The Exchanges

Q So what sort of questions are those? Is that like, how do you approach a new vertical when it arises or?

A No, I think they're more roundabout questions. So I like asking people questions about their customers. And I think people who are learning quickly know a lot about their customers and a lot about their product. So for example, you know what your customers like specifically about your product. You know the customers who have churned what they didn't like about your product. You can, off the top of your head, tell me the three things you're going to do to improve your product. You talk about your roadmap vis-a-vis why customers are bailing on it today, right? So you've got your mind around this machine that you're building that is Making your existing customers happier, making the product more valuable for them, and expanding the audience of your product as you go. So good teams, they don't necessarily articulate it that way, but I think good teams just very naturally have that orientation around the customer and the problem, and bad teams don't have that data. And I don't even mean quantitative data, right? They just can't even talk about these issues.

AI assessment note: “No, I think they're more roundabout questions. So I like asking people questions”

Q you think founders should also look to understand partnership dynamics within VC funds? For instance, you know, member X of the partnership has just had a big exit with portfolio company Y. They will have huge decision-making power and proxy on the board and in the process, and so, you know, they are the targets. Do you think that sort of kind of honed and examined research is necessary today?

A I'm not as big on that. I generally tend to think that Entrepreneurs are better served building a great business and understanding, generally speaking, what milestones are going to take risk out of the business and where to focus their energy and the fundraising. You still have to run a process, and we can talk about that, right? Like, it's not that fundraising doesn't matter, but I tend to think that people spend far too much time trying to lawyer the process and game the system. We talk about signaling risk and all this stuff. Build a great company. And so I, I think you want to know what partners are going to be interested. You don't want to pitch people who just aren't interested in your, your business. So I think you want to find people, you want to build a list of investors to talk to who have some relation to your field or business or whatever. And then obviously try to get warm introductions, but I'm less interested in the partnership dynamics, particularly like if you're running a good process, you're talking to a So if you're talking to a partner who doesn't have a lot of influence and they don't push your deal through, it should be the case that you're talking to three other firms. And if you're a good company, you are. And so any given decision, someone who falls out of your pipeline, it just shouldn't affect your ability to find good partners.

AI assessment note: “I'm not as big on that. I generally tend to think that Entrepreneurs are better”

Q You said there about kind of focus on product. I'm intrigued because we often hear about ABR always be raising for founders and CEOs. Do you think that's true then? Or do you think that it's a bit of bullshit?

A I mean, I do think it's helpful to build relationships to VCs, but I don't, I don't think it's necessarily about raising, I guess. I think a missed opportunity for many founders is there are a lot of really smart people out there sitting inside venture firms, and they have a broad perspective on the industry that you will never have. Many of them have great operational experiences, so I think you can meet with those people when you're not explicitly raising money. They can be useful. You To you in terms of giving you feedback on your business, giving you advice, a byproduct of those conversations can be that you are building good relationships. They're seeing longitudinal data, which makes them comfortable when you go to ask for money, you're actually getting good advice and building relationships. So you're thinking about them and whether you want to work with them. And that doesn't have to be pre-transactional, right? It doesn't have to be the case that you're like, all right, I need to raise around an 18 month. Let me meet with, you know, Mark Suster, because I want to Try to trick him into leading my round, right? Like Mark's not stupid, you know, like, and he doesn't want to waste his time. So if your mentality is, I'm going to go in and try to get value out of these conversations, they're probably going to love to meet with you, and if not, it probably is a waste of your …

AI assessment note: “I don't think it's necessarily about raising, I guess.”

Q you know, Stanford alums, they've kind of got the weight of SF behind them, and they have the ability, in some cases, to raise pretty significant war chests. What's your take on, on that as the flip side? Should they raise those war chests and go for the heavy valuation, or should they raise what they need and be conservative? Kind of Mark Sooster constraint enforces creativity to an extent.

