The Exchanges

Q I mean, this is very macro, but it is something that I'm actually concerned about, which is in the case of kind of excessive QE strategies, like you mentioned there, are you concerned about kind of mass hyperinflation?

A You know, right now we're in an odd situation where things are reasonably deflationary. Because demand is dropping. And so if you look at China as an analog, the last report I saw, which is maybe a week or two old now, production was still down about 10% in China, and consumer demand was down around 20, 30%. So if you see these big shifts in demand, usually that creates deflationary pressure. Pricing pressure comes down, costs come down. I was talking to a friend of mine who's a real estate developer in San Francisco, and he said a lot of the general contractors he worked with have told him that their subs, their contractors, Are coming in with 30, 40, 50% lower bids than they used to because they just want to get back to work. So all those things are going to drop prices versus raise prices. But again, I don't know how this is going to play out long term, and I'm definitely not an economist or macro investor. I just think it's important to keep your eye out for these things as they happen.

AI assessment note: “right now we're in an odd situation where things are reasonably deflationary.”

Q Yeah, no, absolutely. On the kind of two to three year runway there, you've spoken before about a stress test model that we can really employ to determine the kind of the health of that runway. What did you mean by the stress test model? And how do you think founders can really enact

A Yeah, I think there's two types of stress tests you can do. One is at the customer level, and one is at the sort of broader, just financial modeling or revenue level. At the customer level, if you're an enterprise or SaaS company, you really want to look at your top end customers. It could be 10, it could be a hundred, but sort of the folks who make up the bulk of your revenue, as well as the bulk of your pipeline. And you need to ask who's going to be hurt, who's likely to cut spend, what are some warning metrics you can start tracking. And so, for example, if you have a lot of customers in the travel vertical, And they're all cutting headcount. They're cutting costs. Your product may or may not survive those cuts. They may either turn off or they may dramatically reduce what they pay you. So that's something that you have to model out. So you can do sort of the bottoms up version of it. You can also do it vertical by vertical if you're dealing with SMBs or sort of broader market segments. And then on the revenue level, so that's sort of the customer stress test. On the revenue stress test, you can basically make assumptions. Instead of growing two X this year, what if I grow a 50%? What if I grow at 20%? What if I'm down 10%? And then what happens to cost and burn across the company? If you're not assuming anything about a specific customer, but you're more looking at the ove…

AI assessment note: “there's two types of stress tests you can do. One is at the customer level”

Q How do you advise founders when it comes to secondary opportunities? We mentioned them earlier. How do you advise them when they arise?

A In general, I think it depends a little bit on the stage of the company. I think there are two circumstances under which it makes sense to do it. One circumstance is the company is stable, there's a clear path forward, and you basically want to de-risk your position with the company. And you want to have money to be able to keep going. You don't want to feel like you need to sell because you want to put your kids in school or something. That often happens at around a five hundred million to one billion dollar valuation. It's sort of a crossover point where often that reflects a pretty stable company. The other reason to do it is you may just have a deep life need to do it. You know, you have a sick family member or you want to buy a house. You know, there's some impetus for it. And either way, I think If you do it, you may want to figure out how not to sell too much of your stake too early with the hope that it appreciates, but still take money off the table so that you have that stability. So for example, at 500,000,001 percent of the company is five million dollars. That's a significant amount of money. And at that point, founders will often own, you know, 20, 30% of the company. So one percent of that isn't that much.

AI assessment note: “there are two circumstances under which it makes sense to do it”

Q Yeah, no, absolutely. On the kind of two to three year runway there, you've spoken before about a stress test model that we can really employ to determine the kind of the health of that runway. What did you mean by the stress test model? And how do you think founders can really enact

A Yeah, I think there's two types of stress tests you can do. One is at the customer level, and one is at the sort of broader, just financial modeling or revenue level. At the customer level, if you're an enterprise or SaaS company, you really want to look at your top end customers. It could be 10, it could be a hundred, but sort of the folks who make up the bulk of your revenue, as well as the bulk of your pipeline. And you need to ask who's going to be hurt, who's likely to cut spend, what are some warning metrics you can start tracking. And so, for example, if you have a lot of customers in the travel vertical, And they're all cutting headcount. They're cutting costs. Your product may or may not survive those cuts. They may either turn off or they may dramatically reduce what they pay you. So that's something that you have to model out. So you can do sort of the bottoms up version of it. You can also do it vertical by vertical if you're dealing with SMBs or sort of broader market segments. And then on the revenue level, so that's sort of the customer stress test. On the revenue stress test, you can basically make assumptions. Instead of growing two X this year, what if I grow a 50%? What if I grow at 20%? What if I'm down 10%? And then what happens to cost and burn across the company? If you're not assuming anything about a specific customer, but you're more looking at the ove…

AI assessment note: “there's two types of stress tests you can do. One is at the customer level”

Q Absolutely. I mean, in terms of kind of owning a function, though, sadly, not everyone can scale sufficiently with the company over time. I do have to ask, how do you know when you have an executive or employee that maybe you Isn't scaling sufficiently? And what are the signs that it's a stretch too far?

