Aug. 23, 2022

The Past, Present, and Future of Entrepreneurship in Austin. Part 2 of our Discussion with Brett Hurt Co-Founder and CEO of

The Past, Present, and Future of Entrepreneurship in Austin. Part 2 of our Discussion with Brett Hurt Co-Founder and CEO of

We are back with Part 2 of our discussion with Brett. In this episode we cover the expanding Austin region, identifying talent, the intersection of philosophy, politics, and innovation, and of course what comes next.

What's Next Austin?
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We are back with Part 2 of our discussion with Brett. In this episode we cover the expanding Austin region, identifying talent, the intersection of philosophy, politics, and innovation, and of course what comes next.

What's Next Austin?

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Our music is “Tech Talk” by Kevin MacLeod. Licensed under Creative Commons 4.0 License 


Episode 47: Brett Hurt Part 2

Michael Scharf: Austin is the new innovation powerhouse, not the next Silicon valley, but the first Austin, we are adapting to the future in real time.

Jason Scharf: I'm Jason Scharf, a biotech executive, and early stage investor.

Michael Scharf: And I'm Michael Scharf advisor and board member for multiple private companies.

Jason Scharf: You can call us optimists, abundance minded up wing, and even solutionists we see a bright future ahead that can be achieved through innovation and entrepreneurship.

Michael Scharf: In this podcast, we explore Austin superpowers, the people and companies driving our growth and the macro, and microtrends that come together to create Austin today.

Jason Scharf: This is Austin. Next.

Michael Scharf: Welcome to part two of our conversation with Brett Hurt, CEO and co-founder of In part one, we talked about his role in the ecosystem as a serial entrepreneur and investor, B corporations and their role in the future of companies and the clash and collaboration of creatives and capitalists. In this episode, we discuss how Austin's geography affects the ecosystem, lessons from his book, The Entrepreneur's Essentials,philosophy, politics, tech, and of course, what's next Austin.

Jason Scharf: One of the things that we are seeing and it's obviously been this way for a while, but continues to be is that the Austin ecosystem is not just the city of Austin. Right? We've got, you know, movie studios in San Marcos and Bastrop. Georgetown and Leander are just exploding.

Brett Hurt: That's right.

Jason Scharf: Tesla's down by the airport.

How do you see this geographic spread and growth affecting the ecosystem all the way down to the fact. And you know, I've been lamenting recently about how our interconnectivity with San Antonio is not really what it should be.

Brett Hurt: Mm-hmm,

Jason Scharf: It's close. You can connect in pretty fast, but really this, this is more is a mega region than just saying the city of Austin, even though Austin is kind of the, the, the buzzword that's used in place of that.

Brett Hurt: Well, one of my best friends in Austin is Josh Baer, and we talked a bit about intentionality and how the intentionality I've seen since I was a kid of helping, helping others. Josh has created a Texas Startup Manifesto,where he's really talked about the importance of connecting, you know, Austin, San Antonio, Dallas, you know, Houston, et cetera, in this kind of giant triangle region, which is in large part of how Southwest Airlines started up as, we're going to connect this triangle. And that talk about a company with a great soul. And, you know, I'm very confident that if Herb Kelleher started that company today, he would've started as a public benefit corporation, but it takes that type of intentionality.

Like Josh sees that, that we can connect these hubs and, and it's, and some of that's already just naturally happening. But there's a huge opportunity there in, in a state with such a large GDP and such a diversity of what they stand for. Like, you know, so many Fortune 500 companies are headquartered in Dallas, so much in, you know, energy is in Houston and, you know, definitely there's a huge part of the world, which is around the future of energy and a lot of the conflict we're having right now. Like if energy wasn't in the equation, you know, would, would Russia even be able to attack Ukraine and be moderately successful at it. You know, it's, it's like all that dance around energy. So, and, and everybody knows that the future is not oil.

