E460 | Daniel Dippold, EWOR: Launching EWOR to unite Europe’s most powerful unicorn founders

28:07And I think we've seen it poorly executed before as well. Meaning you really have to be very smart and do a completely different model to come to venture and say, we rewrite the rules. And I think that we've seen people trying to do it before where I just would say it has not worked. I'm not naming people here because I don't think it's worthwhile for anyone, but I'd be very curious to hear then. And I think everyone here in the audience would be curious to hear, okay, what is a group of unicorn founders, decacorn founders that come to our market and build their own thing? What is their view? Let's start with a part on rules, right?

28:51I think there's some rules that can be rewritten and some rules that cannot be rewritten. And you need to be very clever about which ones you're trying to rewrite. The super pre-seed plays that come a little bit with like the operative support, they have historically had a very adverse selection. Only bad founders applied because those that didn't apply could immediately fundraise, right? And what we have, in my opinion, already empirically shown is that people who have all of the opportunity in the world, they want to do the fellowship. I think we have rewritten the rule that there is adverse selection in a pre-play such as this automatically.

29:34And this is something I feel comfortable about rewriting. We thought a lot about this and it took us two years to get first initial empirical evidence for it. It will take us another two years in order to make the world understand that this is truly the case and happening. And maybe yet even another two years for this rule to be like exclusively true. Right. So I'm not saying like, oh, we've already rewritten the rules. It takes incredibly long and we've made an incredibly strategic decision about which ones to rewrite and which ones not to rewrite. Then there's of course other rules. For example, how does the distribution curve of venture look like Gaussian versus kind of heavy tailed?

30:16I've seen a lot of pitches based on the kind of Gaussian part saying like, oh, I'm actually going to take out the outlier cases and I'm just going to finance like clear five, six, seven X's. And with that kind of strategy, I moved to a somewhat of a Gaussian environment. And I think those are the rules you, at least me, you know, like with my background, I wouldn't dare to rewrite a rule like this because I think it's just the distribution of the equation. It's kind of how it works. So personally, I wouldn't be courageous enough to rewrite a rule like this, right? So you have a set of rules. You believe maybe one or two of them you can influence.

30:53Anything more than that is probably also bad shit crazy. and it's way too much. So you need to be very prioritizing about those and then you can have your strategy, be informed by it. And do I want to talk about the entire strategy? Sadly, I think it would take us so long, you know, like there's so much we need to get through. Is that enough of an answer for your, you know, for your question on strategy? Is that enough in order to kind of move on to the next slide or should I give a little bit more away? I would love it if you'd give a little more away. Maybe if, can you answer it by answering the question, where do you think that you're most contrarian against the current venture model, so to say?

31:40What contrarian belief do you have around venture that is underwriting the whole EWAR model or the whole EWAR strategy? A bunch of people say it. I think no one really does it. We believe all of the underwriting on the venture side, which is, of course, also then a prerequisite for an underwriting on our side, can be done on the founder level. We have invested in the shittiest business models, in the shittiest markets. You can pivot out of a market, no problem. You just need to understand what is possible and what isn't. If you invest in a person uniquely set up to build one special case in SpaceTech and they're building a SpaceTech hardware venture, can they pivot?

32:22Probably not because the founder market fit is like uniquely fits to this niche case in SpaceTech, right? So you cannot simply underwrite on the founder. What we specialize on is we found a subset of founders that you can purely underwrite on the founder. This is not simple, finding the subset, and there's way more to it than I just explained. But once you've found this subset, you can actually inform them. You just need a thesis about what works in order to inform the founder. We had one founder we worked with from Eastern Europe. A little bit of revenue, bad business model, bad market, not the best product in the world yet.

33:07founder absolutely incredible based on a thesis on pure underwriting on the founder we backed him and we decided we're gonna do some pivot some edits six months and so on from then onward like the thing scaled to three million arr from like from literally nothing and we personally believe that if you do the pure underwriting of the founder and then have the on the founder and have the resources to guide the founder to the right thesis right like this is not trivial because as an investor you do have this bird's eye perspective and it is incredibly useful and you should use it in order to help people who don't have the bird's eye perspective because they're all day operating and to inform it needs to be an interplay between those two parties that is really productive but as long as you can do that i personally believe that you can do the pure are underwriting on the founder, completely irrespective of what the business is doing, what the market is actually doing, and then help them develop into a great market with a great business model capturing enough value in that market and the technology scalable enough in order to capture that value within a very short amount of time.

