Startup Investor School Day 2 Live Stream

Y Combinator2018-03-06

24K views|6 years ago

💫 Short Summary

The video covers various aspects of making smart investment decisions, emphasizing the need for unique choices, a structured decision-making process, and face-to-face meetings. It discusses the importance of personal conviction, avoiding groupthink, and setting clear criteria for investments. The speaker advises on effective communication with founders, providing helpful feedback, and the significance of follow-up in investor-founder relationships. Additionally, the video addresses the challenges in the internet provider industry, innovative approaches to starting ISPs, and handling situations where investors lose faith in companies. It concludes with insights on successful investing, determination in startup founders, and the impact of clear communication for startup success.

✨ Highlights

📊 Transcript

✦

Importance of Feedback and Networking Opportunities.

01:24

Encourages questions through Twitter and Slack, highlighting the value of feedback for networking.

Announces wine and beer networking event to foster community building.

Acknowledges feedback on the need for more community and networking support.

Urges investors to make unique investment decisions, avoid following the crowd, and consider unconventional ideas.

✦

Importance of making smart investment decisions by predicting the future correctly.

05:06

Meeting with companies of interest to determine investment potential is crucial.

Insights from Dalton Caldwell on founder meetings and the investment process.

Examples of investment tactics and the significance of storytelling in explaining product value.

Learning from past mistakes to become a better investor and make informed decisions for successful investments.

✦

Importance of having a structured process for making investment decisions.

07:37

Process funnel for selecting investments starts with leads and moves through intros, qualification, decision-making, and final investment.

Emphasis on face-to-face meetings in the investment process for optimal outcomes.

Need for a structured approach to decision-making to optimize investment outcomes.

Consideration of budget constraints in determining investment decisions.

✦

Setting a budget and clear investment strategy before meeting with startups is crucial to avoid wishy-washy decision-making.

09:31

Qualifying leads and setting criteria ahead of time can help streamline the investment process.

Negotiating with oneself and establishing a process for decision-making are crucial steps in making sound investment choices.

Avoid meeting with too many companies or too few to ensure optimal decision-making and maximize the use of time and resources.

✦

Importance of Timely Decisions in Investor Behavior.

11:29

Indecisiveness can have a negative impact on founders.

Commitment once a decision is made is crucial to success in investments.

Diverse investment criteria among investors can lead to identifying unique opportunities and generating substantial returns.

Key criteria for investments include team strength, relevant experience, and market size.

✦

Importance of evaluating necessary background in a field before investing.

14:21

Groupthink can lead to non-optimal returns as everyone invests in the same deals.

Good investments are often contrarian or unfashionable.

It is crucial to think independently and consider unique opportunities for successful investment decisions.

✦

Importance of Personal Conviction in Investing

17:28

Half-hearted decisions in investing can lead to challenges and lack of success.

Founders value investors who genuinely believe in the deal, not just when it's popular.

Being honest about financing risks and avoiding empty promises is crucial in investing.

Investors should be willing to take risks, look foolish, and accept being wrong in order to make successful investments.

✦

Importance of Personal Conviction in Investment Decisions

21:55

Founders should be willing to face potential embarrassment and avoid decision-making anti-patterns like indecision, flip-flopping, and seeking constant validation.

Lack of financial commitment should be interpreted as a 'no' despite positive feedback, as excessive interest without actual investment can lead to fundraising failure.

✦

Building a good reputation as an investor through in-person meetings and founder-friendly approach is crucial.

22:22

Start meetings with basic questions about company progress, team, and funding to gain valuable insights.

Focus on the founder's story and allow them to share their own words before delving into complex details.

Follow-up meetings should gather information leading to a clear decision, avoiding irrelevant topics.

Trusting gut feelings during conversations with the founder can be a valuable indicator of conviction.

✦

Key Highlights of Evaluating a Startup Pitch:

24:52

Trust your gut reaction and level of excitement when assessing a startup pitch.

Founder credibility is crucial - doubts about their honesty are a red flag.

Consider if you would want to work for or have the founders as your boss.

Evaluate if you are willing to endure tough times with the team.

Treat investor meetings like job interviews, focusing on mutual fit.

Watch out for distracted investors or those trying to dominate the conversation.

✦

Investors should focus on listening to founders during meetings and deciding whether to invest rather than making it about themselves.

27:17

Providing excessive product advice and criticism can negatively impact the founder's perception and be counterproductive.

Overloading founders with advice on how to run their company or fundraise can be off-putting, and it's more valuable to offer advice after providing financial support.

Trying too hard to differentiate oneself by offering introductions or excessive feedback can be perceived as a waste of time.

Communication and follow-up are key in investor-founder relationships to avoid misunderstandings and ghosting.

✦

Key highlights on navigating the process of angel investing.

29:51

Emphasizes the importance of being comfortable with saying no and following a clear protocol for investments.

