The Exchanges

Q Listen, I want to start, for those that maybe missed our first show, just with some context. How did you make your way into the world of venture, and how did you come to be a GP at Founders Fund in a, in a short one to two minutes?

A Man, it's been a long time now. It was, I started at Founders Fund almost 15 years ago. Um, I was at Google. I was an engineer and an engineering manager. And started doing startup investing on the side there in 2006, 2007, investing in a whole bunch of Y Combinator companies when Y Combinator was still brand new. Um, decided to make that my full time thing in oh seven was trying to figure out what to do. Do I raise my own fund? Do I do something else? And that's when I met, uh, Sean Parker and we became friends and he. Said, Hey, why don't you check out what we're doing at Founders Fund? And I came in and that's when, uh, we were considering, uh, a little investment in a company called SpaceX and, you know, said, this is what I want to do. So I joined up.

AI assessment note: “met, uh, Sean Parker and we became friends and he. Said, Hey, why don't”

Q I totally get you. Uh, tell me, final one, you've mentioned it before, but Andrew, what, what in the most in particular, I'm intrigued, you mentioned most a lot, what got you the confidence that Andrew's moat was just so compelling that you wanted to put two hundred million in?

A I, I don't even know where to begin on that. We put more than, we put four hundred million in that company total now. This is just our most recent one was two hundred million. This is an example of cross fund. I don't think any of our investors are upset about the fact that Andurl is in, ah, multiple funds. Um, but the moats are extensive on Andurl, right? Like the, they, they are in a space that hasn't had true new tech, you know, entrepreneurship in decades. Right? Your most valuable companies in the space are Lockheed, Boeing, Raytheon. These are companies that have been doing cost plus models in defense forever, um, and have had no real true, you know, ingenuity. You take the Endural team, the, the team who, like, a team who is seasoned, who knows what they are doing, has great government relations, pair it with a person as brilliant as Palmer Luckey in terms of product, um, tech and product brilliance. To be quite frank, right? And you've got something truly special paired with a space that until recently was considered, oh, you can't do that in Silicon Valley. Now it's not post, you know, Ukraine and post a couple of other things, but before it was like, you know, oh, you can't work on defense. That's not a, that's not a proper thing to work on. You should work on chat instead. Um, and so you take a team that was willing, that has the culture of working on things that nob…

AI assessment note: “the moats are extensive on Andurl, right? Like the, they, they are in a space”

Q at the early stage seeing this price inflation, price, um, inversion element where you see the migration of later stage capital down earlier and earlier stage. And so actually for obviously the best pedigreed founders, the price is actually higher than ever because you've got an increased high of capital going in. I think we're going to see that for your, does that, how do you think about that then?

A I mean, it's why we haven't deployed much capital in the last six months. You know, we deployed one, One, you know, my, my typical strategy is to try and deploy just a huge check, um, into the best companies, and I've deployed, I have, you know, did, we did a two hundred million dollar check, um, this year into Anduril, right? And that's a, you know, that for us is like, yes, no brainer to plow a large check into, um, at this time, but there's been nothing else. Um, even though I've seen great companies, we just can't get They're not interested in raising at, you know, October, 20, 22 prices, right? And so I would love to invest in them, and we'll, we'll see. There's probably going to be some that will be like, all right, all right, we get it. We'll raise a little more capital right now. You know, we won't raise a lot more capital because we don't want to take that decision, but we'll raise a little bit more capital now just to, you know, shore up the balance sheet and do it at a reasonable price, and those we're going to be all over. But so far in twenty-twenty-two, the only, the only big check I've done is Anderle.

AI assessment note: “it's why we haven't deployed much capital in the last six months.”

Q Where does that conversation go? Like, you see other funds, you know, creating products like accelerators, incubators, scout networks. Where does your conversation go?

