0:00:02 Today, I’m gonna tell you about seven strangers
0:00:05 who made the greatest investment of all time.
0:00:07 ♪ I feel like I can rule the world ♪
0:00:10 ♪ I know I could be what I want to ♪
0:00:13 ♪ I put my all in it like days on ♪
0:00:14 ♪ On the road let’s travel never looking back ♪
0:00:15 – I’m just gonna put my finger to your lips
0:00:16 and just say let me cook here
0:00:18 because I got something for you.
0:00:20 I’m just gonna, I’m gonna take you down a road here.
0:00:22 All right, so I’ve been down this rabbit hole, dude,
0:00:25 for the last, I wanna call it six hours preparing
0:00:28 for this podcast because I just got obsessed
0:00:32 with the random story and lore
0:00:35 of the first people that invested in Google.
0:00:35 This is crazy.
0:00:37 So this is the story of all the people
0:00:38 who invested early at Google.
0:00:41 And the lessons from this are not about investing in Google.
0:00:43 This was like, you know, 20 years ago,
0:00:47 but how crazy the world of angel investing is
0:00:50 and how much you can almost create your own luck.
0:00:52 And I wanna show you how these people
0:00:54 created their own luck step by step.
0:00:56 So first, let me show you something.
0:00:59 And if you’re on iTunes, go to YouTube right now.
0:01:02 You’re gonna wanna see my little PowerPoint I made for Sam.
0:01:03 All right, Sam, check this out.
0:01:05 Do you recognize this building?
0:01:09 – Just probably something in downtown Palo Alto.
0:01:13 – What you’re looking at is 165 University Avenue,
0:01:15 also known as the Lucky Office,
0:01:18 also known as the Karma Building.
0:01:20 You might recognize a little better here
0:01:22 when you see one of the companies that was started here.
0:01:24 So Google was started here.
0:01:26 Before Google was started there, PayPal was started there.
0:01:28 Before PayPal was started there,
0:01:29 Logitech was started there.
0:01:30 After Google was started there,
0:01:32 a company called Danger was started there,
0:01:33 sold for 500 million to Microsoft
0:01:36 by the guy who created Android right after that.
0:01:38 This office is legendary.
0:01:40 – Who’s in there now?
0:01:43 – Well, it’s had a little bit of a cold streak recently.
0:01:45 And it’s kind of like Ed Sheeran says.
0:01:47 Ed Sheeran believes that rooms have songs
0:01:50 and he’s like, once a studio has been mined
0:01:55 by like four or five great artists, it loses its magic.
0:01:56 There’s no more songs left in the room.
0:01:58 That’s kind of what’s happened to this office now.
0:02:04 All right, I wanna take you through the first few people
0:02:05 that invested in Google and how it happened.
0:02:07 Do you recognize this guy here?
0:02:08 Do you recognize either of these two guys?
0:02:10 – The guy on the left is Sergei.
0:02:11 He’s one of the founders.
0:02:13 Is that Sergei or the other guy, Larry?
0:02:14 – Yeah, that’s Sergei.
0:02:16 – Sergei, and the guy on the right is that Eric Schmidt?
0:02:17 – It’s not Eric Schmidt.
0:02:21 It is a guy named Andy Bechtelstein.
0:02:23 Does that name sound familiar?
0:02:23 – No.
0:02:26 – Maybe if you just look at these murdered out guys
0:02:31 from red corvettes from the early nineties here,
0:02:33 this might ring a bell or two.
0:02:36 What you’re looking at are some of the OGs of Silicon Valley.
0:02:39 These are the founders of Sun Microsystems.
0:02:40 Do you know what Sun Microsystems did?
0:02:42 – It was one of the first big companies.
0:02:44 Was it making microchips?
0:02:46 – Workstations, computers basically.
0:02:48 And they made their own chips also.
0:02:49 They ended up making chips.
0:02:50 They ended up making their own operating system.
0:02:52 They ended up doing a lot of things.
0:02:53 These guys were like the OGs of the OG.
0:02:56 That first guy, the Indian guy, that’s Vinod Kosla.
0:02:57 So that’s Vinod Kosla.
0:02:58 There’s Bill Joy.
0:02:59 There’s Andy.
0:03:00 And then there’s Scott McNeely.
0:03:02 All right, so these are the four founders of Sun.
0:03:04 – Dude, by the way, for the record, they look dope.
0:03:06 – They look dope as hell.
0:03:08 – And I just want to say like Corvette and the Flex,
0:03:09 that doesn’t exist anymore.
0:03:11 And I think it’s fantastic.
0:03:12 I think this is great.
0:03:13 – First of all, they’re all on cell phones.
0:03:14 Guess what?
0:03:15 Cell phones hadn’t been invented yet.
0:03:17 So I don’t even know what they’re holding.
0:03:20 There’s like a corded phone that gets running into their car
0:03:23 with the little, you know, like the spiral cord.
0:03:24 Anyways, these guys are awesome.
0:03:26 So Andy wakes up one morning
0:03:28 and he’s got an email in his inbox.
0:03:30 And it’s from two Stanford students,
0:03:33 Larry and Sergey, the founders of Google.
0:03:35 And they’re pitching him on an idea
0:03:37 for a new kind of search engine.
0:03:39 You know, the way that search engines worked at the time
0:03:43 was there were these ass chiefs, there was Alta Vista,
0:03:45 there was Yahoo and all of these companies
0:03:47 back in the early nineties, they were, you know,
0:03:49 search engines that had some combination
0:03:51 of manual curation.
0:03:52 So they had like editors picking
0:03:54 what goes up front for people.
0:03:56 What, how do you find what you find?
0:03:58 Or you would search and it would just try to match the words
0:04:00 that you’re typing to the website.
0:04:02 And these two PhD students said,
0:04:04 hey, we have a new way of doing this.
0:04:06 It’s called page rank.
0:04:08 And what page rank does is it basically says,
0:04:09 this is genius insight.
0:04:11 The genius insight was of Google was that
0:04:14 instead of just showing you what our editors say
0:04:16 is the right answer when you search
0:04:18 for murdered out red Corvette,
0:04:22 instead of just giving you a word match for it,
0:04:25 we’re gonna show you a link to the website
0:04:27 that other people are linking to, social proof, right?
0:04:30 So if other websites are linking to your website,
0:04:32 that means your website’s probably pretty good.
0:04:34 And the more important those websites are,
0:04:37 so like let’s say the Wall Street Journal links to you,
0:04:39 that matters more than if Sean’s website links to you.
0:04:40 And they had this insight that they could create
0:04:41 better search results this way.
0:04:43 They said, we’d like to show you.
0:04:47 And so he says, I’ll see you tomorrow morning, 8 a.m.
0:04:50 He sees them, they pull up in a parking lot.
0:04:53 He’s in his, the story says Porsche.
0:04:54 So maybe one of these is a Porsche.
0:04:55 One of those is a Porsche.
0:04:56 Okay, great.
0:04:58 So as you can tell, I’m a car guy.
0:05:00 One of those is a Porsche, that’s Andy’s car.
0:05:02 Larry and Sergey show up, they have a little laptop
0:05:04 and they are trying to show him a demo of Google.
0:05:06 And they show him, they say search for something,
0:05:09 he searched for something and the results come up
0:05:10 and it’s magic.
0:05:11 The results are way better than you would get
0:05:13 out of a traditional search engine.
0:05:15 And they start telling them their thesis
0:05:17 and what they’re gonna do and how they’re having,
0:05:18 they’re thinking about raising money
0:05:20 to go actually turn this into a company.
0:05:22 And he says, guys, there’s a lot of things
0:05:24 we could talk about right now.
0:05:26 But I think it’s easier if I just give you money.
0:05:27 And he goes back to his Porsche
0:05:29 and he comes back with a checkbook.
0:05:32 He writes them a check for $100,000.
0:05:34 And he writes it out to Google Inc.
0:05:36 And they’re like Google, they’re like,
0:05:40 hey, we haven’t even incorporated the company yet.
0:05:42 And he goes, it doesn’t matter.
0:05:43 And they go, but what about valuation?
0:05:47 He goes, guys, this is the best idea I’ve ever seen.
0:05:48 Take the money, start building.
0:05:50 And he leaves it, he gets back in his Porsche,
0:05:53 he drives away and he doesn’t even know
0:05:54 how much of the company he’s just bought
0:05:56 because he didn’t even agree on a valuation,
0:05:58 a number of share price, none of that.
0:05:59 He invests the money, he walks away,
0:06:01 he invests at a $10 million valuation.
0:06:04 Google today is like multiple trillion dollars, right?
0:06:06 – So he owns 2%.
0:06:07 – He owns 2% of this company.
0:06:09 He doesn’t even realize this at the time
0:06:10 ’cause they haven’t decided on an evaluation.
0:06:13 And he’s so excited about this company.
0:06:15 And if you remember the four levels of luck,
0:06:18 he’s basically has that luck favors the prepared mind.
0:06:20 He knew when he saw this company that this was,
0:06:24 he goes, this is the greatest idea I’ve ever seen.
0:06:27 And this is the guy who created Sun.
0:06:29 At the time, he’s like the man, right?
0:06:31 This is like if Elon saw something
0:06:33 and invested in a company,
0:06:35 he’s like, no, this is the best product I’ve ever seen.
0:06:39 This is the guy that made Tesla and SpaceX is building rockets.
0:06:40 He’s like, no, no, no, this is the shit.
0:06:42 So Andy does that and he’s so excited.
0:06:45 He goes and he tells the next guy in our story.
0:06:46 And this is the next guy.
0:06:48 Do you know who David Sheraton is?
0:06:52 – He’s another OG like Cisco or something like that,
0:06:54 or one of these like big things
0:06:55 that I don’t even know what they do,
0:06:56 but they have a huge building.
0:06:58 – Arista networks, yeah.
0:07:00 He also invested in I think VMware
0:07:03 that sold to Cisco for $700 million.
0:07:06 So I took the screenshot off of Google.
0:07:07 It says the quiet billionaire.
0:07:10 Oh, I forgot to say Andy’s nickname is the golden boy.
0:07:12 Well, David Sheraton’s nickname was
0:07:14 he was the billionaire professor.
0:07:18 This guy’s a professor at Stanford,
0:07:20 but he’s super wealthy, like a multi-billionaire.
0:07:24 He’s also on many lists as the cheapest billionaire,
0:07:26 as the top 10 cheapest or most frugal billionaires
0:07:27 you’ll ever meet.
0:07:29 A little quote from him on it.
0:07:31 They were like, dude, you’re a billionaire.
0:07:33 Why don’t you like you ride your bike everywhere?
0:07:34 You don’t even have like a fancy car.
0:07:36 You still live in this old house
0:07:38 that you lived in before you got rich.
0:07:39 What’s the deal?
0:07:42 And he goes, honestly, I kind of hate the idea
0:07:44 of living like a billionaire.
0:07:46 He goes, I’m actually pretty offended by that sort of thing.
0:07:48 You know, the type of people that live in houses
0:07:49 with 13 bathrooms and so on.
0:07:51 Something’s wrong with those people.
0:07:52 And this is David Sheraton.
0:07:54 He gives away tons of money.
0:07:56 So he’s given away, you know, tens of millions of dollars
0:07:59 to universities, to schools, to education, to philanthropy,
0:08:02 but he himself just rides around like a doofus
0:08:04 with a bike helmet out on his old bike.
0:08:06 And he just, that’s how he lives his life and he’s great.
0:08:08 So can we just say really quick
0:08:10 that the professor billionaire type,
0:08:11 I think of all the billionaires,
0:08:13 they might be one of the best.
0:08:13 Maybe your favorite.
