U.S. markets closed
  • S&P 500

    +33.11 (+0.75%)
  • Dow 30

    +382.20 (+1.09%)
  • Nasdaq

    +73.91 (+0.50%)
  • Russell 2000

    -8.52 (-0.37%)
  • Crude Oil

    +1.35 (+1.66%)
  • Gold

    -29.80 (-1.66%)
  • Silver

    -0.13 (-0.54%)

    +0.0005 (+0.05%)
  • 10-Yr Bond

    +0.0570 (+3.75%)

    +0.0074 (+0.54%)

    +0.5230 (+0.46%)

    +267.97 (+0.44%)
  • CMC Crypto 200

    +57.32 (+4.07%)
  • FTSE 100

    +26.32 (+0.37%)
  • Nikkei 225

    +517.70 (+1.81%)

Influencers Transcript: John Borthwick, August 29, 2019

ANDY SERWER: The internet helped make John Borthwick's career. Now he wants to remake the internet. Straight out of the Wharton School, he launched a web content studio that was bought by AOL, working there for a few years. He then hopped to Time Warner to lead its technology strategy.

In the mid 2000s, he co-founded Betaworks, a venture capital firm that invested in household names like Twitter and Airbnb, and operates some of its own, like Giphy. He's here to talk about where the internet went wrong and how tech startups can help make it right.

Hello, everyone. I'm Andy Serwer. Welcome to "Influencers." And welcome to our guest John Borthwick, who is the CEO of Betaworks, which is a venture firm and so much more. We'll get into that. John, how are you doing?

JOHN BORTHWICK: I'm doing good. Nice to be here.

ANDY SERWER: Thanks for coming. I want to talk to you about technology. And there's so much to talk about in the world of tech these days. And you've been critical of what the big tech firms have been doing. Do you want to sort of just lay out your case? I mean, there's a lot to it, I know. But just sort of what's the basis of it?

JOHN BORTHWICK: I mean, I-- I think in 2019 it's clear that tech is no longer the-- when I started in this business, it was-- we believed and we were seeking to create magical experiences which would change people's lives. I think that, in 2019, tech is both the-- it's the solution to some problems, but it's also the problem in our society.

And I think that as software-- Marc Andreessen called it right. Software is eating the world. But I think that generally, we on the technology side haven't thought clearly or articulated clearly, what is that world we want to make. What is the future that we want to create?

And so I think you can see the sort of unintended, sometimes intended, consequences of just bad tech, which sort of looks like-- it looks like a pollutant. It looks like-- it's toxic. It's similar to cigarettes. And it's just I think not what I wanted to create in this business.

ANDY SERWER: Right. I mean, one thing I know that you were concerned about, just as a for-instance, are personal assistants with speakers in homes, like the products that Amazon has, and Facebook is getting into it, and Google, and all the rest-- and Apple. Why is that a problem, for instance, John?

JOHN BORTHWICK: I mean, I think that the-- the smart speakers are-- on one hand, they are this incredible innovation that represents the way that I think-- and my team, we talk about this, is we think about it as a new interface. Right? So think about you go into your kitchen, and you can talk to this device, and it gives you information.

Smart speakers-- also smart headphones, right, I have in the same category. So Siri-- with my AirPods in, I can speak to them. That's kind of cool, right?

So I would-- I would say that there's two or three layers of-- sort of problematic layers with these new smart speakers, smart earphones that are in market now. And so the first is-- from a consumer standpoint, user standpoint, is that these-- these devices are being used for what's-- it's hard to call it anything but surveillance.

And so there's been incidences of, there was a smart TV that was listening into-- a bunch of people bought the smart TV. American consumers bought the smart TV. 11 million-plus were sold in the US. And they were listening to the activity going on in the room, and using that to target ads and using that for data to be able to personalize experiences. But that is just-- that doesn't seem OK.

And then in the same way, these smart speakers-- I was particularly sort of disturbed by-- it sounds very wonky, but the-- the smart speakers are driven by an implication. You invoke it. And you say, hey, smart coffee cup--


--I would like you to tell me what's the temperature of my coffee or what's the weather today. You invoke a request. What's happening now is that Google and Amazon have gone out to the IoT devices, right-- so all these smart devices in the home that are connected into this, right? So the light bulb over there, which you get say to your smart speaker, turn on that light.

