Who is Chris Sacca?
- Best known for a few things:
- His beard.
- His amazing wife.
- And professionally, as an angel investor.
- Chris has invested in Uber, Kickstarter, Lookout, Twillio, Twitter, Instagram, and Facebook, etc.
- How to say “Sacca”:
- It depends on the region.
- In buffalo, NY it is nasally, pronounced “syahy-kah”.
- It is really pronounced, “sack – a”.
- Chris has a lot of funding experience.
- Recently, he was featured on the cover of Forbes.
- His first fund may be the most successful in the history of venture capital.
- According to Chris, a job as a venture capitalist is never done.
- As a developing company, Uber is not done.
- They are at around 250x multiple on the fund.
Total Immersion is a Lifestyle Change:
- When investing, Chris got started with many mentors (e.g. Josh Copilton, Tony Conrowd, Industry Ventures, etc.)
- It is important to remember that “execution is everything”.
- There is no secret in the approach.
- You are the one who has to execute it.
- There is no “playbook”.
- You can’t fake if you aren’t good at it.
- It helps to network & build allies through advice sharing.
- Chris and Tim’s relationship is proof.
4 Tips for Early Stage Investing:
- Only gets involved in deals in which you can personally impact the outcome. (i.e. material impact, making something likely to succeed, etc.)
- Start with something that is already great that you can make more awesome; not something bad that you can make good.
- Give youself a chance to get rich. Don’t invest all of his money; try go into deals low.
- Try to be proud of every deal and to not regret anything.
- In order to be successful, Chris does research, sees what is successful, and then sees how to get involved.
- He only invests in things that are live and/or in production with an effective team, not just ideas.
- Any pitch where the founder is trying to convince her or himself of the idea.
- They need to fully believe in what they are selling.
- They should also have solid goals for the future that are spoken as unconditional. (e.g. “When we get to 50,000 users…”)
- Look for founders that know their idea will be a big thing.
- Look for founders with confidence, realistic ideas, and plans for the future.
Anecdotal Story – Wii Tennis:
- At his house in the mountains, over the holidays with his family, on New Year’s day, Chris’s friend Travis and himself go snowshoeing at midnight on tradition.
- Chris’s dad challenged Travis to a game of Wii Tennis in the morning.
- They played the first couple of games and scored very closely, but Travis won.
- They kept playing and Chris’s dad worked really hard to try to win.
- Travis was still hungover from the night before, yet he was winning.
- Then Travis said, “I’m sorry, but I’m not left-handed.”
- He switched hands and didn’t even let Chris’s dad hit the ball.
- Travis was ranked #2 in the world at Wii Tennis. (also the founder of Uber and clearly obsessively competitive
Examples of Successful People:
- The founder of WordPress, Matt Mullenweg, is very successful.
- WordPress is worth over a billion dollars.
- The most successful are incredible listeners.
- They listen well not just in casual conversation.
- They go out of their way to interview other people.
- They take notes.
- They will listen to anyone.
- A waitress, teacher, etc.
- There are billionaires & leaders from whom they are learning.
- They will listen as a strategy to not share everything in their heads.
- Successful people also read a lot.
- They learn and study, so when they speak, it matters.
- They are learning, modeling, and constantly researching and gathering data.
The Investing Game:
- You have to say, “no,” a lot.
- Chris played poker and made money sitting (by knowing when to fold), not by playing hands.
- Investing is a rigged game.
- The risk of an investor and a founder is different.
- As a venture capitalist, Chris is making it more rigged.
- People give him money, he takes a fee to take their money.
- If he makes money, he pays back the fee and splits the profits.
- If he loses money, it doesn’t come out of his pocket and he keeps the fees.
- Only the investors really lose money.
- It is unfair and rigged in favor of the venture capitalists.
- He essentially places bets by looking at risk analysis with all or nothing probability perspective.
- Venture Capitalists are rewarded on the upside and not the downside.
- Hedge fund investors are able to make money when things go wrong.
- Wallstreet people are on drugs and are very competitive. Not in Venture Capital – demands a steady/reflective state as well as negotiations. Thought & emotional intelligence.
- Silicon Valley built on positive energy…stakes got higher, funds got bigger, more capital, but now more competitive.
- On the East Coast vs West Coast:
- East Coast – stab each other face to face
- West Coast – cut the Achilles and watch them bleed
- Long-Term friendships maintained, scale over time with VC. 10-year fund…
- East Coast has shorter time frames. Not as many dynamics of a long-term fund.
- Media Business/record label – no equity deals. the payments work differently because they want guaranteed cash.
- Silicon Valley is a small world – work for “deal flow” (good opportunities come to you), rather than hunting for opportunities.
- Hedge fund – working on analysis of stocks from a distance
- Private Equity – products, supply chains, etc. and you are improving it. Some tension with management.
- Venture C. – collaborator and is involved much earlier in the process of developing the business; work with CEO; give advice; etc.
What Chris Was Wrong About:
- Chris regrets more on what he passed on than what he “failed”
- DropBox – compared it to wrongly Google Drive and thought Google would crush it. This is actually rare.
