Emily i have never had the opportunity to ask how did Roger Mcnamee become Roger Mcnamee . I am glad we have a chance to do that here today. Roger so i grew up in albany, new york. I had a wonderful childhood. I had Health Problems as a kid. I developed a condition at age two. At 10, i had a traumatic injury that required lifesaving surgery. It was one of those experiences you come through and it forms your personality in an interesting way. I became more introverted and essentially, i got used to having to go my own way because the digestive disorder i had meant i could not eat anything that had any grain in it. You grew up without birthday cakes, cookies, bread, and cereal. You have to develop tremendous selfcontrol. You are going to become an investor. What are some traits that are really useful. Emily did you want to become an investor . Roger i knew nothing about it. When i look back, the experiences of zero to 10 had a great influence. It was that willingness to do it my own way. To be different from everybody else. From zero to 10 i was always different from all of my classmates. Emily you went to yale. Roger i took a oneyear leave, but my father died. With him went the family finances, and so my mother was forced to sell the family house at a huge loss. There was no money to pay for college. So i stayed out for 2. 5 years. I got really lucky. I found a job where i was selling advertising space for little weekly newspapers. I was both selling and collecting, which is interesting because you have to learn how to analyze businesses to learn which one will pay you. You dont want to sell it to somebody who isnt going to pay you, so it has got to really work. Thats when i discovered wall street. I bought 100 shares of a Company Called beech aircraft. They had a brandnew airplane called the king air, and the stock went up six dollars the first week i owned it. At that point i had the bug, but i did not know you could work there. I was not going to be a trader, i didnt know what the jobs were that they had. But i earned enough money and went back to college. People get paid to do research. I managed to persuade Goldman Sachs to give me a job in the summer of 1981. For those who have not studied history, 1981 was the year Interest Rates peaked for all time, tbills went to 21 . Municipal bonds with a aaa rating were 15 or 16 yield. So i go back and it is 1981. We are in a bare market. I sent a resume to t. Rowe price history, 1981 was the year associates. A Mutual Fund Company in baltimore. I go in for my closing interview. I sit down next to the head guy and go, i love this place. I want to work here. I know you are not going to hire me. I give them three reasons why they will not hire me. I watch his face and i realize it is like a cartoon his whole expression is shocked. There is this pause. He goes, this is amazing. I said, what do you mean . He goes, i was not going to hire you, and you got the three reasons in the correct order. We are in the business of hiring people who are good in judgment. Who can anticipate what people are thinking and feeling. I have never seen anybody try that tactic before. That was a great piece of analysis. Would you like to come work for t. Rowe price . And i said, you betcha. Emily you went on to run a Technology Fund. Roger i did. Starting my career, being assigned to Cover Technology meant the first rule of wall street is timing is everything. Emily so were you smart or were you lucky . Roger i was totally lucky. You can explain my entire career on the basis of a great starting day and being assigned to the sector that was the dominant growth sector of the u. S. Economy for my entire career. Pure dumb luck. I get there, things go up, things go down. They create this thing called the science and Technology Fund 19 days before the crash in 1987. The thing is down 31 in a month. They say, roger, why dont you take over . I said, cool, but you have to do it my way. They said, this is what i love about t. Rowe, they said, fine, do it your way. I spent 120 days a year traveling. Institutional investors and top analysts were doing 29 Company Visits a year. I was doing 400 facetoface meetings with companies. Nobody had done that before. This is the late 1980s. It worked so well in tech. Emily you went on to cofounded silver lake. Roger silver lake, we literally Institutional Investors and top analysts were doing 29 Company Raised the money in 1999 and buy three stocks, seagate technology, the Worlds Largest disk drive company, a thing called day tech, which you know is ameritrade, but they also have this Amazing Technology platform that now tries that drives the nasdaq. There were two pieces of that. And gartner group, a Consulting Firm in the technology world. So we did like six deals, but i did three and those were the three. We did them right at the top of the market. In the Second Quarter of 2000. You think nothing would work, but we got very lucky again and the strategy worked well. Emily so as i understand it, you got pushed out. Roger