The Exchanges

Q goes, you know, you should be embarrassed by your first Product in the first shipment, and bluntly the table stakes in terms of product are so high actually stay in terms of consumer expectation that I sometimes question, well, can you afford to be embarrassed by your first product release? How do you think about that? You should be embarrassed versus actually it needs to be pretty fucking good today.

A Yeah, I think Reid's quote was accurate maybe 10 years ago when he probably said something like that, but the truth is the bar for where your product needs to be today is so much higher, and yes, you should be embarrassed because I think the best founders will Perpetually be embarrassed. Patrick and John from Stripe are probably still embarrassed, but you have to have an insanely high level of product quality. You just do, especially around the stuff that really sets your product apart, like your reset password flow, things like that might be a little bit embarrassing. The stuff that you might notice as a founder, someone working on the product, but the stuff that the user goes through the sort of like from zero to that magic moment, it has to be virtually perfect. In my opinion, it has to be really, really, really, really, really good.

AI assessment note: “the bar for where your product needs to be today is so much higher”

Q could be kind of categorized as three of the main ones. And I've heard Andy Radcliffe say on the show before, actually, amazing market, ok people, market wins. Amazing people. Okay. Market, market wins. How do you think about the prioritization of these three? I know Elad Gill, who I'm sure is probably both a mutual friend of ours, very much favors markets. Where do you stand on your prioritization?

A I mean, I think of it like a math equation, and I think the simple one is value equals market times people. And if one of those is a zero, it's not worth it, right? You need both. I think you need a large market You also need a team of incredibly qualified people. One thing that I think is underrated in the venture community, and I think this is part of where the dissonance between VCs and founders, I think, comes from. One of these things is time horizon, right? Because, like, for example, Gumroad, it took me seven, eight, nine years to get to a place where Gumroad kind of is considered, like, you know, we're at ten million in revenue doubling every year, but that's because of a macroeconomic shift, namely COVID, that just happened out of the blue, and it took nine years to get to, and it was sort of considered a write-off Literally a write-off by Kleiner Perkins two years ago, seven years into the company. And so you just never know. And I think ultimately the reason the market is so important to VCs is because you need to get from zero to one, that one has to be really large. And you have to do that within a relatively short, compressed amount of time, right? Because IRR, it's sort of annual return is really, really an important metric for VCs. But as a founder, look, if I make fifty million bucks and it takes me nine years or 10 years or 15 years, look, I'm going to be aliv…

AI assessment note: “simple one is value equals market times people. And if one of those is a zero”

Q I mean, speaking of paying for things you don't need yet, I mean, I've never seen such aggression towards Preempted rounds. As we see today, it's really not necessarily a negative thing, but it's just mind blowing. How do you feel about the rise of preempted rounds as aggressively as they are today?

A Yeah, it's interesting. I mean, I think VCs, they know that there's only a couple rounds that a company will raise at sub hundred million dollars, sometimes even less in the case of something like Clubhouse. And you need those, you need that win, right? Like if you look at the sort of the last 10 years, you look at Uber and Palantir maybe, and Pinterest and Slack and Square, and there's probably a dozen sort of ten billion dollar plus companies, Twilio, etc., and you need those if you're a billion dollar firm. So I just think, yeah, firms are really trying to make sure that they find those companies early. They're willing to have a portion of their fund on sort of option calls per se, where they're able to spend millions of dollars, low millions of dollars, to sort of get into these companies, to know what's going on, to have information rights, so that when this company is ready to raise 20, 30, 50, a 102 hundred million dollars, They're going to be able to get into those rounds. I don't know if that's good or bad. In general, as I mentioned, I'm kind of sort of a pro-competition person, but it does, as an investor, I'm like, dang it. That makes my life a little bit harder, because ultimately, I can't compete on that level, right? If you're raising ten million bucks, like, yeah, sorry, my two 50 K is not going to do anything for you.

AI assessment note: “as an investor, I'm like, dang it. That makes my life a little bit harder”

Q Who's the most memorable board member you've worked with, and why?

A Yeah, so Michael Abbott was on our board at Gumroad. He was awesome. He was the VP of Engineering at Twitter before he became a Partner at Kleiner Perkins, and he was amazing. He let me do whatever I want, maybe too much, honestly, but he just listened, and he pushed me on certain things, and I highly, highly recommend, and when Gumroad was going through the sort of, we're going to have a hard time raising our Series B, that sort of a year-long time, he was like, look, we can stop doing the board meetings, like, just let me know if you need me. I trust you to sort of, I know that you care more about driving this car than I do, so like, I'm going to leave you to it, and I, and that sort of trust sort of meant the world to me at that time.

AI assessment note: “Michael Abbott was on our board at Gumroad. He was awesome.”

