The Wisdom Wall

“I'm going to get, I, I believe that most companies, you know, and I have a chapter in Eli Gill's high growth handbook on the topic in a, in a fairly lengthy core answer as well on, I believe most companies are better Off going public early period.”

“If you have a monopoly, for example, Google has this 20%, you know, side project bullshit where they used to. If you have a monopoly business with 99% gross margins or 90% margins, maybe letting your employees waste time once in a while maybe isn't catastrophic. Most of us do not run pure monopoly businesses with 90%…”

“The skill set required to invest at seed is utterly different, different and probably completely incompatible with the idea of being a good growth or public market investor. The reason why is at the end of the day, Seed companies have no financial metrics.”

“I think you can learn from failure what not to do again, and that's probably worth learning, like repeating the same mistakes makes no sense, but you can't learn how to be successful just by avoiding mistakes. The way you learn how to be successful is just You join a winning team. You create a winning culture. You have…”

“Some management lessons about avoiding general managers. We didn't really subscribe to the view that someone was a quote unquote good manager versus someone who was excellent in a particular discipline. And I think there's a lot of truth to that.”

“when at a seed round or a series A round, when you're walking away at price, it is a bit of lack of conviction, and you really should be looking at the mirror and say, why don't I have conviction? Because if you call, if you make the right call at seed, you're going to wind up in a pretty good place if that company is…”

“you're probably better off not reserving, and then making ad hoc decisions, uh, based upon the quality of that particular opportunity, which includes who's the investor, what's the traction of the company, what do we believe about the founder, what have we learned about the founder's abilities and traits, and then…”

“So I don't believe that IPA windows really close or open. I think just the criteria for success is different in that, you know, what the bar is on, let's say revenue or what the bar is on your unit economics.”

“I think you definitely do past X thousand employees see some regression to the mean, and the art is constructing some accumulating advantages, let's say a network effect before that happens, because the momentum of a network effect can offset some of the slippage in like quality.”

“If you're world-class, you're right, 40% of the time. And I define venture as heat stage investing, series A investing. 40%, Hall of Fame, Ted Williams, tech category. So, my definition, 40% right is going to lead to 60% not being right.”

“projecting who's likely to be a great investor is even harder than figuring out who's going to be a world-class founder.”

“So, I actually think within 12 months, 90%, 99% of the time, you know whether you've made a good investment, even if the external world doesn't know.”

“The problem for younger VCs over the last three or four, maybe even five years, is with everything inflated, most of that inflation is paper, not real. So unless you were also savvy enough to sell, those are fake returns. Depends on whether you distribute it.”

“I think you do need to think through the market comps. So I think one of the mistakes people have been making over the last shoot, three years is let's say if Shopify is trading at one hundred sixty billion, let's say, then the upside case for things that could be Shopify feels like a hundred billion. With Shopify…”

“Like every time you get your money back as a VC, it means you made a mistake in some ways.”

“in venture it's really tricky because actually in some ways you should rationally allocate your time to your best performing companies. It turned, if you're not careful though, the worst performing companies will, it will require the most of your time. And while that might help save a few and be really helpful to…”

“The price, the price in value, the price in valuation just doesn't matter in traditional ventures, even series A.”

“I've always had the hypothesis that, in fact, Opendoor would do better in a bad real estate market, a down market, a depreciating market, than an appreciating market. If you think about it, we basically provide liquidity. Typically, people who want liquidity crave liquidity in a depreciating market, and really don't…”

“I don't really believe cash is a moat generally across technology companies. I think cash follows progress, not really predicates it.”

“when the, when the individual's, uh, propensity to grow falls below the company's growth rate, I think you need to make a change.”

“I've been doing investing now professionally for four years, and at some point you start losing touch with the skills you used to have as a manager, as an executive, as a leader.”

“And I think if the CEO doesn't have first rate marketing instincts, you kind of never get there.”

“Usually you're dealing with a ratio of, you know, 70% internal promotions, and 30%, you're selectively adding new capabilities, so you're always playing around with some ratio. I don't think a hundred percent works, but I also think if you're below fifty-fifty, then you're irresponsible in a different way.”

“you actually want to be inconsistent on this, whether you're like quote unquote micromanaging or you're giving a lot of rope because it depends on the task relevant maturity of the person and the project and the consequences to the business.”

“I think generally you start with product is a much better formula, and it evolves into the platform.”

“At series B, you can pick a good company and invest in it, but you pay the wrong price. The risk reward is totally out of the, totally out of whack. You may not even make real money.”

