Disclosure
Ribbit Capital requires deal conviction but bans individual partner attribution
“I would say we have a process that's intentionally conviction-driven, meaning somebody on the team needs to pound the table, but we try not to attach that Investment decision to a person because I think that often leads to people thinking about investments in …”
Disclosure
Ribbit Capital wired Robinhood $500 million in emergency liquidity in one day
“We were able to figure out terms and get the liquidity to wire them half a billion dollars that day.”
Insight
Shalek: Sector-focused funds often get blinded by their own expertise
“There's a lot of things actually about being a sector-focused fund that are a disadvantage that people think are an advantage, like expertise that we talked about earlier, because, you know, you can become way too full of your own ideas, and you miss that the …”
Opinion
Shalek: Crypto is one of the best risk-adjusted bets in the world
“Myself have been kind of hooked on crypto ever since. And convinced that, you know, it's one of the best risk-adjusted bets you can make anywhere in the world.”
Opinion
Shalek: Sector-Focused International Funds Can Succeed in Venture Capital
“Look, the thing that Mickey wanted to do, which was start a sector-focused fund that would invest internationally, it went against everything that I'd learned as an LP about what worked in venture. You know, I told Mickey sector-focused funds don't work, and t…”
Insight
Shalek: Core VC metric is whether top founders choose your firm
“A friend of mine has a theory that any decision or any investment can be whittled down to like One single most important question. And for me in venture capital, that's like, will great entrepreneurs consider working with us? You know, there are lots of good p…”
Insight
Shalek: Type two errors are much more painful than type one errors in tech investing
“In most cases in tech investing, it's great to have conviction about things to invest in or to do, but you gotta be really weary of conviction around things not to invest in. Like type two errors are a lot more painful than type one errors.”
Insight
Shalek: Investors should prioritize top companies over strict ownership targets
“I think investing in the best companies should be the tail that wags the dog. You know, you certainly shouldn't back a weaker company because you think you can own a few more percent of it.”
Insight
Individual deal attribution creates unhealthy political biases in venture firms
“Like it can be easier to bring the wrong biases when it's a deal attached to a person. Like we need brutal honesty as a firm and a kind of no holds barred kind of debates, but you might think about supporting the person behind the deal, which is a nice sentime…”
Assertion Supported
Top fintechs took $800 billion in market cap from banks in 2020
“Like if you take the top seven, eight fintechs and the top seven, eight banks last year, Something like eight hundred billion dollars in market cap swap hands between them.”
Disclosure
Ribbit Capital passed on early investments in Stripe, Adyen, and Stone
“Early on at Ribbit, we had the opportunity to invest in, in Stone, in Adyen, in Stripe, you know, in a number of companies that are relatively early stage. And we said, we're not doing payments right now.”
Prediction Not checkable as stated
Shalek: Kavak could become one of Latin America's largest companies ever
“We also recently backed a Mexican company called Kavak, which we're convinced could end up being one of the largest companies ever built out of Latin America.”
Insight
Shalek: LP investing and venture capital are fundamentally similar models
“In my view, the LP and the venture business are actually similar in a lot of ways. You know, both are fundamentally about backing amazing people, often with limited control or data as an LP, you know, you're mostly putting money in blind pools. So you learn to…”
Assertion Supported
Shalek: David Swensen revolutionized institutional investing through unconventional principles
“He really reimagined what institutional investing should be with a few core ideas like that liquidity was overrated, or that you should pursue active management in areas of inefficiency, or that, you know, you should be equity oriented over long periods of tim…”
Insight
Shalek: Updating priors and reframing scale defines the best investors
“One of the hardest things I've found in tech investing is updating your priors. You know, one point you can only see Stripe as a billion-dollar company, and then you got comfortable with as a It's a ten billion dollar company, but how do you get over that view…”
Disclosure
Shalek: Ribbit Capital re-underwrites every deal and follow-on decision
“Our principle from the beginning is we re-underwrite every deal, including follow-on decisions.”
Assertion Supported
PayPal and Square surpassed Bank of America and Goldman Sachs in 2020
“Last year, you probably know this, but you know, you've heard some of these stats, like PayPal became more valuable than Bank of America and Square became more valuable than Goldman.”
Disclosure
Most Ribbit-backed founders invest their own money into Ribbit Capital's funds
“A significant majority of the founders, we've backed our investors in Ribbit, which means a lot to us.”
Disclosure
Ribbit Capital re-underwrote its Robinhood investment seven times from Series A
“We'd re-underwritten and invested in the business, I think, seven times, like from the A to the G.”
What-if
Shalek: Ribbit Capital should have concentrated capital even more into top winners
“We could have been even more concentrated in the companies that we really believed in. We've done plenty of doubling down on our winners, but I would try to do it even more.”
Disclosure
Shalek: Ribbit Capital made early non-consensus bets on Bitcoin and Coinbase
“Like how it felt when we first invested in Bitcoin and Coinbase. And most people just had no idea what we're talking about.”