0:08:15 I think so.
0:08:17 I thought criminal billionaire like Silk Road type shit
0:08:18 was coming up.
0:08:19 Those are cool, those are cool,
0:08:20 but they’re not aspirational.
0:08:22 Like I want to be friends with them,
0:08:25 but like the aspirational one is the professor billionaire.
0:08:26 You know, the guy who started Renaissance,
0:08:29 the big hedge fund professor billionaire,
0:08:31 Ed Thorpe was a professor billionaire.
0:08:33 Those are the best billionaires.
0:08:35 But what about, I thought you love like the,
0:08:36 just the ruthless tycoons.
0:08:39 I like reading about them.
0:08:40 They’re fun to read about.
0:08:41 They’ve got great stories.
0:08:42 But if you could be anyone,
0:08:45 you wouldn’t be the professor billionaire is great.
0:08:47 So Andy tells David Sheraton, he goes,
0:08:49 “Hey, you got to talk to these guys there at Stanford.”
0:08:51 He starts, he meets the guys.
0:08:53 He also writes a check in the same round.
0:08:55 Again, like $100, $150,000.
0:08:56 So he puts it in.
0:08:57 Okay. So now-
0:08:59 And was he a billionaire when he made that deal?
0:09:00 Or was he just successful?
0:09:01 Not a billionaire, but successful.
0:09:03 He had started a company called Granite System.
0:09:06 He had, and eventually he does create Arista Networks,
0:09:08 which is a multi-billion dollar company.
0:09:11 But at the time was like, you know, let’s call it,
0:09:13 probably had tens of millions of dollars.
0:09:15 And he is really rich now.
0:09:16 I just Google them.
0:09:17 Holy crap.
0:09:18 Yeah. Like 10 billion plus, right?
0:09:21 20 billion, like closer, like really rich,
0:09:23 like top 100 rich.
0:09:25 Yeah. He’s, him and Andy, both of them.
0:09:27 They both are now.
0:09:28 So this guy’s made,
0:09:30 this guy ended up making over a billion dollars
0:09:31 just off his Google shares.
0:09:33 Okay. So he meets David.
0:09:35 Now, who’s the next person that finds out
0:09:36 about this little company called Google
0:09:39 that started by these two students on campus?
0:09:42 Well, David goes to a holiday party.
0:09:45 And at the holiday party, he meets another person.
0:09:46 Do you know who this guy is?
0:09:48 Yeah, Ron Conway.
0:09:50 Ron Conway, this is gonna be a little bit of a long session
0:09:53 because Ron Conway is a goddamn legend.
0:09:56 And I kind of knew Ron Conway was the man.
0:09:58 I’ve actually met Ron Conway before.
0:09:59 And I just, he just has this presence.
0:10:00 He’s got a bit of an aura about him.
0:10:02 But it’s he like a forgetful professor type
0:10:04 ’cause like where he’s like always taking notes
0:10:06 and he’s like always moving and doing stuff
0:10:07 and he forgets stuff.
0:10:08 He is always taking notes.
0:10:09 So like this picture,
0:10:10 he’s got this yellow legal pad.
0:10:12 When I met him, he also had the yellow legal pad
0:10:14 and he was furiously writing notes.
0:10:16 And we were just at like a lunch.
0:10:17 We were at like a lunch with the mayor
0:10:20 and he was just writing like copious amounts of notes.
0:10:22 And he was just like always on the move.
0:10:23 He was moving.
0:10:25 And if somebody asked him a question,
0:10:25 he would just,
0:10:27 if somebody came to introduce themselves,
0:10:29 he’s like, how can I help you do what you’re doing?
0:10:30 And he was just like, get to the ask.
0:10:31 Like, what’s your ask?
0:10:33 If I could do it, I’m gonna do it.
0:10:35 And he would jot down a note on his yellow legal pad.
0:10:36 Cool, I’ll make that introduction.
0:10:38 And like literally like seven minutes later,
0:10:39 the introduction was made.
0:10:41 He just got moves at a different speed.
0:10:42 – You know, like in the mafia,
0:10:43 when the Godfather has a wedding,
0:10:44 his daughter’s wedding,
0:10:46 everyone in the town can come and ask him one favor.
0:10:48 He’s like that every day.
0:10:49 – Exactly.
0:10:52 You said, is he also like the forgetful professor?
0:10:54 I think he’s more like,
0:10:56 he’s more like Santa Claus.
0:10:57 He’s, he’s Saint Nick.
0:10:59 He’s like Saint Nick after,
0:11:00 with like a triple espresso.
0:11:02 And so he’s just moving.
0:11:03 – Okay.
0:11:04 – And so, okay.
0:11:05 So Ron Conway goes to this holiday party
0:11:07 and the way he tells the story is he goes,
0:11:10 I get to this party and I’m in a tuxedo.
0:11:11 And I got down, I hate being in a tuxedo.
0:11:12 I’m so uncomfortable.
0:11:15 And I just see, I see David there.
0:11:16 He’s also in a tuxedo.
0:11:17 And I go up to him and I go, David,
0:11:18 let’s talk about something else
0:11:20 because I’m so uncomfortable with this tuxedo right now.
0:11:23 And he goes, David had invested in his fund.
0:11:27 And he goes, David, the deal is you invest in this fund.
0:11:28 Cool, I’ll invest your money,
0:11:30 but you got to be telling me what you’re seeing.
0:11:32 And like, you got to be my eyes and ears on the ground.
0:11:34 He goes, David, what are you seeing at Stanford?
0:11:35 What’s exciting right now?
0:11:39 He goes, oh, I just invested in these two PhD students
0:11:40 that are doing the search engine thing.
0:11:42 And he had invested in Asgiv.
0:11:46 So he knew, okay, search engine’s big deal.
0:11:47 If somebody says there’s a new search engine
0:11:48 that’s better than Asgiv.
0:11:49 I got, I’m interested.
0:11:51 I want to check it out.
0:11:54 So he asked, David, can you arrange for a meeting?
0:11:58 And he tries to get this meeting and he kind of fails.
0:12:01 They’re like, they’re busy.
0:12:02 They’re like, look, we’re not taking angel investors.
0:12:04 We want VCs.
0:12:09 But they go, but maybe you can actually help us get a VC.
0:12:12 Was Ron a legend then or a legend in the making?
0:12:14 Legend in the making.
0:12:14 Got it.
0:12:16 Do you want the quick backstory on Ron?
0:12:17 That’s pretty insane.
0:12:18 Yeah.
0:12:19 All right.
0:12:21 So he, Ron Conway starts off as an entrepreneur.
0:12:23 He starts this company called Altos Computing.
0:12:25 So he’s also making computers like Sun.
0:12:27 And he ends up taking it public
0:12:29 and then they get their ass kicked.
0:12:30 The personal computer comes out.
0:12:32 The PC, the PC starts kicking their ass.
0:12:34 They end up selling the company, but they do well.
0:12:36 And his early investor was Sequoia.
0:12:37 So he goes to Don Valentine,
0:12:40 who’s like the guy who created Sequoia.
0:12:42 The OG of OG investors.
0:12:45 And Don’s like, all right, Ron, what do you want to do next?
0:12:46 What’s the next company you’re going to start?
0:12:49 He goes, honestly, I never want to manage 1000 people again.
0:12:51 That was a nightmare.
0:12:53 I don’t know what I want to do, but that’s not it.
0:12:55 And he goes, that’s a bummer.
0:12:57 Like, you know, my hope is you’re ready to start
0:12:59 a new company and I was ready to write the check.
0:13:01 But if not, maybe you’d be a good investor.
0:13:02 How about I recruit you to Sequoia?
0:13:04 Why don’t you come follow me around for a couple of weeks,
0:13:05 see if you like this investing thing.
0:13:08 So he follows Don around and he’s like, hey, this is,
0:13:10 he goes, hey, I think you could be pretty great at this,
0:13:11 but you know what you should do?
0:13:13 You should do this thing called angel investing.
0:13:14 It’s a new thing.
0:13:15 And angel investing at the time
0:13:16 was actually a term from Hollywood.
0:13:18 It was about investing in movies.
0:13:20 I think they called it super angel or something.
0:13:22 Was it like even like a different term?
0:13:23 He became a super angel,
0:13:25 but like it started with just angel investing.
0:13:26 He goes, you know what?
0:13:27 You don’t even have to start your own VC fund.
0:13:29 You could just invest your own money,
0:13:31 just small checks, 10, 20K checks.
0:13:32 And then, hey, when you see something cool,
0:13:34 you bring it to me at Sequoia, right?
0:13:36 And so he tells me, you should go do this.
0:13:37 And Ron decides, all right,
0:13:39 I’m going to start angel investing.
0:13:41 And basically he starts angel investing his own money.
0:13:43 Very quickly he decides, he’s like,
0:13:46 I’ve made one great decision in my life.
0:13:47 And it’s in 1994.
0:13:50 He’s like, all right, I could just be an investor.
0:13:54 He’s like, but if I’m competing against guys like Don,
0:13:55 I have no advantage, right?
0:13:56 They’ve been doing this.
0:13:58 They’re just more skilled, more experienced than me.
0:14:00 They have a better brand than me.
0:14:02 And they just know that game inside and out.
0:14:04 He goes, but what can I do to differentiate?
0:14:08 He goes, well, what if I actually just start investing?
0:14:09 What if I pick a niche?
0:14:10 And he goes, and so Don’s like,
0:14:13 okay, is your niche going to be like hardware computers
0:14:15 just like you just did with your company?
0:14:17 He goes, no, all I know is I hate hardware.
0:14:19 So what’s the opposite of hardware?
0:14:20 Software.
0:14:21 What’s this new thing, the internet?
0:14:22 And at this time, by the way,
0:14:23 the browser hadn’t even been invented.
0:14:26 Like Mark Andres is still a student at University of Illinois.
0:14:27 He hadn’t even graduated yet.
0:14:29 But he’s like, I think there’s this thing,
0:14:33 software, we needed it for our computer, for our hardware.
0:14:34 And there’s this new thing called the internet.
0:14:36 Fuck it, I’m all in on the internet.
0:14:38 And he just decides, he’s like, look,
0:14:39 it’s a thing that’s at zero.
0:14:41 So he goes, the beautiful thing is there are no experts.
0:14:44 So I can’t be behind cause this thing just started.
0:14:46 So I’m going to go in this thing at zero.
0:14:47 I’m going to get to watch it grow.
0:14:49 And by the time this thing’s four years, five years in,
0:14:51 I’ll be the expert.
0:14:52 And he goes, that’s the greatest decision
0:14:53 I ever made in my life.
0:14:55 And he goes, by the way, it’s now 2025.
0:14:58 I’m still all in on the internet.
0:15:01 He’s like, this thing, I thought this thing was small then.
0:15:03 He goes, I still think it’s early days.
0:15:05 And so he goes all in the internet.
0:15:09 Now around 1999, he’s been angel investing.
0:15:09 He raises a fund.
0:15:12 He raises a fund for $25 million from other people
0:15:16 to be the Silicon Valley, you know, angel investing fund,
0:15:17 SV angel, if you’ve heard of it.
0:15:19 And actually at the time it was called something else,
0:15:21 angel investments or something like that.
0:15:23 But he decides I’m going to invest in Silicon Valley
0:15:26 companies, he raises $25 million, the dotcom boom hits.
0:15:27 It’s getting hot.
0:15:29 He raises the next year another 175 million.
0:15:31 And his approach is just spray and pray.
0:15:34 He’s investing in anything and everything that he sees.
0:15:37 And so he’s made like 250 investments
0:15:40 by the time the dotcom bubble bursts.
0:15:42 And when it bursts, he’s like, oh, shit.