34:21And that is truly unique. And I don't see anyone other really executing on it. I see some people saying it, but then if you look at what they do, declining and accepting paces purely on how the market does and what the founders do and the traction and so on. And that's simply not what we do. I would definitely agree on both points. I imagine that I cannot ask you, so what's that thing you've spotted? But rather, I would ask you, well, so to those that think this is exciting, I do think that And someone like Mike Mables Jr. has written some very cool pieces on exactly underwriting. So he underwrites based on the tech development, like the inflection that's happening technologically, society-wise, adoption-wise, and then the founder.

35:11And then what he says is whether the business model, whether the markets, whether all of these things align right in the beginning, that does not matter at all. If there's a strong tech inflection and there's the right founder, then it'll work. And that's kind of, you know, at least his work around the importance of tech inflection points and capturing those is focused. And I think that it provides a great framework. And I imagine that people can definitely use that to maybe understand your thing here a little more. At least you use words that are similar. I fully agree. And before I move to the next slide, I also want to say something quick about the context of all of this.

35:49right like why are we thinking so deeply about this because we want to do it for the next 40 50 whatever years right like that's really the goal that's the anticipation we have here and if you back incredible founders because of course you know like i've done a whole like spiel on like hey like this is all for the founders like we want to support the craziest people to change the world If you lose all of your money five years down the line, it's just not going to work out. You've got to go back to something that earns you money. And we figured out how can we change the world for the people we support while still making a return that creates a positive live bill.

36:33So I just want to put this conversation a little bit into context. I think you really need that impact thought of like, hey, how do I make an impact in this world? And then also that sustainable business model behind it, right? And if just now talked about the sustainable business model and even as an entity and the strategy, and if that's okay for you, I would love to bring us also a little bit back to like the impact and share those slides here. And this is the Silicon Valley thing here, right? Like that I've talked about, like our thesis kind of is, and I don't have the time to go through all of those people.

37:11But let's go through the person here in the middle, Fabrice Grinder, for example, who's also one of our backers, right? In my opinion, he's the best marketplace investor in the world. He started FJ Labs, insane return, over a thousand investments. Honestly, to anyone listening to this here, I think they should also really consider doing something at FJ. I think it's one of the most incredible funds. But then, you know, he also built OLX, which is a marketplace and scaled it to over a billion, sold it. is an incredible entrepreneur, incredible operator, ex-Princeton, incredibly intelligent. He backed Alibaba, Airbnb, Uber, crazy pigs, right?

37:48And if you're building a marketplace, our job is to get you in front of Fabrice and say, hey, Fabrice, this is such an incredible founder. You ought to chat with them, right? And it doesn't matter whether you live in San Francisco and you can walk over to Fabrice's, by the way, not based in San Francisco, based in New York, we can leverage this ecosystem by making it like you in this little village. And imagine that in this little village, there is Fabrice, there is Kevin, there is Haya, there is Andre, and they are the best in the world in something. Patrick, in my opinion, is the best in the world when it comes to deep tech fundraising.

38:28He raised over a billion for Lilium on one of the biggest visions to date. And you can argue about, hey, whether Lilium is good or not for the world. I think that if regulation would not have been part of the equation, he would have put this off. And I think it would have changed the planet for the better. And I think he's an exceptional founder. And when it comes to you raising your deep tech funding round, you've got to talk to Patrick. He's just like one of the most incredible people to do this. And he's a PhD in aerodynamics himself. He's like a founder. He's an operator. He's a fundraiser.

39:01He can tell you how it's done. So our goal, like with Ebor here, is to create that virtual Silicon Valley in the way I've described it, by giving people access to the best in the world in whatever they need right now. And that's why Ebor is structured completely modular. Because for every founder, it'll be different what they need. It'll be different what they want to achieve in terms of like the next three months. some of them need hiring. And those hiring probably want to talk to Kevin about how he hired a person who then after he hired them as an intern started a company called Palantir. And then you're asking yourself, how can Kevin hire such incredible people?

