#884: How to Spot 10-Year Trends and Build Billion-Dollar Companies — Kevin Ryan of DoubleClick, MongoDB, Business Insider, and Many More

The Tim Ferriss Show

Kevin Ryan, the 'Godfather of NYC tech,' discusses his career trajectory from scaling DoubleClick to founding AlleyCorp. The episode explore

Key takeaways

• Successful companies require a 10-year horizon rather than chasing short-term hype.
• Identifying 'second-order' effects, such as falling bandwidth costs leading to YouTube, is key to spotting opportunities.

Main topics

• Trend forecasting
• Venture capital strategies

Notable quotes

10 years is important because to build an important company, unfortunately, you can't do it in two or three years.

Conclusion

A strategic guide for entrepreneurs on how to look past immediate mark

Transcript preview

Speaker 2 (0:00) Hello, boys and girls, ladies and germs. This is Tim Ferriss. Welcome to another episode of The Tim Ferriss Show, where it is my job to deconstruct world-class performers across all disciplines. My guest today comes from the world of business, Kevin Ryan. He is one of the leading entrepreneurs and investors in New York, which is an understatement, often called the godfather of New York City tech. He is the founder and CEO of Alicorp, a New York-based venture capital firm that incubates and invests across, catch this, healthcare, AI and software, consumer tech. deep tech and more but investing is just part of it he is also co-founder of several notable companies including mongodb business insider zola guild group and transcend therapeutics what do those all have in common they are completely different industries earlier in his career kevin was the ceo of doubleclick which he helped grow from a 20-person startup to a publicly traded company with more than 1500 employees we get into a lot here So without further ado, please enjoy a very wide-ranging and tactical conversation with the one and only Kevin Ryan. Speaker 2 (1:26) Kevin, thank you for making the time. So nice to see you. Happy to be here. So I wanted to just give people a scan at 30,000 feet of the landscape, meaning your chronology for a second. So this was prepared by the robots. So don't believe everything you read, but let's just go through some of the basics. I'm not going to spend too much time, but please indulge me for a second. So 1985, graduates from Yale. I think that was economics. Begins his career at Prudential Investment Corp. all right new york and london 90 1990 earns his mba at insead subsequently works at euro disney in france then united media we're going to come back to all of that 1995 helps launch the blank website i'm leaving that blank for a reason we'll come back to it and then after that double click that's where if people interview you and i know you don't do very much media but in the few that i've seen that's where a lot of people start we will not start there goes on double click sells for 1.1 billion. Ryan steps down. 2007, founds Alicorp. We're going to spend a lot of time on Alicorp. Co-founds Gilt Group, Business Insider, 10Gen, later renamed to MongoDB. Then co-found Zola, a wedding registry company. And Nomad Health in 2015, a marketplace connecting clinicians with temporary healthcare jobs. I'm trying to give people an idea of the breadth of fields. 2015, Axel Springer acquires control of Business Insider. I've got some numbers here, but who knows? $442 million, something like that. Hudson Bay buys a guilt group for an announced $250 million deal. MongoDB in 2017 goes public on NASDAQ 10 years after its founding. I know there's a lot of stories behind that. 2021, we met, I guess, or had dinner next to each other two years prior to this, roughly. Co-founders Transcend Therapeutics, developing new medicines for psychiatric conditions. We will certainly talk about that. 2023, skis 101 kilometers to the South Pole. So that stands out as an outlier. Then June, 2026, Otsuka completes acquisition of transcend 700 million upfront plus up to 525 million contingent on future sales. July, 2026 announces Ali corpse, 335 million second fund focused on backing companies at their earliest stages. I think you're doing a lot more kind of deep tech investing. Also, this is a crazy bio, Kevin. There's so many reasons I wanted to chat. and learn from you and i wanted to start we're eventually going to get to things like recruiting and talent scouting but i wanted to talk about trends and gazing into the crystal ball looking into the future so i've read that you sometimes do an exercise of listing trends on a whiteboard throw 20 trends up and i'm going to read a bit this is from foundersjourney.org So one exercise I do is to list 20 ideas on the board of trends that I believe are going to exist for 10 years. And then what are the implications that come out of that? And you can look at societal trends, healthy eating, automation and restaurants, gig economy. And this is where I think I miss steps. So first, I get the first part. You ask, if I bet that's going to continue for 20 years, the market's going to grow by 5x. He asks, what will exist that doesn't exist today? So sometimes I miss that second step. But could you... Perhaps just walk me through how you think of trends and spotting opportunities in those trends. And it strikes me