Q as well, you know, you mentioned obviously Pinterest there, and I spoke to Manish before the show, and he told me about your leaving Pinterest without any of your stock vesting. I couldn't not ask about this, because it comes into one of my favorite questions, which is like, how do you think about your relationship to risk and money? Because that's a big element now, looking back at it.

A Yeah, definitely was an expensive decision. The way that I think about risk is I really, I mean, Jeff Bezos, I think, is kind of famous for the sort of the regret minimization for Framework. But I think I have one life, and I want to spend it doing really interesting things, learning lots of stuff, working with really interesting people, or even just meeting interesting people, not necessarily even having the chance to work with them. I think that's just so much of what gets me excited about my life and getting out of bed. Starting a company is just fundamentally different from working at a company. Even as hot as Pinterest was, like, I just felt like very quickly, sort of post-product market fit You kind of become a cog in the machine. You kind of figured it out, and now you're just iterating, you're optimizing, you're scaling, and that just wasn't as exciting me as starting a company, raising money from investors, meeting people like Matt Collection, really, really figuring out, like, do I have what it takes to do this? But yeah, it was expensive.

AI assessment note: “The way that I think about risk is I really, I mean, Jeff Bezos”

Q life in three to four minutes, so I mean, you did a brilliant job there, Sahil, but I do want to ask, you know, you mentioned your time at Pinterest there, an employee number two, and it's such a formative time in your career as well. I'd love to hear, how did your time with Ben and Pinterest impact your operating mindset, do you think, when you look back now?

A Yeah. I mean, I honestly wish I knew how unique of an experience that was, right? Because back then it was the only experience that I had and it was amazing. And now I'm sort of years on, I've been able to notice like, oh wow, like that experience was just super unique being that early in the life of a company that's that significant. But the simple things like the product focus, like the team back then was so product focused and I just assumed it was normal. That every company was that product focused, but in the years since I've noticed that actually that's not true. Like very, very, very few companies have that level of attention to detail that Pinterest had. And that's simplicity. Ben was so adamant every time basically I suggested we should build something new, it was rejected. And he was so good about staying true to this sort of the core mission of the company, keeping the product incredibly simple, hiring very, very carefully. These things that every person will tell you, you can read blogs about it, you can listen to VCs talk about it, but seeing it in practice, I think really trained me to really know what was really important and what would really matter. And I'd say the other thing is as an early employee, there were a lot of things that were made me uncomfortable. It was new to everybody. There was a lot of uncertainty. And so when I started Gumroad, it was really …

AI assessment note: “seeing it in practice, I think really trained me to really know what was really important”

Q living, which is why I think it's such an incredible job, quite frankly. And you recently raised a rolling fund with AngelList, and Straight off the bat, a thought for me is, like, bluntly, Sahil, why did you choose to do an angel-less rolling fund when you could have done a capped normal fund, like a micro VC fund, like my 20 VC fund? And how did you approach it?

A Yeah, the truth is, I never really intended to be a VC or to have a fund, and there's this sort of concept of activation energy, and with a fund, you just have to pick a number, you have to sort of spend potentially weeks or months raising the capital, and you can't tell anyone about it. So I couldn't use my sort of like primary asset, which is my Twitter account. It was just work. It just felt like I couldn't start small. I mean, I could start small, but then I'd be stuck at that small amount, right? And when Naval told me about rolling funds, it really just opened the door for me because I could start very, very low. My initial goal was a 100,000 dollars a quarter. Naval was going to anchor the fund. So I was already a good chunk of the way there. And it just made it easy. Going back to what we were talking about before, it's that friction piece, right? It's like that onboarding experience. It's The zero to the aha moment, and Angelus just sort of, like, destroyed the friction there. All these questions about, like, well, what is the cap? Who do you want to raise from? Who are you going to talk to people about? Like, do you have to make a deck? And all of these things that, of course, I could have done it, probably, but just the sort of the cognitive overload, the cognitive overhead there was so high, and when Angelus said, look, you can start at a hundred K a quarter, you ca…

AI assessment note: “AngelList just sort of, like, destroyed the friction there.”

Q is actually on the turn down. Bluntly, it's something that I haven't nailed. If I go into the kind of thinking on the reasoning why, I get pushback. And if I don't and I say something very kind of short but direct, I get, can you please expand on why not? From your perspective, and especially again with the founder hat on, what's the right way to perfect the no?

