Founders Fund's Brian Singerman on building a legendary VC firm, “Adapt or Die” and "Ikigai" | E1896

25:21And these were considered different pursuits in venture. And I looked at it and I just was like, huh, with my next fund, I'm going to try to do both in the same fund. Absolutely. Kind of crazy, but we're going to have 300 names. And then I'm reserving half the fund for the top 10 names. And then I told folks, don't be surprised if one of those gets 20 % of the fund. So 300 to one. And you know what? Most LPs do not understand what we're doing. And I'm like, huh? But then some do. And they're like, got it. But so this is one of the weird things about bet sizing and fund strategy. LPs actually don't understand in many cases what we do, do they?

25:57Sure. But I don't know that that matters. The thing I love, the thing I love about our LPs and LPs in general, and I'm always good talking to one of our LPs, and we choose them because we love them, is like, they also care about returns. Right. And so they're not sitting there trying to tell the best LPs, just like the best VCs, don't try and tell a founder, oh, this is how you should run your company. No, the best LPs are like, oh, that's unique. Great. Make me some money. Right. And so they're not trying to necessarily like, tell you how to run your firm, or they don't even want to for the best funds.

26:31They're just like the best ones are just like, yeah, would love to hear about portfolio updates because we love companies. We love startups. We love investing the stuff. That's why we're doing this. But otherwise, figure out the strategy and make us money. And so the best LPs really do. That is how they feel. They're just like, great. You guys do you. For instance, I mentioned before that we've put SpaceX in multiple funds. We don't really think through reserves in a fund. We think through, put most money into best companies possible at best price possible. And maybe that's one of our own companies.

27:06And maybe we've invested a previous fund, but great. So we'll put it in the next one. Like Founders Fund 2 owned 10 % of SpaceX or whatever. That didn't stop Founders Fund 4, Founders Fund 5, Founders Fund Growth, Founders Fund Growth 2 from investing in SpaceX, right? They all did because it was still a really good investment, even if the previous fund is out of money. Yeah. You are making that continuation bet based on... One of the great things about our industry and what we do is it is based on inside information. You do have information asymmetry. Now you can't do that in public markets because retail is participating.

27:37I don't invest in public market stocks. Yeah, but we can. And in fact, the whole name of the game is to have information asymmetry. You're on the board, even if you're just an advisor of Airbnb, even if you're just getting dinner with the founders regularly. Yeah. Yeah. If you're hanging out with Brian and Joe and they're like, yeah, you know, Europe's taking off. That's incredible. We didn't know if Europe would work, but we got more air babies in paris you know i was like uh yeah we should probably make a bet here and then we should probably get that here yeah so let's talk a little bit about sean parker okay you know sean's been out of the game uh you know doing philanthropy and all kinds of interesting stuff but man this is one of the sharpest minds absolutely in our industry brought zuckerberg to the bay area when did you first meet sean parker 2007 2007 tell me about your impressions of him and his unique genius in the world.

28:27You know, I love talking about Sean. And I will say this, like I owe Sean a ton. And, you know, Sean, when I, when I, I will say this, when I joined Founders Fund, I'd become friends with Sean. I didn't know who the other guys were. You know, I was just like, oh, Sean is amazing. Yeah, I want to, of course I want to join with him. And so my first meeting with Sean, it was almost like a scene from the freaking movie because we started dinner at 9 p.m. and we went until 2 a.m. Catch our partner time for you. It was just nonstop, but he is just one of the most brilliant. And I know a lot of smart people, right?

29:06Like I've met a lot of smart people through my work, through whatever. And Sean is just the one of the probably maybe the smartest, right? Like Sean was the best example of a proactive venture capitalist, I think maybe in history. There's reactive, which is somebody like me. It's like, I'm open to anything, but I'm not like sitting there going like, oh, this is how the world should be and finding it. Sean would be like, oh, this is how the world's going to look like. I need to go find the best company. Facebook. Oh man, the world is shifting to streaming music. Spotify. And he would just have this unique ability to just know what the world was going to look like and find the best company that was going to do that.

29:47Otherwise, the best proactive VCs have to start the company if it doesn't exist. Let's talk about that. You've allowed founders, again, this is very non-traditional, and startup studios, as the concept goes, they've all essentially failed or stalled. They've had a very mixed bag of results. Why? Well, when you start a company, you need a CEO. Pretty hard to get a CEO or hire. We all know that. And why would a founder who's absolutely extraordinary or Palmer, Lucky, whoever, why would they join a startup studio, but, or join a startup studio company? So you have that exact example. Let's talk a little bit about how you've tried to make this work and if it is in fact working and when it works and when it doesn't.

