Sandy Kory: The Founder Obsessed Investor Behind BillionToOne, BaseTen & Palantir

What makes a great founder?

Sandy Kory has spent decades trying to answer that question. As the founder of Horizon, he's backed companies like Palantir, BillionToOne, Canva, BaseTen, and SendCutSend long before they became breakout successes.

In this episode, Sandy shares the unconventional framework he uses to identify exceptional founders, why he ignores most pitch decks, why talent density matters more than almost anything else, and how he developed conviction in companies years before the market recognized them.

KEY HIGHLIGHTS
-Why Sandy invested in Palantir before the company had a clear business model
-The founder traits he looks for before reviewing a pitch deck
-How he discovered BillionToOne at a $4 million valuation
-Why talent density is the most important metric in a startup
-Missionary vs. mercenary founders
-The role of intellectual honesty in building great companies
-How Sandy evaluates founders in the first 20–60 minutes
-Why he believes early-stage investing remains highly inefficient
-The SendCutSend story and backing an overlooked manufacturing company
-How AI may change venture capital—and what won't change

TIMESTAMPS
00:00 Introduction
08:46 The Palantir Investment Story
23:22 Finding BillionToOne Early
36:00 Sandy's Founder Evaluation Framework
47:07 Missionaries vs. Mercenaries
53:18 Hiring, Talent Density & Red Flags
01:09:25 AI, Investing & The Future
01:19:29 The SendCutSend Story
01:34:03 Advice for Founders & Closing Thoughts


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Follow Sandy: https://www.linkedin.com/in/sandykory/

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DISCLAIMER
This podcast is strictly informational and educational and is not investment advice or a solicitation to buy or sell any tokens or securities or to make any financial decisions. Do not trade or invest in any project, tokens, or securities based upon this podcast episode. The host and members at Delphi Ventures may personally own tokens or art that are mentioned on the podcast. Our current show features paid sponsorships which may be featured at the start, middle, and/or the end of the episode. These sponsorships are for informational purposes only and are not a solicitation to use any product, service or token.

Transcript

SPEAKER_00 0:00

I hadn't been everywhere in the world, but it did seem like Silicon Valley had a pretty amazing density of talent. And so it's like, oh, this might be the smartest, most ambitious group of people in the world. Did you know what Palantir was doing? A little bit, but they couldn't even describe it. Yeah, I remember having coffee with him in like 2008 and explained to him the definition of revenue. You know, like no one there knew the definition of revenue. I mean, ironically it didn't matter to the business. Like they were making great progress. It was like, you know, revenue has a specific, you know, technical meaning. Like someone at the company should know this.

SPEAKER_01 0:30

You've been early to an incredible amount of names to the point where it's definitely not luck.

SPEAKER_00 0:36

Most of the conversations with investors are focusing on like that. So you're not asking about the product at all. No, I'm I mean I'm like 90% of the conversation is going to be on like the things you've done before the startup. There's a lot of contrarian things here you're saying. Sometimes founders are really like annoyed by it. They want to show me the slides. Sure, everyone looks at the slides. Send me the slides after the words, like sure, I want to look at that. So yeah, I think there's like more alpha, you know, the earlier shades you go, and I think there is more room for legitimately different approaches.

SPEAKER_01 1:06

Thanks for joining me today. First in-person like podcast for the Delphi show, and you're the first guest. So excited. I'm honored. Thank you. Yeah, for sure. Well, Sandy, um, my colleague Rawson introduced me to you, uh and he said, you have to talk to the CC, he's brilliant. And I said, okay. I emailed you, you were gracious with your time. We spoke, and I'm like, damn, I gotta get uh a podcast episode with him. So so thank you for being here. Um maybe just to give a little bit about you, I'll give I'll give a brief intro on you. You're you're a VC and you're the founder of Horizon, pre-seed and seed stage venture fund, and you've been early to like an incredible amount of names to the point where it's definitely not luck. Um as we were joking before. I mean, you've been early to Billion to One, Palantir, Canva, Base 10, said cutsend, and just a laundry list of incredible names. So I'm really happy for you to be here. Uh, why don't you give us a bit of your background and and uh about yourself? Well, thanks again for having me.

SPEAKER_00 2:07

Um well, so uh I guess my my background, where you know, where to begin. Um I uh you know ended up graduating from uh Stanford, you know, 20, 25 years ago. And uh that's when I first got exposed to venture capital. Uh and um, you know, I was really fascinated with tech and entrepreneurship. Didn't really take to programming. Um venture capital seemed like this thing that the gods on Mount Olympus were doing, and I would never get a shot, never get called up. Um, but uh it was it definitely kind of made an impression on my mind. And and even going back to you know, when I was a kid, I was, you know, I loved numbers and like statistics, baseball cards, and then I learned a little bit about investing in the stock market when I was, I don't know, 10, 12 years old. I thought all that stuff was really fascinating. But then uh, you know, when I was in Palo Alto, that was really amazing to kind of see what tech entrepreneurship could could do and to see the role of of like VC. But yeah, that was totally not open to me. Uh, so I decided to um, you know, basically try to go out and make money and uh, you know, no one could stop me from angel investing. And so I kind of uh kind of stumbled into investment banking. Uh I didn't really want to do Wall Street or anything like that, but I there was a kind of like a startup boutique M ⁇ A firm um in the Bay Area that I joined. And uh they found a niche advising bootstrapped technology companies on mergers and acquisitions. And the job actually ended up being very sales heavy, which was kind of funny because I never really thought of myself as a salesperson, but but I did pretty well and so made enough money to uh you know fund the uh you know the angel investing hobby. And um, so I I worked for a few boutique MA firms in the Bay Area. Um in 2009, uh I uh made uh an angel investment in Palantir. Um in 2010, I got let go uh from my uh in the position I had and uh kind of had no choice but to start my own MA firm. Um so in 2010, I kind of launched along with my partner uh Mike, who's also my partner with uh the venture fund. Um, you know, so we launched the MA firm and uh it was a little slow going in the beginning. I had to raid the 401k to pay rent. Um but then by 2012, it was a good cash flow business, and so then it really kind of funded my my angel investing uh habit.

SPEAKER_01 4:23

That's a long app, though, two years of sounds like of no real income.

SPEAKER_00 4:27

Yeah, yeah, it's funny. I mean, I I I've taken a lot of like personal financial risk. Um, you know, I wouldn't like advise people to do that, but I always felt comfortable. I always felt like I could make money. And so when I was investing in uh Palantir, it was like it was a I don't know, half of my you know net worth at the time. It was a it was a laugh. But I kind of thought about it, it was just just a silly rationalization, I thought about it like NPV. It was like, I think I'm gonna make money if I need to. So I didn't mind, you know, putting, you know, significant, you know, uh dollars into Palantir. And so so yeah, so I was, you know, uh kind of we were we were getting the MA from off the ground and it was pretty lean, but I kind of felt like I'd be able to make money. Um, but then I had this fascination with with investing and and like honestly, like this like kind of crazy kind of competitive drive that I, you know, kind of repressed a little bit. Um, but just thinking, you know, I'm gonna see if I can make myself into a great venture investor. Like, no one's gonna hire me. Fine. That's what you always wanted to do. I'm just gonna, yeah, I'm just gonna try to do this, see if I can kind of figure it out. And uh, you know, kind of, I mean, it's like, you know, like when I was a kid, um, like I taught myself how to ride a bike. Um, and uh like we had a like a driveway that had a hill, and um, I basically would go to the top of the hill and there's bushes on the bottom of the hill, and I would get on the bike and I would just plowed to the bushes, and and so I had a you know, high pain tolerance, and I didn't mind taking a few risks, probably got some brain damage from that.

SPEAKER_01 5:56

So, can we linger there for a minute? Like it it there that's a lot of like like core items in such a short amount of time. Like investing in Fallentier, getting let go, starting a company are all like three really big decisions. Is that like within a month? Is that within a year?

SPEAKER_00 6:13

Like, uh yeah. I mean, it was probably within 15 months, 16 months.

unknown 6:18

Yeah.

SPEAKER_01 6:19

And throughout this episode, I'm gonna try and pull out like how you look at founders. And when we were talked before the show, it sounded to me like diligencing Palantir and like making this decision was like one of your initial forays into refining your founderlands, right? Like it was the start of it. So walk us through like how did you get so convicted to put half of your money into Palantir at that time?

SPEAKER_00 6:45

Yeah. I mean, it it was it was like I mean, I had this uh this deep interest in angel investing in venture capital, but it was it was as much like just a wealth management decision because it was it was really like you know the the worst of the financial crisis, like March, April 2009, and banks were failing. Um, and so you know, I mean, in hindsight, it it was the bottom of the stock market, and you could have put money to the stock market, you were you could have bought real estate, you know, in San Francisco, you would have done well. Um, but for me, I I was you know really unsure what to do with with uh the dollars I had in the bank account. And so uh, you know, when I was I did a graduate program uh at Stanford and I uh got to be good friends with a guy named Sean Sankar, who's now the CTO of Palantir, and I spent a lot of time with him. Um, you know, we happened to have a bunch of classes together and you know, work out together. And uh, I mean, he was just amazing. And I would say that, you know, I was in a pretty big graduate program. You know, if we could have voted, you know, who's most likely to succeed, uh, Sean would have won. Uh he was just amazing. Um, and so you know, he he went to another startup after uh university for a few years, but then he joined Palantir in I think 2007 as employee number 13. And I remember just vividly him raving to me about how talented these people were. He talked about like Joe, Joe Lonsdale, Stefan, Stephen Cohen, some of the founders, and and this is so this is like you know, your buddies with you know LeBron James, and he's saying, Oh, these guys are so good at basketball. It's like, what? So it kind of blew my mind. And so then it was a couple years later, um, uh, I had the chance to invest in this like kind of bridge round uh a couple years later. So yeah, he joined in 2007, and and I wasn't even thinking about Angel investing, you know, in Palantir at that time. But in the in you know, Sham you know pinged me in, you know, in like whatever March of 2009 saying, hey, we're doing like a little bridge round. They didn't need the money, but the world might be ending. And I think Peter Thiel was actually still quite bearish about everything. Um so uh he is again with moving to Argentina, but yeah, yeah. Uh well yeah, he's usually usually right. Um but uh so they let like cats and dogs in, like me. And uh and and uh so yeah, so I made that investment.

SPEAKER_01 8:55

So it so it sounds like for me looking at your story from the outside, you had somebody who you ranked really highly, and this person comes to you and says, I rank all of these people highly.

SPEAKER_00 9:08

Yeah, it was like a statistical, you know, like it was an inference, and it was like, like, what are the chances, you know, that that these people are not like the most ridiculously talented people in Silicon Valley, or at least they must be this must be one of the most talented groups, and they also were incredibly dedicated, had this incredible mission. And and you know, I hadn't been everywhere in the world, but it did seem like Silicon Valley had a pretty amazing density of talent. And so it's like, oh, this this might be the smartest, most ambitious group of people in the world. And the you know, financial crisis shit is crazy.

SPEAKER_01 9:41

I I I don't know if all my new listeners understand how bad the financial crisis was, but it it was terrible. It was crazy, yeah. It really was crazy. Like to I I don't know how to describe it. Like the world was literally failing, everyone thought it was over, and you're over here writing checks.

SPEAKER_00 9:55

Yeah. That's well, it's it's great. Yeah, and so it's like it it turned out that was the bottom.

SPEAKER_01 10:00

But uh Did you know what Palantir was doing? Like, were you bullish that a little bit, but they couldn't even describe it.