“So, early stage companies, it's kind of like liquid concrete. It's very valuable. And then it solidifies. Post Series B, it's, it's totally solidified. And if you want to change something, you know, that's concrete, you have to mold this jackhammer, which is incredibly painful, expensive, noisy.”

“Every great company builds its own muscle. It's its own cult. It's your unique cult.”

“I think we need to, I don't think you should practice your pitch with mediocre investors, because really good investors are going to ask completely different questions.”

“So there are real, real trade-offs to company building. I would not recommend that.”

“So you can be very successful if you have kids. Um, you know, there's touring artists and music that have kids. Um, it requires you to be more disciplined, like about your time allocation. It tends to amplify things if you're really disciplined, maybe even do better with kids.”

“in technology, the opportunity cost in your twenties is very high. If you look at a lot of people who have been most successful, the foundations of their career are in their twenties.”

“almost every trait That's important. You develop early in your life, and there's evidence of it. So like work ethic, intensity, resilience, resourcefulness, it shows up very, very early.”

“Every company that's successful is like a cult and every cult that works is unique. And so if you just take general feedback and apply it to a unique situation, it can often be, you know, bad, like really bad.”

“Like, nothing that works at Apple would work at Google. Like, everything Google does is completely antithesis of Apple, and so that's why you have to have, like, a philosophy that accommodates successful examples, and then you apply that philosophy to what you're trying to do.”

“I think you can build an open source company predicated on open source software in a distributor way and distribute away because you have thousands of contributors or hundreds of contributors all around the globe to open source software and you're managing and corralling the contributors. It's a very special exception”

“Whereas like an executive, I always know in 30 days whether they're really going to work.”

“any early stage investor, unless they have running a billion dollar plus fund, Has to depend on future financings. Almost no company you or I will ever finance will be profitable on the first tranche of investment.”

“most of what I've been successful at are really seed and series A investments, in which case the public comp rules don't really matter, and I don't pay too much attention to them.”

“but a three, four, five, ten million, even up to a ten million dollar check, a zero doesn't matter in the grand scheme of a very large fund anyway.”

“my asset test for success as a VC is do half of my friends who are VCs laugh at my investments.”

“And for CEO, that one skill alone Can propel a company. If you can assess people infallibly, that is, you know, the propellant for many, many, many companies.”

“when you're going from one city to two cities, There is no algorithm behind this stuff. I mean, because by definition, you don't have data to tune what cities are most attractive.”

“And maybe it makes you a little bit too cautious sometimes because you remember what can go wrong and maybe the people who do the best try to forget that.”

“when an executive is really performing, he or she is about six months ahead of the curve in terms of their plans, their initiatives, their thinking. When they're barely hanging on, they're delivering just in time, and obviously if they're not delivering, you clearly need to make a change right away.”

“Yeah, I'm not a big fan of the term sustained growth. I think you should take growth right away. When you have product market fit, you want to take advantage of that and, and really capture the value as much and as fast as you can. It's a very, uh, tumultuous world. Things change very fast. I don't think you should…”

“I don't think you can do the just focus on your winners strategy. I think that causes real problems for you in the future as an investor, because by definition, the number of like non super successful companies you're going to invest in is greater than the number of successful companies. So I don't think that, that,…”

“if you spend too much time with other VCs, you start thinking like other VCs. And then you're going to have the same returns as other VCs, which is not what your goal is.”

“You know when you're editing or when you're actually writing, and you want to be editing people's work as the CEO. You don't want to be writing, and if you feel like you're using a lot of red lines consistently in the same area of a company, that's a really bad signal, and if you're simplifying, that could be a good…”

“what worked historically sometimes often doesn't work when you multiply the number of people by three, four or five, and it definitely doesn't work when you multiply the number of people by 10.”

“six months is about where you want someone thinking ahead because not every lever can be tuned in a week. Most can't. Not every lever can be even tuned in a month. So if you think six months ahead though, if you're really consistently six months ahead, most levers can be manipulated within six months. You land where…”

“ultimately CEO is ultimately responsible for everything. There's no excuses. So you can't ever abdicate. There's no such thing as like, I let this person do X, but I'm not responsible for the results when you're CEO.”

“A lot of company building is you want to tap into a vein. Like inertia is not your friend. When you start a company, Everything. Time's not your friend. The world doesn't care about you. You have to invert, literally invert inertia. So you have to create momentum, like literally the physical definition of momentum.”

