The Exchanges

Q Man, I'm so thrilled for you. I think your updates, by the way, are some of the best from Fun One. So, I mean, it's just so well deserved. I do want to touch on, you've, you've heard the show before. How did you think about portfolio construction, stage concentration with the new fund and the seventy million that you have?

A Yeah. Absolutely. So for contest fund one, I think we got it a little bit wrong in a way that I don't think will deeply end up mattering, but fund one, and this is the dangers, like we thought it would be a six million dollar fund. And then we kept kind of creeping up and it became a twelve million dollar fund. And as a result, we ended up with more companies than we thought we wanted. So, you know, we ended up with almost 80 companies in fund one, which was very clear that it was too many and it was a little bit too diversified. So for fund two, our goal is to concentrate a little bit more. I think we'll end up with roughly Four D-ish core positions, and by core positions, I would define them, you know, average of one, one and a half million dollars per position, but there'll be a range, I would say, you know, maybe 300 key on the low end, four million on the high end. With the idea, wherever possible, we would like to own, you know, close to five percent on the company. It's not a hard rule. It's not something where there will be lots of exceptions, but that's roughly the model we're working backwards from.

AI assessment note: “for fund two, our goal is to concentrate a little bit more.”

Q Man, I'm so thrilled for you. I think your updates, by the way, are some of the best from Fun One. So, I mean, it's just so well deserved. I do want to touch on, you've, you've heard the show before. How did you think about portfolio construction, stage concentration with the new fund and the seventy million that you have?

A Yeah. Absolutely. So for contest fund one, I think we got it a little bit wrong in a way that I don't think will deeply end up mattering, but fund one, and this is the dangers, like we thought it would be a six million dollar fund. And then we kept kind of creeping up and it became a twelve million dollar fund. And as a result, we ended up with more companies than we thought we wanted. So, you know, we ended up with almost 80 companies in fund one, which was very clear that it was too many and it was a little bit too diversified. So for fund two, our goal is to concentrate a little bit more. I think we'll end up with roughly Four D-ish core positions, and by core positions, I would define them, you know, average of one, one and a half million dollars per position, but there'll be a range, I would say, you know, maybe 300 key on the low end, four million on the high end. With the idea, wherever possible, we would like to own, you know, close to five percent on the company. It's not a hard rule. It's not something where there will be lots of exceptions, but that's roughly the model we're working backwards from.

AI assessment note: “our goal is to concentrate a little bit more. I think we'll end up”

Q So my question to you, and this is general, and it's tough to answer, do you think VCs add value on the whole, honestly?

A I think the majority of investors take away value, not a ton, take away value. So I think the cardinal rule for investing, this is what we tell all our companies too, is my first rule is like, do absolutely no harm and be the least pain in the ass investor you have to ever deal with. And very often that means even silly things. Like when we say yes, we'll sign and wire as soon as possible. You need a board consent for anything. I will take like roughly four minutes to like turn it around. So the first rule to me is just do no harm. That already places you at like a 70th percentile investor. And again, that's changing. I think the very best ones do add value. A lot of times the value I got from my investors, and that's the value I want to give my companies, and maybe they don't think of it that way, but like it's emotional support, right? Like for me, it was very helpful to have a bunch of founders who had invested in us because I would text them. A good example is like Matt Brezina. He was our first investor ever, you know, serial founder. A lot of times I would just like be like, yo, this super weird thing happened at our company. Like, is this normal? Cause it seems kind of messed up. And he's like, yeah, it's normal. And I'm like, cool. I feel much better now. But, you know, having those sorts of exchanges for me was immensely valuable, being able to talk to founders about a…

AI assessment note: “I think the majority of investors take away value, not a ton, take away value.”

Q So what makes you, sorry, and this is, again, off schedule, what makes your relationship with Jeff, with Naval so special?