39:43How did he do it? How did he interview? That's probably what you want to do. But not every founder VBAC needs to hire within three months. So those people might not want to talk to Kevin. They might want to talk to Fabrice on how to structure the marketplace, right? So it's completely modular. Those are, by the way, some of the people that we're backing. So now you're showing a slide that shows some of the names of the people that you're backed. I'd love to ask you to verbalize how you think about outliers or what you call the 0.1 % founder prodigies. I am doing what I'm doing with the podcast purely because I love outliers.

40:22And just being able to talk to people like yourself is just such a, that fills me with joy. And I knew from the get-go, I don't need to get rich. If I can do this all day, I'm going to have fun. So tell me about these 0.1 % founder prodigies. How do you understand them? How do you recognize them? How do you, now you spoke a bit about what type of company or firm you built to service them. but I'd love to ask you to really talk about how you verbalize your thinking around outliers. Such a great question. And I resonate so much with what you just said. This is also why I'm doing Evo. It just gives me so much pleasure talking to the people who are shown here in the slide.

41:04Actually, some of those people became my best friends with whom I like to go on hikes, with whom I like to spend time. I'm doing a birthday party in a week from now. And two of those people are coming. I mean, it's a small group. It's only 11 people I invited. And it's what you just said, right? Like that is quality of life to me, to like, to never stop learning, to learn, you know, from Jürgen about engineering, to learn from Ariel about multi-agentic AI, to learn from Lucas about computer vision, to learn from rehab about hiring. is just incredible, right? And to start with a little bit of concrete stuff of what you said, like, of course you can look at empirical evidence, right?

41:48Ricky, 98X angel investor, I think 20X LP or something, like built, had a nine figure exit. Andrew Nata built Bestwing, 180 million revenue when he left, right? This is like, okay, sure, outlier, right? You just see it empirically. Then there's kind of people, there's kind of a couple of first signs, right? Nick was, to my knowledge, that's what the Wikipedia says, the youngest person to receive VC. 16 years old, received VC, then raised a million, sold the company for 30 million. What a crazy guy. I remember my first call with Nick. I was so blown away by Nick, the way he talks, the way he thinks.

42:29I was in awe. I knew from a couple of VCs of how they looked at the market. And I said, like, as long as Nick is on this, I give a shit about the market. I give a shit about everything else. Like, Nick is going to do this. Right. And this is kind of this feeling of awe. Like, it's an outlier detection system. Jürgen, Richardson's first patent when he was 12 years old. Record holder in the British boat race when he was 16. And then Oxford. Ariel, the youngest machine learning researcher at Cambridge. He was a race car driver, really successfully. And then he does machine learning research at the age of 15 at the University of Cambridge.

43:08How goddamn crazy is this? And then rehab emancipates herself out of Tunisia and then studies physics and electrical engineering and gets herself a software role at Microsoft as a Tunisian woman. Like how absolutely incredible is this? Or Lucas out of Munich working directly with Elon on 3D computer vision at Tesla. like this is and you know like i can verbalize abstractness here as well but i think it's a the crazy thing as you talk to someone and the feeling you get afterwards is just like oh my god like this person if anyone's gonna change the world they're gonna be that right and it's sometimes also that's listening to your intuition i cannot give you a perfectly abstract definition of this being an outlier.

43:59But I can tell you that when you combine a little bit of abstract definitions and some rules with a little bit of intuition of what you've just seen as a founder yourself and what your co-founders have seen, you kind of get a good detection mechanism for outliers. Do you think that venture can be done by someone who has not been close to outlier success? And when I say close, maybe you haven't enacted it yourself, but maybe you were a first investor and you were very close with the founders. And for that reason, that might be close enough. What's your take there? Do you have to have been there?

44:34To be very honest, I think you do. I think you can also become an investor and then do it afterwards and maybe burn the first couple of checks. But as long as you commit it, like really long-term to like this, you can expose yourself to outliers, right? It's not impossible. And by you becoming an investor, you automatically get exposed to more outliers. It's a question of do you realize and do you learn and are you willing, right? And maybe in the first one or two years are happening, it's not happening. So in the short term, I say no to your question. I think if you want to have success in the next one or two years, you already have to be exposed to outliers.