They've gone to those devices and they've said, give us data when people passively act upon the device. So in other words, I walk over to that light switch. I turn it off, turn it on-- it's now giving data back to the smart speaker. So these smart speakers have gone from this invocation, which it's sort-- if you think about it-- I think about it like such, right?

We used to go to a place. And we used to give Google our data-- our search requests and our data. And then at some point, there's this inversion, which is very subtle, that takes place, where Google is now looking at and reading all of my emails in order to make my searches better. And I think that we've sort of tripped over a line, which many people are now calling surveillance and I think is-- is-- is wrong.

ANDY SERWER: So what do you think should be done? I mean, now Washington's finally clamoring to take action. You've got the FTC, DOJ, Congress, maybe hearings. Is that the right tact?

JOHN BORTHWICK: Well, look, I think that when you look across the world, you-- you see that in general there's-- when you talk about regulation, there are several-- there's been several different approaches that different geographies have taken. So I'd characterize the US and what we've done so far in the US as being laissez faire and basically being self-regulation to date. You're right. It's changing now. But I would characterize it today as being like tech companies saying, we got it, don't worry, it's OK.

The Europeans are being a lot more activist. They've-- GDPR, a whole set of principles they've put together that have sort of bounded some of these privacy issues. And I think you'll continue to see that come out of Europe. And then the other model is the sort of authoritarian model that you're seeing coming out of China, where it's a highly centralized authoritarian model where you have state-driven surveillance that is taking place. And there is sort of a massive installation and massive base now of cameras around China.

There's this wonderful-- "wonderful--" this very disturbing piece of media which I saw about six months ago, where there was a journalist who was in a city in China. And it took about-- I think about six minutes for them to find him in the city-- to identify his face, where he was in the city. And so this is being used to monitor people, to monitor, I think, minorities, et cetera.

So you have the sort of Chinese authoritarian model, laissez fair, and the sort of the-- I think you can see that the-- the European model-- and you're going to see regulation here in the States that's going to come out of Washington. I also think you're going to see state-driven and local regulation, which I'm particularly interested in. Right?

The city of San Francisco recently banned computer vision in devices in the-- installed in the city. And so that was interesting, that you're seeing-- so it would come up from local. So you're seeing that. And that's sort of on the regulatory side. I think there's also antitrust.

ANDY SERWER: Yeah. Should these companies be broken, John?

JOHN BORTHWICK: People are talking about a break-up.

ANDY SERWER: What do you think about that?

JOHN BORTHWICK: I mean, I think that-- I think Chris-- Chris Hughes' post was-- was very thorough and articulate. And I think Chris is-- is a thoughtful guy. And he really-- it was very-- it's very clear that this was just him-- he thought about this for a long time. I think his argument is compelling, but I don't think it's sufficient.

I think that just taking Facebook, and Instagram, and Whatsapp, and Oculus, and breaking them up-- insufficient. You still have this incredible base of data. If you take YouTube out of Google, you still have this incredible base of data within these companies. And you'll still have many of the same problems. So you need to do more.

ANDY SERWER: So how would you regulate-- how would you regulate the companies that have all the data, which is YouTube; and then Google itself, of course, with Search and all their other businesses, like Maps; and then Facebook; and Instagram; and to a lesser degree Twitter and Snap even?

JOHN BORTHWICK: I mean, I think that-- I think the regulatory-- how-- how you regulate is w-- I think we're in the process of figuring out, what are the boundaries. Because we've had this sort of laissez faire approach to data ownership. I personally believe that you, as a-- as a user and as a-- somebody who likes technology, who wants to use technology, that you should have far more rights about your data usage that we have today.

And so I think that data ownership, graph control, your ability to export a graph from these social media companies so you can say these-- I want to leave this and I want to take my friends with me, making sure that shadow accounts aren't being created-- there's a lot of details to it. But I think generally, it's about giving the users a lot more power over the decisions that are being made. I think that's one piece of it.

I think another piece of it-- which is happening sort of incidentally, but is very important-- is just sort of media literacy or technology literacy, where people are understanding what these devices are doing. And these devices have empowered so much goodness in the world. And they've enabled us to do so much.

