In this episode, we talk with Delian Asparouhov, principal at Founders Fund, about keynesian beauty contests, who should become a founder, removing bottlenecks to successful companies, how to encourage more agency and more.
Transcript:
Will Jarvis 0:05
Hey folks, welcome to narratives. narratives is a podcast exploring the ways in which the world is better than in the past, the ways it is worse in the past, where it's a better, more definite vision of the future. I'm your host, William Jarvis. And I want to thank you for taking the time out of your day to listen to this episode. I hope you enjoy it. You can find show notes, transcripts and videos at narratives podcast.com.
Well, dealin How are you doing this morning?
Delian 0:42
Doing good, excited to you excited to chat today?
Will Jarvis 0:45
Absolutely. Thanks so much for taking the time to come on the show. I really appreciate it. Do you mind giving a brief bio and some of the big ideas you're interested in?
Delian 0:53
Sure. So you know, sort of a sped up version of my background. I was originally born in Bulgaria moved to the United States. My parents when I was you know, a kid, you know, kind of bounced around around the United States eventually ended up at MIT thinking that I was going to become an academic, instead of sort of took a hard left turn. And you know, after sophomore year, I ended up dropping out of school to make my way off to Silicon Valley, founded my first company which was like an enterprise healthcare company with you know, YC, summer 14 with it ran for about three and a half, four years, we kind of got to ramen profitability, but you know, sort of never grew fast enough to raise series A and then went off and became after either shutting down the company became the VP of growth at this company called Teespring, which is another YC company, and then ended up switching over to the investor side of things. I've been an investor now for about five years or so, first few years of that over at Khosla ventures with Vinod Khosla, and in the last three years or so, over here at Founders Fund, and mostly focused, you know, in those five years on investing in sort of seed Series A, and mostly in what I call, you know, sort of just everything but you know, boring software. So no consumer social, no enterprise, SAS, nothing like that. But everything from like, regulated industries like healthcare, tech, FinTech, InsurTech, you know, as well as a lot in the world of called Deep tack, you know, hardware, it's everything from like aerospace, industrial automation, robotics, home construction. And yeah, you know, I think, you know, one of the things that I really in some ways, you know, like about venture is that it's one of the few jobs where as an adult, you actually still get paid to, you know, continue to learn. And so, you know, over the course of, you know, my time in venture, I've gotten to, you know, dive into a variety of different fascinating areas. I think, partially from spending some time with you one of my primary mentors, Keith Raboy, who's also on the board of, or he's one of the founders of open door, I learned a lot about sort of the like, you know, real estate industry, and in particular, which is like, fascinated with how inefficient like single family home construction was. And so, you know, a couple years back, I was fascinated the idea of like, you know, why, you know, why is sort of, you know, our single family homes inflationary, but if you look at almost every other consumer goods, they're extremely deflationary. Right, phones, TVs, etc. And most of the reason being that, like, you know, most of the things that are deflationary have largely been produced on sort of automated, you know, assembly lines, and so why hasn't anybody taken a team approach, and done it with homes, turns out, you know, homes have a lot more skews in them, there's a little more difficult. And, you know, the thing is, a home is much more difficult to deliver, you know, fully finished. And so, you know, in like an automotive line, you know, when you're, you know, assembling a car, there's a few different sort of like sub assembly lines, and there's, you know, the sort of the final assembly in the line notice, like the general assembly line, you know, in homes, the general assembly line has happened on site in the middle of, you know, the outdoors, the wild Lido, sort of conditions can't happen on a factory floor. And so, there's a ton of different, you know, difficulties that come with that. And so, I ended up getting fascinated with that whole field that I got to invest in this company, you know, cover, which is based out in LA. And so it's been fun to, you know, see that, you know, as my, you know, fascinations shift over time, I'm able to, you know, then invest in the company and move on to the next fascination. So, you know, right now, it's been a lot of my time, you know, in aerospace, trying to think about, okay, how do you sort of, you know, take this infrastructure that, you know, honestly, mostly Elon has built, and, you know, that infrastructure being the equivalent of, you know, AWS in 2008. And, you know, now you've got this great infrastructure, you don't have to build your own data centers, what are the interesting, you know, applications you can do on top of it, and you don't have to build your own data center, ie on rocket and so working on that myself, you know, in the space manufacturing world in Florida, but then, you know, also excited to be investing in companies like Hadrian, impulse space, other people's sort of building on top of that infrastructure to provide those next generation use cases. One of the other areas that I'm particularly fascinated by right now, in particular, because I'm sort of in the thick of it, you know, myself is the world of sort of like IVF, fertility, surrogacy, you know, how to sort of encourage, you know, the replacement rates of, you know, Western countries not being below two, you know, right now, the, you know, average, you know, child rearing rates in the United States is actually below you know, our death rates and so, really fascinated by you know, the various companies that are working on trying to, you know, make that easier, everything from you know, obviously, poster child being born and, you know, the homeschooling world, all the way back to you know, embryonic Uh, you know, sequencing polygenic risk scoring, you know, surrogacy, you know, brokers, you know, IVF facilities. And so that's one area that I'm spending the least amount of time on. So, yeah, it's a multi varied, you know, interest in areas that are like, you know, diving into, but I like the things that are, you know, sort of the things that actually you know, shape society, but are either super inefficient and, you know, now everything from you know, housing costs to, you know, babies are probably the current fascinations.