A I mean, look, we've done that too. I mean, I don't think that goes to any one strategy, right? The way that we do things at Founders Fund is everybody runs their own strategy based on what they are the best at. I don't know how to run a company, so I'm not going to go start a company, but Trey is excellent at starting companies. Keith is excellent at starting companies. So great. So Trey and Keith, Go and start companies, um, right? And yeah, hopefully one of the reasons they do that is to have an awesome company, and both, you know, Andurl and OpenStore are fantastic, right? But one of the reasons, but another reason is to keep their networks fresh, because they were going to have a lot of people working for them that are eventually going to go start companies, and hopefully you get an Andurl mafia, and an OpenStore mafia, or whatever, right? Like, absolutely, that's part, that, that, that's part of it.

AI assessment note: “everybody runs their own strategy based on what they are the best at”

Q Does that not make it, I mean, given the size of your funds, does that not make it incredibly hard? I mean, you can do a hundred million dollar check.

A It makes it incredibly hard. If I'm, if I'm talking to new managers, the advice that I always give them is, and this is counterintuitive, but it's the right answer. Raise as small of a fund as you can in order to just crush it, because then you can write your ticket for a number of funds. It is much harder to get returns on Larger funds than it is on smaller funds. It just, just is. And so, you know, until you really, you know, I, I would say until you know that you can write a 30%, 25 to 30% of fund size check. You know, raise whatever fund size you can in order to like be comfortable writing a 25 to 30% of fund size check, right? Like if you're not comfortable writing a more than a five million dollar check, do not raise more than a twenty-five million dollar fund. Just go crush a twenty-five million dollar fund. Right. And maybe raise more frequently. Um, for me, this fund size is important because remember what I do, I like where I'm best is at writing these two, three, four hundred million dollar checks. And so, you know, if I'm using my own, practicing what I preach, it's like, if I'm comfortable writing a, let's say the most, the biggest check I'm comfortable writing is a five hundred million dollar check, which, you know, it's probably roughly that, then I should raise a two and a half billion dollar fund. But not many people can say that they're truly comfortable writi…

AI assessment note: “It makes it incredibly hard.”

Q Have you always been this style of investing, Brian?

A That's the only way of investing that I know how to do. And I think it's one of my unique moats and unique angles is that I'm good at this type of investing, and I'm honest with myself on what I'm good at and what I am not good at, and I'm good at this kind of stuff, and I'm not good at Other things in this, in this space, which is why we, I, we try and partner with people who are totally different from us, right? Like, I don't know how to start a company. Great. I, do I love having Keith and Trey as partners? A hundred percent, right? They're great at it. Um, you know, I don't know how to do financial analysis on companies. Do I love having Napoleon as a partner? Absolutely. I know nothing about macro, right? Do I love having Peter Thiel as a partner? Absolutely, right? I mean, you, you try and You don't try and hire clones of yourself. You try and work with people who have their own unique strengths that are the best in the world at something.

AI assessment note: “That's the only way of investing that I know how to do.”

Q So I totally agree with you. And you saying about kind of, it's hard just to get a deal done. Is that not a prime opportunity for someone like founders fund in the notion of, you know, be greedy when others are fearful and keeping that in mind?

A It depends. I mean, if you, if you find one of the best, we only want to invest in the best companies, right? And so if one of the best companies, if we see something as the best company, you know, that's an amazing company and we can actually get a reasonable price on it. Absolutely. We're going to invest, but if even the best companies want You know, end of 2021, beginning of 2022 prices where other comps in their market have gone down by 80%, then we're just, we're also just not going to play that game. Like, we don't have any pressure to invest capital. Um, you know, we've done very well with IRLPs. They trust us with their money, and we feel zero pressure to invest capital. We can just wait. And there's always going to be, you know, You know, hopefully, right in the world, there's always going to be really, really, really good companies, regardless of the macro cycle. Um, and so, I, we can just, we can just wait until prices actually catch up, and then we can invest in great companies at great prices.