Recommendations include expressing enthusiasm for investments, avoiding unnecessary complications, and being cautious of additional requirements introduced by investors.

Highlights the importance of communication and clarity in the investment process, as well as the potential challenges faced by new angel investors in negotiating terms.

Provides an example investor meeting to demonstrate practical application of the discussed concepts.

✦

Overview of the internet provider industry and historical regional monopolies and barriers to entry.

33:11

The speaker shares their experience of starting their own internet provider, emphasizing decreased costs and increased accessibility due to technological advancements.

The company mentioned successfully launched their own ISP, serving 47 customers in the southern parts of San Francisco.

Discussion on the complexity of the business and the importance of having a deep understanding to navigate the industry effectively.

✦

New approach to starting ISPs with a box containing hardware and software to eliminate the need for huge capital investments.

36:33

Individuals can start their own local ISPs by becoming a network operating center to assist in setting up the ISP.

Scalability is possible without the need for raising substantial amounts of money.

Two signed franchise agreements with buildings in multiple cities demonstrate the success of this method.

✦

Importance of Customer Investment in Local ISPs

38:41

Drawing parallels to Uber and Airbnb, the speaker discusses the idea of customers investing their own capital to create local ISPs.

Emphasizing the need for increased competition in areas with regional monopolies to enhance internet service quality.

Encouragement for those interested in challenging big companies like Comcast to consider starting their own ISP.

Discussion on the challenges and opportunities present in the internet service provider sector.

✦

Handling situations where investors lose faith in a company they invested in.

42:21

Emphasis on immediate closure of investments and distinguishing between bad fundraising and true deception.

Advice to address breaches of trust on a case-by-case basis, involving founders and lawyers.

Rare occurrences warranting thorough examination and communication.

Insight into saying no to investments with lack of faith, suggesting polite but firm communication.

✦

Providing helpful feedback to founders is important during interactions with investors.

45:35

Sending decks or data before a meeting may not be beneficial for quick interactions.

Milestone-based financings are suggested for companies to align funding with achievements.

Meeting with investors first is recommended before presenting extensive information to avoid low ROI.

✦

Advice on deal structures and future investments.

49:24

Avoid milestone-based payments and opt for simple deals to maintain flexibility.

Prioritize in-person meetings over remote communication for significant investments.

Value of both local and global investors emphasized, with active engagement and networking recommended for successful partnerships.

✦

Dealing with underperforming investments, long-term horizon, competition discussions, and information asymmetry.

50:41

Successful investments may take years to yield returns.

Approach competition discussions with founders neutrally and be mindful of defensive reactions.

Handle information unknown to founders carefully and transparently to avoid issues.

✦

Importance of handling sensitive proprietary information in investing.

53:51

Proprietary information should be kept internally to avoid influencing decision-making.

Investors should be transparent with founders about funding concerns.

Establishing clear investment criteria is crucial for investors.

Investors face a dilemma in providing funding amounts, as both too little and too much can have negative consequences.

✦

Key highlights on successful fundraising in startups.

57:51

Importance of reasons for successful fundraising and encouraging founders to get money wired from investors to avoid commitment disappearances.

Ensuring compatibility between investor and founder personality types before making an investment.

Y Combinator (YC) follows a process to track funded and non-funded projects, progress, successes, and failures to improve with each batch.

Emphasis on prioritizing the team first and learning through trial and error with investments.

✦

Importance of experience and iteration in investing in startups.

01:14:26

Learning from failures and successes is crucial for building confidence as an investor.

Making decisions in the startup world is more of an art than a science, requiring the acceptance of losses to gain expertise.

Emphasizes the need to lose money before becoming an expert and the value of learning from past experiences to improve decision-making.

Introduces Paul Buchheit as an experienced investor with significant achievements in the tech industry.

✦

Importance of Analyzing Past Decisions for Future Improvement

01:18:18

Paul discusses the value of both favorable and unfavorable outcomes in shaping investment strategies.

Identifying unique startup opportunities that big companies may overlook is crucial, using Google's humble beginnings as an example.

Emphasizing the need for startup ideas that may seem bad at first but have the potential to disrupt established markets.

Paul's approach involves storytelling, reflecting on past experiences, and drawing conclusions for future investment decisions.

✦

Google founders attempted to sell the company for a million dollars to Yahoo, Excite, and Infoseek, but were rejected as search was seen as undervalued.

01:20:11

Luck is a significant factor in the success of startups.

The speaker ended up at Google because of his interest in their product and Linux.

Initially, the speaker did not believe Google would succeed but joined to gain knowledge about startups.

The speaker left Google as it grew into a large company and wanted to return to startups in early 2005.

✦

Early days of Y Combinator and its role in replacing summer jobs for college students.

01:24:37

Despite skepticism, a speaker reached out to get involved after being impressed by Paul Graham's essays.