A I think it's the beauty and power of compounding relationships, right? So I think Jeff is a great example. So he's a partner at Accomplice, he started Accomplice, and our relationship Started with, you know, them sort of putting a small, frankly, in retrospect, an option check into, you know, one of our early rounds, but then it's been a relationship now that's developed over six, seven years, and it's taken different forms at every stage, right? It started off with him being our seed investors. Then he became our only board member. We had a two-person board for the entirety of Teachable, which is, which I highly recommend. You know, we were able to do board meetings at breakfast and dinner, and it was like this informal relationship that then Our default point of contact was through text. It worked really, really well, and he, in turn, informed the kind of investor I want to be, where, by default, you are hands-off because you're an independent person, and you trust the companies to be independent, but whenever the company needs anything, you're there, and you're willing to, like, actually do the actions and not just words. Anytime we had any sort of a financing round or whatever, Jeff was, I didn't even have to check with him. I knew he would have our back, and that's the kind of investor I aspire to be, but that relationship has evolved, right? He went from that to the Start…

AI assessment note: “I think it's the beauty and power of compounding relationships, right?”

Q I totally agree with you. Can I ask, if I'm worried about pricing, what are you worried about, my friend, when you look at the venture landscape today, and you have a unique perspective, having just in the last year's move from operating?

A I think right now, there's a fair amount of frenzy happening, and I think the people who are getting hurt the most, even though they don't think about it, are companies that are raising very large rounds, and don't have product market fit, and can fall into this really, really bad trap. And I have at this point, Not going to name names, but a few companies, all of whom are phenomenal founders. We backed them on the seed. They're super trendy right now. They've raised very large round series B's in some case, and they don't have product market fit. And it's not bad, right? Like no one starts a product market fit. And I think that's the trap that really, really worries me, especially when you have multi-stage firms coming in where a lot of multi-stage firms and hedge funds, what they're doing is they're shadowing the trendy investors, right? So you can totally have a setup where maybe you have, you know, an Andreessen or a Sequoia or a benchmark or someone who Investing early in a seed or an A of a company pre-product market fit. They know it's pre-product market fit. That's the bet they're taking. But then you have a Tiger, Koto, whatever, following them in saying, hey, this firm invested. They know this market better than I do. So let's give them a big B. And now all of a sudden you have a company that's raised two or three rounds and may have 20 to fifty million dollars in the…

AI assessment note: “companies that are raising very large rounds, and don't have product market fit”

Q Okay, do you not think we're losing it already? With the compression and fundraising timelines, Anka, you and I have both sat on calls where I say, hey, deal closes today or tomorrow, and you're like, this is not a relationship, this is a transaction. Do you not feel that this game is becoming more and more transactionalized?

A Yes, it has, but I think it's bifurcated. Like, I can look at my portfolio, and I can tell you there's probably, you know, roughly estimating, 20% of my founders, what I do think we're pretty close with. I mean, I have a Today, who's flying in after this meeting, and he's staying at my place. Things like that are something I want to kind of keep maintaining, and it's also why, from an investing strategy perspective, I'm now being far more drawn to deals that may be a little bit unsexy for whatever reason. It may have something a little bit wrong with it. It may be a little bit broken, maybe non-consensus, because I think that's sort of where, what I find more valuable, ultimately, where we can either lead or co-lead around, write a large check, Take a bet on someone that other people may not be taking a bet on, and I think that's where a lot of the value does come from. It's also why we've been finding it more meaningful to write larger checks, come in at, you know, unconventional stages, because, yeah, otherwise you're just, you know, one sort of name on a cap table in a very hot round, which, you're right, I mean, it is transactional.

AI assessment note: “Yes, it has, but I think it's bifurcated.”

Q And then tell me, what's the most recent publicly announced investment, and why did you say yes and get so excited?

A So the most recent investment I'm super excited about, it's actually going back to Pakistan. It's a company called Loop. What they do, and this is also what I love in emerging market tech deals, it's something I've seen myself growing up there is just how cash-based economies work, and what they do is they've built a payment gateway that is for, that supports both cash and online payments, and it's something that I think is super, super powerful because that's what digitizes a country, yet you can't forget where a country and a market comes from. And I think those are my favorite sort of deals where it's something that is, it's not like you're taking a model that already worked because literally nothing in the Western world works like that, but applying it to a local market as you help it transition from one stage of the economy to another.

AI assessment note: “It's a company called Loop. What they do... built a payment gateway”

Q I totally agree with you. Can I ask, if I'm worried about pricing, what are you worried about, my friend, when you look at the venture landscape today, and you have a unique perspective, having just in the last year's move from operating?

