0:00

There's certain things about KB that led to that

0:02

successful track record in KB4, 5 and 6 that

0:04

I kind of missed. And

0:07

then there's several personal things that just were more

0:10

appealing to me as a human, aside

0:12

from my professional aspirations and goals and ambitions.

0:14

And so the combination made a lot of

0:17

sense. This is 20VC with me, Harry Stebbings,

0:19

and this Wednesday we had some of the

0:21

biggest venture news in a long time. Keith

0:23

Raboyd, legendary Founders Fund investor who'd backed the

0:26

likes of Stripe, Fair, Ramp and

0:28

others, was leaving Founders Fund to rejoin

0:30

Vinog Kostler and Kostler Ventures. In this

0:32

exclusive, we dig into the motivation behind

0:35

the move, the plans ahead for both

0:37

Keith and Kostler with their $3 billion

0:39

in new funds, and then dig into

0:41

some of his biggest lessons investing from

0:43

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0:46

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0:48

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3:01

Keith, I am so excited for this. My word,

3:03

you decided to save some of the biggest VC

3:05

news for the start of the year. So thank

3:07

you so much for joining me today first. It's

3:09

a pleasure to be with you again. Talk

3:11

to me, Keith. Moving back to

3:13

Coastler, I guess the first question is, why did

3:16

you decide to make the move back from Founders

3:18

Fund to Coastler again? Well, in some ways, I

3:20

spent six years, just so everybody has some context,

3:22

I spent six years from 2013 to 2019 as

3:24

an MD at Coastler Ventures. And

3:28

we had a really successful run together.

3:30

KB4, KB5, and KB6 were the funds I was a partner

3:32

in. And we produced

3:34

really stellar returns working as

3:37

a collaboration team between Binod,

3:39

Samir, Kul, David Widen, and

3:41

Sven. I never really

3:43

left in some senses because after I

3:46

left, I stayed in really significant contact

3:48

with Binod, Samir, and David particularly. We

3:50

co-invested almost every quarter together.

3:53

So Samir invested and led a financing

3:55

round in the company I run as

3:58

CEO in OpenStore. the

4:00

Series A for a company that you're

4:02

familiar with, Trava. We worked together there.

4:04

I led a growth route to one

4:06

of Simeer's favorite companies called Ultima, Ultima

4:09

Genomics. Simeer also led

4:11

either an investment round in

4:13

Barda, Delian's company. I worked

4:15

very closely with David Wyden

4:17

on a bunch of companies,

4:19

including Fair, Bungalow. So I

4:22

felt like I was actually seeing more of Simeer and

4:24

David than I did when I was at KB for

4:26

six years and the last five years at Bowersfund. Basically,

4:28

when I was at KB, I would see them

4:30

every Monday for hours at a time. But I

4:32

didn't visit them Tuesday, Wednesday, Thursday, Friday. So we

4:35

were all going meeting with founders, doing one-on-one with

4:37

founders, attending board meetings, taking pitches, etc. Whereas

4:39

in the last five years, actually, I

4:41

was working with Simeer and David basically

4:43

every single week. The bridging and bonding

4:45

got stronger over the last five years

4:47

and in the six years we were

4:49

just debating at partner meetings. The recombination

4:51

made a lot of sense. I even

4:53

spoke at the KB CEO Summit last

4:55

May. I've stayed in quite close contact

4:58

with all the partners. At KB, I

5:00

even helped recruit Nikita originally to KB.

5:02

So I'm extremely excited to be able

5:04

to work with him. What you said

5:06

there about the things that you missed

5:08

that were inherent in KB4, KB5

5:10

and KB6, and then the personal. If we just

5:12

take those two, what was it that you missed

5:14

that was kind of central to the success of

5:17

those funds that you wanted to return? So we

5:19

had very extensive partner meetings

5:21

every Monday for hours at a

5:23

time. And we vigorously debated new

5:25

investments, as well as

5:28

the impact to the potential

5:30

upside of the current portfolio. And these

5:32

were very unstructured and very vigorous debates,

5:34

particularly with Vinod and Simeer, David, and

5:36

sometimes Sven. And I felt that they

5:38

made me a sharper investor, a smarter

5:41

investor, even though it was ultimately my

5:43

decision on what to do with the

5:45

companies that I was championing or the

5:47

companies that I was on the board

5:49

of. They made my brain work

5:51

better by listening to them. And

5:53

occasionally I made the mistake of over listening, but

5:56

it was always my mistake. I

5:58

was doing my job better. It's

6:00

a stereo surround widows perspectives mere fact

6:02

of Davis for fact it a unitary

6:04

to with me to Ap Ap in

6:07

a library for the first year Racketeer

6:09

their voices sorcerers them out of us

6:11

but I your data whispering about the

6:13

financials, calculation of the contribution marches and

6:15

here severe talking about sir things about

6:17

founders O W, think about video talking

6:20

about the up option dioxide and achieve

6:22

and we need to get more decisive

6:24

hours in the company sounds like wandering

6:26

around the wishes of my head. But.

6:29

I actually think that need be a

6:31

better faster and so this up in

6:33

L. A personal side as you know,

6:35

kiddies significantly branded ah successfully that detached

6:37

our core technology in passing space and

6:40

even a that's not my forte insult

6:42

my compared with them to life I

6:44

felt I was learning something new about

6:46

the world every week. So for example,

6:48

ever six years of education others lot

6:51

about robotics, other in a lot about

6:53

the fundamentals of A. I have heard

6:55

about liquid biopsy to detect cancer so

6:57

I had learned so much. And I

7:00

felt like I was becoming broader as a

7:02

person even if it didn't really translate to

7:04

the day to day with decisions I was

7:06

making. A really decide. I was like getting

7:08

a free education in the world of technology

7:10

every week. Learning by going to hurt her

7:13

knees and said our does like a free

7:15

benefit do my job. You mention that the

7:17

Monday partner meetings and rigorous to base stats

7:19

will kind of. We think of with venture

7:21

partnership discussions. that's not the way the founders

7:23

on charges it. No.

7:26

Doubt his son is so see what

7:28

I joined was very much people running

7:30

their own. It strides is think of

7:33

is like a Pm ready. The only

7:35

that societies editors were sinking and getting

7:37

a certain number of a critical mass

7:39

and votes to support it. Vastly different

7:42

sauce olds of dollar figures, but he

7:44

really wasn't designed for the most part

7:46

for that tie. nerve analytical rigor like

7:49

Katie. Had the conventional parody matic old

7:51

school partner meetings every week. They were

7:53

quite subsidy, quite dense, even. the preparation

7:55

for those meetings are sunday sunday for

7:58

me used to be roused operating together,

8:00

let's say Square or LinkedIn. Sunday would

8:02

be the day that I would kind

8:04

of do brainstorming and strategy, pull

8:07

out my big water's notebook and kind

8:09

of redesign org charts and things like

8:11

that. Sunday at KVD was a full,

8:13

dense day of writing substantive memo emails,

8:16

reading other people's DAX analysis. I didn't

8:18

have time to let my brain wander

8:20

at all Sundays, because there was so

8:23

much preparation that that was going into

8:25

each Monday partner meeting. You also didn't

8:27

have time to do barriers, my friend.

8:30

I definitely did barriers, don't worry about

8:33

that. Can I ask, I obviously

8:35

spoke to Vinod before this, and

8:37

he said in particular, no one really

8:39

runs the firm partners work closely together,

8:41

each MD can decide to make an

8:43

investment even if the others disagree. How

8:46

do you think about listening to people

8:48

at KV without letting it impact your

8:50

mindset and decision making process negatively to

8:52

the extent where you could say no

8:54

to something that could be great? The

8:57

way it really works and the way the rubber kind

8:59

of beats the road is sort of like a certain

9:01

amount of social capital. So I have a certain amount

9:03

of social capital within the firm. If I want to

9:05

do something that's very non-standard or very controversial or

9:08

not expected, I'm kind of learning and

9:10

consuming some social capital. Now if I

9:12

make the right call that gets paid

9:14

back with interest, and you know, the

9:16

next time I want to make a

9:19

controversial decision is actually even easier. But

9:21

Vinod's right in the sense of there

9:23

were times at KV where

9:25

I wanted to do x, y, or z

9:27

in my six years there, and there was

9:30

some critical feedback, and maybe I listened to

9:32

it, but it was always my decision to

9:34

listen to it. So there are times that

9:36

maybe I regret me like actually listening to

9:38

it, that I should have, you know, had

9:40

more confidence and more conviction. And then there's

9:42

times actually counterintuitively and people sometimes forget this,

9:44

there are times that I would actually champion

9:46

an investment, champion a company, and

9:48

the reaction afterwards would not be critical, it would

9:50

be more enthusiastic than even I was. The reaction

9:52

in the room was like, do not lose this

9:55

investment. It doesn't matter if you have to, you

9:57

know, invest in a higher valuation than we normally

9:59

do. They typically would. This is actually

10:01

really good. So sometimes it would actually cut

10:03

the other way. It wasn't just like critical,

10:06

like what the hell are you thinking? It

10:08

was like, oh no, no, this one's really

10:10

special. You're right and double down right now.