Investments in YC companies, including Wufu, resulted in successful exits like SurveyMonkey acquisition.

Founder of Wufu, Kevin Hale, became a partner at YC, highlighting the long-term benefits of early investments in startups.

✦

Success story of YC company Justin.tv leading to the creation of Twitch.

01:27:27

The company initially faced struggles and uncertainty, but pivoted to focus on video game streaming.

Twitch became a successful business and was eventually sold to Amazon for a billion dollars.

The company had four founders, with Emmet continuing as the CEO of Twitch and Justin Khan starting multiple new startups.

Other founders also went on to start successful companies or take on leadership roles within Y Combinator and beyond.

✦

Importance of having a great team in starting a company.

01:29:35

Convincing Brett Taylor to co-found FriendFeed due to his exceptional skills and dedication.

FriendFeed struggled to compete with Facebook and was eventually sold to them.

Surrounding oneself with people who are smarter and more insightful, like Brett and the team at Facebook.

Emphasizing the significance of team quality over individual prowess in investing in founders.

✦

Importance of founder expertise and insights in assessing startups.

01:32:56

Meraki's success through bootstrapping and strategic deal-making.

Juicebag's failure due to excessive spending without customer validation.

Cisco's $1.2 billion acquisition of Meraki showcasing value of strong startup foundations.

Challenges faced by founders who sell early or lack financial planning, using Justin.tv as an example.

✦

Importance of Innovation and Unconventional Approaches in Business Success.

01:35:31

Justin.tv founder opted to build their own streaming server to avoid high costs, leading to business survival.

Startup founder in supersonic jets lacked background but self-taught to pursue vision successfully.

Founders tackling impossible challenges and innovating unconventionally are key to achieving success.

✦

Importance of Investing in Founders with Expertise

01:38:03

Founder effectively communicated complex ideas and had ambitious goals in supersonic aircraft development.

Emphasis on potential for success in biotech investments and not dismissing opportunities due to lack of personal knowledge.

Less flattering story shared about missed meeting with founder of Dropbox.

Founders with expertise in various fields beyond software should be considered for investment.

✦

Importance of Prioritizing Own Startup Over Angel Investing.

01:41:19

Speaker shares experience of missing out on investing in Airbnb and Dropbox due to hesitation, leading to higher costs.

Key takeaway is to be decisive and proactive in investment decisions to avoid missed opportunities and low valuation traps.

Speaker advises being deliberate and quick to act when identifying promising investment opportunities.

✦

Investing based on perceived value or price can lead to regrets, as it's not a reliable indicator of success.

01:44:51

Emotional attachments to founders or investing out of pity often result in losses.

It's important to invest in optimism and the future you want to see, rather than fear.

Good numbers don't always translate to success, so focus on the overall potential and vision of the investment.

Avoid being blinded by impressive figures and make sure to consider the bigger picture.

✦

Importance of communication and speed in startup success.

01:48:09

Successful founders excel in clear and concise communication, displaying depth of understanding and clarity of thought.

Paul Graham and Y Combinator demonstrate the impact of effective communication in achieving success.

Founders who can effectively convey their vision and plans are more likely to succeed.

Moving quickly, as shown in examples like Brett rewriting maps in a weekend, is crucial in the startup world.

✦

Importance of pursuing ambitious and seemingly impossible ideas in startups.

01:50:25

YC's success in attracting top talent through bold and innovative concepts.

Founders with strong convictions in risky ideas attract talented individuals.

Successful startups like Stripe prioritize building products based on customer demand.

Google and DoorDash's success from creating products that fulfill user needs and address real-world problems, respectively.

✦

Importance of determination in startup founders for success.

01:53:30

Founders who hedge their bets or have easy outs are less likely to succeed.

Individuals with perfect resumes and no history of failure may lack resilience needed for startup challenges.

Taking early exits and selling startups for symbolic value can hinder genuine entrepreneurial growth.

Strong commitment is needed to withstand daily failures and uncertainties of being a startup founder.

✦

Importance of fast movement and quick iteration in evaluating startups.

01:59:23

Founders who act fast and show progress are more likely to succeed.

Focus on companies constantly moving forward, even with minimal revenue.

Invest in startups with potential growth rather than stagnant ones.

Asking founders about their recent accomplishments can provide insight into their speed and agility in developing their business.

✦

Importance of Clear and Concise Communication in Startup Interviews

02:01:40

YC funds companies based on a 10-minute interview, requiring clear explanation of the company's product.

Failure to clearly explain the product in 10 minutes leads to quick rejection from investors.

Overcomplicating investment decisions with complex theories is cautioned against as most investments may not work out.

Companies fail for fundamental reasons and there is a risk of talking oneself out of good deals with overthinking.

✦

Importance of learning from past mistakes in investing.

