well that I want every private company to be fawning over these people. It's a little bit like, you and I were mentioning, right, in Israel and the IDF, right, they have this cyber corps where it's the best and brightest kids coming out of high school who go to the cyber corps. And when they come out, every venture capital firm is falling all over themselves to fund these guys. Every cyber company wants to hire them. That's the kind of thing we want for the federal government. And if people love being in government, great. God bless them, they can stay in government. But we don't need to ask people to make 30, 40-year commitments.

[David Senra]
I think your appealing to interest is way smarter than saying, "Hey, here's the government. You're a citizen. Come try to do something-"

[Scott Kupor]
Yeah

[David Senra]
... "good for the government." That will get some percentage of people, but it's like, you're going to get a lot more if it's like, "No, this is actually good for you and your country at the same time."

[Scott Kupor]
That's exactly right.

[David Senra]
Align the incentives. And look what could happen. This is where your starting point is when you come in. This is what we can do. This is what you'll learn during this, and this is what happens after that.

[Scott Kupor]
That's exactly right. And then while you're here, which comes to the second point, is, look, I have to create a high-performance culture for people like that to succeed, right? So if I can convince young, aggressive, career-minded people to come to government, they can't come to the environment that I walked into, which is, you have to sit in a job for a year before I consider you promotion, or I can't hire you at a GS-14 level because you haven't experienced it. I'll tell you the story,

[Scott Kupor]
which somebody was reminding me of today. So, if you followed the DOGE stuff, right, there's a guy named Big Balls. Have you ever heard of Big Balls?

[David Senra]
I have heard of Big Balls.

[Scott Kupor]
I hate to-

[David Senra]
I don't know anything else but his name.

[Scott Kupor]
It's very hard to say it on air. But anyways, as I mentioned to somebody I talked to this morning, he actually has a name. His name is Ed. So, apologies to his mom that basically Big Balls has become his name. He joined the government, he joined DOGE, he joined Elon's team. I think he was 19 years old. He went to Northwestern, and I think he dropped out as a sophomore, okay? And he's one of the most brilliant software developers around, basically. And he's like, "Look, I got motivated by Elon, and I want to do this stuff." And he's still there, by the way. He works for Joe Gebbia now as part of this National Design Studio, which is redesigning all of the websites for the government. Anyway, so when I saw this article come out a few months after he joined, this was in the height of the DOGE stuff, when, of course, everyone was thinking the world had come to an end. And there was a quote from a government employee that said, "We would never hire..." He didn't say Big Balls, he said Ed. He said, "We would never hire Ed in government because he didn't have a college degree and he didn't have five years of work experience." And when I saw that, literally, I wanted to pull my fucking hair out because I was like, "This is exactly the problem," right? This guy's awesome. We should hire him because he actually has the skills to help us, and literally every job description in government, almost all of them have a college degree requirement. Well, in my mind, that is a proxy for skill that may be indicative of something, but may not, right? The fact that Ed didn't have a college degree had no bearing on his software engineering skill set, but it would have been used to basically kept him out of a job because he would not have qualified, or we would have hired him at this low level where we would have paid him 40,000 dollars a year, which he never would do, of course. He would go to Silicon Valley and get paid 10 times that, right? So, part of this is, if we're going to get great people, we have to be able to actually have them walk into a culture that actually believes in performance, that believes in accountability, that allows them to progress the organization, that pays them at the level that's appropriate for them. Look, we're never going to pay what Silicon Valley does, and that's fine, and that's okay. But we ought to at least level people appropriately so that Ed should not come in at this GS-5, which is the most entry level for government. He should come in at a GS-14 or 15, which is the highest levels, because his merit shows that he's capable of performing at that level. But the system as it existed would not have allowed that to happen. So, this is what we've been doing from a policy perspective, is to fix all that stuff and say, "Merit matters. Take a test, take an assessment, and everything else, quite frankly, we shouldn't worry about."

[David Senra]
So, Big Balls kind of gives you the blueprint where he says, "I'm super talented."

[Scott Kupor]
Yes.

[David Senra]
Dropout, maybe never wouldn't qualify for the set of requirements in federal government, but I heard this person I admire tell a compelling story.