A I mean, I, I think about it in terms of where you're raising money and where you need to get to. So if I'm talking to a pre-product company, right, typically my advice to them would be raise as much money as possible because you have no idea where you're going to be in a year. You just have no idea, right? If you're a company that has a product in the market and you have some customers and you understand where your resource constraint, particularly if you have some level of product market fit, I think it's easy I tend to talk to founders about focusing on how much money you need and what you think you can accomplish, and my general rule is figure out what you think you need and multiply by 1.5, because something's going to go wrong, but for you as a founder, the results are pretty binary, right? Like, if you're on a venture track, it tends to be fairly binary, and so I tend to think that where people mess this up is they try to optimize for dilution, and I think anybody who's optimizing for dilution, first of all, if, like, that That's your mentality, and we're having a conversation, I'm already biased against investing. Negative signal all around, but, you know, it's like, look, like, be rational about it, and you just do the math. I've sat down and done this spreadsheet with a couple people, and you're like, look, like, let's imagine we're building a billion-dollar business. …

AI assessment note: “figure out what you think you need and multiply by 1.5”

Q I'm super intrigued then. What were the learning lessons for you then moving to 500 and then kind of watching it scale over the couple of years that you did from 10 to, I imagine, probably 50 when you left?

A Yeah, boy, what was it? They're like a 150 now. It's amazing. Dave's scaling like crazy. I mean, I think it was an interesting firm in that, you know, 500 is not a traditional VC, and AngelList is a tradition, not a traditional VC, right? So my whole experience as an investor has been in these weird organizations. I think we, you know, struggled with all of the things that operational companies struggle with. You hire people, now you have to figure out how to manage and support these people, you have to figure out how to coordinate the team, and then you've got all of these companies who are effectively your customers, and we were doing Boy, when I started, we were probably doing 40 deals a quarter, and by the time that I left 500, we were doing four times that, maybe. So, I mean, it's, it's managing scale, right, which is, I think, a problem that's very common across operational companies, as I say, less of a problem for VCs who typically are scaling by adding a partner and then doing a few more deals a quarter or a year.

AI assessment note: “it's managing scale, right, which is, I think, a problem that's very common”

Q You said there about kind of focus on product. I'm intrigued because we often hear about ABR always be raising for founders and CEOs. Do you think that's true then? Or do you think that it's a bit of bullshit?

A I mean, I do think it's helpful to build relationships to VCs, but I don't, I don't think it's necessarily about raising, I guess. I think a missed opportunity for many founders is there are a lot of really smart people out there sitting inside venture firms, and they have a broad perspective on the industry that you will never have. Many of them have great operational experiences, so I think you can meet with those people when you're not explicitly raising money. They can be useful. You To you in terms of giving you feedback on your business, giving you advice, a byproduct of those conversations can be that you are building good relationships. They're seeing longitudinal data, which makes them comfortable when you go to ask for money, you're actually getting good advice and building relationships. So you're thinking about them and whether you want to work with them. And that doesn't have to be pre-transactional, right? It doesn't have to be the case that you're like, all right, I need to raise around an 18 month. Let me meet with, you know, Mark Suster, because I want to Try to trick him into leading my round, right? Like Mark's not stupid, you know, like, and he doesn't want to waste his time. So if your mentality is, I'm going to go in and try to get value out of these conversations, they're probably going to love to meet with you, and if not, it probably is a waste of your …

AI assessment note: “I do think it's helpful to build relationships to VCs, but... not necessarily about raising”

Q you know, Stanford alums, they've kind of got the weight of SF behind them, and they have the ability, in some cases, to raise pretty significant war chests. What's your take on, on that as the flip side? Should they raise those war chests and go for the heavy valuation, or should they raise what they need and be conservative? Kind of Mark Sooster constraint enforces creativity to an extent.

