How Do You Know Which Opportunities to Bet On?

Few people had the prophetic understanding that one day there would be something called the internet. That communication from one side of the world would come in the blink of an eye. But those few people that had the foresight, those people capitalized on it. Today we have the opportunity to talk to Howard Morgan who foresaw the internet, email, and eventually used that incredible foresight to build mega companies like LinkedIn and Uber. This week on Jewish Grit. Welcome to Jewish Grit. Today we have the distinct pleasure of welcoming Howard Morgan to the Jewish Grit podcast. Thank you so much for joining us. So Howard, I mean it's hard to know where to start with you. Uh we could talk about venture capital and we could talk about technology and we could talk about the countless boards that you sit on direct. We could talk about the different organizations that you assist. But I think maybe it would be a good idea for us to hear like from you if you had to talk about your life in 60 seconds. Can you cram it into 60 seconds? Uh the way I try to cram my wife in my life. >> You see your wife came in right away. >> She came in right away and that's for good reason. Okay. Uh Ken and her were married 58 years. >> Wow. >> Um and and I'm in the process of writing my memoir and it's called Pick Great Partners. And my life in 60 seconds is a series of really great partners that have helped me grow, have helped me be successful, make money, uh make an impact on the world. And it's it's all about finding people you're compatible with and being able to help them and have them help you. >> That's amazing. Just want to drill down a little bit more. So you have a PhD if I'm not mistaken. You were a professor in college. like what made you kind of choose where you're at today over the many different possibilities that were in front of you? >> Well, I was a professor for 14 years at at Cornell and at Caltech and at the University of Pennsylvania and Harvard Business School. >> What did you teach? >> Uh, I taught computer science when people didn't know what computers were and operations research, which people still don't know what it is, but it's mathematical decision-making um and management. And I was really focused on what we called in the 70s the office of the future. Uh but what happened was one of the people one of the great partners that I ended up picking or picked me was Jim Simons and Jim Simons was also a professor decided we could start doing quantitative trading and venture capital and he said take a two-year leave of absence so I left Penn for two-year leave of absence at 82 and I never went back. >> You were literally they say one of the first people that realized the power of the internet. Bring us into that part of your life. Where were you? What were you doing and how did you realize that? >> I was at Cornell and I I took a leave of absence to Caltech uh and Caltech was thinking about computer science. They decided to delay computer science. So I went to the University of Pennsylvania where my research was on advanced user interface technology. How would how should users interact with computers? So back in in of course this early 70s you interacted with punch cards and and there were terminals and one of the things that drove me nuts was message error messages you know you would get on your print out which would say fatal error and I would say fatal to whom I'm still here you killing who you killing I'm still here and so we built a bunch of things to do error correction and to try to to make it easier for students to get their their things working and then uh The internet had started with five schools, five universities. Penn had been asked to join and decided not to in 1969. When I got there in 72, I was determined to have us join. So I got machine number 50 on the internet. What to say the internet. Uh there were 2500 people or so on the internet. We all knew each other. We all got the first spam that was ever sent back in 1973. Now did you realize at that point the global opportunity to connect the world or that was not even a new worldview? >> Uh what was in my worldview then was that the world was going to use these technologies which included email. So I was kind of got been on email for 54 years. So my thesis my PhD thesis was written on punch cards. I wrote a text editor to do it printed on the computer. Uh, and when we turned it in to the Cornell thesis office, they rejected it. They said, "Well, you got to retype it. I mean, this is, you know, computer printed and it's got justified, you know, right and left side. We've never seen that." And we think you got to get it retyped. And my adviser and I went to them and said, "We're not going to retype this. You're crazy. Every time we find a mistake, we correct the one the card and the mistakes gone forever. If we retype it, we got to have thousands of mistakes come in." No. It took us about two months to convince them that the future was going to be electronically submitted PhD thesis. So mine was the first one at Cornell and uh we made that we made that happen. So I realized that word processing, email, all those things were going to change the world and I went through the 70s lecturing around the world to governments to large companies to tell them what the office of the future was going to look like and my research was also on windowing systems. So, Microsoft Windows was 20 years later, but we we doing Windows for the Navy and and the Army and so on and put a system on some one of the carriers to help with decision-m. So, I knew that was all going to happen and I was a a prophet of about that. Uh and and it all happened and I kind of foresaw I would say when when you read some of my early papers everything that was going to happen up to the iPhone and that's that's when I when I >> did you have a cellular phone in there or or not yet? We had cell we had we had cellular phones. We knew that you would get all this stuff on mobile so you'd be able to get it when you were mobile and I had a Palm Pilot and I had a trio and all those things. Uh but it was it was all text based. It wasn't graphics based. It wasn't the kind of things you had to do at a computer. And the iPhone just completely changed that and got it into the hands of consumers and that was a huge delta. I mean the PC industry which we benefited from got it into the hands of some some computers but some people but not everyone was using PCs. >> Sure. >> Right. I mean you had you had you know tens of millions using PCs but not billions. >> And