that I think that 10 years is important as opposed to like one or two years. But could you speak to that? Speaker 1 (4:46) Yeah, first of all, 10 years is important because to build an important company, unfortunately, you can't do it in two or three years. It does take 10 years. And so you've got to bet on a long-term trend. So if it's something that is hypey today and is going to be done in two years or started five years ago, you're too late. And it's very hard. I've gotten it wrong many times. But sometimes you get it right. So double kick was internet advertising was going to be very important. And that trend, we absolutely got right. Unstructured data in databases was Mongo. And that was a 20-year trend. psychedelics was a very important trend. I became a big believer that that, you know, would be significant for mental health and that we are five years into that 10-year trend. Nuclear energy is something that we made a bet on, a very significant bet on two and a half years ago and are an incredible company there. The creator economy is something that we made a bet on several years ago and have an extremely successful company there. That's a trend that is continuing. There are other trends out there. And more specifically, value-based care is a trend. Value-based care is a way the government has structured it so that you can go to multiple hospitals or doctor's practices and work out ways for them to reduce their costs by focusing on a specialty often. And if you reduce their costs, then you can share in the savings. And so we have multiple companies there. And sometimes there are trends I'm not able to think of the right way to benefit from or the right product. Longevity and this focus still haven't come up with the right thing. I have a conference called DOC, which is in Napa Valley in October, that is longevity and science. And so that's to learn more. But I don't have a product idea yet Speaker 2 (6:31) on that. Why do you do events? Are the events opportunity and talent scouting mostly? I understand that learning is sort of a bedrock beneath both of those two, but what was the impetus behind an event like that? Speaker 1 (6:44) Yeah, so I have four now, and some of them are linked to my business. So Deep Tech New York, it's 450 people talking about the most fundamental deep tech trends that are happening out there in material science, things like that. Then I have one Digital Health New York, which is next week, then Doc, and then I have one that's... called Odyssey, which is just ideas. That's less commercial and just getting 100 very smart people together. And I look at that as more intellectual nourishment. I don't think of it as directly generating business. If I meet fascinating people in different areas, good things will happen. Some Speaker 2 (7:20) of them may be business-oriented and some of them may not be. Could be dragging a 100-pound sled behind you in Antarctica. Speaker 1 (7:27) Yeah, no, for example, I'm leading 20 people as part of Odyssey to China in a month. And the theme is, what does China do better? There are things they do worse, but there are things they do better. And I haven't been in a long time. I don't do a lot of business in China. So I just felt like I need to see that. And so I'm bringing heads of VC firms, a bunch of interesting people on that trip. And we did one, took 16 people skiing that are off-piste skiers to a place in Val d'Isere. Fascinating conversations in the afternoons. I'm going to take 30 people to Switzerland on a hiking trip next May. Anytime I'm surrounding myself with great people. and we structure it in a good way that these conversations are happening, then I'm going to get a lot out of it. Speaker 2 (8:10) All right. So I had planned, but plans change when the conversation gets flowing on hitting early chapters and I want to hit early chapters. But before we get there, I remember sitting next to you in Portugal whenever it was 2019. And the first thing I thought was, good God, what does this guy do for exercise? I mean, you take seem to take unless your genetics are just like Usain Bolt or something fitness movement exercise very seriously yeah and we'll probably get into what that regimen looks like a bit later but when you organize these trips so I organize a few trips a year for friends how long are the trips in the case of say the hiking off-piste like you got to check some boxes before someone's going to be like avalanche ready and so on in the case of the hiking trip How do you think of composing the group? How long is the trip? What goes into creating that? Speaker 1 (9:04) So the hiking trip is three or four days. It'll be probably 30 people. And my structure will be probably a four-hour hike, sort of eight till 12, which is a good size hike. You can go longer, but four, maybe five. And then in the afternoon, we'll have sessions. So there'll be someone talking about climate change. There'll be someone who's talking about nuclear or whatever is happening. that we think is interesting or consciousness. And so you should feel like you had great content. You got to know other people. You had great conversations. And then at dinner, a lot of that comes together. And you get to hopefully come away knowing 20 of these people who've been selected because they come from