0:15:44 And they go to him, he’s only working with like four or five
0:15:46 guys and they’re like, hey, what’s our strategy?
0:15:47 Like the market’s crashing.
0:15:50 He goes, our strategy is we don’t invest anymore.
0:15:52 Like our strategy is I think it’s over.
0:15:53 I don’t know what to do.
0:15:56 Like there’s just nothing to invest in now.
0:16:00 And so he’s like, but my hope is that one of these deals
0:16:03 that we did early on is a winner.
0:16:06 And basically what he says is that when that dotcom bubble
0:16:10 burst, 80% of our companies just went to zero.
0:16:13 But luckily he had Google and he had invested in Google
0:16:15 along the way and Google carried them.
0:16:17 Okay, so how did he end up investing in Google?
0:16:19 Because remember they didn’t want an angel investor.
0:16:20 They wanted an institution.
0:16:22 Well, the thing about Ron Conway is that Ron Conway
0:16:27 is known for being just extremely generous.
0:16:28 So even if he’s not going to invest in the deal,
0:16:30 he’s just like, I’m going to help the founder.
0:16:32 And his philosophy was, and a lot of people say this,
0:16:33 but he actually did it.
0:16:37 His philosophy was, all I do is I am in service of the founder.
0:16:39 I’m just going to help as many founders as I can
0:16:40 and money will be the byproduct.
0:16:43 Like money has to come if I help enough great founders.
0:16:45 Money has to show up.
0:16:49 And Paul Graham basically calls us the Ronco principle.
0:16:51 And he goes, Paul Graham describes this.
0:16:54 He goes, I noticed what Ron Conway, he goes,
0:16:56 I’ve never heard one instance of Ron Conway
0:16:58 behaving badly to any founder.
0:16:59 And that’s incredible.
0:17:01 Because this guy’s invested in like thousands of companies.
0:17:04 He goes, in fact, I went looking for examples.
0:17:06 Has anyone had an experience where Ron Conway
0:17:09 treated you poorly or didn’t act in your best interest?
0:17:11 He goes, and instead I just got this outpouring
0:17:13 of people being like, no, you know what?
0:17:15 He had nothing to gain from a situation.
0:17:16 And he just went above and beyond.
0:17:19 And he goes, so Paul Graham hears this and says,
0:17:21 you know what, actually maybe there’s something to this.
0:17:23 Actually I’ve heard about a couple other investors
0:17:24 that are like this.
0:17:27 And he goes, maybe this is not just like a funky coincidence.
0:17:29 Maybe this is a bit of a strategy,
0:17:31 which is so much of angel investing
0:17:34 is getting invited into deals.
0:17:35 And if your reputation is just one
0:17:38 where you’re just always act benevolently,
0:17:42 then it’s actually not just like an act of generosity
0:17:44 or charity, you’re actually building a reputation
0:17:45 that’s gonna get you into the next deal,
0:17:46 the next deal, the next deal.
0:17:48 And that’s exactly what happened here.
0:17:51 And so Ron Conway, who by the way, just side note,
0:17:53 go to SV Angel’s website.
0:17:54 If you were trying to research this company,
0:17:56 what would you pay attention to?
0:17:58 Which companies they invested in.
0:18:00 And what do you see there?
0:18:04 Pinterest, Coinbase, Facebook, OpenAI, Snapchat, Twitter,
0:18:07 Rippling, Reddit, Okta, Anthropics, Square.
0:18:10 Every hit company is on this list.
0:18:13 Every hit Silicon Valley company is on this list.
0:18:14 Paul Graham, when he interviewed–
0:18:19 Airbnb, Brex, Checker, like everything ever,
0:18:22 like literally every company.
0:18:24 Paul Graham did a talk where he interviewed Ron Conway
0:18:26 and he goes, all right, if you need to remember
0:18:28 one thing from this, I’m gonna say a bunch of words,
0:18:30 but just remember this, one sentence.
0:18:31 Ron Conway is the man.
0:18:33 He goes, I was gonna do an intro,
0:18:35 talking about the hit companies you’ve invested in.
0:18:37 And then I realized it’s actually shorter
0:18:39 to write down a list of the hit Silicon Valley companies
0:18:40 that you missed.
0:18:44 And he had three, it was like, he missed Salesforce.
0:18:47 He missed Kickstarter and he missed one more,
0:18:48 I forgot which one it is.
0:18:50 And he’s like, it’s insane,
0:18:52 the number of hits that you’ve invested in.
0:18:54 And he goes, and the funny thing is that Ron doesn’t even
0:18:57 spend, I don’t know if you know about his
0:19:00 like investing style, but it’s exactly the same as YC,
0:19:01 which I find fascinating.
0:19:02 – Which is what?
0:19:05 He just like $100,000 in every single thing.
0:19:07 – He meets you and in 10 minutes he makes a decision.
0:19:10 And Ron says it’s usually three to five minutes
0:19:12 and he’ll just decide on the spot in three to five minutes.
0:19:14 YC has a 10 minute interview
0:19:16 and then they make their entire decision off 10 minutes.
0:19:21 So the two best pickers, the two best angel investors
0:19:23 in the history of Silicon Valley,
0:19:27 both make all of their decisions in under 10 minutes.
0:19:28 Isn’t that insane?
0:19:31 – And so how much does he invest?
0:19:34 – Initially he was investing like, you know, 25K,
0:19:36 then it became 100K, then it became 250K.
0:19:38 – I’m not sure if that strategy would work now
0:19:41 because there’s, because I think that then
0:19:44 in the 2000s and 90s and things like that,
0:19:46 if you had the gumption to be one of the people
0:19:47 who like threw your hat in the ring
0:19:49 and like got a meeting and did this,
0:19:51 I think that because the barrier to entry was high
0:19:54 because there was a higher ratio of like freaks
0:19:57 doing this shit, you know, now it’s because it’s like cool
0:19:58 that there’s a lot more noise.
0:20:00 But I don’t, so I don’t know if that would work now.
0:20:01 – Let’s look at their list here.
0:20:03 Anthropic, that’s recent.
0:20:04 Open AI, that’s recent.
0:20:06 Hugging face, that’s recent, right?
0:20:07 Like these are the big, if I said,
0:20:09 what are the best companies in the last four years,
0:20:11 you know, that to be invested in?
0:20:14 Open AI, Anthropic, Hugging Face,
0:20:15 like these would be in that list.
0:20:17 Yeah, you know, he’s in you to swap it,
0:20:19 which was the big one in the crypto phase,
0:20:21 like, you know, five years ago or whatever.
0:20:24 So I think this still works,
0:20:25 but the trick to making it work
0:20:27 is not just that they make snap decisions, right?
0:20:31 Like his decision, you know, his process was basically,
0:20:31 they’re like, what’s your thesis?
0:20:33 He goes, I had no thesis.
0:20:35 He goes, I went into angel investing
0:20:37 when there wasn’t even really a word.
0:20:39 He goes, there was no thesis that you could have at the time.
0:20:41 I just, all right, the internet’s cool.
0:20:43 And then he’s like, I, he goes,
0:20:46 I realized one mistake pretty quickly,
0:20:49 which was that the more I tried to judge a,
0:20:51 you meet a founder and they have an idea,
0:20:54 they have a personality and then there’s a market.
0:20:56 And basically, if you try to blend those together,
0:20:59 you try to make a decision off the mix of the idea,
0:21:01 the founder and the market, you lose.
0:21:04 If you love the founder, but you hate the idea,
0:21:05 you also lose.
0:21:08 He goes, Airbnb, I didn’t love the idea,
0:21:09 but I love the founders.
0:21:10 So what does he pick?
0:21:12 One of those three or just the person?
0:21:13 He’s just like, I just picked the founder.
0:21:15 He goes, and what I do is I was like,
0:21:16 I’m just gonna invest in the founder.
0:21:18 It’s the founder’s job to figure out the idea
0:21:20 and they’ll change, often they change the idea.
0:21:22 And he goes, and by the way,
0:21:24 I’m not just investing in this founder for this company.
0:21:25 I’m investing in this founder for life
0:21:27 because he goes, I realized that the best founders
0:21:28 start multiple companies.
0:21:32 Yeah, so for example, he put one of his first employees
0:21:35 at what he started doing this was his son, Tofer.
0:21:37 And his son’s 13 years old
0:21:39 and his son makes his first investment at 13
0:21:41 at a little company called Napster.
0:21:42 And he’s like, oh, I heard about Napster,
0:21:43 but I don’t know about this shit.
0:21:45 Tofer, go use this thing and tell me if it’s amazing.
0:21:46 Tofer comes back the next day.
0:21:48 He’s like, dad, this is the craziest thing
0:21:49 I’ve ever seen.
0:21:51 I can get any song, I can download anything.
0:21:52 This is changing the game.
0:21:53 I’m downloading bits of the song
0:21:55 from other people around the world.
0:21:59 It’s like, this is mind blowing, this decentralized thing.
0:22:00 And he’s like, cool.
0:22:01 All right, let’s go invest in this thing.
0:22:03 He goes and he meets the founders.
0:22:04 All right, he had already met the founders.
0:22:05 That was his diligence.
0:22:07 And he invests in Sean Parker and Sean Fanning.
0:22:08 And he’s like, cool.
0:22:11 Anything you guys do from here on out, I’m in.
0:22:13 And so Napster didn’t work out,
0:22:15 but Sean Fanning’s fourth or fifth company
0:22:17 ended up being a hit.
0:22:18 And Napster didn’t work out,
0:22:20 but Sean Parker’s next company was Facebook.
0:22:22 And he’s like, I totally didn’t get Facebook.
0:22:24 I didn’t know how social networks would make any money.
0:22:26 It seemed like college kids,
0:22:29 posting pictures of their drunk escapades.
0:22:30 I didn’t seem like something was gonna be money,
0:22:33 but Sean Parker’s in and I’ve decided.
0:22:35 Sean Parker’s a founder that I want it back.
0:22:36 And so I invest in Facebook too.
0:22:42 All right, let’s take a quick break
0:22:44 ’cause I gotta tell you about a friend of the pod
0:22:45 who’s got their own podcast.
0:22:47 If you know Steph Smith, she is a legend.
0:22:49 She’s been on MFM many times.
0:22:52 And she’s got her own podcast called the A16Z podcast.
0:22:54 And it’s all about technology.
0:22:57 If you think about it, technology has evolved like crazy.
0:22:58 I mean, I grew up in the 90s.
0:23:00 I had CDs, phones had cords.
0:23:03 You couldn’t use the internet if your mom was on the phone.
0:23:05 And now there’s like 3D printers
0:23:08 and there’s rockets that can go up into space, AI.
0:23:09 There’s so much crazy stuff going on.
0:23:11 And you gotta have a place
0:23:12 that helps you stay ahead of the curve.
0:23:15 And that’s what the A16Z podcast is trying to do.
0:23:18 It’s a podcast from the VC firm, Andres and Horowitz.
0:23:19 And it’s trying to give you an inside look
0:23:21 at the trends that are shaping our future.
0:23:23 They’ve had guests like Mark Cuban and Neil Stevenson
0:23:26 on and they talk about topics like deep fakes
0:23:29 or the science behind GLP ones or autonomous drones.
0:23:30 No small boy stuff at all.
0:23:32 Steph is the host, she’s awesome.
0:23:33 I think you’ll enjoy the podcast.
0:23:34 So check it out.
0:23:35 It is the A16Z podcast.
0:23:37 And I like this tagline to say
0:23:38 it’s like eavesdropping on the future.
0:23:39 That’s pretty cool.
0:23:40 That’s a good tagline.
0:23:41 So check it out.
