20VC: Twitter's Most Controversial VC Delian Asparouhov on Inside the Walls of Founders Fund: What the World Does Not See | Why Western Europe Will Be Like the Third World | Why SaaS as an Industry Might Be Dead

23:45I mean, I feel this very much so, you know, sort of today, my ability to, we can talk about the, you know, sort of, Brian related questions on how does, you know, Varta make me a worse VC. One of the examples is like, I'm not willing to do the things that I was willing to do back in the sort of health, sort of diligence process, which was going incredibly deep on the science and tech of the company. But then also within a week of a cold email, I hopped on a flight and took a red eye out to Portugal to go through a very extensive, exhaustive, sort of diligence with the company. And then also it was managed to convince the KV partnership that the following week, we should have them basically present to the whole firm.

24:16No matter how compelling the opportunity is, the GP of Coastal Ventures, Venote, Samir, David, Wy and Keith Sven. No matter how compelling, there's just no way that they're hopping on a one week turnaround to a, you know, red eye to Europe to go and meet a random founder. And you have to be willing to do those types of things as a junior VC and gamble on this sort of top of funnel aperture, you know, opportunities in a way that the GPs are not, you know, I always say try and to rock, Jim be awful. I don't know the others, but I love the Nord and I love Keith. But like to the best, not example, I sent Tom Tunger's a deal on a Thursday.

24:49He flew to London on a Friday. He won the deal on a Saturday. of a he beat out everyone in London. The guys at IVP fly to Romania to do UI path. They fly to Germany to do D -PAL to the best not get on planes. They do, but again, there's some level of turnaround of Keith's scheduled example is booked like a full three, four weeks in advance. The idea that it's gonna be a week long turnaround is possible. For his activation energy, it has to be the junior resters have gone and done some level of diligence built conviction. And for sure, it's a say he will do it at some point, but I was just willing to do it faster, quicker turnaround, and like, you know, dive much, much deeper than what they would be capable of doing.

25:26But that was the value that I provided to the table where I came back within two weeks and said, hey, I've gone and visited a management team in person. I've run through the list of 100 questions that Vinod basically wanted me to make sure that I did while I was in Portugal. And I feel high conviction that we should invite these founders, the United States, pay for their flights to basically either sort of come, you know, sort of pitch, that, you know, sort of partnership. So it's not to say that that like elite GPs don't go and do it. But again, it's just a different, you know, sort of turn around time, etc.

25:49The analogy that I like to, or like the one line mantra is just extraordinary careers when you're junior and venture do not get built sitting behind a desk in an office and you know behind a laptop You have to be willing to go meet with founders in person figure out how to you know sort of understand their businesses and how to convince them to even spend time with you When you're not you know one of the big general parties. I'm sure you have a lot of people ask you for advice on entering vans I have a lot of people ask me and I like should I try and do as many deals as possible? Should I try and do few?

26:14What's your advice on do many do few? I think in your first year of V .C. You do want to just open your aperture and build your sort of like data set on your sort of founders where, you know, again, that first year I think I was effectively willing to meet almost any sort of founder that was willing to meet with me in vice versa. Once you sort of met, call it on the order of a thousand founders. And especially if in that sort of a thousand you are fortunate enough to have a data set of founders that look like Parker Conrad, Eric Climan, Alex Wang, etc. You start to have an understanding of, you know, sort of what does greatness, you sort of look like.

26:43I think you should be very judicious on waiting to pull the trigger until you feel like you have identified the taste, you know, for what that greatness looks like. I thought it was fascinating when I spoke to Keith and he said actually relevance is my biggest challenge actually, and making sure that we stay at the forefront of the best founders. I appreciated his honesty, but I also thought it was fascinating. I'd also think for Paul Peters' sake, there is a little bit of a difference in age between Peter and Thinod, as wonderful as Thinod is. I didn't want to lump them in necessarily the same bucket.

27:10I do have to ask you what are the biggest fuck ups you see young VCs might stay in career planning in venture? Ultimately you need to recognize that you know venture is the most you know sort of commoditized. Let's say you know industry within you know sort of tech you have no moat other than your brand. The product that you deliver at the end of the day is you know US dollars just like anybody else can deliver you to sort of that fundamental product. People don't focus enough on you know sort of focused on a multitude of sectors generically well. I think it was Sarah Tauval, you know, Betchmark may not love me for various comments that I make, but I do like Sarah's framework and I use it all the time, which is there's four or five aspects to VCE and at least aging in career, you do need to be world -class at least like three of those.

27:57But early on, you need to focus on one. And the five that she breaks down is one, you basically need a top of funnel way to basically source, whether that's more marketing or sales driven. You then need to sort of develop a nose for what are the deals that you yourself like and want to champion? You then need to you know develop a skillset for champion those you know investments that you like within the firms So basically like the internal basically selling you then need to also do the external selling of convincing basically the founders that They should take you know your capital relative to anybody else's and then post investment You need to help that founder basically manage the business and you know exit trying to be great at all five is it completely easily, you know, sort of impossible, you know, sort of task.

28:38I'm seeing there are people within Vounders Fund that explicitly choose to not work on the fifth one, you know, sort of whatsoever, right? You know, Brian and Trey's sort of strategy is we believe the best founders, you know, sort of need no help. And we are not going to try to differentiate on, you know, sort of helping founders. I, you know, thankfully, love to work at a place where we can agree to disagree on investment strategies. And I enjoy differentiating myself on the fifth. And I think it helps with other, you know, sort of categories. But I think junior VCs make the mistake of, let me try to do all of these and across the multidude sectors versus, I I think I just, early on, decided I'm going to focus on two core things that I'm going to differentiate myself on.