45:13If you want to have success within the next two decades, you can solve the outlier exposure issue yourself. Yes, but the definition of the venture distribution curve is a power law and that power law is driven by outliers. And therefore, you are in a job that is dedicated to outliers. That is purely the mathematical background of the profession of VC. And anyone who says something different is, in my opinion, lying because it is violating the rules of logic. So, yes, you do need to be exposed to outliers. and let's look maybe at the most successful VCs. Sequoia, the founder was a journalist. His job was to be exposed to outliers.

45:55He was a journalist. It's your job to find those crazy stories, of course. David Rowan, the editor-in-chief of Wired UK, former editor-in-chief, founding editor-in-chief actually. Great investor, great investor. He was like, we backed this Eastern European founder. No one else wanted to back him. David was the only guy who said this person is crazy. He came in at like a 5 million valuation. Then nothing happened. Then the 3 million ARR happened. And then people threw money at him at a 50 million post money valuation. David already made his 10x journalist, right? David was the second person after us to put money into Jürgen Zweig.

46:32Incredible success journalist. And of course, a great founder. And of course, a great investor. That all happens afterwards. The next group of people is former founders. If you look at Andreessen, Mark Andreessen, Ben Horowitz. I don't know if you read The Hard Thing About Hard Things. What an incredible book. What an incredible story about suffering and learning. They were exposed to outliers because they're outliers themselves. And outliers know other outliers. And they were founders, right? And then there's other people that just happen to be some sort of different kind of investors. Maybe they were in PE before.

47:05Or maybe they were in some sort of angel investing. and then they go into VC. And depending on how much they were exposed to outliers there, I think they're also going to be exposed to outliers in venture and it works out. But short answer, yes. I think you need to be exposed to outliers. The definition. Can I close on a super provocative question? That'll get you in trouble, I'm sure. Can I go through two slides and then we go to your provocative question, okay? Go. Let's do it. I mean, the results, let's skip over them. I think this is something I really wanted to say. It's the last thing I want to say, and then you ask your question.

47:45But the way we've built Evo is we've reimagined two things. First of all, the virtual aspect, right? I don't believe in a post-COVID Zoom-based world, you need to be physically based anywhere. You can't do it all virtually. And secondly, in the tech-driven world we live in today, we just simply don't believe you need a program. We've killed program. We've killed standardization. We don't believe any of that is necessary. When you do eWorld, you get loads of unicorn one-on-one time. I've talked about this. You want to hire people. You don't have to wait until hiring happens in the program. How much of a turnoff is this to those people?

48:24It's the biggest turnoff on the planet. If you nick, I've done this two times. Like, shut up. I need to hire now, right? That's the reality of what a great founder does. So what we've done with Evo is we've completely modularized everything you see here, hiring, fundraising, developing yourself, distribution, sales, like all of this. It's completely modularized and you get it when you need it, how you need it, in the right magnitude, without anything on top that you don't need. Everyone always asks about like, which problem have you solved at Evo that no one else has solved? I think this is it.

49:00I think this is how we solved adverse selection. by building this modular system. And founders love it. They get a 10 out of 10 all of the time. The last NPS survey for the ideation fellowship was 100%, which was a really big win for us. And the one for the protraction was like 89%. This thing here, this modular system is working. And this is personally what I'm most proud about. But I'm going to stop here. I've chatted enough about Evo. I completely agree with you that you can build incredible things, especially in venture. So not necessarily as a founder, but as a VC, you can be wherever you want to be.

49:40I do not think that the digital look in the eyes is that much less worth than looking someone straight in the eyes. My final question to you, which would get you in trouble, is I want to ask you, what do you think about the current state of VC? And by that, I ask you about the quality of the typical VC. So here I don't ask you to comment on your co-investors and the people you respect a lot, but maybe the broader spectrum of venture capital. Let me answer this in a somewhat political way. When you already tell me up front, oh, you're going to get into trouble. But I'm still going to make this a bit of edgy because we're in a podcast.