A I think right now, there's a fair amount of frenzy happening, and I think the people who are getting hurt the most, even though they don't think about it, are companies that are raising very large rounds, and don't have product market fit, and can fall into this really, really bad trap. And I have at this point, Not going to name names, but a few companies, all of whom are phenomenal founders. We backed them on the seed. They're super trendy right now. They've raised very large round series B's in some case, and they don't have product market fit. And it's not bad, right? Like no one starts a product market fit. And I think that's the trap that really, really worries me, especially when you have multi-stage firms coming in where a lot of multi-stage firms and hedge funds, what they're doing is they're shadowing the trendy investors, right? So you can totally have a setup where maybe you have, you know, an Andreessen or a Sequoia or a benchmark or someone who Investing early in a seed or an A of a company pre-product market fit. They know it's pre-product market fit. That's the bet they're taking. But then you have a Tiger, Koto, whatever, following them in saying, hey, this firm invested. They know this market better than I do. So let's give them a big B. And now all of a sudden you have a company that's raised two or three rounds and may have 20 to fifty million dollars in the…

AI assessment note: “that's something that really terrifies me about The current landscape.”

Q I do want to ask that, you know, with the transition from angel to fund investing, I had actually Josh Kaufman on the show a while ago now, but he said actually his mindset became more conservative with the transition. How did your mindset and process change when going from angel to fund investor?

A I think I've always had a strong sense of fiduciary responsibility to the degree that it may Probably is a weakness. Like, I'll give you an example. At Teachable, too, we raised thirteen million dollars in equity financing, which is pretty small for kind of where the company ended up. When we sold, we still had ten million in the bank. Our burn rate was, in retrospect, probably too small, but it's, it's sort of been the same with the fund investing, where I raised money from a lot of people who I really did not want to lose their money, like people like my family and friends and, you know, non-tech people who have non-tech money. So I think it pushed me to work harder, and as a result, I would agree that Probably made me more conservative than I otherwise would have been. Though I've always had this voice in my head, and I can't remember who told me that, but someone said a lot of investors become very good in the second half of their career because they're not afraid. And so that's sort of the challenge I have. Like I sometimes wonder, am I not as good as I could be because of that fear? Because a lot of times when you start your investing career, you're scared of so much. You're scared of letting your partners down. You're scared of letting your LPs down. And it's only after being successful that you kind of lose that fear. So it's been a battle of like having an inherent fea…

AI assessment note: “I would agree that Probably made me more conservative than I otherwise would have been.”

Q Same with like, how do you feel about founder secondary? They're becoming more and more.

A That's a great question, right? So the investor part of me, when I see a founder, like taking a large amount of secondary pretty early on, the investor part of me is like interesting, you know, like, like this does change the game, founder motivation, all of that. But I go back to being a founder and I'm always a founder first. I think I'll, and if I ever get to a point where I've been investing long enough that I don't feel founder first, it probably is a bad sign and I should step back. But as a founder, I've multiple times given multiple of my companies, the advice, the founders rather advice that Go ahead, take the secondary, because if I was in your position, I would have done that. So it would be hypocritical of me to, you know, put my investor hat on and say, don't do it. So I was a founder in today's market. I would absolutely be taking secondary because again, it's sort of the middle-class upbringing I have where it's like, Hey, you don't know what the market's going to look like. So do the responsible thing for you and your family and all of that. So my advice has been take the secondary. These conditions are unnatural and I would be doing the same. But at the end of the day, you think about it, right? The founders in a lot of ways are Stewards of capital. If they're thinking about it in a smart way, that in turn means they're going to be thinking about other things i…

AI assessment note: “So my advice has been take the secondary.”

Q my checklist on emerging markets investments, I'm intrigued if you have the same. One is like a founder who spent Significant amount of time outside of their home market in Western markets, bluntly learning to proven business. So like banking as a service or neobank. So you name any of your vertical, but like proven customer need. And then third is like reasonable pricing. Is that the same as you?