SPEAKER_00 10:08

Their business was was kind of a mess. I mean, I I remember like I was you know friends with Joe Lonsdale, who was just like amazing. I remember having coffee with him in like 2008 and uh explained to him the definition of revenue. You know, like no one there knew the definition of revenue. I mean, ironically, it didn't matter to the business, like they were making great progress. It was like, you know, revenue has a specific, you know, technical meaning. Like someone at the company should know this. Uh and you know, and so they've always done kind of interesting, you know, creative, you know, uh, you know, contracting arrangements. Um, it's worked out. Right. And and like, and so I take a lot from that. You know, it's like, yeah, you know, you know, knowing gap financials, okay. If you're going public, someone should know. But but much more important is like talent density, ambition. And so everyone, you know, like it they pretty much never raise money from top-tier VCs. Now, okay, Founders Fund turned out to be a top-tier VC, but you know, the the the tier ones at the time, you know, all thought Palantir, you know, it was a consulting business. Uh it's 20 years ago almost. And sell, you know, selling to the government. What a shitty, what a shitty business. It's no one wants to sell to the government. Um, and it's consulting. You know, what kind of business is that? Uh and so they were so radically contrarian in like so many different ways. Now, I wouldn't say every single way was, you know, value creating, but the culture of extreme first principle thinking um and and the and true mission orientation, um, that is something that is easy to you know kind of pretend, but they really they really had that. They really thought they were doing important things. So, yeah, they couldn't really explain the business model that well. They could kind of explain it because they were still working it out.

SPEAKER_01 11:42

How long did it take for you to make make the decision? He your buddy from college texts you, emails you, you get the pitch. You what was the turnaround time?

SPEAKER_00 11:51

I think I think I said something like, uh, you know, is there any information you can share? And and I'm pretty sure Joe sent this like long email. I'm pretty sure like he was sharing with other people. Um and so uh yeah, it was a pretty quick decision. Um it was a pretty quick decision.

SPEAKER_01 12:06

So we're gonna we're gonna revisit this. Like your founder once throughout the episode. This is a great foundation. But my last question on the Palantir side, why do you think your friend knew you would be receptive to angel investing? Like, why did he reach out to you? You're not running a fund at the time. The MA business, I don't think, has started yet. You're sold a job. Like, how did he know that you were somebody that would understand this and pull the trigger?

SPEAKER_00 12:26

Probably the biggest thing was Sham was doing me a favor, you know, and he thought that I was like a smart person who could like understand opportunity. And I mean, they had such incredible belief in the value of the company that like I really think Shom was just coming from a place of like, hey, you know, you're a friend, and we've, you know, we're good, we were good friends. You know, we both did favors for each other. I I did some consulting at the company uh or you know, even before that. And so I knew a bunch of people there. And so it was like, oh, well, Sandy's a good guy. Like, let's let's live in then on this uh this special opportunity. Sandy, I need better friends.

SPEAKER_01 13:00

I need this class of friends.

SPEAKER_00 13:02

Well, I'm I'm very fortunate. Yeah, so I'm very fortunate.

SPEAKER_01 13:05

So you did the Palantir investment, uh, got let go, started doing MA. How do you go from MA to really refining this angel investing process? Because we're not at Horizon your fund yet. So what happens between uh starting your MA business and horizon? Like what's in there?

SPEAKER_00 13:24

Yeah, I mean, it was kind of like the you know, the I want I want to have cash flow. I kind of need to have cash flow to pay the rent. Like that was the MA business. And, you know, I would say the way I, you know, I I wasn't the most successful person in MA, but we were pretty successful. Um, you know, I mean, I I you know, I I, you know, me and my partner Mike, I mean, we limited ourselves because we were intellectually honest. Um, so you know, you you you you know, you have uh limitations in the industry when you're when you're you know scrupulous about certain things that we were scrupulous about. But but we did pretty well. And uh in my angle, you know, my um you know, my my kind of sales pitch was that I was really good at understanding these tech businesses. So these bootstrapper tech businesses. And the funny thing about bootstrapper tech businesses is like, you know, the more profitable the business is, the the less likely you know the founders are to know the numbers. You know, if you have a 50% profit business, who fucking cares what the EBITDA margin is, right? And so some outside you know VCs or bankers would look at that and be like, oh God, this what kind of founder is this guy? He doesn't even know his Ebid DA margins. But I kind of realized, oh, no, no, no, this is a very good value, like you don't, you know, who cares? Um, so so I've really enjoyed being very analytical about these, these, uh, these boost rep tech businesses and uh and and trying to be helpful and and give good advice. And um, so I I had like an investor mindset. And so it was, it wasn't like a, oh, I'm trying to invest in you know the next palantier, but I was, I think I was kind of honing my my uh you know, kind of investing in analytical, you know, kind of understanding tech businesses, understanding of the 82 different ways, you know, founders can kind of BS you um and uh and just you know kind of figuring out some of those kind of you know personas and archetypes. But then yeah, then on the side, you know, once I had some money, I was really interested in angel investing. And so that was like my nights and weekends uh passion. And so I was but I was kind of leading a double life. I mean, I was advising these bootstrappers that were in places like Saskatchewan and Ontario and Texas and Florida. Um uh so that was like the day job. And then nights and weekends, I was, you know, talking to like YC startups and and you know, just kind of shaking the tree, reaching out, trying to find interesting companies like all over the place, like Australia, Africa. Um, and um it was great. I mean, it's funny because a lot of times the founders, you know, that I, you know, I'd have a coffee on on a Saturday with some, you know, founder raising a seed round and they hear I'm an MA guy and they're like, oh, you want to sell me? I'm like, no, I'm gonna say I don't. Like it's hard, and they don't no one believed me, but they're like, I don't, you know, I sorry, I threw the other hat on. Yeah, I mean, Palantir, like, I don't want to sell Palantir. I mean, they would never hire me. They're never gonna sell. Canada's never gonna sell. And so so I did end up giving a lot of kind of free advice to struggling startups that I invested in. And so that was fine. I mean, I try to kind of pay it forward.

SPEAKER_01 15:59

The the crazy thing though is like it's like for most people, it's so hard to to context switch. Like, just, I mean, you have to like really, I mean, the founders you look for, for example, like you need to really focus on one thing, get those exponential returns, the the five nines, the nights and weekends, thinking about in the shower. Here you are doing banking, also angel investing. And the craziest thing I think about this story about you is that this is such a deep and valuable skill set, like banking, understanding the financials, being able to structure sales, like, but now as a VC, like you don't have to use that anymore at all, which is crazy to me. Like, do you ever feel like, hey, maybe I want to dig into the numbers?

SPEAKER_00 16:39

Or is it well, no, and it's funny, like I I realized because when I was doing MA, I would run into VCs in the context of like MA, their companies, and I realized most VCs don't know jack about MA. Uh but it's it's because like you don't need to know. Because, you know, it's like if you invent, like I remember reading about the story of how WhatsApp sold to Facebook. I mean, it was crazy. You know, like Zuckerberg like had a meeting like on a Friday, and then they met on a Saturday, and Zuckerberg is like, he tells his corp dev team, like, we're gonna pay $10 billion, deal closes on Monday, right? And some VC is like, oh, I just learned a lot about MA. No, you didn't. This is like a one-off unicorn. I mean, great job, VC, great job. But uh, so I just learned that yeah, actually, like the MA knowledge is, I mean, it's interesting and and I can add value. Like, you know, we've had two, you know, two portfolio companies in our fund one that have sold with like nice exits. Um, and in both cases, I would say I I was able to go above and beyond as a VC to help out. Um, and and I think the founders appreciate that. Um and and there's a little bit of benefit to you know the the investors, but but they're you know small exits and and like the big wins in the portfolio will be companies like Palantir and Canva, where it's like I don't I don't care about anything I know about MA. So yeah, it's funny. But I I contact switching, I think, has always been, I don't know, kind of easy for me. Like I'm not I never took to programming, uh, you know, I even though I was interested in tech and entrepreneurship, but you know, maybe them like ADHD. I could never, you know, kind of spend, you know, lock myself in a room for 12 hours and you know, do do coding. Like for me, just bouncing around from from you know, five minutes to this, 10 minutes this, that contact switching was always like a lot more tactical.

SPEAKER_01 18:14

I I definitely have a touch of ADHD and I I think it's such a valuable skill. Just think they'll hate to jump around, go super deep. Um, but but maybe to linger, like it I feel like if you build up such a unique and deep skill set, like for you on the banking side, I feel like it's just very hard to mentally say, I'm gonna throw that all away. Like, did you actively make that decision or was it a shift over time? Like, because you're successful at MA, you want to do angel investing, and eventually you go on to start the fund. But at some point you have to say, hey, I'm gonna get rid of what I've done forever.

SPEAKER_00 18:48

Yeah, it's interesting. Uh I mean, for a while I was happy doing MA and then doing, you know, angel investing on the side. Um, but I did deep down, you know, have a greater passion for investing. And uh I thought about doing a fund um you know, probably for a few years before I did it. I had friends who uh who had funds and I saw that it was a real fundraising was a real slog, you know, and you, you know, emerging managers can you know generally kind of trade, you know, sod stories on the you know, so I didn't want to do that. Like in my MA business, I did a lot of selling. And I, you know, like when I started out, I was doing a lot of cold calls and and it was fine. But I, you know, I for whatever reason, I just thought, if I'm gonna do a if if I'm ever gonna try to do with my own fund, um, I don't want to do a lot of selling. I I don't, you know, I mean for me, it was it's like, you know, if I'm selling your business, I don't mind pounding on doors. If I believe that your business is violent, I don't mind telling everyone like this is, but I just didn't want to be the guy pounding on doors saying, give me money. I just that just some people do that, but I didn't want to do that. I wanted it to be kind of like a downhill. It's a different sales experience. Yeah. So so what happened was in in 2021, um, I mean, hey, that was a great year in hindsight. You know, I I learned, you know, market great markets make us all uh think we're you know smarter and better looking than we really are. So I was very smart, very good looking in 2021. Um, and you know, I had I'd been bringing people into some of the deals that I did over the years. I brought a couple of people into Canva, for example. Um uh like my business partner, my my father, and a friend. So that worked out great. I mean, my my business partner in MA, I I didn't want him to be upset that I mean he was working 100-hour weeks on MA. I was working 100-hour weeks too, but a big chunk of that was Angel and Death. You want align the incentives? I wanted to make sure, yeah. So um, but so I started bringing people into the deals. And um, some of the a few of the ones I brought people in, you know, didn't work out, but net it's worked out. And and I brought people into billion to one, for example, like there was a ridge round between the A and the B. Um, and so that's that's been great. Um, and it I I didn't even do like an SPV, I just put together like a partnership. I was like, hey guys, I'm not gonna make any money on this, but I think this is a good deal. Like kind of like what Sean did to me for for Palantir. Like he didn't say, oh, don't do an SPV. He was just trying to be uh friendly. So I brought people into deals, and then in 2021, we did some SPVs. Um we had we had two SPVs actually in a client um that we had at a bootstrap technology company, and we had it was kind of a special situation, we had high conviction, and and it, you know, six months later, you know, we returned like one and a half to X capital, and there's still some role for it. So so 2021, um, you know, it was it was you know, we had some exits. Um, and so and we and I had kind of made people money over the years investing and then in MA. And so I thought late 2021, I thought now is the time. Do the fund. Do the fund. And so, and and so that everyone that I, you know, asked to invest in the fund, it was like MA clients. And it was like, hey, you know, you you trust me, right? I mean, if I if I sell your business, we have a high trust relationship. It's really hard raising a fund to establish the trust, right? Um so uh you don't know if you're right for a long time.

SPEAKER_02 21:47

Yeah.

SPEAKER_00 21:48

So I had this high trust, you know, kind of uh foundation, and and my that business partner mic helped a lot as well. So so like I kind of you know cringe because you know, uh I know fundraising can be such a grind for a lot of like Really good investors, but for us, for fund one, it really wasn't a grind. It was pretty downhill. Um, so we raised a uh, you know, and so so that was the, you know, I kind of thought, okay, now's the time to do a venture fund. Um, and and then I said, I'm just gonna leave the MA behind. And basically, initially with with my partner Mike, I was I was kind of like, hey, you know, I can I can help out on the side, um, but he's a self-sufficient guy and he he did he wasn't gonna need me. So it's his it's his business. So yeah, so I kind of left, you know, I left uh you know, almost all the cash flow, you know, for we had a little bit of a of a sharing, you know, for a couple of years, but but I kind of was at peace with saying I'm not gonna take any you know the MNA cash flow, I'm just gonna live on on the investing, and you know, we'll we'll see how that works out, but I'm I'm okay with it.