But know the way that you-- it goes all the way down to the way that you manage your notification settings on your phone and the way that you manage your own personal-attention stream. And I think that that's something which people need-- there's education there, but it's also about self-reliance and about people saying, I'm going to figure out how to manage this device.


JOHN BORTHWICK: Right. And I remember one of my kids saying to me-- he was talking about YouTube. And he was like, look, I can't have the browser open on my computer while I'm working, because it's like having a bowl of ice-cream next to me. And I keep YouTube in the browser. I keep knowing the bowl of ice-cream is there. And I'm just going to take a bite.


ANDY SERWER: It's the addictive nature of these things.

JOHN BORTHWICK: It's the addictive nature. And it's also the constant temptation. And it's also these-- these services have been fine-tuned to hack our attention stream, and to try and get in there, and try and say, hey--


--you need me now. And I think part of that's about just you, as a person, and being able to say, I'm going to close that browser down, I'm going to sent my notifications, I'm going to manage my life in a way that actually prioritizes what I want to do and how I want to interact with people.

ANDY SERWER: What do you think, though, that the tech companies would say about people like you, and Chris Hughes, and Tristan--

JOHN BORTHWICK: Harris, yeah.

ANDY SERWER: --yeah-- that, oh, you guys-- you're trying to create startup companies to compete against them? And Chris kind of washed out. And Tristan left Google. You guys are just malcontents or small potatoes-- right? They would dismiss you guys.

JOHN BORTHWICK: Yeah. I think that-- I think that I'm-- we're sitting here in New York. And I think that there is-- if you look at the New York tech community, there is-- I'm seeing entrepreneurs here who are seasoned sort of startup-two or startup-three entrepreneurs. And she or he are coming into their new startups. And they're saying, I want to do it differently. I can see that the things that we've done today have not actually accomplished what I wanted to in the world. And I want to do it differently.

I spoke to a venture capitalist in [? Santa ?] [? Rosa ?] two days ago. And he was explaining to me-- he was like, look, I funded a whole bunch of companies in the gaming space. I don't want to do that anymore. I want to start to fund companies who are actually contributing to positive outcomes in society and to human experiences.

So I think we're seeing a change take place. And it's starting to bubble up. It's-- I think it's a little bit like seat belts or smoking. It's just like-- there's a piece of it which can come from the government, but then there's a piece of it which is just people choosing this and saying, hey, this is the path I want.

I am seeing more and more-- and this is obviously self-fulfilling, but I seeing more and more startup activity where entrepreneurs are saying, hey, we want to try and do this differently. And-- and then also-- I mentioned New York at the outset of this question.

And I think there is an opportunity in these cities that aren't just tech cities to bring together the whole myriad of industries and capabilities-- creative community that is here in the city-- so that we can reintegrate them into the technology conversation. Because I think part of this is about, we need to change the way we build stuff.

And we need to-- the sort of-- my company is called Betaworks. And it was very much-- I named it very much after the agile development process [? Betas ?] Work. And move fast and break things has its limitations. And I think we're now bumping up against some of them.

ANDY SERWER: Right. That's good. Let's talk about Betaworks a little bit. First of all, I want to understand better what it does, and what you've done, and how it evolved. But can you just first off give us some of your greatest hits-- some of the companies-- the high-profile, public names that we would know that you've invested in?

JOHN BORTHWICK: Yeah. So we-- so we started off very much as an incubator, or as a startup studio, where we were building companies and then we started investing in companies. The companies which we built in the early years I think that-- one, which got to fairly wide circulation was Bitly. Sort of the link sho--


JOHN BORTHWICK: Yeah, the link-shortener, which a lot of people know. And that grew up to be a interesting big-ish company. We both invested and then helped get on its feet and point in the right direction a company that became Twitter's search engine. So we sold that company to Twitter. It became Twitter's search engine. And then we ended up partnering with Twitter and creating a bunch of companies around the Twitter ecosystem-- so TweetDeck and other things.

More recently was companies like Giphy-- much more recently on the investment side, because we now do pure investments as well as incubation. Companies like Gimlet and Anchor, that were recently acquired by Spotify a couple of months ago. And so those are some of the myriad of companies that we've been involved with.

ANDY SERWER: So what do you look for, John, when you're looking at a company to invest in?