10:13

Like sign that service seat today. I remember

10:15

when we were considering the first institutional investment

10:17

at Max Elections Company at a firm. And

10:19

their uniform reaction was, Keith, make this happen.

10:22

And then so, you know, then the only question was,

10:24

you know, Max and I had to work out like

10:27

what a fair valuation would be. But the reaction was

10:29

like, I wore what I brought in OpenDoor. We're

10:32

incubating OpenDoor. And Eric came in to present.

10:34

People were familiar. People knew that I wanted to

10:37

incubate it. So there was, you know, a

10:39

default kind of like leaning in. But afterwards, everybody

10:41

was like, this is a no-brainer. We absolutely

10:43

should do this. Close this. Is

10:45

there an example where they persuaded you not

10:47

to and you regress it? I knew that

10:50

I was on the edge of

10:52

consensus and I was

10:54

gonna burn a lot of social capital,

10:57

mostly on should I increase the valuation

10:59

of a particular offer? So it wasn't

11:01

like, should we proceed or not? It

11:03

was like these terms feel rich, you

11:06

know, and make sure the risk rewards

11:08

there. So for example, I can

11:10

think of two or three where I

11:12

knew that I was at the edge of

11:15

the valuation range of what Coastal

11:17

Ventures would typically accept. And

11:19

there was enough criticism and concerns about the

11:22

company that really was taking a lot of

11:24

liberties to go further. And once in a

11:26

while I did decide to pay, you know,

11:28

whatever the valuation was required. And once in

11:30

a while I went out, one

11:33

of the examples and probably, you know, the

11:35

one I'd lose most sleep about, you know,

11:37

after almost 11 years of being in VC

11:39

is RipLan. So RipLan came in,

11:41

Parker came in and we gave a term

11:43

sheet, you know, obviously controversial at the time

11:45

for the seed and Gary Tan initialized, also

11:47

gave a term sheet. And at

11:49

the time there was about a $10 million gap.

11:52

I probably offered five at 25 plus or

11:54

minus for memory. And I think Gary was at

11:56

like 35 And Parker Really

11:59

Walked in. The be to increase the

12:01

offer. And. I felt like there

12:03

is just didn't have consensus to get

12:05

the offer out of that. If I

12:07

really need all that, I might be

12:10

burning A lot more control than I

12:12

thought I should and how to see

12:14

It turned out to be an unmitigated

12:17

disaster for me. Forces recovery offered. Parker.

12:19

Ah, Sarita it up. He doesn't care

12:21

very much and endeavors. There's a moment

12:23

also where I'd already like locked in

12:26

a turkey to read this series seat

12:28

for Robin Hood actually a twenty post

12:30

which was pretty. Expensive but they came

12:33

back and really wanted me to join

12:35

the board in the seed round. And

12:37

susan maybe my second year T V

12:39

so I ask you to blow in

12:41

Severe are reading. Sites. Where the

12:43

board and uniform reaction was like no way

12:46

he can be joining like always Boards of

12:48

seed like that is what work. So we

12:50

decided to part ways. very suddenly. You don't

12:52

I just said a catcher a the board

12:54

and they want to find the other Dusters,

12:56

Odyssey and other sort of unmitigated, just absurd.

12:58

But you know, They. Were right for

13:01

the most part that you cannot be

13:03

institutional investor in a multi stage fun

13:05

cause joy to forge see said be

13:07

very to dishes to a t.was it

13:09

Rod was as long as apply to

13:11

complete a result. For the up to

13:13

me I would have joined the board

13:15

it is doing enough when the same

13:17

thing happened for years later I have

13:19

been another company that I had sought

13:21

to fix it up and as he'll

13:23

be the see this copy call failed

13:25

their came back and said back said

13:27

to me I target cofounders and he

13:29

was. A yes yes. Joined the board. And.

13:32

Having learned and and bird by the

13:34

are robbing them spirits I never really

13:36

told that are dosages report suggests there

13:39

probably happy with the dow but of

13:41

the public capital required for that here.

13:43

So. I went on pine couple of

13:45

on say he said about price sensitive. the

13:48

especially was rippling Saudi five vs twenty five

13:50

which would you say is more price sense

13:52

to is T V or found a

13:54

sand and just post Is it even good

13:57

to be price sensitive? Historically I'd say T

13:59

v his. Read: more Price disciplined Their found

14:01

her side, but I think Found Her son

14:03

is actually more price sensitive and more discipline

14:05

than most people. Give you credit for the

14:08

guy Ossie notices when I joined. The.

14:10

Discipline eternally is was much

14:12

a stronger. Did. I thought

14:14

from afar you're watching The from T

14:16

V has historically been maybe the most

14:19

price disciplines of Etti Large is to

14:21

so fine I think they have have

14:23

relaxed out of it. Was.

14:25

At Dodger sun actually saw some turkey

14:27

city said it I was looking back

14:29

and say wow over the first public

14:32

that appeared in that would have up

14:34

and by the it but I think

14:36

of the major firms at maybe he'd

14:38

be and it's status on baby the

14:40

two most disciplined at least squares also

14:42

historically been very crisis of went I

14:44

to the credit they've also realize that

14:46

a bit on the dirt I think

14:48

very top down to consciously but I

14:50

think historically those three might be the

14:53

most price just went it is a

14:55

not. The more for topic is where you

14:57

should you be should you care how much care

14:59

of Cetera and I still remember. This.

15:01

Episode You recorded with Peter Sidon. When.

15:04

Peter said. Price. Is always

15:06

a trump. He. Does his early in

15:09

my career or the Beijing the Record

15:11

before started vc by Listen to It

15:13

I didn't photograph get when I listened

15:15

said episode The Gear for Do in

15:17

Peter. Over. The our

15:19

customs my eleven years the wisdom

15:21

be hi Peter I is inside

15:23

has suffered even more and more

15:25

as stasi for what idea which

15:27

is primarily season series A When

15:29

Peter and Would said it was

15:31

saying the prices always attracted really

15:33

excuse for not having to make

15:35

so that's basically translated your whole

15:37

episode events ah sets the surge

15:39

version of that is. He's. Mostly

15:42

right that wind and seed round or

15:44

a series a rod when you're walking

15:46

away place. It is a bit

15:48

of lack of conviction and you really should

15:51

be lucky. The married say why don't I

15:53

have condition he says if you caught did

15:55

you make the right call at seat. You're.

15:57

Gonna wind up in a pretty good place to that

15:59

companies. Chronic. At. Even a

16:01

a you make the right call at

16:03

almost any price you're going to be

16:05

pretty happy at crates years be that's

16:07

not true a series be to pick

16:09

a good company that boston it briefly

16:11

to are priced the risk reward is

16:13

sorely our the totally our ottawa me

16:15

that he didn't a real money but

16:17

i'm primarily beating see the first institutional

16:19

around and company as he of my

16:21

goal in life is to be the

16:23

ursus tucson bastard said he'd have you

16:25

know relatively high price for fail or

16:28

twenty nine coast was actually hi her

16:30

and in Detroit you. But added with

16:32

back and stuff but since then I so

16:34

I totally agree the the sniff it all

16:36

goes plan you when regress it's but when

16:39

you actually look back at for five years

16:41

and see average entries rice been twelve and

16:43

a half and then five years later average

16:45

entry price being twenty five author see you

16:48

just have your hands were yeah some people

16:50

have forgotten this in Edo. One thing that

16:52

kills really disciplined about as he told the

16:55

other senses this these dynamics really well. And

16:57

is always pointing this out internally. sometimes

16:59

externally that he returns are not going

17:01

to be the same as which had

17:03

stopped when that's what's going on in

17:06

the macro army. And series can't

17:08

follow the seat strategy with a different kind

17:10

of for entry price on average at all.

17:13

But. Yeah was while know he went astray

17:15

show when I invested ramp in the seed

17:17

round which odyssey proven to be a very

17:19

good about smith. The. Pricey on.was

17:21

extraordinarily high. Percy don't.