different walks of life, but are doing something very interesting. Speaker 2 (9:46) So with 30, does that mean that you would have something like 10 who end up getting up to speak? Yeah. And... at dinner, is that structured in any way? And the reason I ask is that there can be unstructured events. One of the characteristics of dialogue that I really enjoyed in the early days, when it got bigger, it changed. Also didn't realize I was in Peter Thiel's secret society when it came out in the media. Who knew? In any case, in the early days, I remember they had very small tables, four to five people, and there would be a question at each table and someone would have to take the responsibility for effectively acting as moderator. And there was frequently assigned seating to ensure that you would get exposed to a variety of folks. And I thought that was really an astonishing way to squeeze a lot out of a few days. But in this case, if it's unstructured, how do you think about... seating and grouping people, right? Because if it's just one long, like red wedding, Game of Thrones thing, then if somebody's at one end and the other, and someone's at the opposite end, they're not going to interact necessarily, right? Is it Jeffersonian or like? Speaker 1 (10:50) At 30, it's too big to have one conversation. So what I would generally do actually is in the first two nights have seating so that it forces people to mix it up. And maybe on the last night, not do it. So then you can say, you know, the person I really want to catch up with is this. And you should have that opportunity of someone you spent some time with. On my bike, I have an annual biking trip where we just classic four days, do a lot of mountains last year in the Douro Valley in Portugal, might be in Italy, things like that. There's only eight of us. And each person has a topic that they, one meal is going to be a 20 minute conversation that you're going to lead. And it can range from very early on, we were talking about crypto and it wasn't so obvious. Good topic when you are relatively well off. How do you handle money with your children? Always a tricky issue and all of us had kids. So wide range of topics. On the trend side, Speaker 2 (11:44) personally, I remember, for instance, way back in... 2008, 2009, I met Toby, who is still CEO of Shopify. And they had 10 employees, something like that. Got very lucky, ended up becoming the first advisor to Shopify. But in part, the reason I committed to that is I thought, okay, one year, two years, who knows? But in 10 years, will there be more people online? Will there be more e-commerce? I feel like that is... a no-brainer. Toby and his team, Harley and everyone, were also very focused on being basically first movers on mobile. And I was like, well, okay, well, will there be more mobile phones, more broadband? I mean, that seems obvious, of course. And so ostensibly someone will probably win a decent part of that market. Sure, why not? Give it a shot, right? And there's a lot of luck involved with these chance encounters. But I feel like you... over time have probably developed a more sophisticated lens or kind of multi-dimensional lens of looking at trends. So if you're, say, hosting a company offsite and they're imagining where different industries are 10 years from now, can you walk through maybe common pitfalls or mistakes that people make when extrapolating trends? or forecasting? Are there any follow-up questions or frameworks that you use to hone in on something that might be an opportunity or disqualify something that is shiny but is actually a suicide mission? Speaker 1 (13:16) One of them, again, if this were formulaic, we'd all be doing it and it would be easy. So there's definitely some gut feel and some instincts and guesswork in here. But I'm always thinking about, let's imagine Shopify does very well. Who else? works with them and supplies them. So that's a second order. And so let's think about that. Like the people who are providing the fixed intervals to data centers are doing very well. And how does behavior change? You know, what does that mean? Sometimes that has a result that people will stop doing this and be doing more of this. Can Speaker 2 (13:49) you Speaker 1 (13:49) give an Speaker 2 (13:49) example Speaker 1 (13:50) of that? Well, I'll give you one example in second order that we sat down in 2003 and didn't quite do it and thought about bandwidth price is going down and they were going down. The reason there was no video in 2003 is because it costs about $10 per thousand to serve content. And you could get about a dollar in advertising. So that model doesn't work. But we looked at the trend and thought, you know, by 2005, 2006, they're going to cross. And we should have started YouTube and we didn't. It's not a coincidence that YouTube started in 2005 and then crushed it. And that was the second order that led to a company that today is worth $300 billion. That was a Speaker 2 (14:29) good acquisition. Speaker 1 (14:30) Incredible. Speaker 2 (14:33) Incredible acquisition. Speaker 2 (14:37) Many of you know that I've battled sleep for decades. I've had onset insomnia. I'm constantly hot because I'm a little meat cube, and the list goes on. 