AI assessment note: “It depends. I mean, if you, if you find one of the best”

Q So I totally agree with you. And you saying about kind of, it's hard just to get a deal done. Is that not a prime opportunity for someone like founders fund in the notion of, you know, be greedy when others are fearful and keeping that in mind?

A It depends. I mean, if you, if you find one of the best, we only want to invest in the best companies, right? And so if one of the best companies, if we see something as the best company, you know, that's an amazing company and we can actually get a reasonable price on it. Absolutely. We're going to invest, but if even the best companies want You know, end of 2021, beginning of 2022 prices where other comps in their market have gone down by 80%, then we're just, we're also just not going to play that game. Like, we don't have any pressure to invest capital. Um, you know, we've done very well with IRLPs. They trust us with their money, and we feel zero pressure to invest capital. We can just wait. And there's always going to be, you know, You know, hopefully, right in the world, there's always going to be really, really, really good companies, regardless of the macro cycle. Um, and so, I, we can just, we can just wait until prices actually catch up, and then we can invest in great companies at great prices.

AI assessment note: “It depends. I mean, if you, if you find one of the best”

Q Founders that are saying, hey, fundraising markets have changed. We've got 18 months left. Is it going to get better? Is it going to get worse? Should we raise more now?

A I don't, I, as you can probably, my answer is I do not know. I don't try and predict macro economy, period. Um, I don't, I, I, I only play games that I know that I can win at. Right. This is why I don't do public. I don't buy any public stocks ever. Right. Like, and I don't try and predict, you know, be one of those VCs who sits there and like says, oh, the funding environment is going to be bad for a long time, or it's going to get better. Like who knows? Nobody knows. And so you only do what you can for right now. And you assume that right now is how it's going to be. Um, and so if you're a company that needs to raise some money, like I advise doing it at a reasonable price that doesn't kill the company or some companies are going to have to shut down. This is just the reality of this business is you get into these cycles and I've seen this before. I've been doing this for a long time where, yeah, some, a lot of companies are just going to shut down and that just is how it is.

AI assessment note: “my answer is I do not know. I don't try and predict macro economy”

Q I can sell really well. I, you know, believe it or not, I'm good at marketing myself. Um, but that may not be true. You know, we both know people, you know, who may not be as good as they seem or are not, are much better than they seem. How do you think about that? Because I find that really hard, and I don't have an answer for that.

A Oh, I mean, you don't just like, you have multiple conversations with people, like backchanneling is still important, and I like the, the type of backchanneling that I like is where, They can't tell what you want to hear, right? It's all, it's, it's quite easy to back channel, um, and due diligence on something when, you know, the human being that you're doing diligence with, like, kind of knows what you want to hear, and they're just, like, inclined to tell you what you want to hear, because No downside to them. Right? So the stuff that I like the best is when you ask questions that the other person doesn't know that you, what the answer should be. And so, or what you're looking for. Um, and so that's how we kind of back channel all of these candidates to try and figure out like, well, is Sam truly an expert? Uh, you know, high growth tech enterprise sales. Right. And so we try and figure that out. And of course, like, you know, we've been wrong sometimes on that front too, but that's okay. Right. We're really good at adapt or die. We don't just sit there and be like, oh, we made a mistake. So let's never do this again.

AI assessment note: “backchanneling is still important, and I like... where, They can't tell what you want to hear”

Q Now, I want to start with a little bit. You mentioned Palmer there, obviously. I spoke to Palmer just now, and Palmer said a very pertinent question. He said, why are you such a hard ass, and how do you stay so popular despite being tough and aggressive when needed? What's the secret to that balance, Brian? Help me out.