17:24

Have. A surprise. Probably made a

17:26

big forty Posted was more the thirty.

17:29

Wow. I am respect for you. I

17:31

remember our to Paris before like it

17:33

wasn't at Susie Unicorn founder. Know

17:36

he Ido in fact is quite controversial.

17:38

I sometimes think that it might have

17:40

been the most courageous investment needed to

17:42

be seats because everybody was so were

17:45

defeated. Express, you know nonsense on antidotes.

17:47

typically not the best strategy she fast

17:49

follow you know another side of the

17:51

construction. but I knew Adidas is cold.

17:54

I knew exactly what press was going

17:56

to do Rod and I knew that

17:58

if we could find. Bloggers we

18:00

could absolutely dominate. It has proven to

18:02

be the case. Rap is actually going

18:04

to be the winner. Probably will be

18:07

two three four five had times more

18:09

valuable to when you invested seeds Day

18:11

the annual concerned about price Do you

18:13

ask yourself, Do I really have enough

18:15

conviction? On. Try I try to do

18:17

that. I really tried it applied to to

18:19

fighting see that sort of. It's now much

18:21

more frequently. I. Do think about though,

18:24

Capitalization. Overtime you do up

18:26

to take into account what kind of

18:28

company is this have a couple of

18:30

the gonna require to exceed certain milestones

18:32

in here Depends on what does a

18:34

copy sparring to do because of your

18:37

composition is going to require so much

18:39

in your first and she prices so

18:41

high that company me dhabi suffer success

18:43

in.e a big decrease the overall probability

18:46

of being saslaw which is a material

18:48

problem so certain vertical slice or maybe

18:50

a step functions did you have to

18:52

achieve Us postal. Kind of the

18:54

Chivas curve of progress. Is a

18:56

step folks who wants to be slightly

18:58

near senior valuation at your crisis to hide

19:01

that companies debt. And. That's a

19:03

real problem. He said they're back and

19:05

dilution concerns insensitivity three percent again size

19:07

of he played. Continuing to invest kv

19:09

of is he had continuous sons. Now

19:11

we'll get into the separate churches. I

19:14

I don't like years as a heathen,

19:16

I don't want reason please educate me

19:18

but because it's trash in him. If

19:20

I'd done reserves how to put money

19:22

into hopping clubhouse that would not have

19:24

been a good set of. and that

19:26

so how do you think about that

19:28

and bluntly proactively allocating ahead of time

19:30

especially when you don't know what's. Coming.

19:33

There's. Like three or four things in virtually

19:35

nobody knew. Nobody does super well. I'll slit

19:37

it's our job is much more art than

19:40

science. How did you reserves is one those

19:42

topics at T V. there is a more.

19:45

Discipline. Let's say a price reserves or

19:47

doesn't mean better. By the way, to see. It.

19:49

Is more top down like what our

19:51

reserves homage to reallocate to copy X,

19:53

y and Z. Thomas. You have

19:56

a similar All cases do we have to

19:58

receive this one increases one except. Where's

20:00

the counter Sanders know explicitly a

20:03

policy of not reserve and in

20:05

every investment season is odd and

20:07

out on a case by case

20:09

basis in their strong Marisol actually

20:11

even though most of my best

20:13

installed maybe closer.tv I think. I'm.

20:16

Closer to the sound her son style of you're

20:18

probably better off not reserve. And. In

20:20

making ad hoc decisions based upon

20:22

the quality of that particular opportunity

20:24

which includes who's the duster was

20:27

the toxin of the company would

20:29

have believe about the founder would

20:31

be worried about the founders abilities

20:33

interests and then western I reset.

20:35

Do. You worry that with the second model

20:37

being found a songs model and found a

20:40

say hey what's your approach to reinvesting and

20:42

he said it's a dog fight for it

20:44

you go to prove yourself and it's been

20:46

a it's that's beyond it's Nord is enticing

20:49

and saying oh we allocate x amount of

20:51

reserves. While me and vast I worry that

20:53

I think in theory there's your might have

20:56

been some seats that but in practice just

20:58

observer being observed sound or so. Before I

21:00

joined working there five years I never saw

21:02

it be never translated into a practical problem

21:05

with about. Going back to Cede but

21:07

before we can be weighs about going to risk

21:09

and series be been challenging place in terms of

21:11

briskly not being paid for it. I don't think

21:13

you're paid the risk that we take it seed

21:15

Keith slower, divert. I did. Were

21:18

not at all. but the outliers

21:20

are. so. I think the seed range

21:22

of us as the seem a

21:24

seed range these days is an athlete

21:26

billion post to twenty. Five. Lower

21:29

on that spectrum. Now I still see

21:31

five on twenty five daily with and

21:33

or got yes to those I would

21:35

not be doing obscene Extraordinary reasons. So

21:37

one of the metaphors I worried effort

21:39

as you actually tommy estimated been someone

21:42

a kiddie but saddle and they found

21:44

her son also applies. this is your

21:46

basically to get play poker it every

21:48

round design a card your be.and there's

21:50

different. Informational cortex is different price points.

21:53

For. that round so would receive receive get

21:55

from that new card and then what's

21:57

the price five and forty five and

21:59

strides That card is very expensive

22:01

for a certain amount of informational

22:03

content. So that's probably a very

22:05

rare opportunity that you want to

22:07

say yes to. Now I would

22:09

say it's not like I'm holier

22:12

than thou. I've definitely done that. As I said,

22:14

I gave a term sheet to Ripling with

22:16

those terms exactly. So I will do it,

22:18

but you want to know why you're doing

22:20

it because that card price

22:23

point is not smart generally

22:25

speaking. The question is, how is that

22:27

five calculated? Is the founder

22:29

reverse engineering from evaluation expectation, which in

22:31

that case I'll be using in a

22:34

bar, or is five

22:36

the correct dose to achieve certain accomplishments

22:38

that will unlock the next round? And

22:41

there are some times, some markets where really self-fide,

22:43

you can't achieve those milestones. So you're kind of

22:45

fooling yourself. You can give a term sheet at

22:47

two or three, you know, at a lower valuation,

22:49

but the company's not going to achieve what it

22:51

needs to achieve. You said that's what they need.

22:54

You should be told we're seeing a lot of rounds that are 15 to

22:57

30, 40 even, especially in

22:59

kind of AI with pedigreed founders. What

23:02

do you make of those? Because when we see those, you probably

23:05

don't need 15, 20, 30 to get started. Mid-Journey

23:09

is a bootstrap company. How

23:11

do you feel about those? One of

23:13

the most important pieces of feedback, a really good

23:15

VC can give a founder is

23:17

what you need to achieve where the

23:19

rest of the world will appreciate you

23:21

so that capital is unlocked. Capital will

23:23

be easy to raise. But

23:26

one of the things I try to do

23:28

is calibrate that right away. Okay, for this

23:30

kind of company with this team, if we

23:32

achieve two of the following three things, people

23:34

are going to appreciate us, whether it's my

23:36

firm or someone else's firm. Let's

23:38

dial in how much time and how much money is it

23:41

going to take to get there. And let's make sure you

23:43

have the sufficient resources. It's a little bit like the driving

23:45

the car metaphor of like, there's some destination you need

23:47

to get to. There's one amount of fuel that's

23:49

required to get to that destination, but I don't

23:51

want to overfuel you. That doesn't work. It's like

23:53

playing when you overfuel, you're just like bogging the

23:55

play down and it sort of creates

23:57

more resistance. So for example, let's talk about open

23:59

door. we raised 10 of the seed for

24:01

open oil. That was actually the correct dose. Buying

24:04

homes, you really can't prove that

24:06

you can buy cohorts of homes accurately, like

24:09

priced accurately and resold properly for less than

24:11

about 10 million. Maybe you can make it

24:13

eight to 12. Otherwise

24:15

it's really not worth trying for less than 10.

24:18

Like you're fooling yourself. So 10 million

24:20

was the proper size round for that

24:23

particular shop on gold. Do you think that Series

24:25

A is the best place to be investing today?

24:28

I think a risk reward can be

24:30

really strong. It's hyper-competitive.

24:32

So one of the other

24:34

lessons you take from zero to one

24:36

and is globally true is you want

24:39

to be careful about hyper-competition. My

24:41

belief is I like to lead seed rounds.