0:23:43 The A16Z podcast wherever you get your podcast.
0:23:46 (upbeat music)
0:23:49 All right, so bringing it back to Google.
0:23:50 All right, so bringing it back to Google.
0:23:51 He goes to the Google guys.
0:23:53 They’re like, hey, we want a VC.
0:23:55 They’re like, all right, we will let you in
0:23:56 if you can go get a Sequoia.
0:23:58 Because Paul Graham asked him,
0:24:00 he goes, you know, when you invest in Google,
0:24:02 did you know like this is a huge company?
0:24:05 There’s gotta be like an all time company.
0:24:08 He goes, you know, you could never think of a company
0:24:09 as like a trillion dollar company.
0:24:11 He goes, but I did think it was gonna be really, really big.
0:24:14 And I went all in trying to get this investment.
0:24:16 And he goes, why’d you go all in?
0:24:17 And he goes, well, because they had three things.
0:24:19 He goes, first, super smart geeks.
0:24:23 That’s criteria one, two, really determined.
0:24:25 Three, do they do something that surprises me?
0:24:28 For example, they’re really smart geeks,
0:24:30 but they’re also really charismatic.
0:24:32 Or the real, he goes, but that wasn’t the case for them.
0:24:35 It wasn’t the case for Zuck that they’re really charismatic.
0:24:37 He goes, with Zuck, it was that early on,
0:24:39 he was talking to me about like getting into,
0:24:41 getting 300 million users.
0:24:44 And he’s like, no service had 300 million users.
0:24:46 So the fact that Zuck had figured out like,
0:24:49 yeah, we’re gonna connect everybody.
0:24:50 And he’s like, oh, shit.
0:24:53 Okay, just the fact that this guy is saying things like that,
0:24:56 he is a level of ambition that’s not really, you know,
0:24:57 common and guess what?
0:24:59 I wasn’t surprised when he turned down a billion dollars
0:25:02 from Yahoo because all he wanted to do was rifle focus
0:25:05 on a product that would actually reach everybody.
0:25:07 So with Google, he goes, they were super strategic.
0:25:09 He goes, they told me, they go,
0:25:11 you can be in if you can get Sequoia.
0:25:13 He goes, okay, that’s great.
0:25:15 Sequoia is great, but why Sequoia?
0:25:17 They go, not just Sequoia, we need Mike Moritz.
0:25:19 He goes, okay, Mike’s great, but why Mike?
0:25:22 And he goes, because Mike is on the board of Yahoo.
0:25:23 And what we’re gonna do is we’re gonna build
0:25:25 the best search engine.
0:25:27 And right now Yahoo has a deal with Alta Vista.
0:25:29 Alta Vista powers all of their search.
0:25:31 So we wanna cut two mega deals.
0:25:35 We want to be the default search engine on Yahoo.
0:25:37 And once we convince Mike Moritz, this is awesome,
0:25:40 he’s on the board of Yahoo, he’ll get us the meeting.
0:25:42 And then we wanna do the same thing with AOL.
0:25:44 – Do they have like a product at this point?
0:25:45 – They had a product, they had users.
0:25:46 And he talks about that.
0:25:48 He’s like, you know, basically he’s like,
0:25:50 I saw the searches, the results were better.
0:25:52 And they had early users that were like,
0:25:54 the people who used it used it all the time.
0:25:56 So it wasn’t like they had a ton of users,
0:25:57 but it’s same thing as Facebook.
0:25:59 The people who used it used it like crazy.
0:26:02 And so they go, we want Sequoia
0:26:03 and we want Kleiner Perkins.
0:26:05 He goes, well, you know, you could have either
0:26:07 or they don’t usually like to do deals together.
0:26:10 He goes, we want Sequoia and we want Kleiner Perkins
0:26:12 ’cause Kleiner Perkins, John Doors on the board of AOL
0:26:14 or has a relationship with AOL, we need that deal too.
0:26:17 – So they were cocky and smart and…
0:26:19 – Strategic, yeah, they knew what they needed.
0:26:20 And they were like, we’re gonna,
0:26:21 looks like an algorithm.
0:26:22 It’s like, that’s the output we need.
0:26:24 So then we need to find the path to that.
0:26:27 – Well, I read stories of them,
0:26:29 the Sergey and Larry retelling the story.
0:26:31 And they were like, we were full of ourselves.
0:26:33 We thought we were the best.
0:26:35 And we were pretty good and we acted like it.
0:26:37 – Well, there’s stories of both, right?
0:26:38 At one point, they tried, before this,
0:26:41 they tried to sell the tech for $1 billion.
0:26:43 And this is when they were like, oh, it’s just an algorithm.
0:26:46 And then they had sort of gotten bigger and bigger.
0:26:51 So anyways, so he goes, so he goes, I basically…
0:26:53 So from the time that that guy, David Sheridan,
0:26:56 tells about this company at this holiday party,
0:26:58 he goes, I called them for five months straight,
0:27:00 every month I called them.
0:27:01 And finally I got my audition.
0:27:03 And at that audition, they go, you’re in,
0:27:04 if you can get Sequoia.
0:27:06 So he starts working the phones, he gets them a meeting.
0:27:10 Sequoia’s in and Kleiner Perkins is in.
0:27:12 Oh, actually there’s one little thing before that.
0:27:15 He goes, hey guys, I’ll lead this myself, $10 million.
0:27:17 And they go, no, we don’t want you.
0:27:19 And he goes, okay, fine, I’ll go get you Sequoia.
0:27:21 So he goes and he gets them Sequoia and Kleiner Perkins.
0:27:22 But they’re negotiating.
0:27:23 They both want to do the deal.
0:27:26 They both want to do the deal at unprecedented numbers.
0:27:28 They’re trying to do it at like a $75 million valuation,
0:27:31 which at the time was like bananas
0:27:32 to do a $75 million valuation.
0:27:35 But they believed that search was already like a big deal
0:27:38 and they thought this was the new search thing.
0:27:39 But they can’t agree who’s gonna get the deal.
0:27:41 They don’t want to share it.
0:27:42 And Larry and Sergey get fresh
0:27:44 after a month of back and forth to Larry and Sergey.
0:27:46 They’re like, dude, forget this.
0:27:47 We don’t want to be fundraising.
0:27:50 Ron, you said that you would do this thing 10 million
0:27:53 yourself, was that bullshit or is that real?
0:27:55 He goes, they go, you said you could make that happen.
0:27:56 Could you actually make that happen?
0:27:58 He goes, I can make it happen.
0:27:58 This is Friday.
0:28:01 He goes, I’ll have it by Monday if you want it.
0:28:03 And they go, all right, that’s what we want.
0:28:06 He goes, but honestly guys, do you want that
0:28:07 or do you want them to share the deal?
0:28:09 They go, our first choice, we want them to share the deal.
0:28:11 But if they can’t get the shit together,
0:28:13 we’ll do it with you.
0:28:16 And again, Ron Conway badly wants this deal.
0:28:17 But he does what Paul Graham calls
0:28:21 the most generous act in the history of Silicon Valley.
0:28:23 He calls, he calls Klein and Birkins.
0:28:26 He goes, guys, they’re not bluffing.
0:28:27 If you don’t have this thing done by Monday,
0:28:30 they’re doing a deal with me to do all 10 million.
0:28:31 But they want this with you guys.
0:28:32 That’s what they truly want.
0:28:34 You guys got to figure this shit out.
0:28:36 By Saturday morning, they’ve agreed we’re gonna do this.
0:28:39 And they carve out Ron a little allocation
0:28:41 because he put that deal together.
0:28:42 He broke it, yeah.
0:28:44 Yeah, he gets the 250K.
0:28:48 So that’s how Ron Conway gets in on this deal.
0:28:49 One last little Ron Conway thing,
0:28:52 ’cause it’s just, you said something about like mafia.
0:28:56 And here’s Ben Horowitz from Andreessen Horowitz.
0:28:58 He wrote a whole blog post called Ron.
0:29:00 And in the blog post about Ron, he says,
0:29:02 Ron is not an investor.
0:29:04 Ron runs a network.
0:29:06 And in Ron’s network, everybody who’s a node
0:29:08 knows you are important.
0:29:10 And there’s a certain code of behavior
0:29:11 that you have to have.
0:29:12 He goes, to get into the network,
0:29:14 you must have a relationship with Ron.
0:29:15 No, I say a relationship.
0:29:17 That means not just I’ve met or I know.
0:29:19 More on this later.
0:29:22 He goes, too, you must answer when called.
0:29:24 Ron makes sure that his network matters
0:29:27 because he demands extreme reliability.
0:29:28 If he calls you to participate,
0:29:31 you must participate when called upon.
0:29:32 And he goes, three, that keeps you
0:29:34 in what I call good standing with Ron,
0:29:37 which is you must remain in good standing with Ron
0:29:38 to remain in the network.
0:29:40 If you do not act when called upon
0:29:42 or you do not act well in terms of,
0:29:44 you have some kind of bad behavior with founders,
0:29:47 Ron will light you up and take your ass out of the network.
0:29:49 And he goes, no matter what deal you’re in,
0:29:52 it is more costly to be out of Ron’s network
0:29:54 than it is to try to get one up.
0:29:55 And because of that,
0:29:58 he is ensured that Silicon Valley works.
0:30:00 So people like this guy that much, huh?
0:30:01 All right, listen to this story.
0:30:03 So Alfred Lin, who ends up,
0:30:05 have you ever heard that name Alfred Lin before?
0:30:06 Zappos, Zappos?
0:30:09 Yeah, he ends up being like the number two guy at Zappos,
0:30:10 I think.
0:30:11 Before that, he had started this company.
0:30:12 And he tells the story.
0:30:14 He’s like, yo, so we had this company,
0:30:16 it was honestly, it was on the brink of failure.
0:30:18 And he’s like, it didn’t end up,
0:30:20 it looked like the company was gonna fail.
0:30:21 And me and my co-founder were talking,
0:30:24 we’re like, all right, have we tried everything?
0:30:25 And they’re like, well, there’s one investor
0:30:26 we haven’t talked to,
0:30:27 ’cause we don’t really know him super well,
0:30:30 but like Ron did invest in our company early on.
0:30:33 And they’re like, we had this deal with this big company,
0:30:35 this fortune 50 company fell apart.
0:30:37 And like, there was no way,
0:30:39 if we had lost this deal, the company’s dead.
0:30:42 So he goes, I didn’t know Ron at the time.
0:30:43 And his investment was really small,
0:30:44 which is why we hadn’t reached out to him yet.
0:30:47 We first went to our big investors, but we struck out.
0:30:49 So he goes, we had nothing to lose at this point.
0:30:51 So at 11 p.m. I wrote Ron an email that said,
0:30:53 hey, you don’t really know me,
0:30:55 but I’m an executive at a company you’re an investor in.
0:30:57 And we need a meeting in person
0:30:59 with the CEO of this fortune 50 company.
0:31:01 We need the meeting this week.
0:31:02 And if you can’t make it happen,
0:31:04 hey, that’s totally okay, I understand,
0:31:07 but we may be going down and I’m sorry.
0:31:10 He goes, he goes, two minutes later is 11 p.m.
0:31:12 Two minutes later, Ron writes back
0:31:15 in a way that I now have learned is Ron’s style.
0:31:18 It’s immediate email short and it’s all caps.
0:31:20 I’m on it, all caps.
0:31:22 By the next morning, Ron had done it.
0:31:24 We got an eight-figure contract with that company
0:31:25 that led to a nine-figure contract
0:31:27 all because of this desperate email.
0:31:30 And eventually our company got acquired for 800 million.
0:31:31 We were on the brink of death.
0:31:33 Ron didn’t know us from Sam and he saved our ass.