then the laptop the portable computer computer was was a huge >> well portable was important and we had the first laptops and grids. I used to lug around. They called them luggables for a while. the compact computer, luggable. And then we had the grid, which was sort of the first thing that you would recognize was a modern laptop made out of metal and meant for the military in in fact originally. U so that that all that all was happening, but it was still not for the masses. It was for business use. Yes, there were some personal stuff. there was gaming that you could do but you know as I say tens of millions of people maybe to a hundred million but not billions. >> At what point did you start monetizing? >> So uh in 19778 uh while I was spending the summer uh at the Rand Corporation in California, one of the other people there who I knew said he wanted to start a company to commercialize the Unix operating system uh which at that time was only used only able to be used by nonprofits. So he convinced Bell Labs to give him the license for commercial and and uh he convinced me to help him start the company and he found this guy this other professor he knew Jim Simons to fund it and so that's when I started to commercialize it. We created Interactive Systems Corporation. We ended up selling it to Kodak later on for for quite a bit. Uh and that sort of got me into investing. >> Fast forward, you know, 50 years. Um are you still highly or deeply involved in in tech or you've branched out in terms of venture capital and investments? >> Deeply involved in tech uh for sure. So uh my my life is sort of split into three pieces. So a third of it is running this large venture fund B Capital which has about 11 billion under management and does early stage, mid-stage and late stage venture. A third of it is my family office. So I now have a large family office uh investment budget and that's for my kids and grandkids mostly and >> lucky them. >> Lucky them and that invests in a lot of venture capital but it also invests in a lot of quantitative trading because renaissance that Jim and I started was quantitative trading as well. Uh so as far as the journey was concerned we went from starting interactive systems a few years later Jim said gee he was going to leave the university and start renaissance he was doing successfully doing some quant trading and we could use some of the money for venture and some of the money for quant. So renaissance from 82 to 89 was half venture half quant. Uh by ' 89 the the quant was doing so well that we took the venture out because the quant was doing 38% a year which was amazing and has done that particular fund has done that to this day and the venture was was a measly 25%. >> So who are you? So, so, so we took it out. So, it would be it would be separate. And ever since I've done pretty much venture capital ever since then for for and so I but I keep funding new people doing new quant funds because when quant funds work well, they are a cash machine. And >> what's the other third? >> And the other third is philanthropy. So, I'm on on a number of boards where I spend time. As I mentioned, Cornell University is a big one. Cold Spring Harbor Laboratories, which is the big microbiology uh learning center. uh the New York Public Library. I'm on the board of the executive committee particularly focused on the digital transition that's happening in libraries around the world. Uh Kabad on campus uh where we have now forget the latest numbers but it's about we're on about a thousand campuses. We have about 350 houses around the world. Uh and we reach millions of students a year. Uh and it's a wonderful operation. Why why is it so important to fun I know why but I want to know what you why is it so important to fund kabad on campus or just campus in campus outreach in general. >> Well first of all um we've had studies done that show that students who attend a kabad on campus service or not even a service but even a party whatever have half the intermarriage rate of students who just go to hell. >> Wow. And that doesn't that it doesn't matter whether they started out secular or or or reform or conservative, whatever. It's half the intermarriage rate. And I have seven grandchildren. And I am very concerned about that. I believe that it's important for the the Jewish people to to I mean% we got to keep going and uh and anything we can do to try to minimize uh inner marriage is is important. Men, >> do you take time to count your blessings? >> All the time. I do. I absolutely do. >> How do you how do how do you make that time? Is there like a specific time or you just always thinking about it? >> You know, I go to the gym almost every morning and I sit in the sauna or the steam room and that's when I >> thevitz and that's when I think about, you know, life because I have no no computers, no cell phones, nothing, you know, no nothing. I can't read, which I do prodigiously. I just think and that's where I think about how fortunate >> that's rare. How many people actually take time to think? Well, not not enough. >> You know, since October 7th, being a Jewish person in this crazy world that we live in, and particularly with what's going on now in the Middle East has taken on new significance, maybe even a new identity. As somebody who is very involved in startups, are you involved at all with the Israeli startup scene or it's >> Yes, absolutely. I I' I've backed a number of companies in Israel. Uh after this podcast I'm going on a Zoom board with an Israeli company but we have a number of different companies in Israel. >> Do you feel a difference personally since October 7th? >> October 7th was you know for me uh really scary uh in in that we didn't think it could happen again and it happened again. >> So that part was very scary. It also showed in some in some ways who my friends were. We were raising money from a a Muslim country sovereign wealth fund. Uh we got through their investment committee. It said Fesco said wonderful. We we want to do this. Want to give you a large amount of money, tens of millions of dollars to invest. Uh two weeks later we had a call. Well, uh one of our board members uh uh has nixed this investment because we saw Howard posted a pro-Israel tweet and I said I don't think we need their money then in that case. >> What should we be doing to combat this brand new anti-semitism that none of us ever thought could happen? Well, we're doing whatever we can. I working with with some of the Jewish organizations I work with. Uh, education is num number one. Uh, you know, we built the