Who Is Michael Ovitz?

by Michael Ovitz

  When we met, at an L.A. restaurant, I expected a geek from central casting. What I got was someone six foot five, an athletic-looking guy with a winning smile. He did dress like a geek—he was wearing patterned shorts and white socks—but he was hyperarticulate, insatiably curious, and voraciously well read. He was Michael Crichton on steroids.

  Marc invited me north to meet with Ben Horowitz. Ben is a brilliant manager and entrepreneur in his own right, and together he and Marc were a formidable team. They asked me to join the LoudCloud board, and so began a new chapter of my life.

  Another board member was Bill Campbell, a legendary mentor to people like Steve Jobs at Apple and Sergei Brin and Larry Page at Google. I learned an enormous amount from Bill, who had nearly impeccable judgment (when the venture capital firm Kleiner Perkins sent him to Amazon to fire Jeff Bezos, Bill came back from their meeting and said, “You can’t fire him”). But at one point he and I got into it in a board meeting. LoudCloud was in big trouble: its stock had sunk below a dollar a share and was about to be delisted. Bill thought we should just work our way through the rough patch, but I suggested that the board members demonstrate their faith in the company by buying stock. Bill, no fan of smoke and mirrors, screamed, “Ovitz, that’s the dumbest fucking thing I’ve ever heard!” After a shocked moment, everyone cracked up. I bought half a million shares of LoudCloud stock, some of the other board members followed suit, and soon our shares were back up over a dollar. In 2007, Hewlett-Packard bought the company, now renamed Opsware, for $1.65 billion.

  As Marc and Ben led me into their world, I felt like a privileged student in a graduate school of one. After they sold Opsware, I asked Marc about joining their angel investment group. “Funny you should mention that,” he said. “Ben and I are thinking about doing something more formal.” As their venture capital firm began to take shape, I coached them about how to make Andreessen Horowitz stand out. The idea that took was to offer a full menu of business services—a novel approach in venture, whose stars tend to be one-man bands who freelance out of a larger firm.

  In other words, Marc and Ben set out to be the CAA of Silicon Valley. They borrowed our roots to give themselves gravitas the same way I had borrowed from Lew Wasserman and Sun Tzu. In essence, the firm linked all the partners’ networks and added specialists to strengthen the whole organism. No individual “owns” an account at Andreessen Horowitz; investments are chosen by joint approval of the general partners, with the entire staff having a say. Then the team provides in-house experts to assist its start-ups with recruitment, budgeting, operations, sales, publicity, IPO rollouts—whatever an entrepreneur might need.

  While other venture firms seek out executive talent for their clients, Andreessen Horowitz goes further. It develops ties with the Valley’s best software engineers, designers, and product managers, helping them with introductions and career counseling. At times it connects these engineers and managers to one of its portfolio companies, but often there’s no direct payoff. It does the same for top Valley executives, much as CAA negotiated employment contracts for studio executives. Andreessen Horowitz aims to forge long-term relationships that might eventually prove helpful at a future start-up, or as part of future deal flow. And Marc and Ben’s thesis has worked brilliantly. They have rapidly established themselves as one of the nation’s top five venture firms, with prescient investments in Facebook, Skype, Stripe, Airbnb, GitHub, Instacart, Lyft, and Pinterest, among many others. As Marc told the New York Times, “We’ll wire up talent first with the goal of knowing and building relationships with all the best people. It’s more like a Hollywood talent agency.”

  Meanwhile, the talent agencies themselves have become small parts of giant conglomerates. A few years ago, a young exec at TPG, the private equity firm that has bought 52 percent of CAA, casually told me, “I own CAA.” That hit me hard. CAA is still a force in entertainment, but the real heirs to Ron and me are Ari Emanuel and Patrick Whitesell, who’ve turned William Morris Endeavor into a multihyphenate business, a new octopus. Ari is now an agent, a producer, an advertiser, and an investment banker. Naturally, he trained at CAA. And, naturally, Ari and Patrick met at InterTalent, which Ron Meyer worked so hard to put out of business. You can’t kill the good ones. William Morris learned that after we left to start CAA, and CAA learned it when Ari and Patrick rose up to battle them.