0:31:35 Dude, the takeaway from all of this,
0:31:37 San Francisco is amazing.
0:31:38 Now it’s cool to shit on it
0:31:40 because it is very frustrating.
0:31:41 It’s a very, I’ve lived there for 10 years.
0:31:42 It’s super frustrating,
0:31:45 but I have missed out so much not being there.
0:31:46 And just like what people don’t realize
0:31:49 that San Francisco is only like 800,000 people.
0:31:51 And if I had a guest, Ron Conway lived
0:31:53 in like Pacific Heights, Marina area.
0:31:56 And just like walking around that area, you feel it.
0:31:58 And you hear these like weird conversations
0:32:00 and just being able to email someone
0:32:01 and just be like, I’ll meet you at the coffee shop
0:32:03 five blocks away.
0:32:04 That’s special, man.
0:32:06 Just these types of interactions are special.
0:32:07 So check this out.
0:32:09 So you said like, I don’t know if that approach would work
0:32:11 ’cause now there’s somebody more companies.
0:32:13 And at the time when there’s very few people
0:32:15 starting companies, that might’ve worked.
0:32:17 So they asked him, this was kind of like
0:32:20 when he was in his peak investing time.
0:32:21 They go, so how do you invest?
0:32:25 He goes, I only take meetings that come from my network.
0:32:27 So he goes, I will get five pitches a day.
0:32:30 So I see 30 a week, 30 deals counted by desk a week.
0:32:32 Every single one is from a referral of a founder
0:32:34 or investor that I know well that knows me
0:32:36 and knows what to refer to me.
0:32:39 He goes, I will invest in one out of 30 every single week.
0:32:41 He goes, of the five that I get per day,
0:32:44 I’ll turn down two or three just via email, no phone call.
0:32:46 The rest we’ll invest in and I’ll invest in,
0:32:48 I’ll make my decision within five minutes
0:32:49 of talking to the founder.
0:32:50 They go, well, what are you looking for in that founder?
0:32:52 He goes, I’m looking for three things.
0:32:54 Insane 24/7 desire to work.
0:32:56 He goes, I could tell when I’m talking to a founder
0:32:57 if they wish they could just spend
0:32:59 all of the time working on this.
0:33:00 And they view everything else in their life
0:33:04 as like a nuisance or an obstacle in the way of doing this.
0:33:06 He goes, have they warned their wife or girlfriend?
0:33:11 Like, hey, I love you, but I’m all in on this thing
0:33:13 and I’m gonna be gone and I’m gonna be doing shit.
0:33:15 And like, this is it.
0:33:17 This is my thing and I’m doing this.
0:33:19 He goes, that’s the first thing I look for.
0:33:21 He goes, if I could feel it,
0:33:23 then I know it’s gonna be infectious to other people
0:33:25 ’cause they’re gonna have to recruit badass other people.
0:33:27 He goes, lastly, can they communicate why this matters?
0:33:29 He goes, you know, Zuck, it’s not like he had
0:33:32 like this crazy charisma or personality,
0:33:34 but when you talk to him,
0:33:35 it’s the feeling we got when Amjad
0:33:38 from Replet was on the podcast where it’s like this.
0:33:40 It’s like, oh, shit, this is kind of bigger
0:33:43 than I realized and this is like your life’s work.
0:33:46 This is kind of, this is gonna change everything, isn’t it?
0:33:48 And they sort of distort your reality to believe
0:33:51 that this shit is even bigger than you could ever believe.
0:33:54 Next week, we’re going to hang out with Jimmy, Mr. Beast.
0:33:56 And I always have this feeling,
0:33:58 every year we go to do this event with him,
0:34:01 we hang out with him, we literally like stay at his house.
0:34:05 And when you’re there, it’s like, what he’s doing
0:34:07 is the most badass, important, crazy shit
0:34:09 that any human being could be doing.
0:34:11 And then you leave and you click a video
0:34:12 like three weeks later, it’s like,
0:34:16 these friends are putting their hand on these chocolate bars
0:34:18 and whoever takes their hand off the last
0:34:19 gets like half a million dollars of chocolate bars.
0:34:20 It’s like, wait, this is just like,
0:34:22 this is kind of a dumb video.
0:34:23 But when you’re there, it’s not a dumb video,
0:34:25 it’s fucking everything.
0:34:26 And he’s able to like make you feel that way.
0:34:27 So that’s kind of what he describes.
0:34:29 The last thing he talks about is he goes,
0:34:30 rifle focus on the product.
0:34:32 He goes, I invested in Square
0:34:34 and all Jack Dorsey ever wanted to talk to me about
0:34:35 was the product.
0:34:37 He goes, I invested in Twitter, same thing.
0:34:39 All they talked to me about was the product.
0:34:40 I invested in Facebook.
0:34:41 All Zuck wanted to talk to the product.
0:34:43 He goes, Pinterest.
0:34:44 Pinterest, I didn’t really get.
0:34:46 It’s like this pin boards, like scrapbooking.
0:34:49 I didn’t really understand it because I met the founder, Ben.
0:34:50 And he goes, all he’s talking about this product.
0:34:52 He goes, then I met his head of product
0:34:55 or he’s like kind of one of his core guys.
0:34:56 And I met him three times.
0:34:59 And every time he was wearing the same shirt.
0:35:02 And I go, hey, do you wear the shirt like often?
0:35:03 He goes, I wear the shirt every day.
0:35:04 And you know what the shirt is?
0:35:06 It’s a shirt with a circle.
0:35:09 Just the inside is just this word focus.
0:35:13 And he goes, this guy literally every day,
0:35:16 wears this shirt that just says focus in the middle of it.
0:35:17 This guy was ex Facebook.
0:35:18 And then he was at Pinterest.
0:35:20 And this guy was just absolutely obsessed
0:35:23 with all we need to do is focus on the product.
0:35:23 Oh, there’s a meeting.
0:35:25 Oh, we got invited to speak at this event.
0:35:27 What are you talking about?
0:35:28 I don’t want to go there.
0:35:30 He goes, to the point of being rude,
0:35:32 these people just want to focus on the shit
0:35:33 that they’re focused on their product.
0:35:34 That’s it.
0:35:37 He did Google, he brokered the deal.
0:35:38 Who are the other people?
0:35:39 I want to–
0:35:42 No way, who are you see?
0:35:47 I see Shaquille O’Neal, Shaq, not a chance.
0:35:49 So Shaq is sitting at the–
0:35:50 That doesn’t even make sense.
0:35:52 What’s he even famous then?
0:35:55 Of course Shaq is famous, this is the 90s.
0:35:58 Shaq is an NBA star at this time.
0:36:00 Shaq is in a hotel, he’s in a fancy,
0:36:01 I don’t know, four seasons or Ritz Carlton,
0:36:03 sitting in the lobby.
0:36:05 And this is Shaq telling the story.
0:36:09 He goes, I see four distinguished gentlemen in the lobby.
0:36:10 Is this your Shaq voice?
0:36:12 We got a little lower.
0:36:15 I see four guys.
0:36:18 Four distinguished gentlemen.
0:36:20 He goes, everybody says he goes,
0:36:22 gentlemen don’t know who I am, but their kids do.
0:36:25 And their kids are like, oh my God, it’s Shaq.
0:36:26 And they run up to him.
0:36:27 And the cool thing about Shaq,
0:36:28 if you’ve ever seen videos of Shaq,
0:36:30 Shaq is like a giant kid.
0:36:32 He’s super playful, he’s super good.
0:36:34 He’s super good to people that see him.
0:36:35 He’s not like one of these celebrities
0:36:37 that’s like sunglasses hat on,
0:36:39 trying to like push people away at all times,
0:36:41 getting annoyed when you get in his space.
0:36:44 And so Shaq goes, I’m doing my job, babysitting.
0:36:46 And so he just starts playing with the kids.
0:36:47 He’s just babysitting while they’re having a meeting.
0:36:50 At the end of the meeting,
0:36:52 Ron Conway comes up to Shaq and goes,
0:36:55 thank you so much for playing with my grandkids.
0:36:57 And so they just start chit chatting.
0:36:58 He goes, yeah, we were just talking
0:36:59 about this investment that we’re doing.
0:37:01 You know what, you should invest in this company.
0:37:03 It’s one of the best companies I’ve ever seen.
0:37:04 It’s called Google.
0:37:09 Shaq gets a meeting with, I guess it’s with Larry and Sergey.
0:37:10 He goes, yeah, it was an accident.
0:37:12 He goes, I’m doing my job and babysitting.
0:37:15 And then he goes, I have a meeting with them.
0:37:16 Sounded good.
0:37:18 I put in some money, I forgot about it.
0:37:20 Years later, Google goes public.
0:37:23 He doesn’t even realize that he’s invested in Google.
0:37:26 He reads in the newspaper that Shaq is in the S1.
0:37:28 Shaq’s gonna make a killing off of this.
0:37:30 He goes, I’m Shaq.
0:37:31 What?
0:37:35 And so he goes and he remembers it’s Shaq turned.
0:37:37 And he’s like, yeah, I wish I had invested more.
0:37:39 Shaq turned like a couple hundred grand
0:37:42 into a hundred million plus off of his Google investment.
0:37:43 No way, really.
0:37:46 Nobody knows how long he held it, but it’s pretty insane.
0:37:48 So Shaq is the next one.
0:37:50 Do you know who this is?
0:37:51 Yeah, RIP.
0:37:53 RIP, this is, I don’t know actually,
0:37:54 how do you say her name?
0:37:57 Susan, last name is the Polish name.
0:37:59 Wajowski, I forget.
0:38:01 Wajowski, I don’t know what it is.
0:38:02 Susan W.
0:38:04 So Susan, it ends up getting in
0:38:06 on the action early with Google,
0:38:08 but I don’t know if you know the story how.
0:38:10 I know that she had a garage
0:38:11 and they wanted to work there.
0:38:14 And did she like give them a free place to stay
0:38:17 and work there and got like a little bit more equity?
0:38:18 Yeah, kind of.
0:38:22 So her sister, Anne, was dating Sergei.
0:38:25 And Anne says, my boyfriend needs a office space.
0:38:28 And Susan wasn’t wealthy at the time.
0:38:31 She was like a mid-level marketing manager at some company.
0:38:33 And her and her husband had just bought this house
0:38:36 and then they were feeling a bit of the pinch
0:38:38 about like kind of the home.
0:38:39 And they were like, you know what?
0:38:40 What if we rented out her garage?
0:38:42 So they put up an ad saying we’ll rent out our garage.
0:38:44 Anne is like, oh, actually my boyfriend needs a space.
0:38:46 So the Google guys rent out her garage
0:38:47 for $1,700 a month.
0:38:49 And they start working out of her garage.
0:38:51 And she just sees them working their day and night.
0:38:53 And she sees, she hears updates
0:38:55 just because she’s bumping into them.
0:38:56 She quits her job.
0:38:58 She ends up being employee 16 at Google.
0:39:01 And so that’s how she became a billionaire,
0:39:03 was by quitting her job to go work for the company
0:39:05 that was working out of her garage at the time.
0:39:07 And she ended up being up until recently when she passed.
0:39:10 She was the YouTube CEO.
0:39:10 Exactly.
0:39:12 So she worked on AdWords for a bit.
0:39:14 And then when the Google, she was a big advocate for like,
0:39:17 hey, we should acquire YouTube.
0:39:18 And when they acquired YouTube,
0:39:19 they were like, hey, you were a big champion for this deal.
0:39:22 She ends up becoming the CEO of YouTube for many years
0:39:23 before she passed away.
0:39:26 I think that’s sister of hers started 23 and me.