[Scott Kupor]
Exactly. Right.

[David Senra]
You came in before, during, after DOGE? Like, what was-

[Scott Kupor]
Yeah, so I came in with, basically, I got interviewed and I came in with the DOGE guys. So, it was obviously Elon, but of course, there were guys like Steve Davis was kind of the day-to-day person running it. And, I had the opportunity to spend a bunch of time with them pre-inauguration, so kind of, end of... I got nominated first week of December or something, and so kind of December and first part of January, late to inauguration. Then what happens is they tell you, "Okay, until you get through your nomination process, you basically have to be persona non grata and stop communicating with folks because otherwise it can foul your nomination process." So, we had developed a bunch of plans and ideas for what we would do once the administration turned over, but I wasn't there day one to be able to actually execute those things.

[David Senra]
But you were observing a lot of what was going on.

[Scott Kupor]
That's exactly right. And they were executing it literally out of my office. It turns out my office was the ground central for, ground zero for everything that was happening.

[David Senra]
So, regardless of controversy over anything that happened there, I'm not even interested in that. I'm interested, is there any ideas that you saw coming out of that, that you thought were good and valuable and should be spread further?

[Scott Kupor]
Yeah. Here's my view overall on it, is

[Scott Kupor]
part of the issue is, just to give you a sense of the numbers, right? So, there were roughly 2.3 million federal civilian employees on day one when President Trump took office. Today, we're just about two million. So, we've reduced by close to 300,000 people the size of the federal government, which puts the federal government at the lowest level it's been as a percentage of the workforce since 1960. And you literally have to go back to Clinton-Gore before you have anywhere even close to that. The numbers that president has is much higher, but still, that's the last time you had any serious effort. So, part of it is, look, the entire apparatus of government travels in one direction only, which is budgets just get bigger every year. Every time an agency wants to do something new, they go back to Congress and they say, "Great, you want us to do that thing? Give us more headcount to do it." So, that's been the path of travel basically for the last, I don't know, 50 years probably or something like that. So, the way I think about what Elon did was, Elon had to come in and to change the direction of a 2.3 million person oil tanker, you can't do gradual incremental stuff. You have to have a big bang approach, right? Now, people can argue and debate about his tactics, and it's fair. I think there's fair arguments to have on both sides. But the idea that you had to have someone come in with a mission and actually try to do some serious change, I don't think there's any argument that you could ever make the change that we did without effectively a big bang strategy. Look, he got a lot of shit for it. Lots of people got a lot of shit for it. And, look, history will write the story about that one. What we're trying to do now, when I came in was, I was like, "Great." They did all this work. Now we have to institutionalize this. That's kind of how I think about my role, which is, okay, Elon, Steve Davis, all these guys did an amazing job of breaking glass basically and saying, "This is how things are going to be." Now we have to do the long-term institutionalization of it, which means we have to now go through and say, "Great, what are you actually working on? Tell me the 20 things you're working on. Which ones are really important? Which ones should we not be doing?" We never take stuff off the plate in government. We just keep adding.

[David Senra]
This inertia-

[Scott Kupor]
It is

[David Senra]
... is insane.

[Scott Kupor]
It's crazy.

[David Senra]
The story of you oversee retirement-

[Scott Kupor]
Yes

[David Senra]
... benefits for all, right? And we were on the phone the other day, and you told me this story I just could not believe. Because I was like, "Do you understand?" We were talking about the fact that, hey, you know what? America's full of dynamic, really smart, high-agency young people that don't even know this is a path and it's an opportunity, and maybe we should just shine a light on this and it'd be beneficial regardless of what you think. If you have the choice between a better functioning government or not, of course you're going to choose that. And it has to do with the people that are in that, and the organization. But then you're like, "Do you know about the mine full of four million pages of documents?" And like-

[Scott Kupor]
400 million.

[David Senra]
I'm sorry. 400 million. And I'm like, "Scott, what the hell are you talking about?"

[Scott Kupor]
I know.

[David Senra]
Can you tell this story?

