Founders Fund's Brian Singerman on building a legendary VC firm, “Adapt or Die” and "Ikigai" | E1896
13 Feb 2024 (7 months ago)
Jason speaks to Brian Singerman of Founders Fund.
- Brian Singerman was attracted to Founders Fund because of their investment in SpaceX.
- SpaceX was a unique investment opportunity as there was no other rocket company at the time.
- Venture capitalists love these "N of one" companies because the upside is unlimited.
- Founders Fund lets their partners start companies.
- They often put a large percentage of their fund into just one of the portfolio companies.
- Their portfolio includes SpaceX, Palantir, Airbnb, and Anduril.
“Adapt or die!” and the unique approach and strategy at Founders Fund.
- Founders Fund's strategy is "adapt or die" and to change up their approach constantly.
- Each partner runs their own strategy and is trusted to figure out ways to make returns.
- Unlike many partnerships in Silicon Valley, Founders Fund does not have mandatory debates or votes on investment decisions.
- Partners are expected to collaborate with the team, but they also have the freedom to run their own deals and strategies.
- The fund hires people who are good people, get along with the team, are unique, have their own strategies, and can make money.
- All partners and above interview potential new hires.
- Founders Fund has Associates and researchers, as well as "Young Guns" or up-and-comers.
- Anyone at the fund can lead a deal, regardless of their level.
- Check sizes involve different levels of involvement or voting power.
- The ability to lead a deal is considered essential for learning and becoming a good venture capitalist.
Brian's tips for emerging venture capitalists on making investments.
- To stand out in the crowded venture capital industry, emerging venture capitalists should identify their unique strengths and focus on areas where they can differentiate themselves.
- Founders have diverse needs and preferences when choosing investors, ranging from mentorship and operational support to strategic advice, specific connections, or simply capital.
- A differentiated partnership with diverse strengths and expertise is crucial for venture capital firms to find and win the rare, impactful companies that matter in venture capital.
- Different partners can bring unique expertise in areas such as hardware, consumer experience, global macro, or operating experience, which can give a firm a competitive advantage in attracting founders.
- Brian Singerman has been involved in hundreds of investment bets over his 18-year venture capital career, including 16 years at Founders Fund.
- He emphasizes the importance of taking calculated risks and making bold bets, even if they may seem unconventional or risky to others.
- Successful venture capitalists should be willing to back founders with disruptive ideas and the potential to create transformative companies.
- Brian highlights the significance of conviction and belief in the founders and their vision when making investment decisions.
- Brian Singerman, a partner at Founders Fund, discusses his approach to building a legendary venture capital firm.
- Singerman emphasizes the importance of having a clear investment thesis and being willing to adapt to changing market conditions.
- He also stresses the importance of building a strong team and culture within the firm.
- Singerman discusses the importance of being able to adapt to changing market conditions.
- He says that the best way to do this is to have a clear investment thesis and to be willing to make changes when necessary.
- He also emphasizes the importance of having a strong team that can help you make these changes.
- Singerman discusses the concept of "ikigai," which is a Japanese concept that refers to finding your purpose in life.
- He says that finding your ikigai is essential for success in life and in business.
- He also emphasizes the importance of having a strong sense of purpose when making investment decisions.
Brian reflects on his career's trials and triumphs
- Brian Singerman reflects on his career in venture capital and the lessons he has learned.
- He emphasizes the importance of founder selection and his ability to identify and support exceptional founders.
- Singerman highlights Founders Fund's unique strategy of making large, concentrated bets on a small number of companies, with some bets representing up to 33% of the fund.
- Singerman discusses several key investments that exemplify Founders Fund's high-conviction approach.
- SpaceX: Despite initial failures, Founders Fund recognized SpaceX's unique position as the only rocket company and made a significant investment.
- Airbnb: Founders Fund identified Airbnb's potential before the market fully appreciated its value.
- Elon Musk: Singerman praises Elon Musk as one of the greatest founders in history, comparing him to Steve Jobs and Jeff Bezos.
Brian shares an anecdote about a gloating LP who passed on one of the greatest venture funds in history.
- Founders Fund's success is attributed to its willingness to invest in unique founders and companies with substantial market potential, even when others are skeptical.
- Despite initial doubts from the founders themselves, Founders Fund recognized Airbnb's potential and provided significant capital while allowing the founders the freedom to operate.
- Founders Fund focuses on identifying and supporting "N of one" companies with the potential to dominate their respective markets.
- Venture capital aims to maximize returns by finding top-tier founders who believe in their vision and providing them with the necessary support.
- Founders often make the mistake of using their personal phone numbers for business.
- OpenPhone is a business phone service that provides a professional and easy-to-use solution.
- OpenPhone has a gorgeous app that works on phones and desktops, making it easy for teams to communicate.
- OpenPhone allows users to create shared phone numbers with multiple employees, ensuring that calls and texts are not missed.
- OpenPhone is affordable, starting at just $13 per user per month, and Twist listeners can get an extra 20% off for the first 6 months.