A That's super hard. I don't think there's a good answer. What I've done so far is to say, hey, thanks for the time. It's not a fit for me right now. Thanks, Sahil. I basically have a canned response. I type it out every time, but it's effectively the same one. Occasionally, people will say, hey, can you expand on this? Currently, I say, sorry, like, the only feedback I can provide is money, if it's a good fit. It would be like going to OpenAI and being like, hey, GPT-III, why did you say this, right? It's just such a complex thing. Equation that's going on in your head that you can't really articulate. So anytime you try to do that, you're going to fail and it's going to come off as inauthentic or fake. And then even if you've really put a lot of thought into it, the founders will often sort of say, well, you know, you said it wasn't a big market, but it actually is a big market. Or you said this, but it actually this, and ultimately it becomes like, sorry, the answer is no. Like I'm trying to leave the party right now and you're trying to keep me in, you know, kind of thing. I think ultimately what I want to do is write a document that says, look, these are the reasons that I pass on companies. And then I can just send people this and say, Hey, look, I can't tell you in this specific case why I pass on your deal, but I can at least provide you with a sort of aggregate view on a…

AI assessment note: “I think ultimately what I want to do is write a document that says”

Q Man, you did a party round. Can I ask, how do you feel about party rounds? They seem to have kind of come back in many senses today.

A I'm a fan, honestly. I mean, I really believe, I can speak as a Again, I would raise from a coalition of people. I just think it's way better to have people like you, me, JMJ, Brianne Kimwell, Ryan Hoover. Like, why would you want a group of amazing people on your cap table? 1015, 20 people. Maybe even more than that, potentially. Now there's sort of the reggae plus stuff. You can do crowdfunding for equity. Like, I just think it gets so many more people in your corner. It kind of almost crowds out the market, in a sense, against competition. Ultimately, again, like, the money is money. You're not gonna get an insane amount of help from people. And so optimize for good signal, optimize for sort of like low touch investors that aren't going to bug you. And a good way to do that is to raise from like a good group of people, raise from many, no one's writing a huge chunk of the round. And so no one's going to feel sort of super entitled. And there's a lot of pushback, a lot of VCs, especially sort of push back on the party round. They say, look, when you're ready to raise an A or you're struggling, no one's going to do their parada or they're not bought in for you. But ultimately, like that was the case for me anyways. Like Firms are, again, going back to what we talked about before, they don't owe you anything. They're going to make the right business decision at the time. And lo…

AI assessment note: “I'm a fan, honestly. I mean, I really believe”

Q You won't see it. Yeah, it's hard. Question for you, and I've done episodes before with like Bradfeld and Jerry Cloner on depression and struggling with personal happiness. When you had things like the Kleiner writing you off, how did that feel, Sahil, if you don't mind me asking, and how did you kind of get through it?

A Yeah, I mean, it was brutal. I mean, I put all my eggs in one basket. It doesn't matter how trite it sounds to say, look, most companies fail and this and that. The truth is when it's you and your life, And you have to do a round of layoffs, or you have to kind of leave San Francisco, because it just doesn't feel like a fit for you. You're basically saying, like, that thing that I spent years and years of my life, basically one-dimensionally on, was wasted. That's what it felt like at the time. Now I realize it wasn't wasted, but at the time it certainly feels like that. And it's a public failure. Like, TechCrunch wrote about it, and everyone knew about it in the industry, and it was just like, oh, this kid who raised a bunch of money and was maybe the next XYZ Actually, it wasn't. It was hard, and it honestly took me years of sort of distance, physical distance, literally, to get past it, and I think it took being in a community of people, specifically Provo, Utah, I just started writing and painting and really just not thinking about Gumroad more than the four hours a week I was doing support. Being around other people who didn't also care, that really allowed me to kind of, like, port their priorities, and they were like, how are you doing? How's your family? Are you married? Like, their concerns kind of overrided mine over time, almost like mimetically. And eventually I was…

AI assessment note: “Yeah, I mean, it was brutal. I mean, I put all my eggs in one basket.”

Q get over. So, uh, Yeah, I think you should probably invoice me afterwards for that one. I do want to ask, cause you know, we see so much multi-stage money coming into seed now. I'm interested from your perspective. How do you think about the multi-stage money entering seed? And there's a lot of founders who have multi-stage and then more traditional seed firms. How do you advise them? Yeah.

A I mean, ultimately what I always tell founders is look, understand that it's your job to build this company and investors might say they're going to do a lot for you or do very little for you or what have you, but in general, they're not going to save the company if it's going to fail and they're not going to kill the company if it's going to succeed in general. The people that you raise money from, if you're raising from sort of like pretty good investors. So that's sort of, I think, super important. So ultimately, like focus on the terms, get a good price, and then get back, right? Get back to your job building stuff. I think that's sort of super key. But specifically to your point, in general, I try to say, look, like you want to work with people who care about the early stage, who care about pre-seed or seed. In my opinion, like we raise money, our pre-seed round, or our seed round back then it was called, was 1.1 million. Excel put 400 K into that. Frankly, if I could go back in time, I would have said no to them. I would have given that 400 K a hundred K to four different people, super angels or angels, or, or even split it further. This is sort of before the party round became really popular. Cause ultimately I think the most valuable people are founders, are operators, are creative people like you who are actually just doing stuff, right? They're not always thinking a h…

AI assessment note: “if I could go back in time, I would have said no to them.”