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  In 2009, I found myself at what I thought was a social dinner at a New York restaurant. Across the table were three dear friends: Marc Andreessen; his wife, Laura; and Herb Allen III, the son of the Herb Allen who’d brought me to Sun Valley all those years ago. I’d known young Herb since he was ten, and he now ran the family business. I’d introduced him to Marc in 2000, believing that he should get the Allen firm out of old media and into tech and that Marc would be the best possible adviser in that transition, and I felt as close to him as I did to his father. Herb had maintained his father’s old-school style—the wood-paneled office walls, the sweater vests—and he possessed his father’s quiet humor, indifference to trends, and outsized loyalty.

  This was my new inner circle. As I took my seat, I saw three solemn faces. Had someone died?

  “This,” Marc said gravely, “is an intervention.” I tensed, knowing what was coming. Lately I’d been spending two days a week at Andreessen Horowitz. Now I was about to be triple-teamed into picking up stakes and making northern California my base of operations.

  I spent my life solving other people’s problems and steering the conversation away from myself. But that night I was trapped. First Marc pounded on me, with Laura chiming in. Then Herb took over. I squirmed for three hours as they discussed how I needed to change. My face flushed. My ears rang. It’s tough to resist heartfelt counsel from three people you trust, especially when they’re three awfully smart people.

  As we rose from the table, Marc said, “Cortez, dude!” His reference to the Spanish conquistador who burned his ships to prevent his crew from returning to Europe made me laugh. That night was the kick in the pants I needed. I tore up my travel schedule and flew the next day to San Francisco, where I took an apartment. Andreessen Horowitz made me a special partner and assigned me to several portfolio companies.

  I decided to study Silicon Valley the same way I’d studied the entertainment industry when I was twenty-three. I began networking, taking eight to ten meetings a day with founders and engineers. At first I wore a suit, then I left the tie at home, and pretty soon I was business casual, which proved both more comfortable and a psychic relief.

  Many of the founders I met were dimly aware that I’d consulted with Steve Jobs, both about the entertainment business and later, after he bought Pixar, to help resolve tensions between him and Michael Eisner at Disney. That gave me some credibility, as did my work launching CAA, Hollywood’s ultimate start-up. So with the right introduction it was relatively easy to get a meeting with almost anybody. I met with Peter Thiel and Max Levchin, who’d founded PayPal and become leading investors in tech. I met with Kevin Systrom, who’d founded Instagram. I met with Reid Hoffman, the LinkedIn founder. I took separate meetings at Facebook with Mark Zuckerberg and Sheryl Sandberg. I met with Eddy Cue at Apple. And so on—377 meetings that first year alone.

  Getting a second meeting with the superstars was harder; you had to prove in the first meeting you had something to offer. But I gradually developed a strong network, growing close not only to a number of founders, but also to venture capitalists such as Michael Abramson, the youngest partner at Sequoia Capital; Josh Kushner of Thrive Capital; Steve Loughlin at Accel; Danny Rimer and Mike Volpi at Index Ventures; and tech banker Quincy Smith. The players in the Valley first made their marks in their twenties, as Ron and I did when we started CAA, so I felt right at home with the ambient energy and ambition. Young people make their own rules.

  I learned my most important lesson when two MIT engineers came to me with unproven tech
nology to improve mobile payments. Acting as their agent, I called John Donahoe, the CEO of eBay, whom I’d met with earlier, and asked him to take a look for PayPal, which eBay had acquired. John brought two of his senior engineers to the meeting, and they began picking the code and the technology apart, asking nasty and insinuating questions. Accustomed to protecting my directors when studio execs got rough, I finally stood and told my guys, “They can’t talk to you like this! We’re going.” The engineers stared at me and said, “What are you talking about? It’s totally fine.”

  I sat back down; eBay ended up buying the tech. And as we walked out, John Donahoe put his arm around me and said, “You’ve just learned something very important about the Valley. There are no manners here, just brain challenges. It’s about getting to the truth of the idea any way you can.”