Everybody knows that. I mean, there's no way that that's the future. Like we have ubiquitous energy coming down from the sun. You know, the whole reason that Elon Musk started Tesla, in the very first place, was to create a sexy alternative that people would buy to fight climate change. So it just makes so much sense.

If you think about where the future of the world is going, that we would connect these cities and, and the fact that they all stand for different things and all have different ecosystems around them is really, really exciting. So it's just a massive opportunity, but I would encourage you to have Josh Baer on your podcast.

And also to, if you're listening to this to read the Texas Startup Manifesto, I think he's on the 3.0 version of that. It's on his Medium account, and it really distills like what that opportunity is all about.

Michael Scharf: I've had a chance to read through your book. I'm now holding a copy of it in front of me and

Brett Hurt: Great.

Michael Scharf: Uh, the, The Entrepreneur's Essentialsalmost like textbook for entrepreneurs, it's divided up into chapters and almost into a course outline if you will.

Brett Hurt: Mm-hmm

Michael Scharf: But I kind of skipped around a little bit and I found your, your chapter on talent really interesting and really controversial.

Brett Hurt: Okay, good. Now I love controversy, so, okay.

Michael Scharf: I've run large divisions of large companies. And when you talked about having to test

Brett Hurt: mm-hmm

Michael Scharf: potential employees.

Brett Hurt: Yep.

Michael Scharf: I will tell you, my, my head was cocked on. Man. I'm not even sure we could do that anymore. And I remember doing psychological testing and all this other stuff, but that, isn't what you're talking about.

Brett Hurt: Right.

Michael Scharf: So tell me,

Brett Hurt: Maybe I should describe the test.

Michael Scharf: Absolutely.

Brett Hurt: Yeah. So yeah. I'm glad you brought that up because Brant Barton who's my co-founder for Bazaarvoice, and I really pioneered a lot of cultural innovation at Bazaarvoice, and one of them was the test. And so maybe I could just describe where the idea came out, becausit wasn't, it wasn't until the fifth company that I co-founded, that I, that, that we thought of that.

And what Brant and I were trying to do is that I told him two stories, you know, in this brainstorm, like how are we going to hire people? And how are we going to be very intentional about hiring people that really are passionate about the mission of Bazaarvoice? How are we going to know if they're passionate?

I told them this story, you know, growing up in Austin, I really thought that I was passionate about guitar and I love to listen. I love music, you know, this is the city that Stevie Ray Vaughan grew up in and became one of the greatest guitar players of all time. You know, tragically he passed away way too young, but just incredible, incredible.

He was on a lot of the early Austin City Limits tapings. And so I thought that I wanted to play guitar and my mom got me a guitar and I tried to learn how to play and I just hated it. And I realized that's not me. Like, I can appreciate it, but that's not me. And a lot of times in business, you need to pick up the metaphorical guitar.

And decide if that's you, and there's a lot of romance in business. And as people see startups succeed during, you know, the dot-com boom, there are a lot of people that went into the startups that really weren't passionate about it. At the end of the day, they weren't, they weren't passionate about like what it actually meant to create something from scratch and how hard that would be.

They've thought, "Hey, this is a great way to become a millionaire." And get some of this dot-com money. You know, we've seen that to an extent with crypto as well. And so they basically had that mentality. And so you'd get a lot of people that really weren't meant to be there. And when the dot-com bust happened, I saw a lot of those people wash out and go back to the big corporates.

So when Brant and I decided to, to do this, this test and I'll describe the test in a second, it was super controversial around Austin, because I would go speak. I'm a, you know, pretty well known CEO here. And I would go speak about how we do this. And CEOs would throw up all over it and they would, they would literally raise their hand.

They'd be like, you're insane. Like if I did that, you know, probably 90% of the people I'm interviewing would fall out of the pipeline. And this is a real competitive, it's always been a competitive hiring market here. And I said, well, I now have the stats on it. I didn't have the stats on it at the beginning.