apple introduced a product called the ipod. Initially it was just on macintosh. I called up steve jobs and said, man, this is really amazing. Your Company Options are at 40, the stock is at 12. Your options are 40. That is nuts. Lets do an lbl. Steve goes, i dont like to do it. If you want to do it, you can buy 18 of the company, come on the board, and we will do this thing together. I took that idea to silver lake and they said no. Emily steve wanted you to join the board of apple . Roger bono calls up and says i want to buy universal music group. They say, we love this idea, but we dont want you to do it. I went, what do you mean . He wants to do it. Why dont you want to do it . They said we think it is time for you to go. I went, really . After day tech, seagate, and gardner, you want me to go . They said, yeah. Anyway, so, i went, ok. I was really crushed. This thing started as my idea. It was hugely successful. I had just been voted out. I am in new york. I call bono up to say i dont think the deal is happening because i am leaving the firm. Bono said, the heck with them. We will start our own firm. The same day. Its like, oh, you want to do a firm. You want to be in the Investment Business . He goes, no, i really do. I think i can help my work in africa raising my profile among the people i raise money from, bill gates, warren buffett, rupert murdoch. He loved raising money. He was incredible at it. Every company we invested in wanted to be like bono, like u2. He would go and talk to the employees, he was so motivated. It was just a gamechanging thing. We had one day a week of his time. We were really open about this. There was nothing like him in that world. If youre trying to invest at the intersection of technology and media, the fact he was not a hood ornament, was intimately involved we have some strong personalities. He was the one who always internal issues. It was just amazing. He is such a beautiful person. He is that rare celebrity who is in real life all the good things you see in their celebrity, and then a whole bunch more. Emily you think that facebook is in an existential crisis . Roger oh, i do. Emily you met Mark Zuckerberg in 2006. Roger i get a call from chris kelly, who is the chief privacy officer, one of the senior executives. He goes, my boss has an existential crisis. I cant tell you what it is. I think you are the right guy to help him solve it. He comes in. 22 years old. It is like march of 2006. Emily two years after facebook was founded. Roger correct. I think they had 9 million in revenue at that point. I said, mark, we have never met each other. I need to tell you something before we start. I said, because if i dont tell you now, you will never believe me later. You will just assume i am trying to appeal to you. I think you have created the most Important Company since google, that within a few years you will be bigger than google is today. And i think the secret is you solved the problem of identity and you take privacy seriously. Those two values are really powerful. I said the problem is that if it has not happened already, either microsoft or yahoo will offer 1 billion for your company. Your parents, your board of directors, your management team, your employees will all tell you to take it. Your lead venture investor will back your next company. You can have 650 million, you can be a philanthropist. You are only 22. You can do something that is just as cool as facebook. I am here to tell you that is nuts. No one has been able to replicate the great idea at the perfect time. You dont get a chance to do that a second time. You either miss on the timing or miss on the idea. I said you will never get a chance. If you believe in this idea, you have to remind everybody that they got involved in this because of the mission you are on and they cannot force you off it. There are then ensued the longest, most painful silence of my entire career. He is like a cartoon character. He goes like this, and like this, and like this, and it seemed like it went on for an hour. He goes like this, and like it probably only went on for four or five minutes, but i am dying. I said, what are you doing . I have never seen anybody do this before. Finally, a cloud bubble appears over his head and you could see his Blood Pressure comes down and he goes, you are not going to believe this. In my bag, i have a contract from one of those two companies and every single thing you said already happened in the last two days. I said, well, do you want to sell the company . He said, no, but i dont want to disappoint all these people. I said you will not be disappointing them. This is such a good idea, that they will be happy you turned it down. That began a fouryear period when i was one of his mentors. Emily what did he come to you with . Roger in the beginning, the company did not have the right set of people. There was an issue with a senior executive. There was the Magazine Article that created enormous issues for him. So i helped him get through those sorts of