A I mean, I, I think about it in terms of where you're raising money and where you need to get to. So if I'm talking to a pre-product company, right, typically my advice to them would be raise as much money as possible because you have no idea where you're going to be in a year. You just have no idea, right? If you're a company that has a product in the market and you have some customers and you understand where your resource constraint, particularly if you have some level of product market fit, I think it's easy I tend to talk to founders about focusing on how much money you need and what you think you can accomplish, and my general rule is figure out what you think you need and multiply by 1.5, because something's going to go wrong, but for you as a founder, the results are pretty binary, right? Like, if you're on a venture track, it tends to be fairly binary, and so I tend to think that where people mess this up is they try to optimize for dilution, and I think anybody who's optimizing for dilution, first of all, if, like, that That's your mentality, and we're having a conversation, I'm already biased against investing. Negative signal all around, but, you know, it's like, look, like, be rational about it, and you just do the math. I've sat down and done this spreadsheet with a couple people, and you're like, look, like, let's imagine we're building a billion-dollar business. …

AI assessment note: “if I'm talking to a pre-product company... raise as much money as possible”

Q And then the biggest challenge for AngelList in your mission going forward?

A It'd be interesting getting Evolve's perspective on this. I think from my perspective, when we think about what we're trying to do, we think a lot about helping startups, right? We have a cheesy sign in the office that's like, you know, startups are here to save the world, and it's cheesy, but we've Believe it. It's true. And I think the hard thing is, you know, you're sitting there in this business, and there's syndicate leads, and there's investors, and there's sort of all these other people that aren't startups calling you every day, and it's, I think it's really hard to stay focused on the mission when there's all these other folks that are trying to pull you onto their mission, so I think if you're not conscious and clear about your mission, it's easy to get pulled off, so I think that happens for other people. It's maybe not unique to us, but I think it's particularly challenging for us Just because, you know, the startups are busy not calling us, right? They're busy building their businesses, so our customer doesn't want to talk to us very much, right?

AI assessment note: “it's really hard to stay focused on the mission when there's all these other folks”

Q So what sort of questions are those? Is that like, how do you approach a new vertical when it arises or?

A No, I think they're more roundabout questions. So I like asking people questions about their customers. And I think people who are learning quickly know a lot about their customers and a lot about their product. So for example, you know what your customers like specifically about your product. You know the customers who have churned what they didn't like about your product. You can, off the top of your head, tell me the three things you're going to do to improve your product. You talk about your roadmap vis-a-vis why customers are bailing on it today, right? So you've got your mind around this machine that you're building that is Making your existing customers happier, making the product more valuable for them, and expanding the audience of your product as you go. So good teams, they don't necessarily articulate it that way, but I think good teams just very naturally have that orientation around the customer and the problem, and bad teams don't have that data. And I don't even mean quantitative data, right? They just can't even talk about these issues.

AI assessment note: “No, I think they're more roundabout questions. So I like asking people questions about their customers.”

Q you think founders should also look to understand partnership dynamics within VC funds? For instance, you know, member X of the partnership has just had a big exit with portfolio company Y. They will have huge decision-making power and proxy on the board and in the process, and so, you know, they are the targets. Do you think that sort of kind of honed and examined research is necessary today?

A I'm not as big on that. I generally tend to think that Entrepreneurs are better served building a great business and understanding, generally speaking, what milestones are going to take risk out of the business and where to focus their energy and the fundraising. You still have to run a process, and we can talk about that, right? Like, it's not that fundraising doesn't matter, but I tend to think that people spend far too much time trying to lawyer the process and game the system. We talk about signaling risk and all this stuff. Build a great company. And so I, I think you want to know what partners are going to be interested. You don't want to pitch people who just aren't interested in your, your business. So I think you want to find people, you want to build a list of investors to talk to who have some relation to your field or business or whatever. And then obviously try to get warm introductions, but I'm less interested in the partnership dynamics, particularly like if you're running a good process, you're talking to a So if you're talking to a partner who doesn't have a lot of influence and they don't push your deal through, it should be the case that you're talking to three other firms. And if you're a good company, you are. And so any given decision, someone who falls out of your pipeline, it just shouldn't affect your ability to find good partners.

AI assessment note: “I'm not as big on that. I generally tend to think that Entrepreneurs are better served”

Q Do you think there's a readiness check for when, when founders should know that, yes, they are ready to kind of wave the flag and stick up the fundraising mosque?