A Roughly the same. The one sort of differences is, is I think there are some business models that are so like uniquely local to those markets that it's, I wouldn't put the whole pressure of like having things to be in Western markets. I mean, Some of these markets are inherently so different, and, like, I think micro-entrepreneurship is a great, or whatever you want to call, I think micro-entrepreneurship is probably a good word, but, like, a lot of these countries have this base of, like, very, very small businesses, mom-and-pop shops, or whatever, like, India is a great example, and those sorts of behaviors are just nothing like what you see over here. Even culturally, right, like, there's some cultural things that are just pretty different, where I don't necessarily think that it has to be done properly. In Western markets before the one addition, like that I would add, and this may again sound a little bit controversial is I do think you sometimes have to screen for integrity a little bit higher and I'm Indian, so I can say that, but like, I do think, you know, like from a diligence perspective and stuff, the one thing I try and do is a little bit of local diligence because there have been times when I see deals where it's only kind of Western investors. And that does to me raise a little bit of a question mark. So typically the other item I would add to the checklist is lik…

AI assessment note: “Roughly the same. The one sort of differences is”

Q What did you learn from getting those reps in and that kind of many angel investment portfolio that you had in the early days?

A I believe as an investor, and this is how I live the rest of my life, I rely a lot on my instincts, but until you have enough data points, your instincts are not worth anything. So even though you read a lot of things, right, you read about how power laws work, you read about the sort of founders and companies that To invest in. For me, there's been no substitute of having, you know, written those first 50 checks and internalize those lessons. There's nothing like actually seeing the data after you've made those mistakes to actually form those instincts. So for me, it was very, very important early on to write lots of small checks, take a couple of years to see them develop, and then use that to hone instincts. Even though the caveat is we've, most of us, I think you and I at least, have honed our instincts in a bull market, so I'm sure there's another level of learning to come after seeing things go the other way, but, you know, that's sort of where we all are at this point.

AI assessment note: “until you have enough data points, your instincts are not worth anything”

Q The question that I have for you, and again, we had a nice schedule, but I'm intrigued on this one. Hey, we see, you know, the Tigers, we see the compression of, you know, deployment timelines. Everyone just says, play the game on the field, deploy, deploy, deploy. How do you feel about that in contrast with the fiduciary duty and with the discipline that I think we both have?

A So the thing that helped me get a lot better about feeling good about it, this is Purely mental game was the way I structured my fund. I put a large amount of capital into the fund myself. So for the first fund, it was, you know, a third of the fund for the second, probably 25% of the fund. That's a lot. And that at least like to me was a very strong signal to my LPs. Like, Hey, if this ship sinks, I'm going down with you. I'm the first person down with you. We also charge zero management fees. So a hundred percent of the capital we raised ended up being invested. Both these things made me feel a lot better that I was, you know, it's not like I was sitting here making money off the The only way I was going to personally benefit from this is if I created a good outcome for everyone. So that in turn helped me get to a much better mental place to feel more confident and comfortable deploying. And with that said, we've deployed relatively fast, but I think that's also by virtue of seeing a ton of sort of good deals. And I do believe this is a golden time for not just investing in startups, but startups being created. And there's a million reasons why. So we've kept up the deployment pace and early on, especially with the smaller checks, It also is very helpful since it's sped up the rate of, you know, lessons and learning.

AI assessment note: “helped me get to a much better mental place to feel more confident and comfortable deploying.”

Q Tell me, how do you think about reserves, and do you believe that you can Can build ownership in your best companies or does Sequoia and Andreessen come and plop them away before you have a chance?

A So we never kept formal reserves just because I want to have the flexibility downstream to adapt to new information, right? I've told all my LPs this, our model is a best guess of how the world is going to work in one year, but things are moving so fast that I fully want the right to be like, Hey, with all the information we've learned over the last year, we're going to change up how we're investing. So we have not kept reserves. The way we do pro rata is different from a lot of other funds, frankly, who have much greater AUM, where I look at each pro rata as a new investment, completely like, would I invest in this company at this stage? And as a result, what happens is for most of the companies we invest in, we'd like to at least do a mental exercise. Like, is there a ridiculous set of circumstances that could lead to this company being worth a hundred times more than it is today? And with each subsequent stage, obviously that gets harder. So more often than not, we do not Take pro rata from the fund, but we'll spin up an SPV, spin up another vehicle and do it from there. There are exceptions, but typically we will try and write a large check relatively early on, which is typically I would say, I don't know what we're calling rounds of these days, but let's say in the first two, maybe three rounds after that, you know, we'll do a million dollar SPVs. We'll keep our allocation…

AI assessment note: “we never kept formal reserves just because I want to have the flexibility downstream”

Q creating value, one kind of deterrent of that is kind of price inflation. When we look at the pricing, say it's Unlike ever before, and Paki McCormick tells me that you are one of the most price disciplined people he knows. I disagree. My question to you though is like, how do you think about price, and how do you feel about the current level of pricing we have today?