JOHN BORTHWICK: I mean-- I mentioned at the outset-- when were talking about smart speakers, I mentioned this idea of thinking about new interfaces. So I'm always thinking about the evolution of the interface and sort of, what is the primary interface that people are going to experience computing in.

And so that to be, once upon a time, on desktop. And then it's moved to mobile. And now it's moving to auditory. And it's moving to AR. It's moving to-- so that sort of-- that first experience, I think about that a lot-- of how you first experience technology.

The-- the extraordinary entrepreneurs. I mean, you meet people. And they have a passion for what they're building. They have a belief in that they can change the world in-- in some way. So I think it's the-- I think it's the areas that they're building in, the new interfaces.

It's the entrepreneurs-- their passion, their talent. And then some of it's bounded by geography, because the majority of things that we do are in the US. And there is a-- we have a investment partner on the west coast. But there is a bias towards the east coast.

ANDY SERWER: So you look to create a community around Betaworks--


ANDY SERWER: --as opposed to just a regular venture model. How is it different?

JOHN BORTHWICK: Yeah. Yeah. So we-- in the early years, the New York tech-- when we started off 11 years ago, New York tech was-- consumer tech in New York was tiny. And so we-- we incubated a bunch of companies. We invested. And we had a lot of people just sort of gravitate towards us.

And we would do-- every week, we'd do our demo sessions, where people would come in and openly demo. And we'd do also things we'd call Think Sessions, where people would talk about tech and society. We'd do those each week. And that sort of rolled forward our brown bag lunches, et cetera.

And so we were always-- part of it was always about convening because it was a way to-- first of all, it's I think very much in our culture. But it was also a very clear way for us to connect to the community, and for us to learn, and for other people to learn by being part of it.

We-- we formalized that a couple-- about a year ago, where we actually opened up a club. And so we opened up a nerd club, or a-- it's called Betaworks Studios. But it is a membership-based club for people who are building, people who are interested in technology to join and to hang out, do some work, meet some other builders, share ideas, help find people who they could potentially hire or partner with, and also participate in events.

And so we're doing maybe eight to 10 events there per week now. So that's a standalone business that we've set up, Betaworks Studios.

ANDY SERWER: Is that working? Is it a--

JOHN BORTHWICK: It is working great. It-- it's interesting. I mean, I've never been in the club business before. And so-- and when I told my friends I-- we were opening up a club, they were like, what? You know? I think they thought disco.

So very different. Very different business, but in a way not different at all, because it grew right out of those roots of us convening, and bringing together the community and the tech community. But you-- you came by and saw the space. I mean, the space is a 7,000-square foot space.

It's not-- it's-- you walk in off the street, it's not a big space. But we've seen about 14,000 people there since we opened it. We have about 500 members, about 600 people on wait list. And so it's a bustling community now.

And it's also opened up my eyes to some of the other areas of tech in New York that I wasn't aware of. Right? There's a lot of food tech happening here. There's a lot of--

ANDY SERWER: Food tech?


ANDY SERWER: What's food tech?

JOHN BORTHWICK: So there's a lot of food-related startups--

ANDY SERWER: Like Beyond Meat?

JOHN BORTHWICK: Yes. And there's a lot of food-related startups-- a lot of beverage, a lot of performance bars, a lot of performance things period.

ANDY SERWER: But why is that a tech then?

JOHN BORTHWICK: I think that many of these companies are considered tech companies because of their means of distribution. And so there's one which we actually backed, which is a company called Dirty Lemon, which is on the surface a drink. It's a beverage. It's a soft beverage that's a good beverage-- it's low-sugar, it's good for you, et cetera, et cetera. But you text it. You text your beverage.

ANDY SERWER: How do you text your beverage?

JOHN BORTHWICK: So how the-- how the hell does that work, right?


ANDY SERWER: Right, right.

JOHN BORTHWICK: So you text. You pick up the bottle. And on the back, it says, don't follow us on Instagram, text us. Now, a lot of people follow them on Instagram. But you text it.

And then you get into a conversation with this part-human, part-bot that basically texts you back and said, OK, what flavor are you interested in? And then you order a six-pack. And then a day later, it says to you, hey, Andy, did you enjoy the [? March ?] six-pack? And then you say, yeah, it was great. And then they say, would you like another? And you go, yes. And ka-ching.

ANDY SERWER: That's crazy.