SPEAKER_01 22:44

G and so it's it's it's just a wild arc, right? Because you you're at Stanford and this is something you always want to do, and it took, I don't want, 15 years or yeah.

SPEAKER_00 22:54

I mean I get I mean probably 20 years from like, you know, so like I there's this one class we took that was taught by VCs, and it was basically yeah, 20 years later, you know, when it was like okay. So for the listeners, it's never too late. Yeah, yeah, that's right. I mean, like Ray Croc started at McDonald's when he was like 54, right? You know, I mean I'm 46, so I got I got eight years to to you know mess around before I really could get you know start it.

SPEAKER_01 23:15

So I wanna I wanna do a couple more like portfolio company examples, and then we could get into like your founder lines because I think these examples really demonstrate what you look for, how you found them, and things like that. Um you were the I think the earliest investor in billion to one at a four million dollar valuation, which is just nuts, because I think there are four billion now. Like that's an obscene return in a good way. Um let's walk through billion to one a little bit. How did you find that founder? Like, what did you think at the time? How did you end up pulling the trigger?

SPEAKER_00 23:47

Let's linger here for a little bit. Yeah, sure. And I would say the, you know, if I if I looked at the the most successful investments I've had, there's not like one way that I'd meet founders, it's a bunch of different ways, um, for better or for worse. So in that case, um Y Combinator briefly had a program called the YC Fellowship. Uh, and it was basically like it didn't even involve investing, but it was kind of, you know, there at the time some people were complaining that you know YC was kind of demanding too much traction. And so YC was kind of like, oh, we're gonna make a minor leagues, and you can be without traction, you can be in a YC fellowship, and we're not gonna give you anything, but earlier in the process. Yeah. Uh and so, and I think they thought maybe it could be like a feeder uh to YC. They canceled it after like a year because it it whatever. Um so they should have kept it. So yeah, they should have. TechCrunch had an article about YC fellowship and had like the six companies. And so I looked at the six companies and I think I reached out to three um that looked interesting. And so one of them was Blaine Toll1. And you know, I kind of had a a thought that wasn't an original idea, but just the intersection of of you know software and and bio, you know, that there seemed something interesting there. Like actually a couple years earlier, I had um, you know, talked to Benchling, and uh um I I took too long to pull the trigger and the round closed, but I I knew that was like a really exciting company. So, anyways, that was interesting to me. So I reached out to those guys and and they were you know happy to meet for coffee in San Francisco. And um uh yeah, I mean at the time there were three founders, one subsequently left, but they were all like just brilliant. Um they all were just just about to finish their PhDs. Um, you know, I I think all three of them were PhDs at Stanford, like undergrad, like the one went to Princeton and um one went to Rice. Um and uh they were just you know brilliant and there was just like a kind of a kinetic energy, like they were kind of raw and like no one would say they were good fundraisers, but they were very honest. And and you know, ironically, like I slept through biology in ninth grade. Uh and so I I didn't know anything about what they're doing. But I don't, you know, I I guess I have you know curiosity and I I like to ask questions and listen. And so I asked them like really basic questions and I was impressed at how they kind of explained everything that they were doing. And um, you know, I find that's uh that's a nice signal for a great founder. Like, yeah, being really smart helps, but there are some people who are really smart who just can't really explain things for whatever reason. And I think that's uh that could be a real negative because if you you know, if you're doing something highly technical, you need to build a big business, especially like in kind of healthcare, you need to be able to, you know, communicate effectively with a lot of different like levels of of you know background knowledge and such. So um that really made a big impression on me. Like they were really good at explaining this incredibly you know technical concept. Um, and then I felt like I kind of got it and I kind of understood. And they were clearly like not bullshitters, they were just not people who were gonna who are gonna be bullshitting. And so I was telling, okay, well. Uh and they're you know, so they were just super intellectually honest about the risks and things like that. But it seemed like, okay, well, these mousetraps are doing this, and this could be a better mousetrap. And these guys are just, you know, I mean, really uh brilliant and super energetic. And so maybe it was a pre-seed investment, but um, but yeah, it's like I wrote a I wrote a, you know, at the time for me, like a small check. Um, and then I kind of helped them, you know, informally over the next month as they're raising money. And I just really liked the way they were interacting. Uh, and so I I did like a you know, doubled that small check. Um, and then uh like a year later, they raised a little bit more money at the four million dollar valuation. And they, you know, they were like, hey, you know, we're gonna take a little bit of money at this valuation. You know, we like you. Would you like to, you know, so I kind of, you know, these were small numbers, but I kind of doubled down. And so with billion to one, it was the company that I I you know wrote the most checks in uh over time. I wish I said they have the bigger checks, but but but you know, all in, it it was, you know, they the company that I put the most money in as an angel. So that's nice.

SPEAKER_01 27:39

Not to not to like overly spend time just on metric, but so you were in before a four million dollar valuation.

SPEAKER_00 27:45

That's a four million dollar valuation. They raised money the same valuation a year later, uh just a small round. Um so they, you know, it's like they probably raised, you know, 300,000 in that first tranche, and then they probably raised another 300,000 like a year later.

SPEAKER_01 27:58

So I I want to just I wanna like just go back to that meeting, right? Like you're at this meeting, you meet these three founders, you you're not deep on bio, but you found them yourself, you're interested. They're really intellectually honest with you, they're explaining things well, but you like I'm trying to figure out like how you got the conviction there and then. Like what like I'm trying to like piece together and pull out like what it is exactly that impressed you.

SPEAKER_00 28:24

There's I can give you a few more details. I'll also say though that it's it's tempting to like you know be overly deterministic about it. Um, because I I did other investments in in 2016 uh that I was also excited about. This is the the best one. Um, but um yeah, I mean look, they were they were high achievers. Um and and like subsequently I actually learned a lot more. Like I've you know, I met you know people who went to school with these guys in like undergrad, and I heard these funny stories about how they were, you know, and you know, I I just looked, you know, like Ogazan, the CEO, was like the you know, top, you know, score in like the the you know that I think of the math and science exam in you know high school in Turkey. And like I don't think I asked him about that in the you know when I when I was first meeting him, but like I heard that subsequently. But um, like they had this story, so his father had a like a medical clinic um in you know his like the small city he grew up in, Turkey. And they had this story about like for for what they were doing, they needed like some blood samples. And so he um say this, uh, but basically he he kind of smuggled some blood samples from from the lab uh from his doctor's uh from his dad's practice uh into the US, you know, like in like a coat or suitcase or something like that. I mean, it's not the James Bondish. Yeah, not not the most critical thing, but but I mean, but these were people like these are like very like rule following people. Um, and so I could get a sense, like, but there was like this dedication, this determination. Um, and so there was this, you know, off the charts intelligence, this like dedication, determination. There were what seemed to be like really interesting insights into the into a market opportunity you know and technology. Also, the three founders, they were all um, you know, like very knowledgeable about you know biochemistry and the science, but also like very tech. So sometimes you'll find someone who's you know some PhD in in you know biology. Um I don't really know much about programming. So I really like the fact that all three of them were were like, you know, they seem you know extremely like versatile in terms of what they can do.

SPEAKER_01 30:21

You mentioned like briefly that one founder ended up leaving. Like, did that um change your your thesis or initial read? Or did that happen later? Or not really.

SPEAKER_00 30:31

So I mean it's funny, like with the building to one, I mean it like honestly, like I've never invested. I mean, I've invested in some great companies, but but I've never had a company that's like every single time um like has overachieved. And and they're like investor updates is is a topic that comes up with founders and VCs, and some founders will do them like monthly, and some won't do them at all. And building to one has always done them quarterly. They've done they've done them like very professionally um in terms of the style and the cadence, but they always overachieve. And so in the beginning, when I first invested, you know, they thought that the market opportunity was uh gonna be like in India and East Asia. They thought that regulatory in the US was gonna be harder. And so their initial plan was to target, you know, like beta thalassemia was like a genetic disease that is like, you know, relatively common in Asia, less common here. So they kind of thought they would they would be targeting uh that market. And so one of the founders um, you know, was Indian and had relationships in like India with like some hospitals and government, and so so what happened is maybe maybe it was like six months into the company, they they realized that they could actually go into the US earlier and that was a better market. And so then the third guy who was gonna be like the guy in India, like I think he wanted to go back to India, but it wasn't so so that was kind of so you know, yeah, in that case it was, and and they were always super transparent about everything. Um so there was no questions about like you know integrity or anything like that. Um, and it was actually like it was a it was kind of a function of like the opportunity being even greater because the it was like, oh, US, great. Yeah, better market, great, overachieving, great.

SPEAKER_01 32:04

And I kind of like brushed over this a little bit, but like what did what is uh Billy Twin doing and what were they doing when you invested? Is it the same story originally on the product side? Just more so for the listener.

SPEAKER_00 32:15

Yeah. Well, so they're they're you know, like they're you know, they're so they're they're public and and they're you know, right now about uh $100 million uh in revenue a quarter, um, so $400 million revenue run rate, you know, roughly, and uh yeah, 100% growth and they're actually quite profitable, which is very unusual for a for a diagnostics company. Um so maybe 90% of their revenue is um what they call NIPT, which is non-invasive prenatal testing. So basically it's blood tests for pregnant women. Um and kind of the cool science is just that uh like in the past, to do a blood test on to see if the baby, you know, the fetus has some, you know, a risk for genetic disease, you would need mom blood and dad blood. And it's like if mom has a gene and dad has a gene, oops, that's that's probably a risk, uh, you know, certain certain genes. Um, but actually what happens is there's there's uh you know the fetal DNA in the mom's blood. And so they can take mom blood and they can test for kind of the you know, fetal genetic risks. Um and so that's called NIPT. And so it's basically blood tests for for um pregnant women. Um and then 10% of their revenue growing faster, um, the bigger, probably bigger commercial opportunity is in like the the oncology or cancer mark in that's called liquid biopsy. It's kind of the same science, which is basically looking for a needle in a haystack or you know, billion to one, that's you know, looking for like one in a billion. Um and so, you know, if if uh you know after a cancer treatment, often you have to wait to see if it's going to come back. You take a little bit of tissue, you do a biopsy. So the idea with a liquid biopsy is like after you have a treatment for cancer, cancer is in remission, take a blood test to see if there's any like lingering pieces of cancer, which is uh gonna be like the there's like kind of mutant DNA of the of you know from the cancer, which is you know, it's kind of so basically what they're looking at, you know, their technology is it's like a chemical microscope. It's not a microscope, it's it's chemistry, but they effectively have like the most powerful microscope, you know, period. Um, and so they can look at with like a single molecule resolution um to and detect these like tiny bits of like mutant DNA, you know, like for with a mom, like I'm being facetious, but you know, the the fetus has different DNA, so you're looking for that DNA, and then if cancer, you know, sadly, you know, that it also has kind of mutant DNA.

SPEAKER_01 34:22

It sounds like a needle in a haystack because you're getting the baby's DNA from the mother, and then another needle in the haystack because you're looking for abnormalities in the baby.

SPEAKER_00 34:30

Yeah, yeah. And then the the like the genius of their of their approach is that like like the kind of traditional approaches are basically, you know, like using chemistry, but but amplifying. So like we have a little bit of blood, like let's kind of like magnify it, not with a magnifying glass, but but effectively, okay. But when you do that, and if you ever think about you know intense magnification, you get noise. You know, if you took like a penny and you put it in a you know in a in a microscope and you you blew it up, like there's it becomes kind of blurry, it's noisy, right? And so what they basically do is they have a really um you know like unique proprietary way of like putting some, you know, putting like a little bit of like DNA fragments in the sample that they know, uh, and then they like blow it up to like a million times resolution, but they you know, because they know you know what to expect based on like spiking the sample, um, then they can basically kind of take the noise out. Um, and so they can you know blow up something to like a million X resolution chemically um and and see it with with you know like perfect resolution. Um it's pretty amazing.