A I feel like we're always going to be in a place where we'll be complaining about price. I think you look back in history, and I think there's always been stages where prices seem sort of out of whack. Again, for me, very often, it's just like Doing the quick mental math, like, do I see a world where things can a hundred X from here roughly and use that as my gauge? A lot of times that means though, we've said no because of price a bunch of times, and we'll keep saying no because of price, but the markets are bigger than ever before. Companies are growing faster than ever before. The size of outcomes has gone up. And I still think based on where you look, you can find value even at current levels, but I think it goes back to sort of what are the non-consensus deals. And where you can actually go ahead and find them.

AI assessment note: “do I see a world where things can a hundred X from here roughly”

Q Okay, do you not think we're losing it already? With the compression and fundraising timelines, Anka, you and I have both sat on calls where I say, hey, deal closes today or tomorrow, and you're like, this is not a relationship, this is a transaction. Do you not feel that this game is becoming more and more transactionalized?

A Yes, it has, but I think it's bifurcated. Like, I can look at my portfolio, and I can tell you there's probably, you know, roughly estimating, 20% of my founders, what I do think we're pretty close with. I mean, I have a Today, who's flying in after this meeting, and he's staying at my place. Things like that are something I want to kind of keep maintaining, and it's also why, from an investing strategy perspective, I'm now being far more drawn to deals that may be a little bit unsexy for whatever reason. It may have something a little bit wrong with it. It may be a little bit broken, maybe non-consensus, because I think that's sort of where, what I find more valuable, ultimately, where we can either lead or co-lead around, write a large check, Take a bet on someone that other people may not be taking a bet on, and I think that's where a lot of the value does come from. It's also why we've been finding it more meaningful to write larger checks, come in at, you know, unconventional stages, because, yeah, otherwise you're just, you know, one sort of name on a cap table in a very hot round, which, you're right, I mean, it is transactional.

AI assessment note: “Yes, it has, but I think it's bifurcated.”

Q Same with like, how do you feel about founder secondary? They're becoming more and more.

A That's a great question, right? So the investor part of me, when I see a founder, like taking a large amount of secondary pretty early on, the investor part of me is like interesting, you know, like, like this does change the game, founder motivation, all of that. But I go back to being a founder and I'm always a founder first. I think I'll, and if I ever get to a point where I've been investing long enough that I don't feel founder first, it probably is a bad sign and I should step back. But as a founder, I've multiple times given multiple of my companies, the advice, the founders rather advice that Go ahead, take the secondary, because if I was in your position, I would have done that. So it would be hypocritical of me to, you know, put my investor hat on and say, don't do it. So I was a founder in today's market. I would absolutely be taking secondary because again, it's sort of the middle-class upbringing I have where it's like, Hey, you don't know what the market's going to look like. So do the responsible thing for you and your family and all of that. So my advice has been take the secondary. These conditions are unnatural and I would be doing the same. But at the end of the day, you think about it, right? The founders in a lot of ways are Stewards of capital. If they're thinking about it in a smart way, that in turn means they're going to be thinking about other things i…

AI assessment note: “my advice has been take the secondary. These conditions are unnatural”

Q Tell me, what's your biggest strength and your biggest weakness?

A My biggest strength is, and there's a word, it's not a dictionary word, called pronoia, but it's, like, the sense of the universe is conspiring on your behalf, and I feel like I'm very optimistic Optimistic in a world where it's sometimes not based in logic, but I just believe things will ultimately work out, and I think that's been very helpful, especially, you know, while operating a business, but I consider that to be my biggest strength. Weakness would be, and anyone that's worked with me can attest to that, and why, while building an organization, I had to always surround myself with very organized people, but I think I'm a complete train wreck of a human when it comes to, like, being an operator, being organized, being able to, like, If you consider the spectrum of people with like, you know, frenetic kind of founder energy and people who like actually get the things done and much more the former. So yeah.