30:31Yeah. So I don't know how to start a company. I won't be starting your company. However, remember our mandate is returns. And sometimes, right? Not all the time. And because you don't get many of these things, right? Because it's a lot of work. Sometimes if I did just generate returns is to start a company, right? If one doesn't exist. So Trey and Palmer, we were the first investors in Oculus, right? And that's how we got to know Palmer, right? We invited him to one of our, let's get together with all of our portfolio founders and hang out and play paintball kind of events. And he met Trey at that event.

31:04And then they were both being like, oh man, nothing really good exists in defense. This is really important. Boom, founding of Andurl. And I don't think you do this every day, right? But you do this when the time is right, when the energy comes together. And again, it is an important part of generating returns. Not everybody can run that strategy. I cannot run that strategy. Sean can, Trey can, and Peter can, right? And therefore, we can do it. right now startups have to do more with less we all know that it's rough out there folks so if you need great tech talent but you don't have the time to interview dozens and dozens of candidates you need to check out lemon.io lemon.io has thousands of on-demand developers to choose from and these devs are vetted experience result oriented and they charge competitive rates great developers can be incredibly hard to find and when you do find them it can be hard to integrate them into your team lemon.io handles all of that for you startups choose lemon.io because they only offer handpicked developers with three or more years of experience and strong portfolios.

32:05In fact, only 1 % of candidates who apply get in. And if something ever goes wrong, Lemon.io will get you a replacement ASAP. You know what? A bunch of our launch founders have worked with Lemon.io and they've had great experiences, which is always good to hear. Go to Lemon.io slash twist and find your perfect developer or tech team in 48 hours or less. Go to Lemon.io slash twist and find your perfect developer or even a tech team in 48 hours or less. And twist listeners get 15 % off their first four weeks. What a deal. Stop burning money. Hire developers smarter. Visit lemon.io slash twist. Let's talk a little bit about maybe founders who are challenging to work with.

32:43There's a famous four quadrant chart that one of the founders of Sequoia made, which is like how agreeable a person is and how competent they are. And you draw four quadrants incompetent. You obviously don't want an agreeable or a disagreeable incompetent person. But you have competent, agreeable, competent, maybe hard to get along with. The character of founders who actually do change the world and pursue these outlying things, does that track with you that they can be challenging to work with? And then if so, what's your approach to that? Yeah, of course. And remember, the reason those kinds of founders love us, and we love those kinds of founders, and here's why.

33:21We don't claim to know more about their company than them. We don't claim to try and run their company. So those kinds of founders that you're talking about, the very competent, but disagreeable or whatever, as long as they're still a good person, maybe they're a disagreeable strategy. We don't go over the line. We don't ever invest in people who are doing anything illegal or anything like that. But as long as they're on that other side of the line and they're just unique or disagreeable or something, but they could be doing something amazing that nobody else has done before. We love those kinds of founders and they tend to love us.

33:53And honestly, that is where so many of our outsized returns have come from, are those kinds of matters, because we don't tell them what to do. We don't tell them how to run their company. We let them dictate how to best use us. If you're going to take on, you know, something that's going to challenge incumbents, I hate to use the word disruptive, but that is actually disruptive. Sure. You might, you know, ruffle a few feathers. If you're Elon doing SpaceX, you know, the Russians who are putting satellites up might not be so happy about having a competitor. if you're Airbnb and the incumbents who are, you know, selling hotel rooms, they might get a little tweaked.

34:28If you're Uber, whatever, if you're NewBank, you know, a lot of these companies, incumbents might not be too pleased with their aggressive entrance into the market. And so you have to be there with them and guide them sometimes if they need help. But other times, you just got to be like, this is a war and this is a wartime CEO. So be it. I love my role. What I tell founders I want my role to be is founder consigliere. So you just said like, that's what I don't want to, I don't need to be on the board. I don't need to tell you what to do. It's like, I'm your consigliere. Like come to me during wartime stuff when you really want to chat about some of the hairy stuff, right?