24:43

The reason why I like to lead seed

24:45

rounds is they're less competitive, first of all,

24:48

because what I'm working with typically is a

24:50

keynote deck in a team. Most

24:52

investors are terrified of assessing

24:55

a team in a keynote deck and

24:57

handing over one, two, three, four, five,

24:59

$10 million. I actually think that's

25:01

my comparative advantage is doing that. So I want to

25:03

do it as often as possible. Secondarily,

25:05

because I believe I can have some

25:07

impact in the company, the earlier I

25:09

get involved, the less I inherit things

25:11

that might've been avoidable. You know, I've

25:13

used this metaphor with you about concrete.

25:15

Early stage companies, it's kind of like

25:17

liquid concrete. It's very malleable. And

25:20

then solidifies post Series B. It's

25:23

totally solidified. And if you want to

25:25

change something, either that's concrete, you have

25:27

to maul this jack, however, which is

25:29

incredibly painful, expensive, noisy. So I don't

25:32

want to be manipulating solidified concrete. I like

25:34

what's liquid and malleable. So the greater I

25:37

can get involved, the better. That's where I

25:39

want to be competing. Series A to the

25:41

risk reward, generally speaking, can be pretty strong,

25:43

but you're competing with other people who are

25:45

very good at what they do. Benchmarks, pretty

25:47

good at what they do. Sequoia has been

25:50

historically very good at what they do. You know,

25:52

you're running right down the middle of some of the

25:54

best investors on the planet versus Seed or not and

25:56

Series B maybe or not. Do you think that's still

25:58

it? When you see the multi- stage firms move

26:00

so aggressively into seed and then you look

26:02

at a lot of the partners who lab

26:04

20 million Series A checks in years prior

26:06

go oh I'm underwater with ball commitments I

26:08

need to fire sell a load of shit

26:10

companies like I don't want to do new

26:13

deals I almost think A is better because

26:15

they're just saying to all the young ones

26:17

go do seed I think when you get

26:19

I do think a lot of funds get

26:21

nervous and risk a burst in the let

26:23

these go when the market's not particularly attractive

26:25

but I think the really best investors which

26:27

are really the people I compete with don't

26:29

do that the world of venture is

26:31

more stratified that tier two investors are very different

26:33

than tier one and I think this is true

26:35

on the Series A dimension you don't

26:37

want to pull your foot off the gaps

26:39

in Series A if you're if you're really

26:41

strong investor but the natural reaction of both

26:43

firms and most partnerships is

26:45

to do that which is a genuine

26:48

mistake I think it's Series A if

26:50

the price if you think about the

26:52

pricing let's assume that the median valuation

26:54

for seed round is between 10 and

26:56

20 these days and let's

26:58

say a Series A it's like 30 40

27:02

maybe 50 I agree with you

27:04

that I'd rather pay 30 40

27:06

for all the learnings that first

27:08

15 and 20 for no learnings often but

27:10

then I have to compete with more people like

27:12

so you know one of the other things I've

27:14

pointed out is in about 11 years of doing

27:16

this I think there's somewhere between

27:18

five or six or so term

27:20

sheets have extended where I didn't close them like I

27:22

lost to somebody and the reality is

27:24

that four of the six or two thirds of

27:27

them are the same or to the same people

27:29

it's like it looks like it's a very hyper-committal world

27:32

but at the end of the day I was competing

27:34

with like one or two other people and

27:36

so if I wait to the Series A

27:38

I know that there's a decent chance that

27:40

these people have taste like my taste and

27:43

they're actually pretty good at what they do and

27:45

they can close they know how to close and

27:47

they have you know good references all these things

27:49

so if I go seed most these people do

27:51

not love to do seeds and I can get

27:53

involved before they figure out what the hell is

27:55

going on that's much better for me even if

27:57

I have to pay a slightly disproportionate skewed price

28:00

To do that Keith, you know, I love

28:02

you and think the world of you you're

28:04

a competitive motherfucker Why don't you just

28:06

beat them a day like if you do you must

28:08

reflect? Well, I tried but like you're even if you're

28:10

great at what you do, you're gonna win caught 50

28:12

60 70 percent You're

28:15

not gonna close a hundred at seed actually

28:17

probably close a hundred percent of the things

28:19

I want to invest in if I want

28:21

to There's no way that Go

28:23

ahead to head with the top two or three other investors

28:25

that series a to ground a hundred percent. We're great We

28:28

mentioned seed that being you know less

28:30

competitive but harder and people shying away We

28:32

mentioned a being the best risk reward growth

28:34

is pretty dead as I think we're both

28:36

seeing Do we think it'll stay that way

28:38

and you excited to be more active in

28:41

growth or not? I think that growth is

28:43

pretty broken. I think most growth

28:45

funds were pretty bad at what they were doing Why were

28:47

they back because they were just price insensitive chasing

28:49

the ledge? I'm not really understanding fundamental

28:51

company building thinking spreadsheets to take results

28:53

like, you know Not understanding the inputs

28:55

first the outputs that these companies are

28:58

built by people not by now at

29:00

the end of the day So I think most

29:02

good funds are your debt or dying. So I

29:04

think there's a zone there. That's pretty non-competitive Is

29:06

that what I do for a living? You know,

29:09

you have to figure out what your comparative advantages

29:11

in life and I don't think growth and vaccines

29:13

might I've made a few growth Investments over lost

29:15

three years and three or four years of

29:17

forcing they worked out but I'm Extremely

29:19

careful if I'm leading a growth

29:21

route that I think I have some alpha some comparative

29:24

that it's like so for example document

29:26

KB days One of the

29:28

better investments I made was co-leading the series

29:30

C for strike, you know I worked

29:32

at PayPal square understood financial services pretty

29:35

well There's a reason why I was

29:37

dialed into that price being willing and

29:39

comfortable investing at that price at the

29:41

time at KD When we

29:44

invested in stripes series C It

29:46

was an order of magnitude more expensive than

29:48

the entry price for any investment in the

29:50

history of KD back to the

29:52

point though About the partner meetings being sometimes

29:54

counterintuitive One of the things

29:56

that was most valuable was Samira was pushing me.

29:59

He's like you should do this. And then David

30:01

said to me, Look, I know

30:03

this is not normally my style to be

30:05

like pricing sensitive. But you need to be

30:07

able to make this call like you should be better situated to make

30:09

this call than anybody else on the planet. Just

30:11

aside, don't worry about what my normal

30:13

feedback is. So Samir and David being

30:16

very enthusiastic that I should be in

30:18

if I wanted to, gave me more

30:20

courage and work with fiction because this is pretty early in

30:22

my career as either the first or second year there. So

30:25

that's why sometimes the partner meeting can be exciting

30:27

in like, give you more conviction and

30:29

confidence. I don't know that I wouldn't have proceeded

30:31

had they been more cynical, actually, because it was

30:33

so crazy like trajectory, but they were like, Nope,

30:35

this is where this is what we hired you

30:37

to do. This is the area you should know

30:39

better. Make a call. Translating

30:42

stock, founder's fund could be very successful

30:44

in growth, because I think most

30:46

other growth funds are basically not able to

30:48

compete. And founder's fund has great talent in

30:50

the growth side. When I put on

30:52

Twitter that we were doing this show, I got a load

30:54

of DMs and they were saying $3 billion

30:57

in KV fund, how can you make

30:59

money on a fund that size? So

31:02

I'd love to put that to you. So

31:04

you can kind of break that down and

31:06

debunk that. Properly sizing a venture fund is

31:08

one of these other complicated arts in the

31:11

industry. I think the key is there's

31:13

a couple inputs. One is what

31:15

stage are you investing in? How

31:17

many opportunities are likely to be and

31:19

then see what's the

31:21

team composition, your internal team.

31:24

So let's walk through this. So KV,

31:26

although that sounds like a big number,

31:29

$415 million of that is for seed investing, $1.5 billion

31:32

or so is

31:34

for venture, and only about $800 or $900 million is for

31:37

growth. So as a firm

31:39

and a set of partners

31:41

that really enjoy seed investing,

31:43

that's right down the middle,

31:46

Samir right down the middle of what

31:48

he likes to do, probably my comparative

31:50

advantage in life, you have three to

31:52

five partners that all really strongly like

31:54

to meet seed grounds. So $400 million

31:57

isn't unreasonable at all for a seed

31:59

fund. in

34:00

about 3.2 billion, I think in the growth,

34:02

fund growth too, it's just different weighting. So

34:04

you need to have a strategy that's coherent

34:06

around the people, the team, and the weighting

34:09

of your fund sizes. When we spoke last

34:11

time and I said, what would you change

34:13

about Founders Fund? He said, we could be

34:15

younger. Could Coaster be younger? Would the same

34:17

apply here? You know, good question. I don't

34:19

know yet the four people that are

34:22

most senior or MDs, you know, the official MDs,

34:24

at KVO, the same people I worked with, what

34:26

I was there. I haven't worked

34:28

with most of the people that are

34:30

not at the partner level at KV.