JOHN BORTHWICK: And so it's e-commerce via texting, which is very innovative. So I think the means of distribution.

ANDY SERWER: So shifting gears, John. You came to the United States as a high school student to go to college at Wesleyan--


ANDY SERWER: --from England.


ANDY SERWER: What made you come to the United States?

JOHN BORTHWICK: What made me come? I mean, I can come at this from many levels. There was-- I mean, there were family issues that I-- I was-- so part family. I was obsessed with liberal arts education.

And then somebody showed me a picture of-- it was something that was an ad that talked about sort of Americans and the dreams that Americans can have. And it was-- it was both a wonderfully inspiring image and text, but later on I also realized it was an ad, which sort of--

ANDY SERWER: Well, that's-- that's perfect.

JOHN BORTHWICK: It cued me into the American dream. And at many levels, it was the real American dream, right? Because it was-- so the fact that people could create and dream here was something that always pulled me here.

ANDY SERWER: Right. And so a lot of people complain about what's going on in the United States-- the divisiveness, the rancor, the lowest common denominator stuff, politically-- politically in particular. What do you think about America right now-- going down the tubes?

JOHN BORTHWICK: No, I think-- I mean, I think America's-- it's the greatest experiment in democracy the world's ever known. And I think that what we're going through right now is just what we should be going through as a republic. I think that we're going through massive economic change. I think much of this is being driven by technology.

Much of the social displacement and economic displacement we're seeing is being driven by technology. And I think we are in very messy ways, which is, oh, by the way, it probably should happen. We're having hard and messy conversation about our future, about economic distribution of wealth, about climate change-- about all of these things which I think are-- are part of the future.

And so I think this is-- I think the great American experiment continues. And as a-- as a Brit, five years ago, I could look at you and say, well, things are pretty good back in England. And yet today--



JOHN BORTHWICK: There's a-- there's a great debate going on there too. And so I think a lot of this is-- it's happening everywhere in the world. And I think here in the States, it's-- it's happening in a-- in a messy, but constructive way.

ANDY SERWER: Is Donald Trump good for business? He says he is. He just points to the scoreboard-- look at the growth, look at unemployment, look at the stock market. Must be, right?

JOHN BORTHWICK: I think-- I think that-- is Donald Trump good for business? I think that-- I think that Donald Trump-- I don't-- I didn't and I wouldn't vote for him. He is-- I don't think he's good for our country, per say. I think he's a product of an-- of the dislocation we're going through.

And both-- and that's at so many levels, right? He is a product of the-- the financial crash all the way through to the economic dislocation. He's a product of that. He's also a product of the media system that we've created and that he's helped create. So he's like-- he's not only pulled us into the hall of mirrors-- he's not only a mirror, but he's-- he's in there himself.

And so is he good for business? I think the economic prosperity and the run which we're on now started way before him. And it will end at some point, because cycles do. And I think that he's-- I think his unpredictability and his way of negotiating is not good for business.

ANDY SERWER: And what do you think about, on the other side of the aisle, politicians like Alexandria Ocasio Cortez and Elizabeth Warren, who seem to be bashing and beating up wealthy people and the accumulation of wealth-- saying that billionaires are immoral?

JOHN BORTHWICK: I mean, I think that this clearly moved center-stage with Bernie, right?


JOHN BORTHWICK: And-- and I think that-- and I think that part of the-- not being an American, but I think one of the things the Democratic Party has failed to do in the last 10-15 years is to-- its progressive roots sort of being eclipsed by a globalist-- sort of a liberal-globalist agenda that-- I think that now it's going to have to struggle to get back to some of that.

And so I think that-- look, as it relates to climate change, I am very supportive of-- you think we need to-- the conversations that are coming on the progressive left I think are very constructive. As it relates to tech, many of them are very constructive. As it relates to income inequality, they are-- they're real conversations that we need to have.

Many of the solutions-- [? well, ?] some of the solutions that I hear from-- from AOC and from-- even from Bernie-- I grew up and I knew socialism. Right? I lived in a country where there was socialism-- real socialism, which I don't believe [? are ?] of kind that we've seen in America before.

And the sta-- that state-driven socialism, I think it's-- it's most evident right now in China. And that's not what I want this country to be and my children to grow up in. But I think that the social conversations that are being had are very important.