02:04:04

Risks associated with ICOs, including scams.

Negative impact of excessive funding for startups.

Significance of engaging with customers and staying grounded in reality.

Caution against relying solely on large amounts of money.

✦

Investing in what excites investors is key.

02:08:14

Relying on founders' expertise and passion is crucial for investment decisions.

Determining a founder's determination and risk-taking willingness is important for success.

Paul Graham stresses the significance of founders who are ready to face challenges head-on.

Past experiences and failures can give insight into a founder's determination and ability to overcome obstacles.

✦

Paul Graham emphasizes the importance of learning from past mistakes and the complexity of being an investor.

02:12:31

Graham discourages founders from pursuing their ideas without considering past experiences.

Contradictory advice is given on leveraging past experiences as an investor.

Being a good investor is acknowledged as a challenge, with an emphasis on continuous learning.

The segment concludes with gratitude towards Paul Graham for his insights and a transition to perspectives on investing from outside YC.

✦

Angel investing as a form of charity and giving back through investments in startups.

02:16:21

The speaker's personal experience in angel investing, focusing on early-stage YC companies.

Reflecting on investments over 4.5 years, including a billion-dollar exit and investments in Reddit.

Investing in other successful startups with high valuations.

Viewing angel investing as an opportunity to support innovative ventures and make a positive impact.

✦

Importance of substantial investment checks for angel investors.

02:17:43

Creating a system for quick investment decisions is crucial for maximizing returns.

Acting promptly, signing paperwork swiftly, and avoiding delays in the investment process are key tips for investors.

Introducing the 'FOMO/frnd' rule to support friends' ventures with potential for success.

Efficiency in financial transactions and timely investment decisions are essential for maximizing profitable opportunities.

✦

Key highlights from demo day investing.

02:21:36

Investors should do their homework beforehand to make informed decisions quickly.

Maintaining relationships with founders post-demo day can lead to future investment opportunities.

Hyped investments on demo day may not always be the best, as crowd judgment can be flawed.

Raising funds at a high valuation is advantageous, but not always the best investment opportunity indicator.

✦

Factors to Consider in Startup Investing

02:24:50

The size of the investment check determines the impact on the startup, with larger investments leading to greater influence.

Transitioning to larger investments requires conviction and the ability to see potential success in founders, even if initial impressions are negative.

Successful investors can shape a startup's future by influencing key decisions and trajectory.

Building a strong portfolio and making strategic investments based on thorough analysis and belief in founders' potential are crucial for becoming a top-tier investor.

✦

The impact of investors on a company's direction is rare but significant.

02:28:02

YC startups are advised to pursue multiple investors to ensure beneficial partnerships.

Most YC companies are expected to fail, with only a small percentage securing follow-on funding post demo day.

Success as an investor requires hard work, diligence, research, and maintaining conviction.

Missing out on great investments can be attributed to being busy and prioritizing existing companies.

✦

Importance of equity ownership for founders after funding rounds.

02:32:29

Cleaning up cap tables and addressing harmful setups with previous investors.

Challenges and complexities of acquisitions in startups.

Difficulty for startup founders to be employable and the necessity of intellectual rigor in decision-making processes.

✦

Importance of Confidence and Networking in Startups

02:35:25

Overanalysis can lead to diminishing returns in the startup process.

Raising large amounts of money is crucial in the current startup landscape.

Y Combinator's open application process and focus on talented individuals contribute to their success.

Internal evaluation at YC and the impact of the summer 2012 batch on the organization are also discussed.

✦

Importance of Change and Progress in Companies

02:39:01

Implementation of a program to assist companies in raising Series A funding and focusing on progress.

Emphasis on maintaining relationships with alumni and learning from their experiences.

Qualities of an A-plus investor and the role of luck in investment outcomes.

Caution against relying solely on past success in investments.