AI assessment note: “My biggest strength is... pronoia... Weakness would be... being organized”

Q But I want to hear a little bit of context, because you obviously ran Teachable and founded Teachable, and now on the investing side, tell me kind of two questions. What was the first check that you wrote, and how did you get into the fund investing side? Because it is different to angel investing.

A Absolutely, and I think I'm super grateful to two mentors of mine to get me started on this process. Jeff Fagnon, an accomplice, and Naval Rubikant, an angelist. They created a program called Spearhead, where their thesis, which now seems genius in retrospect, but this is maybe four years ago, was that founders will make great investors, so let's give them capital to do that. So they were the ones that pushed me down this path, you know, set me up with a fund, and it's been intimidating to listen to everyone on your podcast who comes on, and they're like, oh, my first investment, I had no idea what I was doing, but now it's worth a hundred billion dollars or whatever. My first two investments, I'm not going to name them, but I'm pretty sure they're worth zero dollars today. So it was sort of a rocky startup front. Eventually, you know, you get more reps in, and it kind of works out, huh? And now we're at a point where, you know, have transitioned from writing the odd check to a full-time fund manager.

AI assessment note: “My first two investments, I'm not going to name them, but I'm pretty sure”

Q what I mean by that is the round is super hot, and the founder really likes you, but they've only got a hundred K or 50 K. Doesn't really make sense in yours or my fund structures, but it's a toehold in that gives you access, information, and data to put more in at the A or the B or wherever. Do you do the check or do you not?

A It's been an evolution, right? So when I started investing, I was like, yeah, The FOMO, I'll be, I'll be candid, right? I mean, you almost have this FOMO of like, hey, here's this hot deal, and you want to be, kind of, be a part of it, but as things have evolved, I've gotten a lot more comfortable saying no, and I've also started realizing I don't derive that much value by being a name on a cap table, and I don't mean any offense to the founders, but a lot of times I, you get the impression that it's kind of working on both sides, where you're seeing founders almost collect names on a cap table with investors, and no investor is actually Super happy with their allocation, but they're all a part of it, and there's, you know, this round sounds super hot, there's 50 brand name investors on, then you have investors that are doing the same thing, where they now have portfolios of a hundred companies, and it's not that meaningful on either side, and as I've been doing this longer, I started despising that more and more, and saying no more and more to being part of those rounds. Is it perfect? No, and you know, there are exceptions when I do think, and the exceptions are always when I think the founder is truly, truly, truly, truly exceptional, where I will still do it, But if I get the impression that I am no more than a name on the cap table, I've started just saying no, because I d…

AI assessment note: “I've started just saying no, because I don't feel like those end up serving”

Q Tell me, what's your biggest strength and your biggest weakness?

A My biggest strength is, and there's a word, it's not a dictionary word, called pronoia, but it's, like, the sense of the universe is conspiring on your behalf, and I feel like I'm very optimistic Optimistic in a world where it's sometimes not based in logic, but I just believe things will ultimately work out, and I think that's been very helpful, especially, you know, while operating a business, but I consider that to be my biggest strength. Weakness would be, and anyone that's worked with me can attest to that, and why, while building an organization, I had to always surround myself with very organized people, but I think I'm a complete train wreck of a human when it comes to, like, being an operator, being organized, being able to, like, If you consider the spectrum of people with like, you know, frenetic kind of founder energy and people who like actually get the things done and much more the former. So yeah.

AI assessment note: “My biggest strength is... Weakness would be”

Q my checklist on emerging markets investments, I'm intrigued if you have the same. One is like a founder who spent Significant amount of time outside of their home market in Western markets, bluntly learning to proven business. So like banking as a service or neobank. So you name any of your vertical, but like proven customer need. And then third is like reasonable pricing. Is that the same as you?