Will Jarvis 5:28
That's great. That's great. I'm curious, how do you pick, you know, Eric, problem areas to explore? Is it just you look at, it's like a top down approach, where you look at the biggest problems facing humanity right now, you know, like, our tea, like, we were below replacement in the West, or like, housing prices, just insane explosion in the price of housing in the US? Do you just see a problem and then go down and try and figure out why and where people are building solutions? Or is it just more ad hoc you like, you see a company? Okay, like, wow, that's super interesting. Let's go investigate, and then you go up to the broader problem.
Delian 6:00
Yeah, I think I think I tend to be more of like a bottoms up thinker than a, you know, tops down, you know, I think there are people in the world, you know, how people even at my firm would say, like, you know, Peter Thiel is the world are very much top down macro, you know, under, you know, sort of provide these general and overarching, you know, frameworks to think about the world. And I think I take a very sort of opposite approach with just like, how I get fascinated with problems, and you know, where you know, where you gravitate towards, in that, you know, in the world of like, you know, IVF, fertility, etc, is mostly just like myself going through the process, as a user, you know, is the fascination with, you know, home construction, it was honestly just like, you know, seeing, you know, John Jaffe from winnaar, he's the president of winnaar, which is, you know, the largest home builder in the United States. And you know, him, you know, talking about, you know, how they construct homes, the difficulties of that, and then, you know, I think it's, you know, I sort of get these, like, you know, brain worms in my head, where I'm like, oh, that's, like, super interesting. And then I end up spending, like, the next three weeks talking to every single like homebuilding, you know, expert, digging into, you know, every single company. So, I'd say it's a little bit more, you know, bottoms up, add curiosity, I can't just help but you know, scratch, you know, scratch the itch. And sometimes I get an itch. And it's like, it's not that interesting of a solution. And like, you know, yeah, they're like, you know, that integral problem, were something that can actually be faked. And sometimes you ended up discovering, like, Oh, my God, this is actually like, a really big problem. And people are kind of talking about it, but like, you know, not nearly enough. So I'd say like, you know, fertility is one of those things. But as you can see, like, for example, Elon has not tweeted, I think, like, twice in the past, like six months about, like, you know, people needing to have more kids, they just feel like it's starting to get a little bit more attention. But, you know, even a year or two ago, it still felt like one of these topics that was, you know, under discussed it that, you know, sort of Western fertility rate?
Will Jarvis 7:32
Absolutely. It seems like, you know, there are a lot of problems like this that just go completely unnoticed in society. I just had an academic on from Ai yesterday, who works on this, this crazy fact that 7 million US American men don't have a job or in education aren't doing anything. And they're just, like, completely ignored. Like, no one's talking about this, like this huge, like problem. I'm curious, how do you get up to speed in an area? Do you have like, a systemic process? Where you like, call an expert first? And then you like? Or is it just like, trying to do research on the internet in the beginning? And then it's finding experts? Or is it just completely ad hoc? And it just depends?
Delian 8:04
Yeah, I think, you know, I, I don't have an infinite set of data points on you know, how I've succeeded in doing this, you know, aerospace probably being the you know, only one as far where I'd you know, comfortably say that I have a very good understanding of the entire sort of aerospace industry ecosystem, you know, what the upcoming business models are, and if I sort of reverse engineer how I came about, and it was mostly just, like, spending lots of time with smart people in person, right, you know, I think, yeah, there's some amount of like, you know, reading online, or, you know, some amount of like, you know, textbooks, but like, that was not what the majority of the interesting insights came from, it was ultimately just like, going to a lot of aerospace conferences, practically reaching out to and speaking to a lot of different like, aerospace CEOs. And just like spending time around people that, you know, thought really deeply you know, about the industry. And it's fascinating sometimes how, like, even people within the industry don't take the time to survey their own industry. Right. You know, I think it was surprising to me that like very rapidly, I became more well networked in aerospace than people that were even like working very practically in aerospace, because it just wasn't their core focus, their core focus was just like execution versus I was like, very practically, you know, going out to you know, try and you know, sort of meet everyone learn about their, you know, philosophies how they thought about, you know, the industry and eventually end up liking amalgamating and sort of higher level view where you've kind of, you know, seeing, seeing everybody in it. And so, yeah, I'm pretty, you know, obsessive with the fact that, you know, right now, you know, diving into even some of these new areas, right. IVF, fertility life sciences, and like, my first thing is just like, Okay, who are the experts that I can talk to you? What are the conferences that I can go to, and just like, you know, start to inundate myself and learn, you know, via osmosis. So, I think much more of, you know, I don't know what the right thing is, you know, it's not as verbal as a visual etcetera, learner. I'm like a like, you know, visual osmosis learner like, you know, the way that I learned the best is like, having an expert walk me through their paper, like I can go read the paper and yes, I'd like you to absorb some of that. But being able to like live q&a like basically like you know, with the author is always fun, much more fascinating. And I think people under appreciate if you just like, have a like, you know, very inquisitive mind and, you know, clearly written sort of cool Little email that explains why you're excited to chat with them. Almost anybody in the world we're like, you know, hop on the phone with you and, you know, walk you through, you know what they're up to. They're just like, so like, you know, people love explaining their work, right? You know, this may be being a perfect example, right? I'm always happy to hop on a podcast and explain what I'm up to. Turns out, you know, even the, you know, top IVF researcher in the world is happy to do the same, because people very rarely are, you know, interested and curious about their work. And, you know, dig up, you know, their papers.