00:03Hey

00:04good morning thank you we have a lot to

00:11do today so I'd like to get my way my

00:15part out of the way as quickly as

00:18possible good morning again and welcome

00:21to our second day of start-up investor

00:22school my role is a little bit more but

00:27not much more than telling everyone not

00:28to park over there so don't park over

00:30there there's other parking apparently

00:34there's a lot of parking behind 3:35

00:36there's parking here and there's parking

00:39on the street or you know there's this

00:41great services called uber and lyft they

00:44work really well too so we we had our

00:47you know startup growing pains yesterday

00:50a few things went a little bit wrong the

00:52toilets backed up of course the coffee

00:54was lukewarm and the the live stream was

01:01almost invisible maybe that was actually

01:03a feature since I was the first person

01:04talking and it got better after that

01:06I think we've corrected all those I I

01:08can at least testify to the fact that

01:10the coffee is now hot hopefully the

01:13toilets are working but I think we've

01:16got that figure it out so as a reminder

01:19can you put the the it's a reminder if

01:24you have questions out in livestream

01:27world you can tweet them to YC sis or

01:32with hashtag YC sis there's also now a

01:34slack channel for those of you who are

01:36here in person I think you've all been

01:39invited you can ask questions there's a

01:41there's a there's a slack channel for

01:42just communications between you guys and

01:45a slack channel for questions you can

01:47ask questions and then up vote those

01:48questions and we will hopefully get to

01:51some of them time time willing I will

01:54also go through all the questions

01:55afterwards and try to do a piece

01:58answering the questions that that that I

02:01can answer so there will be wine and

02:08beer on Thursday that's my big

02:10announcement yes wine and beer small

02:13amount of time

02:13for networking for you guys and I don't

02:17know how much time but I guess depends

02:19on how much wine and beery there are

02:21there are four that there was some

02:24really great feedback helpful feedback

02:26from you guys probably the biggest thing

02:28everyone said is point we'd really like

02:30to have more community in and we'd

02:32really like to be able to network mark

02:34and a few others sent me more detailed

02:36information about how we can do a better

02:38job of helping you all network we get

02:41that so so far we have a slack Channel

02:44and we'll think about that I don't know

02:47how much progress how much change we'll

02:50make during this version of start-up

02:53investor school but we really appreciate

02:55that feedback and we obviously take it

02:57really seriously I will point out as Sam

03:01said yesterday that one of the worst

03:04things you can do as an investor is to

03:06be sheep don't follow other investors

03:09the best investment decisions you'll

03:11make are the ones that other people

03:13aren't making like you know when people

03:16come by with really stupid ideas like

03:18you know having air beds in uh in

03:21someone's home after a conference stupid

03:24idea right no one's going to invest in

03:25that one except for you and then you'll

03:27make a billion dollars and then you can

03:28laugh so we covered a little bit about

03:35you know Sam's introduction and then a

03:37lot more about safes and and and how

03:40people do startup investing we're gonna

03:43cover moral today on the how so I'll get

03:45back to that in a sec just a quick word

03:47on on equities versus safes it's a very

03:52complex on the surface it seems like a

03:54simple topic is you heard yesterday it's

03:56not actually rather complex why would

03:58you do a safe well because it's simple

03:59it's easy it's fast and it's cheap it's

04:04better for founder's but there's a

04:06little hair we admit that it's sometimes

04:09hard to know what happens with the

04:11dilution there's tools there angel calc

04:13is linked on the site but we'll also put

04:16up I don't have it up yet but we will

04:18put up a spreadsheet if for those of you

04:20who are more comfortable with old

04:22fashioned tools and we and you'll be

04:25able to model cap tables and conversions

04:27it's a weird

04:28conversion it's circular and so yeah you

04:30know it's it's it's kind of bizarre but

04:32we actually do have a spreadsheet that

04:33helps you figure that out

04:36so dilutional can be a little weird to

04:38understand and it is important to

04:40understand it all four founders and

04:42obviously for investors as well okay so

04:46with that we're going to get to the top

04:48today and I am actually really excited

04:50myself to to listen today because

04:52hopefully I'm going to learn something

04:53about how to be a better investor

04:55because I have made many mistakes and

04:59you guys want to corner me later I can

05:01tell you about a few dozen mistakes that

05:03I have made so the topic really today is

05:06overall how to make smart investing

05:09decisions how do you do that well it's

05:14simple all you have to do is make

05:17correct predictions about the future

05:18easy right well the way you start off

05:23deciding whether to invest is you find

05:26companies you meet you you want to you

05:28you think you're interested in and meet

05:30with them so our very first presenter is

05:32my my friend and partner Dalton Caldwell

05:34who is the founder of a couple of

05:37companies imeem in app net he's been a

05:40founder YC a partner YC for four years

05:44now he knows a lot about many things he

05:48my favorite quote from Dalton because

05:52it's one of the few I could find but

05:53it's a good one is if someone tells a

05:55coherent story with the beginning middle

05:57and end explaining what their product is

05:59who wants it

06:00what's it does just that

06:04so here's Dalton Caldwell to talk about

06:07founder meetings thank you hi how's it