A Yeah, I mean, what I do best is I think I'm a pretty good founder consigliere. I don't know how to operate companies. I'm not going to seed your top of funnel. I'm not going to Do a bunch of like low level operations work for the company. But what I am pretty good at is, is strategy. And I really, really, really enjoy the hairy, honest questions. And that leads to hairy, honest answers. But a lot of founders really need that. And a lot of founders really dig that. And so I can be very just honest and transparent. It's less hard ass and more just not candy coating any things and wanting to get to the crux of the hardcore strategy of a company. And that's what I like doing, and the founders that like working with me, that's what they like about me, I'm assuming.

AI assessment note: “It's less hard ass and more just not candy coating any things”

Q It's crucial to have that in any working relationship and team. Final one, what's your favorite story from working with the company and the team? What one's the most memorable to you?

A I think the first time, so we've been talking about the company for a long time, and we knew stuff was going to be able to get built, but the first time we actually took a trip out, saw the technology package all working. They've got this space in a huge field that they can kind of play around with their stuff, and I had never really seen the platform before. I'd heard, oh, here are the capabilities, here's what it can do theoretically, and like, great, great, great, but actually seeing the product And then seeing it integrated into a whole bunch of different things, like, look, we saw a demo of defense drones that were all integrated onto the same platform as, as everything else. I think seeing that live and in action was kind of a game changer in my mind, because it made me think, wow, this is actually real, and the US actually has a chance to have real defense, as opposed to just spending a bunch of money on stuff that doesn't work. Again, for somebody like me, who does care about national defense, and who does Think it's extremely important to innovate in the space, and who does not want to live under foreign government rule, that was a pretty special moment, seeing this stuff actually work.

AI assessment note: “that was a pretty special moment, seeing this stuff actually work.”

Q Now, I want to start with a little bit. You mentioned Palmer there, obviously. I spoke to Palmer just now, and Palmer said a very pertinent question. He said, why are you such a hard ass, and how do you stay so popular despite being tough and aggressive when needed? What's the secret to that balance, Brian? Help me out.

A Yeah, I mean, what I do best is I think I'm a pretty good founder consigliere. I don't know how to operate companies. I'm not going to seed your top of funnel. I'm not going to Do a bunch of like low level operations work for the company. But what I am pretty good at is, is strategy. And I really, really, really enjoy the hairy, honest questions. And that leads to hairy, honest answers. But a lot of founders really need that. And a lot of founders really dig that. And so I can be very just honest and transparent. It's less hard ass and more just not candy coating any things and wanting to get to the crux of the hardcore strategy of a company. And that's what I like doing, and the founders that like working with me, that's what they like about me, I'm assuming.

AI assessment note: “It's less hard ass and more just not candy coating any things”

Q In terms of the investment mindset, how have you seen it change?

A I've had, well, here, I've had a whole bunch of silly rules throughout the years, like in, in, in, in, in, in, in, in, in, in, Facebook. We saw social networks for dogs, and social networks for dead people, and social networks for seventy-five-year-old females from Ohio. And so, I just got so sick of that stuff that I, one time, apparently, you know, said, no, I'm not going to do any more consumer internet. That's, of course, not true, right? That was just a reaction to what I was seeing at the time, but there's still fantastic consumer internet companies, and always have been. So, I've kind of evolved Into having no dogmas. I've, I've evolved into a perfect Zen state of sector agnosticism.

AI assessment note: “I've evolved into a perfect Zen state of sector agnosticism.”

Q at the early stage seeing this price inflation, price, um, inversion element where you see the migration of later stage capital down earlier and earlier stage. And so actually for obviously the best pedigreed founders, the price is actually higher than ever because you've got an increased high of capital going in. I think we're going to see that for your, does that, how do you think about that then?