Will Jarvis 10:25
That's great. That's great. And that is my motivation for starting the podcast and beginning. I'm curious, does that experience make you bearish on remote?
Delian 10:34
Oh, yeah, extremely sad. I mean, I think it's just hard, you know, some of these conversations require some level of like, meandering, you know, where, and just like, you know, spontaneous, you know, connections. And I think it's just really hard. Like, you know, if I were to recreate that airspace thing, you know, airspace, let's say, like, you know, osmosis period, and I did it entirely remotely, it's not the same, it's, it feels so much more artificial words, like, Hey, I would like to, like hop on a, like, 30 minute zoom call with you, within the Zoom call, like, needs to have a particular topic or something versus like, just sitting down at a conference and like, you know, grabbing lunch and and this person comes over, then this person comes over, and you just kind of, you know, absorb and, you know, listen, I think it just like really, really hard to create that sort of experience. It's actually why I think in particular, that like, you know, World of remote actually hampers people earlier in their career the most because like, if you're sort of mid stage, and you're like a VP of product at like XYZ company, at that point, like, you know, you may not be actually interested in like building up your skill set anymore, you're just like, pure execution mode. So yeah, it's great for like, the VP of product that's 32 married has two kids, like remote, I totally understand why somebody like that would absolutely love remote. But like the hyper ambitious, 24 year old, like really wants to learn from them, man, it kind of sucks reporting to that VP of product, cuz like, you don't get as much of the spontaneous interaction. And, you know, if you're the hyper curious, you know, whatever, you know, 20, whatever I am, you know, nine year old or I don't remember how old I am 28 year old, you know, venture capitalist that wants to, you know, keep learning via these types of, you know, spontaneous osmosis interactions. You know, I think it's, you know, I think it's tough to do that, you know, remotely, to speak of the devil I am, you know, in an in person office right now at ramp, you know, in New York, and surrounded by budget, you know, 20, you know, I read those 21 to 28 year old, hyper ambitious software engineers, product managers, you know, product operations, folks that are just outside of this office. And, you know, I can tell you, these folks are moving a lot faster and learn a lot, a lot more than people that are trying to do the same thing over zoom.
Will Jarvis 12:24
Definitely. Well, it definitely seems like there's a lot of legibility problems, right. You know, like the, the problems you're working on, often are difficult to describe and much easier to to kind of understand a person it seems like I'm curious if with Varda, was it a top down approach as an or was it like a, you know, I want to build a company, a space company, then I'm gonna go out and figure out what you know, what's the best problem I can solve? Or was it you know, maybe I know, manufacturing space, is this huge 25 on the sidewalk? I just need to go get that idea.
Delian 12:54
No, yeah, it's very much either the ladder and it wasn't even like, let's say, like a vetting of the idea. I've been thinking of the idea for like, almost a decade before pulling the trigger on it. It was actually in q4, 2019, q1 20. before even starting BARDA, I was so convinced that there's an opportunity here that actually spent most of those two quarters, talking to everybody that was working on the problem. And there were a variety of different sort of, like, what I'd call more academic type groups, that had been either publishing papers on it doing small scale experiments on the ISS. And I was actually hoping to invest in one of those groups. And ideally help them scale their work beyond the ISS and a much more sort of a commercial venture, scalable, you know, fashion, but you know, unfortunately, just like could not, you find a team that was excited by slash team knows excited to actually take that sort of ambitious, more risky approach of moving off of the ISS, and potentially not necessarily just relying, you know, a NASA unit for funding. And so actually originally put the idea back on the shelf once COVID hit. And then, you know, as we were sort of in the summer post COVID, summer 2020 was realizing, man, I still am, like, really excited about this idea. And, you know, honestly, more had zero interest in starting a company again, like I had a lot of, you know, PTSD and frustrations from my, you know, first go round, realizing that, you know, maybe I wasn't the best suited to be the CEO of a company. And so, if anything, it was extreme, you know, definitely not like, I want to start a company, and let me go figure out what to work on. It was more like, Man, I'm so obsessed with this idea. And it bugs me that nobody's doing it correctly. And like, fuck, the one thing in the world that I really don't want to do is start a company. But like, if this is the only way to solve it, and like, you know, maybe I will, but only if I like put together the perfect founding team, the perfect financing and cap table, and like, have it ready to go. And I remember thinking at the beginning of the summer, like, you know, you know, June July 2020, I was like, there's just no way that like, I lined all these things up, like it's COVID it's gonna be impossible to do this. I didn't buy like, you know, December, I had the perfect founding team, I had the perfect you know, financing lined up, etc. And I remember thinking I was like, it feels like, I'm like looking down the double barrel of a shotgun. And I know how painful it is to blow my brains out and blow my brains out before and yet again, I'm choosing to pull the trigger and say yeah, here I am, you know, a year and a half later with my brain splattered against the wall and like, Why the fuck did I Do it. But some problems are worth splatting your brain against the wall for?