Q life in three to four minutes, so I mean, you did a brilliant job there, Sahil, but I do want to ask, you know, you mentioned your time at Pinterest there, an employee number two, and it's such a formative time in your career as well. I'd love to hear, how did your time with Ben and Pinterest impact your operating mindset, do you think, when you look back now?

A Yeah. I mean, I honestly wish I knew how unique of an experience that was, right? Because back then it was the only experience that I had and it was amazing. And now I'm sort of years on, I've been able to notice like, oh wow, like that experience was just super unique being that early in the life of a company that's that significant. But the simple things like the product focus, like the team back then was so product focused and I just assumed it was normal. That every company was that product focused, but in the years since I've noticed that actually that's not true. Like very, very, very few companies have that level of attention to detail that Pinterest had. And that's simplicity. Ben was so adamant every time basically I suggested we should build something new, it was rejected. And he was so good about staying true to this sort of the core mission of the company, keeping the product incredibly simple, hiring very, very carefully. These things that every person will tell you, you can read blogs about it, you can listen to VCs talk about it, but seeing it in practice, I think really trained me to really know what was really important and what would really matter. And I'd say the other thing is as an early employee, there were a lot of things that were made me uncomfortable. It was new to everybody. There was a lot of uncertainty. And so when I started Gumroad, it was really …

AI assessment note: “seeing it in practice, I think really trained me to really know what was really important”

Q as well, you know, you mentioned obviously Pinterest there, and I spoke to Manish before the show, and he told me about your leaving Pinterest without any of your stock vesting. I couldn't not ask about this, because it comes into one of my favorite questions, which is like, how do you think about your relationship to risk and money? Because that's a big element now, looking back at it.

A Yeah, definitely was an expensive decision. The way that I think about risk is I really, I mean, Jeff Bezos, I think, is kind of famous for the sort of the regret minimization for Framework. But I think I have one life, and I want to spend it doing really interesting things, learning lots of stuff, working with really interesting people, or even just meeting interesting people, not necessarily even having the chance to work with them. I think that's just so much of what gets me excited about my life and getting out of bed. Starting a company is just fundamentally different from working at a company. Even as hot as Pinterest was, like, I just felt like very quickly, sort of post-product market fit You kind of become a cog in the machine. You kind of figured it out, and now you're just iterating, you're optimizing, you're scaling, and that just wasn't as exciting me as starting a company, raising money from investors, meeting people like Matt Collection, really, really figuring out, like, do I have what it takes to do this? But yeah, it was expensive.

AI assessment note: “The way that I think about risk is I really... regret minimization”

Q going to seismically change venture. How do you feel about that? Do you think it is this seismic shift? Or bluntly, and I don't mean this rudely to you, do you think it is kind of a game of the one percent? And you do have the distribution. You do have the Gumroad experience. You do have the network. Do you think it's like the theory of the one percent?

A Yeah, I mean, I think it's really hard to know. Ultimately, I'm a big believer in democratization. I think Gumroad It fits very much into that, making things that were previously inaccessible, more accessible, making things cheaper, making things faster. I really believe in those tenants. And I think you're right. I think it is a little bit of a one percent game. Certainly just like any sort of democratized system, you end up with a power law where you have a few people at the top that are absolutely killing it, and then you have sort of like a lot of people that are doing okay. And I think that will probably happen with rolling funds. I don't expect to see hundreds and hundreds of hundreds of emerging fund managers all managing these really big, large portfolios. I think you'll see probably a dozen or so. But I think it matters at the most critical juncture in venture, which is early stage, right? We're never going to see hundreds of billions of dollars in rolling funds, in my opinion. But what you're going to see is all of these companies that might have failed that were able to raise a hundred K here, two 50 K there from these new emerging fund managers that have these different networks that have these different LP bases that are going to lead to much more interesting, different, diverse companies getting started and continuing to get to that next stage. Traditional venture…

AI assessment note: “I think you're right. I think it is a little bit of a one percent game.”

Q is actually on the turn down. Bluntly, it's something that I haven't nailed. If I go into the kind of thinking on the reasoning why, I get pushback. And if I don't and I say something very kind of short but direct, I get, can you please expand on why not? From your perspective, and especially again with the founder hat on, what's the right way to perfect the no?

A That's super hard. I don't think there's a good answer. What I've done so far is to say, hey, thanks for the time. It's not a fit for me right now. Thanks, Sahil. I basically have a canned response. I type it out every time, but it's effectively the same one. Occasionally, people will say, hey, can you expand on this? Currently, I say, sorry, like, the only feedback I can provide is money, if it's a good fit. It would be like going to OpenAI and being like, hey, GPT-III, why did you say this, right? It's just such a complex thing. Equation that's going on in your head that you can't really articulate. So anytime you try to do that, you're going to fail and it's going to come off as inauthentic or fake. And then even if you've really put a lot of thought into it, the founders will often sort of say, well, you know, you said it wasn't a big market, but it actually is a big market. Or you said this, but it actually this, and ultimately it becomes like, sorry, the answer is no. Like I'm trying to leave the party right now and you're trying to keep me in, you know, kind of thing. I think ultimately what I want to do is write a document that says, look, these are the reasons that I pass on companies. And then I can just send people this and say, Hey, look, I can't tell you in this specific case why I pass on your deal, but I can at least provide you with a sort of aggregate view on a…

AI assessment note: “What I've done so far is to say, hey, thanks for the time.”