SPEAKER_01 35:33

It is it's yeah, it's it would sound so scientific back then, and it it worked out. So I I want to like not round out in close, but I want to round out these two examples and like kind of like figure out what your founder lens is. Most PCs will look at the project, they'll look at the TAM, they'll look at like what's hot this quarter, what's on YC's list, they'll look at um all these different factors to figure out where they think they should be investing and probably losing money. Um you have a very different approach in being hyper focused on the founders, right? Your your story with Palantir, your story with a billion to one like signifies that, but you have it's not like random, like you've refined this focus, you figured it out, and now it's like something a lot of VCs talk about, like we're hyper founder focused, but it's it's it feels like you've been doing this like the longest. Um like I don't know, like maybe I don't know where to start with this question, but like when did you like make the overt decision like I want to hyper focus on the founder? Or is it something that you kind of grew into? And and let's just talk about this.

SPEAKER_00 36:45

Yeah, sure. Well, okay, so uh I uh undergrad, I majored in psychology. So and I probably even before and then had interest in psychology. And so that that's not exactly founder focused, but I probably had more of a predilection for that direction. Like so I'm not a CS major, um, so I'm not, you know, like you know, hacking on the on the you know, on the project to, you know, and so with early stage venture, I think one thing that's fascinating is that there are different approaches that are that are successful. And so there's some super founder focused people who are successful, but there's also people who are super market focused. There's, you know, and there's there's some astrology, um, but I think there's persistently successful people who have different approaches. At later stages, I think it converges. And if so, if you're you know a growth stage investor or you're a pre-IPO investor, like you're all kind of doing the same thing. Uh okay, there's there's a few little things driven, but but it's you know, like don't the story's working. You're yeah, it's legible, right? But at the earliest stage, and so I think that there's more legible, uh sorry, there's more alpha for like what I want to do um, you know, as early as possible, where it's like most I mean, I guess, you know, I mean, my my my you know my ambition, this is a very flattering comparison, but it's a little bit like billion to one, you know, looking for the needle in the haystack, right? Where it's extremely hard to see. Like what billion to one is doing is very valuable because it's so freaking hard.

SPEAKER_01 38:00

So the early stage is ridiculously inefficient.

SPEAKER_00 38:03

What's that? The early stage is ridiculously inefficient. It's less efficient. I mean it's getting more efficient. And I think, you know, and so like there are some founders, you know, at the idea stage who are like kind of consensus, obvious founders. And um, and maybe I would invest in those. I would think I think that's a little less interesting. Now I wouldn't say they're guaranteed success. I'm just saying, you know, like Elon Musk is doing some startup today, you know, that's lots of people would say, oh, I should definitely invest, right? So and maybe that's from a pure, you know, alpha perspective, you should do that. But I think intellectually that's not so interesting.

SPEAKER_01 38:33

There will be another Elon Musk.

SPEAKER_00 38:35

Like probably hopefully, yeah, probably not. That's that's I don't know.

SPEAKER_01 38:38

Something maybe remotely close when we do that. Yeah.

SPEAKER_00 38:40

Uh and there's yeah, it's fascinating. Um so uh so yeah, I I think there's like more alpha, you know, the earlier stage you go, and I think there is more room for legitimately different approaches. And so it's like I think I have a, you know, potentially I have a lane um to be yeah, super founder focused. I'm not the only one, but I think that I have a you know set of experiences and and and you know, some theories in a track factor that gives me, you know, gives me conviction that I can do this properly. Um, but I haven't always been this. I mean, I would say that as an angel investor, I experimented with a lot of different approaches. I mean, I definitely, you know, at times would be focused on traction. Um, like, hey, oh, you're raising at a at a you know $5 million evaluation and you've got you know $500,000 in revenue, like count me in. Like I don't, I don't care, you know, and you can say, well, you know, hey, uh this founder, you know, has $500,000 of revenue. They haven't raised anything. Like, must be pretty good. It's validated. Yeah, yeah. And so you, I mean, so that, you know, I'm not ignoring the founder quality, but you can look at other signals more closely. You can say, oh, track, or you can just say, like, market, like, oh my God, this this founder has this insight um into this market opportunity. Like, oh, no, no one has made um, yeah, no one has made uh you know tablet-based sales automation software for uh for pharmaceutical sales refs. Oh, no one's done that before. Oh, that's a good idea. Oh, we founded Viva. Good idea. That was a good market. You know, I mean Salesforce was getting inbounds um from you know pharma companies with sales reps, um, and they wanted software on on tablets, on iPads in like you know, 2007 or something like that. And and Salesforce didn't want to make software for tablets, you know, and they were like, oh, let's have a platform. Uh hey, Viva, he's got some pharma leads. Uh and uh one thing led to another. And so that I mean great founders. No, it works. Like there was a market opportunity there and and that company, if you had just been you know market focused, uh it probably you would have done Viva and you would have done great.

SPEAKER_01 40:37

But for you though, you're you've figured out like hyper focusing on the founders is is the correct path for you. And and this is the lane you want to be in. And it's clearly it's clearly working, right? And it's clearly something that I think will continue to work unless someone like like uh backs into like what you're looking for from this episode and pitches you and then yeah, are you ever worried about that?

SPEAKER_00 40:59

Yeah, maybe I should be. I mean, I'm more worried about AI, just you know, so you you're you know, you can outdo this um by you know from some AI, you know. So that that to me seems like okay. Like I'm a good chess player, but AI is gonna be better than me one day, uh, or or it is better than me. So yeah, I guess the the way I talk to founders um, you know, in a first conversation is I try to go pretty deep on their backgrounds. It's it's kind of uh interesting. You know, you talk to a founder that's been working on a startup for, you know, it could be two months, it could even be a year or two. And I think most of the conversations with investors are focusing on like that. Like, tell me about the idea, tell me about the business model, tell me about what you did in the past. So you're not asking about the product at all. No, I'm I mean, I'm like 90% of the conversation is gonna be on like the things you've done before the startup.

SPEAKER_01 41:46

Okay, that's extremely different from what every RSVC is.

SPEAKER_00 41:50

Sometimes founders are really like annoyed by they want to show me the slides. I'm like sorry, you know everyone looks at the slides. I'm sure they're nice, but I don't really care that much, you know? So I mean send me the slides after the words, like sure, I want to look at that. Um and I you know I do care, you know, like I would say that you know, a founder might have some impressive um achievements and and and characteristics, but then in talking about the business that they've been working on for a month, if it like doesn't make any sense, I might pass. Now, I can think of examples where I pass and then they pivoted into like a better idea and they're doing great. So whereas like, you know, they the analysis of their life before the startup or before the idea was like, oh, this is a good founder, but then I'm like, that's a stupid idea, I'm not gonna invest. And then they they pivot. So I think there's a lot more signal in the life before the startup.

SPEAKER_01 42:37

Interesting. So what do you though, like it the the thing that I struggle with with it, and I agree with your approach, but the one thing that I struggle with when hearing about founder stories is if they're a founder, they most likely had a pretty hard upbringing. Right? They they fought, they got ahead, they've done these things, they've been successful, they haven't been successful. How do you gauge the relative uh hardness of their life and then their outcome?

SPEAKER_00 43:05

Yeah, okay. So so I I think that the founder trauma thing is a little overdone. I totally agree. And I mean, and now it's like I want to, you know, I want to tread lightly because I don't, you know, we all have different experiences. And it's it's ironic. Like, you know, take any person on the planet and there will be like, what's the worst thing that happened to them? And there are some people where it's like the things that they've been through is unimaginably bad. And then there's other people where like compared to that, it's like nothing. But it was still the worst thing that happened to them, and it was traumatic at the time. So I really, you know, you know, want to be like respectful. But like from my understanding, you know, there are some great founders like say Mark Zuckerberg or Bill Gates that came from like good families and had pretty good upgrades. And I don't know exactly, but um, I think that there's or you know, Larry Page. Um, so uh I I'm not sure that the trauma thing is actually that that uh that that useful. And I think it you know, and then it and then yeah, and then it's like everything. Relative, right? So it's like I do think you need to look for like absolute signs of outliers. Um and it and it can be in different different ways. And now it is it's a fun challenge. Like, you know, if you're a basketball scout, you're like, oh, that person is seven foot five. You know, okay, that's clearly, you know, but I'm more interested in in these things that are like uh you know less legible. So one of our portfolio companies is is a smart glasses company. And you know, the founder, um, I think he's probably, I think he's like 29 now, um, Google Glass came out when he was in high school. And like that changed his life. He was just obsessed with AR. And uh, you know, in high school, he, you know, and then he, it's like he went to he went to Georgia Tech. And after investing, I met someone who actually went to school with him and was like, oh yeah, so obsessed. They were in the same like engineering lab. And he's like, Oh yeah, he's so obsessed. He was always running his Google Glass, yeah. Uh and he and he he dropped out, he was a chill fellow, dropped out, did a did a company in this space, raised a little bit of money, didn't have success. This is his second company. And so, you know, Tom Suarez, I mean, he's he's a great founder. I mean, his personality is very different um than some other founders. Um, but like in in his case, like the to me, the signal is like this obsession um with um you know, with this technology and this this product. And then he's also like a polymath. Um, he's he's self-taught. And so he can, I mean, he he you know, can write software backwards and forwards. Um he can talk about like wave guides and and and optics, and uh, and there's you know, making that type of uh you know piece of technology requires like extreme depth in like lots of areas. And so now I don't have depth in any of those areas, but I think I'm pretty good at picking up on like someone that really is legit across these areas. And then, you know, often I'll get you know reinforcement just talking to other people that that are you know world-class experts.

SPEAKER_01 45:47

And I'm not discounting that the trauma, it's it's horrible to have to go through anything. It's just hard, it's always been hard for me to figure out like the relative trauma versus another founder because everybody, like you said, has been through something terrible, right? So it's hard. If you had to pick the things that you that you look for, it sounds like you're looking for obsession. It sounds like you're looking for people who were previously like self-starters, had hints of success, or failure, it sounds like is fine with you too, historically. It sounds like you look for founders who could explain technical things to a broad crowd. Like, are those the those obviously aren't all the main things, but like what would you say are the the main things? Is it just this? I want to go really deep on your life, figure out if you're an outlier, and that's the lens?

SPEAKER_00 46:29

Or well, so it's I guess it's you know, signs of extreme potential. And they, you know, unlike in basketball, where there's only like a few things. There's like you're tall or you could jump really high, right? Or your Steph Curry and you could shoot like like a you know, like an ex-cat. But uh, but there's so there's lots of ways that this can express, but just a sign of like extreme talent in in in you know an area or two, and then it's an you know an absence of negatives. Um that that's important. Like there's uh founders where I detect, you know, um like bullshitting, like lack of intellectual honesty, overly commercial. Now, I might get things wrong, by the way. I mean, no no one from is gonna get everything. Um I I also um really uh care about like missionary over mercenary. And I would say that that's something where I I my perspective has evolved.

SPEAKER_01 47:10

Missionary over mercenary. Okay. Yeah, where um so you would take the anthropic founders over the founders who moved to meta.

SPEAKER_00 47:17

Yeah, on the AI. Totally. And it's like I think it's a you know, and I mean, uh, you know, you might say, obviously, obviously missionary over mercenary. Like, look at what anthropic has done to open AI. It's crazy. Like a year or two ago, no one would have would have, you know, well, maybe just a few people would have bet on it. But um, so but but I would say like, no, actually a lot of ECs don't don't care about that. Um and there are cases, and uh not to you know pick on too many people, but like I would say there's companies like Uber or Facebook that nah, I think they were I don't think they were that mission-driven. Maybe they kind of would say things, but they were super competitive, really smart, and you know, wanted to win, and then so that's all good as capitalism. But is the but not mission-oriented.

SPEAKER_01 47:52

Is the missionary an output from the founder's obsession? Like they're so obsessed that they want to build this, would you say?