A There's a few common signs and sometimes there's very unique signs per person. The first one may just be how frazzled are the people? Are they always late to meetings? Do they seem put out and stressed out? Like you can typically tell these things in terms of somebody running very ragged, which shows that they aren't able to either find the right people or delegate or really scale a function. Second is they sort of collapse into micromanagement. So often the tendency is to get two hands-on versus two The other way around, if, if you're a little bit in over your head, third is whether they're unable to recruit great people for the layer under them. So exceptional people want to work for people that they feel like they can learn from. And if that individual just can't attract great talent, that means that people of that function just don't view them as very competent. So for example, say you had a great marketing person that was unwilling to work for your CMO or repeatedly your CMO was unable to ever close anybody senior. That would suggest that that CMO may be out of their league. And then lastly, if they're not thinking far ahead enough or anticipating issues or opportunities, so it could be team issues, product issues, customer issues, but if basically they seem behind the ball versus six months ahead in terms of planning and thinking forward and what should be done next, then…

AI assessment note: “There's a few common signs and sometimes there's very unique signs per person.”

Q No, I completely agree. I think it's also often a forgotten element. I do have one more element to touch on on the M&A front. A hunter recently tweeted about Mike and Kevin not getting enough credit for staying and leading Instagram at Facebook. How do you think about founder retention and engagement post M&A?

A There's a few really great examples of founders who've stuck around after getting acquired. So for example, John Henke stuck around Google for many years. After getting acquired for Keyhole, and then he eventually ran, I think, all of Google Maps and local and other areas, and he had an enormous impact through doing that at Google. Similarly, Andy Rubin was acquired when Android was, I think, about 11, 12 people, and then obviously that led to this amazing handset OS and sort of platform for the world. So fundamentally, I think if you can retain some of these great founders, you can really end up with outsized outcomes for your companies. When all's said and done, it Largely boils down to three things. Number one, the level of responsibility that that individual has, and can they really have big impact? Like many founders are driven by the impact that they can have, and so can you create a platform for them by which they can do that? Number two is, frankly, keeping politics and bureaucracy out of their way. Founders tend to be least happy when they have to deal with those sorts of things, just given the personality traits of many founders, and so creating a shield or protection for them is important. So for example, Instagram was Allowed to run pretty independently from the rest of Facebook. Similarly, Android actually had its own hiring practices, which at the time was Anthema…

AI assessment note: “When all's said and done, it Largely boils down to three things.”

Q Absolutely. I mean, in terms of kind of owning a function, though, sadly, not everyone can scale sufficiently with the company over time. I do have to ask, how do you know when you have an executive or employee that maybe you Isn't scaling sufficiently? And what are the signs that it's a stretch too far?

A There's a few common signs and sometimes there's very unique signs per person. The first one may just be how frazzled are the people? Are they always late to meetings? Do they seem put out and stressed out? Like you can typically tell these things in terms of somebody running very ragged, which shows that they aren't able to either find the right people or delegate or really scale a function. Second is they sort of collapse into micromanagement. So often the tendency is to get two hands-on versus two The other way around, if, if you're a little bit in over your head, third is whether they're unable to recruit great people for the layer under them. So exceptional people want to work for people that they feel like they can learn from. And if that individual just can't attract great talent, that means that people of that function just don't view them as very competent. So for example, say you had a great marketing person that was unwilling to work for your CMO or repeatedly your CMO was unable to ever close anybody senior. That would suggest that that CMO may be out of their league. And then lastly, if they're not thinking far ahead enough or anticipating issues or opportunities, so it could be team issues, product issues, customer issues, but if basically they seem behind the ball versus six months ahead in terms of planning and thinking forward and what should be done next, then…

AI assessment note: “There's a few common signs and sometimes there's very unique signs per person.”