Will Jarvis 15:04
Absolutely, absolutely they are. Do you think of on the margin more founders should wait until it's like, man, like I cried, like, I just have to do this instead of like trying to put a square peg in a round hole.
Delian 15:15
Yeah, I mean, this is a classic feedback that I give, you know, especially to like younger founders that are like, ah, you know, I've gotten this, they have this, like, you know, and I had this too, I had this like, mental image of like, oh, I need to be a founder, because I'm like, feel like status or respect, or, like, you know, the access that you got to either certain individuals or being able to, like, you know, talk about, you know, the fact you fundraise, and it's just like, you know, that was partially why my first company failed. This was like, ultimately, a problem that I wasn't sort of deeply, deeply passionate about. And that was sort of the promise that I made to myself after my first company was, you know, the only you know, if I would ever do this, again, in the future, it needs to be a problem that is like, so brain warmed in my head that I know that no matter what happens, if you chop it, like, you know, feed off, you know, make it to that, like, you know, I have to spend every game down in my bank account, I'm going to care about this problem so much, they were like, still do it. And for a long time, I just, I thought I was like, it's no such problem exists, you know what I mean? But it was that, like, exploration of space manufacturing is an investment thesis and then noodling on it over the summer. I remember, there's actually, you know, funnily enough, the way that it sort of transitioned from, you know, idea in my head to Oh, fuck I might need to start a company to do this was, it was actually like, probably, like, May or June 2020. And I can like, dig up the tweet, but it was effectively like, you know, drawing this correlation between, like, you know, the government is printing shit tons of money, that means, you know, interest rates are going like crazy, crazy, low cost of capital is effectively zero. Now, it's probably the best time in human history effectively, to like, start a deeply, you know, capital intensive deep tech company, especially in aerospace. I remember like, I tweeted that, and I was like, off fog, like, you know, I gotta, you know, go do this idea. Because like, it's really like the right time to do the idea because like, Falcon nine is reusable and starship is coming online and like the capital environment are like, perfect right now to basically start this type of idea. So yeah, I think more founders should take this approach of like, you should be like, you know, begging yourself to, like, find a solution to the problem that you want to solve that isn't starting a company. And if and only if the only way to solve that problem is to like start a company, then once you do it, the people that take this approach of like, oh, man, I got to start a company for starting a company sake, those people all end up like you're depressed three years in, because it's like, even if your company isn't successful, your work, you're gonna make some boring enterprise SAS thing you can give like zero shits about the promise that the moment you hit any single moment to like adversity, you just, you know, you know, surrender at the first you know, you know, you know, fire from the enemy. And so, yeah, there's just so many examples of this, just like, you know, even if the first three years, four years are easy, because you chose that like, hot new web three, SAS, social, blah, blah, blah. No company is like smooth sailing all the way through. And so then you're, you know, Ryan Breslow, you know, quitting at the 20 12 billion valuation, just when the going gets tough. And like, you know, that's, that's not what ends up, you know, making you a top tier entrepreneur in the long term. Yeah, you got to stick it out. Absolutely. And it's only fun to stick it out if it's a problem you really believe in?
Will Jarvis 18:02
That's right. That's great. I'm curious, what do you see is the biggest bottleneck, you know, you work in venture so you get a good view on this? What's the biggest bottleneck to getting more breakout companies? Is it you know, capital? Is it like, smart founders working on the right problems? Like Like, what do you what's your sense of that?
Delian 18:20
I actually believe in I think this was Sam Altman did tweeting about this a lot lately, but I'd have to go back and look, but it's basically just like a lack of, like, people who have been trained with high agency, like, you know, I think, yeah, there is a significant under appreciation, by, you know, call it with some level of like, intellect, network, you know, access to capital, etc, under appreciation of like, how much agency that gives you in the ability to, like, manipulate the world to the future that you want to, you know, see, and I think that's what's mostly lacking, like, it's not for a lack of like, Stanford educated computer science grads, there's like a semi infinite number of those, I could probably throw a dart, you know, off, like this office building here. And I'd probably hit a Stanford CS grad, there's definitely not a lack of that. Definitely not a lack of capital. There's still like, even with, you know, the current public markets, there's still like semi infinite capital, if you have, like, you know, the right ideas. And so, you know, I think it mostly comes to just like this, like sense of, you know, agency of, you know, tackling, you know, a hyper ambitious problem with just like the, you know, right, you know, skill set founding team approach. That to me is like sort of like the lacking founders is the lacking factor is these like, you know, sort of high you know, agency you know, founders that are you know, tackling something you know, sort of truly, truly ambition is not you know, an incremental you know, whatever SAS for you know, plumbers type thing.