0:39:27 Correct.
0:39:33 Hey, Sean here.
0:39:35 I want to tell you a story about Winston Churchill.
0:39:38 So Churchill once said, first, we shape our buildings.
0:39:40 And thereafter, they shape us.
0:39:42 And I think this is true not just for the buildings
0:39:44 we see in cities, but also for the building blocks
0:39:45 you choose in your company.
0:39:48 For any company that I start, I use Mercury
0:39:49 for all of my banking needs.
0:39:50 Why?
0:39:52 Well, it was built by a YC founder, and you could tell.
0:39:54 This is built by a founder who understands
0:39:55 the needs of other founders.
0:39:56 Second thing is this modern.
0:39:58 It’s clean, easy to use.
0:39:59 The design is really nice.
0:40:01 You never have to drive somewhere, park,
0:40:04 put coins in the meter, get out just to do one simple task.
0:40:06 You could do everything in just a couple of clicks.
0:40:08 They got bill pay, checking account, savings account,
0:40:10 wire transfers, everything you need, they got it.
0:40:12 I use it for not one, but actually six of my companies
0:40:15 right now and actually even have a personal account with them.
0:40:15 It’s kind of amazing.
0:40:17 So if you’re ready to operate in the future,
0:40:20 head over to mercury.com, apply in minutes.
0:40:22 Disclaimer, Mercury is a financial technology company
0:40:25 out of bank banking services provided by Choice Financial
0:40:27 Group and Evolve Bank and Trust members, FDIC.
0:40:30 Thank you to Winston Churchill for that little ad segment.
0:40:31 All right, back to this episode.
0:40:36 All right.
0:40:40 This is– I don’t think you know who this is.
0:40:41 No.
0:40:42 Oh, yes, I do.
0:40:44 I do, Pear.
0:40:44 Yes.
0:40:45 Oh, wow.
0:40:47 That’s a deep pull for you to know this.
0:40:49 So this is Pedgeman.
0:40:51 Now, he did not actually invest in Google,
0:40:52 so I’m cheating a little bit.
0:40:54 But this is part of– you said, well, my takeaway
0:40:56 is the magic of Silicon Valley.
0:40:58 Here’s more of the magic of Silicon Valley.
0:41:01 OK, so this guy’s story is crazy.
0:41:05 He– him and this other guy–
0:41:06 last name, Amity.
0:41:08 I think it’s like Sameed Amity or something like that.
0:41:10 Amity– two Persian guys.
0:41:14 So first Persian guy starts a rug shop in Silicon Valley,
0:41:17 right in the heart of Palo Alto.
0:41:19 He’s selling luxury Persian rugs.
0:41:21 And right above his–
0:41:22 or like right next to his rug shop,
0:41:24 there’s also some office space.
0:41:28 And so he ends up renting out office space
0:41:29 to the founders of–
0:41:32 I think it’s PayPal or something like that.
0:41:37 PayPal’s early founders were there.
0:41:39 There was a couple others.
0:41:41 And so he ends up–
0:41:43 he’s like– he’s selling rugs to these people.
0:41:44 He gets to know these people.
0:41:48 And then he realizes, like, wow, Google PayPal–
0:41:51 Does that– like the classic gregarious immigrant–
0:41:52 Persian guy.
0:41:54 Persian guy, like, hey, my friend, come here.
0:41:55 Come here, come here, my friend.
0:41:55 Exactly.
0:41:56 You want some tea?
0:41:57 Let’s have some tea.
0:41:57 They have a tea.
0:41:58 Tell me about yourself.
0:41:59 Tell me about yourself.
0:42:00 He becomes friends.
0:42:00 He’s right next to them.
0:42:02 He’s selling them rugs.
0:42:03 He’s selling them office space.
0:42:07 But he’s like, dude, these companies made a killing.
0:42:10 And so they start taking their rug money.
0:42:11 And they start investing.
0:42:12 They become angel investors.
0:42:14 And they don’t know anything about technology, really.
0:42:16 But they’re like, let’s just invest
0:42:18 in the people that come in to buy the rugs
0:42:20 if they seem interesting.
0:42:22 And so how does Pedgeman factor into this?
0:42:25 Pedgeman cold calls this guy.
0:42:27 And he’s like, hey, I’m coming out to Silicon Valley.
0:42:31 And he’s like, can I have a job with you?
0:42:33 And the guy’s like, well, have you ever sold rugs before?
0:42:34 He’s like, no.
0:42:35 He’s like, have you ever sold anything before?
0:42:37 He goes, no, but I could learn.
0:42:40 And he goes, listen, man, how can I give this job to somebody?
0:42:41 He’s got no experience.
0:42:43 He’s like– he plays on the Persian side.
0:42:45 And he says, like, how can you turn me down?
0:42:46 You haven’t even met me yet.
0:42:47 Just meet me.
0:42:48 And so he agrees to meet him.
0:42:49 He hires him.
0:42:55 And so he ends up becoming basically like a rug salesman
0:42:56 for this guy.
0:42:59 And over the next 15 years, his English improves.
0:43:00 His confidence improves.
0:43:03 He becomes a Beatty’s top rug seller.
0:43:07 In his best year, he moves $8 million worth of rugs.
0:43:08 That’s insane.
0:43:10 That’s absolutely insane.
0:43:10 One of his first–
0:43:13 Out of a storefront.
0:43:14 Out of a storefront Palo Alto.
0:43:20 And so that’s like $600,000 of rugs a month.
0:43:23 That’s so many dollars worth of rugs.
0:43:25 It’s amazing.
0:43:27 So along the way, they’re like–
0:43:30 Is it one of that $20 grand a day of rugs?
0:43:33 And this guy’s living– he comes to Silicon Valley.
0:43:36 He lives in an attic above a yoga shop
0:43:38 and then becomes a rug salesman.
0:43:41 And that guy ends up becoming one of the greatest investors
0:43:42 in Silicon Valley.
0:43:43 And here’s his trick.
0:43:46 So he’s like– he meets somebody– he starts selling rugs.
0:43:49 And one of the guys who walks in is this guy, Andy Rubin.
0:43:52 Andy Rubin comes in, and he sells him a $5,000 Persian rug.
0:43:55 And during the negotiation, he’s like so impressed with this guy.
0:43:57 He’s like, man, you’re a great negotiator.
0:43:58 What do you do?
0:43:59 He’s like, oh, I’m a businessman.
0:44:00 I got this company.
0:44:01 And he’s like, tell me about it.
0:44:02 He’s got this company called Danger.
0:44:05 Remember, I told you one of the companies in the lucky office,
0:44:06 company called Danger.
0:44:08 And these guys made–
0:44:10 do you remember the T-Mobile Sidekick cell phone?
0:44:12 That’s– Andy Rubin made that.
0:44:14 His next thing he made became Android.
0:44:16 And so Andy Rubin’s prolific.
0:44:20 And then now he’s since done DeepMind or some type of AI?
0:44:25 No, he went and became the head of mobile for the big Chinese
0:44:26 manufacturer or whatever.
0:44:29 And then I think now he’s doing an AI, I think.
0:44:31 So he’s like– and so he’s talked to this guy.
0:44:33 And he goes to his boss.
0:44:36 I mean, he goes, we got to invest in this guy’s company.
0:44:37 He goes, cool.
0:44:37 What does it do?
0:44:39 He goes, couldn’t tell you.
0:44:40 It’s something technology, super complicated.
0:44:42 I don’t know anything about it.
0:44:44 But I’m telling you, we got to invest in this guy.
0:44:45 He goes, are you sure?
0:44:48 He goes, listen, if this guy was selling red balloons,
0:44:49 I would invest in it.
0:44:50 This guy is going to make things happen.
0:44:51 And so he goes, OK.
0:44:55 They write a $400,000 check into Danger.
0:44:58 And along the way, he ends up becoming a partner
0:44:58 in their investing.
0:45:00 As he makes money from his commissions,
0:45:03 he takes every dollar he has, basically $200,000.
0:45:05 And he buys into their partnership
0:45:07 to be investing in startups.
0:45:09 And they invest in all these different startups.
0:45:12 So he meets Joe Lonsdale.
0:45:13 No way.
0:45:15 After he’d done Palantir, Joe’s buying rugs,
0:45:16 whatever he gets introduced to him.
0:45:20 And he goes, Joe, I would love to show you a rug.
0:45:22 He’s like, cool, I’ll come into the shop.
0:45:24 He goes, no, no, no, no, brother,
0:45:25 let me bring the rugs to your house.
0:45:29 So he brings like 100 rugs to Joe Lonsdale’s house.
0:45:31 And his trick, he’s like, you learn a lot about a person
0:45:33 when you go to their house, much more than if you meet them
0:45:35 for coffee or they come into your shop.
0:45:38 And at the time, Joe Lonsdale would have been
0:45:39 in his mid-20s, right?
0:45:41 Yeah, he’s very young.
0:45:42 And he goes and he meets them.
0:45:43 And he’s like–
0:45:44 But he’s in that Persian rug game.
0:45:45 He’s in that Persian rug game already.
0:45:49 And he’s like, doing this next company, Adapar,
0:45:52 which by the way, recently sold for a couple billion dollars.
0:45:55 And at the time he’s like, love this guy, love Adapar,
0:45:57 Joe Lonsdale, we gotta invest in this thing.
0:45:59 And he ends up investing in Adapar.
0:46:00 He ends up investing in Dropbox
0:46:03 because one of the co-founders of Dropbox is also Persian.
0:46:06 And so he’s speaking in Farsi, he’s like, chumming him up.
0:46:07 And he’s like, come on, please let us in.
0:46:08 He ends up doing that.
0:46:10 And he ends up investing in App Lovin,
0:46:12 which is now a $100 billion plus company.
0:46:14 Because I think the founder of App Lovin
0:46:15 might be a Persian guy, right?
0:46:16 I think so too.
0:46:16 I think so.
0:46:19 Yeah, he’s Iranian or somewhere from that area.
0:46:21 And so there’s like this whole mafia
0:46:22 that has created off of this rug shop.
0:46:23 How insane is that?
0:46:29 Dude, do any wasp want to relate with me?
0:46:33 Hey, let’s talk about baseball and hot dogs and cows.
0:46:37 Like, where’s my wasp that?
0:46:40 Dude, OK, I’ll give you some credit.
0:46:42 One of your best investments now
0:46:46 is this company you told me about that I totally didn’t get.
0:46:48 Because I was like, dude, what are you doing?
0:46:50 You’re just putting nicotine pouches in your mouth
0:46:51 while we’re doing the podcast?
0:46:53 And you’re like, yeah, I always have one in.
0:46:55 And I was like, what the hell are you doing?
0:46:56 And you invested in this company called Lucy.
0:47:00 That was making like a nicotine gum or pouch at the time.
0:47:01 At the time it was a gum.
0:47:03 And it kind of just wandered around for a little while.
0:47:05 Didn’t even seem like it was going to take off.
0:47:06 But now this shit is taking off.
0:47:08 Dude, I think Lucy is going to end up
0:47:11 being like a $500 million or billion dollar company.
0:47:14 You invested early on in that because you were your pouch
0:47:15 bros with these guys.
0:47:17 Yeah, I did $25,000,000 into it.
0:47:22 And when I did it, I was just like, oh, you started Soylent.
0:47:24 And our mutual friend is Josh.
0:47:26 And Josh says you’re cool.
0:47:28 And nicotine is addicting.
0:47:29 Yeah, like I guess.
0:47:30 Cool, sounds good.
0:47:30 I’m in.
0:47:32 And so I invested $25,000.
0:47:36 I think I only had $100,000 saved up.
0:47:37 So that was like a big deal for me.