Q I mean, this is very macro, but it is something that I'm actually concerned about, which is in the case of kind of excessive QE strategies, like you mentioned there, are you concerned about kind of mass hyperinflation?

A You know, right now we're in an odd situation where things are reasonably deflationary. Because demand is dropping. And so if you look at China as an analog, the last report I saw, which is maybe a week or two old now, production was still down about 10% in China, and consumer demand was down around 20, 30%. So if you see these big shifts in demand, usually that creates deflationary pressure. Pricing pressure comes down, costs come down. I was talking to a friend of mine who's a real estate developer in San Francisco, and he said a lot of the general contractors he worked with have told him that their subs, their contractors, Are coming in with 30, 40, 50% lower bids than they used to because they just want to get back to work. So all those things are going to drop prices versus raise prices. But again, I don't know how this is going to play out long term, and I'm definitely not an economist or macro investor. I just think it's important to keep your eye out for these things as they happen.

AI assessment note: “right now we're in an odd situation where things are reasonably deflationary.”

Q Absolutely, Nick. The secondary effects are always felt. I do want to ask, in terms of kind of post-pricing element, there's always the terms of the deal. And I've seen on Twitter a lot of suggestions about, could this be the re-entering of kind of Vulture VC days. How do you advise founders on the terms and structures to avoid or be wary of in times like this?

A Yeah, I mean, the very best thing you can do is keep the round as clean as possible, which means non-participating preferred and one X liquidation preferences and things like that. Often there's two reasons that a structure will come into play into an investment and structure means something where the investors are guaranteed a certain type of payout or return or a structure may mean some forced timeline for IPO. There's all sorts of things like that. And there's basically two types of structures that come into play. One type of structure usually comes in when the investors and the founder can agree on the valuation. There's a big difference. And the investor may say, as long as you guarantee me a certain return, say, as long as we get to a two X within three years or four years or whatever it is, as long as you clear that two X hurdle, I'm fine with whatever you do. It's sort of capped upside for the investor. The structure goes away. If you hit certain milestones, that's often a perfectly okay type of structure. The other type of structure is one where Even if you win at the end of the day, you go public, whatever it is, you're still not happy about winning, then that's a very bad structure. And sometimes that happens. There's a bunch of companies that are very good companies that ended up putting in structure over time in later stage rounds. Zappos did it, for example, becau…

AI assessment note: “the very best thing you can do is keep the round as clean as possible”

Q I mean, what a phenomenal lead into my next Question on attracting the best people. Cause you've seen many a great CEO, a great CEO yourself. How do the very best CEOs hire the very best execs?

A I think there's a multi-stage process to hiring great people. And I think the definition of great again, kind of evolves with the scale of the company. And so a key point, I think Ben Horowitz makes this in his book is, and I think it's a general truism is to really focus on hiring people who will be great for the next Hiring somebody who's ran a multi-thousand person team, if you're only a 50 person company, doesn't really make sense because that person is going to get bored with sort of the lower scale that they have to deal with. And similarly, hiring somebody who's only managed two people, if you're looking for somebody who's run, or who's going to run a hundred person team within a year, is also sort of the wrong thing to do. And so the first thing is figuring out what's the right type of person in the context of the scale that you have at that time as a company. And then secondly, I think one of the best tactics is to really go almost on a tour of The experts in a specific functional area. So for example, if you've never hired a general counsel, or if you've never hired a CFO, really what you want to do is figure out what is great in that role. And that means talking to people who are great at that role. So for example, if I were to hire a great CFO, I would first go and figure out who are the best CFOs, not just in Silicon Valley, but maybe more broadly in terms of great…

AI assessment note: “I think there's a multi-stage process to hiring great people.”

Q I mean, what a phenomenal lead into my next Question on attracting the best people. Cause you've seen many a great CEO, a great CEO yourself. How do the very best CEOs hire the very best execs?

A I think there's a multi-stage process to hiring great people. And I think the definition of great again, kind of evolves with the scale of the company. And so a key point, I think Ben Horowitz makes this in his book is, and I think it's a general truism is to really focus on hiring people who will be great for the next Hiring somebody who's ran a multi-thousand person team, if you're only a 50 person company, doesn't really make sense because that person is going to get bored with sort of the lower scale that they have to deal with. And similarly, hiring somebody who's only managed two people, if you're looking for somebody who's run, or who's going to run a hundred person team within a year, is also sort of the wrong thing to do. And so the first thing is figuring out what's the right type of person in the context of the scale that you have at that time as a company. And then secondly, I think one of the best tactics is to really go almost on a tour of The experts in a specific functional area. So for example, if you've never hired a general counsel, or if you've never hired a CFO, really what you want to do is figure out what is great in that role. And that means talking to people who are great at that role. So for example, if I were to hire a great CFO, I would first go and figure out who are the best CFOs, not just in Silicon Valley, but maybe more broadly in terms of great…

AI assessment note: “I think there's a multi-stage process to hiring great people.”