34:32

I have worked with Nikita before. I

34:34

mean, that's what I was, I recruited

34:36

him. I've worked closely with Alex Morgan,

34:39

lots of interesting dialogues and debates. So

34:41

I know those two pretty well. The

34:43

rest of the team, I don't know

34:45

very well, so I shouldn't really apply

34:47

yet. What do you think KV can

34:49

learn from Founders Fund? I think the

34:51

rigor around growth investing, I actually, I

34:53

learned this personally. I think FAF

34:56

is very strong. I figured out

34:58

how to value a growth stage

35:00

opportunity. And that translates to the

35:02

reason why I care. What makes

35:04

them good at it, whether growth investors

35:06

we mentioned before, FAF? That's

35:09

a great question, actually. And I'm

35:11

not sure I know the answer other than just

35:13

watching who produces the full investments or not. But

35:16

the one thing that was most relevant to

35:18

me to learn is you have to make all

35:20

these pro-rata decisions in your best companies. So,

35:23

you know, I said I need a seed

35:25

for DoorDash and the Sears A, Pro-Rata, that's

35:27

easy, not different at all. But then C,

35:29

D, E, you know, at different prices or

35:32

Open Door, 400 million, 500 million,

35:34

600 million, do you do these rounds?

35:36

How do you think about them? And I don't think

35:38

back in my day at KV that

35:40

we had a lot of analytical rigor

35:42

to those late stage pro-rata decisions. Whereas

35:44

at Founders Fund, the growth team is

35:46

very dialed in to evaluating

35:48

those opportunities. And so I felt

35:50

like I learned a lot about how they do their

35:52

work that would make me sharper about my

35:55

own pro-rata decisions on the companies I'm most

35:57

involved with. Peter Thiel often says about a

35:59

decision. not to do. I think the B

36:01

of Facebook or the A of Facebook being his

36:04

most costly. Yeah, I mean, it's easy to make

36:06

a mistake. I actually think that

36:08

I, you know, I have my own coherent version

36:10

of this. I actually, you know, have my own

36:12

set of views about when and when not to

36:14

do piranhas, like to the companies I'm involved in.

36:16

But I've learned a lot from like working with

36:18

Napoleon and his team at Foundersun. I spoke to

36:21

Mike, but you're like, how the fuck did you

36:23

speak to so many people before this show, how

36:25

we agreed it last night, but I also spoke

36:27

to Mike at Traba and he asked the question,

36:29

why would founders prefer working with one

36:31

firm versus another? Yeah, well, I think

36:33

it's a matchmaking exercise at the end

36:35

of the day. The right

36:37

founder paired with the right investor increases

36:40

the probabilities of success for the company,

36:42

in my view. And so every

36:44

founder who's successful, every founder who has

36:46

a shot at being really successful is

36:49

different. Like Mike is definitely different than

36:51

other founders, Mike and Jack Dorsey, for

36:53

example, very, very different, both going to

36:55

be extremely successful. The correct pairing for

36:58

different founders is who's complimentary

37:00

to you, who can you work with

37:02

and add value but be on the

37:04

same page with. So for example, Mike

37:07

has very strong views on culture, how

37:09

to run a company, how to build

37:11

a company. Being in line with his

37:13

views allows me to be more effective,

37:16

because when I'm channeling feedback, we're not

37:18

debating first principles ever. But once in

37:20

a while, I may see something or,

37:22

you know, in this cartoonish mirror, and

37:24

I can play back to him his

37:26

decisions or what I see and say,

37:28

hey, just apply your own principles, your

37:30

own philosophy. Does this make sense? Versus

37:32

debating whether his philosophy is correct, he

37:35

would be a horrible pairing with someone who

37:37

doesn't agree with his philosophy. They would just

37:39

have like constant thoughts would be useless. Or

37:42

so let's take another example. Jack, Jack

37:44

is very design driven. And he wanted

37:46

to build swear in a design driven

37:48

culture, which is, you know, let's say,

37:50

jargonistically, like Alpo ask, most of them

37:52

know what that really means. But like

37:54

fundamentally, a designer culture, Perry Jack was

37:56

someone who doesn't appreciate design would be

37:59

an unmitigated disaster. Like the

38:01

investment in the design the quality of

38:03

design the thoughtfulness the crafting the perfectionism

38:05

across so many different dimensions would just

38:07

be almost Unfathomable

38:09

to someone who grew up in a bottom-up

38:11

empirical, you know, everything's not qualified and he'd

38:14

be testing So you have to be careful.

38:16

That's why I think speed dating during coded

38:18

was a disaster for everybody It wasn't good

38:20

for founders to do zoom based investing It

38:22

wasn't good for investors And so I think

38:25

it's healthier to take your time as a

38:27

founder and find someone who could be insightful

38:30

But he's directionally aligned with your

38:32

ambition with your prioritization That's

38:35

where you get a match that really works for like a

38:37

decade Do you think FF and KV have

38:39

the same type of founder when I look at like

38:41

Mike? He fits the founder

38:43

mold for what I think a

38:45

founder son founder would be run

38:48

through walls Very opinionated very hard

38:50

and shares a lot of traits within a lot of

38:52

other FF founders. I know Do you think KV has

38:55

an archetype like that? Yeah, I actually do I mean,

38:57

I think one of the reasons why you see such

38:59

a high portfolio of overlap is like the proof sign

39:01

of the break KV and FF

39:03

have almost exactly the same ownership in

39:06

trauma I believe in

39:08

open store we have the same preferred

39:10

ownership KV and FF. I think in

39:13

Avon FF and KV have very

39:16

similar ownerships a lot of people

39:18

like KV or founder driven I

39:20

wouldn't say this only criteria KV

39:23

sometimes KV can be technology driven

39:25

innovation driven Whereas FF is mostly

39:28

founder driven But the event diagram

39:30

overlap with a successful founder is

39:32

pretty high which is why the

39:34

portfolio overlap H sleep You know

39:37

more portfolio overlap Varda more portfolio

39:39

overlap high portfolio Overout so that

39:41

obviously the criteria is clearly similar

39:43

because you're seeing the manifestation of

39:46

that in the portfolios When

39:48

you were thinking about just this option

39:50

always other options come to mind. Did

39:53

you consider other options? Not

39:55

with a pre-existing fund and felt that

39:58

KV knew why we were successful successful. We

40:00

were successful. I knew why or at least

40:02

I think I know why and I thought

40:04

that that would be helpful. I think every

40:06

other fund, the grass may be a little

40:08

bit greener kind of problem of like they

40:10

have their own bodies. There's more

40:13

mess somewhere else don't want to fix other

40:15

people's messes kind of like fluffing, you know,

40:17

over the years and I'd say over the

40:19

15 year time horizon last 15 years of

40:21

my life, I have occasionally thought about should

40:23

I start a fund, there's definitely a lot

40:25

of drug coefficient associated with that that I

40:27

was not particularly excited with, which is why

40:29

sort of my definition, I have a certain fund, I

40:32

did look at it very seriously in 2000 pet or

40:34

so in 2013 before joining

40:38

KB, I had a pretty specific idea

40:41

about a fund. But for lots

40:43

of reasons, what I like to

40:45

do is most importantly, find undiscovered

40:47

founders, give them the opportunity to

40:49

be successful with advice, counsel and

40:51

capital, and then work with those

40:53

founders and help them shift the

40:56

probabilities of success so they can

40:58

achieve the ambitions for their company.

41:00

That's what I want to do. Everything else is drag

41:03

coefficient to me. Why did you not think you've got

41:05

rid of the drag coefficient? I was the same. I

41:07

don't think you can get rid of the drag coefficient,

41:09

certainly from scratch. I mean, they say the first six

41:12

months, let's say heavy drag coefficient, can you

41:14

later reduce it's like a high fixed

41:16

cost away. One very successful founder

41:18

scribe it to me as I was asking for

41:20

a little bit of advice. The fixed cost is

41:22

very high. And once you get

41:25

over the fixed cost, maybe the marginal

41:27

cost is more tolerable. But that first

41:29

fixed cost is really painful. And I

41:31

like what I do. And the reason

41:33

why I work is I really enjoy

41:35

meeting these founders, discovering these people and

41:37

saying, Yeah, this person got shot. And

41:40

then working with them in helping unlock their

41:42

brain once in a while and watching their

41:44

eyes light up. That's what motivates me every

41:47

day. Do you ever think about money? Uh,

41:50

no, not really. Obviously, this was another question

41:52

that I have, which is you have more

41:54

cash than Rockefeller. So like, what motivates you

41:56

today? What about good friends who I work

41:58

with? How does 30th birthday recently.