A My advice to founders is to go get some data points, right? So I'd Spent a lot of time with people raising seat rounds, right? And so I say to them, look, like, let's work backwards from the A, so as you're out raising, be explicit about the milestones that you're, you think you're gonna need to hit for that A, right? And then if you end up talking to Series A people, talk to them about it as well, because I think a lot of people really fuck that one up, right? And it's like, if you don't know what the A is, then you don't, you don't, you can't really intelligently say what you need, what kind of resources you need to get there, right? So, How can you know how much to raise in your seed round? So I feel like, yeah, absolutely. There's a readiness check. You need to understand what the market is and far too many founders, particularly the ones who find it easy to raise money, raise an amount of money. That's what they can raise based on what people want to put in. So the round defines them as opposed to the other way around. And I think that's where you see people having to go back out and raise seed pluses. For example, they just didn't understand the market. They, they, it's not even like, just think about being ready for the round you're raising now. You're going to raise another round in the future, another round in the future, and these rounds are not independent of one ano…

AI assessment note: “I feel like, yeah, absolutely. There's a readiness check.”

Q VC that lies ahead of us today, and I often hear that we're going to see VC disrupted, and you're really at the center of this with AngelList, so talk to me, how do you view the future of VC, and I guess, who do you think is, is vulnerable in today's market, and whose position is very stable and strong with their value add still being very much required?

A Yeah, I mean, I think the way that we think about it is angelist, and I started to use this phrase of cap table engineering, right? I think that we are on this trajectory, generally speaking, of founders being able to exert more control over the process, over who invests, over how they invest and whatnot. So I think that's generally where we're going. I think in large part, that's a function of the amount of money that's trying to pour into the space, right? More money is trying to pour into the space. It creates pressure, right? And the constraint is still talent. It's still these innovative companies, right? There just aren't enough of them for all the money that wants to come into the market. So I think that's the broad dynamic. At AngelList, we're trying to take advantage of that dynamic by building this syndicate model and creating a really interesting way of putting more useful people on your cap table. I think there are big firms trying to take advantage of this dynamic. They see it. They're obviously seed folks, um, thinking about it as well. So that's the dynamic. When we talk about disruption, I'm very skeptical that where we're going to be in 10 years is, you know, everything is initial coin offerings, and there's no VCs, and, you know, there's just sort of marketplaces like AngelList and Bitcoin, right? Like, I don't think that's where we're going. I think VCs offer…

AI assessment note: “I tend to think for what it's worth that the seed market is, it's easier”

Q And now at AngelList, I think I'll be, Pretty hard push to find someone who's seen more early stage deals than you. And we always hear from VCs that it's all about the team, the team, the team. So how do you approach then and view team formation with your experience having seen so many great deals?

A You know, it's interesting. I mean, AngelList is, as I mentioned, a little bit different. So when we're sitting there, we're relying pretty heavily on our syndicate leads and our institutional partners, right? Folks that are leading pricing, doing diligence on these rounds to really evaluate the team and get comfortable with the team. We're typically not meeting the team. We're not talking to them. We're maybe looking at some information about them to give us context on the deal. So our model doesn't really think as much about the team, and I think that that's, that works if you're doing 200 deals a year in a fund, right? You can, you can play the odds on these things and work with smart Partners and use the transitive property of diligence on people. That said, when I'm looking at deals personally, or sitting inside 500, it's an old VC cliche that the team is what matters, but it's a cliche for a reason, and it's correct, right? Like, the people, the, you know, the ideas change, the models change, the markets change, but generally speaking, you can't change the people. So, I mean, I think when I look at a team, I think a lot about You know, what is the heart of this team? What are they going to need to be successful? Often, by the way, I think when that's a founding team at the idea stage, you know, you look at this team, and the reality is that some of these people aren't goi…

AI assessment note: “when I look at a team, I think a lot about You know, what is the heart”

Q I'm super intrigued then. What were the learning lessons for you then moving to 500 and then kind of watching it scale over the couple of years that you did from 10 to, I imagine, probably 50 when you left?