SPEAKER_00 47:59

Yeah, I think so. And and then there's like a there's a um, you know, there's I I think there's something, you know, they they think there's something good about this, about what they're doing. And I think that, I don't know, I think there's something good about this, I think then attracts talent. So talent density, you know, talent magnetism magnetism is like really important. I mean, it might be the most important thing, frankly. Like, like, and so if I, you know, if if I make an investment um and you know, two years later, you know, you're the you've got a crystal ball, you know, and you're you're gonna tell me like like quite one data point about I made the investment yesterday, two years from now, um, you know, I can you can you'll tell me one thing about what's going on in the company. Like for me, it would be, you know, tell me something about like kind of talent gravity, like the you know, tell me the caliber of the engineer that just joined.

SPEAKER_01 48:43

It's crazy because that is now going back to where we started with Palantir.

SPEAKER_00 48:47

Yeah. Yeah. Like if you can get Sean Sankar to join your company, you're fucking killing it. You know?

SPEAKER_01 48:52

How do you um like this is all by definition subjective? Like you do your DD, you're talking to these founders, they're obsessed, are they seven out of ten obsessed, or they overcome these things, or are can they attract talent? Like, this is all a scale. Like, do you ever find yourself um, I don't know, like on the edge of that scale, or are all of these things these investors you're making blowing you away across these spectrum? I'm trying to get a sense of where you make the decision along a subjective scale of a founder.

SPEAKER_00 49:25

It's it's tricky and I've evolved like from the first I don't know, five years when I was actively angel investing, I did like rankings, you know. I would rank like you know, founders and market and this and that. And I but I would look at the data afterwards, it just was noisy, you know. So there, I mean, there's probably someone who can do a qu quantitative system uh and yeah, maybe using like LLMs. So it's a good question. Um uh I I think I guess it's well, I guess, you know, like Peter Thiel has a line, it's like, you know, if there if you like something like half as much, you don't write a check half as big, don't invest. So, you know, there is something like gut. You know, I hate, you know, there's some cliches that I think are kind of pseudoscientific, like gut or or art and science. Um it's just to me, it's just you know, the science isn't that good. Um, so yeah, my science isn't that good, but uh I I do think that um when I reflect upon it and I'm thinking, um, and I guess I there's like other, you know, mental uh kind of heuristics that I have. And like there's there's a another great investor, um, is this guy, uh Jason Lemkin from you know Saster. And I've heard him say that what he thinks, because he was a successful founder, I mean, he wasn't like, I guess, the best founder ever, but he was very successful. And he says he wants to invest in CEOs that are better than him. That's how we and I'm like, okay, that's that's now it doesn't work for me. You know, I'm I know it's the CEO of a little company, but um, but so um uh yeah, so one thing that I think about is so some people who are like super market focused. Okay, here's a founder that has an interesting market insight. In my experience, like I've been I've invested in some of those companies over the years, um, but what's gonna happen is that in the next like six months or a year, there's gonna be four other funded startups. Sequoia is gonna back one and they're gonna be good. You know, Kleiner's gonna back one, you know, Andreas is gonna back one. And so then, so my kind of heuristic is kind of like, okay, you know, to take uh to take a founder, um, you know, Jim Belistic of Sen K-Sen, it's kind of like, okay, the competition is coming. It's coming. Like you can't, you know, like, is he gonna, you know, are they gonna uh are they gonna um, you know, am I gonna be confident? How am I gonna feel? And it's like, because I've had companies where I invested and then some of those came to the market and I'm like, oh boy, I'm worried. But then I've had others, you know, and like building to one is like this, it where it's like, oh, you know, a hundred competitors came to the market, oh, this is gonna be fun. Yeah. If I was an investor in like SpaceX or like Elon companies, maybe I'd feel the same way, you know.

SPEAKER_01 51:47

But that's a good heuristic though. So the the idea is if you meet a founder and you're you know that they're gonna be successful, there will be new entrants because this is clearly a big idea.

SPEAKER_00 51:57

If they have like a high quality market, you know, or like an earn insight, if they have a, you know, like it's definitely something that you want. You want someone with like a quality earned insight. Um, but I think you also have to think to yourself, okay, guess what? There's gonna be a bunch of funding. If it's as good an insight as you think, there's gonna be really badass facts. Sham Sankar is gonna join or start a company uh coming out, you know, and like how are you gonna feel about that?

SPEAKER_01 52:20

And you the question you ask yourself is is if this happens, is the founder of investing able to beat the phone. Right.

SPEAKER_00 52:26

How might I mean I feel like it's inevitable it's gonna happen.

SPEAKER_01 52:28

If it doesn't happen, it means the market wasn't there. Interesting. And and these founders have to beat those probably more well-funded versions of themselves.

SPEAKER_00 52:38

So they have to be like great at execution. You know, and like what does that mean? I mean, I guess really the founder lens, it's all about this is what it's all about. It's like so Ogazan from building the one is a maniac at execution. He's got a great team, he's got founders not just him, but like that, I mean, that you know, him or in you know, Sean Sankar, uh, you know, Ramp, uh, those guys, you know, I'm not like an early investor anything like that, but insanely good at execution. You know, if I was like an early investor in ramp, I would, you know, I remember people, you know, people were talking about like Brex and Ramp, you know, and and I was just, you know, eating popcorn, like, oh, smart people, like let's see what happens. And I guess if, you know, if I was a ramp investor, you know, I'd like to think I would have been like, yeah, bring it on. Bring it on. Like we're gonna, we're gonna be, you know, on top at the end.

SPEAKER_01 53:20

Maybe to to also round out your founder lens, is there a project where you were really close on pulling the trigger, like checked a couple of boxes for you, and you ultimately didn't make the investment for some reason? Because I'm trying to get a sense of like, I know where your where your max is, I know where you'd pull the trigger, I don't know where you wouldn't pull the trigger.

SPEAKER_00 53:40

Yeah, okay. So I mean, I I would say that the ones that that come to mind are when there does seem like there's a quality insight, when there's some traction as well. And then particularly with the traction that I like is um, you know, there, there's, you know, customers are coming to you. You know, you don't have to work that hard for the customers. Um, and so so there's some traction there. Um, there's a nice insight, you see a market opportunity, but then it's like kind of the founder and okay, are they gonna recruit great people? One I see a lot is um like I'm just not convinced that they're gonna recruit like great people. They're not gonna try to recruit, you know, Sean. They're not gonna try to recruit like amazing people. Um, and I think it's really, you know, in my, you know, like by the way, I mean like I don't really want to give advice to anyone. Uh I guess it's like the you know, the founder's fun, like let's have founders who don't really, but of course, well, I'm happy to give advice, I'm happy to 24-stem do whatever I can for founders. But um, it's like I don't want to have a debate with a founder about like, you know, hiring philosophy. Uh I would say like YC is just like hire your smart friends. And, you know, like there's 500 YC companies, that's probably gonna work for a few. But but I want a founder who's gonna try to hire like the best people they can, you know, and so and it might be their friends. I mean, if you went to MIT and you were doing math camp when you were a kid, like, okay.

SPEAKER_01 54:51

But but so you judge that though, like based on your read of their skill set.

SPEAKER_00 54:57

Yeah, and then and they're well, and they're hiring, you know, like so. So this is there, like hiring is something where I mean you might be great at a lot of things, but I think a lot of I think a failure mode for a lot of, you know, so there are a lot of successful startups, you know, in the sense that they, you know, have an A, a B, a C, but they they you know slow down, they don't scale. Like I, you know, I would and then there's you know, and there's different, you'll hear different, you know, uh stories for why companies, you know, kind of slow down and you know don't work. But I would say the biggest thing is is um you know hiring quality, you know, which and it's and it's could be related to hiring too fast. I mean, it's theoretically possible to go from you know 20 people to 60 people in a year and keep like a really high bar in hiring and keep like a strong mission orientation, it's but it's unlikely. You know, and I've just seen, I mean, it's it's just really hard to keep that. And so um now look, it's probably a you know, if I'm a pre-seed investor and you went from 20 to 60, not everyone is like an A plus, like it's still probably a pretty good investment. But um, at the seed stage, you know, you you've you know, you you're you know, you've you've got a founder and you've got you know two engineers, and I'm asking about your your you know who's on your team or who you're gonna hire next, you know, and I'm I'm thinking, like, are you really trying to get like the best people on the planet? I mean, it's hard. You don't have 24 hours to do recruiting, but that's it. So so that's a big signal for me, is like I'll I'll get checked on a lot of things, but then I'm just not convinced you're really gonna push hard on hiring like the best people you can.

SPEAKER_01 56:20

Okay, that is really, really interesting. So if you're on the fence, this is the like one area you you'd fall back on to make your decision to say? Yeah. Okay. And okay, that is really interesting. And maybe I want to circle back to one question I I missed. On your founder DD, um, I'm curious how long it takes you to get comfortable. Is it the first call and everything after is like validation, checking for red flags? Is it I want to talk to mom, dad, best friend, uh, boss? Like, yeah, what what yeah.

SPEAKER_00 56:52

I I don't put much stock in references. Um I really don't. There's a lot of contrarian things here you're saying, which I mean, I will do some references sometimes. Um I mean, so the most recent investment I made, and I think you you you know the the company. Um so that one, like I did some references and they were they were good, but like of course they were good. Um now the you know, if if there was a cheat on that one, it's that I talked to the founder a couple times uh before their fundraising. And then a couple months later, I I talked again. And so that was a cheat. Like I got extra signal there. Um and so yeah, I really like the founder a lot. Um if the if in the first conversation they were like, oh, a raising around is gonna close next week. Would I have invested? Uh I'd like to think I would have. Um, but I but I I couldn't tell you like really, right? So so that's something. Um, and that's kind of like a case-by-case thing about, but I I I definitely I mean there's definitely some great VCs who are like, oh, I make a lot of mine in 10 minutes. Um, and uh I I I think people can do that.

SPEAKER_01 57:50

There's also Masa Sun who does that in 10 minutes explos billions of dollars.

SPEAKER_00 57:54

Yeah, and I would say that's that's pseudoscience. Yeah. Uh so it's like I don't want to do that, right? I want to be on a so yeah, you can definitely get like big negative signals in 10 minutes, and no, this isn't good, you know, and you can get big positive signals, but I do, yeah, I do want to wanna kind of reserve judgment to a certain extent. But I but I you know I like people uh well I like founders. I mean the founders I talk to, I have you know, I screen some Latin song, dog great people. So honestly, like I kind of fall in love, you know, like every day with the founder before you get on that door. Yeah, but then I have to reveal myself in, knowing, okay, but you know, as an angel investor, it's kind of easier because you get you can uh you know, you know, and and and some of those will will probably do well, but like as a you know, as a venture fund, I have like a really high bar, so then I have to, you know, unfortunately, you know, say no a lot. I mean, some of these people say no to me, by the way.

SPEAKER_01 58:40

But but but like the I guess the my question is like on the velocity of the conversation, you're talking to a founder. Are you continually impressed and more excited? Or as you dig, do you get more questions and that leads to more conversations? And like I'm trying to figure out like where you make the decision talking to a founder, where it's like, I'm clearly understand that this founder fits my founder lens. Like, could it happen in an hour? Does it take 10 hours? Yeah, I'm just I'm just trying to get a sense of that.

SPEAKER_00 59:09

Yeah, I mean, I would say it's probably, you know, to get a good read is it's probably anywhere from 20 minutes to uh an hour. Um and it's like I because and then, you know, I do think there are some people who can get a really quick read, but I also think a lot of founders are coached and to what you said before, um, so about like a founder can just kind of say the things they think you want to hear. Um but they're not coached on telling their like life story. They're not. That's right. That's right. So I think that's but it takes a little bit of time to like unpack that. And I'm not trying to be that there's mental. Yeah, I mean it it would be easier if I had like, you know, I only invest in people who have like the most dramatic childhood ever, right? You probably do okay. Maybe there's a there, you know, there's a you know, there's all sorts of rooms for esoteric uh funds. Yeah, I think someone should have a fund to uh invest in identical twins. Um I think identical twins are can be really good founders because there's like two of you, uh, but I'm not identical, so I I feel like I'm the wrong guy. But uh there's all sorts of good ideas. And so yeah, that there's this super traumatic. And I haven't I I had a pretty good childhood. So I think the the VC who's gonna own the I only invest in people with like you know, super tragic childhoods, probably you should have a super tragic childhood.