things. Then the smartphone things started to happen. Mobile became real. And they were not, he did not so i helped him get through believe in mobile at the beginning. I had the ability to bring in great technologists to help him understand mobile, so in the end that wound up being an important thing i did. Emily you also helped him to meet sheryl sandberg. Roger when mark has this problem, it is time to monetize and he is having all these issues with senior executives, i said there is no comparable thing here. The closest thing anybody has done is creating adwords. I know the person. Sheryl sandberg, have you met her . I said, i want to get her to come and talk to you about being your chief operating officer. Next thing you know she goes there as the chief operating officer. At which point, basically they did not need me anymore. She is way smarter than i am. One of the most capable people i have ever met in any way. Emily how much Facebook Stock did you buy ultimately . Roger i did not buy that much, but it turned into a lot of value. Emily how much did you make . Roger a lot. For me, it was really important. Facebook was weird. It was the gift that kept on giving. Emily fastforward to today, you think facebook is in an existential crisis. Roger oh, i do. Emily and you have not been shy about it. Roger no, in 2016, i noticed bad actors on the platform. I did not know what i was seeing. Initially it was the democratic primary in february of 2016, then it was related to a firm scraping facebook, people who were interested in black lives matter, then selling it to Police Departments in violation of the fourth amendment. Then there was brexit, where all of a sudden it was like, the campaign has set your hair on fire, the immigrants are going to take away your jobs and culture strategy versus leave, which was saying stay the course. I realize, holy moly, facebook is biased in favor of anger and fear, and therefore people who run campaigns based on fear have a huge cost advantage from a reach point of view, and that is how brexit happened. In october 2016, i am really concerned, and i read an oped for recode. Instead of publishing it, i sent it to mark and cheryl. They did not take it seriously. They treated me graciously. They responded instantly. They did not think it was real. They said, seriously, we think these are isolated things. We think you are missing it, but here is our senior guy, really smart, beautiful person, and dan was so patient with me. For 10 days in a row, he let me send him stuff and talk to him, and the election happened. And at that point, i went crazy. Emily how big of a role do you think facebook played in the election of donald trump . Emily how big a role do you think facebook played in the election of donald trump . Roger well i think that without facebook it is inconceivable he would have been nominated. Emily he would not have been nominated . Roger no, i think the impact on the nomination was greater than the general election. The reason is because the russians had been doing this campaign of essentially trying to divide the american people, to polarize them, so they took these issues like guns, like immigration, rights of women, black lives matter, and they would try to divide the country by seeding both sides and causing arguments. Trump showed up and adopted the same themes they had been doing, and i assumed it was just because that is the way he thought as opposed to it was coordinated. So he effectively got this free ride off of this 23 years of russian investment. The other republicans were all running standard republican campaigns. They were defenseless. It was effectively he had been campaigning three years before they started. That is how he got nominated. We cant fix 2016, and that is not my goal. My goal in this whole thing is, i believe the advertising Business Model creates the wrong incentives for facebook, and that essentially it forces them to use highly Addictive Technology and to basically push people to increasingly extreme positions, so polarization is good for their business. Anger and fear are good for their business. Emily what do you believe we are at risk of now because of the way facebook is constructed . Roger to be clear, it is not just facebook. All the social media platforms have it, but they are the most important, 2 billion active users, 1. 