Will Jarvis 19:44
Do you think that's something we can perhaps modify, like, you know, encourage people to have more agency give them some kind of hero license, because you've found one right with Varta. So there maybe there's some process or maybe this could just be inbuilt. You could just like you'd be a high agency person or something.
Delian 20:00
Yeah, no, I, you know, I don't I don't think that I had some sort of natural predisposition to agency. I do think that this was something that was either coached into me encouraged into me, or just the fact that, you know, I, you know, spent got to spend time early in my career with very high agency people, you know, I think, you know, and I don't know what the right way to, like, you know, scale their approaches, because like, by default, the whole point of this is that there's like, a lack or a scarcity in hygiene people. And so if the only way to scale it is as most other hygiene people that obviously it's like a relatively limited function. But you know, as an example, you know, I kind of skimmed over this in my, you know, original sort of bio introduction, but actually, my very first job in Silicon Valley was December of 2012, being an intern at Square, and part of why even prioritize Square was like, you know, it's not that I was, like, particularly passionate about, like, you know, you know, mobile payments for, you know, cafes, I was particularly passionate about, like working with Jack Dorsey, you know, and this was in 2000, Paul before, like, Jack is who Jack is today, you know, back then it was clearly it was like a top tier, you know, entrepreneur, but a much more, you know, controversial figure. But I was just so fascinated by the idea of like, I wanted to work with somebody like him, right. And at the time, there wasn't like, you know, Elon was still under the radar, but it's much like, you know, maybe I just wasn't as fascinated him at the time, but I think I want to work with this, like, magnetic, super clearly super high agency, you know, individual. And so I guess, like, I was, you know, attracted to agency. And so maybe the way that we would like, you know, steel it is making, you know, if anything, like maybe people criticize the glorification of like, you know, founders in today's day and age, and I do agree that it's like, okay, yeah, maybe people over glorify the DOM Hollins of the world that like, you know, are phenomenal fundraisers, but you know, I wouldn't necessarily say they're phenomenal, you know, operators, how you maybe make it a bit like young people, glorify high agency, you know, people that would be like the way to scale it up, because then more of them will want to go work near those hygiene people and then they themselves become heightened TVI osmosis, but I think a like alternative path, DeLeon, that would maybe was just as smart, just as much access to capital, you know, I was still in Silicon Valley, but I was not exposed to like Jack Dorsey, and then Keith Raboy. And then, you know, Sam Altman, etc, are these people that are described as like super high energy people that were like, extremely influential, you know, all three of them in my career from ages, like, literally, you know, I was working at square when I like, just barely turned 18 I was like, you know, 18, and five months or whatever, right, you know, old, all the way through to, you know, starting Varta at age, you know, whatever, roughly, you know, 2626 and a half those like, you know, eight years, I had, like, semi constant exposure, you know, to those, you know, three, you know, individuals all of whom are described as, like, extremely high agency. And so when you have these, you know, sort of mentors, that you clearly see are able to, like, Will something into the world, right? Like, you know, maybe, you know, Keith being obviously you might, you know, closest mentor, you know, I got to know him basically summer of 2012, when I was working at Square and he was a COO, when, when I was an intern at Square, and he was a COO at Square. And so I got to know him from literally like, the like, ideation moment of open door, through now, obviously, you know, open door being a, you know, in my opinion, very successful, you know, public company, I think maybe underappreciated by the public markets, but I think that will shift over time. And that was literally just like, completely, like, you know, there was no happenstance, there was no like, Oh, these two founders accidentally, like, you know, Matt, etc. It was like, No, he liked it, he was like, this is the thing, I need to, like, construct this, you know, into existence. And, you know, literally willed it into existence and force it into existence, when it may not have like, there's zero chance that it would have existed or succeeded otherwise, like, there were like, other people working on things like, you know, open door, when you open door, it, you know, came together, and it's, you see that you're like, okay, like, I can, you know, I think I could do that, like, you know, it's not easy, you know, for sure, like, but like, follow the formula, it's just like, Yeah, you know, really believe in an idea. Think about what the ideal founding team needs to be hunt those people down, convinced them that they shouldn't, you know, work on this, like, he'd spent, you know, almost like, I think like four or five years, sort of, you know, one he worked on, like the original idea of open door, like two dozen three, called home run, realize that the time it cost capital is too expensive, couldn't actually approach him. But then even the ultimate CEO of open door, Eric, who he'd actually like, tried to recruit for the CEO of Open Door role three or four years prior, and, you know, didn't actually either succeed, either it was only the second time around of like, recruiting Eric, that he actually managed to, you know, convince him to work on open doors, it was one of these things that like, he clearly just persisted on, just like, you know, trying to, you know, willing to reality. So, it's like, when you when you experienced that up front and up close, you just like, it is very possible to willed things into the world through like, you know, against your sort of willpower and so that just made me very convinced that I was like, I can do the same thing with Varta when I like Will this in existence, and it's gonna be painful and take a lot of effort I'm gonna have to like you know, hunt down the exact right people, but it is definitely like, you know, not impossible anyways, very long winded answer to I think osmosis to other hygiene people is probably the right way to to get them into the youngins if they can do the same.