SPEAKER_01 1:00:16

Um that's that being one one other question I had was you mentioned the absence of red flags, which I thought was interesting because when you meet these like exceptional founders that you know dug themselves out of caves and have done like spectacular things, I feel like most of the time they kind of push the limit a little bit, like ethically or morally somewhere, and like you know, they went too far and they reined it back in. Like they have this general sense of overachievement. And sometimes that goes the wrong way, but they still could become an incredible founder. But to a VC, that would look like a red flag. Like, how do you view, like, I guess what is a red flag to you?

SPEAKER_00 1:00:52

Well, so and I would also say, I think I'm gonna miss a few of those. I think I'm gonna be a little harsh on that. But I would say that, you know, if you told me that when you were 13, you were stealing cars, like honestly, like that's not a red flag. I mean, I mean, it it could be part of a of a of a you know, but it's like I'm a I'm not that judgmental. As long as you're still not stealing cars. Yeah, exactly. Exactly. You know, so uh and if you're being honest about it, right? So it's it's more about how you, you know, how you and so I calibrate based on on age, right? And so people, and yeah, if I'm talking, I mean, I'll uh you know, I the if there's kind of a thing these days about, oh, I invest in the youngest founders, and I've I've I've definitely met some incredibly good, you know, compelling founders who were 16, 18, 19. So, you know, I would I would do that and you kind of calibrate. I mean, obviously, if you're investing, someone has to have a certain amount of maturity. But if you're a 19-year-old, I'm gonna evaluate things a little differently than if you're 29. Um, so uh yeah, I think uh um it's kind of case by case, but but for me, I, you know, it's not maybe an overindex on this, but but I care a lot about your intellectual honesty. And so like, will you tell me just just the straight, you know, the straight truth of of you know what happened to you, what what you think happened to you when you're younger, or you know, you know, and and I guess you know, fast forward, you know, with founders that invested in uh and as an angel investor, like I invested in over a hundred companies. And so I've kind of seen it all. I mean, I had a uh at least one that was like fraudulent. Uh so it's like I've seen a lot, right? And so it's like I just want to have founders that are gonna be, you know, honest with me about about the company.

SPEAKER_01 1:02:19

Um I think it's also like just maybe just to like zoom out, like it is really hard, I think, for a lot of founders to be so radically honest at that age because you have a 19-year-old kid who really hasn't experienced the world coming to a successful VC like you, they want to put on a good face, they want to be impressive, they want to tell the story the way they pitch their mom and dad and and people, like it's hard to find that.

SPEAKER_00 1:02:42

It's hard to find. So I probably would maybe miss a few good founders by being a little harsh there, but I also think I would calibrate. And I guess another way to think about it is is back to the um talent magnetism, right? I mean, can they if the 19-year-old has an incredible co-founder, you know, who's 18 or 28, you know, that that's a signal. You know, have they gotten other people on board? Like that's a signal. Um, and um, and if they, you know, if they tell me about the, you know, the two people who joined them on the team, I can kind of gauge there. And I've I'm like, oh wow, those that sounds like really impressive people. Like they trusted this person. And so, yeah, maybe they're a 19-year-old who's a little bit performative because that's what YC tells them. Like, so I I can get comfortable with with different styles. It's just, I think, I think it's like I want, you know, fast forward a year later, I just want someone who's going to be honest with me about what's working. I mean, they can be confident, um, but I also want someone who's who's open to saying, okay, this thing isn't working out right. Um, and that is, you know, it and that gets back to learning, like the best founders and the best back to like the you know, Ogazans and Nishan Senkars, like they're learning machines. And so it's like deconstructing what are the things that lead to that. And I think people who are, you know, bullshitting other people, bullshitting themselves, just kind of gets in the way of learning.

SPEAKER_01 1:03:51

Yeah, it also just like it creates so many issues. Like, I think if you're just so transparently open, no ego, authentic, not in a mean way, because I think that's stupid. Like rad the radical transparency thing, I guess I think is screwy, but yeah, I think if you lean on the side of more transparency, more information, everybody around you could make way better decisions. Um, and I've always felt that way within Delphi too. Just always, always makes sense. Um you you also um is your partner Mike is not at Horizon full-time or right.

SPEAKER_00 1:04:22

So he's full-time MA. Um, I mean he works like a like a maniac. And then on the fund, he uh like we kind of tag team on fundraising, and then he handles uh most of finance legal. Okay.

SPEAKER_01 1:04:35

The reason I ask is because like for me, I have my partners, Jan, Anil, Jose. I they could tell me this is dumb, you're being stupid, like back it up, this doesn't make sense. You know, I spoke with the founder, I didn't get the read you got, like things like that. For you, cowboy, right? You're single, single guy.

SPEAKER_00 1:04:52

Like well, I had a I had an associate working with me for you know maybe uh half of the funds history, and she was she was you know good and and uh super smart, and so I valued her perspective. So yeah, we we would definitely be open to hiring another person. And and I, you know, I'm open to you know, I'm not actively looking for a partner, but I'm kind of intellectually like anyone who's who's great, who can add value, like I would, I would not we're not gonna have 10 people join the firm, but I would I would be open to that. But you know, working in a small company like to chemistry is really important, and so it's it's it's but more so I'm wondering like how do you keep your like bar so high?

SPEAKER_01 1:05:25

Like who do you intellectually spar with on this stuff to myself?

SPEAKER_00 1:05:28

Okay, so I mean I I am definitely a very harsh critic of myself. But how do you do that? I I could be, you know, I could be better at being a harsh critic of myself. Um but uh but yeah, I mean I'm constantly, you know, thinking about my uh this thinking about the decisions I've made, the process I have and making decisions. I'm constantly like I I love what I do. You know, it's like uh, you know, I loved sports when I was a kid. And so if you had told me when I was a kid I could be like the GM of some pro sports team, that probably would have seemed like the perfect job, assuming I couldn't make the NBA, which you know, but when I was eight. I wouldn't, I wouldn't have conceded that just yet. But it's like if you're, you know, if you're the GM of a sports team and you love sports, like you're probably always thinking about like who's who's the better, you know, who's got a better jump shot or who's who can, you know, you know, who's got better fastball? And you're always, you know, so like I'm always thinking about the founders. I'm always trying to, you know, think about the the data, the signals and ways to you know get better at what I do.

SPEAKER_01 1:06:21

Where do you do this like thinking? Is this like a a beach walk or run? Is this like grilling the founders call after call? Like where do you get the I try to I try not to bug founders?

SPEAKER_00 1:06:32

Uh you know, it's it's yeah, there's there's a lot of sometimes I'll hear VCs talking about, you know, like, oh yeah, I talk to these founders like all the time. And I'm like, I don't know if they really want that. You know, like I, you know, I'm they have a company to build. Yeah, yeah. But um, but I mean I love talking to all the founders that I I work with. Um but yeah, like you know, in the shower, you know, in the you know, in the gym, um, you know, I'm I'm always uh thinking about this stuff.

SPEAKER_01 1:06:58

So um and I I guess like I begged the question earlier on like somebody listening to this and reverse engineering the story and coming to you and saying, you know, making up a story that is credible enough uh based on what you're looking for. How do you like how do how do you tell if they're faking it? Like I like intellectual honesty is interesting, but like if you're not a bio expert, the billion and one people could lie to you.

SPEAKER_00 1:07:25

Like you know what I mean, like well, I th I think I'm pretty good at detecting inconsistencies, you know, in a story, um, in a way someone is communicating. And so I think I'm I'm pretty good at at detecting, yeah, when someone is is um you know kind of exaggerating their knowledge or or exaggerating about something that happened, um, you know, or is just lying. I mean there's you know that's one thing, but even if they're not lying, they you know, often people like bullshit and exaggerating things like that. And so I'm I think I'm pretty good at uh and then and then I like I I don't have any hesitation around asking the dumb questions. Um like I guess I have, you know, I've I've never lacked for uh intellectual confidence, so I don't mind letting them steep it. Um I don't mind you know talking to some super smart person and asking like a like a like a dumb question. So I think I'm I guess if yeah, if there's a few things that in my job I'm I'm really good at, I think one of them is that I'm I'm very, you know, like you could have someone tell me about quantum mechanics and you know, have you know, some someone who's bullshitting and someone who's not, and it's like I think I'm pretty good at at picking out the one who's who's uh who's being intellectually honest.

SPEAKER_01 1:08:31

And that gives them the opportunity to explain these technical things to you in a way that you want to understand and you can tell if they can share it with the world.

SPEAKER_00 1:08:38

Yeah, and by the way, and I think I think they want to do like if you're a founder, like you, you you know, you want to tell the story, everyone likes talking about themselves, and you kind of think it's fun to explain to you know someone who's maybe I'm smart, but I don't know anything about the thing. And so it's you know, hopefully you view it as a bit of a challenge and you and I'm I can be a pretty good listener. And so you know, I think that that's a good signal if you know if someone is kind of like, oh God, I don't want to talk to this fucking idiot, he doesn't know anything. I think that's a bad signal for a founder. I mean, I might like I'm gonna miss a few founders. There's probably one or two founders who are gonna be successful like that. But um, like the billion one founders, they I don't think they left thinking, God, that guy was stupid. I think they're like, oh yeah, well, I feel like a nice guy.

SPEAKER_01 1:09:16

I spoke with um one of your portfolio company founders, Zayn. I didn't speak with him, I just emailed him after um before this episode. And he mentioned that you're you are a generalist, but you're able to get up to speed so quickly. And I want to parlay this question into the the future and where we're going with AI and where we're going with technology. And it seems like it's gonna be a lot harder to get up to speed on AI than it has been on historical sectors. It's you know, it's extremely um difficult to understand all the intricacies of this entire supply chain, what's going on, what's different, the models, the data, the infra, everything. Do you feel that your process on getting up to speed with these founders will be different going forward? Like, do you think it's gonna be hard mode moving forward? Do you think it changes? Or yeah, what do you think?

SPEAKER_00 1:10:05

Well, I'm biased because I hope it doesn't change much. So uh I do I don't think it'll change much. I'm very I'm you know, I I definitely want to use technology, use AI as much as I can. I think some people are precious when they kind of say, well, you know, AI is gonna automate this part of the job, but like it's not gonna automate this part of the job. Like, well, that's what I do. You know, that's a special, you know, and I'm like, I don't want to be precious like that, right? Like AI could could automate everything. So I want to be open-minded about that. But I I guess you know, there's like a great Jeff Bezos quote, or someone is maybe it's from like 10, 20 years ago, someone is asking him about the future. Uh, you might know this one, and it's like, oh, you know, what's gonna happen in the future? And he kind of says, well, you know, actually what I like to think about is is you know, what's gonna stay the same? And he's like, you know, I think in the future, you know, everything is gonna change except people are gonna want, you know, low prices, they're gonna want, you know, big selection, then they're gonna want, you know, fast shipping. And so as long as we focus on that, like we're gonna be okay. And so I think I think, I think what's gonna stay the same is you know, these certain types of founders, these certain types of exceptional, outlier, you know, brilliant, determined, resourceful, uh, mission-oriented, intellectually honest founders, like, I think they're going to be very successful in creating and shaping the future. And like my my algorithm is I'm not gonna catch every founder. Um, like there's gonna be some like hypey founders who have like huge exits, not for me. Um, and some of my founders are not gonna work out. Um, and I'll miss some that that you know I'll regret. Um uh, but it's like I think this formula for finding founders, I think it's gonna work. So I'm not 100% sure that I'm gonna be able to execute on it. I think I will. Um, but I I'm you know very confident that this formula um will will be working. As long as capitalism runs reasonably, you know, so then we can get this, you know, AI right now it's such a dynamic time, and some people think that you know the terminator is is just around the corner. So okay, yeah. I mean, assuming a few things around capitalism and free markets.

SPEAKER_01 1:11:55

Well, you mentioned like what won't change. It seems highly unlikely that like mass human founder psychology will change in 10 years or something. I feel like you're probably fine.

