Keith Rabois – This Week in Startups with Jason Calacanis – Part 1

Check out the This Week in Startups Episode Page & Show Notes

Key Takeaways

  • The line between success and failure is often very thin
    • A company often exists only because of the heroic efforts of a handful of individuals
  • The team you build is the company you build
    • People typically say startups succeed 1-10% of the time – “I actually think if you put together the right founding team, it’s more like a 35-40% chance of success”
  • To do unreasonable things requires unreasonable commitments and sacrifices
  • The keys to success aren’t secret, they’re just painful
    • It’s all about deferring immediate gratification for delayed gratification
  • The immunity from what other people think is what leads people to be unreasonably successful

Books Mentioned

Intro

  • Keith Rabois (@Rabois) is currently an investment partner at Khosla Ventures, but has a storied and diverse background as an investor, entrepreneur, and executive
    • He has worked in senior positions at Paypal, LinkedIn, and Square; has led investments in companies like Stripe, YouTube, Palantir, and AirBnB; and started the company OpenDoor, which aims to transform the process of selling a home through technology.
    • Keith has quite an impressive list of bosses throughout his career  Peter ThielMax LevchinReid HoffmanJack Dorsey, and Vinod Khosla

Who is Michael Ovitz?

  • Both Jason and Keith are fans of the book
  • Keith’s big takeaway – “The line between success and failure and how thin it is”
    • In the book, Michael tells the story of many famous movies, and how they barely got made, and how much heroic effort by him, his business (CAA), and certain actors/producers it took to actually make these movies
      • Examples – Rain Man, Jurassic Park, Tootsie
      • Translate this to startups – “A company often exists only because of the heroic efforts of a handful of individuals”
    • Just like a movie’s talent (actors, writers etc.) determine its odds of being a blockbuster, the strength of a startups talent determines its chances of success

The Importance of a Good Team

  • A model Keith goes by at Khosla Ventures – “The team you build is the company you build”
    • “When you think about why Paypal was successful – we were able to marshal a critical density of talent in one building, and sustain it for a period of time”
  • When Keith gets involved in a company, he tries to help founders find the missing gaps which are holding them back from where they hope to be
    • Keith uses his network to help them out
  • People typically say startups succeed 1-10% of the time
    • “I actually think if you put together the right founding team, it’s more like a 35-40% chance of success”
    • A good VC can help find the right people for the team
  • “The companies that really succeed become this magnet for talent, and they’re able to sustain it for a significant period of time”

Opendoor

  • Keith founded the company
  • “Basically what we provide is instant liquidity for your house”
    • If you want to sell your house, you go to the site, give your address, and you’ll get an offer – if you like it, you can have your money in as little as 3 days
    • Their goal from the beginning – to make selling your home as easy as trading in your car
  • They’re now in 18 markets (cities) in the US. (they expect to be in close to 30 by the end of 2019)
    • Keith estimates that Opendoor will buy $10 billion worth of homes in 2019
  • Keith says Opendoor sells the homes that they buy faster than on average (compared to how fast it sells on the market)

What does Keith think of the “it doesn’t have to be crazy at work” movement? Do you have to hustle?

  • Expanded – Can you build a Tesla or a Facebook and not sacrifice a large swath of your time and life in that pursuit?
    • No – but it depends what your ambition is
      • If you want to play on a NBA all star team or be an Olympic gymnast…yes
    • “It depends what your goals in life are, but the idea that there are no sacrifices or trade-offs is crazy”
    • To do “unreasonable things” requires “unreasonable commitments and sacrifices”
      • “To tell people that they can achieve these things without the sacrifice is just misleading and borderline fraudulent”

Success and Delayed Gratification

  • “If you want to be more like a successful person, you should copy the traits of successful people”
  • “To be a successful company, copy the traits of successful companies”
  • The keys to success aren’t secret, they’re just painful
    • It’s all about deferring immediate gratification for delayed gratification
  • “Most of life is – can you trade long-term-gratification for short term sacrifice, and can you compress the feedback loop?”
  • “There is a formula for most success, but it entails trading off short-term and long-term gratification, and you just have to decide where on that dial you want to be”

Is Silicon Valley a meritocracy?

  • “It’s more meritocratic than any other industry in America”
  • Keith’s definition of meritocratic – Can you go from literally nowhere to success overnight? 
    • In Silicon Valley – absolutely yes
      • Keith says he’s actually had a few interns who went on to be more successful than him
      • “Almost every important Silicon Valley company in the last 50 years had at least one founder that was a first-generation immigrant”

Female and Minority Founders

  • Jason says he invests in about 10x as many women today, compared to 5 years ago
  • “My impression has been that the female founders that pitch us actually receive term sheets at a higher rate, than the average male founder that pitches us…certainly the ones who make it to the partnership meeting stage” – Keith
  • “In the 6 years I’ve been a VC, I’ve witnessed a significant receptivity to finding, identifying, funding, and mentoring people with different backgrounds”

Keith’s Thoughts on Trump

  • Keith says he’s conservative, but has never been a fan of Trump
    • “Trump was never prepared to be president of the United States, both personally and professionally, and was basically borderline sociopath…and I think that’s proven to be accurate”
    • “I did not vote for him”
    • “He doesn’t have the right demeanor in many ways to be an inspiring leader”
  • Keith says Trump does have great marketing instincts, though
    • “Trump, like a very strong founder who has great strengths and incredible weaknesses, has some great strengths – that’s why he was able to win the election. You clearly can’t do that without some skill.”
  • “His lack of discipline creates more unforced errors than any professional politician I’ve seen in my life”
  • The best politicians of our time, were voracious readers before they were elected
    • “Trump completely lacks that intellectual heft”

Margaret Thatcher

  • Keith says she’s one of his heroes 
  • “When I get depressed, I just reread a great Margaret Thatcher speech
  • “She had great relentlessness and tenacity. Like a very good founder, she just walked through walls and said, ‘No one’s stopping me.'”
  • Margaret has famously said – “I don’t read the papers, they might deter me:
    • “That immunity from what other people think is what leads people to be unreasonably successful”

These notes were edited by RoRoPa Editing Services

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