29:10I'm going to spend a lot of time in frontier tech and in particular in aerospace and understand that entire industry extremely well. So at any time somebody thinks about a space deal, they immediately think of me top of mind. Whereas if you don't have that type of defining trait, you're just not going to be top of mind when people are thinking about cone vassers and that's the ultimate sort of failure case. And out of all of those five things, I'm actually going to focus on that fifth one first. So rather than even trying to sort of source and understand my taste, et cetera. I'm actually going to make myself extremely useful to Keith's pre -existing portfolio of founders.

29:42So that when one day I need to have a dry -to -attempted deal, Max Rhodes, the CEO, Fer, will be willing to hop on the phone and say, look, Dalyam was obviously not the person that sourced or let our deal, but ultimately was very valuable to the company in like XYZ ways you should take his capital. And so when you look at, I believe it was true work, it was literally the sort of founder reference of Max that ultimately sort of helped me you know, so to get that, you know, sort of deal across the line, which obviously then maybe better at, you know, sort of part four of the job. You mentioned getting deals across the line in time of the day.

30:09Can I ask you, have you had a deal where you wanted desperately to get it over the line and it didn't go over the line? Yeah, my biggest, you know, sort of miss investment and, you know, one that I, you know, sort of think about a lot was in December 2019. I had the opportunity to double down on Sword and invest in the company, basically, you know, sort of 10 on a hundred million post. And we had previously actually done a smaller check into Sword Basically as soon as I joined Founders Fund from KV I really wanted to really believe in the company and wanted to double down and I was still pretty new to FF and I don't think I just set up the Arguing for why we should do it correctly or built enough basically internal consensus in some ways before you know sort of going to Peter at FF I think, counterintuitively, I think your best way to get a deal across the line at FF is actually to probably go to the most junior person at FF and have them start to build a consensus amongst a wider group.

31:04If you look at FF, I feel like a lot of the deals percolate from below. As their build, a set of people doesn't have to be the entire firm, but it's a subset of two or three people that are really high conviction. And then even if it's a later stage check that requires basically Peter's approval, it's with that broader conviction that it's brought to the GP of the firm. those tend to be actually how a lot of our later stage deals get across the line. I think there I critique myself for being so high conviction myself that I just tried to go straight to Peter rather than working within the broader set of the firm.

31:40Including people that actually had been part of the consensus in earlier checks that we had done at Sword at Founders Fund. That one is a painful one given that that would be $10 million, that would be a $300 million dollar position here today. And I definitely lose sleep over that. And so I think about that a lot, you know, today where one way that we like to, you know, say it internally is you should always go for the path of most resistance when, you know, trying to work on a deal out of F work and make sure to loop people in from the investment team that are going to be the most critical of the company given that one, if you're able to get those people to conviction, then bringing it to the sort of, you know, sort of GP shows that you really, you know, sort of do it on your homework internally versus I think that 10 on a hundred million dollar post one, I just, I didn't do my homework.

32:20What is the biggest floor of the FF investment decision making process today, do you think? Let's see, I mean, you're sort of relative to, you know, sort of other, let's say, tier one elite firm was over the past five years, in some ways. Can I just put some names around the study, and it's really unfair of me, but tier one elite firm is which is where you do most respect? Sequoia, and Dresan, probably more historical benchmark than modern benchmark, but I still think there's lessons to be had, you know, sort of there. And, you know, if I were to look over the past, sort of five years, generally the founder's fund decision making has led to generally superior endurance and also less gaps in various ways, whether it's the FTX type of sort of rod debacles, whether it's the holding publics beyond when you should on behalf of your LP.

33:07Is there anything you change about it then? If anything, the biggest change is I would double down on what we've done sort of best historically, which is if you look at the general partners today at Founders Fund beyond Peter, which is either sort of Brian, Saramon, Trace Stevens, Napoleon, Yosiotta, all three of them began as either interns or relatively junior investors at Founders Fund over a decade ago. The best thing that we could be doing today is ensuring that we have people on the team Today, that in a decade are going to be the future Brian Napoleon's sort of trades. Right now, technically full time at FoundersFund, there is only one person that is under the age of 27 that is probably not a sort of sufficient class of future up and coming investors that would be those future general partners in 10, 15, 20 years.

34:04I would say probably the biggest change would be double down on what we've done best in the past and do it again. You mentioned Brian many times that I love Brian, I had him on the show a couple of times, wonderful dude, spoke to him beforehand. He said, you have to ask him, what makes Founders Fund so special with the Addendum that very few people do not know or consider? So not the like, Contrarian mind, yeah, we like big plans and big ideas, everyone knows that. What that not many people see makes them so special. The thing that is probably most underappreciated, the fact that the team is very small allows for there to be very strong sort of personal relationships.

34:40We're obviously in any network, the number of you know, certain network connections grows by N squared. And so the fact that, you know, I probably won't do the, you know, sort of counting perfectly, but I think there's, you know, call it 11, 12 of us on the investment team today, on the order of N squared, 130, basically, permutations of, you know, sort of connections. That's actually, you know, sort of relatively, you know, sort of possible to maintain quite strongly. Once you actually go to even, you know, sort of 20, at that point, you're talking about 400, which then basically becomes impossible to maintain.

35:05And what that allows us to do and the way that we sort of do our economics, which is there's no sort of deal -by -deal, either sort of basis, makes us say that firm is far more collaborative than I think people expect in terms of many of the even like intro calls that we take will have multiple people on the firm and there's not jockeying around who was the most point person and who gets to claim the most basic, you know, sort of credit for an individual investment that type of of politicking sort of doesn't really exist because I think a combination of the team size being small and the personal connections being strong and the way the economics are structured.

35:41And so so much of what we do, it's not to the level of like benchmarks, like full sort of consensus, everybody needs to vote on it culture. But by far, if you look at the best investments, it's when three or four sort of investors collaborate significantly to get to conviction on a particular investment, but also the rest of the firm didn't like the investment. And I think it's only possible to both collaborate to that depth and also get deals across this line, even if the rest of the firm doesn't like it, when you have that very small collaborative and very personally close structure. One anecdote that I'd use that maybe reflects this is Brian, when we do our once every year or two year annual retreat with the whole team.