Q You won't see it. Yeah, it's hard. Question for you, and I've done episodes before with like Bradfeld and Jerry Cloner on depression and struggling with personal happiness. When you had things like the Kleiner writing you off, how did that feel, Sahil, if you don't mind me asking, and how did you kind of get through it?

A Yeah, I mean, it was brutal. I mean, I put all my eggs in one basket. It doesn't matter how trite it sounds to say, look, most companies fail and this and that. The truth is when it's you and your life, And you have to do a round of layoffs, or you have to kind of leave San Francisco, because it just doesn't feel like a fit for you. You're basically saying, like, that thing that I spent years and years of my life, basically one-dimensionally on, was wasted. That's what it felt like at the time. Now I realize it wasn't wasted, but at the time it certainly feels like that. And it's a public failure. Like, TechCrunch wrote about it, and everyone knew about it in the industry, and it was just like, oh, this kid who raised a bunch of money and was maybe the next XYZ Actually, it wasn't. It was hard, and it honestly took me years of sort of distance, physical distance, literally, to get past it, and I think it took being in a community of people, specifically Provo, Utah, I just started writing and painting and really just not thinking about Gumroad more than the four hours a week I was doing support. Being around other people who didn't also care, that really allowed me to kind of, like, port their priorities, and they were like, how are you doing? How's your family? Are you married? Like, their concerns kind of overrided mine over time, almost like mimetically. And eventually I was…

AI assessment note: “it was brutal... it honestly took me years of sort of distance, physical distance”

Q price on the next round. If you're a multi-stage fund or a larger fund in early, you don't want to price optimize for the next round, because you want to put a bigger check in. It would be against your interest to optimize the price because you've already got a check in and you just want to build ownership. Do you know what I mean? So you'll miss a lot.

A I mean, the way I think about it is, look, I want to write a check into a company and then I'm done with the sales process. I know roughly what my allocation is going to be. And now I'm just excited about helping the company build it when they need help. And the problem with VC is sort of the multi-stage folks is they're always thinking about, well, they're not done. They're still in the sales process. They're still kind of trying to Potentially get in. They're still sort of, in a sense, negotiating and thinking about these things. Whereas I really just, I want to clear my head, and I just want to be like, look, cool, I did the math. We figured it out. I wired the money. This is what I got. Sure, I'll do a hundred percent of my pro rata hopefully in the next round. Beyond that, I'm done, and now I just get to help you build this thing. And I just think it simplifies the relationship a lot. It just makes it really, really, really transparent.

AI assessment note: “the problem with VC is sort of the multi-stage folks is they're not done.”

Q goes, you know, you should be embarrassed by your first Product in the first shipment, and bluntly the table stakes in terms of product are so high actually stay in terms of consumer expectation that I sometimes question, well, can you afford to be embarrassed by your first product release? How do you think about that? You should be embarrassed versus actually it needs to be pretty fucking good today.

A Yeah, I think Reid's quote was accurate maybe 10 years ago when he probably said something like that, but the truth is the bar for where your product needs to be today is so much higher, and yes, you should be embarrassed because I think the best founders will Perpetually be embarrassed. Patrick and John from Stripe are probably still embarrassed, but you have to have an insanely high level of product quality. You just do, especially around the stuff that really sets your product apart, like your reset password flow, things like that might be a little bit embarrassing. The stuff that you might notice as a founder, someone working on the product, but the stuff that the user goes through the sort of like from zero to that magic moment, it has to be virtually perfect. In my opinion, it has to be really, really, really, really, really good.

AI assessment note: “the bar for where your product needs to be today is so much higher”

Q Not at all, but I would love to kick off with a little bit on you, so I'm going to pretend like I'm blisterly ignorant here, but how did you make your way into the world of startups, and how did you enter the investing world?