42:01

And you know, at the dinner for 30th birthday,

42:03

the question the question at the table is what

42:05

do you want people to kind of say it

42:07

or you know, you would use somewhat morbid but

42:09

whatever. And I thought about it. And it occurred

42:11

to me what I want to say what I

42:14

want people to say is, I can't

42:16

imagine my life without keeping it, you know, like

42:18

that had that much impact in some ways. And

42:20

there's different ways you have impact, obviously. But I

42:22

was like, fundamentally, I really want to have impacted

42:25

people's lives. And that they really think about it,

42:27

that it was that impactful that their life would

42:29

be completely different. And so this

42:31

is a business version of that, you

42:33

know, the entrepreneurs version of that. You've

42:35

definitely had a huge impact on Delian's

42:37

life. How did Delian take it? Well,

42:40

you should ask him. I shouldn't speak for

42:43

him. Yeah, I think I

42:45

will. You can ask him his

42:49

opinion on lots of things. He's very

42:51

strong willed and very opinionated. He

42:53

certainly is opinionated. Can I ask a

42:55

spook to Samir before? And he said,

42:57

what does it take for an investor

42:59

and a firm to win today after

43:02

10 years of bull run? First

43:05

of all, they said this several years ago

43:07

on your 20 minute DC, you have to

43:09

have a comparative advantage. Sure. And you need

43:11

to isolate it for you and your phone.

43:14

Like why me? And why us? So for

43:16

example, like our mutual friend, like when he

43:18

meets a new investor, he always asks him

43:20

this question. He loves doing this. He's great

43:22

at it. Why should a top tier founder

43:25

like me take your money? And you need

43:27

to have a sharp differentiated answer to be

43:29

successful. And the more differentiated the more true

43:31

that is the better. And I think most

43:33

investors either don't have that answer or forget.

43:36

And so you don't want to be a

43:38

commodity, you need to be special and you

43:40

need to be treated. So you need to

43:42

have your your difference, like comparative advantage somewhere.

43:45

I remember I posted publicly my

43:47

national criteria, probably 2017. And

43:49

you know, on Twitter, and the last

43:51

one that confused a lot of people

43:53

was the last question was, do I

43:55

have a comparative advantage? And I

43:58

take that pretty damn seriously, like why me? Why

44:00

am I investing in this company? Because the

44:02

general returns in venture are not strong at

44:04

all. The general returns in 75, 80. And

44:08

if you normalize against like the two hot periods

44:10

of the last 50 years, like 1996, 99, and

44:13

take out like 2019 and 21, the

44:16

returns are horrific except in maybe the top

44:18

two to five, maybe 10% of venture. If

44:21

you don't have a strong answer to why you have

44:23

a comparative advantage, you're gonna regress to the middle of

44:25

the bell curve. And the middle of the bell curve

44:28

returns are just not acceptable, period. And so I always

44:30

take that very, very, very seriously. It will

44:32

often pass if I can't look in the

44:34

mirror and say, this is a lot of

44:36

a fair advantage. So like we talked about

44:38

a couple of companies, FAO. The CEO

44:40

and COO worked for me. I used to

44:43

be able to assess their abilities better than anybody else on the

44:45

planet, period. And if I can't do that, then I'm the YB

44:47

of DC. At Stripe, we talked about,

44:49

you know, I helped build PayPal, I ran a

44:51

large fraction of Square. I need to be able

44:53

to understand Stripe pretty much, pretty that well, or

44:55

it shouldn't be a VC. You know,

44:57

Mike was my best friend, and

45:00

was my best friend before we started

45:02

the company. I definitely knew the traits

45:04

that would be too, the way he

45:06

runs this company, intentional culture, the tenacity,

45:08

the resourcefulness. That was all there from

45:10

like, maybe first day I met him. What

45:13

if you're not the best for it,

45:15

but you know it is incredible? Are

45:17

you not gonna do that deal? Great

45:19

question. I think at a fund, the

45:21

first instinct is, do I have a

45:24

partner who would be a really good

45:26

parent? And at KV, we did do

45:28

this. I would consciously think, like, oh,

45:30

David Wyden may be a really good

45:32

partner for this specific, both market and

45:34

founder, or Samir might be. There are

45:36

times when Samir would be a much

45:39

better partner, for example, than I would

45:41

be to a specific founder, Depends Again,

45:43

or Vinod, Vinod, me, or Sven, really

45:45

depends what the company's doing in the

45:47

founder's skill set. So The first instinct

45:49

would be, okay, I Don't really feel

45:51

I have a comparative advantage, but our

45:53

fund may, or someone else's fund may

45:55

be. Let's introduce them and see if

45:57

that kind of partnership can work really

45:59

well. On to this does work

46:02

it out. The answer may be within

46:04

our find Better salaries on as you

46:06

informed as he do that every day

46:08

We know when a Midas deformed by

46:10

that. Have we done okay the we

46:12

absolutely do that all the time that

46:15

that every week like constantly at Dollars

46:17

Fun we do we did it too

46:19

but more I have hoc basis.system smith

46:21

but a a kid is very systematic

46:23

like Top Doubt. even videos sometimes would

46:26

say this a syndicated to me he

46:28

might say hey don't you say lifespan.

46:30

Or Samir gave it would be a better

46:32

partner. the way we use resolving if like

46:35

for example was a clear sometimes we'd actually

46:37

tell the founder hey your choice now decide

46:39

like them I say he gets first much

46:41

me with three or four people and see

46:44

who you think would be most useful and

46:46

who's the right parents to dust by normal

46:48

default is if not knees or somebody else

46:50

I have to fix it about in there

46:53

and if not are fund that is some

46:55

was more complicated decision of what to do

46:57

to worry about the weight of your words.

47:00

You to it and I loved my can

47:02

either use great but you there is a

47:04

my my he's younger than he is a

47:06

lot less experience in you when you say

47:08

no this is what I things to worry

47:10

that you have too much impact at points

47:13

he under his dick, glossy globally of D

47:15

C and aboard ever ask you this worry

47:17

about this all the time. I've

47:19

learned from some of the best that

47:21

aired. Ah, roll off on Tommy some

47:23

lessons of a articulate, a few pr

47:25

the line taught me or my career.

47:27

How did you some of these things?

47:29

So the role of taught me. As.

47:32

Board member One of the best ways

47:34

to ask things in terms of questions.

47:36

daughter's answers. To. Pro by classes

47:38

to that you're never meeting. you

47:40

may be meeting a little bit

47:42

the you'd ever prescribing. It is

47:45

very big difference. say traded up.

47:47

The Saturday of Learn is to

47:49

describe intentionally carefully calibrated your level

47:51

of condition. So. i wasn't

47:53

i say something like might like up

47:55

my instinct is to do acts by

47:57

actually i don't have that much called

48:00

this that I'm right. Like if you forced me to

48:02

make a decision, this is how I would make the

48:04

decision here of why, but it's a

48:06

close call in my mind, I'm not sure. Or

48:08

there's sometimes when I might say to somebody, whether

48:10

Mike or someone else, I have about 80% confidence,

48:13

I know the right answer here. So be

48:15

able to communicate the level of connection, help

48:18

them just challenge or solve it. Some

48:21

founders also, the other thing I do pretty

48:23

well is reverse engineering the logic. Not

48:25

always, but sometimes it's actually hard to understand

48:27

how you got to a conclusion. Sometimes

48:31

you have this intuitive reaction and then

48:33

trying to decompose, okay, what's the logic

48:35

behind that decision? For example, I work

48:37

with Sadi and Avon. He's a really

48:39

great company, he's a phenomenal founder. He

48:41

always wants to know the why. It's always why,

48:43

why, why, why, why? And he does that internally,

48:45

he does that with me. It's great. So I

48:48

can walk through the logic underneath it and then

48:50

he can say, oh, I buy that logic or

48:52

I don't buy that logic. That's

48:54

another sort of instantiation of it.