A Roughly the same. The one sort of differences is, is I think there are some business models that are so like uniquely local to those markets that it's, I wouldn't put the whole pressure of like having things to be in Western markets. I mean, Some of these markets are inherently so different, and, like, I think micro-entrepreneurship is a great, or whatever you want to call, I think micro-entrepreneurship is probably a good word, but, like, a lot of these countries have this base of, like, very, very small businesses, mom-and-pop shops, or whatever, like, India is a great example, and those sorts of behaviors are just nothing like what you see over here. Even culturally, right, like, there's some cultural things that are just pretty different, where I don't necessarily think that it has to be done properly. In Western markets before the one addition, like that I would add, and this may again sound a little bit controversial is I do think you sometimes have to screen for integrity a little bit higher and I'm Indian, so I can say that, but like, I do think, you know, like from a diligence perspective and stuff, the one thing I try and do is a little bit of local diligence because there have been times when I see deals where it's only kind of Western investors. And that does to me raise a little bit of a question mark. So typically the other item I would add to the checklist is lik…

AI assessment note: “Roughly the same. The one sort of differences is”

Q How do you expect the venture model to change in other ways over the next five to 10 years? As you said, we've seen it change so much over the last five. What do you think it looks like in another five?

A So one, I think we're moving to a world, forget venture, where everything is getting financialized. We were basically witnessing and, you know, through crypto, through like everything, the financialization of everything. And I think when you think 2030 years from now, this is going to look like child's play. With that, what I personally think will happen is I think venture and public marketing will kind of, right now, they seem like two distinct things. I think they'll keep sort of happening on a continuum where the differences will start becoming less and less. And I'll give you an example. Right now, I think Historically, companies in private markets were very cheap because they were very, very illiquid, and we're starting to see liquidity happen and be offered more and more. I mean, just in the last two months, we've had the chance to sell out of positions. We're not going to because that would be stupid at this stage from large firms coming in and offering that kind of liquidity, so I think all investing is going to start existing on the same continuum, and just the entire population is starting to take a greater interest in financial markets and all of that, so As crazy as things seem now, participation and startup investing and investing in ideas earlier and earlier, and eventually people will just continue to be more commonplace, and we're still in the super early days o…

AI assessment note: “venture and public marketing will kind of... happening on a continuum”

Q But I want to hear a little bit of context, because you obviously ran Teachable and founded Teachable, and now on the investing side, tell me kind of two questions. What was the first check that you wrote, and how did you get into the fund investing side? Because it is different to angel investing.

A Absolutely, and I think I'm super grateful to two mentors of mine to get me started on this process. Jeff Fagnon, an accomplice, and Naval Rubikant, an angelist. They created a program called Spearhead, where their thesis, which now seems genius in retrospect, but this is maybe four years ago, was that founders will make great investors, so let's give them capital to do that. So they were the ones that pushed me down this path, you know, set me up with a fund, and it's been intimidating to listen to everyone on your podcast who comes on, and they're like, oh, my first investment, I had no idea what I was doing, but now it's worth a hundred billion dollars or whatever. My first two investments, I'm not going to name them, but I'm pretty sure they're worth zero dollars today. So it was sort of a rocky startup front. Eventually, you know, you get more reps in, and it kind of works out, huh? And now we're at a point where, you know, have transitioned from writing the odd check to a full-time fund manager.

AI assessment note: “They created a program called Spearhead... set me up with a fund”

Q No, listen, I do totally agree. Do you think we'll see, don't laugh, but do you think we'll see the mega incumbents, your Andresans, your Sequoias, your Tigers of the world, will they be acquiring these founder operators with not small funds, but with smaller funds?

A I don't think it would be prudent of them to acquire these operator funds. They may choose to anyways, but it won't be prudent because I think what makes these funds special is the fact that they're independent, and that independence is what allows them to be the best they can be. And I think for From their perspective, it's probably just going to be smarter to be LPs in these funds than actually acquire them. So you get the best of both worlds where you kind of keep that information flowing, but you still let operators move at the speed they do. And again, what's been really fun for me to see is like, there's a certain level of energy intensity, like way of doing things founders bring to something. And it's been cool to see people bring that to venture funds. I mean, look, you hustle a ton, right? I probably work, you know, 30% as hard as you, yet I'm still doing things, you know, on Saturdays and Sundays and nights, and there's a lot of people in the venture industry that have never done this. That's a crazy idea for them. I'm willing to get on a plane for any of my companies tomorrow. Like, that kind of intensity, I think, is a good thing for this industry, and it just aligns founders more closely with their investors that were working at the same speed, timeline, and all of that. I think it's a great thing for the industry. I think injects youth, it injects energy, and will…

AI assessment note: “I don't think it would be prudent of them to acquire these operator funds.”