A Yeah, so I got my start as an early employee at Pinterest. I was the second employee there. Before that, I was a freshman at USC. And before that I was in high school making iPhone apps. The app store had just come out and that was sort of this amazing thing for me because I could just make stuff and Apple would worry about everything else, right? The operational, legal, finance, payments, all of that stuff. I could just make apps, put them in the store, pick a price, and then people would pay me. And that was really what got me excited about the internet and e-commerce. 1015 years ago is I could just make stuff and people would pay me just strangers. I don't even know who they are. And it turned out that there was just not that many people making iPhone apps and designing iPhone apps. So when that boom started to happen, companies like Pinterest and Instagram and GitHub and all these companies needed talent. And so Ben sent me an email. He saw some of my work on Hacker News sent me an email saying, hey, I work on this thing called Pinterest. We're a small team. We've raised a little bit of money. We help people collect, organize, share the things that they love, something like that. We need an iPhone app. Can you help us? So that's how I started is just making Pinterest for iPhone contributed on a few other levels. And then Got pulled into Gumroad, had a weekend project that t…

AI assessment note: “I got my start as an early employee at Pinterest. I was the second employee”

Q very young, you know, definitely a lot more than me say, but I put a lot of weight of expectation on myself, especially kind of in the world of venture, and I, you know, people say very nice things, and I kind of really feel them, and feel the weight to perform. Cass, what would you advise me putting all of that pressure on the weight of expectation and performance?

A Yeah, I definitely feel that too, and it frankly, it feels great, right? It It feels great that these people that you respect, that you've respected for a long period of time, are saying that you're doing really, really good work, and I do think that is sort of an insecurity that you need other people. I have it, too. Like, I need other people to tell me, you're really good at this thing that you do, this design, or growing a company, or hiring, or culture, or whatever. It's like, I do need that, and I think that sort of, like, almost, like, comes from a deep place that will never really be resolved. I think there are two things that really help me. One is an emphasis on patience. It's an emphasis on, look, I'm going to be alive, hopefully for a long period of time, and being in a good place long term is far more important than having a few wins early. Patience was a really big one. And then the other one, honestly, is that people don't really give a shit about you, and I think that's great. I think most people care about a few people, their family, their friends, some other folks in their life, but truthfully, you just can't care about everybody. You can't love everybody. You can love people kind of like Jesus loved everybody, but you can't really sacrifice parts of yourself for other people, like a parent would for their children. It's actually been really great for me to kno…

AI assessment note: “I think there are two things that really help me. One is an emphasis on patience.”

Q challenge when you name it the 20 minute VC. What an idiot I was. Anyway, distribution is kind of core to both you and me in terms of offerings. Patrick Collison endorsed yours. I mean, my word, that's street cred and a half. But tell me, in terms of like distribution and brand, How do you think about it and assess your own personal brand, especially stay as an investor?

A Yeah, I mean, I think Naval had a really great tweet about this. He said brand is sort of a lagging indicator of who you are, right? And I think that's pretty smart. I think you are who you are. Word gets out. If you're a good person, if you're a bad person, I think you can sort of quicken that feedback loop if you're really public and you talk a lot and you write blog posts and founders talk about you more often. But for example, Patrick Carlson, like I was helping out with Stripe and I was a sub hundred user of Stripe. In 2011, Gumbert actually launched before Stripe launched, and he tweeted about this in his incredibly kind way this year, right? So that's like a nine year feedback loop of my sort of my quote unquote brand. And I do think about it a lot, and I think it is really important. But again, it goes back to what I was saying before, which is I just want my brand to be, I genuinely want to help people. And every time I tweet something, and I sometimes I break the rule, but I really say, is this valuable? Is this valuable for my audience? And I think ultimately, you're just like a product, right? Look, you can do all sorts of cool stuff. Stripe has beautiful designs, but ultimately, is it valuable for your customer? Are you really genuinely solving a problem that they have? And that's going to be the tell as a VC for me, right? It's going to take a lot longer. It might…

AI assessment note: “I just want my brand to be, I genuinely want to help people.”

Q get over. So, uh, Yeah, I think you should probably invoice me afterwards for that one. I do want to ask, cause you know, we see so much multi-stage money coming into seed now. I'm interested from your perspective. How do you think about the multi-stage money entering seed? And there's a lot of founders who have multi-stage and then more traditional seed firms. How do you advise them? Yeah.

A I mean, ultimately what I always tell founders is look, understand that it's your job to build this company and investors might say they're going to do a lot for you or do very little for you or what have you, but in general, they're not going to save the company if it's going to fail and they're not going to kill the company if it's going to succeed in general. The people that you raise money from, if you're raising from sort of like pretty good investors. So that's sort of, I think, super important. So ultimately, like focus on the terms, get a good price, and then get back, right? Get back to your job building stuff. I think that's sort of super key. But specifically to your point, in general, I try to say, look, like you want to work with people who care about the early stage, who care about pre-seed or seed. In my opinion, like we raise money, our pre-seed round, or our seed round back then it was called, was 1.1 million. Excel put 400 K into that. Frankly, if I could go back in time, I would have said no to them. I would have given that 400 K a hundred K to four different people, super angels or angels, or, or even split it further. This is sort of before the party round became really popular. Cause ultimately I think the most valuable people are founders, are operators, are creative people like you who are actually just doing stuff, right? They're not always thinking a h…

AI assessment note: “specifically to your point, in general, I try to say, look, like you want to work with people”

Q Not at all, but I would love to kick off with a little bit on you, so I'm going to pretend like I'm blisterly ignorant here, but how did you make your way into the world of startups, and how did you enter the investing world?