36:20One of the core things that we go through with his speech that he gives is both who has joined the firm since then. But also, what children have been born into the sort of like Founders Fund, you know, sort of family. Since the last time, you know, we all got together. And in some ways, maybe that anecdote is reflective of that, you know, sort of collaborative, familial culture. There's also winning the deal once they submit the term sheet. Have you lost a deal that, Leon? Uh, it's funny to say, actually, like recently, you just sort of came back up because one of the founders that I lost the deal on, for some reason, brought up the, you know, sort of thread where I, you know, sort of mentioned him not directly, but, you know, somebody asked me what deals have you lost.

36:53And I mentioned him sort of vaguely. He replied to that tweet and was like the biggest mistake of my company building was actually turning down Dellian's term sheet. So that was a very flattering thing to hear. What was the company and what did you take from it? It was this guy Nathaniel. I guess since he's now a carbon -carn, sort of publicly confirmed it himself I think it's fine to say. This guy Nathaniel Manning at this company that was doing a wildfire sort of insurance, technical -neighbled using satellite data, etc. And I think ultimately that sort of failure point came down to just, yeah, COVID era I think the company or the founders were not based in the Yves -Ruby area where I was at the time.

37:26We just weren't quite able to meet in person even though I was willing to fly. I just in the timeframe that he wanted to ultimately come to a decision. That's interesting. Is that because you were older and you weren't willing to get on a plane so quickly? So I think there was just like I didn't get to it in terms of top of funnel quickly enough relative to the round dynamics. but yeah, it was sort of that one. And then in that thread, I mentioned a second that it was a sort of double down on a sort of portfolio company where I think if I were to critique myself there, probably sort of felt entitled to the ability to double down.

38:00And now I've been on the other side of the table and you know, sort of many times and investor entitleness can really rub you the wrong way. Nobody's entitled to their pro -rata. That's interesting, because it is illegal right. Yes, but things in Silicon Valley don't always operate according to the legality, they do sometimes operate according to a little bit of the character, reputation, sort of, sort of, sort of, obviously we're seeing this kind of play out in the drama, sphere of Twitter over the past 2448 hours with Parker Conrad, Vinod, Mike Salana, David Sacks. She thinks this is good for our ecosystem where it makes us seem like rich brass who need to get on with the real world, get on with our jobs, managing money for some of the biggest institutions in the world who are lucky to manage money for.

38:38I think that for the future generation of founders, I think that it is valuable that people's characters are laid on display. It's not to say that anyone comes off unscathed in any of these things, right? Whether you're on the, like, you know, sort of Parker versus David's act side of it, both sides have shown pros and both sides have shown cons. And I think that's valuable because then you as a founder can, you know, self -select into it where, you know, I think one of the questions that you sort of threw in the agenda was, you know, it has your divisiveness on Twitter, you know, sort of lost you or one you at deal.

39:08I'm sure that it has. I'm sure that there is a set of founders that have chosen to just not reach out to me whatsoever because of my You know sort of philosophy, but there's also a set of founders that have self -selected into proactively wanting to you know sort of work with me Eric and Karim of ramp, you know Maybe being a perfect example of this of really wanting to you know opt into the immigrant, you know Anti woke, etc mentality and have that be you know sort of core part of the sort of early culture and so I wish that you know Bill Gurley's you know firing of Travis, you know was you know sort of talked about more publicly about how morally to pray of that entire our basically situation was.

39:40So that people can choose to opt into, is that a firm that you want to work with, maybe it is, maybe it isn't, but I think that stuff should be more on display than not. More for SAKA, not the VCs, winning a point on one another publicly and getting attention for it, but more for the founders to understand how this shit actually happens behind the scenes. How do you think about a challenging situation? You mentioned Bill and Uber there, I'm not directly addressing that. I'm just saying when the fiduciary responsibility that you have to your investors, which is to return the most amount of money possible, is no longer aligned to the best interests of the founder.

40:11A great example of this is when you want to sell your position. You may need the liquidity then, you're all, please may want the liquidity then, but as a lead investor, that looks bad for the founder and for the company. There is now a misalignment between the two. What wins? Part of why I really enjoy working at Founders Fund is because of the fundamental mantra of the firm and why it started in 2004. The idea for founder, friendly VCs, not Founders was extremely contrary. Obviously, it's become somewhat content. consensus, not entirely. There are firms, two ones that I mentioned, benchmark, 16z, Sequoia, etc.

40:43All have examples of sort of founder astings in the past, sort of decade. And so in some ways, it continues to actually be at least somewhat sort of contrary. Do you agree to read? It's what I'm so interested. Do you really agree with that? That is like saying, I will enter into a marriage, and we will never get divorced. That's maronic. Of course, you should have the option to get divorced. You should never have the divine right to be an ambassador at founders fund. If you you don't perform, you won't be there. Yes, but I think if you just, if you look at the fundamental job of venture capitalists, it should provide basically, you know, sort of high beta strategy.

41:17And if you look at the highest, you know, sort of beta outcomes in the world, they are all founder -led companies. And so ultimately, even if you disagree with the approach, even if you think that, you know, perhaps the, you know, sort of company could brought some liquidity if you get rid of the founder, I think, you know, in some ways, obviously, you know, sort of benchmark LPs made a lot of money by, you know, sort of Dara becoming the CEO, taking the company public, like, and today it's cashflow profitability. But perhaps those benchmark LPs would have made even more money if Travis was still CEO and the future of self -driving cars lived within Uber rather than living within Google.