Q No, I absolutely love that. That's a fantastic Fantastic explanation to that question. I do have to ask, navigating kind of market share successfully, obviously then exit becomes an option either M&A or IPO as both Google and Facebook obviously did. If we start on M&A, we've seen a large reduction in the M&A market. So starting on that, why does so little M&A today?

A I think there's two waves of M&A that have sort of slowed down. The first one is there aren't as many breakout companies who are buying talent as they're breaking out. Like Coinbase is Has recently announced a number of acquisitions, and I think they've been very smart about it, but any company that has a market cap of a few billion or more, in my opinion, if they're new, should actually be buying up other companies pretty rapidly, and I think in some cases, those teams just haven't hired a corp dev person, or they haven't professionalized the function, or the founders have not really focused on that as a channel for bringing on talent or filling product holes, and I think part of it is just a lack of familiarity, and part of it is, The prices of these companies have gone up a bit, although again, if a company's not working, which is most companies eventually, you should be able to buy them reasonably and expensively. The second big trend on the M&A side is larger companies are doing a less large strategic buys, and really a lot of the corporate buying and technology seems to be shifting outside of the technology market for people who want to enter it. So, you know, it's GM buying cruise, or it's a Dollar Shave Club getting acquired, or things like that in terms of large exits. And so, that gap in terms of large company buys or tech company buys Has actually been pretty surpris…

AI assessment note: “I think there's two waves of M&A that have sort of slowed down.”

Q What was the most memorable interview from the book, and why? I'm excited for this one.

A There was a ton of interviews I really enjoyed. I mean, Reed Hoffman talking about boards and board members, or Mark Andreessen talking about a variety of topics, or I mean, the list goes on. There's, there's great people in the book. I'd say the one that I enjoyed the most was Clara Hughes Johnson, the COO of Stripe. And in particular, there's an appendix to the interview called the guide to working with Claire, which is a guide that she issued at Stripe when she joined, which basically said, here are the ways that you can work with me that are most effective. And I think that every executive or potentially every manager knows Should basically write up the one page description of how to engage them, how to work with them. What are the things that work well or don't work with well with them? I thought that was a really outstanding insight.

AI assessment note: “I'd say the one that I enjoyed the most was Clara Hughes Johnson”

Q I'm really, really happy you said about that market sizing there, because it's, uh, always a passion point for me, and I'm intrigued to hear your thoughts on whether you're more an advocate of the top-down or the bottoms-up model. Uh, so let's start with that. Are you a top-down or a bottoms-up man?

A Uh, I think ultimately you have to do a bit of both, but honestly, I think people tend to mislead themselves around market size, and it's really hard to know what the true market size for something is. So for example, I know investors who passed on Uber very early Because ultimately they said, well, the cab market in San Francisco is in total two hundred million dollars a year, and if they get 10% of that, that's twenty million, and so Uber's just never gonna be that big. So they were thinking about the market fundamentally incorrectly, right? They didn't think about how it would expand the use case, and how it replaces other types of transportation, and things like that. And so I think repeatedly what I've seen is people tend to underestimate market size for the things that really truly work, and tend to overestimate market size For things that fundamentally aren't really changing anything or doing anything different, and they're just going to go into a very competitive dynamic. Part of it is market size, and then part of it is differentiation, and I think those things are often very hard to tease out. I think one thing that's helpful for people who are operators as well as investors is sometimes you have a gut for where a product is really needed without very complicated market sizing, although the market sizing is important. So for example, a few years ago, I invested in a s…

AI assessment note: “I think ultimately you have to do a bit of both”

Q Absolutely, but a very important one. Tell me, you're at the IP center of both kind of funding and entrepreneurial communities. What would you most like to change about the Valley today?