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  If Hollywood is like high school with money, as people often say, the lesson from that eBay meeting is that Silicon Valley is a true meritocracy. The best idea with the best execution wins. In Hollywood I was always going to be judged against my own legacy at CAA, whereas in Silicon Valley I was judged simply on the ideas I brought to the whiteboard. My big mistake, in retrospect, had been starting AMG when I should have moved to Silicon Valley and become a principal in the tech revolution. The Valley ringingly echoes my shouted belief that hard work and good ideas are an unstoppable combination. The press is full of worries about the rise of China, but I remember the same worries about Japan a generation back, and what I see in the tech community makes me confident that American ingenuity will withstand this challenge, too.

  It wasn’t long before taking general meetings began to pay off. In 2009, Peter Thiel, who’d funded the data-analytics start-up Palantir with $200 million from his own funds, asked me to help his CEO, Alex Karp, expand the company from working solely with the federal government and law enforcement into the world of business. We narrowed the potential areas to attack to three: health (where insights on disease vulnerability or drug efficacy could be teased out of big data), advertising (which had grown increasingly focused on metrics), and finance. Alex and I, who became fast friends, chose finance because the sector had gotten crushed in 2008 and the banks were eager for new ideas. At the next Allen conference that summer, I introduced Alex to Jimmy Lee, a top investment banker at J.P. Morgan, which I knew had been unable to reliably price its underwater mortgages in the wake of the great recession.

  Alex blew Jimmy away and we made a deal with Morgan to launch a three-month pilot program. Alex and I worked with Alex’s cofounder, Stephen Cohen, and Stephen’s engineers, Nima Ghamsari and Rosco Hill. They customized one of the company’s algorithms so it would scrape thousands of hitherto uncorrelated data points about a given property and its location to determine a fair bid-ask spread. This allowed local branches to make speedy, accurate decisions. Settlements that used to take an average of twenty-seven days now got done in two. Jimmy Lee was overjoyed.

  Our success with mortgage pricing rapidly led to a spate of other ventures in banking. When I started working with Palantir, it had fewer than a hundred engineers; today it has two thousand. I was given adviser shares in the company, and I purchased an additional stake, betting on its future. Valued at $600 million then, Palantir is now valued at more than $20 billion. In the Valley you only get paid for performance, and options vest slowly (usually over four years), but the upside can be much greater than in Hollywood.

  Through Alex, I met his brilliant cofounder, Joe Lonsdale, who was just leaving Palantir to launch a venture fund, Formation 8. As the fund went on to invest in hugely successful companies such as Oculus and Illumio, I advised Joe and got even more great advice in return. He was my road map to the Valley; he always knew where tech was going and which young entrepreneurs were going to take it there.

  I also became friends with Alex’s engineers, Nima and Rosco. In 2012, when they launched Blend, which allows you to secure a mortgage with just ten clicks on your cell phone, I helped them raise seed money from Herb Allen, Peter Thiel, and Andreessen Horowitz, and I invested myself. Blend is currently valued at $500 million. When Rosco went on to found Perpetua Labs, which advises companies how to grow by doing data analytics, I invested and began advising that company, too.

  Ben Horowitz introduced me to three robotic-engineering PhDs from Carnegie Mellon who were developing smart toys at a start-up called Anki. Ben called me the minute they left him, and the minute I hung up with Ben I drove to Anki’s office, which was in the skid-rowiest part of San Francisco’s Mission District. I walked up a darkened staircase and knocked on an unprepossessing door. It opened onto a huge room that was empty except for three guys sitting around a card table and playing with slot cars. I happen to be a slot-car freak, and I instantly fell in love with the fact that (a) you could control their cars with your phone and (b) their cars didn’t need slots—they were smart cars that could drive all over the floor. I began working with Anki’s CEO, Boris Sofman, and his two cofounders, Hanns Tappeiner and Mark Palatucci, and soon (much more thanks to them than me) the company had a great second product: a personalized, plucky, six-inch robot named Cozmo.

  Through a Founders Fund venture capitalist named Brian Singerman, one of the best young investors I have met in the Valley, I invested in and began advising Stemcentrx, a bioscience company exploring novel ways to cure cancer. Stemcentrx eventually sold to AbbVie for $9 billion, and I got a 4x return as well as a terrific science education. One thing I really love about Silicon Valley is that each day brings you different fascinating problems, and you’re always learning how the world—and sometimes the universe—works.