- AirBnB – said someone will get murdered or raped there
- That is probably true.
- Let the risk of harm distract him from the best solution.
- Go-Pro – Nick Woodman; didn’t think he would be tech savvy enough and introduced him to someone over YouTube (didn’t think he’d be good so passed him on)
- SnapChat – Took too long to do the deal, someone else got it.
- Thought it would be used by kids exposing themselves, but that is actually not all it is used for. It can be used for networking and building content.
More on Being Wrong:
- Don’t conflate bad outcome with good process. (Focus on the decision making over time even if the outcome is not good.)
- Did you make the wrong decision or the right decision based on your process?
- They all had in common – negative case dominated the analysis of whether he should invest.
- Early-on, data is low because the scale is small. So, you use your gut.
- He let the downside outweigh the risk.
- Even with Uber, he could have said no because of competition with Taxis and regulations/safety, but he somehow overlooked that.
- Tim was an early advisor to Uber, even before Sacca got involved.
- It was dismissed in the beginning (a common investing mistake), people had a false impression of the market as a constrained, niche activity (1%). The first target was confused with the total market and available market. The market grows.
- Some start of as so niche that the market potential is overlooked.
A Developing Expertise
- Avoid “business books”
- Avoid formal business training
- Read good blogs on VC
- Brad Feld: Feld Thoughts
- Computer Science Majors – at Google – math and science with diversity of experience and collegiality
- The degree got so popular and valuable that they didn’t have to pay for school and didn’t need much work experience
- No opportunity to study abroad or do volunteer work because the work was so rigorous/demanding at school
- Became entitled and lacked empathy – so had difficulty relating to the world in terms of business and people
- Chris wants to broaden the scope they have on the world
Empathy is about seeing the world from another person’s lens and deciding what matters to them.
- This helps Chris build something with them and to develop a long-term project with them.
- The world would be better for getting along, impacts made in the world
- Compare US living to a village where kids are dying from dirty water and women don’t go to school.
- Not Fade Away: Biography, sad story but inspirational about someone who is dying
- Impact of death on the people in his life
- Inspires gratefulness
- Inspires empathy
- How to Get Filthy Rich in Rising Asia
- 2nd person, like role playing (You are in a room…)
- Starts – Islam in Pakistan, entrepreneur
- Shows you into different lives of another world
Role Models of Success:
- Fred Stinso, John Door, Mike Moritz
- Used station in life to gather smarter people to teach them about things
- Used talents for storytelling
- Making ideas come to life to build companies
- Became billionaires
- Had great families
- Well respected
Journey from 30 – 40:
- Stop trying to have a role model, don’t define himself externally
- He has been disappointed by everyone he put on a pedestal.
- He tries to define success for himself, not by looking at anyone else.
- Bill Gates and Chris shared a business conversation. He admires his work, but not his character.
- He defines what is important to him:
- Wife & Kids
- He reflects on his own life and his own parents – who spent time with him and his brother.
- Chris’s parents were always involved, took vacations with kids
- National parks not resorts
- Read with them
- Mom pulled them out of school to go see an author at a bookstore 90 min away or a science museum; “Art Park”
- He didn’t know what an investment banker was, but he knew writers, artists, chefs, musicians, teachers, lawyers, doctors, etc.
- Expose children to people from different “walks of life”
- Have a Shitty Job:
- “Sweet & Sour Summer” –
- 1st Half to an internship with relative or friend with an interesting job
- God brother – lobbyist DC (wrote 1 pg summaries of the bills)
- 2nd Half work at his dad’s best friend’s construction company at the bottom level
- There is a world of cool opportunities, but work ethic and experience to give the kids drive.
- He likes to work with people who have worked with poor people.
- Going overseas – become entirely vulnerable relying on locals for help and trusting them with directions, etc.
- This can lead to humility
- Asking for help makes you more powerful as a CEO, manager, etc.
- People who are athletic – self-discipline, introspection and balance, contend with losing, pain is temporary
- Chris once did an Ironman with a 103 degree Fever
- Ran bc parents were there, and he kept thinking “I will be in my bed tonight” and he was in a temporary moment
Historical Figure You’d Most Like to Meet:
- Buckminster Fuller
- passed away 30 years ago
- Mathematician, philosopher, engineer, poet, inventor, futurist
- wrote optimistically about technology
- more resources
- doesn’t think machines are here to take over
- humans are good at heart
- Found optimism in the daunting
- Geodesic Domes ( like at burning man)
- Invented the Bucky ball
- “Tensegrity” & Fascia (keeps organs in place)
- Collected Money
- From a kid, he always wanted to make money
- Sold Air Fresheners as a 6-year-old with his brother
- His parents are successful, but the didn’t push him to make money.
- Mom – college professor
- Dad – Lawyer, does a lot of pro-bono work
Was there a Trigger for this success:
- Baseball was inspiring for him, mark mcguire etc.
- He was good at playing cards, ran a card room in high school
- boo ray (new orleans and lockport new york)
- street games
- teacher would help – he would write passes to go to the card room (his friend’s mom’s office) 07.55
- Chris went to law school without going to class.
- If you go to class you sign a seating chart and sit in the same seat.