A I think there's two things worth changing, and I think they're actually shifting. One is, I felt like there was this creeping cynicism coming into Silicon Valley, and more and more people were showing up just for the money, and I think, for me, traditional Silicon Valley has been a force of optimism. And using technology as a force for change and for good. And I feel like there was this sort of snideness that was starting to come in. It was clearly in the media, but I also feel like some people who were participating in the ecosystem were joining in very cynically and were very entitled. And I think a lot of that wasn't great sort of additions to the scene. The second is just city governance. I think San Francisco has the opportunity to be a golden age city. And unfortunately it squandered some of those opportunities. So Really, San Francisco should be this mecca. It has the revenue to do it. I think the city budget is twelve billion dollars a year, which is a massive amount if you look at it relative to the headcount of the city. And it was already going to run a multi-hundred million dollar deficit before COVID, despite all the problems with cleanliness and homelessness and crime and everything else. And so I do think fewer companies would be announcing this sort of permanent work from home approach if San Francisco was cheap, clean, and livable. And it really should be. I me…

AI assessment note: “I think there's two things worth changing”

Q Absolutely, Nick. The secondary effects are always felt. I do want to ask, in terms of kind of post-pricing element, there's always the terms of the deal. And I've seen on Twitter a lot of suggestions about, could this be the re-entering of kind of Vulture VC days. How do you advise founders on the terms and structures to avoid or be wary of in times like this?

A Yeah, I mean, the very best thing you can do is keep the round as clean as possible, which means non-participating preferred and one X liquidation preferences and things like that. Often there's two reasons that a structure will come into play into an investment and structure means something where the investors are guaranteed a certain type of payout or return or a structure may mean some forced timeline for IPO. There's all sorts of things like that. And there's basically two types of structures that come into play. One type of structure usually comes in when the investors and the founder can agree on the valuation. There's a big difference. And the investor may say, as long as you guarantee me a certain return, say, as long as we get to a two X within three years or four years or whatever it is, as long as you clear that two X hurdle, I'm fine with whatever you do. It's sort of capped upside for the investor. The structure goes away. If you hit certain milestones, that's often a perfectly okay type of structure. The other type of structure is one where Even if you win at the end of the day, you go public, whatever it is, you're still not happy about winning, then that's a very bad structure. And sometimes that happens. There's a bunch of companies that are very good companies that ended up putting in structure over time in later stage rounds. Zappos did it, for example, becau…

AI assessment note: “keep the round as clean as possible, which means non-participating preferred and one X”

Q So two subsequent questions from hearing that, Elad. First is you're an investor as well as an operator. How do you assess and analyze preemptive rounds, maybe when investing?

A Honestly, I think it's pretty tough because what you're trying to do is guess an extra round forward or an extra 12 to 18 months forward in terms of where a company should be, and so really you kind of have to start thinking about it in terms of TAMs or total addressable markets. In other words, how big could this thing really be if it really works, and then how do I want to think about investing relative to that? And honestly, I think preemptive rounds are best suited for venture capitalists who have large funds, because I think it's much harder as an individual to manage capital relative to guessing whether something will work or not. Now that said, sometimes there's companies that you just know are going to work. Airbnb consistently was one where I think it was at least clear to a subset of people that the traction was so strong and the momentum was so strong that it was really going to be a massive franchise. And therefore that would have been one that today probably would have gotten preempted and it would have made a lot of sense to do so. So I do think that Traditionally, there are companies where the traction was clear, but the size of market was more self-evident than others. Ultimately, it comes down to absolute market size versus anything else. I do think a lot of people will be making mistakes on the preemptive side, though, because they're basically investing ahead…

AI assessment note: “Ultimately, it comes down to absolute market size versus anything else.”

Q You've seen many MNAs and an advisor to many founders who've been acquired. What are the big questions that founders should be asking when this opportunity does arise?

A I think first and foremost is just whether or not to engage in the MNA event itself or to talk to people. I think once you start talking as a founder, you start going down that path where mentally you've effectively started spending the money that you'd get if you got acquired or thinking about how much easier your life would be. And so I think the first thing is to decide whether to even have the conversation because it's not an explorer and you can always back away. Often you kind of get seduced into it. So number one is, should you even consider it? The second thing is, will it be a good home for you? Ultimately, unless you're truly selling an asset in a competitive situation where there's five buyers who each want to buy your company for a billion dollars, in most cases, you're going to have to stick around at the acquirer for many years. And so I think the second thing to ask yourself, is that really the place where you and your team will be happy? And will you thrive there and will your product thrive there? And so I think the second question is just sort of happiness. And then lastly is the one of financial return for, for your shareholders and for yourself. And these aren't meant to be in order. It's more, you know, these are three different things that you need to consider. And on the financial side, I actually think people tend to undercount the value of exiting early…

AI assessment note: “first and foremost is just whether or not to engage in the MNA event”

Q And then I want to finish today, and this one I'm fascinated by, so many options for you, but the next five years for you, and what does that personal roadmap look like?