“I think you can sort of pseudo hack your way into momentum. You can't scale it forever. If you're really hacking it, you're going to have to make the train tracks real, and you're going to have to make the engine that propels things pretty real at some point.”

“I've seen examples where people start with PR. Doesn't usually work, but once in a while, you can get a spark, and then if you see the spark, then you can figure out how to do it more scalably.”

“It'd be like a topic in itself, but actually, so whereas most wrong as an executive would be on hires, like, you know, one bad hire, just one. Can really set back an organization and undermine the momentum pretty severely.”

“Actually, as an executive, when you know certain content areas, subject matters, and, like, you have some ability in that craft, it's a hell of a lot easier to have a direct report there, because you're diving in really quickly to what's key. When you have to manage functions you don't really know that well yourself,…”

“If I want to do something that's very not standard or very controversial or not expected, I'm kind of burning and consuming some social capital. Now, if I make the right call that That gets paid back with interest, and you know, the next time I want to make a cultural original decision, it's actually even easier.”

“you cannot be an institutional investor in a multistage fund, constantly joining boards at Seed, so you have to be very judicious, so the feedback wasn't wrong, it was just wrong as applied to that company.”

“And those step function ones, if you slightly miss and your valuation entry price is too high, that company's dead, and that's a real problem.”

“it's like playing poker, and every round is like a card you're being dealt, and there's different informational content, and there's a different price point for that round, so what's the information you get from that new card, and then what's the price?”

“And so if I want to pay, you know, pay an appropriate price, there's no way that go head to head with the top two or three other investors at series A that you're going to have a hundred percent win rate, period.”

“I think the, the guidance I learned, and I don't know this is as rigorous as many things, but is roughly a good portfolio for a fund? Should be about 50, like that. So 50 is the right, 30 to 50.”

“As a board member, one of the best ways is to ask things in terms of questions, not in terms of answers. So you probe by questions, because then you're never leading. Um, you may be leading a little bit, but you're never prescribing, and it's a very big difference, so you try to do that.”

“It's like not possible in like C to literally meet every company, whereas the growth people can meet every company that's ready for a growth round.”

“eventually all strategies and venture people learn that they're effective and Can reverse engineer them, but you may have a five or 10 year window before that's the case.”

“You don't just go to the field and practice all day, 24 seven. You might study film, and like, you might go home and spend four hours watching video of your opponent, and that makes you more successful. So your body is recovering, your, like, your brain is training, but you're spending every incremental moment watching…”

“Almost every other CEO I know, including ones who've been incredibly successful, probably procrastinates on that conversation a little too long.”

“You know, one metaphor I like to use for this is like, imagine you're playing in a, uh, like football, let's say in America, you win the Superbowl. But your own, you have to go back preseason, start all over in training camp, and your record's zero and zero again, and you have to reorient everything. So you can think…”

“culture is like concrete and in liquid form. Concrete's really valuable, but once it solidifies, it takes like a jackhammer, which is incredibly disruptive, painful, expensive, to break.”

“There's usually two or three things that matter, and when you talk to a really good investor, it's so consistent how they dial into the same two or three things.”

“Is that if you're going to play the game of high-priced valuation entry, you also need to be good at exiting trades.”

“the most important thing you can do is agree upon with a founder what the best destination is. Meaning given what we know about the company, founder team metrics, product market fit, where's the best place this company can go? What's the probabilities of getting there? And then I'd ask the question, okay, let's agree…”

“The combination of aging in venture plus complacency is a really bad, lethal product. Uh, uh, combination.”

“In addition, we do use debt and debt is the oxygen for businesses like Affirm. It's the oxygen for companies like Opendoor.”

“And so we could buy a cohort of call it 20, 25 homes. And you can get some statistical validity out of that size cohort.”

“I've always prioritized eight hours sleep in my life. I think it's the most important sort of decision. You can make in terms of health, happiness, professional success.”

“I think there was so much hype and so much interest in technology and internet innovation that, and so many companies were being funded that the companies were desperate for talent. So they were willing to hire like people like me who might've had some skills, but certainly didn't know anything about business or…”

“you really do need people to focus on about one thing. If you want breakthrough ideas, um, and tackling that breakthrough idea constantly, consistently, and not allowing them to get distracted with other initiatives.”

“I don't think it's productive to have an opinion on everything. I think deciding where you have a competitive advantage based upon your experiences and skills and have a specific and unique insight where it's worth bringing to bear that skill to a Is a lot of the art.”