48:56

And then the final point

48:58

is, and I'll give you kind of an

49:00

amusing anecdote about this. I almost never

49:03

ever tell a founder what they really should

49:05

do. Like I almost never say, you must

49:07

do this. That the one example

49:09

that always occurs to me is there was a

49:12

time when Mike was building his company in

49:14

Miami that he's incredibly frugal. The

49:16

company's incredibly financially disciplined. And in

49:19

Miami, the buildings charge a surcharge

49:21

for running air conditioning past certain

49:23

hours. And he was hesitant to

49:25

pay the air conditioning, even though they're

49:27

working like 99 plus. And

49:30

there was one point time I said to him like, well,

49:32

how much does the incremental air conditioning is like $6,000

49:34

or something? I said, Mike, you should pay for the

49:36

air conditioning. That's about the most

49:38

direct I've ever been with a founder. You

49:40

mentioned there about venture not being like necessarily

49:43

a great asset class in terms of returns.

49:45

I totally agree with you actually. When you

49:47

look at the historical data on distributions, there's

49:49

very small windows where liquidity is apparent and

49:51

strong. And If you don't take advantage

49:53

of them, it's quite crap, even for the best.

49:55

How do you think about when to sell? I'm

49:57

not sure I Have a great answer to this.

50:00

The way in one of the

50:02

editor to be a Subaru see

50:04

to master is your three perfect.

50:06

I've watched other people make these

50:08

decisions and I've seen brilliance sometimes

50:10

to for example Tv before my

50:12

days I dusted to but ours

50:15

are roughly a million in.c Grounds

50:17

for square and. After. Joke

50:19

A d there is always a quasi

50:21

enough in Nancy Square and public when

50:23

sell the market didn't really appreciates were

50:25

fairly for a long time to there's

50:28

lots of to be eternally in. The

50:30

Node had a very shocked respected that

50:32

proved out to be incredibly valuable incredibly

50:34

profits party here a couple t devices

50:36

i want our said exact logic but

50:39

fundamentally he had a very strong view

50:41

that kitty she aussi not sell period

50:43

and it turned out to produce meaning

50:45

we different results based upon his insight

50:47

and are never. Listening to this

50:50

beta was able to just say

50:52

design my own shares it up

50:54

as executive says complete Iraqis from

50:56

siding with Celts but the logic

50:58

in his insight was incredibly penetrating.

51:00

A that will lead to significantly

51:02

better returns for Tv Three. Understanding

51:04

how to think about that? On

51:07

is a real superpower, but I think

51:09

it's very rare and I surface haven't

51:11

mastered it. Cause.

51:13

Whoop Mace then so special him and

51:16

his brand the light on the ascent

51:18

again there's a couple of there's a

51:20

couple ingredients. First he is the technology

51:22

so far he really does see the

51:24

implications of a new technology way before

51:27

other people do acted see the implications

51:29

the society of of his business disrupted

51:31

all birds a decade often before and

51:33

people he was on the either the

51:36

Ai for said before even join to

51:38

the in two thousand thirty he published

51:40

papers about you know how a I

51:42

was gonna replace. Doctors medicine in this

51:44

is like before a Judge Judy

51:47

so where to curb really understand

51:49

understood seem to pieces types of

51:51

ai and really masters like how

51:53

the dots and acting. Spend lots

51:55

of time with all the leading

51:57

practitioners both an academic, academics, academia

51:59

and or. Wow, the companies said that's

52:01

one Saturday to secure input. He still

52:03

works hard. He loves his crossed the

52:05

last word your sounders. I've seen him

52:07

worked eight am to midnight on Sunday

52:09

sometimes like Tv meetings he did after

52:11

fifty years. In essence up to like

52:13

the Notes still takes meetings so I'll

52:15

works mostly bore her less than half

52:17

his age. what do you think drives

52:19

been out? He really does what change

52:21

the world to technology. It really motivates

52:23

it so that he's so good I

52:25

see me implications that yet to find

52:27

the Saudi sun actually take it that

52:29

it's the insights. Which is them. There's only

52:31

so many voters who are amazing and like some

52:33

Isa that you can't take all your ideas to

52:36

get into the heads of works or Souders as

52:38

five go the get bastards who when using by

52:40

kind of reflects your time is found a son

52:42

before we do a quick five was your biggest

52:44

take away from that time and how it impacted

52:46

your investing style. I think. You

52:49

learn well. I would have had the

52:51

advantage of. Being. Senior person at

52:53

two different times and I think what

52:55

you learned from that experience is what's

52:57

in gimmick to venture. There are fundamentals

52:59

about our business. They are. These

53:01

be baked into the business and then

53:03

what? What are optional seasons or cultured

53:06

Susan making hiring and then how he'd

53:08

Caesar salad to be more successful said

53:10

it how to two different vantage points

53:12

as hopefully we'll lock in my brain.

53:15

It allowed me to manipulate you this

53:17

decision to be ideal ideal to reduce

53:19

the best possible outcome and produce the

53:21

best possible happiness for me is very

53:24

rare to have. like the Sonos unique

53:26

vantage voice said that's my take away

53:28

site and then she like for example

53:31

either and significantly. More about growth, investing

53:33

and how to be disappointed about beer

53:35

out the valuation for high potential companies

53:37

cetera that I'll take with me, but

53:39

it just how to make decisions was

53:41

the best way to make decisions. Homicides

53:43

send a partner meaning burst. Not what

53:45

are the benefits to spend eight hours

53:47

a week, your partner meeting for spending

53:49

thirty minutes a week? Where's that guy?

53:51

lucky the worst, diminishing marginal returns, etc.

53:53

The. Kids change your mind psyches, Becoming.

53:56

A father. I think there's

53:58

a couple. The Easy: I'll admit,

54:01

I'm. I. Strongly.

54:04

Believe but have watched it already.

54:06

Macys or Shit Out Years olds.

54:09

That people are much more beach.

54:11

In impressionable I'd really are pages that

54:13

dictate how they are when they grow

54:16

up. As much earlier he said before

54:18

they absorb so much and even if

54:20

they can't communicate to you with your

54:23

absorbing they are absolutely absorbing. A brain

54:25

is a young had a world or

54:27

the inputs are kind of my train

54:30

your brain It occurred machine front of

54:32

says as he already gary careful a

54:34

very thoughtful. About what does

54:36

into its are even knew he

54:38

Most parents are not incredibly cautious

54:40

about out into watching what they've

54:42

already been able to learn absorb

54:45

the started almost like from day

54:47

one. Do. You feel the weight

54:49

of that responsibility over absolutely like

54:51

for example the at the downside

54:53

as hobby access to resources are

54:56

your money, etc is I feel

54:58

the weight was anti side of

55:00

it. I think about this every

55:02

day of. How. To react kids that

55:04

are nine titled because it's natural like they have

55:06

a one benefits. I want them to have the

55:09

work ethic of someone person. Okay, how do you

55:11

think we're doing that I chatted that dhabi that

55:13

new bank and he was like it's the hardest

55:15

thing I think I have to deal with of

55:17

the I'll add actually discuss this with a lot

55:19

of people who have seen either. He. Bought

55:21

some Weiss Raise kids I think are

55:23

really he a successful inspiring and ask

55:25

them they're specifically which do was not

55:27

you would you think about what she

55:29

nods in try to borrow some ideas

55:31

but it's a complicated topic but I

55:33

have stressed out about it. Except

55:36

for to get our why with kids

55:38

said I will not be presidents like

55:40

if I want to do what I

55:42

do to the bass and I want

55:44

to win just like he uses a

55:47

fucking give it everything and you have

55:49

to be an absolute monster at why

55:51

the actors dauphin really important. Eight ingredients

55:53

to success he be start law about

55:55

what's most important to you and achieving

55:58

success but it'll have your ass. success,

56:00

top 10 basis points,

56:02

one basis point in any field are absolutely

56:04

making trade-off decisions, hopefully intentionally. You can be

56:06

like 8 out of 10 good and be

56:09

there for dinner, I think. But if you

56:11

want to be like 9.9 out of 10,

56:13

which you have to be in venture, I

56:15

don't think you can be home for dinner

56:17

every night. I think there are some

56:19

VCs who might have been able to somehow do

56:21

that. But I think they all said it at

56:23

other times in other ways. And I don't believe

56:26

there's shortcuts to success. One of the benefits of

56:28

just people knowing me in

56:30

other fields is I get to

56:32

watch really successful people in music,

56:34

politics, and sports. The

56:36

traits of each success are shockingly common. And

56:39

a lot of it is just pure input. Right. Are

56:42

you ready for a quick follow, my friend? Let's go. Okay.