A I think it's really about moving from a situation where I did a lot of stuff individually to a situation where I can get leverage on time, and so that's things like this book, which is a way to try and codify a lot of things that I've just had as one-on-one conversations with founders over the years around scaling companies. It could be things like I've been helping out a crypto fund called Electric Capital, and I'm just there half a day a week, but, you know, that's a way to sort of get a little bit of leverage on time, and so really the big question in my mind is, How can I get ultimate leverage so that over the next five years I can do as much as possible and work with as many great people as I can.

AI assessment note: “moving from a situation where I did a lot of stuff individually to a situation where I can get leverage on time”

Q So two subsequent questions from hearing that, Elad. First is you're an investor as well as an operator. How do you assess and analyze preemptive rounds, maybe when investing?

A Honestly, I think it's pretty tough because what you're trying to do is guess an extra round forward or an extra 12 to 18 months forward in terms of where a company should be, and so really you kind of have to start thinking about it in terms of TAMs or total addressable markets. In other words, how big could this thing really be if it really works, and then how do I want to think about investing relative to that? And honestly, I think preemptive rounds are best suited for venture capitalists who have large funds, because I think it's much harder as an individual to manage capital relative to guessing whether something will work or not. Now that said, sometimes there's companies that you just know are going to work. Airbnb consistently was one where I think it was at least clear to a subset of people that the traction was so strong and the momentum was so strong that it was really going to be a massive franchise. And therefore that would have been one that today probably would have gotten preempted and it would have made a lot of sense to do so. So I do think that Traditionally, there are companies where the traction was clear, but the size of market was more self-evident than others. Ultimately, it comes down to absolute market size versus anything else. I do think a lot of people will be making mistakes on the preemptive side, though, because they're basically investing ahead…

AI assessment note: “really you kind of have to start thinking about it in terms of TAMs”

Q mentioned one of the drivers of these preemptive rounds being the just hugely phenomenal exits that quite frankly, I don't think no one anticipated. One other dominant trend in the ecosystem now though is the extended period of privatization for I believe we have close to five hundred and eighty billion in illiquid company stock. So is this lack of liquidity good for venture this cycle, do you think, Elad?

A I think the lack of liquidity is, it depends on how you define liquidity. So liquidity can either be defined as people's ability to exit a position, or it could mean a company actually getting bought or going public. And people always say that in the short run, markets are a voting machine, and in the long run, they're a weighing machine. And I think what's happened is we have a whole generation of startups That have never been weighed by the public markets. And I think, for example, that, you know, half of the unicorns are probably dramatically overvalued, and if they were public companies, their valuations would get chopped down pretty dramatically relative to where they are today. So I think for a subset of companies, it's actually been positive for them to be private for longer, but it may be bad for the ecosystem overall because it's tying up a lot of capital and talent into pockets that may not deserve that capital and talent as much. From a venture fund perspective, I think it's had both positive and negative impacts The positive impact is that VCs can continue to mark up certain companies in their portfolio and raise follow-on funds, and therefore, if half of these unicorns should really be worth dramatically less than what they're worth, some of these venture funds perhaps shouldn't have been able to raise future funds, and so the lack of liquidity in some sense actual…

AI assessment note: “From a venture fund perspective, I think it's had both positive and negative impacts”

Q I'm intrigued when, when the portfolio built up and really established itself, did that begin to become more processes around it?

A Uh, not really. I mean, since I'm an individual angel, I haven't had a huge number of processes. I basically asked what are the three or four lightweight things that really matter? And I think it's very similar, for example, to when you're running an engineering team, you ask, what are the two or three processes that you should absolutely put in place? And the other 80% in the context of a startup, for example, just aren't really useful, or they tend to slow you down. And similarly, as an angel investor, there's two or three things that I like to do. But beyond that, I try to keep things pretty lightweight, since for me, it isn't my full-time job. It's very much sort of a passion.

AI assessment note: “Uh, not really. I mean, since I'm an individual angel, I haven't had”

Q I think I need to learn from you. What are the productivity tips and tricks?