SPEAKER_02 1:12:05

Yeah.

SPEAKER_00 1:12:05

I mean, even if companies, you know, have you know a thousand agents for every human, you know, I think that the founders who are most successful are gonna be pretty similar. You know, I think the the the the the Steve Jobs, the the Elon Musk, you know, the the the Shom Sankar, uh Melanie Perkins, it's kind of like, yeah, I think uh I mean not everyone is going to be just as successful, but I think these are the types of people who who, if you have a portfolio full of, you know, whatever, 10, 20, 30 of these, of these uh startups, these types of founders, it's like, I think it's gonna be a great portfolio in five or 10 years, uh, even if the world is really different in some ways.

SPEAKER_01 1:12:40

One other like personal daily question I have for you is I like force feed this book, Essentialism, to everyone at Delphi. Like Essentialism, just managing your time, like focusing on the one thing that you could be really successful at. And I've always found myself personally just like insanely unsuccessful when I have to manage four or five different things, context switching, things like that. I'm curious like how you manage your time. Like, are you like is Mondays for sourcing and Tuesday, Wednesday founder calls? Like, how do you manage your time and how has that evolved over time?

SPEAKER_00 1:13:12

It's honestly stayed pretty similar as long as I've been a professional. Probably when I was a student, you know, it was a little different. You know, since I've been a professional, I've had like a digital calendar to look at. When I was a student, I didn't I didn't have that. I forget how I track things. I don't know what the hell I did. Um and so yeah, and I it's like I I know that there are some people who you know want to have like meetings back to back to back. And some of the you know, some of these people are amazing VCs. Like I talked to a VC the other day, I think he said he he talks to 10 times a day. And I was like, that that's not what I want. Um, so you know, and then and then there are people at like big companies where I think a lot of it is kind of like a bunch of bullshit and they've got meetings and you know, I'm so busy, and you know, so I I guess I have like a view where for me where it's like I want to have like a certain amount of like you know, programs, space, things to do, but then I also have some free time. Um and um, but yeah, that but I'm also extremely urgent to be productive. Like I, you know, actually my wife says I shouldn't use the microwave, it's not healthy, but I use the microwave for things, and like I'll put something in the microwave for 40 seconds, and then I think I got 40 seconds, what should I do? Oh, vitamins. Oh, you know, tie my shoes. Um and I've always kind of been like that. So I'm definitely like a big optimizer. But then also sometimes it feels like there are people who, you know, the people who like drive you know an hour to save a nickel. You know, there's people who will like, you know, read some, yes, spend eight hours, you know, productivity hacking, you know, like what have you done? Um, so how much time have you actually saved? I mean, I have a few systems, you know, I will I will write things down, I have like a task list.

SPEAKER_01 1:14:44

Um but you're not getting back to every single inbound. You're not like are you replying inbox zero kind of guy?

SPEAKER_00 1:14:50

Like what I'm an inbox zero kind of guy. Yeah, I'm but but my my inbox is so I have a task list and then my the emails in my inbox are like another manifestation of a task list. Um and so I don't have in inbox zero. I usually strive to have inbox three, and those are three important things.

SPEAKER_01 1:15:07

Okay. I always like to figure out how people spend their time, just because it it just it works for you. Yeah.

SPEAKER_00 1:15:12

I mean there's the guy, um but he's a famous productivity guru. And most of these people I I think are are not you know useful, but he's the get getting things done guy. What's his name again? Um he has some good rules, and I someone was telling me about his rules one time, and I was like, oh, I those are like rules that I follow, you know, about about yeah, trying you know, like writing things down, you know, so you can just have more clear, you know, working memory.

SPEAKER_01 1:15:38

And yeah, maybe like closing conversation here, but I want to talk through like maybe and I'll lob this your way. You can take it any way you'd like, like biggest setback in building Horizon. Like maybe it's a a personal story, maybe it's a founder that you really rated highly, it didn't work out. Maybe it was I don't know. I'm just curious like what the setback for you is.

SPEAKER_00 1:16:00

Yeah, it's like I don't I don't know how how personal you want to get, but I would say that I have not had any significant setback in in Horizon. It's kind of like the per it's kind of like the the the person's childhood, you know, who had like a pre-K child. Like, you know, I've been I've been a full-time VC since 2022. I have not had any significant setbacks. Um there's been a few, uh but okay, what were the moments where I was most like bothered or yeah, there there's like one time where I really want to get in a deal and I couldn't. Yeah. That that was but you know, the big scheme of things, right? Um, but I've had you know some good luck, maybe you know, hopefully I've had like good strategy, good execution. Now I could go back before in in other, you know, professional and personal avenues, and I could, yeah, maybe give you some soft stories about setbacks. But um, so I feel like I'm pretty resilient. And so I would say, yeah, I mean, knock on wood. I mean, I'm I'm sure I will have greater set setbacks uh as a VC. Um I'm gonna do this for a long time and it's inevitable, but but I'm I'm I'm fortunate right now to say that uh yeah, I wouldn't say that I don't think people randomly don't have setbacks though.

SPEAKER_01 1:17:01

It sounds like you must be working so hard you get to a point where you don't.

SPEAKER_00 1:17:05

Because like at some point it just becomes like chance, like you will have a setback or something, yeah, unless you're really I mean, it's like the big setbacks I think are um in VC, you know, fundraising can be a foot a setback, but yeah, we've we haven't had a real struggle fundraising. I mean, there's been a few, there's been a few people who have said no, but but overall it's worked out pretty well. And then it's never it's never been a constraint. And I and I and I'm not trying to raise the biggest fund, by the way. You know, I'm I'm I'm kind of modest and it's another story about what I want. But yeah, so um uh and I don't want to spend a lot of time fundraising. Like I'd never want to spend more than like 10% of my time fundraising. Uh and then yeah, I would say another setback is companies, you know, having having failures. And uh we definitely have had some companies not succeed. Probably the most painful thing is when you have a company that you think is worth a lot and then it kind of falls on hard times. And I'm sure that will happen in in the venture fund. Uh it hasn't yet. I I think we are investing in founders who are very resilient, who are not bullshitters. So I think our businesses are less likely to get like bullshit markups. Um as an angel investor, I had a few. You know, maybe it's kind of you feel good, but it's not real. It's like a paper market. Yeah, you had where you thought you had something that was, you know, a 20x and and then it's it's not worth anything. So I've definitely had that as an investor and it's and it's painful. Yeah, I have it happen a couple of times, and you you realize it's kind of part of the part of the deal. Um, so yeah, so hopefully I have a pretty good strategy. I'm I'm pretty resilient. Um, you know, I've got my partner Mike doing some of the things that maybe other VCs, you know, don't like to do. So that's another thing is is um, yeah, it's like I get to spend time. I mean, there's a few things that are a little annoying. Or or you know, I do say uh, you know, uh like I I always follow up on founders. Like I never go with founders. I mean, maybe it's happened, but it was an accident, and I'm sorry if you're doing it. Like I cannot believe it's so common that VCs don't follow up with founders, it just bothers me. Um, and so so I write a short note to every founder, and I really like doing that. Yeah, but but it's part of the job and it's respectful. And I don't want to, you know, AI is not doing it. Um, so yeah, there's some parts of the job that aren't that aren't perfect, but generally I have I think I have a great job. It's kind of insane.

SPEAKER_01 1:19:02

Kyle Simani, who's like a giant in our industry, has always said like he always gives a founder a reason because they always gave them uh their time, something along those lines.

SPEAKER_00 1:19:09

I always give a reason as well. I mean, it's a real inside baseball thing. Some people don't do that because yeah, sometimes you'll get a founder like who wants to debate you over email and and that is annoying. But but I get it. Like people are they care a lot. So I I you know I appreciate it. And yeah, I mean these founders that I get to talk with, I mean, they're they're amazing. And I'm so yeah, it's kind of ridiculous that this is my job. I get to uh to spend time with these people.

SPEAKER_01 1:19:30

I want to close out with one more fun like portfolio story to round out our conversation, maybe just like bring back the lessons you've shared into another story. So Canva or or Sen Cut Sen, like either, which one would which one should we take?

SPEAKER_00 1:19:43

Uh Sen Cut Sen is a really fun one and it's it's recent where um so I was so we started the fun in 2022, but I was the you know the first investor in the company in 2021 when they raised a seed round, but we did an SPV. Um Sandy, sorry, what does Sen Cut Sen do though? Just for Yeah, so it's a it's a you know it's a brutally integrated manufacturing company. It's really you know democratizing manufacturing, where traditionally, if you were you know a tinkerer, um, you know, building something in the garage or even in a company, you know, if you wanted to get like one part, you know, custom part made, you'd go to like a local, you know, job shop, local manufacturing company, and they'd be like, one? No, like you need to worth a thousand. Like a piece of metal, a fabrication piece of money. Yeah, yeah, like like, you know, take you know, lasers, bending metal, cutting metal. Um, and um, and so Jim, the founder, um, was you know super passionate about these these projects. He had a successful uh software business, he bootstrapped, and that's how I got to know him originally, but he was like more into these, you know, building cars in his garage. And he was really frustrated by dealing with these manufacturers who would never want to make him like two parts or one part. And so he kind of was like, first he thought, okay, their technology is bad, I'll make software for them. And they're like, no, leave me alone. Uh and so then he said, fine, I'll just, I'm just gonna do this myself. And the way he tells the story is that, you know, you know, he wanted to basically put a bunch of money into these like really high-end um machines, uh, and he had to like justify to his to his wife, so who's his co-founder, you know, it's like, well, hey, you know, I'll I'll make a business out of this and I can use this, uh, this fancy equipment. And basically I'm gonna put a you know, put a website up there and let anyone order, you know, like one part. And it was uh like a real textbook like disruptive innovation. It feels like 3D printing, but it's metal or so so so a lot, most of the startups historically in this space make a 3D printer. They make a machine. And that has been a terrible business. Um it sounds cool, but there's never enough demand. And so people have made these incredible machines, but they never get the demand. And so Senca Sen does not make machines. It's they're always using like top-of-the-line, expensive machines from you know, like Omada, Japanese company is a big supplier. Um, so they'll so if you have a 3D printing company or you're most of the these, you know, uh startups in manufacturing that want to build a machine, like okay, Senka Sen would be happy to be your customer. Um and then Senka Sen's customers are you know kind of tinkerers um who are tinkering, you know, on a project in their garage in the weekend. In the week, what do they do? They work for Tesla, they were for SpaceX, they work for Android. Um and so when we invested in 2021, um uh 80% of the business um was uh was uh like SMBs and tinkerers, 20% was like more like industrial and bigger companies. It slipped now. And so there's I mean there's been a huge wave of reindustrialization, defense tech, robotics. Um, and so everyone uses SenCas and it's kind of like an AWS type of so in you know 2010, like AWS was kind of like the only thing, the only shop in town for what they did. And every startup used AWS and loved it. And AWS never spent a cent on marketing. Senko Sen's like that for all these hardware startups and companies. And so they, you know, I mean, they probably spent a few dollars on on marketing, but it's it's all inbound. And so all the companies in the space historically have struggled to get demand. And Senko Sen has this like genius story of like making a strategy, genius strategy of making like an incredibly awesome product. Uh, and if people come to that.

SPEAKER_01 1:22:55

And it's uh and it's crazy because it feels like, I mean, if you argue like American manufacturing, hardware, tinkering, take off if software are commoditized with AI, like they're gonna have a lot of clients around the world who want to mess with robotics and drones and all types of stuff. Yeah, yeah.

SPEAKER_00 1:23:10

So I mean their biggest competition would probably be China, um, where there are c you know, where often you can get a part for cheaper if you want to wait like two weeks or three weeks. Um, but but often if you want one part or two parts, you want to fast. And then then also there's a ton of this stuff where you're not allowed to get apart from China or what have you. So Susenka Sen has an amazing business and Jim is amazing.

SPEAKER_01 1:23:30

How did you find the founder?