ANDY SERWER: Sort of wrapping it all up in one question, was it a good thing that--

JOHN BORTHWICK: I want to hear this.


ANDY SERWER: What's that?

JOHN BORTHWICK: I want to hear what the big wrap-up question is.

ANDY SERWER: Well, was it a good thing that Amazon decided not to come to New York, was essentially prevented in its mind from-- from coming here?

JOHN BORTHWICK: I don't-- look, I put that down mostly to the incompetence of our mayor. And-- which is unfortunate. But I think that it was-- the-- I think in both his working with the progressive side of his body of the Democratic Party, but also working with Amazon to try and figure out if there was a way to make that work.

So I see it as something that was a-- could have been a net positive for New York, but I don't think that the administration dealt with it and set it up to be that.

ANDY SERWER: So I take it you're not supporting Bill de Blasio for president?


ANDY SERWER: Any-- any other favorites at this point or anyone you are looking towards?

JOHN BORTHWICK: I-- you mentioned I went to Wesleyan. And Michael Bennett is a-- was a Wesleyan grad in my class. And so I had the pleasure of seeing him last week. It's amazing to see somebody in your own graduating class now running for president.

I think that-- you mentioned Elizabeth Warren. I think Elizabeth Warren is doing an extraordinary job of laying out an agenda, right-- of just being incredibly articulate, thoughtful, and-- somewhat proffers oil, but laying out an agenda.

We had-- we've had a couple of candidates come by the Studios. We've had-- Mayor Pete came by a couple of weeks ago. He is just-- it's electrifying to be around him as a person. He's one of these people who just lights up a room with his enthusiasm and his positivism. I think that it's a-- it's going to be-- we're going to see how this plays out.

I always found that kind of crazy in the American system-- that it started so early-- because-- But it's part of the media game. And yet, I think that you're seeing the positivism of-- I mean, somebody like Mayor Pete I think has a-- he has just a fundamentally positive view of America and of the possibility that we can have looking forward in the world, which I think is-- I think is so important.

Because I just think that we have-- we have a lot of difficult conversations to have as it relates to technology, to AI, to income distribution, to all the changes that are wrenching our society apart. And we're just at the sort of bottom of this curve. And so I think having a view that we can talk about this, but what are we going to create?

ANDY SERWER: So can technology solve those problems, John?

JOHN BORTHWICK: I do think-- look, I think technology can solve a lot of problems. It's solved everything from washing machines all the way through to glasses to computers to-- I mean, we've done-- as a species, we have done-- we've built these bicycles for the mind. We've built these amazing things that have enabled our species to do so much. But technology in and of itself isn't-- it isn't good or bad. But I also don't believe it's neutral.

I think technology has a grain to it almost like wood has a grain to it. And there's a direction to technology. And you need to understand that direction. So you need to understand when you look at AI that part of that grain in AI is you have massive acquisition of data. OK. Now we have to understand what is in the nature of that data, who should have rights to it, who should own that data.

And then when you look at AI today and you see how algorithms are creating outcomes that we could not have expected-- so in other words, those systems out there that cannot show you their homework-- that's a grain that I want us to understand and see, OK-- as it relates to embedded biases in systems and in algorithms, how can we make that something that's explainable? Right? How could--

So I think technology-- yes, it can help. But we have to-- like anything, it's a tool. Right? And you can turn it into a pen, or into a sword, or into a pick-axe, or into something. Right? You can shape it. And that's the-- that's been the story of our species. And so it's just more so.

ANDY SERWER: Last question. This show is about influencers. And so my question is, how do you see using your influence on the world?

JOHN BORTHWICK: I mean, con-- conversations like this I think are-- to be able to talk sort of broadly about the impact on technology in society are important. But the sort of fulcrum for how I want to generate these conversations and have these conversations is through these studios that--

I want to open up 10, 20, 30, 50 of them, or 100 of them around the world so that we can really bring together the tech community, our tribe of builders, and connect it with other people who are building things and who understand technology is changing their lives, and have those conversations and connect those people. So that's sort of what I'm focusing a good deal of my time on right now.

ANDY SERWER: Great. John Borthwick, CEO of Betaworks, thanks so much for coming by.

JOHN BORTHWICK: It's a pleasure.

ANDY SERWER: I'm Andy Serwer. You've been watching "Influencers." We'll see you next time.