41:44And maybe Uber becomes a $1 trillion company over the course of the 2020s if Travis is at the helm rather than Dara. And so I think in some ways you shouldn't overly rely on history. However, Darwinistically, founder -led companies are the only ones that generate the returns that matter for VC. Totally. I'm 100 % with you. I hate it when founders let me say say, All right, all right, I'm a zero to one person. I'm like, great, I'm an out person. That's not what we're here for. But do you agree with what I'm saying? No one has a divine right to that position. As an investor, you also have an obligation to the employees within a company.

42:18And if someone is not doing the work, lazy, lying, they don't have a divine right to the position to be there. Travis committed no crime, and they sort of ousted him despite the fact that they actually didn't necessarily have the legal control of the useo. They just cornered him in a hotel room two days after his mother had passed away and convinced him to sign papers that he you know, sort of shouldn't have. And so I'm just intrigued. If you weren't good enough as the founder of Vodup, saying three years time, whatever, you didn't scale into it. Do you not think founders fund or coastler should be able to remove you?

42:49No, because I think ultimately in order to deliver generational returns, there's no way for that to happen other than the founder still being at the helm. The moment that you install a professional CEO, that person doesn't have the same level of moral authority or capability to sort of take risks that require you, the risks that are required to take in order to sort of generate those types of true, true, and tail. Do you not think Satya Nadala disproves that? Very bold risk, writing a billion dollar chat to OpenAI, completely transforming a business that Steve Balma had let plateau. And yet, Zuck releases whatever Lama, three or four, and releases it completely free in open source, and it is beating all the benchmarks of anything that OpenAI and Microsoft have ever done.

43:27perhaps that actually doesn't matter. And it turns out Zuckerberg is going to be the massive AI platform. And it's because he's willing to take risks and invest into a level of H -100s that Satya was not willing to do because Satya had to ultimately serve the public markets versus Zuckerberg still has pent up a control over everything that Facebook does. And so it's not to say the professional CEOs can't take it so some amount of the way. And obviously Satya has delivered phenomenal returns to investors, but I still think at the end of the day those entail outcomes aren't possible without found a lead company.

43:59This is very clever positioning from you, okay? Because you look like a great guy and I look like an evil old VC. To be clear, I completely agree with the founder -led companies being the most important and valuable for anyone thinking that I'm a dick listening. So I totally understand and agree. I do have to ask, that is a very strong statement from founders fund on the founder -led companies and always, always taking the founders. When you think about something that you believe, I like this question from Twitter. What do you believe that the Founders Fund Partnership will heavily disagree with you on?

44:31I want to because this is, you should brought up a point, you know, if there's a thing that I've learned from Peter the most. It is there's always a way to structure your arguments such that you are on the winning side no matter what and look the best. And I think he does a phenomenal job of that of structuring his sort of loggerjake arguments and frameworks in a way where if you disagree with him, you by default just look like a buffoon because the fundamental way that the argument is basically sort of structured. And so that's probably the number one thing that I've learned from Peter is being very diligent in how I structure my logic.

45:03Before we dive into what you believe that Fanon's fund is screwing with you on, Peter is such a large presence, important person. When he's in a room, how do you prevent the weight of his words being the only words that matter? I actually think it goes back again to that sort of familial and nature at Founders Fund. I think because he maintains such closeness to everyone on the team, and obviously it's you know, when you're in your first year there, it's probably more difficult. But once you're, you know, sort of five years in, at that point you've spent so much time with him that star power or, you know, sort of weight of words, et cetera, you sort of goes away when you get to know the individual behind the sort of star.

45:39And so, you know, if anything, he values sort of people that are willing to actually sort of disagree and stand up to him so much so that, I think it's incentivizes behavior internally where people proactively want to disagree with him more than others. And so I actually, if anything, they're like reverse effect, You know, it sort of happens. I remember I just like, there was this particular, you know, sort of moment right after the Keith departure. And I was obviously, you know, sort of feeling some way is very emotionally raw. We're having this user team meeting where there's this like discussion about, you know, sort of candidates and who we wanted to bring onto the team.

46:06And there's this person that Peter was particularly excited by. And I remember I just like practically jumped in. And I don't want to go into the details part because it'll probably reveal who the person is. And it's a little, you know, sort of confidential. But anyways, I just practically just jumped in. And I was like, Peter, I think that is probably the worst candidate idea that anybody is like, you know, sort of brought up to the firm like the, you know, the last six months. And I feel about this so strongly that we just discussed this, you know, sort of framework of path of most resistance.

46:28We should have xyzgp meet this person as a part of the interview process. And Peter goes, well, why should that person meet? This person would be sort of a venture, you know, sort of candidate. This gp may not be the right person to, you know, sort of assess. And I was like, because I know that this gp will hate this person and that will absolutely guarantee that we do not, you know, sort of hire this person. So anyways, point big, I think, you know, even on a tactical day to day level, I actually don't think, you know, sort of this happens of anything that reverse effect actually sometimes happens.

46:53Tell me, what do you believe that the majority of the partnership will disagree with you on? I think it's that fifth part of the venture job, train, Brian, are more than welcome to take their approach of writing a check to a founder, but then largely be hands -off from there because the best founders don't ask for help. The best founders in my portfolio have looked to people that they value their opinion of and want those people around the table. And so I do spend every single time I invest in a company, I try to meet with them on a monthly basis, I go to the board meetings, I try to be very thoughtful about how I should engage in those board meetings.

47:26Vinod Cosa says, I can't remember the exact numbers, so if Vinod's listening, don't kill me or sue me if I get it wrong. 80 % to 90%, I'm just giving a range of VCs, actually detract value. Do you agree with that? Yeah, I mean, when I look at the set of co -investments, see a board meeting, board rooms that I've had to be a part of, I think that's an accurate sort of percentage, I think. People chat shit about venture investors like the Chasing Valley. How, how do they? I think there's a couple of different causes. One of the worst outcomes is when a venture investor feels pressure from the firm, whether it's in the like, you know, uber case of we need liquidity, or one of the most, you know, worst cases that I've seen is when it's your first sort of like, quote unquote, big deal big investments.