A I think three things. Number one, if you can do something immediately, do it immediately. Number two, because otherwise you just, End up with a giant to-do list. Number two, try if at all possible to get as close to inbox zero as you can. It actually makes a huge difference because then you don't spend time agonizing over the same emails or issues over and over again. And then number three, you really need to figure out how to break out large chunks of time. Large doesn't have to be more than an hour or two, but actually allow you to spend concentrated effort on a singular thing. And part of that then means that you have to say no to things. I think the, the key thing that People tend to forget is early in your career, the way to be successful in some sense is to say yes to everything, because a set of opportunities that you have are quite limited. And so any opportunity in some sense is an interesting opportunity. Uh, as you advance in your career, the flip happens. The more things you say yes to, the more inbound you have, but many of those things are very low value add relative to your position. And so you have to start saying no to an enormous amount of things. And so one of the hardest transitions for people Is moving from a prior state they were in, where they just worked really hard on everything to try and be successful, to state to where, when they are finally successf…

AI assessment note: “I think three things. Number one, if you can do something immediately, do it immediately.”

Q Yeah, no, I do, I do completely agree with you there, and, and fair play on Snapchat. I do a final question before we dive into the quickfire, and it's, you mentioned the incredible companies that you've invested in there. I have to ask, was the competition to invest incredibly strong, or was it not what it seemed because it was such early stages?

A Uh, for some of the companies, it was very strong, and for some, it wasn't. And it also depended a little bit on phase, because sometimes you'll have a very competitive seed round, and then nobody wants to invest in the Series A for some reason, and then everybody wants to invest in the B, C, D, etc. And so, you really see these odd cycles of people being interested, losing interest, and being interested, etc. And so, and then finally, it breaks out, and everybody wants to invest. And so, it's very hard to predict whether the most competitive things early end up being the biggest things, And similarly, you know, sometimes you see these cycles where people want in, and then they don't, and then they want it again, or they question the valuation, or whatever it may be. So, you know, Airbnb, for example, I wasn't at all part of their seed, but my sense is that that was not very competitive for a long time, and then suddenly Sequoia wanted it in, and then it became very competitive to get any dollar that you could into it, right? And so, there's also these weird phase transitions in fundraising, where suddenly everybody just decides something's interesting.

AI assessment note: “for some of the companies, it was very strong, and for some, it wasn't.”

Q I'm really intrigued. You said about kind of the running of the company there and being the primal thing to do with your time. I'm intrigued. How does the angel investing and the running of color integrate together, and does it impact the way you think about either discipline, potentially?

A Yeah, I think it's Helpful. I've actually moved recently from the CEO role at Color into a chairman role, so I'm still full-time here, but, ah, thanks, yeah, so I've swapped more into a chairman role now, but I think that the way that it's been very helpful is it provides you with a lot of information in terms of what's happening in the market more broadly, and that could be in terms of product, it could be in terms of network, so we've actually gotten very good introductions from my own company to partnerships or deals that we did through startups Or founders that I knew that I'd invested in. In other words, it sort of creates an expanded network that you can tap into. And then lastly, ultimately, I think that it gives you a good pulse on key things like hiring, salaries, how capital markets are working. Should you raise money now or later? What's the mood in the environment? So it's a really nice way to get key insights that you normally wouldn't have if you weren't investing. The flip of it is it does take up a lot of time, and so I wouldn't recommend it for everyone. And I think that ultimately, you know, when people... Talk to me about their hobbies. You know, everybody has different hobbies. You know, my hobby is startups, and so, you know, the time that I would spend on the evenings or the weekends pursuing a hobby is my angel investing, and it's my passion, and so that'…

AI assessment note: “it sort of creates an expanded network that you can tap into”

Q I'm intrigued when, when the portfolio built up and really established itself, did that begin to become more processes around it?

A Uh, not really. I mean, since I'm an individual angel, I haven't had a huge number of processes. I basically asked what are the three or four lightweight things that really matter? And I think it's very similar, for example, to when you're running an engineering team, you ask, what are the two or three processes that you should absolutely put in place? And the other 80% in the context of a startup, for example, just aren't really useful, or they tend to slow you down. And similarly, as an angel investor, there's two or three things that I like to do. But beyond that, I try to keep things pretty lightweight, since for me, it isn't my full-time job. It's very much sort of a passion.

AI assessment note: “Uh, not really. I mean, since I'm an individual angel, I haven't had a huge number”

Q Yeah, no, I do, I do completely agree with you there, and, and fair play on Snapchat. I do a final question before we dive into the quickfire, and it's, you mentioned the incredible companies that you've invested in there. I have to ask, was the competition to invest incredibly strong, or was it not what it seemed because it was such early stages?