06:15goin so I'm going to be talking about

06:18founder meetings and process so this is

06:21the we're gonna break down how you think

06:23about making investments and how

06:25tactically to do it and we have lots of

06:27examples of you know maybe not the best

06:31approach the naive approach we'll talk

06:32about those so so let's get into it

06:35let's talk about the first principles

06:38everyone needs a process even if your

06:41process

06:42is I have no process that I've never

06:43done this before and I don't know what

06:45I'm doing that is in fact a process I

06:47would suggest so I would encourage you

06:49and what we're gonna talk about over the

06:51next few slides is to think about how

06:53you make a simple simple simple process

06:55for yourself just to get started with on

06:57how you make investment decisions right

06:59how you choose who to invest in how much

07:02to invest all this good stuff it's it's

07:04good to have the process it's good to

07:06have some sense of what your process

07:07funnel is and I'll talk about what that

07:09means in a second and I would argue one

07:12of the most important parts of a process

07:14is the face-to-face meeting the

07:16face-to-face meeting is pretty much

07:17where everyone that's done a lot of

07:20investing that's that's the meat and

07:22potatoes of how you tend to make

07:24investment decisions you do a bunch of

07:26qualification and then the face-to-face

07:28meetings are where you decide whether

07:30you're actually going to invest or not

07:31so we'll talk a bit about face to face

07:33meetings as well okay so here's a very

07:37basic process funnel it's just it's just

07:39like a sales funnel right you're gonna

07:42have some leads this is people that you

07:43might want to invest in it's maybe

07:45things that you read in the press it's

07:47people you see at demo day you know very

07:49straightforward

07:50you have intros these are folks that you

07:52have actually have some introduction to

07:54and you have some exposure to the

07:55company you do some qualification you

07:58know for instance is this even in an

08:00industry that I'm interested in or is

08:03this something that I'm excited about

08:04funding does this fit with whatever

08:06kinds of companies I said to myself that

08:08I wanted to fund so that's some very

08:10basic qualification then you have some

08:12decision-making process which is how do

08:14I decide whether I'm a yes or a No

08:16which is actually quite tricky and then

08:18finally the last bit is actually making

08:20the investment and and closing the deal

08:22right so again very straightforward just

08:24like a sales a sales funnel if you've

08:26done sales before but it's worth

08:28thinking about your investment process

08:29this way because again if you're not if

08:31what you're doing is saying well I don't

08:32know I'm gonna take some meetings and

08:34you know maybe and you have a very

08:36wishy-washy approach you you're probably

08:39not gonna make optimal investment

08:41decisions so here's an example of a

08:45process funnel the first thing is

08:47actually good to think about what your

08:48budget is I don't know if other folks

08:50have already talked about this or will

08:52talk about this but if you don't know

08:54how much

08:55you want to invest in what your budget

08:56is you're probably gonna be making

08:58suboptimal decisions so it's good to

09:00think here's how much I'm willing to

09:02invest across a bunch of startups

09:04beforehand versus being like well you

09:07know I have some money saved away and I

09:09was thinking about maybe doing something

09:10else with it but I'm gonna meet with

09:11some startups and maybe if three or four

09:13of them can convince me it's good then

09:14I'll invest in them that's a really

09:17tricky thing to do if that's the way you

09:19think about it because you're gonna end

09:20up negotiating against yourself and

09:22there's a good chance she'll end up in

09:23this wishy-washy maybe land and

09:25wishy-washy maybe land is just not a

09:28great place to be as an investor so say

09:31you you decide okay I have a 500k budget

09:34per year that I'm going to allocate to

09:36this asset class and I've talked to my

09:38wealth manager or whatever and

09:39everyone's on board with this I've

09:40talked to my significant other and this

09:42makes sense of to make this financial

09:44decision and so the way I'm going to

09:46stage out this is do a certain number of

09:48investments you know if you're gonna do

09:50it off YC doing it you can it's pretty

09:51straightforward you show up to demo day

09:52and you pick the five companies you

09:54would want to invest in but if you don't

09:56want to do it through YC demo day you

09:57want to allocate it in other ways put

09:59that on a calendar and then think about

10:02what is your the pass rate of your

10:03process funnel going to be for instance

10:05in this case that's about picking five

10:10out of your favorite twenty right so you

10:12probably don't want to meet with a

10:14hundred and fifty companies if you're

10:15only going to be making five investments

10:17probably not a good use of your time or

10:20the company's time so you want to do a

10:21little bit more on the qualification

10:23step on the other hand if you want to

10:25make five investments and you only meet

10:26with five companies probably you're not

10:28gonna be making optimal investment

10:29decisions so I would think a little bit

10:31I'd work backwards from what your

10:33financial commitment to making

10:36investments are to how you decide how

10:39many leads to qualify how many meetings

10:40to actually do still with me all right

10:45so let's talk about how you actually

10:46make a decision once you've gone through

10:48this this super basic funnel bit the

10:52most important thing is to have a

10:54process in your own mind about how you

10:56will make decisions you need to

10:58negotiate with yourself of what does it