48:11It's like the thing you feel like is defining your next three, four, five years at the firm. And that anxiety then creeps in where you're trying to force the founder into, like, hey, I need a quick markup or XYZ sort of short -term progress. It's like not quite to the public markets quarterly sort of hamster wheel, but it starts to approximate to that where you start to be really, really sort of short -term thinking focused and impose that anxiety upon the founder. Probably the second is people that are just so decayed on operational skill sets, that's put still feel like they have really strong opinions on.

48:43Here's how you should do XYZ marketing, this candidate, et cetera. I just think that unless you've been, in a true operational day to day role, and the last like, sort of three to five years in some ways, your ability to significantly, sort of provide high quality advice, really degrades. And the only way to keep it at a top level is I think, sort of how Keith does it where he just gets so involved in each of the companies where irrespective of in theory, if he had not done open door, open store, et cetera. I still think he actually is able to maintain a sort of significant operational sense because he goes so deep and transitioned directly from operator to investor.

49:18Speaking of that kind of operational now, so obviously you run VALTA today as pros and cons, how does running VALTA make you a better investor? You know, a multitude of you, we go back to that sort of five point sort of framework. There's a multitude that have been significantly positively impacted due to VALTA. The first just top of funnel, there's just a set of founders that did not know me when and I was just the founder, some investor, versus now because the company is an intriguing company, have heard of me sort of through that. Second, my ability to decide on what I would like to invest in, significantly improved.

49:48In particular, I'd like to go back to this example of there's this company that I led the seed round -in Centra Systems. The founder proactively chose to come meet me in Miami, even though he was based in Los Angeles because of the Varta connection. And then I was able to run extremely extensive diligence over the following basically 36 hours after my initial meeting with him, because I was able to call people at Varta that had been his former manager, director poor, had worked with him as a peer, and so the level of the sort of depth of network that I have into this field allowed me to do even for other really top -tier aerospace investors, that type of diligence would have taken them probably weeks, you know, sort of to do to mine into that network versus being so practically so close to the metal, you just have a much more extensive understanding of, you know, sort of the people that day -to -day work in this, you know, sort of field.

50:32The third is obviously close rate. I mentioned obviously this recent is not to say that I love investing in these super hot competitive deals, but since Varda, I have not lost an opportunity where I've wanted to invest even in situations where there have been phenomenal partners, general partners on the other side of the table offering competing term sheets. Have you found a correlation between deal heat and successive company when you look back at your portfolio? No, it's not to say the deal heat means it will not be successful, but if you look you sort of get the returns, some were hot deals and some were not.

51:06And so, it's sort of like a wash, and I shouldn't really focus on it, right? Sword Health was like the epitome of not hot deal. Rain and Portuguese company, there was nobody on the other side of the table, we sort of set terms. The ramp seed round had five or six other offers, and obviously it was sort of super hot. There was basically the two biggest outcomes and on opposite sides of that, sort of spectrum. And so I think it's actually just like uncorrelated. You know, I think obviously at Founders Fund, we definitely have a bias towards seeing it as a negative factor, partially because it does typically end up affecting pricing.

51:36But I do think there's a set of hyper -competent founders. I think in some ways, at Varda, we take this strategy, which is, even in a competitive situation, we don't necessarily take the highest price offer that we have in every Varda round. We've actually not taken the highest price offer. We've done what we thought was in the appropriate reasonable range that sets the company up for long -term success. There are hot rounds where the founders are not irrational and we do like to invest in those if I understand. You mentioned Rams round being a hot one. I remember Keith saying his biggest regret or the thing that keeps him up most at night is not paying 35 for Ripling, you mentioned Parker earlier, when Gary Towne and initialized did.

52:12Rams was an expensive ish seed round. I think it was like 25 or 30, whatever it was. Do you care about price or do you are lying to founders funds mentality of if it's gonna be a generational defining company, shut up and pay? You know, should a closer to the latter, but I do think it still needs to be sort of in family with what is reasonable for the status of the company, I guess, where I think if you're just like two, three X, even if other investors are willing to offer it, it just means that you're going to make future decisions that are also similarly low quality. I think it's in some ways reflective of the quality of the founder.

52:47I think ramp in some ways, it's not particularly unreasonable for a second time exited founder that made money for investors for a seed round to be at 30 posts. I think that's not particularly unreasonable pricing, in some ways Parker obviously was a similar situation. If you're a first time founder and demanding 25 posts, I have a little bit of a hard time getting excited, even if in theory, your vision is super compelling, your team is super compelling. It just shows a willingness to submit to the market instincts of venture capital, rather than having your own defined viewpoint on where you should have land.

53:27I think generally, I'm in the latter camp, especially because most of the investing that I do is below 150 posts and so there, pricing is not as significant of a factor in relative to growth stage, especially for a multi -stage firm where we can continue to double down and build our position. How do you think about how your job has changed with the mnemestic nature of Silicon Valley now realizing that the future is defense and we have to be in defense? My partner, Trace Stevens, was obviously extremely early to this trend. I'd like to say in summer 17, when I decided this was what I wanted to focus on, it was not the typical path the junior VCs were obviously taking in the valley, but I think has led to a lot of the success that I've had to date.

54:04It's been interesting to see that flip on a tag where I had a former colleague, Everett Randall, who's now a partner at KPCB, who would always critique me and say, oh, Dellie and just loves these low margin, cat -back -sintensive businesses that are highly dilutive. And this is in the 2019, 2025 frame, where you just sort of sass still felt like it was the sort of number one thing in the valley. And in some ways, those critiques have gone away, even though the fundamental nature of the critique is still true, which is that these things are low margin, cat -back -sintensive. But ultimately, that is where you build your sort of moat.