0:47:39 So hopefully– and then I like messaged him
0:47:41 and I’m like, what’s happened to you guys?
0:47:42 I haven’t heard from you in like six years.
0:47:43 What’s going on?
0:47:44 And then they recently hollered at me
0:47:47 and it turns out it’s going really well.
0:47:48 Yeah, it’s going amazing now.
0:47:51 Shout out to John Coogan and the crew there.
0:47:53 OK, so let me finish out the story here.
0:47:55 Did you know that Bezos invested in Google?
0:47:56 I heard that.
0:47:58 Did he invest in it because he was getting
0:48:00 a lot of traffic from it or why?
0:48:02 I’m not sure.
0:48:03 I tried to find it.
0:48:05 It could not find like any of this backstory here.
0:48:08 But Bezos invested $250,000 pretty early in Google
0:48:10 as well, which is kind of wild.
0:48:12 It’s the same way that Microsoft also
0:48:14 invested in Apple and kind of saved Apple
0:48:15 from failure at one point in time.
0:48:17 Like there’s these stories of these people
0:48:19 that you think are kind of enemies or competitors,
0:48:23 but actually at a key point in time invested in each other.
0:48:25 I just thought that was kind of cool.
0:48:27 All right, I want to share with you–
0:48:28 let’s see, do I have anything else?
0:48:31 Oh, there’s one other hilarious story from this whole thing.
0:48:32 Rod Conway was like, did you know
0:48:35 that Google would make so much money?
0:48:40 Essentially, the best money machine man has ever made.
0:48:41 And he goes, no.
0:48:44 He goes, I still have Google’s first slide deck, 10 pages,
0:48:46 10 slides.
0:48:47 And it was all about the product.
0:48:50 And he goes, the last slide, which is always like the financials
0:48:53 and the projections, it just said, thank you.
0:48:56 He’s like, dude, where’s your financials slide?
0:48:57 And they go, we have no idea.
0:48:58 And he goes, OK, love it.
0:49:00 I’m in.
0:49:04 But how crazy is this like wild world of like meeting
0:49:07 people at a party or at the lobby of a hotel
0:49:09 and hearing about this thing and doing this deal?
0:49:11 Isn’t this crazy?
0:49:13 But that’s how it still is, isn’t it?
0:49:14 It is.
0:49:15 Like it’s just that you don’t get out.
0:49:18 You know, you still live there, but you don’t get out.
0:49:20 During the Tony Robbins episode on our pod,
0:49:24 he has this phrase he says, which is, proximity is power.
0:49:26 And he just talks about like literally just being
0:49:30 close to the action is like this most underrated thing
0:49:33 you could do, just being as close as you can
0:49:34 to the people you want to be around,
0:49:35 to the people you want to be like,
0:49:38 because whether it’s you hear a thing, you meet a thing,
0:49:41 you start to do the same habits and lifestyle
0:49:43 of those people, proximity is power.
0:49:45 And like that’s the crazy thing about Silicon Valley
0:49:47 is like this proximity is power principle.
0:49:50 I moved to where I moved because of family reasons.
0:49:52 But if I could live anywhere, I think Palo Alto
0:49:53 would be the place.
0:49:56 I think I dearly loved San Francisco,
0:49:57 but I got pissed off at it because of the crime.
0:50:00 But Palo Alto is like pretty amazing.
0:50:02 Do you ever think that you’d rather be there?
0:50:05 I mean, you’re an hour north of SF.
0:50:08 Do you wish that you were an hour south?
0:50:11 No, I mean, SF is now where the action is.
0:50:13 But so the question would be,
0:50:15 do I wish I was still in the city?
0:50:17 And the answer is I definitely would have,
0:50:20 I definitely know I would make more money if I lived in SF.
0:50:22 Like it seems like it’s a more expensive place to live,
0:50:24 but actually I know I would make way more money
0:50:27 because there’s just the serendipitous bumping
0:50:28 intos of people.
0:50:29 It’s just a fucking headache though.
0:50:30 It’s such a headache.
0:50:31 But yeah, exactly.
0:50:34 Making money is not the only criteria.
0:50:35 And so like, you know, family-wise,
0:50:37 it’s much better to be in the burbs for me.
0:50:39 So lifestyle-wise, I’m happy with this choice,
0:50:41 but damn, when I hear these stories,
0:50:43 it does make me wish I was back in on the action.
0:50:46 Like I went and hung out with my friend Luke and Palo Alto.
0:50:48 And we went to his house and he was like,
0:50:49 you want to take a walk?
0:50:50 And I was like, yeah, let’s take a walk.
0:50:52 And we walked around for probably two, three hours.
0:50:53 And in that two, three hours, he was like,
0:50:56 that’s the garage where Google started and this is this.
0:50:58 And that’s Zuck’s house actually.
0:50:59 And this is this person’s house.
0:51:01 That we bumped into like somebody and he’s like,
0:51:03 oh, that’s where the founder of Quora is.
0:51:05 And then we go to the Starbucks.
0:51:06 There’s like a little coffee shop there.
0:51:09 And like, I get recognized by five people that I,
0:51:10 you know, I just sit in my house all day,
0:51:11 but there’s people who listen to the podcast
0:51:12 and then they start telling me what they’re up to.
0:51:14 And they’re doing a cool AI company.
0:51:16 And then you leave the coffee shop
0:51:19 and we just pop into our friend’s, you know, like VC shop.
0:51:20 And we, he’s having a meeting.
0:51:22 He introduced us to those founders.
0:51:23 And so I’m like, oh man, dude,
0:51:25 the amount of serendipity I had
0:51:27 in three hours just now was crazy.
0:51:32 And you don’t really get it until you experience it.
0:51:33 And so if there’s like one takeaway
0:51:35 from anybody who’s like, you know, listening to this,
0:51:37 I would say my two big takeaways
0:51:39 was number one, proximity is power.
0:51:42 And like literally just showing up and being there,
0:51:44 being in the heart of the action
0:51:45 for whatever scene you want to be
0:51:46 and how much that matters.
0:51:49 And the second was the Ron Conway principle
0:51:53 of how do you just act so benevolently
0:51:55 that your reputation is the product
0:51:55 you’re actually building.
0:51:56 You’re not building a portfolio.
0:51:57 You’re building a reputation.
0:51:59 The reputation builds the portfolio.
0:52:03 And the third one is the midwit meme strikes again
0:52:06 where it’s like, so the two best early pickers
0:52:09 of startups ever in the history of Silicon Valley
0:52:11 both make their decisions based off of just
0:52:14 do they feel like these people are fierce founders
0:52:16 and they could figure that out in less than 10 minutes.
0:52:18 And then here you have people that are doing market analysis
0:52:21 and segmentation maps and tons of due diligence
0:52:23 and this and that and they have thesis
0:52:25 on all these different markets.
0:52:27 And it’s like, dude, the best people
0:52:30 are literally just amazing judges of people
0:52:31 and they’re making their decisions at five minutes.
0:52:32 And then they spend the rest of their time
0:52:33 just helping people.
0:52:35 It’s so exciting to hear these stories.
0:52:37 How much do you think that each of these investors made?
0:52:39 Like, I guess like if you,
0:52:41 and what was the first valuation?
0:52:43 So the first valuation was 10 million.
0:52:46 The next round was at 75 pre.
0:52:50 So Ron Conway, this is now a decade plus ago,
0:52:52 I think 2012, they asked him, they were like,
0:52:54 Ron, how much did you, they were like,
0:52:57 first were you scared off by the valuation?
0:53:01 I mean, 75 pre today is a high valuation
0:53:02 for a series A company.
0:53:04 And, you know, Google, obviously now it’s obvious,
0:53:06 but like nothing’s obvious at the beginning.
0:53:07 Nothing’s that obvious.
0:53:08 And he goes–
0:53:10 Which by the way, that’s worth $150 million today.
0:53:12 So that’s a shitload of money.
0:53:13 Like how am I ever gonna,
0:53:15 so this company has to sell for a billion dollars?
0:53:16 Right, right.
0:53:18 So like they’re like, did this valuation scare you off?
0:53:19 He goes, no, I think that’s crazy.
0:53:21 He goes, companies are binary.
0:53:25 He goes, the investing we do, a company is binary.
0:53:27 It’s either a huge win or it’s a zero.
0:53:29 I just let the market figure out the valuation.
0:53:30 And then I invest.
0:53:31 Once I haven’t decided to invest,
0:53:33 I let the market decide the price.
0:53:34 He goes, yeah, we did great.
0:53:37 He goes, for every dollar invested, we got $400 out.
0:53:39 And this was back in 2012.
0:53:43 And they go, is that the peak valuation
0:53:44 or that’s the current valuation?
0:53:48 He goes, the peak valuation of Google is far in the future.
0:53:50 And he knew, right?
0:53:52 ‘Cause this is 12 years ago
0:53:57 and Google has since at least tripled in value since then.
0:54:00 So it’s a pretty wild return.
0:54:03 Now, I don’t know how much guys like Shaq and others got.
0:54:05 So Ron got in at the 75 million round.
0:54:07 The guys like Andy or David that I mentioned
0:54:08 at the beginning of the professors,
0:54:10 they got in in the $10 million round, right?
0:54:12 Which is just wild.
0:54:15 So $100,000 became over a billion dollars
0:54:16 for each of those people.
0:54:18 And the crazy thing about pricing is like,
0:54:23 so Google was started, I think, 30 years ago, right?
0:54:24 28 years ago.
0:54:26 And what are they worth?
0:54:29 A trillion or something or two trillion?
0:54:32 What’s crazy is that the company is like,
0:54:36 the equivalent of that would be investing in a company today
0:54:37 and trying to convince yourself
0:54:39 that it will be worth six trillion.
0:54:41 Do you know what I mean?
0:54:42 Like it’s really–
0:54:43 It’s a $2.3 trillion company today.
0:54:46 So in 30 years, double that or triple that.
0:54:50 So like it’s incredibly hard for the brain to think,
0:54:52 if I invest in this company,
0:54:54 maybe one day it could be worth a trillion dollars.
0:54:57 That’s like an inconceivable thing to think about.
0:54:59 And so that’s why angel investing is a mind fuck.
0:55:01 Like to think like, because you think like,
0:55:03 oh, this is worth a hundred million now,
0:55:04 you got to sell for a billion.
0:55:06 And the founder’s like, no, man, it’s like one trillion.
0:55:09 Like those, the math behind all of this
0:55:10 is very, very, very challenging
0:55:13 to even like wrap your head around.
0:55:14 Yeah, totally.
0:55:16 And even when it’s staring in the face,
0:55:17 I think I’ve told the story before,
0:55:20 but I remember sitting in a conference room
0:55:24 in Silicon Valley in 20, maybe 14, 15, something like that.
0:55:24 There was some point in time
0:55:26 where I was telling this guy,
0:55:28 I was like, yeah, I came out to Silicon Valley,
0:55:30 I applied to two places, the place I’m at now.
0:55:32 And the other place I applied to was Stripe.
0:55:34 There’s only two jobs I’d ever applied to in my life.
0:55:36 And I didn’t get the Stripe job.
0:55:38 I got rejected, I blew the interview.
0:55:39 And he goes, oh, actually,
0:55:41 I’m investing in Stripe right now.
0:55:44 And I go, Stripe, now it’s not like an angel investment
0:55:45 anymore.
0:55:48 He goes, yeah, he goes, yeah, it’s a $3 billion valuation.
0:55:50 And I remember just thinking, like, what a dummy.
0:55:52 Like, $3 billion, what do you think this is gonna turn into?
0:55:56 Like, I thought the game of startups
0:55:58 to create a billion dollar company.
0:56:00 So hearing that one was already at three.