A I mean, it's why we haven't deployed much capital in the last six months. You know, we deployed one, One, you know, my, my typical strategy is to try and deploy just a huge check, um, into the best companies, and I've deployed, I have, you know, did, we did a two hundred million dollar check, um, this year into Anduril, right? And that's a, you know, that for us is like, yes, no brainer to plow a large check into, um, at this time, but there's been nothing else. Um, even though I've seen great companies, we just can't get They're not interested in raising at, you know, October, 20, 22 prices, right? And so I would love to invest in them, and we'll, we'll see. There's probably going to be some that will be like, all right, all right, we get it. We'll raise a little more capital right now. You know, we won't raise a lot more capital because we don't want to take that decision, but we'll raise a little bit more capital now just to, you know, shore up the balance sheet and do it at a reasonable price, and those we're going to be all over. But so far in twenty-twenty-two, the only, the only big check I've done is Anderle.

AI assessment note: “I mean, it's why we haven't deployed much capital in the last six months.”

Q Where does that conversation go? Like, you see other funds, you know, creating products like accelerators, incubators, scout networks. Where does your conversation go?

A I mean, look, we've done that too. I mean, I don't think that goes to any one strategy, right? The way that we do things at Founders Fund is everybody runs their own strategy based on what they are the best at. I don't know how to run a company, so I'm not going to go start a company, but Trey is excellent at starting companies. Keith is excellent at starting companies. So great. So Trey and Keith, Go and start companies, um, right? And yeah, hopefully one of the reasons they do that is to have an awesome company, and both, you know, Andurl and OpenStore are fantastic, right? But one of the reasons, but another reason is to keep their networks fresh, because they were going to have a lot of people working for them that are eventually going to go start companies, and hopefully you get an Andurl mafia, and an OpenStore mafia, or whatever, right? Like, absolutely, that's part, that, that, that's part of it.

AI assessment note: “everybody runs their own strategy based on what they are the best at”

Q That, that I totally get. Do you think your winners are obvious early?

A Oh, it depends on which stage we invest in. Like, do I think our winners are obvious at the seed stage? No. Do I think that we invest, do we play on a better dartboard than most people? Because we can see, Founder quality better and get into those deals with the best founders. Yeah. Um, I think they're pretty good, but do we, no, I don't think anybody can see that something is going to be, or they can, they can say they've got their thesis and I, you know, whatever, but like, I don't think you can predict a hundred billion dollar companies at the seed stage. That's silly, but you can predict, Hey, this company has a way, way, way, way, way better shot. At being a big company than most. And that's what you're doing at this, at the early stage.

AI assessment note: “Like, do I think our winners are obvious at the seed stage? No.”

Q Founders that are saying, hey, fundraising markets have changed. We've got 18 months left. Is it going to get better? Is it going to get worse? Should we raise more now?

A I don't, I, as you can probably, my answer is I do not know. I don't try and predict macro economy, period. Um, I don't, I, I, I only play games that I know that I can win at. Right. This is why I don't do public. I don't buy any public stocks ever. Right. Like, and I don't try and predict, you know, be one of those VCs who sits there and like says, oh, the funding environment is going to be bad for a long time, or it's going to get better. Like who knows? Nobody knows. And so you only do what you can for right now. And you assume that right now is how it's going to be. Um, and so if you're a company that needs to raise some money, like I advise doing it at a reasonable price that doesn't kill the company or some companies are going to have to shut down. This is just the reality of this business is you get into these cycles and I've seen this before. I've been doing this for a long time where, yeah, some, a lot of companies are just going to shut down and that just is how it is.

AI assessment note: “my answer is I do not know. I don't try and predict macro economy”

Q That, that I totally get. Do you think your winners are obvious early?

A Oh, it depends on which stage we invest in. Like, do I think our winners are obvious at the seed stage? No. Do I think that we invest, do we play on a better dartboard than most people? Because we can see, Founder quality better and get into those deals with the best founders. Yeah. Um, I think they're pretty good, but do we, no, I don't think anybody can see that something is going to be, or they can, they can say they've got their thesis and I, you know, whatever, but like, I don't think you can predict a hundred billion dollar companies at the seed stage. That's silly, but you can predict, Hey, this company has a way, way, way, way, way better shot. At being a big company than most. And that's what you're doing at this, at the early stage.