And I can tell you that over 90% of the people that are given the test, take the test and that it bonds them to the company in a very unique way and actually makes us stand out versus their competitive alternatives and makes them more likely to accept if we've decided they did really well on it. So what is the test?

The test is that again, that metaphorical picking up the guitar. We've gone through a process recently at where we're hiring a VP of finance, the test for a VP of finance or a VP period at a company like ours, you're going to be be responsible for leading. And so we look at how do we know how they're going to lead and what do we, what are they, going to prioritize?

They've come in with a lot of experience. So we came up with the kind of presidential 100-day plan. What are you going to accomplish in your first hundred days? And you learn a tremendous amount when you tell someone, hey, you're a finalist and there's this one more thing we need you to do. We need you to come in and present to us your 100-day plan. We'll give you about 45 minutes to present and we'll have 15 minutes of Q&A, and you don't give them anything else then that. You don't want to script it for them. And then you learn like how well do they prepare for something that ambiguous because look, leadership is very ambiguous. Who do they contact if anybody or do they just do it in a vacuum?

Do they say like, hey, is it okay if I talk with X, Y, Z people in the company? Of course it is like, we didn't give you any boundaries. You can do whatever you want, but the people that don't make the assumption, they can do whatever they want. You learn a lot about that person's going to operate on their own independent island, or they're not going to be as resourceful. And then when they're presenting, you actually learn a tremendous amount because you are now simulating what it's going to be like to work with that person. And they are simulating what it's going to be like to work with you. And you learn a tremendous amount on whether or not they're truly passionate about it. And hey, is this someone that, you know, we really want to work with? And so, so the test is basically to put them in the role of the job, kind of like a day in the life of, and it takes a lot of time to prepare for, I mean, that's, that's the part that's maybe the most controversial is someone preparing a 100-day plan that may take 20 hours.

Okay. That's that's a lot of time, but what's the worst situation someone coming in and finding out that they don't like playing that guitar. And just dropping it or faking it, you know, for a long time, there's a lot of people that go through faking in life and really don't love what they're doing. You know, Guy Kawasaki, who was one of my original startup mentors, he always says he was a failed lawyer who then became the chief evangelist for Apple.

He like spent his whole life going through that track. And then, realizing I hate this track and he's one of the greatest marketers in the world, was one of the greatest original kind of startup marketers in the world. And so anyway, that's what the test is all about. It's all about really making sure that you're right for them and they're right for you.

And that the mission is something that they really bond with. And look, when you're animated I've, I've had people go through the test that our sales people, the sales test is different. It's come in and present to us. Like we're a prospect. Tell us which prospect to role play. And I've had people come in that were the number one performer in their company.

Like, they're very proud of that. And then they, in a competitive scenario where you're comparing them versus another salesperson, it's very clear that they, that they spent almost no time preparing. And it's very clear that this person that was much hungrier spent a lot of time preparing. And it shows because as a you're simulating being a prospect and you're like, I would buy from that person.

So I don't care if this person was number one. What if they were number one at their company because they were paired with a great sales engineer and the sales engineer was doing 90% of the work to get the sale done. And they were just getting all the credit. The more technical the sale is, the more the sales engineer is needed.

And so there's a lot of mystery about like, is this person that performed… was the reason they performed because of them or because of the people that surrounded them, et cetera? And that's what The Entrepreneur's Essentialsis all about is how to start and grow companies and then ultimately pay back and help others. You want the people that are very self-driven that are very motivated by your mission. You know, we will all run through walls to get it done. It is not going to be easy. It is so much easier to go work at a big company like a Meta or a Google. And just ride the cash flows of all the people that did the heavy lifting before you came in and just be pushing paper in, in this case, pushing buttons on a computer and have no fear of failure.

And everybody's going to salute you when you go home for Thanksgiving and say like, you must be a genius, you work at Google. And they're not going to salute you when you say that you're working at a startup that they've never heard of. They're going to think, oh my gosh. You're like putting your life in jeopardy.