Will Jarvis 24:58
So perhaps, you know, different gonna solve it at the macro level at the micro level, in your career, if you're a young person, should you try and select, you know, the people going to work for for agency, less than trying to select, you know, whether this company is going to be successful in the long term you think that's the kind of an easier metric to select on?
Delian 25:16
Yeah, I think like, you know, I think if there's one mistake that I sometimes see people make early in their career is that they like over optimize, you know, for what is sort of the hot new thing or the status etc, as opposed to I think over, you know, what I would generally optimize for, which is just like osmosis, from high agency, highly successful people, because, like, you know, as an example, like the first like, you know, two years or so of like, working closely with Keith, you know, not in the square days when I started my own company, but when I actually originally joined Khosla ventures as Chief of Staff, we're not particularly like, high status role, like, you know, the thing that I, you know, was joking about with, like, a founder the other day is, like, you know, I mean, parts of that role, were very fond of, like, you know, getting to observe, you know, Max Levchin at a firm board meetings now, again, I was a fly on the wall, but like, getting to observe that was like, such a, like, you know, honor in some ways, like, the greatest entrepreneur of our time, and I got to watch, like, how he was running his company, but like, the less glorious aspects were, like, I just fucking, you know, deliver the Diet Coke during this board meeting, Sue. So it's like, you know, you know, like, first it's, like, formally the founder, up on, like, you know, YC Demo Day, and now, all of a sudden, you got to deliver the goddamn game. You know, sometimes I think it's like, you got a little bit, you know, sacrifice the ego, you know, in exchange for, you know, the, you know, osmosis. And so I think that's the mistake that sometimes you will make is the like, and I and I was there. I mean, like, I was the like, why CTL, Telmo founder dropout, you know, had extreme ego and age, you know, 18 through 21. And then, you know, at some point, you know, I wish I'd been, you know, self aware enough that I was like, you know, practically sacrificing it. But it was more than just like, I fucked up so badly that I was like, Well, clearly, I probably shouldn't have much of an ego, given that my company failed.
Will Jarvis 26:53
Good stuff. So it's, that's very practical advice is like, go find the high agency people do what you can work for him help in whatever way you can, and exactly go from there. Good stuff. This is a bit of a left hand turn. But I'm curious at the macro level, do you think venture you know, when you make a venture investment? How much are you thinking about future fungibility ability? So like, to what extent is venture like a Keynesian beauty contest where you have to worry about, you know, not only like, can these people build this? And will the market buy it? But will future funders be able to like provide capital this? Or is it just too weird that they won't do it? And I'm sure like with some of your work, like with IVF, artificial wombs, etc, they may fall in these kinds of categories.
Delian 27:33
Yeah, you know, a couple different frames that you can take to answering either that question, you know, one of the things that, you know, we definitely need to think about at Founders Fund and is like, the sometimes, you know, primary question that we ask, when investing in a company, is, why will we uniquely appreciate this, and almost every other investor will not, right, it's a, you know, maybe, you know, more specific way of asking the like, how is this contrarian effectively, you know, question. Now, however, the critical part of that is that, eventually, for a company to be successful, it must transition from contrarian to consensus, from when it transitions from an early stage to a late stage company, right. And that is the only way to be successful, right. So every successful company at the late stage is a consensus, late stage successful company, where the most returns are made are contrarian, early stage companies. Now, that doesn't necessarily mean that consensus, early stage companies can't be successful, too. There are plenty of examples in Silicon Valley, where a company was effectively consensus from, like, the earliest stages, all the way through, it's just hard to make as many returns on those because typically, that means that it's like, you know, highly competitive, you know, even you know, from the earliest, you know, financing rounds. So, is it, you know, is it something that, you know, you need to think about? Absolutely, because if it is, you know, contrarian enough that it can never get, you know, sort of future, you know, financing, then it can never become the consensus, you know, late stage company. So, it's something that, you know, absolutely you think about in practice, let's say, you know, for myself, for the last two years, I've tried to take a little bit of like, the two ends of the barbell, you know, you know, curve approach, you know, to investing that I think is, at least, you know, so far we'll see, maybe this is me being a bit naive into the early days of a potential downturn. But over the past few years, I've started taking two ends of the bell curve approach. On one end, I've done the like highly speculative moonshot, deep tech, but largely focused on like, you know, aerospace type investing, right, you know, probably, you know, the biggest units or two positions being like Florida, Hadrian as examples right now in this like, you know, current, you know, you know, recessionary you know, environment, they're actually still largely experiencing, you know, tailwinds partially because we're going through you know, expanding defense budgets, you know, the Ukraine Russia situation and a lot of the you know, customers for those two customers, you know, companies being in DOD, aerospace etc is largely you know, being fine. So, what I thought about those companies that downstream investors, I was like, Okay, these are things where like, the downstream investors I think, will appreciate these companies because the like, you know, customers that they will be after will be, you know, relatively will have, you know, run To eat, you know, larger budgets actually than expected. And then on the flip side, I invested in a bunch of companies that just had like, you know, great financials, even if they like, on the surface kind of have you know, warts because they had like some hardware or some regulation or is like something that like, and brushes wouldn't appreciate. And in the early stages, but as the company got later, if you just exam with the financial profile, they were quite attractive. And