- OpenPhone allows users to port existing numbers from other services at no extra cost.
Brian’s approach for securing a deal with founders.
- Venture capitalists (VCs) must build relationships with founders to secure deals, as founders choose VCs.
- Successful VC firms focus on maximizing upside potential by identifying and heavily investing in outlier companies.
- Founders Fund's strategy involves making numerous early-stage bets while reserving half the fund for follow-on investments in the top performers.
- Founders Fund prioritizes investing in the best companies at the best possible price, even across multiple funds.
- The venture capital industry relies on inside information and information asymmetry, giving VCs an advantage over public market investors.
The sharp mind of Sean Parker.
- Sean Parker is one of the sharpest minds in the venture capital industry.
- He brought Zuckerberg to the Bay Area in 2007.
- Parker is a proactive venture capitalist who can predict what the world will look like and find the best companies to invest in.
- He is the best example of a proactive venture capitalist in history.
- Founders Fund has started up studios, which are essentially companies that create other companies.
- These studios have had mixed results.
- It is difficult to get a CEO for hire for a startup studio company.
- Founders who are extraordinarily talented, like Palmer Luckey, are unlikely to join a startup studio company.
- Starting a company can be a way to generate returns when there is no existing company that fits the investment criteria.
- Founders Fund was the first investor in Oculus, which led to the founding of Vural.
- Starting companies in this way is not something that can be done every day, but it can be an important part of generating returns.
- Not everyone can run this strategy, but Sean Parker, Trey, and Peter Thiel can.
- Brian Singerman, a partner at Founders Fund, discusses his approach to building a legendary venture capital firm.
- Singerman emphasizes the importance of adaptation and continuous learning in the rapidly changing venture capital industry.
- He believes that successful VC firms must be willing to evolve and embrace new ideas to stay ahead of the curve.
- Singerman introduces the concept of "ikigai," a Japanese term that refers to finding one's purpose in life.
- He argues that finding one's ikigai is essential for personal and professional fulfillment, and that it can help entrepreneurs and investors make better decisions.
- Singerman shares three key takeaways from his experience in the venture capital industry:
- Embrace change: The VC industry is constantly evolving, and successful firms must be willing to adapt and embrace new ideas.
- Find your ikigai: Discovering one's purpose in life can lead to greater personal and professional fulfillment, and can help entrepreneurs and investors make better decisions.
- Be humble: The venture capital industry is full of smart people, and it's important to stay humble and always be willing to learn from others.
The character of founders who change the world and how to work with them.
- Founders Fund supports founders who are challenging to work with but competent and unique, as they often generate exceptional returns for venture capital firms.
- Founders Fund acts as a "founder consigliere," providing guidance and support during difficult times rather than controlling or dictating the company's operations.
- Venture capital focuses on maximizing upside potential, and Founders Fund is willing to take risks and support founders who are also willing to take risks to achieve exceptional returns.
- Founders Fund accepts the risk of ruin in exchange for the potential for significant upside returns.
- Successful examples like Uber's adaptation in London and Las Vegas and Spotify's survival despite regulatory challenges demonstrate the importance of adaptation, persistence, and continuing operations to gain legitimacy in business.
Regulation and the anti-competitive landscape of large companies in the US.
- Brian Singerman believes in focusing on what he knows best and not getting caught up in global macro or policy issues.
- He emphasizes the importance of adapting to the current political environment and playing the game rather than complaining about it.
- Singerman admires founders like Dylan Field of Figma who continue to build their companies despite facing challenges such as blocked acquisitions.
- He stresses the significance of accepting reality and continuing to build great companies, even in the face of setbacks.
- Singerman highlights the transient nature of political environments and the importance of building companies that can weather economic ups and downs.
Self-awareness, strategy and the state of venture capital.
- Brian Singerman discusses the current state of venture capital and the challenges it faces, including negative public sentiment, high fees, and concerns about exits.
- He emphasizes the importance of self-awareness and adapting strategies in response to market conditions.
- Singerman highlights the shift in focus from social networking, photo sharing, and chat-related companies in the early 2000s to AI and machine learning in recent years.
- To counter this trend, Founders Fund invests in areas that are still promising but less popular, such as crypto and bioengineering.
- Singerman emphasizes the importance of finding exceptional founders and spending time with them in person to assess their potential.
Keith Rabois's transition from Founders Fund back to Khosla Ventures.
- Keith Rabois left Founders Fund to join Khosla Ventures.
- Founders Fund and Khosla Ventures have different cultures and approaches.
- Rabois's departure from Founders Fund was amicable, and he continues to collaborate with the firm.
- Vinod Khosla, the founder of Khosla Ventures, is known for his contrarian views and unapologetic approach.
- Khosla's authenticity and focus on his strengths have contributed to his success and longevity in the venture capital industry.
- Avoid virtue signaling and focus on your strengths.
- Identify what you love about the job and keep doing it.
- Surround yourself with people you enjoy working with.
- Find the intersection of what you love and what you're good at, and never stop doing it.