[Scott Kupor]
It's a great story. And credit to Elon, right, because Elon made this story a real one. So, we, OPM, manage retirement. So, roughly 100,000 to 200,000 people retire per year from government. And when you retire, there's a whole process, right? You have to fill out a bunch of paperwork. It has to go to your HR department, who has to confirm it. One of the literally crazy problems, by the way, in government is, we do not have the canonical history of your government service until you literally decide to retire. So, most people- ... to this day are in government for 30-plus years. They go to different agencies over time. Each of those agencies has different HR systems, has different payroll systems, and so I cannot look at David's record and say, "Hey, you spent five years here, and you spent this." Literally, part of the retirement process is we have to create that record. Now, we're changing that, by the way. One of the other big projects I'm going to come back to the mine is, we are consolidating the entire HR IT system in government from 120 different systems into a single system, and we're going to go from spending 2 billion dollars a year to 40 million dollars a year. We're literally going to save 95% by actually getting to a single system, and we will now have the record of David Senra that you can look at every day and see all the stuff. So anyways, you want to retire. What you did prior to last year was you literally filled out paperwork, you put a fucking stamp on it, you mailed it by mail to your HR department, okay? They did their stuff. They put a stamp on it. They mailed it to a payroll department, which is different, by the way, in the federal government from the HR department. Payroll is a totally separate thing. And then the final piece is they mail it literally to an underground mine in Boyers, Pennsylvania. Now, nobody probably here has ever heard of Boyers, Pennsylvania. It actually happens to be in Butler County, which is where the president's assassination attempt in July, I guess, of '24 was. It's what you would expect rural middle America looks like. The federal government happens to be actually one of the largest employers out there. So, people go to work every day in an underground mine that used to be an actual working limestone mine. It was since turned into basically a storage facility, but you can't get in there without going through massive security. You can go down in the mine, and there are literally people driving golf carts around in with limestone walls. And so it shows up here, and then literally we have individuals, 800 people in my retirement service organization, who take that paper, they read the paper, they make a bunch of manual calculations, and then they give you a retirement check. That process historically takes anywhere from three months at the low end to 12-plus months to do, partly because we go back and forth, and if you forgot to sign your paper, I literally will snail mail it back to you, ask you to sign it, and that will introduce another one-month delay in the process because literally, it's sitting there waiting for you to happen. So, Elon identified this, and rightly so. He's like, "This is insane." He teamed up with a guy named Joe Gebbia. Joe is a co-founder of Airbnb who's now running this National Design Studio, and they started this project at OPM before I got there, and then I picked it up, which is, how do we automate this process? Today, we've fully automated the process. So now, you never actually send a piece of paper. In fact, we declared last day of paper in the mine on June 30th. So, we will never receive another piece of incoming paper into the mine. Everything's online, which it should be in the year 2026, which is, this is not rocket science, right? You should be able to fill out an online application for your retirement, and as a result, we can reduce the processing time today just with the first iteration of this by more than 50%. My goal is, we're going to be able to reduce this by 90%. Our commitment is, if you give us an application that's electronic, that's healthy, within 15 days, you should literally have a full retirement check. It should not be any harder than that. So, we're doing that. Now, we have 400 million existing pieces of paper from all the people who retired prior to last year, basically, who call us up sometimes and they say, "Hey, my spouse died," or, "My child needs to be added to my insurance," whatever, all this stuff. So literally, if you call our call center today, we send what we call a runner, this is actually a job classification in the mine, who goes into the mine, pulls a file out of a electronic file cabinet. Sorry, not electronic file cabinet, actual virtual physical file cabinet, some of which date to the 1950s. It's a great... I'll show you some pictures after. And they bring it to the person who adjudicates it, and then when they're done, they literally return the thing back to its thing. We've just purchased two massive

[Scott Kupor]
digitization machines. I don't even know what to call them, literally scanners that take up an entire room. It's like a mainframe computer.

[David Senra]
Mm-hmm.

