Insight
Childhood instability drives the best founders to master chaos
“And I do believe that parental instability or home instability leads to a situation where the smartest and most interesting founders who are strong enough, I would add, sooner or later learn how to master chaos because they had to survive in it.”
Insight
Older venture capitalists exit the industry because they cannot learn new models
“And I think that's probably why venture investors that are younger tend to enter and think about and go along with new innovative models. And I also think that's why venture people at a past a certain age point exit out of the business. They can't learn enough…”
Assertion Not checkable as stated
VC and LP incentives diverged in the 1990s due to management fees
“And a lot of this thinking started when the fund sizes started to become large and people started living off of the management fees. So the incentives started to diverge from the limited partners incentives, and people started thinking of it as an investing bu…”
Insight
Great founders have a psychological need to build large companies
“And that's one of my key criteria with founders is does this person need to create a big company? Not just want, but need to, which will create a persistence that follows through their entire life almost to build and create companies.”
What-if
Twitter would not exist as a company without co-founder Evan Williams
“Evan basically made the company what it is. Without Evan, there would be no Twitter as a company.”
Insight
Zachary: Wealthy people cluster socially to avoid friends with financial motives
“I just started hanging out with people in approximately the same economic zone because I knew they had no interest in wanting to get any money. I think that's why a lot of times people in the same Socioeconomic zone end up hanging out with one another.”
Insight
VCs should back founders who want capital but reject investor coaching
“You want to go after the founders who just want you out of their way. They don't want help. They don't want coaching. They basically want the money and they just want you out of the way.”
Insight
Exceptional founders succeed through intense willpower rather than superficial charisma
“Most of the great founders that I've met, they will listen to the data and act differently. And they will also listen to you, but they'll take your input into account, but they're not going to necessarily do what you want. And I haven't found them to be partic…”
Opinion
Venture capital fund sizes grew too large following Google and Facebook
“So I think in terms of fund size and returns, I do think fund sizes have gotten too large, and it really took off after Google and predominantly after Facebook.”
Disclosure
Zachary agreed to a $30 million PillPack check after four days
“On day one that I've met him by day four, I was shaking hands with him on a thirty million dollar check.”
Insight
Biotech investing requires significantly deeper technical expertise than software venture capital
“Unlike investing in enterprise software or consumer investing, the depth of knowledge needed to invest in the area is extremely, extremely deep and usually involves a PhD in some one of the areas that you're gonna invest in, in bioengineering or biotech.”
Disclosure
Zachary wrote a $5 million check to Udacity without a business plan
“And after that, I basically gave him a check for five million dollars within an hour of him presenting at our firm with basically no business plan.”
Insight
A venture board member's only true control is hiring and firing CEOs
“There's really only two control points you can do, which is hire and fire the CEO. Everything else you have influence over, but that's the only real control points that you have.”
Insight
Developing new venture capital partners requires a harsh sink-or-swim environment
“A lot of the growing, I think, has to be sink or swim. That's my opinion. And the sink or swim sounds a bit harsh, but that's how I survived in the business.”
Insight
Wealthy individuals socialize within their economic bracket to avoid financial motives
“I just started hanging out with people in approximately the same economic zone because I knew they had no interest in wanting to get any money like zero. I think that's why a lot of times people in the same socioeconomic zone end up hanging out with one anothe…”
Insight
Investors should avoid capital-intensive startups late in market cycles
“It's made me think about being careful about getting involved in capitally intense projects, that the further on you are in the cycle, the more careful you should be about financing companies that will take lots of rounds of capital.”
Assertion Not checkable as stated
Social network Genie failed because Facebook expanded into users over 30
“The thesis behind Jeannie was that there would be a social network for people above 30. Unfortunately, Facebook Expanded into that segment. So that didn't work out.”
Assertion Not checkable as stated
Only five of 50 venture capitalists from the 1995 cohort survived
“In 1995, 96, when I got in, there were about 50 people that entered into venture. And as of several years ago, there were about five of us left. Most of the people were exited out of the business in the first four or five years.”
Assertion Not checkable as stated
Venture firms can spend $1 million solely on diligence for biotech deals
“It's not unheard of to spend a million dollars on a deal and a large deal just on diligence.”
Insight
Venture board members should operate 'nose in, hands out'
“They told me a simple phrase, nose in, hands out. So pay attention to what's going on in the business, but don't get involved in the company and screw it up unless the founder wants you to get involved.”
Disclosure
Zachary: I only have one friend in Silicon Valley venture capital
“I don't have many friends that I hang out with in the venture business here in Silicon Valley. I would say maybe one.”
Assertion Not checkable as stated
Seed rounds in 2000 were $300,000 and required a working prototype
“When I was in the business 20 years ago, a seed deal was 300,000 dollars. And a C deal meant that there's actually a deck with probably a prototype, what people might call a Series A today.”
Disclosure
Zachary deployed only $240 million across his first 23 years in VC
“Up until that point in my career in roughly 23, 22 years, I had invested about two hundred forty million dollars, so I've never been a person just to write a ton of checks and throw darts at a wall and see what happens.”
Disclosure
Zachary initially rejected VC offer thinking it was about country clubs
“Sooner or later, that led up to the year 1995 when someone asked me if I wanted to be in the venture business and I had no idea what that meant. And I kind of thought it was about country clubs and playing tennis. And I initially turned down what the job was b…”