0:56:02 It’s already three X over valued.
0:56:04 It’s like, oh, what do you hope it gets to $10 billion
0:56:06 and you triple your money, like nuts.
0:56:08 And now it’s a $100 billion company.
0:56:10 I would have 30 X my money even then.
0:56:11 And it was so obvious.
0:56:13 Like, anybody I knew used Stripe.
0:56:15 It was so obvious Stripe was the best company
0:56:17 in Silicon Valley at that time.
0:56:19 And I talked myself out of investing in it
0:56:23 ’cause I just couldn’t fathom the numbers, right?
0:56:25 It just didn’t make any sense.
0:56:26 It’s because you think in absolute numbers.
0:56:29 So I remember one time when I first started my company,
0:56:30 we were spending $30,000 a month
0:56:33 that I met with the CEO of like a billion dollar company.
0:56:34 And I was like, can you believe this?
0:56:37 I hired two people and we went from spending $8,000 a month
0:56:39 to $30,000 a month.
0:56:40 How insane is that?
0:56:41 And he was like, dude,
0:56:45 like I spent, you know, $300 million a year.
0:56:47 Like these aren’t,
0:56:49 he was like, you can’t think of this
0:56:52 as an absolute number compared to your real life.
0:56:54 It, this is just a number on a spreadsheet
0:56:56 and it doesn’t matter how many zeros are behind it.
0:56:58 You just, are these zeros going in
0:56:59 and you’re getting more zeros out.
0:57:00 That’s all you have to think about.
0:57:03 Don’t think about this in terms of like a real number.
0:57:04 And when he told me that,
0:57:07 that kind of like shaped how I viewed a lot of things.
0:57:09 You need to do like the casino thing.
0:57:11 You try to take your cash, trade it for these chips
0:57:13 that are different colors you’re not used to,
0:57:15 and then just try to make the chip stack bigger.
0:57:17 Versus if you look at a, you know,
0:57:18 a hand of blackjack you’re playing.
0:57:19 Like the $50,000 hand.
0:57:21 Dude, that’s a month’s rent or whatever it is, right?
0:57:23 It’s like a insane.
0:57:25 All of a sudden you just start making different decisions.
0:57:28 I remember like even, it’s not even the absolute number.
0:57:30 Sometimes even relative will screw you up
0:57:33 because I remember investing in Tesla
0:57:37 when Tesla was like a, like a five or $6 billion valuation.
0:57:39 And, or I invested even before that,
0:57:41 I think it got to six or seven,
0:57:41 something like that.
0:57:43 I had made like three times my money.
0:57:45 And I remember looking at the market cap
0:57:47 of the biggest car company I could think of at the time.
0:57:48 I think it was like GM or some Ford
0:57:50 or one of those, one of those companies.
0:57:53 And it was like a $26 billion company.
0:57:54 And I remember thinking like,
0:57:56 and I looked at how many cars Tesla was selling
0:57:57 and how many cars they sold.
0:57:58 It was like, you know,
0:58:00 Tesla sold like nothing compared to them.
0:58:01 And I just remember thinking,
0:58:05 okay, okay, the ceiling of this is like a $30 billion company.
0:58:06 Like, cool.
0:58:07 So like if I ride this out,
0:58:09 if, if Tesla became the most valuable car company
0:58:13 in the world, it would be a $30 billion company,
0:58:15 that would be $30 billion to be like a 5x from here,
0:58:18 or I could just take my winnings now and go and enjoy them.
0:58:18 I don’t remember the exact number,
0:58:20 but I remember that $26 billion was like
0:58:22 where the car companies were at.
0:58:26 Tesla today is not only is it today
0:58:28 like a one and a half trillion dollar company
0:58:29 or whatever it is.
0:58:32 So it’s, now it’s a one and a half trillion dollar company.
0:58:35 So I was off by like, you know, more than 10x.
0:58:39 I was off by like two orders of magnitude basically.
0:58:44 On top of that, Tesla is worth more than the next,
0:58:47 like 10 car companies in the world combined.
0:58:50 It’s like the whole idea of like number one,
0:58:53 it broke, like it breaks my brain, right?
0:58:57 Like Tesla is literally worth all of the next six car
0:59:00 companies, they’re worth like, I think it’s like,
0:59:02 I don’t know, 600 billion or something like that.
0:59:07 It’s like a, oh no, the big six are 477 billion.
0:59:09 Tesla is 1.3 trillion, right?
0:59:13 So it’s, it is just mind boggling what these things are.
0:59:14 – It’s hard, it’s hard to understand.
0:59:15 I mean, didn’t I tell you the,
0:59:17 when I was trying to understand what a trillion dollar,
0:59:19 a person worth $100 million,
0:59:21 compared to a person worth $1 trillion,
0:59:24 which is what Elon will be in three or four or five years.
0:59:27 If you have $100 million, you’re like ungodly rich, okay?
0:59:28 But the equivalent of those two compare,
0:59:31 of those two, the gap is the same as $100 million
0:59:33 and $10,000.
0:59:36 – Right, isn’t that insane?
0:59:39 So like, when I think of a $100 million person,
0:59:41 I think you’re one of the richest people I’ve ever met.
0:59:44 – Dude, I think my, there’s this great quote about happiness.
0:59:47 It’s like, I have talked myself out of happiness
0:59:50 a thousand times, but I’ve never once talked myself into it.
0:59:51 Right, I’ve never thought, or it’s like,
0:59:53 I’ve never thought my way, I’ve thought my way
0:59:55 into unhappiness a thousand different ways,
0:59:58 but I’ve never thought my way into happiness.
1:00:00 I don’t know if I buy that quote exactly,
1:00:02 but I get the premise of it, which is like,
1:00:04 we could very much talk ourselves out of things
1:00:06 or into unhappiness.
1:00:08 I think investing is very much the same.
1:00:10 I’ve now realized like, especially in technology investing,
1:00:12 this may not be true for value investing,
1:00:14 but for tech investing where you’re,
1:00:18 the whole game is like, find the one or two psychos
1:00:20 and the one or two like breakout categories
1:00:23 that are gonna just break the entire game as the power law
1:00:24 and these things are gonna become worth,
1:00:26 not a billion dollars, not $10 billion,
1:00:29 but like $100 billion or even a trillion dollars each.
1:00:32 I think it’s back to the like,
1:00:34 make a five to 10 minute gut based decision
1:00:37 on the like quality of the founder
1:00:41 or the overall space, like the internet in 94,
1:00:46 crypto in the early 2010s, mobile, now AI, right?
1:00:48 It’s like, just the smartest person I know
1:00:49 is doing something in AI, that’s enough.
1:00:52 I don’t need to like, the more I think
1:00:53 the worse my returns will get
1:00:57 is sort of what I’ve realized when it comes to tech investing
1:00:59 because it is all about the breakouts.
1:01:00 And the breakouts are not things
1:01:03 that you could just linearly, you know, figure out.
1:01:04 We had SHIELD on the pod the other day
1:01:06 and he’s like, yeah, I invested in Bitcoin early
1:01:08 and Nvidia early, like, wow, you’re so smart.
1:01:09 He’s like, yeah, I invested in Bitcoin
1:01:11 ’cause I thought it was gonna become this other thing
1:01:13 and I invested in video because I thought about,
1:01:15 I thought it was gonna win in crypto mining.
1:01:17 So he’s like, you know, even in the ones he was right,
1:01:22 even in the professional investor with amazing returns
1:01:25 who picked the right two things to bet on
1:01:28 over the last 15 years, Bitcoin and Nvidia.
1:01:30 He got it absolutely right.
1:01:31 He did it even for the wrong reason, right?
1:01:32 Like it’s like, God damn it.
1:01:34 What are you supposed to do in this?
1:01:35 This was a great podcast.
1:01:36 That was a great story.
1:01:39 We should, it would be fun.
1:01:42 I would love to do a series where we get the first employee
1:01:46 or the first investor in, or one of the first
1:01:48 in legendary companies to come and talk.
1:01:53 So like Google, Facebook, Reddit.
1:01:54 I think that’s the hack
1:01:57 because getting the founder obviously is great, super hard.
1:01:59 And they’re also like still running the company
1:02:01 and have to say certain things.
1:02:03 And like they’ve been so media trained.
1:02:06 And like the statute of limitations can be like passed it.
1:02:07 So it’s like, if it’s 10 years old, it’s like, look,
1:02:10 no one’s gonna get mad at you if you say that you guys
1:02:13 like called the competitors and pretended to be a customer
1:02:15 just so you can get like fake information.
1:02:15 You know what I mean?
1:02:17 Like it’s, we’re past that.
1:02:19 It’s so you could actually reveal a bunch of stuff.
1:02:21 Paul Graham asked Ron Conway, he goes,
1:02:23 you’ve been doing this now for like, you know,
1:02:25 you were a founder and now you’ve invested
1:02:27 all these legendary founders, what’s changed?
1:02:31 And he goes, he goes, we drank way more back then.
1:02:33 He goes, what, that’s the thing you’re gonna say?
1:02:37 He goes, yeah, he’s like every day around like 4pm,
1:02:40 we had this woman, Donna, who would like push a cart
1:02:43 around the office with booze and we would all drink.
1:02:45 And he’s like, we literally talk like work hard,
1:02:46 play hard at the same time.
1:02:48 Like let’s do this.
1:02:50 He’s like, there was all kinds of crazy shit going on
1:02:52 and is in our company.
1:02:53 And he’s like, that’s just what we did.
1:02:55 He goes, now I go to these companies,
1:02:56 they don’t do that at all.
1:02:58 They’re much better about segmenting it.
1:03:00 They do play hard, but they like happy hour
1:03:03 on Fridays after work, like not like all the time
1:03:05 during work, crazy shenanigans going on.
1:03:07 Dude, that was great.
1:03:08 Is that it?
1:03:09 That’s it.
1:03:10 That’s the pod.
1:03:12 ♪ I feel like I can rule the world ♪
1:03:15 ♪ I know I could be what I want to ♪
1:03:18 ♪ I put my all in it like no days off ♪
1:03:22 ♪ On the road, let’s travel, never looking back ♪
1:03:26 (upbeat music)
1:03:27 Hey everyone, a quick break.
1:03:30 My favorite podcast guest on my first million is Darmesh.
1:03:32 Darmesh founded HubSpot.
1:03:33 He’s a billionaire.
1:03:35 He’s one of my favorite entrepreneurs on earth.
1:03:37 And on one of our podcasts recently,
1:03:40 he said the most valuable skill that anyone could have
1:03:44 when it comes to making money in business is copywriting.
1:03:45 And when I say copywriting,
1:03:48 what I mean is writing words that get people to take action.
1:03:49 And I agree by the way,
1:03:51 I learned how to be a copywriter in my 20s.
1:03:52 It completely changed my life.
1:03:54 I ended up starting and selling a company
1:03:55 for tens of millions of dollars.
1:03:59 And copywriting was the skill that made all of that happen.
1:04:01 And the way that I learned how to copyright
1:04:03 is by using a technique called copywork,
1:04:06 which is basically taking the best sales letters
1:04:07 and I would write it word for word.
1:04:09 And I would make notes as to why each phrase
1:04:11 was impactful and effective.
1:04:13 And a lot of people have been asking me about copywork.
1:04:15 So I decided to make a whole program for it.
1:04:17 It’s called copy that, copy that.com.
1:04:19 It’s only like 120 bucks.
1:04:23 And it’s a simple, fast, easy way to improve your copywriting.
1:04:25 And so if you’re interested, you need to check it out.
1:04:26 It’s called copy that.
1:04:29 You can check it out at copy that.com.
1:04:31 (upbeat music)