SPEAKER_00 1:23:30

Like what was the So and the company's based in Reno, Nevada. Um, and so I I met Jim through my M ⁇ A business because I was I was you know advising him on his software business. And so he didn't transact, but I got to know him and spent time with him and built up a like a high trust relationship with him. And then it was just funny because in hindsight, I remember when we went to Reno and we're hanging out with him and he was talking about these crazy things. He was he was building, like he was that was like the most animated he was. Like, yeah, the software business was nice, but like what he was really passionate about was like these crazy projects, and everyone in the office was like, Oh yeah, Jim's got this crazy expensive machine in his garage. And uh, and so years later, he's you know, he starts this business and he reached out to me, and I was like the only finance person that he like trusted. And because he, you know, he couldn't stand VCs. Um, and he reached out to me and he It's such a cool story. He funded the business originally on his own with you know a couple hundred thousand dollars. Um, and um, and then when I talked to him, there were they had some traction and he he, you know, he's an amazing guy, but doesn't have a lot of finance or accounting, and so couldn't really tell you the gross margins, couldn't really tell you anything about it you know, except the revenue and the growth. And it was, you know, it was clearly like self-funding. And so clearly the you know, the gross margins were soft for gross margins, but like the thing was working and customers loved it. And um, and so yeah, so I was really fortunate there. But but it was in the summer of 2021 when everything was SaaS, and um, I I was a little nervous about the frothiness in SaaS, and so I was like thinking about other things to do as an angel. And you know, Jim um wanted to raise this around. I was really excited, didn't have a fund. Um, I guess in hindsight, so we invested a million and a half in an SBV. In hindsight, we could have just done that, but I kind of said to him, he was like, you know, I want to I want to raise a venture capital. And I was like, I'm an angel investor, I'm not a I'm not a VC, but like, let me see if I can help you. And um I reached out to people in my network and and found, you know, a like a really good uh you know, great guy, great VC, uh MHS capital, Mark Schipperman. And so he, you know, they led when they wrote a $2.5 million check and then we did a $1.5 million SPV. So that was summer of 2021. Um fast forward next year, we had the fun, fun invested. Um so but you double down often. What's that? You double down very often. I do. And a lot of people don't do that. Uh and like I would say, like with billion to one, like maybe that's the, you know, we're all functions of our own experience. So we're billing to one at like quintupled or whatever, yeah. How do you say 12? Yeah, the 12 tupled, you know, and like that worked, right? So I've definitely had some double downs that didn't work um in my angel portfolio and in the fund. But yeah, with Senkit Send, like let's let's double down.

SPEAKER_01 1:25:55

Can I ask you one question too, just to like again narrow in on your founder lens? Like, this is somebody you dealt with who came to you who wanted MA work. It's not somebody who came to you to pitch their business. So it wasn't like you trying to figure out their psychology, their background. They were coming, you were just trying to size up his business for a sale or something like that.

SPEAKER_00 1:26:14

Yeah, so I mean it's a very different model from the like the founder archetype. So I mean, I I pursued Jim initially because he had a bootstrap software business. Um, so got to know him that way, built a high trust relationship with him, and was, you know, but but wasn't at all thinking about any, you know, investing. I was thinking about like, you have a software business, how much is it worth? Can I help say, you know, and his business was like very profitable. And it sometimes, you know, you'll have businesses that are very profitable. And it doesn't make sense to sell it because you can't get a high multiple. Um, so you know, don't, you know, like if you have a group, you know, a good cash business, good cash flow, and you can only get you know three or four times cash flow, you puck shouldn't sell it. And and me is and I think one reason why he liked me was that most, you know, most transaction people would be like, you should sell, you know, you should do a deal. But I said, I don't think you should, you got a really nice business. Like, I don't think you're gonna get a big multiple for it. If you if these things changed, maybe, but but and so I think he appreciated that. So I spent a lot of time with him, but ultimately it was the advice was we don't think you should do anything. But no, no, that you built the trust. Yeah. Years later, he reached out to me with about the business. And and the first time he talked to me about it, I was like, Jim, I love you, but I don't know what the hell you're talking about. Um manufacturing, like and it it it's it's it, you know, a little bit of a coincidence, but it can't be a pure coincidence, but it was like you know, billion to one. Like, literally, look, I got good grades in high school, but I slept through biology. Like, I like this, like my my high school achievements were like the thing where I really was like the Olympic champion. I was not like an Olympic champion, you know, that these days all the founders are you know gold medalists, this and that. I was the Olympic champion of getting good grades and knowing nothing. That was my championship. Uh that was my observation function in high school. Um and so, and then you know, with manufacturing, like, yeah, I mean, I never, you know, never wanted to touch a power tool in my life, you know. Uh so he's telling me about this manufacturing business, and it was really hard to understand it. It seemed like it was working. And this was early 2021. It was basically like, okay, um, tell you what, let's talk again in like six months. Things are going well. Um, then like, yeah, you know, because um uh I you know, I wasn't thinking like, oh, I'm gonna sell the business. I was just thinking, like, this is a friend, I'd like to help him, maybe I'll invest. Not sure. Six months later. So it's a little bit like the the recent investment where I said I talked to the founder and then two, so yeah. And so in this case, it was like, whoa, this thing is working. Jim is a great guy. I mean, he's he's uh um, you know, he's he's he's he's an outsider, you know, kind of you know, you know, Reno Nevada, like not a guy who wants to hang out, you know, and doing any Silk and Valley networking, um, super, you know, just a like a really good guy like the family.

SPEAKER_01 1:28:41

They did around recently, right?

SPEAKER_00 1:28:43

Yeah, so that's so that's the fun part. So so back then in 2021, no, yeah, I mean, no one wanted to invest in this business. Like it, you know, it wasn't like he chose like he just couldn't get an investor, right? You know, uh, so uh, you know, so we invested and uh you know, it wasn't like immediately clear that this was going to be like a you know a fun returning you know type of investment, but but you know, it over a little bit of time I got pretty confident, just like I was in billion to one. Like I brought you know, billion to one, you know, between the series A and B, I brought people in, and it wasn't like a super fancy company, but I was like, you know, like like Sean reached out to me with Palantir, you know, no one in 2009 thought Palantir was a sure thing, but he, you know, so I had that conviction uh in billion to one when I brought people in. And so yeah, I got that conviction and so I got sent, right? And uh, but but no one else really cared about manufacturing in 2022. And I mean you know, Andrewson started to talk about you know American dynamism and this and that. So um, but anyways, and so then uh earlier in the year, Jim decided he wanted to raise money, and uh it's kind of a funny story because um there's like a journalist who was doing a story on him that's you know pretty well networked. And Jim mentioned that he was interested in raising capital, and so he was like uh this guy, Ashley Vance, um, goes, Um, you should talk to my friend Patrick Hollson. And Jim says, Oh, okay. Uh so he he gets introduced to Patrick Hollson and uh and they're having a conversation and Jim's telling him about the business. And in the beginning of the conversation, Jim's like, Yeah, you know, I'm thinking about raising money at like a billion-dollar valuation. This is like the first conversation he's had with an investor, you know. And so then at the end of the hour-long conversation, Patrick says, Um, well, so if you're raising money at a billion-dollar valuation, count me in for 10 million. And then he says, Uh, can I introduce you to a few of my friends? Uh, and so he introduces him to uh, you know, his friends at Sequoia. Uh Matt Huang from Paradigm, who you probably would know.

SPEAKER_01 1:30:34

I saw the tweet, and uh, Matt is a is a legend.

SPEAKER_00 1:30:37

He's a legend, right? It was a cuto guy more than a manufacturing guy. Um, but I guess they're all they're all buddies. And so Jim ended up talking to like a few other VCs, but it's just ironic. It's like, you know, no one wants to dance with you, and then everyone wants to dance with you.

SPEAKER_01 1:30:51

I saw Matt from Paradigm's like, I don't know if it's a deal toy, but it was like a big metal piece of engraving with the uh, I don't know if it's with send cut send or something else in it. Yeah, yeah. But I I guess the one last question I have just to double down here is this is some this was somebody a so far win, an incredible company, but it was outside of how you found the last bunch. The last bunch you were, you know, you found these people and you did your questions, you looked for obsession, you looked for all these things. The sandcut send was totally different. It was somebody that you worked with and you didn't care if they were obsessed, you probably didn't care if they were obsessed or not because it's MA, but turned into something big. Was the process different in you deciding to invest in SandCut Send? Because you didn't have to do the normal DD, I guess you'd do on a new founder.

SPEAKER_00 1:31:36

Yeah. Um, yeah, there was some traction there. And what I would say is like, you know, if you're looking at a category that's totally out of fashion and you're looking at a founder who lacks, you know, most of the prestige credentials that most VCs care about, you know, you know, you might get an opportunity to to you know use traction uh as part of your uh assessment. I mean, because ultimately what you're looking for is is executioning, right? And that that's it's it's all about that, right? Um and so this and Jim was just, I mean, it was it was uh it was he was just amazing the execution, like what they were doing, like to have this, you know, organic inbound demand. It was small numbers, but but so so yeah, like I I I wish I could say that I looked at Jim's business plan and I looked into his eyes and it was like cut me in.

SPEAKER_01 1:32:20

Uh but it's just cool though, because during your relationship with him on the MA side, like you, he wasn't trying to sell you. Like he you you probably got to know the real you do you think you know him probably deeper than any other founder?

SPEAKER_00 1:32:32

Uh yeah, probably. Probably. I mean, there's a few other founders that I've I've known for yeah, similar amounts of time. Like there's a few other founders that I've in in our fund where maybe I invested in their last company or I just knew them. Um but yeah, with Jim, it's a really special relationship. I really, you know, and it's really, yeah, I mean, I guess it's gets back to like just pinching myself. It's it's really uh great that this I get to do this for a living, where it's like, you know, I really was like the first believer. And I mean it's one thing to be first believer in you know the 19-year-old, you know, brilliant MIT, you know, whiz kid. And and good for you if you're the first believer, right? Um, but I I to me I find it um, yeah, I'm just like lucky that I can, I can, you know, there's there's definitely some luck involved, hopefully some skill. Um, but yeah, then to be like the first believer in a company. And then the the really fun part for me, which is, you know, I'm like super competitive. I don't, you know, I'm not like one who wants to like pound my chest when I have something good happen. But like inside it feels really good because yeah, everyone wants to dance with Sen Cut Sen now. And uh and it's so much, you know, and like I'm I'm yeah, I'm not doing the hard work by the way. Like he's the cut, it's all you know, all credit to the company and the founders and the team. But um, but you know, I helped a little bit. And then, but it's so much fun when you know, I I can talk to like any defense tech startup, I can talk to like any hardware startup. And I mentioned Sen Cat Sen. Oh sen, uh, that's great.

SPEAKER_01 1:33:46

That is cool. It lowers the barrier, yeah, it just makes it easier. Yeah, yeah. Do you have any advice for a founder who this is resonating with who wants to get in touch with you, or is it more that you want to find them?

SPEAKER_00 1:33:57

Yeah, I know I I'm open to people reaching out. Um, so I I I usually respond to people who okay, so if you send me a message that, you know, is not AI generated, I it's highly likely I will respond to you, but I wouldn't guarantee it. You know, if I talk to you, 100% I will follow up with you. Um but yeah, if you but these days I get a lot of inbounds from like AI and I don't, you know, so those are um but yeah, if someone wants to reach out to me and and it can actually, you know, it I have written so many cold emails, you know, and so I I'm acting this is another thing that I've you know, not that good at too many things. But like yeah, it's like, you know, how do you write a short email that demonstrates that you know it's not AI, you know, it's a little bit personalized, it's a little bit thoughtful. It don't spend more than five minutes, or even maybe you can do it in two minutes. So, anyways, if you can do that, yeah, please reach out uh or shoot me a message on LinkedIn or my, you know, you can find my email. So yeah, I'm definitely open for anyone who wants to reach out.

SPEAKER_01 1:34:49

Sandy, I really appreciate you joining me. It's uh I don't meet many VCs with like this many wins with this unique of a story who are this focused on the founders. And uh I'm just really excited to see what you you back next. So thank you.

SPEAKER_00 1:35:03

Thank you very much.