A Yeah, so I got my start as an early employee at Pinterest. I was the second employee there. Before that, I was a freshman at USC. And before that I was in high school making iPhone apps. The app store had just come out and that was sort of this amazing thing for me because I could just make stuff and Apple would worry about everything else, right? The operational, legal, finance, payments, all of that stuff. I could just make apps, put them in the store, pick a price, and then people would pay me. And that was really what got me excited about the internet and e-commerce. 1015 years ago is I could just make stuff and people would pay me just strangers. I don't even know who they are. And it turned out that there was just not that many people making iPhone apps and designing iPhone apps. So when that boom started to happen, companies like Pinterest and Instagram and GitHub and all these companies needed talent. And so Ben sent me an email. He saw some of my work on Hacker News sent me an email saying, hey, I work on this thing called Pinterest. We're a small team. We've raised a little bit of money. We help people collect, organize, share the things that they love, something like that. We need an iPhone app. Can you help us? So that's how I started is just making Pinterest for iPhone contributed on a few other levels. And then Got pulled into Gumroad, had a weekend project that t…

AI assessment note: “Yeah, so I got my start as an early employee at Pinterest.”

Q price on the next round. If you're a multi-stage fund or a larger fund in early, you don't want to price optimize for the next round, because you want to put a bigger check in. It would be against your interest to optimize the price because you've already got a check in and you just want to build ownership. Do you know what I mean? So you'll miss a lot.

A I mean, the way I think about it is, look, I want to write a check into a company and then I'm done with the sales process. I know roughly what my allocation is going to be. And now I'm just excited about helping the company build it when they need help. And the problem with VC is sort of the multi-stage folks is they're always thinking about, well, they're not done. They're still in the sales process. They're still kind of trying to Potentially get in. They're still sort of, in a sense, negotiating and thinking about these things. Whereas I really just, I want to clear my head, and I just want to be like, look, cool, I did the math. We figured it out. I wired the money. This is what I got. Sure, I'll do a hundred percent of my pro rata hopefully in the next round. Beyond that, I'm done, and now I just get to help you build this thing. And I just think it simplifies the relationship a lot. It just makes it really, really, really transparent.

AI assessment note: “the problem with VC is sort of the multi-stage folks is they're always thinking about”

Q Can I ask, man, why do you think that early stage is still so undervalued? Because, like, for me right now, the pricing is just at a level where I've never seen it before. What makes you think it's undervalued?

A I think it's undervalued as a system, right? So you're seeing a few of these deals that get super hot, and these YC companies that raise at these 15, twenty million dollar caps. And effectively, it's sort of product quality, et cetera, like a pre-seed stage. But I think there's a much broader group of companies that should get started, employees like me that should leave the companies that they're working at and start new companies, that it's sort of like there's those big winners, and then there's nobody else. And I think there needs to be more of the middle. There needs to be more people starting companies, and I think VCs see this. I actually think that would sort of depress prices, because certainly, like, there's only so many amazing startups that those startups are able to command these valuations, and I actually think Sort of simple supply demand. If you see a lot more interesting companies, you might actually see a depreciation or sort of a depression in the prices and vice versa. Like I think more VCs will do this kind of same thing. I think it's just good for everybody. Simply. I believe in free markets, right? I believe more competition is generally a good thing. And I think that this is just creating more competition, which is going to be better for the customer, whether the customer in this case be the LP or the GP or the founder or the employees, right? And also I…

AI assessment note: “I think it's undervalued as a system, right?”

Q show about certain companies raising it, as we said, kind of high valuations very early with little show for it. I'm interested, like, especially with the founder hat on, you know, Sahil, it's such a fascinating perspective. For me to ask you, but like, how do you feel about current pricing now as an investor? How do you assess price sensitivity having been on the other side of the table?

A Yeah. I mean, again, like kind of like going from an early employee to a founder and having empathy for the early employees. I think hopefully I can have a similar thing being an investor and having empathy for the founders and ultimately look, investors like to say that you should raise less money. You should be sort of really careful as a founder and hire sort of really efficiently and Be capital efficient, etc. But the truth is, look, like, VCs want their same rough allocation, and that roughly means that a founder's gonna get hit with the same dilution if they're raising a million bucks, or five million bucks, or thirty million bucks, frankly, right? Everyone wants their 10, 15, 20, 25%, depending. And so I think, ultimately, founders should raise as much money as they can, within reason, and the only way to fix that, again, is to sort of just fix the system. Just, like, get more people In the game. I think that's just going to be better for everybody. The truth is, look, if I have a hundred million dollars to spend as a VC, and there's five companies, versus if there's 50 companies, right, like, each one is going to get a larger chunk. I don't know where things go. I think people have been calling it a bubble and frothy for a long time. I think often when people say that, it's actually the beginning of much more frothiness. I think software is an incredible force, and I do…

AI assessment note: “founders should raise as much money as they can, within reason”

Q Tell me, the most recent publicly announced investment, and why did you say yes and get so excited?