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Speaker 2 (17:47) So it won't belabor this, but I think it's, well, number one, deeply fascinating to me. If we look at, for instance, guilt group, and maybe you could give just a brief description of what it was. Why don't we start there? Just very brief. What did guilt do? Speaker 1 (18:07) It's a good news and bad news story. So this was an unusual one where I spent a lot of time in France. I have a French passport and everyone in France in 2006, new Vente Privé, which was basically Guilt of France. And they were doing a billion dollars in revenue, doing this concept of flash sales, where during the day, at one moment, they would have discount merchandise of high-end brands on sale. So the equivalent, if you had time to go to a sample sale, which you don't, and I remember walking by a sample sale in New York, and there were 200, mostly women, in line. And I remember thinking, you know, the person who lives in Philadelphia or Austin, you don't have sample sales. It's really the New York brands. And there's a lot of people who'd like to be in that line. And these guys had figured that out. So I started it. It became a phenomenon. So in our second year, we did $175 million in revenue, which is crazy. And, you know, it's merchandise. You have to buy it and package it and sell it and return it and things like this. And we did an incredible job of providing that. So when you're four, we were doing $500 million in revenue. This is quite a while ago. And then the problem was, which does happen, is the market changed on us. Speaker 2 (19:18) This is the part I want to ask about. Speaker 1 (19:19) Okay, yeah. And so what happened was when we started it, let's use Marc Jacobs. Marc Jacobs did not have a website in 2008, 2009. Because they sold to Bloomingdale's and people like that. They were a wholesaler. Why would they have a website? They got a website. They started discounting their own things. You had been filling that gap. I had been filling that gap completely. And at the time, Macy's had a terrible website. They at least got it to mediocre by 2011, 2012. And so did other department stores. Then Farfetch was there. So all of a sudden, I'm competing with a lot of people for that merchandise. It got a little commoditized, and we couldn't figure out a way around that. Speaker 2 (19:57) So this leads to my question, because you have to take shots on goal and sometimes the competitive landscape or the evolution of the competitive landscape is difficult to glean. But did that experience with guilt inform how you think of durable capitalization on trends? In other words, like how you capitalize on that window, but avoid getting. Speaker 2 (20:25) crowded out when you have 10 other people do effectively the same thing. Speaker 1 (20:29) Yeah. And it gets back to, do you have a moat? And we were trying to get to be big enough that we would have that moat. And we got to be quite big, but not big enough. I mean, I was talking to Theory once and they had 20,000 items at the end of the season to sell. I could buy a thousand. that's good, but doesn't move the needle for them. And so I just didn't quite get there to have an impact on the market. So it's hard to know exactly how big you're going to get, how fast, how much success you're going to have over your vendors. And so we almost got there, but didn't. And one of the lessons there, you know, I went to the board and said, I think we should sell the company. And everyone's like, well, we were worth a billion dollars. We thought we could sell it for 400. It's disappointing. I said, we have a falling knife here. And so we went out. And we only got $250 million. Saks came in and paid for it. And three years later, they said, I'll sell it back to you for $5 million. Speaker 2 (21:23) So... Better late than never. Speaker 1 (21:24) Exactly. It wasn't a great sale, but it was a lot better than it would have been because I just didn't like where things were going. And the conclusion has been that I haven't touched really e-commerce since then. You know, it's solved. Startups have to solve a problem. Even if you don't realize that problem is there, when you see it, you're like, oh yeah, that is a problem I had. And right now I can't, I mean, I can get anything delivered to my house in like 27 seconds. I can return it. It's inexpensive. So I don't know how to do better. I don't have any ideas. Whereas in many other fields, you know, cure for cancer, nuclear energy, psychedelics, there are things to be built that have not been built that will improve the world a lot. Let's Speaker 2 (22:06) wind back the clock as I promised listeners earlier. So we're going to get to the helps launch the blank website. Before that, we have Yale Economics, Prudential Investment Corp. Yeah, investment banking. Investment banking, INSEAD, Euro Disney. Was there anything that you learned or developed in those chapters that then helped you when you moved to United Media? Like, is there anything sort of crucial or critical? Speaker 1 (22:34) The key thing is I was quite financially oriented and very comfortable. I've always been very comfortable with numbers and understanding fundamental trends and the business. And that is a component of business and life. And so all of that was business. And then I went finance and then going into operations at Disney.