35:03Like otherwise you've got this on operations. I wouldn't be investing in you if you didn't. That happened with Airbnb. I mean, they were, you know, this is like something that I, you know, I witnessed firsthand at a couple of companies. you've got lawyers saying like, hey, you're bending some rules here. This is like a little dicey. And they always give you the same advice. They're all about minimizing risk. But a lot of times winning is about taking risk and pushing the envelope a little bit. Maybe take us to that. Maybe with Airbnb, there were people who said like, hey, you just shouldn't do this.

35:32You shouldn't be allowed to do this. How do you get over that objection as an investor? I'm going to sound like a broken record, but remember, Venture capital is upside maximization. So sometimes if you're an investor who's like, maybe don't take that chance because we don't want this investment to go down. Honestly, I don't ever think about that. I just don't think about that. It's like, oh, great. Yes, as long as it's legal and as long as playing within some guidelines, it's like, okay, yeah, take that risk. I'm all about it, right? We are all about the founders who also want to take that risk with us, right?

36:07I also want to take those risks to maximize upside, not just be like, play it safe and double my money, right? You need, as a venture capitalist, to find the upside maximalized investments, period. And so a lot of times that comes with... The risk of ruin, let's call it. The risk of ruin. Perfect. I am very much okay with the risk of ruin. Let's just be clear. Whereas in exchange for the upside maximization that we get from these companies. Yeah, I mean, if you're going to take on, I don't know, you know, a country like France that might be very protectionist, unionist, whatever. It's like, okay, we're going to take on France.

36:44What if we lose? Okay, we get kicked out of France. I mean, this happened. I remember when Travis was, you know, he just told me, well, no, we've won when London and Las Vegas fall. When you're able to order an Uber in Las Vegas or London, and then, you know, it's whatever number of years later, and Dara just signed up the taxis in London. This is after five, six years ago, they were trying, they literally were trying to ban Uber from existing in London. And now you can call those awesome London taxis. It's funny that you brought up Sean, because think about what he defined that. It's like, oh, once the regulators say like, oh, you can't do it, but it's like, it wins anyway.

37:26And now the Spotify exists and it's a legit company. It's like, you've won. Let me ask you a hard question. You got, not that any of these have been easy, but I want to go for two hard ones here. Regulation in the United States and the regulatory environment. You're watching very big companies like Apple do very anti-competitive things. They block iMessage. You got the App Store, 30%. Google, where I think you're an alumni of, has the Android store. It's like some on the margins, things that in that duopoly are anti-competitive, right? And so do you think Lina Khan should be blocking more of this M &A and attacking these companies based on bad behavior?

38:07Or are you free market, let it rip? If Apple wants to squeeze too tight onto the app store, well, then somebody create a better app store, a better phone. What are your thoughts? My thoughts are that I don't VC prognosticate and I am not a global macro or a policy expert. And so I tend to focus on what I know that I'm better than everybody else at. and not focus on that stuff. And so, you know, a lot of that stuff changes with politics, right? Based on who's the head of these organizations. And, you know, we're going for in a game where these companies span generations and are not specific on politics.

38:44And so for me, what I don't like doing, I will say this, I don't like crying about the game. Right. So in other words, like, okay, let's say you're in a, let's say you're in an environment where that is the political environment, where they're going after these companies, they're not going to let these acquisitions happen, right? It's going to be tough to get an exit other than going public yourself, right? Because great, play that game, play that game and win it, right? And so to me, it's like, regardless, because that's going to change, like it'll change in the next administration, you know, maybe like who knows, right?

39:15Part of adapt or die is play the game, don't cry about the game. And so we love the founders that don't cry about the game. like here, let me take you through somebody who I think is a winner on this, right? Like Dylan, right? Like for Figma. Okay. They blocked the acquisition. Dylan's still going to have an amazing company. He's still building said company. He's not going to sit there and going like, oh, wine, wine, this didn't happen. No. It's like, okay, that's the current situation. We're building this company to be bigger and better than ever. Right? So huge respect to somebody like that.

39:48You have to accept reality, right? And the game on the field is a game on the field. Dylan got a bad beat. $20 billion valuation. They just cut it to 10, but he's still in the game. He's still building the KIDA process. And who cares if he builds a$50, $100 billion company, then this is like the Stripe thing, right? It's like, yeah. So Stripe raised a round less than what it was previously trading at. So what? At the end of the day, if Stripe is one of the most valuable companies in the world, then amazing, right? At the end of the day, if Figma just keeps building a bigger and bigger and awesome company, So what?