54:36The one line that I sometimes like to use is people love software because the marginal distribution cost or zero, but perhaps what people need to realize is also that the marginal returns are zero as well because there is no moat because two Stanford kids, especially with today's AI, I can replicate your sort of SaaS for plumbers effectively in a weekend. And so, can I be blunt? You're not to see the glib nature of that being service -tighten. I mean, literally exactly that SaaS for plumbers cannot be replicated in a weekend with AI. There are intense workflows, deep functionality, a lot of brand credibility trust love.

55:12It's just not true. Product sort of statement, I would probably disagree with where I think the deep workflows etc. If you're having to invent them for the first time by determining what your customers workflows are versus just replicating off of a sort of known outcome, I think the ability to replicate that with again a team of 10 killer software engineers in AI just feels incredibly sort of quick today. I do think that distribution point and branding point is real, but then that's what people need to recognize is service tighten is actually closer to LVMH than it is to Tesla. And that's fine.

55:45People should invest in brands that have great distribution, clearly return that could be made there. But fundamentally recognize that these are not true technology companies. How does the investor mind need to change with the transition to this very different world of investing that we now face. Like, many investors are high margins as investors, all consumer investors. This is a fundamentally entirely different asset cost. It's not even comparable. How does the investor mind need to change to embrace this? And is the current generation of investors equipped? What's funny is like this is actually what historical Silicon Valley was known for, right?

56:20Obviously, we, you know, became what we are because of the word Silicon. We were a chips industry where you had to do extremely deep technical delgents. Things required quite a bit of CapEx to basically scale up. The fact that we had this low marginal cost, free distribution, very simple business model, is a freak outcome of mid -2000s to late 2010s. I think in some ways we're reverting to the mean where if you look at the most successful investors from the 80s, 90s, etc., they look closer to a Vinod Kostla than a pure SaaS investor, Jason Lemkin. And so I think what you will see is the profile of investors start to change.

56:58You need these very broad polymaths that can get up to speed across biotac material, science, aerospace, et cetera. More so than people whose skill set purely sits in the world of financial analysis and software engineering and product. And so there does need to be adaptation. I think what you'll realistically see is just the ranks of VCs with fundamentally changed. I'm not sure that everyone is going to be capable of reinventing themselves in this way. I just think the up and coming classes will look very different. In 10 years, who will the top three VC firms be? The top three VCs a decade ago kind of look like the top three VCs today, and there's almost certainly basically be the top three VCs a decade from now.

57:37You are starting to see obviously people shift in fundamentally different directions, like Sequoia and A16Z becoming RIAs, maybe points towards a world where they're going to be scaling headcount, asset classes, etc. to the point where they start to resemble something more like BlackRock versus sort of the homegrown VCs of the historical Silicon Valley arc. And I do generally believe that at least within the world of like seed series A technology companies, the most successful ones are going to look more like the founders fund model of small teams focused specifically on that asset class versus just being a subset within a larger BlackRock -looking like Behemoth.

58:10Who will be the biggest losers in the next 10 years of venture? I think the sort of sector -specific specialized funds are going to have a very tough time where if you were a financial services or SaaS focused fund, you for sure had a wave that you could ride for a certain period of time. It's not obvious that there will be that same wave again. Founder's Fund is not a aerospace defense focus investor. It happens to be that we picked up on that trend and saw that there was going to be upcoming tailwinds far ahead of anybody else, but we also invested in Airbnb, Affirm, etc. In some ways, the firms that will struggle the most over the next 10 years are the ones that you sort of have these artificial constraints on the types of investments that they're going to make that don't allow them to optimize for the reality of where he's being disrupted and where are they going to be, you know, sort of generational returns.

58:55To, again, go back to one of Brian's classicisms internally is, you know, the only rule it found to find is that there are no rules. If we establish any type of arbitrary rule, it almost certainly will basically decrease our use of IRR. And so a lot of these, like, sort of specialist firms, I think are going to have a really tough time when their sector sort of falls out of favor. Do you mind if we talk about your Twitter? Sure. Go for it. One of your tweets got me in particular. It was, and I think you know where I'm going with this. It was where you said you can't take people seriously who are over 35 and straight and who don't have children unammarried.

59:29Can you just talk to me about the thinking behind that tweet? I was thinking the technology industry, great sort of companies, movements, technologies only get implemented with people that have extreme sort of long -term thinking. And to me, the epitome of long -term thinking is recognizing that your time on this planet is sort of very short. And what you're here ultimately to do is sort of set it up well for the next generation. And in some ways, the epitome of that is recognizing that there needs to be a next generation. And we have to be the ones to make them. Babies don't come from storks.

59:59They come from people, you know, sort of ideally, you know, being married and having children, obviously unfortunately there's a lot more being born out of wedlock today than not. Do you know this is going to piss people off when you do it? I think this goes back to maybe the beginning of the podcast where I think in the default is just say what you think and it doesn't really matter that much how society sort of reacts to it. And I used to feel very guilty when I was first, you know, you know, moving to San Francisco and I would, you know, say offensive things at the office that people found distasteful or, you know, in my early days at Twitter.

1:00:28And then I think at some point I've recognized, I mean, this is what I'm thinking and it's what I would say in private conversation. I might as well, you know, sort of be myself and say it out loud. It may sort of frustrate some people but hopefully it helps some people either think different ways or become more attracted to, you know, sort of working with someone like me. So I'd prefer to just be my honest and true self. And so I sometimes I'm quite surprised that people are so, you know, sort of put off by some of the things that I put out there. They just feel like very obvious thoughts to me.