so there's a handful of, you know, it's a two to three sort of, you know, series A's that I did, you know, sort of last year, the two that are least public are standing in this, like soil analysis thing. And it's company, Lulu, which is like this InsurTech thing, anyways, both having, you know, the first soil analysis having some, you know, interesting hardware and market dynamics, the second one having a little bit, you know, regulatory, you know, dynamics, you know, but both of those are examples where it's like, you know, again, I think contrarian, you know, at the time, in that, you know, people were like, ah, you know, these companies do have revenue, the book companies were, like, caught, like, even 3 million of ARR. But, you know, we're not getting priced at, you know, whatever, a billion posts, like everybody else was, because they had these, like, you know, warts on them, they're getting priced relatively reasonably, but now, as they're getting later stage, people are just examining financial profile, they're like, well, irrespective of the words in them, look, they are, like, you know, quite, you know, financially, you know, efficient, you know, versus, you know, I think where people got a little bit, you know, tripped up over the past year is like, you know, sort of, you know, funding these 100x, you know, 110x, you know, SAS Arr, you know, businesses are not thinking through the downstream, you know, financing, I, okay, well, at some point, some investor is going to have to invest in this in the future? And are these 100x multiples going to, you know, sort of like last, you know, indefinitely, probably not into, you know, their, you know, sort of much, you know, trickier spot with those investments in those companies. And so, no, yeah, absolutely, there is a little bit of like a, you know, whatever you want to call it, you know, Russian doll effect of like, you absolutely need to be thinking through, you know, what are the, you know, downstream, you know, financing risks. And I think, you know, a lot of investors became particularly blind to that, over the past few years, where there's this sort of assumption that, like, you know, in the past few years, if you had a tarp to your fun lead your seed, it basically meant that you were, like, guaranteed that like another top tier fund within your series A within like, a year effectively. And so people started to ignore the potential, you know, downstream findings. aggress. So, again, you know, maybe I'm being naive, and, you know, I'm gonna have a bunch of failures in the portfolio. But you know, at least so far, you know, relative to peers, I think, partially because of the approach that I took over the last few years. I don't think, you know, I don't think the things that I've been working on have been, you know, hit nearly as hard.
Will Jarvis 32:14
That's great. And going off this question, this is a little bit complicated. But do you think brand really matters in venture more than than people realize? And does that explains it? Because it lets you worry less about future future financing? In other words, and does this explain why top tier firms do a lot better than all the other firms is something like where because, you know, founders find you put in the seed round Series A, they're like, well, that's a positive signal that this is probably a good investment, does that make sense?
Delian 32:44
100% These things are, you know, venture is very much, you know, a, the rich get richer, you know, type of game, in that, you know, even as an individual, like, when you start off in investing, if you don't have a hit sort of in your first like, three to five investments, it just gets really a lot more painful to actually ever have a, you know, a hit in the future. Because, like, you start to experience a lot of like, you know, molasses and difficulty, but the further you're at will start to question each individual, you know, future investment more founders will be like lessons and working with you, because it's like, well, there's no like, you know, positive signaling that comes with it, let alone like on a firm basis, and it's a combination of like, a multitude of factors, it's not just that, like, future investors will, you know, be more interested in likely to invest in the company, but it's also literally that it allows the, like, founder to operate more successfully, because even candidates pay a lot more attention to it, right? Like, the classic feedback that I always give to candidates that are on the market is like, you know, don't try and, you know, choose which company is best, you know, because like, you're not a full time investor, I you know, the goal of a search should be, you know, optimizing ideally for you know, upside in that, you know, company that you choose. But optimizing upside is kind of the investors job, it's always not you as the job market. It's the easiest way, just like choose what the top two your investors are investing in and go work at one of those. Well, on the flip side, as a founder, that makes us that if I take a top to your investors, capital, it makes it so that hiring is much easier, hiring being much easier, then allows me to execute much more easily executing much more easily than does allow for the downstream financing to be much easier. Now, should that be the case? Is that fair? Is that the way that the world should work? Does it fucking matter? Like that is just the way that you know, the world works. And so I think it's one of the things that, you know, makes me very grateful to work in a place like Founders Fund where the alternative or the, you know, parallel reality where Deleon was, you know, either, you know, solo capitalist or working not at a Founders Fund, but still is interested in the same things meeting with the same founders. It's one not clear that like, I would have been able to win the same deals, too, it's not clear that those companies that I did invest in would be as successful because they would have lacked, like the brand halo effect. And so, you know, I definitely am both very grateful to be working at a fund like Founders Fund, but also like, I think a lot of people that are entering into the venture ecosystem under you know, appreciate the like, benefited and advantage. You know, I think a lot of people make the wrong call of, you know, if you have, let's say, an offer that is like an associate role at a tier one fund versus like a partner role at a tier two fund, if you actually are optimizing for like the Long term, if you rent your career, it's pretty rare that like the partner role that's here to fund is actually going to, you know, have the better outcome. It's not impossible, but you're just making like a sort of much, much, you know, sort of more more difficult. Because I think a lot of people do under appreciate this sort of like dynamics of the rich get richer in, in venture.
