What Keith Rabois Thinks About Basically Everything – Venture Stories

Key Takeaways

  • Keith’s Career Advice:
    • Find what you’re best at and leverage it as much as possible if you want outrageous outcomes
      • Or – Try to find a rare skill that is in demand and become the best you can at it
    • Instead of trying hard to pick which company to work for, select your boss
      • Find someone that’s the best in their field, and go learn from them
  • Advice for founders – Solve your biggest risks first
  • On investing – “Fundamentally, the earlier you invest, if you are right about the founder, that is the only thing you need to be right about and everything else will take care of itself”
  • Great advice:
    • “If you want to be healthier, spend time with people who are healthier than you. If you want to be wealthier, spend time with people who are more successful or smarter than you.”

Intro

The Similarities Between Venture Investing & Baseball

  • Keith says running a venture capital firm is more similar to baseball than football or basketball
    • Each player has their own individual stats and can dominate at their job, but they all share wins and losses as a team
    • “You can partial out people’s contributions, maybe not perfectly, but directionally at least”
      • “I think baseball is the closest analogy from a sport’s perspective”

Keith’s Thoughts on VC Firms

  • Keith doesn’t believe venture capital firms should try to acquire other VC firms. The early stage investing (Series A and B) is “much more art than science.”
    • “The incentives to combine are not there economically”
  • Ten years from now, Keith believes VC firms will look almost the same, just like how baseball hasn’t changed much over the decades
    • “Who’s leading the most interesting company rounds…it’s mostly the same people”

Why Did Keith Move Firms?

  • Keith recently left his position as Managing Director at Khosla Ventures and is now a General Partner at Founders Fund
  • He felt it was time to do something different before it was too late – Keith believes VC investing is more of a “young person’s business than an old person’s business”
    • Why? – It takes about 5-15 years after funding to get a return on your investment
    • “I felt a ticking clock if I were to ever do something different, and felt I would need to do it sooner rather than later”
  • Keith on what he’s good at – “My skill is finding things that are brand new, that haven’t even launched in many cases, and investing before other people”

Founders Fund

  • Keith says Founders Fund likes to invest in people that other VC firms overlook
    • He compares this to a high school star athletes dropping out of school, and then and mentoring/investing in them in the hopes that they become pro athletes
    • “We are going to aggressively recruit for up and coming talent and then promote them”
  • Keith has also observed a shift in the way Founders Fund invests – from pure passive investing, to a combination of passive and participatory investing (getting involved in the company)

Keith Looks Back At His Career

  • Keith has lived in Silicon Valley for 18 years
    • The most exciting thing for him is finding exceptional people, mentoring them and watching them succeed
      • “I’ve been able to propel various people forward and give them the opportunity to succeed on their own”
    • The second most exciting thing for him about living in Silicon Valley is “creating companies that revolutionize the world”
      • Usually, the more a company revolutionizes the world, the bigger it becomes, and the greater returns on the investment it generates. It’s a win-win from both standpoints.
  • Keith does about 1 investment a month
    • “A good investor is more like a psychologist than anything else. Each entrepreneur and company I get involved in requires a lot of interaction.”
      • It’s difficult to invest in lots of companies because many companies want investors to attend board meetings, find and recruit talent, talk with customers, etc. – all of which takes up Keith’s most precious resource (his time)

Career Advice

  • “You want to find what you can be best at and exceptional at and in some ways, the rarest skill you have, and leverage that as much as possible if you want outrageous outcomes”
    • People with average skills get average results
    • Instead, try to find a rare skill that is in demand and become the best you can at it
  • “Trying to choose which company will be successful, especially early, is a fool’s errand. The best venture Hall of Famers are only right about 30-40% of the time.”
    • The idea that an individual with no venture experience can identify the next billion-dollar startup and go work for them is slim to none
      • Instead, Keith recommends people select their boss – ”You want to select someone you can learn from, who is excellent, and if that goes well, you’ll be preparing yourself to be in the right place in the right time”
  • “What it really comes down to is this – who the people in the building are, what the critical density of talent is, and how long you can you sustain them working together”
    • While at PayPal, Keith says there was a large group of smart people that worked very well together for several years. As a result, PayPal became an incredibly successful company.
      • The question becomes – “How do you aggregate all of the talented people and put them in one place?”

Advice for Founders

  • “To me, there is no such thing as a mistimed company. The founder’s job is to triangulate to what’s possible…You need to plan for what’s possible today and figure out hacks.”
    • Square started with a card reader that people would plug into their phone, but Jack Dorsey (Square’s CEO) knew that in the future they wouldn’t need the hardware
      • Instead of waiting for a massive change in consumer behavior or tech, Jack started Square and did what was possible at the time
  • “Every good founder has a great answer to the question of, ‘Why now?'”
    • What is it about the world that makes it a great time to start your company now?
  • Keith likes to give founders a 10x credit – ”If you’re at 1,000 users, I believe you can get to 10,000 users”
    • “I’ll basically write checks valued at about a 10x growth”
  • “You want to solve your biggest risks first. What mediocre founders do is solve the easier risks first.”
    • Founders that solve their biggest risks will get rewarded twice
      • Doing so will dramatically increase their confidence and the valuation of the company
    • If a company needs a lot of money to solve those risks, they should ask for it – “If a prize is big enough, the money is there”
  • “The question I ask founders is, ‘Who are you creating value for and why?’ And if that feels large, and feels like a reasonable number of people in the world, I can easily invest.”
  • “Fundamentally, the earlier you invest, if you are right about the founder, that is the only thing you need to be right about and everything else will take care of itself”

Lessons from Apple

  • “If you care about the end user experience, you have to control the whole user experience. That’s the number one lesson from Apple.”
    • “If you actually want to deliver a world class product, you need to control all of the variables.”
      • This applies to content, financial services and all other aspects of the business
    • Vertically integrated companies like Apple, control all components of the business and create more value by not having to depend on other firms/share profit
    • Keith talked more about this in these Podcast Notes

Keith’s Rapid Fire Thoughts

  • Fitness:
    • “The key to fitness is showing people results and compressing feedback”
    • Keith believes the industry will move to more of a customization model (different workouts for different people depending on their body and goals)
    • “Stretching is bad for you”
      • Almost all injuries come from hyperextending muscles – one way to prevent those injuries is to be tight and not stretch
        • However, this does compromise performance – there’s a tradeoff between flexibility and injury prevention
  • Life longevity:
    • There is research supporting that sleeping 8 hours a day, exercising daily, and intermittent fasting can extend a person’s life by several years
      • The problem is that people have to do it for a very long time before they can get the benefits
  • Homeschooling:
    • About 8-10% of Americans are home-schooled
    • ”On any metric, people in homeschools outperform socially and academically”
    • Keith believes that if a startup could solve the problems associated with homeschooling (not discussed), the amount of Americans who are home-schooled will jump to 30%.

Additional Notes

  • “The single best thing you can do for the human race is to get deeper and more sleep”
  • Keith is a firm believer in the phrase – “You are the average of the 5 people you spend the most time with”
    • “If you want to be healthier, spend time with people who are healthier than you. If you want to be wealthier, spend time with people who are more successful or smarter than you.”

These notes were edited by RoRoPa Editing Services

Bookmark

FREE! THE TOP 10 PODCASTS OF 2018, AND WHAT WE LEARNED

You'll also get our weekly newsletter with the takeaways from our curated list of top podcasts. Unsubscribe anytime.