1:00:51Do you think people are too soft today? Born and bred, you know, sort of Americans that grew up within, you know, sort of this, you know, economy, culture, climate, et cetera, don't, they take for granted, you know, sort of what, how special the United States is, our economic system, our political system, and don't recognize, you know, how existential it can be if we sort of lose the current system and how bad the rest of the world is. And so I do think that obviously makes people extraordinarily soft. I'll maybe use the sort of Netanyahu quote from the congressional, you know, speech that he gave yesterday, which is, you know, there are protesters outside of Capitol Hill that had signs that, you know, said, you know, sort of gaze for Gaza.

1:01:29And he was like, you might as well be saying that, you know, we're chickens for, you know, sort of KFC, you know, they would eat you alive there. And I think that's like a perfect example of just like the softness of the, you know, sort of next generation because they take for granted that you can even be gay in this country. Do you think we work as hard as we used to? You know, no. I think if you look at the, obviously, average working hours, sort of today, relative to, obviously, like, sort of factory labor in the Industrial Revolution in the 1920s, the objective answer is no. Magnitude of effort is always an important thing to compete on, but, you know, so is direction.

1:02:02And I think the important thing about, you know, society becoming more and more wealthy is that for the people that choose to work very, very hard, we continue to allow them to be rewarded. We're not year up where we try to steal the wealth of the most successful way from them. And we in some ways enable them to have even more infrastructure to be as productive as they would like to be. If you look at the tools available to me in order to be productive relative to even John Rockefeller in the 1920s, the amount of work that I can put in and the preciseness of the direction is far more direct. There were so many things in Rockefeller's life.

1:02:34There were sort of inefficiencies, whether it was like, you know, communication, transportation, et cetera. And so I think what you're going to see is this bifurcation where there will certainly be more and more people that were less, but there will also be these hyper -efficient people that are augmented by AI, have more wealth, have more people around them that actually become even more productive inefficient. And so the answer in some ways is like, yes and no. The average yes has gone down, but they like, you know, sort of tail extremes. I think you're only going to go up even further. And for everyone listening, Dallian is wrong.

1:03:00Europe do not tax and take away all of your wealth if you make money. I know I pay the tax, I pay the highest tax bracket. Some countries do take more, but sadly, no. Anyway, I do have to ask dude, I was chatting to Sean McGuire before this and he was like, you got to talk to him about marrying up. I did it. What is your biggest advice on marrying up and finding your life partner? The biggest mistake that I see people go into sort of the stage of life where they're prioritizing finding their lifelong partner is they come into that process with a pre -prescribed notion of what they think their ideal partner looks like, whether there be a set of attributes, a list, particular family archetype, etc.

1:03:44They come in with these very sort of strong pre -exposed notions. I came into that process sort of with that similar sort of list myself and arbitrarily one of the things on that list in some ways was I really believed that my wife needed to be a really good skier. Skying was an incredibly important, or it still is an incredibly important sport in my life. It's how my family hangs out, you know, together all on Christmas Day. And so I felt that how would somebody possibly integrate into my familial life basically without that? And then it turns out my wife who I very much so married up for, it was a sort of god awful skier, and you know, bless her heart, at least allowed me to, you know, sort of teach her some of that, to get her to mediocrity rather than being god awful.

1:04:16But I think it's recognizing that you probably don't even realize, you know, sort of what that ideal person looks like, like use the instincts of what you've built, you know, and what worked well in sort of, you know, sort of prior relationships, and try to find the person where you can mose to be yourself, and they just by default love that. You know, in my like early, you know, sort of dating life, I always felt like there was sort of something wrong and something that I needed to edit out of myself, and that was going to make me the better, you know, sort of boyfriend, better, you know, sort of potential, you know, sort of husband, and I would get critiques from the, you know, sort of girlfriends at the time that were like, I like a lot of you, but there's just 10 % that, you know, is maybe the more volatile or the crazier, or the thing that post the bombastic things on Twitter that I would love you to edit.

1:04:53I think ultimately the sort of thing that maybe realized that my wife was the one was where I could just be 100 % of myself and she actually loved all aspects of it and so then rather than not being myself, I could actually just even more be myself and she'd love that, basically even more. Dallian, sex, laughter, honesty and respect. Rank them one through four and importance. Probably honesty first because I feel like in some ways the rest of that It doesn't matter unless you have that. Then it may be controversially, I'd put you to sort of sec second, I think being truthful, I think Zuckerberg actually had an interesting quote yesterday and his Emily Chang interview, we talked about how much he just does not believe in the idea of like plug yourself into a computer and upload your consciousness.

1:05:34We're so much more than just our brains, we are the bodies, the sensations, et cetera. So in some ways, you know, sort of sex in a relationship is the sort of epitome of that and needs to be sort of second. And then it's probably sort of laughter in that, I think life is a difficult thing. The fact that it's so short is a difficult thing. You have to deal with many hardships and if you don't have laughter, you may not be able to get through that. Probably fourth is respect where I did do think it's important, but when I think about it and the ranking of all of those, it is probably sort of fourth most important.

1:06:03If you got honesty, sex and laughter in some ways respect probably falls out of that. You have children. And you are a father now. My question to you is, in what ways have you changed most unexpectedly since becoming a father. Probably didn't expect how much my sort of default mood would improve by having a child. You know, it was definitely something that I felt very ready for. I was excited by, I knew that it would bring me sort of a lot of joy. But there is just this like very base level of, you know, the fact that you get all these endorphins released every single morning. When you pick up this just like, you know, beautiful, happy child, that just like screams and giggles and plays, etc.

1:06:41and just like evokes your inner child. Even when you're in the midst of like what feel like the most existential, stressful, etc. situations and you're going through these professional crises in some ways I feel like all that washes away when you have just like this joyous, you know, you know, sort of child to begin every single day and that just erases, I don't know, anything that you could have in terms of, you know, sort of stress, you know, depression, mood, dampener. What is your most radical thought that you have not tweeted yet that you would like to? You know, I've sort of, you know, hinted at this some amount, you know, in various tweets, but maybe, you know, sort of not said it super explicitly, but I do think the sort of biggest geopolitical and moral crisis that humanity will have over the course of the next minimum 100, but, you know, so maybe it is closer to 150 to 200 years.