AI assessment note: “Do I think our winners are obvious at the seed stage? No.”

Q Have you always been this style of investing, Brian?

A That's the only way of investing that I know how to do. And I think it's one of my unique moats and unique angles is that I'm good at this type of investing, and I'm honest with myself on what I'm good at and what I am not good at, and I'm good at this kind of stuff, and I'm not good at Other things in this, in this space, which is why we, I, we try and partner with people who are totally different from us, right? Like, I don't know how to start a company. Great. I, do I love having Keith and Trey as partners? A hundred percent, right? They're great at it. Um, you know, I don't know how to do financial analysis on companies. Do I love having Napoleon as a partner? Absolutely. I know nothing about macro, right? Do I love having Peter Thiel as a partner? Absolutely, right? I mean, you, you try and You don't try and hire clones of yourself. You try and work with people who have their own unique strengths that are the best in the world at something.

AI assessment note: “That's the only way of investing that I know how to do.”

Q Does that not make it, I mean, given the size of your funds, does that not make it incredibly hard? I mean, you can do a hundred million dollar check.

A It makes it incredibly hard. If I'm, if I'm talking to new managers, the advice that I always give them is, and this is counterintuitive, but it's the right answer. Raise as small of a fund as you can in order to just crush it, because then you can write your ticket for a number of funds. It is much harder to get returns on Larger funds than it is on smaller funds. It just, just is. And so, you know, until you really, you know, I, I would say until you know that you can write a 30%, 25 to 30% of fund size check. You know, raise whatever fund size you can in order to like be comfortable writing a 25 to 30% of fund size check, right? Like if you're not comfortable writing a more than a five million dollar check, do not raise more than a twenty-five million dollar fund. Just go crush a twenty-five million dollar fund. Right. And maybe raise more frequently. Um, for me, this fund size is important because remember what I do, I like where I'm best is at writing these two, three, four hundred million dollar checks. And so, you know, if I'm using my own, practicing what I preach, it's like, if I'm comfortable writing a, let's say the most, the biggest check I'm comfortable writing is a five hundred million dollar check, which, you know, it's probably roughly that, then I should raise a two and a half billion dollar fund. But not many people can say that they're truly comfortable writi…

AI assessment note: “It makes it incredibly hard.”

Q been more strategic about taking cash off the table. And, uh, and two, I think I should have been less focused on what the next round investor would want because you can't predict how that changes over time as it has done recently. Are there any kind of lessons or key observations you're telling the team, younger ones in the team, that you think through from the last few years?

A Sure. I mean, for me, I have not, we've had so many discussions about this and about what the last couple of years means, and did we go too fast in 20, 21? And of course we did, but I still, you can always predict the past and predicting the future is much harder. And to me, I've never been able to be convinced that we should be doing anything other than investing in the best founders or best companies possible at the best prices possible. I, I, I don't really know what we could have done, what to do differently. And right now, I've personally slowed down investing a ton simply because you cannot get a good price on the best companies. Um, okay. So I'll slow down, but I don't know any other way of doing venture capital. And regardless of any lessons or anything else, I have not found anybody who can change my mind that this is just about investing in the best companies possible. Are putting the most money into the best companies possible at the best price possible.

AI assessment note: “to me, I've never been able to be convinced that we should be doing anything other”

Q Is there any partner set where you feel you're missing that skill set? You mentioned there the financial analysis with Napoleon. You mentioned the macro with, with, uh, Peter. Are there any way you're like, ah, we really miss a sales?