Will Jarvis 35:18
Absolutely. Is it your sense that founders underrate the value of brand from top to your ventures are overrated or just kind of properly rated at this point?
Delian 35:27
I think founders correctly rated, but I think founders are unaware or have a little bit of a lagging sense of what the brands are in that like, you know, the, as an investor on the inside, it's very clear, which firms are performing, which are not who is who is not who is helpful, because we just have much we're in the market at all times, right, we are hearing about these rounds happening, this happening, this company exploding, this board number being a pain in the ass to work with, etc. So we have much more like perfect information, the stuff only makes it you know, public, sometimes, you know, a year and a half, two years later, when, you know, a firm, you know, prevents a top tier very public founder from like filing a sexual harassment claim against a board member, you know, that sometimes only becomes public two years later, and then she tweets about it only four years later, versus you know, when you're on the inside, you basically need to see it immediately. And so I think they're, you know, the only thing that founders sometimes lack is, you know, you know, seeing sometimes founders make a choice based off of relatively like, you know, lagging, you know, brand indicators, I think, rated appropriately, but maybe aren't as perfectly in tune. But you know, that's just part of the part of the market is, reputation is very much a lagging indicator.
Will Jarvis 36:38
Got it? Got it. I've got one last big question for you here. And it's a big one, do you think we'll be able to, you know, escape decadence in the last this kind of great stagnation, the fertility, the rising cost disease? I mean, like, the lot indicators look like really bad at this point. Do you think it's possible? And, you know, if so, like, what should we are there any concrete policy policy proposals we should be thinking about more frequently?
Delian 37:02
Where is and Who is John Galt question. I actually, you know, I think I've actually relatively, you know, optimistic about the future of the West, I think, partially, the advantage in particular that the United States has, it is is that it is so much so a country that does not have a singular identity, right? Like I think the reason why a Sweden or a Netherlands etc, you know, struggle to both innovate as much and potentially get sucked into this vortex of like, you know, decadence and lack of productivity and not really pushing the fold is because the identity is of like being a Swede, right, that that is the sort of national identity, Americans lacking national identity, which comes with in some ways, a lot of, you know, downsides of like, you have these like, you know, race wars, extremely divisive, you know, Congress to the point that like he does, either sometimes, you know, unproductive, like, it comes with tons of downsides. The flip side, though, is that there's sort of constant competition amongst various, you know, geographies, idealogue ideologies, but that allows for sort of, like rise to the top of, you know, the best much more so than anywhere else in the world. Yes, do have their cross, you know, you know, seem absolutely insane. You know, do education costs seem like they're, you know, absolutely, you know, going through the roof, our taxes in California and saying, absolutely, all of those things are crazy. However, every single European when they like, you know, have a major, like health disorder, they fly to the United States for, you know, their health care. All of the top tier universities, the top tier research institutes are all in the United States, MIT, Harvard, Stanford, Caltech, etc. America is the only country that is currently like, you know, flying and landing, you know, rockets, you know, in the entire world. And for all these things, you have the counterfactual of like, well, you know, Florida, has pretty damn, you know, low taxes is pretty damn open pro capitalism, you know, pro growth, and that will eventually, you know, cause some level of pressure, like, you know, as much as there's a little bit of like, online meme of like Miami versus San Francisco, or is Miami going to be a tech ecosystem, it's like, it definitely is, I think, irrespective of which side you're on, you should I think be rooting for there just being more competition, such that, you know, San Francisco politicians all of a sudden actually start to feel real pressure, where it's no longer just a guarantee that they're going to be the default, de facto, you know, sort of, you know, number one, you know, tech hub in the United States. There's, you know, real, real alternatives that are very different, you know, sort of policy, you know, approaches. And so I think there'll be, you know, obviously, you know, ups and downs and, you know, difficulties, but, you know, in the green in the grand scheme of life, I'm still very, very, you know, optimistic about the, you know, sort of rise of the West in the United States, either maintaining dominance, you know, over the next century, irrespective of COVID, inflation, geriatric president, etc. You know, I think I think will turn out just fine.
Will Jarvis 39:54
Excellent. Excellent. Well, Dylan, thank you so much for coming on the show. Where should we send people where can they find you?
Delian 39:59
Uh Yeah probably you know the easiest is you know if you're looking for you know more info on Varta it's varna.com var da.com. And fill on me is probably easiest found via Twitter ads a Bolgar at ZTE bu LGA are.
Will Jarvis 40:13
Awesome. Thanks, man.
Thanks for listening. We'll be back next week with a new episode of narratives.
95: Delian Asparouhov - Risk, Venture Capital and Agency