  I also consulted for an amazing entrepreneur named Gurjeet Singh, a PhD in applied mathematics who was the founding CEO of a big-data-sifting business called Ayasdi. A remarkably composed man, Gurjeet taught me a lot about life. After his grandmother died, he remained steadfastly cheerful, and I said, “How are you able to be that way? My mother died two years ago, and I still grieve for her every day.” He said, “Well, as a Sikh, I believe she’s going to come back, so I’m happy for her.” That gave me a comforting way to think about my parents’ deaths, at a time when I’m beginning to contemplate my own.

  I’m now working with at least twenty-five other companies, and new ones get in touch every week. I find that my “value add,” as they say, is advising on how to monetize a technology, how to market it, and how to avoid some of the pitfalls I fell into at CAA. I don’t always know the right move—who does?—but I can often help steer founders away from mistakes of inexperience: from making short-sighted hires, or needlessly alienating a rival who might become a collaborator, or not planning for the long term. Founders are much more interested in my mistakes (which can often be generalized to their situation) than in my successes (which were often particular to the agency business).

  When I met Brian Chesky in 2013, I was astounded that this 2004 graduate of the Rhode Island School of Design, a former competitive bodybuilder with no coding experience, had cofounded and led one of the great start-ups of his era, the “sharing economy” juggernaut that is Airbnb. After providing occasional help to Airbnb over the years, I recently met with Brian to brainstorm about how Airbnb could keep growing. In one of our sessions, we discussed an “end to end” or “door to door” experience, and spent three hours whiteboarding how the company could curate your entire trip, from the time you left home. I told him, “Go larger, tackle the total vacation experience.” The following year, Airbnb announced its “Trips” service, where hosts will introduce travelers who want to experience local living from everything to a dinner party to a Tai Chi class. It’s currently available in fifty-one cities around the world.

  Brian asked, “How did you learn to think so big at CAA?” I reminded him that Airbnb had consistently thought big: it hadn’t been at all content with its original business of renting out air mattresses on floors. Then I added that one way to concept
ualize how to think in business is a martial-arts precept: “If you aim at the target, you lose all your power. You have to hit through the target to really smash it.” To get where you want to go, you have to set out to go even further.

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  In 1998, once our kids were all out of the house for good, I began building my dream home in Beverly Hills, high on the hillside. It’s essentially three interlocking boxes made only of glass, oak, plaster, and steel. A house that doubles as an art gallery, it reminds visitors of a miniature MoMA with bedrooms. It contains my favorite paintings and sculptures from forty years of collecting: modern and contemporary paintings, Ming furniture, African antiquities, Rembrandt etchings, and turn-of-the-century Japanese bronze flower vases, as well as my library of more than three thousand art monographs. The design and build of the house took eleven years, and I drove my architect, Michael Maltzan, crazy. I had the contractor redo the plaster three times till it was perfectly smooth. I also had him fine-tune the “reveals,” or tiny strips at the base of the walls, to get them just so, which required a team of six guys with sandpaper and toothbrushes. The worst day of all was the day I moved in, because then it was done.

  At around the same time, my life took an unexpected turn. After being together since we were teenagers, Judy and I recognized that our lifestyles had diverged—she drawn to her horse ranch in Ojai; I migrating from L.A. to the Bay Area to New York, always on the move. We agreed to live our lives separately, though we’d remain married and the best of friends. We still talk almost every day.

  In 2010, at Ted Forstmann’s Aspen conference, I met a woman I’d encountered several times before. But this time was different. We had a drink, which became a dinner, which became a conversation that shows no signs of slowing down. Tamara Mellon and I love a lot of the same books and movies and art. We enjoy learning new things in each other’s worlds. Best of all, we find ourselves laughing all the time. Tamara is gifted, witty, and kind enough to laugh at my jokes. She appreciates my eclectic interests and loves that I love what she does. She cofounded Jimmy Choo at twenty-seven, almost exactly my age when we founded CAA. She built the company by designing thousands of women’s shoes and bags, many of them now iconic. After a bruising struggle with the company’s shareholders, she is now creating a new business. I’m having a blast watching her and making suggestions to protect her interests.