[Scott Kupor]
And from this day forward now, every single one of those 400 million pieces of paper is going to be digitized, which will allow us, number one, to at some point in time actually literally shut down the storage component of the mine, but also just dramatically change the nature of what we're doing in terms of servicing people. Our service is not good for people, in part because we haven't given the people their... They don't have the stuff at their fingertips to be able to resolve problems. They literally have to wait for somebody to deliver a file for them from a file cabinet. It's insane. There are problems like this all over the government. They're so obvious we should fix them, but this comes back to what we talked about, about risk. I didn't discover this, and Elon, to his credit, didn't discover this. You can go back literally to the 1970s and 1980s, and you will see articles written about how fucking ridiculous this mine is. Nobody has ever tried to solve this because God forbid some congressional person is going to say, "Oh, you screwed it up," or, "You didn't do this, do that." And I was like, "Look, this is ridiculous. We have to fix this." But the incentive structure is so aligned against fixing these things, it's way better to have a shitty service for people and not risk rocking the boat than it is to actually try to convert these things into a modern-day experience. This is the fundamental incentive problem that we have to solve.

[David Senra]
Which ties to your main mission, which is, if you don't change this incentive structure, you're not going to be able to recruit-

[Scott Kupor]
Yes

[David Senra]
... high-quality-

[Scott Kupor]
Yeah

[David Senra]
... talented people. And if we keep... Let's play this out 10 years from now. Okay, it might not matter to you that, what, 44% of the workforce, whatever the number is, is 50 or over.

[Scott Kupor]
Yeah.

[David Senra]
Well, it's going to matter when they're all gone-

[Scott Kupor]
Yes

[David Senra]
... and we have nobody to replace them.

[Scott Kupor]
Yes, that's exactly right. Yeah. So look, everything ties together, right?

[Scott Kupor]
I got to go tell people a good story to get them here. When they get here, I actually have to have an environment they're excited to do. And if they're excited to do it, then we will actually get modernization because they won't be trapped in a system of not actually trying new things. And look, we have to accept the fact that we're going to screw some stuff up. Again, and Mark always gets excited about this, but he's like, there's this whole meme in Silicon Valley, right, that Silicon Valley loves failure, right? And nothing could be farther from the truth. Nobody fucking likes failure. But what Silicon Valley does recognize is, look, if we're going to innovate, we're not going to get it right all the time. And again, okay, if we're talking about life and death for people, we should be pretty careful we get it right all the time. But if I can make the retirement experience 10 times better and there's some risk that's reasonable that I fuck it up, quite frankly, and it doesn't work, we got to incent people to take that risk. It's crazy that we're not doing that, but historically, nobody has been willing to do that because- ... whenever, the person who was in my seat wanted some other political job coming out of this, and therefore, if they got a bad congressional hearing, that would stop it. I told the president this when he interviewed me in December, after he asked me why he thought I was qualified for the job, and I was like, "Look, I'll tell you the other reason why I think I'm qualified is there's not some other job I'm trying to get out of this." I've been incredibly blessed, incredibly lucky in my private life. I didn't come to this job because I'm competing for some other either private sector job or public sector job. So it's like, "Look, I don't really care. I'm going to do what I think is the right thing, and then if I get in trouble, I'm either going to fight if I screwed up, or if it turns out I did something stupid, that's fine. Fire me. I'm okay with that." But there's so many people who are in these jobs because it is a stepping stone to something else that it prevents them from being willing to take that appropriate level of risk to try to get stuff done. And to me, that just makes no sense. And this is why we have kind of stasis for so long.

[Speaker 2]
All right, so let's say somebody's listening to this right now. They want to help. They're young. They want to do a few years stint. Where do they go? How do they get in touch with you?

[Scott Kupor]
We have a whole website, believe it or not, earlycareers.gov. That's one place they can go. We're about to be on 40 different college campuses. If they're there, they can show up and see us. They can follow me on X. I'm just @scooper. OPM is @usopm. Any of those places. But literally, send me a DM if you're interested. I guarantee you, we will figure out a way to make something work.

[Speaker 2]
I love how much you're on this. Thanks for taking the time to talk today, Scott.

[Scott Kupor]
Thanks, Dave.

[Speaker 2]
Appreciate it.

[Scott Kupor]
Appreciate it. Yeah.

[Speaker 2]
All right. I hope you enjoyed this episode. Please remember to subscribe wherever you're listening and leave a review, and make sure you listen to my other podcast, "Founders." For almost a decade, I've obsessively read over 400 biographies of history's greatest entrepreneurs, searching for ideas that you can use in your work. Most of the guests you hear on this show first found me through "Founders."

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