A Yeah, Clubhouse is probably the most recently announced one. I did a small check into that company. I have known Paul Davison, more recently gotten to know Rohan, the other co-founder, since, uh, since, uh, when he built a company called Highlight, and I think I encountered that at South by, and it's just perfect, perfect founder product fit, where when you listen to that guy talk about audio and the future of audio, and sort of this sort of serendipity of it, and, uh, sort of the, the one degree off connections, there's so many things that he clearly loves, and he's clearly thought about For 10 plus years of his life, that I just want to see someone like that, like, finally get a chance to, like, take a crack. I'm a consumer socialist so brutal that when someone finally has some semblance of traction and scale, and he finally gets to kind of, like, explore some of his ideas around this to a, to a sort of an execution. I'm just, I just, like, love backing people like that, and I think it's a great product, and I think some of the conversations people have been able to have on there are people they've been able to meet. I think that's sort of the beauty of the internet, and I think it sort of signals, like, a sort of the end of an era, the beginning of a new era on the web, and I'm just excited to see what they do.

AI assessment note: “Clubhouse is probably the most recently announced one.”

Q show about certain companies raising it, as we said, kind of high valuations very early with little show for it. I'm interested, like, especially with the founder hat on, you know, Sahil, it's such a fascinating perspective. For me to ask you, but like, how do you feel about current pricing now as an investor? How do you assess price sensitivity having been on the other side of the table?

A Yeah. I mean, again, like kind of like going from an early employee to a founder and having empathy for the early employees. I think hopefully I can have a similar thing being an investor and having empathy for the founders and ultimately look, investors like to say that you should raise less money. You should be sort of really careful as a founder and hire sort of really efficiently and Be capital efficient, etc. But the truth is, look, like, VCs want their same rough allocation, and that roughly means that a founder's gonna get hit with the same dilution if they're raising a million bucks, or five million bucks, or thirty million bucks, frankly, right? Everyone wants their 10, 15, 20, 25%, depending. And so I think, ultimately, founders should raise as much money as they can, within reason, and the only way to fix that, again, is to sort of just fix the system. Just, like, get more people In the game. I think that's just going to be better for everybody. The truth is, look, if I have a hundred million dollars to spend as a VC, and there's five companies, versus if there's 50 companies, right, like, each one is going to get a larger chunk. I don't know where things go. I think people have been calling it a bubble and frothy for a long time. I think often when people say that, it's actually the beginning of much more frothiness. I think software is an incredible force, and I do…

AI assessment note: “I think people have been calling it a bubble and frothy for a long time.”

Q Can I ask, man, why do you think that early stage is still so undervalued? Because, like, for me right now, the pricing is just at a level where I've never seen it before. What makes you think it's undervalued?

A I think it's undervalued as a system, right? So you're seeing a few of these deals that get super hot, and these YC companies that raise at these 15, twenty million dollar caps. And effectively, it's sort of product quality, et cetera, like a pre-seed stage. But I think there's a much broader group of companies that should get started, employees like me that should leave the companies that they're working at and start new companies, that it's sort of like there's those big winners, and then there's nobody else. And I think there needs to be more of the middle. There needs to be more people starting companies, and I think VCs see this. I actually think that would sort of depress prices, because certainly, like, there's only so many amazing startups that those startups are able to command these valuations, and I actually think Sort of simple supply demand. If you see a lot more interesting companies, you might actually see a depreciation or sort of a depression in the prices and vice versa. Like I think more VCs will do this kind of same thing. I think it's just good for everybody. Simply. I believe in free markets, right? I believe more competition is generally a good thing. And I think that this is just creating more competition, which is going to be better for the customer, whether the customer in this case be the LP or the GP or the founder or the employees, right? And also I…

AI assessment note: “I think it's undervalued as a system, right?”

Q What do you want to achieve with the rolling funds?

A Yeah, I mean, rolling funds, I think it's so early to see what really happens there. And obviously there's been in the zeitgeist a little bit, but look, I'm just excited to see change. I'm excited to see experiments. The truth is, look, like venture capital doesn't innovate that often. The fact that it took like a couple funds and not massive funds by any means to really kind of focus the zeitgeist means that probably the venture capital industry should be innovating a little bit. We invested in invaders, but I think we might want to do some of that ourselves a little bit more. And I like the idea that I contributed a little bit to sort of making the industry think, oh, maybe the ways that we currently think about how we've set things up might not be perfect. There might be room for growth and improvement here.

AI assessment note: “making the industry think, oh, maybe the ways that we currently think”