You may fail. This whole thing, you know, may taint your career, et cetera. So it takes a lot to get something going from scratch. You know, Elon Musk, who we, as you know, is one of the people we celebrate here. You know, Tesla almost went out of business, he'd put all of his savings into it. And that was the thing that guilted the rest of the VC community to go in and say, this guy's putting everything he's got on the line to make this successful.

And so they, they came in, they were like, that's what it takes. So it's very hard to start anything, but it's the most glorious feeling in the world in career, when you start something from scratch, with a team that you love and a mission you love and turn it into something that actually changes the world for the better. There's no better feeling and all great American companies started that way.

Whether it's Walmart and Sam Walton, you know, I studied him a lot when I went to The Wharton School and his book Made in America, or whether it's Elon Musk. Whether it's Michael Dell, you know, toiling away in his dorm room at UT with his parents saying, Michael, we really want you to finish college.

Like we really want you to become a doctor, a lawyer, and him saying, please, please. I really want to do this. And then his parents saying, look, if you can, if you can make $300,000 this summer just pulling the number out of the air, we will leave you alone. That summer he made like over half a million and they're like, all right, we will leave you alone.

You can drop out of UT. You can, you can do whatever you want with this, with this Dell computer, it wasn't even called Dell back then. But, with this computer company, you want to start.

Michael Scharf: It was great because I think you're calling it simulation is so much better than the test, but just my opinion.

Brett Hurt: Yeah. It's true. The test makes it, it definitely could spike more adrenaline.

Michael Scharf: Oh, yeah.

Brett Hurt: But look, a lot of life as a test. I mean, when, when I, when I got into Wharton I really wanted to go there for my MBA, went to UT for undergrad. I really wanted to go to Wharton for my MBA. I felt like that was my personality and that was my people. And it really turned out to be the case. And I had to work so hard to get in there. I had to study so hard for the GMAT. I had to write my essays over and over again for three months. My wife, you know, we’ve been married 26 years, Debra was like, this isn't good enough. You're not really answering the question.

I would show them to strangers on planes and say to someone, "a stranger's going to read this. What do you think about it, am I describing it well?" Because I that's how much I wanted to get in. And then the people that you're surrounded by have all been through that same hell to get in. And I want people to go through some hell to get a job at or Bazaarvoice before. I want, I want to know that they really care to be there.

Michael Scharf: Oh yeah, absolutely. Your, your section on helping. I absolutely agreed with you on a lot of the key points. I mean, clearly. The growth of the economy is going to be based on intangibles going forward.

Brett Hurt: Mm-hmm

Michael Scharf: VCs coming out of banking. I can absolutely attest to this VCs have turned risk management on its head compared to a bank. And Europe's regulatory model is a disaster compared to the United States. What does America have to do to continue that growth in the startup and the venture and the innovation economy?

Brett Hurt: Yeah. So there's a really good analogy to your episode where you interviewed Dr. John Butler on how Austin started and George Kozmetsky. We dramatically underinvest in this country in innovation, especially compared to China.

And that's a huge mistake. So it's a massive increase in funding, things like basic science. Like that's where we, I, I would love us to take like 20% of the military budget and allocate it to that. No kidding. I mean, because the whole goal of humanity and being, being Jewish, you know, the whole goal of Judaism is Tikkun Olam, to create a better world.

And the whole goal of humanity is based on innovation. Like everything that we've done throughout human history to innovate whether it's the creation of the printing press, or it was the the, the creation of, you know, recently the electric car or whatever. I mean, you know how solar energy's going to change the world.

I gave a talk at our synagogue, during Shavuot, where I gave a controversial talk about… Look, if we are, if we are a reflection of God, Then the goal of humanity is to become godlike. And the people that lived 200 years ago would look at us as godlike today and 200 years from now. If we were able to go into a time machine, we'd look at those people as godlike, they would probably be creating things out of atoms, you know, from what appeared to be thin air to us.