40:18You don't cry over that stuff. You just play the game and you win. And this is, I think, what you'll learn after you've had maybe two decades, maybe three decades. You and I have been in the field for a while. You've seen the boom bust and you've seen Clinton go to Bush and Obama and Trump and Biden. You know that these things are transient. The great companies build through Zerp and crashes and dot-com crashes, great financial crisis. And in fact, you and I benefited in terms of timing as investors. We started our career when things were, let's face it. Biggest boom cycle in history, right? Yeah.

40:50I mean, pretty easy to be good at this game if you do that, but you also then need to have some self-awareness. Let's talk about self-awareness. What are the things that now you've added to your quiver? Are there things that you're working on right now and you're asking yourself, do we need to change this or that? Because right now, people don't believe in venture capital. People think this is like a broken asset class, yada, yada. The fees are too high. The carry is too high. There's never going to be exits again. I don't know that I've lived in a moment in my career where people were so down on venture capital.

41:25So what's your take on sort of like the state of venture capital now and how you're thinking about strategy at Founders Fund going into the next era? Because too much money raised, too many competitors, all these late stage people coming in and doing weird distortions that we then have to deal with, whether it's Masa coming in and making big bets or the Tigers and the Kotus doing all this crazy betting during Zerp. When you look at our game on the field, what are you thinking about? Yeah. So I will tell you, this is an analogy that'll go with this. When I started doing this, when I started doing this at Founders Fund, so call it the year around early 08, what percentage of companies then do you think were social networking, photo sharing, chat related that I saw.

42:08And by the way, my first year of doing this, I saw 1 ,200 companies. I met with 1 ,200. Mobile, social, local? All the most. What percentage of companies were mobile, social, local? It had to be 80. It was 60, which is a crazy number for one field. Okay. 2023, what percentage of companies had, and it is a little bit unfair, but what percentage of companies had AI or LLM in their pitch deck by page two. Oh, it's got to be above the 60 % number seven. Close to 100. And it's by definition was the least contrarian possible thing you invest in, right? And so we just take our strategy of like, okay, we're just going to invest in the best thing, put a lot of money in open AI, call it a day.

42:47But one of the things that we've started to do really, really well is, okay, if everybody is chasing after this stuff, let's go for things that we still believe in, right? But that are not necessarily that, right? So we hired Joey Croke, right? Like best crypto investor in history. He's amazing, right? And he's doing all the best crypto stuff because crypto is less hot now. Fine. Great. Take the best assets, invest in them. You know, I don't do very many deals now. When I do, I try and sink my teeth into one. You know, the one that I'm just doing, you know, very well. We're doing Ohala with Friedberg, right?

43:20I think you do a podcast with him or something. Yeah. I think I've met him. Not AI. Not AI. In fact, it's just, but it's a space that's ridiculously important. It's bioengineering. It's, you know, gene editing, right? It's like food. It's ag. It's, it's, it's going to be the one of the most amazing companies on the planet, not AI. Right. And so we try and find these things with amazing founders. That part doesn't change. And in fact, I think, I think I was the worst at this job during COVID because I didn't meet the founders in person. I couldn't. Right. And so it was bad. Right. But now that we're back, right.

43:55Like you spend time with these founders, you find people, you know, well, who are doing things in, you know, contrarian spaces that in three years will not be contrarian. Right. Like the, the, the bioengineering for ag will not be contrarian in three years. He is the best in the world at that easy, no brainer investment. Right. So tell me about, um, heat leaving founders fund and going to, uh, Kostla. I saw that. And he was kind of like, I want to have a different experience, like people arguing over stuff every Monday in a meeting. And then I looked at it and I was like, yeah, that's a difference between the funds.

44:26But I also thought, well, is he going to just take over Kostla? That sounds to me like succession planning. What was your take on that? Maybe. And remember, I love Keith. Oh, yeah, we all do, man. I've always loved Keith. Yeah, yeah, yeah. And so like, but there's different, you know, Founders Fund, the person, right? Like there's not one right answer. and maybe in some ways it's better for him at Coastal. Either way, it doesn't matter. I love Keith. We still work together. We still are going to do a lot. The reason why Keith was that we got Keith to founders from the first place, we were doing all sorts of deals with him.