50:27faster. So I think the bigger the quantity within the power law gets that you observe, and then you build kind of chunks within a certain power law, these chunks start following that power law. And let me make this a little bit less abstract and more clear. VC is a massive power law because of the ventures. Most ventures don't make it, not because of the quantity of the founders, simply because of other factors as well. Most of them also because of the quality of the founders, I would argue, but that's a whole different discussion. Kind of 1 % of the ventures end up making like the maturity of the return, more than 50%.

51:11Like this is the true statistic, like 1 % of ventures make more than 50 % of the return of the industry. This is insane, but this is the way it works. And as long as the quantity scales massively enough, that no matter if you build chunks of like 30, 40, which are portfolio sizes of VCs, these chunks, these subsets mathematically at one point will follow the distribution curve as well. So we'll see some small VCs that do incredibly poorly and some small VCs that do incredibly well. And the bigger the VCs get, and like talking about like what we talked about and reason and so on earlier, the less you actually have this effect.

51:51So what will happen? Some of the incredibly big VCs, they will become average simply because of the mathematics of what happens. They cannot only get the 1%. This is not how it works. By scaling, they go further along the line and they will become average. And out of the small VCs, many of them will do well and many of them don't do well. And VC now in Europe has happened for a long time. And because of that, we have simply seen so many funds fail. Most of them, similar to most of the ventures, they just don't make it because they follow the same distribution curve. I've once read, I don't know if this is true, don't quote me on this, but what I read is 90 % of VCs in terms of DPI are losing money.

52:35I totally buy this. This doesn't mean you don't make money in VC. We are talking about the median versus the mean, right? It's just mathematics. So what do I think of the industry? I think the industry works. I think it's great. I think most people who are in that industry don't earn money. And those people who are in the industry for earning money, they should really think twice about it. Because simply it's incredibly hard and they are part of a power load distribution curve. And maybe they are not set up to earn money on this kind of power load distribution curve. Is this connected to purely the mathematics of venture, as you just described?

53:15or is it connected to the quality and profile of the venture investors? You wanted something edgy, so let me give you something edgy. So you know what happens when some great stuff happens? I think my second investment was magic.dev. It was a first check into a foundational model that three years later was worth way over a billion. I see this, and of course, I was motivated to do more angel investments. You see a hype, you see something anecdotal. The whole industry works on stories. A lot of people enter this industry on stories. They hear these overnight success stories and they all come and they're not willing to work hard.

53:53They want to drink coffee with people. They don't know how to build a venture. They're wasting founders' time. And those people, they come with a hype, especially 2021, 2022. Lots of funds were raised that, in my opinion, do not, from a mathematical return point of view, deserve to exist. Simply because they don't mean it. They're not ready to suffer. They don't take the chop seriously. They're not excited about value creation. They're excited about the stories. They don't understand the mathematics of the distribution curse. They are like, you know, involved in. And simply, I think those people, they will not survive the next crash.

54:32They simply won't. Daniel, I did everything to try and make people first inspired and then angry. So I hope to some that I succeeded. Daniel, thank you so much for joining me for the podcast. it was hugely exciting. If I should just jump into the shower with you here in the end of Crab, that you're going to receive for making out the final statement. I, of course, pursued it because I think you're very right. I think the venture is a power law industry and I think that it is incredibly important that we, for the betterment of everyone, and I'm not talking about European venture to those that think I dunk on European venture now.

55:08No, no, this happens everywhere. So in no way I'm saying that European venture is suffering from this problem. No, no, this is venture as an asset class. But I think that you're absolutely right that just as you have in startup land outliers, and you have the same in venture. And I think it's so important that people ask themselves, am I an outlier in this industry? Because the outliers are those to whom the returns will accrue. And I just would wish that people would ask themselves that question sometimes. then I think we'd all be better off. Amazing, incredible. Daniel, thank you so much for joining me today.

55:45It's been a real pleasure. Thank you so much for that engaging conversation. We touched on a couple of topics that I don't touch on with anyone else. It was a real blast. Thank you for having me.

55:58Tear down this wall. It's more than just an ally. This is a union of values. Let's start acting. Acting