A Oh, I'm sure. Well, look, I didn't know what we were missing. Like, I didn't know how much we were missing a Sam until we met Sam, but I'm just very open to there being a, You know, a, somebody who's really good at something that I never even considered. Both on the comp, this is, again, this is the same thing that I do on the company side is on the team side, right? I'm looking for companies that have a unique mode. I'm open to anything. I'm the most sector agnostic person you can possibly imagine. Um, and You know, I'm open to any company that has a unique moat in a huge market run by a great founder. I'm open to hiring anybody at Founders Fund that has a truly unique angle that I never even, that I didn't even necessarily know I was looking for. So when you ask me a specific, oh, are there like a specific hole? I'm sure there's an infinite number of holes that we have at Founders Fund, right? Like, and I'm open to, you know, seeing whatever they are, right? I didn't know we had a hole until we met Sam, and then I realized, oh man, this is going to fit a huge hole, right?

AI assessment note: “I'm sure there's an infinite number of holes that we have at Founders Fund”

Q In terms of where we go from here, I see this is like three stages. There's like structured rounds coming now, you know, increased press, you name it. Um, and then down rounds and then recaps. Would you agree with that kind of stage of process of how we're going to see this shake into the ecosystem?

A Sure. I mean, you're already seeing a whole bunch of companies go out of business, um, or companies trying to just raise bridges, um, to, to, to get them through this, or the best companies just simply say like, yeah, um, We can, you know, let some people go and ride this out. Or not even, you know, some of the best companies don't even have to let people go, um, and just ride it out, right? And so it's tough to do a deal, um, in this climate, because you don't want to just be doing these deals, like doing recaps while theoretically playing into your buy low, sell high, you know, it does have a lot of negative impact on, on companies, right? And so sometimes they just can't ever get out of that. And again, with venture being about upside maximization, Are you really just looking for, like, a good deal, or do you just want to invest in the best companies? And I would argue it's all the latter.

AI assessment note: “Sure. I mean, you're already seeing a whole bunch of companies go out of business”

Q not too long ago, uh, and he vigorously kind of debated or disagreed with an idea Which is, uh, buy low, sell high. Um, I often get it now from LPs, and they say, ah, this is the time, Harry, where you can buy low and sell high. Do you agree with that principle? And can you give me an example of either way where it's, it's worked for you?

A Yeah, I don't know. Venture to me is just very different from normal investing. Um, I don't, Claim to know anything about macroeconomics and I don't follow it all that much. At the end of the day, venture is a game where you make an investment and you're not going to see any payoff from it for, you know, a decade. Right? Like, and so that's going to span a whole bunch of different macro economies. So this concept of buy low, sell high, like using regular stock market phrases in venture to me just doesn't make any sense. Um, You have to invest. You have to just invest in really good companies. Now you can't pay ridiculous prices because that limits your upside, right? So venture capital is a game of upside maximization. Um, and the higher price you pay for something that it's going to limit your upside, uh, potential on that. So you can't just go and invest at ridiculous price, you know, ridiculous end of 20, 21 prices in things. Um, however, you know, Either the company is going to do really, really well, um, over time, in which case you'll be able to sell it high or sell it higher, or it won't, in which case it won't matter to you at all.

AI assessment note: “using regular stock market phrases in venture to me just doesn't make any sense”

Q I can sell really well. I, you know, believe it or not, I'm good at marketing myself. Um, but that may not be true. You know, we both know people, you know, who may not be as good as they seem or are not, are much better than they seem. How do you think about that? Because I find that really hard, and I don't have an answer for that.

A Oh, I mean, you don't just like, you have multiple conversations with people, like backchanneling is still important, and I like the, the type of backchanneling that I like is where, They can't tell what you want to hear, right? It's all, it's, it's quite easy to back channel, um, and due diligence on something when, you know, the human being that you're doing diligence with, like, kind of knows what you want to hear, and they're just, like, inclined to tell you what you want to hear, because No downside to them. Right? So the stuff that I like the best is when you ask questions that the other person doesn't know that you, what the answer should be. And so, or what you're looking for. Um, and so that's how we kind of back channel all of these candidates to try and figure out like, well, is Sam truly an expert? Uh, you know, high growth tech enterprise sales. Right. And so we try and figure that out. And of course, like, you know, we've been wrong sometimes on that front too, but that's okay. Right. We're really good at adapt or die. We don't just sit there and be like, oh, we made a mistake. So let's never do this again.