11:00mean to make the decision to actually

11:02write the check right what what is my

11:04burden of proof to be convinced by the

11:07founder that I want to invest in their

11:08company

11:09there's some criteria that you should

11:11decide ahead of time and again it's good

11:14to actually think about these things

11:15versus ending up in this wishy-washy

11:17land where you're doing meetings you

11:18don't even know what you're looking for

11:19you're not even sure you also want to

11:23think about how many meetings or

11:24interactions it will take for you to end

11:26up with a yes or no something that we

11:29see a lot as an anti-pattern

11:31in investor behavior is folks that just

11:33do meeting after a meeting after meeting

11:35after meeting and don't ever make a

11:38decision and that's actually worse for

11:40founders than just saying no right the

11:42the investor that just wastes a ton of

11:45time and feels like they're just on the

11:48edge but never say yes that's very hard

11:52for a founder to deal with that and so

11:53it's actually better off just to figure

11:55out what your process is and if you're

11:56maybe that's that's probably no tell

11:59them no and move along that's a much

12:00better way to run a process like this

12:02the other thing that sometimes happen is

12:04someone will say yes but not actually

12:07Sadie and mouth are going to commit or

12:09they will say yes and then change their

12:10mind and please do not do that this is

12:14this is very important stuff and you

12:17know if you're new maybe you're not used

12:19to making decisions but once you make

12:20that decision that you say yes and you

12:22commit you are fully committed and

12:24trying to back out of the deal after

12:26committing is a huge faux pas and will

12:29you know have far-reaching negative

12:32reputational effects so once you reach

12:35this decision you're in and that's that

12:39so let's talk about what the criteria

12:41are to make investments it's really good

12:45if everyone has in different investment

12:48criteria that's really excellent we want

12:51everyone to have different investment

12:54criteria otherwise what's the point of

12:56having a bunch of investors that just be

12:57there just be a computer that does the

12:59math you feed in the four inputs and

13:01boom that's a yes or no and then the

13:03money goes in right this is an example

13:05of sort of a wisdom of crowds type thing

13:07where a bunch of people with different

13:10criteria are much more likely to find

13:12really interesting outlier companies and

13:15generate great returns versus if

13:17everyone has precisely the same criteria

13:19so what some examples of criteria the

13:22most

13:22straightforward one is the team the team

13:26is pretty important too I see that's

13:27definitely part of our investment

13:28criteria but you can make your own

13:30decision about just how important the

13:32team is and what does that mean how

13:34important is it that there are really

13:36strong programmers on the team how

13:38important is it that they have relevant

13:40experience in the industry they're in

13:41how important is it that you have some

13:44touch points that someone else you know

13:46knows them and about fruit pouches for

13:48them so it's a number of different ways

13:49that you can create in your own personal

13:51process different criteria around team

13:53market size is pretty important to a lot

13:56of folks for other folks marca size

13:58doesn't matter who cares because they'll

14:00figure it out later

14:00right if you did a market size on the

14:05original air B&B thing it'd be very hard

14:08to determine with the market of air beds

14:09were and you would probably say no if

14:11you're purely looking at market size

14:13similarly something like uber the the

14:15market size of people Colleen black cars

14:17was very very small at the time and so

14:19you could have easily you know just

14:21qualified that just on that criteria

14:23alone traction there's some investors

14:26that say I invest when there's no

14:27traction there's some investors that

14:28invest lots of traction so think about

14:30where you come in on the on the traction

14:32criteria the other thing is that a lot

14:35of folks decide no on investments if

14:37they don't have the relevant expertise

14:39we have a number of bio companies or

14:42hard tech companies at demo day and a

14:43lot of folks just hard pass on all of

14:45them

14:46because they don't have the relevant

14:47expertise and that's actually okay

14:49but it's good for you to know am I

14:51willing to invest in something that I

14:52have absolutely no background in or am I

14:56just gonna stay away from that and stick

14:57to what I know it's good if everyone has

15:00different ideas around that but it's

15:01worth thinking about beforehand how much

15:03you feeling like an expert in the field

15:04matters and then finally the last bit of

15:07investment terms

15:08some folks say oh I only pay very low

15:11prices

15:12some folks require certain amounts of

15:14structure and the deal or certain

15:16ownership goals and all the other good

15:17stuff and that's okay if that's what

15:19your actual model is but if you have no

15:22idea here it's worth thinking about a

15:24little bit how much the actual terms

15:27matter what often happens I mean you

15:32already heard groupthink you'll hear a

15:33lot of the sales again is

15:36the people's actual investment criteria

15:37is the thing that everyone else talks

15:39about and seems to think is gonna work

15:41is the thing they want to invest in and

15:43I would again suggest that this is not

15:45the optimal way to make investment

15:47decisions we see a lot so the other

15:53thing that's not great about groupthink

15:54just add a little bit more color on that

15:57is it creates non optimal returns

16:01everyone will just try to plow into the

16:04same deal and the company will end up

16:05being over funded if it's perceived by

