May 22, 2017 · 21m · 20vc
20VC: Founders Fund's Kevin Hartz on Why Investing In Silicon Valley Is Broken & Why Fearlessness Is What Makes The Truly Great Investors
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In this episode of The 20 Minute VC, host Harry Stebbings interviews Kevin Hartz, Partner at Founders Fund and co-founder of Eventbrite and Xoom. Hartz discusses his transition from operator to investor, critiques modern Silicon Valley venture conventions, and highlights Founders Fund's autonomous, sector-agnostic investment strategy.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Harry holds 41.6% of the talking time here. How this is scored →
Harry as informed peer 4.4 Guest teaching 2.6 Guest disagreement 2.0 Harry pushing back 2.4
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 14:04 Kevin welcomes software VCs into biotech
Kevin directly rejects the premise offered by Harry's cited VC, arguing that jumping into unfamiliar sectors is the core definition of true venture capital.
Hardest push from Harry ▶ 13:35 Harry challenges frontier investing in biotechHarry pushes back on frontier optimism by raising serious concerns from another VC regarding software investors lacking domain expertise in regulated biotech markets.
Biggest teaching moment ▶ 10:57 Kevin explains the history of Silicon Valley risk-takingKevin educates Harry on how early Silicon Valley venture capital emerged from defense and semiconductor backing, contrasting true historical risk-taking with modern hyper-specialization.
Harry holds his own ▶ 5:34 Harry cites Sequoia partner on operator decayHarry shows strong subject-matter expertise by bringing up Pat Grady's thesis on operational experience decay to test Kevin's worldview as a founder-turned-VC.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Harry as informed peer | Guest teaching | Guest disagreement | Harry pushing back | Why |
|---|---|---|---|---|---|---|
| Kevin's Career Journey from Founder to VC | 3 | 2 | 2 | 1 | Harry introduces Kevin with a detailed summary of his entrepreneurial and angel investment background. Kevin lightheartedly rejects being called a venture capitalist, emphasizing his operator identity. Harry warmly guides the discussion into Kevin's angel thesis without major friction. | |
| Value of Operational Experience in Venture Capital | 6 | 2 | 1 | 3 | Harry demonstrates industry knowledge by citing Sequoia partner Pat Grady regarding the rapid decay rate of operating experience. Kevin politely offers a counter-perspective, noting that empathy for founders remains valuable despite tech evolution. The exchange remains collaborative and conversational. | |
| Navigating Founders Fund's 'Anti-Process' & Autonomous Structure | 5 | 3 | 2 | 2 | Harry asks detailed probing questions about how deals get approved at Founders Fund given their lack of structured partner meetings. Kevin explains the fund's autonomous 'anti-process' and offers a historical view on how Silicon Valley investing has shifted away from original risk-taking roots. | |
| Frontier Investing & Sector Agnosticism | 6 | 4 | 4 | 5 | Harry presents a strong counterargument from an unnamed VC warning against software investors jumping into biotech without domain knowledge. Kevin directly disagrees, welcoming software VCs into biotech and citing STEMcentrx as proof that non-traditional backgrounds can lead to breakthrough biotech outcomes. | |
| Quick-Fire Round with Kevin Hartz | 2 | 2 | 1 | 1 | Harry guides Kevin through a rapid quick-fire segment covering book recommendations, motivations, and mentors. Kevin gives brief, collaborative answers and jokingly bypasses reading blogs in favor of asking people questions directly. |
Statements from this episode (13)
Stebbings: Kevin Hartz's Angel Portfolio Includes Airbnb, Uber, and Pinterest
“Kevin's also a prolific angel investor, with one of the most successful angel portfolios in the valley, with the likes of Airbnb, Uber, PayPal, Pinterest, and Yammer, all in Kevin's personal angel portfolio.”
Kevin Hartz identifies as an operator rather than a venture capitalist
“I really have spent most of my career on the operating side having founded a couple companies and actually recoil when I hear the term venture capitalists or being called a venture capitalists. I really think of myself as a, as an entrepreneur, as a company fo…”
Kevin Hartz: Sector chasing is flawed; great founders create new segments
“I wouldn't say that I'm a segment investor. I don't kind of believe in chasing different sectors, but instead look for these phenomenal people that really create new segments.”
Kevin Hartz: Venture investing requires slowing down compared to fast startup operations
“In a startup, you know, you're trying to move really quickly. You're trying to make decisions and have things happening on the investing side. You really need to kind of tap the brakes or really be prudent about what you jump into.”
Hartz's first Founders Fund deal evaluation was synthetic anti-freeze peptides
“Come in expecting to be the consumer person that was going to look at all the consumer digital deals, and the first thing I looked at was an anti-freeze synthetic peptide.”
Founders Fund writes checks from $250K to $50M
“If a team member has strong conviction, you know, whether it's a quarter million dollar FF Angel, that's, you know, the minimum amount that generally we invest in this kind of angel vehicle of ours, all the way up to fifty million, we can move quite quickly an…”
Hartz: Silicon Valley VC is overly segmented into niche, afterthought verticals
“And I think what's happened today is there's been this overly segmented kind of focused investing in, in areas that in many ways are just afterthoughts so there's funds that are just focused on AI or funds that are Just focus in other particular verticals, and…”
Hartz: Founders Fund stays sector-agnostic, enabling early investments like SpaceX
“We stay sector agnostic and instead look just at the individuals, and in doing that, that's enabled Founders Fund, and this is far before my time, to be at the ground floor of some very important companies. SpaceX is you know, a grand example of that.”
Hartz: There Were No VC Internet Specialists in the Early 1990s
“There were no you know, again, back to the example of the internet, there were no internet specialist in the early nineties. It was just people took a chance on this new emerging segment that didn't know this.”
Founders Fund seed-invested in DeepMind and Oculus before AI/VR hype
“This fund again, before my time had a seed invested in DeepMind before AI became a buzzword, or Oculus in the early seed rounds before VR became a buzzword”
Hartz: The biotech sector remains significantly underinvested
“The area of investing in, in the biotech side is, is one that I feel is, is underinvested. And there's a whole series of massive industries inside of biotech that need to be developed.”
Hartz: Brian Singerman's Stemcentrx deal is a historic biotech outcome
“Brian Singerman is a computer science, you know, major from Stanford that worked at Google that led the STEM-centric steel, which was one of the best outcomes in biotech history, but even more so, it's done some groundbreaking work at curing cancer, and that's…”
Hartz: HyperTrack is the Stripe for location-based services
“So if you think of messaging as with Twilio, or if you think of Stripe with payments, think of HyperTrack for location-based services, and it's exciting to me because it becomes a mechanism to imagine or to build all these great new services that if you think …”