A Yeah, boy, what was it? They're like a 150 now. It's amazing. Dave's scaling like crazy. I mean, I think it was an interesting firm in that, you know, 500 is not a traditional VC, and AngelList is a tradition, not a traditional VC, right? So my whole experience as an investor has been in these weird organizations. I think we, you know, struggled with all of the things that operational companies struggle with. You hire people, now you have to figure out how to manage and support these people, you have to figure out how to coordinate the team, and then you've got all of these companies who are effectively your customers, and we were doing Boy, when I started, we were probably doing 40 deals a quarter, and by the time that I left 500, we were doing four times that, maybe. So, I mean, it's, it's managing scale, right, which is, I think, a problem that's very common across operational companies, as I say, less of a problem for VCs who typically are scaling by adding a partner and then doing a few more deals a quarter or a year.

AI assessment note: “it's managing scale, right, which is, I think, a problem that's very common”

Q Do you think there's a readiness check for when, when founders should know that, yes, they are ready to kind of wave the flag and stick up the fundraising mosque?

A My advice to founders is to go get some data points, right? So I'd Spent a lot of time with people raising seat rounds, right? And so I say to them, look, like, let's work backwards from the A, so as you're out raising, be explicit about the milestones that you're, you think you're gonna need to hit for that A, right? And then if you end up talking to Series A people, talk to them about it as well, because I think a lot of people really fuck that one up, right? And it's like, if you don't know what the A is, then you don't, you don't, you can't really intelligently say what you need, what kind of resources you need to get there, right? So, How can you know how much to raise in your seed round? So I feel like, yeah, absolutely. There's a readiness check. You need to understand what the market is and far too many founders, particularly the ones who find it easy to raise money, raise an amount of money. That's what they can raise based on what people want to put in. So the round defines them as opposed to the other way around. And I think that's where you see people having to go back out and raise seed pluses. For example, they just didn't understand the market. They, they, it's not even like, just think about being ready for the round you're raising now. You're going to raise another round in the future, another round in the future, and these rounds are not independent of one ano…

AI assessment note: “So I feel like, yeah, absolutely. There's a readiness check.”

Q And speaking of the founders there, I speak to many founders who, who return from the VCs with the common, you know, they said we didn't have enough Traction adage, which, which is very common. So I'm intrigued how you view the early stage traction. You mentioned kind of churn and early stage customers there. So how do you view early stage traction?

A Yeah, I mean, just to speak to that response for a second, that drives me insane, right? Like, let me say you don't have enough traction, right? You're either not able to articulate something actionable, or you're just trying to be nice, and you really don't like the people, and you want them to go away. So I think it's a Founder. It's fair for you to say, great, well, I won't hold you to it, but help me understand what kind of traction you're looking for and how that relates to the risk that you see in the business. Cause I think oftentimes the real problem is I don't buy one of your assumptions about your business. And so there's a risk that I perceive in the business that you don't perceive to be there. And so that's how I try to answer that question is to say, look, here's what you believe about your business that I don't believe. And if you showed me these pieces of data, I would understand that I was wrong, and we'd be on the same page, and of course, then I'd invest in your business, right? So I think it's much more constructive for investors and entrepreneurs to relate in that way, and it's, it's okay, right? Like, let's just disagree about how we think the world is. That's what startups are about. In terms of what I look for and what I think traction is, I think it's really dependent on the market, and again, I think it, it, it's all about risk, right? Like, we're tryi…

AI assessment note: “In terms of what I look for and what I think traction is, I think”

Q And then the biggest challenge for AngelList in your mission going forward?

A It'd be interesting getting Evolve's perspective on this. I think from my perspective, when we think about what we're trying to do, we think a lot about helping startups, right? We have a cheesy sign in the office that's like, you know, startups are here to save the world, and it's cheesy, but we've Believe it. It's true. And I think the hard thing is, you know, you're sitting there in this business, and there's syndicate leads, and there's investors, and there's sort of all these other people that aren't startups calling you every day, and it's, I think it's really hard to stay focused on the mission when there's all these other folks that are trying to pull you onto their mission, so I think if you're not conscious and clear about your mission, it's easy to get pulled off, so I think that happens for other people. It's maybe not unique to us, but I think it's particularly challenging for us Just because, you know, the startups are busy not calling us, right? They're busy building their businesses, so our customer doesn't want to talk to us very much, right?