Jewish children's museum in Brooklyn and all New York City third and fourth grade students are supposed to have a day there so that they learn about Judaism and that, you know, what what do Jews do? What are the holidays? What all that kind of stuff and to try to combat the the anti-semitic feelings early. But there's a very well organized, well funded through the Hamas and Hezbollah and the and Iran basically uh to take over social media. They've certainly had tremendous impact on campus. It's been awful. Uh I'm at Cornell University. I'm vice chairman of the board. We just had the student assembly pass this horrific resolution, you know, completely uh neglecting all the facts of the matter uh which which the school will will turn down. I mean, the president has already said he's not going to accept it, but the that it gets that far >> at Cornell. Do you feel like it's an uphill battle as a me as a member of the administration there to try to to put Israel or Jews in a good way? >> I I think I know. I I think it was an uphill battle two years ago. I think over the last year and so on, we've gotten it gotten over most of it, but we still have these pockets uh the SJP pockets. uh an SJP which which was again funded. We've traced the money. I have some friends who have been doing that, tracing the money, filing lawsuits to get it frozen, but the money came from Iran to Hezbollah to to Hamas to the to the fact that on October 8th there were tents all all the same color and the same size on all the campuses of in the US was not an accident. >> What makes you most proud to be a Jew? Well, I you know, you look at the contributions that Jews have made to the world largely because of the education focus and and the questioning focus of Judaism. I mean, when I learned Talmud, you know, you're always questioning it, right? And that's how you make scientific progress is you're always questioning it. I I'm proud of that tradition. I want to keep that tradition going. Uh and part of that tradition that is part of the Jewish tradition. >> What brings you the most happiness? Which of your three pockets of investments? Well, I look, it it's changed as I got older, but I I still get the most happiness out of helping to create companies and and and that impact the world. When I was at uh at Cornell, I we wrote some compilers for new language. And one day we we looked around, we said, gee, there's a million people now using this around the country because a lot of other universities picked it up. Said, so I've had an impact on a million people, right? uh when we created Uber uh at first round. Wow. I don't know how that's probably had an impact on that part. That's fascination. >> Yeah. So Uber Uber started in our office in San Francisco. >> Wow. >> Uh and >> thank you. >> Well, I mean but the point is it's it's impacted you know billions of people. >> Sure. >> And so that's it's that impact on the world I think that makes that gives me happiness. And I I do get a lot of that from the the ventures I helped create and the the entrepreneurs that I helped to to fund. Now I I get tremendous happiness out of the philanthropy. I mean seeing 3,000 kids go to Pagisha for for that that's that's very very >> Were you there in the streets and everything? >> I wasn't. I wasn't this time but yes I have been. But it's it's it's great fun to watch them. >> I have two final questions for you. Did you also foresee in the 1970s the detriments of social media, internet, the depression or the lack of authenticity that maybe some of that is creating or that wasn't part of your vision? >> That was certainly not part of our vision. You know, when the internet was created, we all knew each other. So even the the some basic plumbing of the internet, the the domain name services called DNS, we didn't put any security around it. And uh when when the internet sort of opened up to non-academic world all of a sudden bad actors started showing up and we had never thought about bad actors. I mean everyone we kind of knew focus on the positive. >> We were focused on the positive but we also knew that if somebody did something wrong you know we the whole community would come down on them right but with the internet there was so much anonymity that we couldn't do that and we did not foresee that properly. And similarly, it's certainly true with the social media and what it's been what it's done to the young people. Now, again, as an optimist, I think the really younger folks have now take a more jaundist view of what they see on the internet. >> We hope. >> We hope. Well, no, but I mean, there's some studies that they do, but but not enough yet. And that's why they fall prey to the horrible propaganda, anti- anti-semitic propaganda that's spread there. But we can spread our own positive propaganda there, too. And we're starting to do that. >> Finally, you have a microphone in front of you, and let's say you could broadcast to a large community around the world of young professionals, college students between the ages of 18 and early 30s. What message would you like to share with them based on your life experience personally, professionally, Judeaically? Go ahead. >> Well, I I would say, you know, the world the world is changing for the better. learn AI and use it everywhere because it is very crucial to what you're going to be doing in the future. Uh and and become a part of it. Don't don't don't try to fight it. Become a user. One of the things I have learned is with technology, it's always changing and it's too easy to fall behind the curve. You've just got to keep at it and say, "Okay, what's next? What's next?" And learn something new every day. And that's what I try to do. That's what people who study tal do. You learn something. you you reread the same page, but you find something new in it every day. >> I want to thank you for teaching me many new things today. It's been a real pleasure chatting with you. Wish you lots of success in your three pockets, and I hope that our paths continue to cross in a positive way. >> I hope so, too. And I and I want to thank you for for this opportunity. And and I hope the people who listen to this, whether they're Jewish or not, uh get some value out of it. >> Thank you for listening to Jewish Grit and Ol mentorship podcast. At Mentorship, we believe that everyone needs a mentor. What better way is there to tap into your personal and professional potential than with a Jewish mentor at your side? Learn more at olam.org/metorship. Don't forget to keep listening on Apple Podcast, Spotify, or wherever you get your podcasts.