A Uh, for some of the companies, it was very strong, and for some, it wasn't. And it also depended a little bit on phase, because sometimes you'll have a very competitive seed round, and then nobody wants to invest in the Series A for some reason, and then everybody wants to invest in the B, C, D, etc. And so, you really see these odd cycles of people being interested, losing interest, and being interested, etc. And so, and then finally, it breaks out, and everybody wants to invest. And so, it's very hard to predict whether the most competitive things early end up being the biggest things, And similarly, you know, sometimes you see these cycles where people want in, and then they don't, and then they want it again, or they question the valuation, or whatever it may be. So, you know, Airbnb, for example, I wasn't at all part of their seed, but my sense is that that was not very competitive for a long time, and then suddenly Sequoia wanted it in, and then it became very competitive to get any dollar that you could into it, right? And so, there's also these weird phase transitions in fundraising, where suddenly everybody just decides something's interesting.

AI assessment note: “for some of the companies, it was very strong, and for some, it wasn't.”

Q I'm really intrigued. You said about kind of the running of the company there and being the primal thing to do with your time. I'm intrigued. How does the angel investing and the running of color integrate together, and does it impact the way you think about either discipline, potentially?

A Yeah, I think it's Helpful. I've actually moved recently from the CEO role at Color into a chairman role, so I'm still full-time here, but, ah, thanks, yeah, so I've swapped more into a chairman role now, but I think that the way that it's been very helpful is it provides you with a lot of information in terms of what's happening in the market more broadly, and that could be in terms of product, it could be in terms of network, so we've actually gotten very good introductions from my own company to partnerships or deals that we did through startups Or founders that I knew that I'd invested in. In other words, it sort of creates an expanded network that you can tap into. And then lastly, ultimately, I think that it gives you a good pulse on key things like hiring, salaries, how capital markets are working. Should you raise money now or later? What's the mood in the environment? So it's a really nice way to get key insights that you normally wouldn't have if you weren't investing. The flip of it is it does take up a lot of time, and so I wouldn't recommend it for everyone. And I think that ultimately, you know, when people... Talk to me about their hobbies. You know, everybody has different hobbies. You know, my hobby is startups, and so, you know, the time that I would spend on the evenings or the weekends pursuing a hobby is my angel investing, and it's my passion, and so that'…

AI assessment note: “it provides you with a lot of information in terms of what's happening in the market”

Q What was the most memorable interview from the book, and why? I'm excited for this one.

A There was a ton of interviews I really enjoyed. I mean, Reed Hoffman talking about boards and board members, or Mark Andreessen talking about a variety of topics, or I mean, the list goes on. There's, there's great people in the book. I'd say the one that I enjoyed the most was Clara Hughes Johnson, the COO of Stripe. And in particular, there's an appendix to the interview called the guide to working with Claire, which is a guide that she issued at Stripe when she joined, which basically said, here are the ways that you can work with me that are most effective. And I think that every executive or potentially every manager knows Should basically write up the one page description of how to engage them, how to work with them. What are the things that work well or don't work with well with them? I thought that was a really outstanding insight.

AI assessment note: “I'd say the one that I enjoyed the most was Clara Hughes Johnson”

Q good. Okay. I'm often told it's too kind of short-sighted and glib, and so I'm glad that I'm okay doing that. I do want to kind of ask, because we spoke about companies that Essentially can thrive in a kind of time like this. You said in the article, a brilliant quote, which was never waste a good recession. Who will win and thrive in this time? Who will die?

A Yeah, I think there's a number of companies that are clearly going to win during this period. And there's a number of companies that could win. And so really, I think you have to start asking, how can I use this shift to my advantage? In some cases where companies are just seeing accelerated growth due to the shift, it could be online collaboration tools. It could be food delivery. It could be a variety of things. And so sometimes the business just naturally fits the environment. Which is what's happening here. Some people are repositioning what they're doing. So they're focused on how their tool or their product, if it's a vertical SaaS product, for example, is helping with, you know, making teams more efficient or reducing costs or things like that. Or it could be around taking a traditional retailer and enabling them to be more online centric. Like Square has actually done some really interesting things there recently. So there's lots of different ways to reposition what you're doing so that it can help accelerate your business. And then relatedly, there may be new vertical So for example, I think there's an opportunity for a lot of social products to grow rapidly while everybody's stuck at home and is kind of being forced to, to just shelter in place. There's the opportunity to really tap into that demand for more social experiences and interactions and things like that, wh…

AI assessment note: “there's a number of companies that are clearly going to win during this period”