44:55And I'm like, oh, let's get him on board. But understood, he's going by with Vinod. No problem. We're still going to work with Keith really well. I still think Keith is a phenomenal investor. And yeah, we're still both going to make a lot of money. yeah but that's the session planning in your mind right that sounds to me like i have no idea i said that i was like wait a second it is amazing that colesley is his age and still so sharp he was at the one of the few one of the only ones one of the only ones that that that's that that's that sharp that's still in the game that's still top tier in the game at this age it's unbelievably amazing why what when you look at that i mean i look at that and i'm like that's who i want to be I want to be 70 something years old, like Khosla and be shit posting on Twitter X, be like making bets, be mixing it up with people.

45:47Yeah. Here's what I'll say about that. Yeah. I've only met Vinod in person a couple of times, but I will say this. He does not care about what's popular and the right way to be and the right way to do things and what's like the proper thing to support. And he is not, he is the opposite of a virtue signaller. Okay. Yeah. And that's one of the reasons why you last in this game. Like, I'm sorry, you do not last in this game virtue signaling. You last in this game, being who you are, figuring out what you're better at than everybody else and leaning in on that. And he just has that in spades and is unapologetic about that.

46:20And so certain types of founders just will only want to work with him. Certain types of founders will only want to work with me. Certain types of founders will only want to work with Peter Thiel. Vinod has that in spades, right? Keith has that in spades, right? On the operations side. And therefore, yes, very bullish on all the people who don't spend time virtue signaling, but spend their time just leaning in on what they are the best at. You've done well, got a ton of money. You'll be, you could retire anytime. You think you're going to go as long as like Vinod? Do you see like an end to this?

46:45How do you think about that? I think, I think, here's how I think about this. There's certain parts of this job that you don't like in certain parts of this job that are just always going to be amazing. And I think if you can figure out a way, like I think Vinod has, right? and Peter has and all these guys who are legends have, is you figure out what you love about this and just keep doing that stuff, right? And it'll fit in, right? I'm never, ever, ever going to get sick of having dinner with Friedberg, having dinner with Chesky, having dinner with Slingerland, right? Having dinner with these guys.

47:14I see no reason to ever stop doing that, right? So, you figure out how to make this the intersection of what you love and what you're good at. And there's no reason to ever stop doing that part of things, right? Yeah. There is a Japanese term for that, like what you love and what you're good at. What is the term? Ikigi is a Japanese concept, I-K-I-G-A-I, Japanese concept, discovering your purpose through exploring the intersection of what you love, what you're good at, what the world needs, and what you can be paid for. I think you just figured out the name of my next company, but I didn't even know that.

47:52yeah a key guy and it really is like a beautiful concept and people will um who are like career coaches will will kind of work on that and i've talked to elon a lot about this like what he loves to do and what he doesn't like to do and i remember the early days you know when he this is pre-spacex and when he was just starting to work on tesla and it was like we were just were lamenting chores he's like i just got to do so many fucking chores and the chores piling up and piling up and And I was like, why don't you get people to do chores? Right, outsource that. And he was like, they don't do it properly, right?

48:27And I think part of his journey was, when you're as good as he is and exacting, is he's now built a bench of people who can do those chores for him that maybe he doesn't want to do. But that's a decade or two decade process of being able to say, I love doing engineering challenges. And you and I both, you know, lucky enough to know Elon. And, you know, when I've been with Elon in meetings, I just watch him love the engineering and the product challenges, right? That's his circle. Always. What he's uniquely good at in the world. And then just peeling back from that, the stuff you don't like, it's so important.

49:02In venture, it's the same thing. You like hanging out with the great founders. It's probably really annoying. I don't know if it is for you or not. I was talking to Saks about this. The number of first meetings is just arduous and painful. The sourcing of companies and dealing with your deal flow. I can't do that anymore. It's exhausting. I used to be able to do it and I can't anymore. So you surround yourself with people who can do it really, really, really well. The first level sword. Yeah. All right. Listen, Brian, thank you for taking the time. I appreciate you. This was fun. If you say anytime, I'm booking you for one year from now.

49:34Okay. Thank you. Let's do it. Anytime. It's going to be yearly. Because five years in between, I mean, we get to talk to each other socially. Yeah. But we're going on a regular one-year calendar. Let's do it. Let's do it. Let's do it next January. Okay. Perfect. All right, man. They have folks, Brian Singerman from Founders Fund. one of the great venture capitalists of this generation. And we'll see you all next time. Bye-bye. Thanks, J.C.L.