56:45

So one from Samir. What do you think

56:47

about Bitcoin going forward? Major

56:50

question. So my theory was

56:52

always from 2013 or 14 that adoption

56:54

of Bitcoin would globally be inversely correlated

56:56

to the rule of law in a

56:59

specific market or specific country. I think

57:01

that's proven to be true. And in

57:03

fact, I think even in the United

57:05

States, Bitcoin really took off in

57:07

terms of valuation, market

57:09

cap, etc., after the election

57:11

of trial. And that was preceded by

57:14

the market as instability or less rule of

57:16

law. It may be less true or false,

57:18

but there was perception. And so

57:20

I think what happens is in 2024 is somewhat dictates

57:22

the answer. If

57:26

people believe the world is more stable,

57:28

the role of law is likely to

57:31

be more robust. Bitcoin doesn't appreciate it.

57:33

But if the world is more tumultuous,

57:35

the rule of law takes steps back

57:38

in major markets, then I think Bitcoin

57:40

appreciates. Which way do you think

57:42

the law is going to go? Well, I think 2024 is

57:44

going to be pretty tumultuous. It's certainly

57:46

off to that start. Is Trump going to win? No.

57:49

You know, as you probably see on Twitter, I don't even believe

57:51

he's going to be the Republican nominee for president. Okay.

57:53

Do you think he'll go to prison? I don't know.

57:55

You know, one of the things you learn to do

57:57

when you focus your time that I focus my time

58:00

time I'm investing and working with founders and

58:02

berries, I've had to subtract out of my

58:04

brain a lot of legal interests. Like I

58:06

used to be a pretty damn good lawyer

58:08

or litigator. And I used to have intellectual

58:10

curiosity about a lot of topics a lot.

58:13

I haven't read all the complaints, I haven't

58:15

focused on them. I don't exist, etc. I

58:17

know the general arc of them, but I

58:19

don't have a strong opinion about the quality

58:22

of the cases and the likely outcome. Did

58:24

Figma kill M&A in 2024? Well,

58:27

I don't think it's Figma cloth. I think

58:29

Figma in some ways was easier case for

58:31

the government in the FTC, which has been

58:33

very aggressive than many other cases. Figma

58:36

is competitive with Adobe's products. Like at

58:38

the end of the day, there's not

58:40

like a stretch where the FTC has

58:42

been taking some crazy positions based upon 50,

58:44

60, 70, 80 years of American jurisprudence.

58:48

They've been really

58:50

confronting some acquisitions that

58:52

really don't have market overlap. This

58:54

one seems down much more down

58:56

the middle. I used to apply

58:58

the visa. I think that

59:00

one, a normal conservative antitrust lawyer like me,

59:03

like I grew up as an antitrust lawyer,

59:05

I could see bringing that case. I

59:07

can also see bringing the Adobe Figma case. Most

59:10

of the other stuff the FTC does seems like ridiculous. Will

59:13

IPO windows open again in 2024? Oh,

59:16

absolutely. So I don't believe that IPO windows

59:18

really close or open. I think

59:20

just the criteria for success is

59:22

different in that what the bar is on, let's

59:25

say revenue or what the bar is on your

59:27

unit economics. As a founder, do you think you

59:29

want to go out? You mentioned, Jonah, as a

59:31

thrive, why would I go out in 2024? I'm

59:33

going to get... I think most companies

59:35

are better off going public early,

59:37

period. And so I still prescribe that. I

59:40

still advise that. I hope a lot of

59:42

the companies I work with will take advantage

59:44

of that advice. Why would you, could

59:46

you get better as an investor, Keith? Oh,

59:49

to my biggest flaw, and

59:51

if you have any solutions, I'm all yours

59:54

because it's very persistent. It is the hardest

59:56

part for me is deciding which first meetings

59:58

to take. So you get

1:00:00

a large amount of inbound interest introductions,

1:00:03

etc. And deciding that

1:00:05

pool, you can't take them all. It's like

1:00:07

not possible in like C to literally meet

1:00:09

every company, whereas the growth people can meet

1:00:11

every company that's ready for a growth round.

1:00:14

You have to decide and I

1:00:16

have made several bad mistakes historically

1:00:18

as an angel master, as

1:00:21

a professional, be seen declining some meetings.

1:00:23

Once you get me in the room

1:00:26

with founders, I've made those calls really,

1:00:28

really well. Like I was mentioning the

1:00:30

other day that I'm not sure I've ever

1:00:32

passed on somebody that's turned out to be

1:00:35

building a multi-billion dollar company. But

1:00:37

I have definitely declined meetings for companies that turned

1:00:40

out to be good. I don't know how to

1:00:42

solve this. Like that's the problem is you

1:00:44

can try like take more meetings, but then is

1:00:46

your brain really sharp? You can try

1:00:48

to delegate it. But if your founder taste

1:00:50

is off, like the person delegate to isn't

1:00:52

really helping. I would say yes for two

1:00:55

things. One, like, I mean, this is the

1:00:57

nicest way. If someone I usually respect or

1:00:59

like sends me something, I'll jump on it

1:01:01

that day and do it myself. Or

1:01:03

if it's something where I love it, where like

1:01:05

you may do with the fintech or payments or

1:01:07

whatever that may be specifically related to your issues,

1:01:09

I'll jump on it and kind of everything else.

1:01:11

I just have, this sounds awful, but

1:01:13

like a person in the team who just meets

1:01:15

everything else. And that way I feel

1:01:18

no guilt on like, will we miss it? Because if it's great, yes, and the

1:01:20

back to me. But I have guilt. I

1:01:22

definitely try to find, I'm trying to find like

1:01:24

a better way to do it. You

1:01:26

know, Raul mentioned this to me, I remember talking

1:01:28

to him a year after he joined Sequoia, it

1:01:30

was probably like 2004. And

1:01:33

we had coffee. And I said

1:01:35

what's the hardest part of the job. And he said,

1:01:37

deciding which first meetings to take. Why

1:01:39

would you send your kids to college? Samir

1:01:42

again. I have a teal fellowship. We're

1:01:45

definitely on the teal fellowship crusade. You know,

1:01:47

I've been tweeting about it. I mentioned Peter

1:01:49

recently that I think that was probably the

1:01:51

most important thing he's done. And

1:01:53

You know, I Think Hopefully they want to. They

1:01:55

want to achieve in their own way. And I

1:01:58

Think Teal Fellowship is a great way. The

1:02:00

either to cultivate those. Now he's cheating.

1:02:02

Europe is descending into a retirement home.

1:02:06

And. Eat or

1:02:08

Larry Summers Forty. So pretty good that Europe's

1:02:11

a museum. I think that's probably pretty ops.

1:02:13

Is either the i could do better keys. You blame

1:02:15

me For a few years. Oh. Wow seems

1:02:18

like the combination of a you know

1:02:20

content plus it as things working really

1:02:22

well it is. difference is we talked

1:02:24

about his other people to do it

1:02:26

pure and answer It is a cohesive

1:02:29

come here it's any strategy was is

1:02:31

i think how you get our five

1:02:33

in to that's great. The gas qualities

1:02:35

obviously awesome. So yeah dogs keep going

1:02:37

like if you have a strategy kids

1:02:40

do it either. Keep keep tasting it

1:02:42

of basically all strategies and venture people

1:02:44

learn that are soft. Did he can

1:02:46

reverse engineer. Events but he may have

1:02:48

a five years and your window before

1:02:50

that's the case. Final one for you

1:02:53

my friend really want Keith ten years

1:02:55

out his teeth kv that and is

1:02:57

key thing is I'm fun and is

1:02:59

Keith chilling with class at he did

1:03:01

she was obvious Kampala sad sir are

1:03:03

I would debris not be so it

1:03:05

and I will not to my would

1:03:07

fund Will I do something Outside Technologies

1:03:09

upset you know the question? Should I

1:03:11

wait I will I when a one

1:03:13

day do something that's very different I

1:03:15

support my life maybe. Did. The

1:03:18

Kv Lps know that you adjoining

1:03:20

when they invested. Oh Duffy.the funds

1:03:22

were all clothes. Are they

1:03:24

must be happy than her? Her advice I'd

1:03:26

either. so I don't know the ball, but

1:03:29

it yeah. Cedars out of the group for

1:03:31

six years ago. There's a good overlap actually

1:03:33

with that that Lps dido pretty wild you

1:03:35

so hopefully hopefully they're happy. I'm actually Enjoy

1:03:37

Media Ltd, Race or me with them and

1:03:40

Keith I so enjoyed this. Thank you so

1:03:42

much for doing and am I always love

1:03:44

much as pleasure to be that. i

1:03:48

mean what a fantastic discussion that was if you

1:03:50

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1:03:52

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