I mean, that's for sure coming right nanotechnology and all types of biotech and everything else. And so that is the goal of humanity, to constantly innovate, constantly try to create a better world. The US should be the leader in that. And it makes me nervous that we are falling behind on that.

But I do think that people are getting more and more of the memo there. Like one thing that is very united on the front of Republicans and Democrats, you know, we can talk about division but the reality is there's a lot of unity when it comes to things like the threat of China and the fact that do we really want the world to evolve in a way where an authoritarian regime is going to be the ruler of the world?

You know, they're they're right now, number two in the world on GDP. Everybody thinks they're going to be number one and could literally be the leader of the entire world. Do we want that for the world? Or do we want a world where the whole goal of humanity is to become free and express freedom and have the ability to choose and not have the, not have this fear of being constantly you know, potentially imprisoned and everything else because you've spoken out against the dear leader.

You know, we've seen that in human history that doesn't work out so well. So I think, I think the United States needs to get massively more involved when it comes to basic science. And when it comes, when it comes to funding innovation, that's so obviously the future, you know, whether it's solar energy, whether it's things like the future of biotech, you know, the future of medicine.

These are things which have literally led. I mean, we created the internet, you know, one of the things that always kind of smile at whenever I'm giving someone, my number that's from overseas is I'm always like, plus one. Well, where the plus one come from where the plus one and the entire world, because we invented the freaking telephone systems, right.

I mean, that was like the original innovation. We invented the internet here, those and those things came originally out of things like basic science.

Michael Scharf: That's the large scale and let's take it down to Austin. What do you think are the biggest challenges that Austin faces right now?

Brett Hurt: Yeah, so I think, I think so many things are going in the right direction for Austin right now.

Like one thing that really held us back, if you go back. When I moved back here, you know, 19 years ago is there was one major VC. It was Austin Ventures. Now we have a diversity of lots of VCs. The problem with that back then is that if Austin Ventures passed on your business, and you went to Silicon Valley to see if you could get funding.

The first question you would ever get is why is Austin Ventures not an investor in you? And have you pitched them? Of course, you have to be honest, you say yes. And they passed, well, now all the decks stacked against you, because they're like, well they know that system ecosystem. And we don't we're based here in California.

So the fact that so many prominent VCs have moved here, whether it's Jim Breyer or Joe Lonsdale or a number of others, You know, Sapphire Ventures has their headquarters here. I mean, it's just amazing, you know, you guys had Garheng Kong of HealthQuest on your podcast. I think he's an absolutely amazing person. I've got intersectionality with him through the Aspen Institute.

He's a fellow there too. So you, you have, you have so many things going. We talked about the diversity of the, the ecosystem. The only thing that I'm fearful for right now in Austin is how the government is innovating in a negative way on the social side. It it's, it's very anti-Texan. In my opinion, like Texas is the definition of a melting pot.

Texas is very diverse. It's actually very diverse politically too. And it's kind of a centrist state at the end of the day. And politically I'm an independent. So one of the things that I did recently, Josh Baer and I, we got a group of CEOs together, a lot of the most prominent startup CEOs in town. And we wrote a letter saying, don't mess with Texas innovation.

And one of the things I give Abbott and Rick Perry, a lot of credit for is they're responsible for recruiting a lot of businesses to move here, which I think are great, giving them incentives and everything else. There are now more Fortune 500 companies in Texas than any other state in the US. I think all that's great.

But if we start to innovate in a way where socially we oppress people of color, we oppress women. I don't think that's the natural evolution of the state that we want. And so if, if anybody's interested in tuning into that letter and signing on with it, you can read it at This is Not Innovation at, or just go to Josh Baer's Medium account.

We put it on his Medium account because he's got a lot of followers on there. Just see if that resonates with you. But that is my biggest fear, that that type of negative social innovation will lead people to reconsider. Like, do they want to locate their business here? Are they going to have a mutiny with their employees?