1:07:29It's sort of fundamentally that, you know, humanity is almost certainly going to be, you know, sort of specieating where both with artificial selection pressures from things like polygenic risk -scoring of embryos, to eventual, you know, sort of crispering of, you know, sort of embryos where you're changing DNA to natural selection pressures of, you know, people being on, you know, sort of moon, Mars, and, you know, lower -otherbit stations. We'll fundamentally, you know, sort of create a new dynamic that we have not had, you know, in the last, effectively, you know, sort of 15, sort of 20 ,000 years, where people would appreciate that we all happen to be sort of homo sapiens, like the only, you know, sort of intelligent conscious beings on the planet happen to be, you know, sort of homo sapiens.

1:08:04Almost certainly, we will have homo -luna, homo -marsha, homo -cosma, and homo -nianderthal and erectus may come back as people decide to optimize or bring back some of those genomes. If we think we have divisiveness today where at least everybody on the planet can mate with one another, produce children in the future that will not be the case, and I fear for humanity survival in that outcome given how close we feel to the brink of nuclear your war constantly when we're all at least the same species and how much worse that may be when we feel like we're not necessarily all the same species. Dalyan, I want to move into a quick fire answer.

1:08:43I say a short statement, you give me your immediate thoughts. Does that sound okay? Sounds great. Okay, so who is the single best ballman that you sit on a board with? You would probably have to be Seth Bannon from 50 years. I think he dives deep into the companies that he's involved in and you should ask some pretty great pointed questions. Which board member have you not sat on a board with but would most like to or which VC would have you not sat on a board with but would most like to? I've gotten to observe it true work Alfred Lynn and you know would love to you know sort of one day find something where we're actually both the use of board members I imagine though that given our you know sort of not super overlapping interests that may or may not happen But that would be one that I would love to experience.

1:09:21What have you changed your mind on most in the last 12 months? I have tried to tone down how much on Twitter I sort of attack the individual versus you know sort of attack the idea Obviously, I've made use of plenty and it means in Silicon Valley and some of them I'm used to comfort with some I've done so much you know So unintentionally where I was you know sort of more meaning to attack the idea in the principal than the actual person And I actually quite enjoyed the person and so probably have changed my mind on how okay it is to attack the person Let's say do you give a shit when PG fights back?

1:09:51Do you get worried? I think at the end of the day, it's better to, and I think this goes back to one of my early answers, it's better for people, at least the founders that have to choose who they work with. Do you understand the character of the people that they're going to be working with? And so I generally prefer for more transparency and honesty with how people truly think about me as one another and their preferences than not. And so, yeah, I'm generally pro, I think, you know, him sort of fighting back. Have you ever been pulled aside and found this fun feel Twitter? Oh, multiple times.

1:10:18I mean, I probably had at least six, you know, single men, you know, sort of one -on -ones where he has to be like, telling what the fuck. Yeah, thankfully those have generally decreased in frequency. You know, I think, you know, especially in the early days, it was like, sorry, I'm such an idiot, I'll try to do better in the future. And then I think, thankfully, I did generally do better in the future. So thankfully, I think, you know, Brian has not had to do one of those, now sit down one -on -ones. And I think two years and a month. So of my five years at Founders Fund, I think we're at least getting to the point where now I'll be past 50 % of the time, Brian having to sit me down versus not.

1:10:51What character trait are you slightly ashamed of, but also has contributed to your success? Probably the one that I'm most ashamed of is I am not somebody who always handles existential stress and threat well in that it really does impact sort of my quality of sleep, physical, mental health, in a serious significant way, such that I do require sort of more unplugging than is ideal. Like when I look at some of the true sort of greatest entrepreneurs and founders, right, if you read about Elon, Steve, et cetera, they're clearly able to even the most stressful moments of their company's lives grind through the 12 to 14 hour days, poll all nighters, et cetera, and be sort of fresh and ready, you know, sort of the following day.

1:11:34And that's just like not something that I'm capable of. If I have to poll all nighter, I might correct not for like a single day, but like for like a week afterwards in terms of being sort of fully productive. And so what that has led me to doing is making sure to surround myself with people that are like that. So you know, so my co -founder Will Brewey is very much so one of those types where like rallies the team grinds through can you know operate on four hours of sleep and still be high energy high functioning It's that obviously doesn't want to necessarily do that for months at a time And so in some ways even though it's been my greatest flaw I think because I've recognized it as my flaw it is forced me to spend far more energy Unfinding people that can basically you know sort of mitigate that flaw Final one for you.

1:12:11What question are you never asked that you should be asked, do you think? Funny when I saw this on the agenda, one of the things that I was gonna say is people sometimes don't ask enough why did you decide to not be founder CEO of Varda and it does basically come down to this where I actually think that and this make trend over time, maybe over the course of the next decade or two as I continue to gain experience, become hopefully more emotionally and mentally, you know, sort of mature. I'm able to do that CEO job, but I do think that, you know, the question I'm not asking enough is, you know, why do you, why didn't you do the CEO job?

1:12:47And it's because I'm not 100 % convinced that I could be in the, you know, sort of top, you know, sort of 0 .1 % of CEOs versus I am very convinced that my co -founder is able to. And so I need to focus on the thing that I can, I think, be 0 .1 % in and that is a bit more of the sort of president, Chairman Rul. That is, and I've absolutely loved having you on. As I said, I've wanted to do this for a while. Thank you so much for putting up with my meandering across different questions. You've been fantastic. Thanks so much for having me on Hario's really pleasant. But before we leave you today, when a promising startup files for an IPO or a venture capital firm loses its marquee partner, being the first to know gives you an advantage and time to plan your strategic response.

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