AI assessment note: “it's really hard to stay focused on the mission when there's all these other folks”

Q And now at AngelList, I think I'll be, Pretty hard push to find someone who's seen more early stage deals than you. And we always hear from VCs that it's all about the team, the team, the team. So how do you approach then and view team formation with your experience having seen so many great deals?

A You know, it's interesting. I mean, AngelList is, as I mentioned, a little bit different. So when we're sitting there, we're relying pretty heavily on our syndicate leads and our institutional partners, right? Folks that are leading pricing, doing diligence on these rounds to really evaluate the team and get comfortable with the team. We're typically not meeting the team. We're not talking to them. We're maybe looking at some information about them to give us context on the deal. So our model doesn't really think as much about the team, and I think that that's, that works if you're doing 200 deals a year in a fund, right? You can, you can play the odds on these things and work with smart Partners and use the transitive property of diligence on people. That said, when I'm looking at deals personally, or sitting inside 500, it's an old VC cliche that the team is what matters, but it's a cliche for a reason, and it's correct, right? Like, the people, the, you know, the ideas change, the models change, the markets change, but generally speaking, you can't change the people. So, I mean, I think when I look at a team, I think a lot about You know, what is the heart of this team? What are they going to need to be successful? Often, by the way, I think when that's a founding team at the idea stage, you know, you look at this team, and the reality is that some of these people aren't goi…

AI assessment note: “when I look at a team, I think a lot about You know, what is the heart”

Q And speaking of the founders there, I speak to many founders who, who return from the VCs with the common, you know, they said we didn't have enough Traction adage, which, which is very common. So I'm intrigued how you view the early stage traction. You mentioned kind of churn and early stage customers there. So how do you view early stage traction?

A Yeah, I mean, just to speak to that response for a second, that drives me insane, right? Like, let me say you don't have enough traction, right? You're either not able to articulate something actionable, or you're just trying to be nice, and you really don't like the people, and you want them to go away. So I think it's a Founder. It's fair for you to say, great, well, I won't hold you to it, but help me understand what kind of traction you're looking for and how that relates to the risk that you see in the business. Cause I think oftentimes the real problem is I don't buy one of your assumptions about your business. And so there's a risk that I perceive in the business that you don't perceive to be there. And so that's how I try to answer that question is to say, look, here's what you believe about your business that I don't believe. And if you showed me these pieces of data, I would understand that I was wrong, and we'd be on the same page, and of course, then I'd invest in your business, right? So I think it's much more constructive for investors and entrepreneurs to relate in that way, and it's, it's okay, right? Like, let's just disagree about how we think the world is. That's what startups are about. In terms of what I look for and what I think traction is, I think it's really dependent on the market, and again, I think it, it, it's all about risk, right? Like, we're tryi…

AI assessment note: “In terms of what I look for and what I think traction is”

Q You're too kind. As AngelList Radio is crushing it. Well done. It's your dual endorsement there. Nice. And then let's, let's go for the highlight of your AngelList journey. When's been the real pinnacle for you so far?

A I think for me, it's, I really get a lot of satisfaction out of the day-to-day, and I think that's hopefully the way that people think about their startups as well. It's like, for me, it's like, when we talk with founders, I get to meet Founders all the time, and just to help them on their journey, meet with our syndicate leads, who are people who are phenomenal people, hustling to make something happen, some of them trying to bootstrap their own VC careers, some of them trying to just invest in great friends who are building meaningful things, like helping these folks, working with these folks, and to some extent the LPs, I mean, they're wonderful folks as well, but, you know, it's great to just meet with folks and get value out of the day-to-day versus the bigger Pick your stuff, which is a little bit less attached to the customer. So that's, I mean, that's what keeps me going.

AI assessment note: “I really get a lot of satisfaction out of the day-to-day”