3 billion completely addicted, using it every day. There are issues with google, youtube and search. There are issues with snapchat, twitter, but facebook is the most important. You have 40 of the country that thinks it is ok for a hostile power to interfere in our most basic civil liberty, voting. I mean they are totally excusing it. Emily some people at facebook have not taken this criticism well. One Vice President said i have worked at facebook and he goes on to accuse you of aggrandizing yourself. How do you respond to that . Roger i would ask, what are your incentives . What possible gain do i have for what i am doing . My primary net worth is in Facebook Stock. I am trying to mentor at a distance. I spent four months trying to speak to them without talking to anybody in the outside world. I spent five months after that researching everything i could researching everything i could to understand it. What i would say to andrew is, i know that facebook did not intend to have these outcomes, but this is really simple, and all these bad outcomes are happening and their users are being harmed. That is their responsibility. All i am saying to facebook is, guys, you have won. You dont need to have this kind of Business Model. There is a way to have a Business Model that is actually better. I would like to spend 10 a month and i want to be able to control my newsfeed. I want to take the ads out and i want it to be more valuable to them, but i want one version that is politics, family, sports, health and fitness, work related, right . And be able to toggle through them and really control things. I want them to be successful, and i think they can be. Emily they say they are hiring 10,000 more people to handle some of these issues, whether it is fake news or abuse, not enough . Roger not only is it not enough, its completely irrelevant. You cant fix this damage after the fact with people policing it. These things are embedded in the algorithms. The same thing that makes facebook the most compelling ad platform, rock n roll bands, consumer companies, makes it the perfect platform for bad actors to have these people. You can only fix this problem by fixing the algorithm. Emily how so . Roger you essentially have to make it so that anger and fear are not the predominant ways that people are motivated to act on facebook. Again, without advertising, if you are not as dependent on advertising, you dont need people to be addictive. You you dont need to make them angry. You dont need to make them fearful. Emily how do they make money . Roger i want to pay them a subscription. I want to pay them 10 a month, twice more than they are making for me today. I am saying, name the price. My point is, give me the option of having a different thing. What they are doing now is the lazy way out. These people are smarter and better than that. Emily what about regulation . Roger so i think regulation is important. The way to think about this is, the most important thing is for the employees of facebook to recognize that things have come off the rails and they have the power to fix it. Emily have you heard from mark. Have you heard from sheryl . Roger no, i suspect their lawyers have told them not to. I would love to. I would love to. The way you know people have a problem and are serious about fixing it is they reach out to their critics to understand the issues. I am sitting here and understand why people would be mad at me, i off the rails and they have the really do, but i would have everybody asked the question, what is actually in this for me . Ok . Seriously. I dont need this. Emily if they dont do this, what do you think will happen . Roger our democracy is in extreme peril right now and we dont have time to fix this. The elections are coming in november. We dont have a lot of time to essentially safeguard it. Its not just the russians you have to worry about, anybody who is angry. It is terrible for our children. This whole addiction thing is being imposed on kids who are in no position to control their lives. We are doing this in pursuit of profit. For what . Emily so elevation does not exist anymore . Roger elevation is me. Emily is this remission of . Are you still investing . Roger i have been doing this nonstop since october 2016. The same way mark outgrew me, this thing should outgrow me. Im not the right person to do this, but there was not anybody else. And so i kind of view it as a form of public service. At least i hope it is. I hope people except it as that. If they are worried, read what i have written. Think about it. Are you addicted . I am, hopelessly so. I cant but help check the thing. I tell people, turn off your notifications, right . And think about how you use these products. Are they taking over your life . If you are on slack do you really want to allow them to browbeat you to having notifications interrupting everything you do. If they do, they control you. Take your time back. Take your self back. These people are all billionaires. They dont need our sympathy. They dont need our help. Well, they do need our help, but they dont need us rolling over for them. Emily Roger Mcnamee, longtime tech investor, thanks you for joining us. Great to have you. Roger thank you. Francine a decade after the last financial crisis, and some are predicting the next one is looming. In 2008, the biggest concern was that banks were too big to fail. Governments felt they had no choice but to prop them up or risk major meltdown. Jump to 2010 and enter philipp hildebrand, former economist, hedge fund manager, and central banker, he was ready to take on the lenders strongly advocating stricter capital requirements. Today on leaders with lacqua, we meet one of the most