AI assessment note: “how we kind of back channel all of these candidates to try and figure out”

Q In terms of where we go from here, I see this is like three stages. There's like structured rounds coming now, you know, increased press, you name it. Um, and then down rounds and then recaps. Would you agree with that kind of stage of process of how we're going to see this shake into the ecosystem?

A Sure. I mean, you're already seeing a whole bunch of companies go out of business, um, or companies trying to just raise bridges, um, to, to, to get them through this, or the best companies just simply say like, yeah, um, We can, you know, let some people go and ride this out. Or not even, you know, some of the best companies don't even have to let people go, um, and just ride it out, right? And so it's tough to do a deal, um, in this climate, because you don't want to just be doing these deals, like doing recaps while theoretically playing into your buy low, sell high, you know, it does have a lot of negative impact on, on companies, right? And so sometimes they just can't ever get out of that. And again, with venture being about upside maximization, Are you really just looking for, like, a good deal, or do you just want to invest in the best companies? And I would argue it's all the latter.

AI assessment note: “Sure. I mean, you're already seeing a whole bunch of companies go out of business”

Q In terms of the investment mindset, how have you seen it change?

A I've had, well, here, I've had a whole bunch of silly rules throughout the years, like in, in, in, in, in, in, in, in, in, in, Facebook. We saw social networks for dogs, and social networks for dead people, and social networks for seventy-five-year-old females from Ohio. And so, I just got so sick of that stuff that I, one time, apparently, you know, said, no, I'm not going to do any more consumer internet. That's, of course, not true, right? That was just a reaction to what I was seeing at the time, but there's still fantastic consumer internet companies, and always have been. So, I've kind of evolved Into having no dogmas. I've, I've evolved into a perfect Zen state of sector agnosticism.

AI assessment note: “I've kind of evolved Into having no dogmas.”

Q I just love that. What makes the best strategy dinners with top founders and what makes the strategy dinners?

A Where it's very clear what the, the, the moat is. It's very clear what the unique, you know, thing that this company has that nobody else has is. And then we can really talk about leveraging that into the next level and beyond. That's what I love. I love focus. I'm very open to, you know, and a lot of people can say this, but I don't think they're good at it. Like, I think at Founders Fund, we are simply just Really good at being open to the fact that there are multiple different strengths, moats, uniqueness, you know, things about people that other people can't see. A lot of, a lot of firms are looking for tracked founders, or like, you know, they have a good sense of what they're looking for. I'm like, I have no idea what I'm looking for. Surprise me with something that is truly unique, and I'm in, right? Regardless of what it is. Um, and so, I love that when you're dealing with a company, a founder and a company that know what their strengths are and are very honest about what their weaknesses are, and we can talk about leveraging the strengths of the company, um, into a much more dominant situation. That is strategy gaming one-on-one. Um, and that's what I love.

AI assessment note: “Where it's very clear what the, the, the moat is.”

Q Can I ask, when you look back at 21 and 20, on reflection, do you think you deployed too fast?

A Um, yes. In 21, that said, like, You know, we had great, we had our best year ever in 20, 21, right? Just because we kind of got our, our strategy has always been to distribute shares slash capital right when we can in companies simply because we don't think we know the public markets better than anybody else. Um, what we do better than anybody else is private company investments. And so why would I do anything else? And so You know, you had to make decisions in 20, 21 on whether you had a bunch of companies go public, it was kind of a crazy year for venture capital, and you had to make a decision on whether you held Held those or distributed. And we've just always had a history of distributing these shares at lockup just because, you know, we, we, we don't know more about the private, about public company investing than anybody else. And so we tend to not hold those.

AI assessment note: “Um, yes. In 21, that said, like, You know, we had great”