If they choose Texas? I got a crushing text last night from a very good friend. One of the greatest innovators in the US who said, I don't want to come to Texas right now. I don't want to even spend a cent there because of the way it's innovating in this area. And I was trying to talk him off of a cliff and saying, look, you know, there's a lot of people like me that are, that are fighting to make sure that Texas doesn't go in a direction, which is so polarizing that it literally disenfranchises people and they don't want to move here. That's that's one thing that I worry about.

Michael Scharf: Brett Hurt, The Entrepreneur's Essentials, founder of We always ask the same question to close the podcast. What's next Austin?

Brett Hurt: I think Austin is just beginning. I really think that it's going to lead the world in so many ways, from energy to food, to manufacturing, to software as a service types of businesses to data. It's really just beginning, it's becoming more and more diverse in terms of the ecosystem of capitalism.

And frankly, even the ecosystem on the creative side, like there are many more creative endeavors being launched here all the time. You just have to open your eyes and look for them. And so I really think that Austin has an incredible future ahead. I mean, one of the things in terms of that, you're going to be hearing a lot about in terms of just lifting others up and something I'm very involved in now is Terry Mitchell is starting something called The Black Fund, which is really going to lift up a lot of the the Black entrepreneurs in Austin.

A lot of the Black nonprofit leaders in Austin. And that kind of stuff happens here because of intentionality. Like she decided to start that as a Black woman and she's got a lot of great technologists, great capitalists surrounding her saying, yeah, it's time. It's time for Austin to do this past time for Austin to do this.

So that kind of innovation is happening all the time and is a really beautiful aspect of, of Austin. But I'm very bullish. I think the next 10 years are going to be the best 10 years that Austin has ever seen. I really believe that the momentum is building on itself. And you could have never asked me to predict that the pandemic would've been the tipping point.

I just, I, I understand it, but I would not have predicted it. I mean, of course, if we predicted it, you know, in terms of old Austinites, we would've all been buying up tons of real estate. Cuz that would've been, that would've been the best bet. You know, when the market was just completely crashing and everything else and we all thought.

You know, everybody's watching the movie Contagion and thinking, oh my gosh, is this, is this going kill all of us? And you know, body bags are lined up in Italy and Wuhan's locked down and we'd never guess that's the moment that would be Austin's moment out of all the moments, it's always been an upward trend, but that that's when it would hockey stick.

But I think what that has led to is great people like you two moving here and your families. It's led to amazing people like Jim Breyer and Joe Lonsdale moving here. And we're just beginning, to actually even see a new university, that's going to be created here. I mean, that's so cool.

Like there's just so many things that are happening here, which are going to have a very long tail in term of impact. Elon Musk, just starting here. I mean, you know, they're about actually creating a whole different city right outside of Austin. That's based, purely on the future and purely on technology and, and, you know, I'm sure The Boring Company is going to be doing all types of projects here.

So it's going to be this city of the future. And even the skyline looks like that I was talking with someone who's very internationally traveled, you know, goes to Singapore and all over the place. And, and he was making the point. He was like, you, you realize that the city skyline of Austin now actually looks more high tech than almost any city I travel to in the world.

I was like you're so right. You know, and, and, and those, those buildings, that creative class and the capitalist class kind of like that tension has led to, you know, very energy, efficient buildings, like very innovative design, you know, a lot of intentionality and in building them, all that stuff just feeds on itself. Because people come here and they're like, I want to be like that too. And pay back and be a part of the Austin ethos.

Michael Scharf: Brett, thank you so much for inviting us into your home and for being on the Austin Next podcast.

Brett Hurt: Thank you. This was a lot of fun.

Jason Scharf: So, what's next Austin. We're glad you've joined us on this journey. Please subscribe at your favorite podcast catcher. Leave us a review and let your colleagues know about us. This will help us grow the podcast and continue bringing you unique interviews and insights. Thanks again for listening and see you soon.