- If you don’t go, then your name isn’t on the chart.
- You just go to the exams.
- The teacher isn’t there.
- He was an amazing test taker and had some of the best grades in his school.
- What is taught in class has little to do with the exam or with being a lawyer.
- Some people need to be taught to think linearly, but he and his roommate along with others were aware of the method and figured out what was important.
- He wasn’t there to be a lawyer.
- If he was, then attending class would have been great.
- He went there because he thought it was the fastest path to a seat at Silicon Valley at age 25.
- You do need notes from the classes to understand cases that the professor brought up.
- He would throw a keg party where it was BYON. (Bring Your Own Notes).
- He would make a composite them and then study for the exams.
Why Go Into VC?:
- He was 20 when he was living in Ireland and going to school through Georgetown.
- He drank a lot while he was there.
- This was before he had learned of Venture Capitalism.
- He had been sharing a notebook with a girl he flirted with.
- They passed each other notes in class in the notebook.
- One question was, “What do you want to be when you grow up?”
- He knew what characteristics of a job he wanted:
- A lot of talking on the phone.
- High risk, high reward.
- Part time from the mountains, part time from the beach.
- Be done before 40.
- He and his wife were standing in their mountain house at 40 when he found the notebook.
- They were cleaning out the mountain house to move stuff to their beach house.
- He wondered what is next for his life.
Storytelling – Words & Phrases:
- He overuses the words: amazing, bananas, co-co-nuts, “that said” (as a transition).
- Learning transitions in Spanish helped him to stay fluent with the language, and they have been great for storytelling in English.
- He is obsessive about writing.
- He wants his work to be crisp & original.
- This is a skill he got from his parents, who both write very well.
- Speaking and writing are different.
- When speaking, he tries to emulate the speaking pattern and speed of whom he is talking to.
Drive, Direction, & Determination:
- He gave advice to college students who don’t know what to focus on.
- He gave a graduation speech two years ago at The University of Minnesota.
- He usually gives speeches to business people.
- The graduation speech was an intense one for him.
- He focused on:
- Be interesting.
- Not great, but interesting, compassionate, and adventuresome.
- Be up for life.
- Be someone you would want to be around.
- Pursue a course of life that embraces interestingness.
- Being interesting isn’t genetic, you get it from having diverse experiences, talking to people, traveling, and working hard.
Shifts of Habit to Maintain Success:
- Chris was fortunate to make a lot of money.
- He ended up losing a lot, millions of dollars.
- He got it back and is successful again.
- He doesn’t have a hack, but he does have advice:
- Before he had money or a business, his then-girlfriend and now-wife moved away from the hotspot of venture capitalism.
- He had a lot of meetings, but didn’t accomplish anything.
- He was reacting more than acting.
- He and his wife built a list of people they wanted to know better and invited them to stay in Tahoe.
- He made a list of companies he wanted to know better and invited them to Tahoe.
- Moving gave him a good excuse to not be available for unnecessary meetings.
- It was a huge shift and a huge risk.
- He could not afford the house and did not have leverage in the field yet.
- He ended up making many friends and building teams.
- He built deep and meaningful relationships.
- They ate and skied together.
- As an investor you need to be collaborate and share your vision of success for a company.
- With Twitter, he got tired of explaining it, so he bought much of the stock from investors he had to explain it to.
- The strategy worked.
- It wasn’t polite or political, and it was very expensive, but the risk paid off.
Less than $100 Purchase with a Big Impact:
Last Recommendations and Advice:
- Be honest with yourself.
- Most people aren’t entrepreneurs.
- Some posers want to be founders.
- There are too many people attracted to ventures with no hope.
- Ask yourself:
- Are you a founder or are you an employee?
- Is there an inevitability of success in your vision?
- When Chris lost money, he was upset, but he didn’t think of himself as losing.
- He knew success would come again because of his mindset.
- He raised $1 billion in Fall 2010.
- He only had one employee, who worked remotely.
- He knew it would work out and he wouldn’t fail.
- If you don’t think that way, this is not for you.
- You have to know, not hope.
- There are many paths to amassing incredible fortunes, and being a founder is a high risk way, but not the only way.
Important Movie for Chris: The Big Lebowski
Social Media: @sacca – Twitter, @sacca – Periscope
This podcast is brought to you by MeUndies. Have you ever wanted to be as powerful as a mullet-wearing ninja from the 1980’s, or as sleek as a black panther in the Amazon? Of course you have, and that’s where MeUndies comes in. I’ve spent the last 2-3 weeks wearing underwear from these guys 24/7, and they are the most comfortable and colorful underwear I’ve ever owned. Their materials are 2x softer than cotton, as evaluated using the Kawabata method. Check out MeUndies.com/Tim to see my current faves (some are awesomely ridiculous) and, while you’re at it, don’t miss lots ofhot ladies wearing MeUndies.
This podcast is also brought to you by 99Designs, the world’s largest marketplace of graphic designers. Did you know I used 99Designs to rapid prototype the cover forThe 4-Hour Body? Here are some of the impressive results. Click this link and get a free $99 upgrade. Give it a test run..