Lenny Rachitsky: evaluation

Transcript context

…i started angel investing in 2007 15 years ago and like many people i started because my friends and colleagues were leaving to start companies this is when i was at google and they were leaving to start companies so literally without doing much i just wanted to support them because i'd worked with them and so i just put a small check into the companies and some failed some did really well but ultimately i realized that for me investing is all about supporting people much more so than companies themselves. The company itself, it's about the entrepreneur and the person. So till today, I think I have enjoyed the most and I've really come to believe in myself that I am a founder-centric. I believe in the founder much more than I do the market. I think there are market-centric investors. Sequoia is amazing and they very much believe in a big market. I strongly believe that great founders and Airbnb is a great example. They create new markets themselves. Or they pivot. I mean, if they realize that a certain market is not good, they'll figure out a way to move. And I'm basically with my check. The biggest mistakes I made early on were after a few checks, I said, oh, I'm going to be much more selective. I'm not just going to write checks with all my friends. I'm going to look to see what the market they are in. So I basically just started making these assumptions. Oh, well, you know, I should not invest in this company. And turns out almost all of them were sins of omission. I much, much more care about sins of omission because you can only use one X, lose one X your money. But for me, the relationship with the person, a person I know and respect and I'm good friends with and I'm not investing in them. I don't want to lose that. And it's an optionality for me to invest in not just this company, but in every other company they start. Because one of the most interesting patterns I see is folks who are unsuccessful the first time around, but then use those learnings to start a company in the same or similar space and then succeed. And I'm seeing this more and more happen. And I want to have, if you don't invest in the first company, even though you thought they were great because the marketers are great, they won't probably come back to you for a second company either. So very, very founder-centric style of investing. Almost like YC, I would say. Closer to YC than anything else. Because YC invests in just founders. At this point, they don't care about the idea. They just care that you're a builder and that you can pivot fast. And if you're a team of builders who can pivot fast, they will invest because they know within three weeks, if you don't have product market fit, they'll get you to pivot three times. And like a new tech segment, you'll find your product market fit four times. See this again and again. I love that advice and it's the way I think about it too. The only downside is if you have worked at an awesome company or two or three, it becomes a very expensive hobby because you end up knowing a lot of awesome people that are doing great things. So you have to be a little bit careful. make sure what the motivation is that's what i really want to understand like you don't want folks there are awesome people but i do want to make sure they're doing it for the right reason in other words they're doing it to solve a problem that they've experienced themselves or seen so i really try to get into why they're starting the company and i want to make sure the reason for starting the company is authentic in that it's a problem that they have observed deeply versus it's something they read about in tech crunch or it's a newest web 3 or crypto thing or nft thing So I think that's how I suss out. So I don't invest in people, even if they're awesome. But I feel the idea for the reason they're starting a company is mercenary. And they're doing it because they haven't immersed themselves in the space. Famously, I think the Collison brothers bought a book, I think on payments, a very old book or something, I think, or paper maybe, and read it to fully understand. You want people who really immerse themselves in an industry and live and breathe it before they tackle it.…

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