Q No, listen, I do totally agree. Do you think we'll see, don't laugh, but do you think we'll see the mega incumbents, your Andresans, your Sequoias, your Tigers of the world, will they be acquiring these founder operators with not small funds, but with smaller funds?

A I don't think it would be prudent of them to acquire these operator funds. They may choose to anyways, but it won't be prudent because I think what makes these funds special is the fact that they're independent, and that independence is what allows them to be the best they can be. And I think for From their perspective, it's probably just going to be smarter to be LPs in these funds than actually acquire them. So you get the best of both worlds where you kind of keep that information flowing, but you still let operators move at the speed they do. And again, what's been really fun for me to see is like, there's a certain level of energy intensity, like way of doing things founders bring to something. And it's been cool to see people bring that to venture funds. I mean, look, you hustle a ton, right? I probably work, you know, 30% as hard as you, yet I'm still doing things, you know, on Saturdays and Sundays and nights, and there's a lot of people in the venture industry that have never done this. That's a crazy idea for them. I'm willing to get on a plane for any of my companies tomorrow. Like, that kind of intensity, I think, is a good thing for this industry, and it just aligns founders more closely with their investors that were working at the same speed, timeline, and all of that. I think it's a great thing for the industry. I think injects youth, it injects energy, and will…

AI assessment note: “I don't think it would be prudent of them to acquire these operator funds.”

Q Tell me, we spoke about non-consensus deals. You've done a lot more than most in emerging markets. As have I, I think we're both passionate about emerging markets. Talk to me about why you're so bullish on emerging markets, and how do you think about kind of bluntly deployment moving forwards, and how do you think emerging markets will play a role in that?

A Yeah, so the reason I'm really excited about emerging markets, and a lot of people are initially excited about emerging markets because of price, or they're like, oh my god, look at this company, they have all this traction, and it's only, you know, x dollars in valuation or whatever. While that's a part of it, I'm most excited. Think about the toolkit we have, right? Venture capital. Going back to first principles, what is venture good for? I think venture is A really useful tool when you have, one, very large markets. Two, things that can grow unnaturally fast. And three, businesses or markets that can use capital as a moat. And when you look at a lot of emerging markets, like India is a great example. You have almost half a billion people that came online for the first time in the last, you know, three, four, five years. Again, I'm an immigrant. For the first time ever, I'm seeing people that moved from India, moved from places like that. Typically, the path was you'd come here, you'd study in a college over here, and then get a job and stay on in America. I mean, that's what I did. But for the first time, I'm seeing some of my smartest friends being like, you know what, the level of opportunity is so much greater back home. I'm going to get educated here. Maybe I'll spend a year or two years working at a company in Silicon Valley, but I'm going to go back and apply these ba…

AI assessment note: “And that's why I'm so excited about emerging markets.”

Q How do you expect the venture model to change in other ways over the next five to 10 years? As you said, we've seen it change so much over the last five. What do you think it looks like in another five?

A So one, I think we're moving to a world, forget venture, where everything is getting financialized. We were basically witnessing and, you know, through crypto, through like everything, the financialization of everything. And I think when you think 2030 years from now, this is going to look like child's play. With that, what I personally think will happen is I think venture and public marketing will kind of, right now, they seem like two distinct things. I think they'll keep sort of happening on a continuum where the differences will start becoming less and less. And I'll give you an example. Right now, I think Historically, companies in private markets were very cheap because they were very, very illiquid, and we're starting to see liquidity happen and be offered more and more. I mean, just in the last two months, we've had the chance to sell out of positions. We're not going to because that would be stupid at this stage from large firms coming in and offering that kind of liquidity, so I think all investing is going to start existing on the same continuum, and just the entire population is starting to take a greater interest in financial markets and all of that, so As crazy as things seem now, participation and startup investing and investing in ideas earlier and earlier, and eventually people will just continue to be more commonplace, and we're still in the super early days o…

AI assessment note: “venture and public marketing will... keep sort of happening on a continuum”