16:07everyone if it's everyone's criteria and

16:10it's actually not super great for the

16:12company if it gets over funded investors

16:14tend a little get a little bit grouchy

16:16if they can't get into the deal and they

16:18all want to invest in it and as Jeff

16:22just mentioned really good investments

16:24are often contrarian or unfashionable or

16:27somehow are deeply unappealing to

16:29everybody else right those are the

16:31really good ones is that you see

16:32something that other folks don't and

16:34that that the fact that it's deeply

16:37unappealing is what creates such a great

16:39opportunity for you

16:40and so again why am i spending all the

16:42time bringing this up it's worth

16:44thinking about what your process is and

16:46knowing what it is versus having your

16:48process be I don't know I'm gonna go ask

16:5010 people what they think is good and

16:51whatever they what's ever on their list

16:53of what they want to invest in it's

16:54gonna be on my list too and I'm gonna do

16:56that for everybody and then end up with

16:57this like meta group think list that's

16:59how a lot of people from what I can tell

17:01do it and I would not recommend that

17:07something super important in making

17:09investments is having personal

17:11conviction you have to really believe to

17:17make this kind of bet you know you're

17:19putting the money in and you're probably

17:21never getting it back there is no undo

17:24button on making an investment and if

17:28you do not have the personal conviction

17:31and even when you say yes it's sort of

17:34half-hearted you're going to have a very

17:36hard time as an investor so one thing

17:40that we hear a lot of especially for

17:42folks that haven't done much of this is

17:43they say okay I'm in once you go find

17:46the rest of the round and this is the

17:49cheapest

17:49of cheap shots that you can possibly do

17:51because what you're actually saying is I

17:54would like an option that's guaranteed

17:56in year-round but I do not believe you

18:00can actually raise it if you prove me

18:03wrong and you raise it and all the other

18:05investors invest then I'm in and I can

18:09understand why from the perspective of

18:10an investor this feels like a super

18:12clever like ninja move but holy cow is

18:17this not beloved by founders and not

18:21great from a reputational perspective

18:23right these are the folks these are the

18:26Fairweather friends these are the folks

18:27that didn't actually believe in you and

18:29all they want is the right to get in if

18:32the deal happens to be hot because

18:34everyone else invests in it right and so

18:36perhaps you've said things like this or

18:38perhaps this is a you know things that

18:42have happened to pass I just I wouldn't

18:44I wouldn't recommend phrasing this way I

18:46would just say the honest answer if

18:48you're in this situation which is I'm

18:50worried about the financing risk so I'm

18:53a no but let's talk later if we if more

18:58financing momentum happens because then

19:00you're being explicit that the answer is

19:01actually no and not like oh yeah I'm in

19:03just go get everyone up just go raise

19:05two million dollars and I'll be the last

19:06check-in right that is not a great move

19:10and one other thing that's kind of

19:15interesting if you think about investor

19:16mentality is you have to be willing to

19:20look stupid and be wrong

19:21on these things if the only investments

19:27you make are ones that are super

19:28defensible and makes sense to everyone

19:30and that could never be made fun of

19:31because that's just a fantastic business

19:33you're gonna be missing out on a lot of

19:36investments and by having the personal

19:38conviction that you know why you're

19:39investing in the company you should be

19:42okay with the fact that people are like

19:44oh well what companies be invested in

19:45and they're like wait you've invested in

19:46the airbed company why don't they tell

19:49you like why did you invest in the

19:50airbed company right you have to be

19:52willing to take that potential

19:54embarrassment that you're like yeah I

19:57did invest on the era bedded company and

19:59and feel good about it and so this is

20:02one of the reasons why conviction is so

20:03important

20:03versus just creating a portfolio of

20:05things that you think seem like that

20:10will make you look good from a

20:11reputational perspective so in terms of

20:16some anti patterns on decision-making

20:17that we see a lot one of them is just

20:20going really really slow disappearing

20:22for weeks not responding to emails not

20:24following up not great

20:27so I mean another anti-pattern is you're

20:30not really sure whether invest or not so

20:31you ask them to like meet your friend

20:33like hey meet my friend and you can keep

20:36doing this over and over and over again

20:37like oh me my other friend and that's a

20:40way to sort of defer making a

20:41decision-making process

20:42that's not not great the other thing is

20:45flip-flopping were you saying yes and

20:47you're like oh actually how about no or

20:50like how about you needyou this other

20:51thing and you're you're sort of moving

20:52the goalposts over and over again as I

20:59said a second ago the way you should

21:01think about is if you're not a yes you

21:04are no and you want to stay out of this

21:06middle flip-flopping I'm not really sure

21:10land and that's where you're gonna feel

21:12most of the time I know that's where I

21:14am most of the time when I make any

21:15investment decisions is you're just kind

21:17of in this like oh yeah this is maybe

21:18good and you're you want any kind of

21:21signal you can to get out of that and

21:23one of the piece of advice we tell

21:25founders run fund raising because they

21:27get confused so much by people see me

21:28interested in their company and not

21:30investing we tell the founders if

21:31they're not saying yes and giving you

21:33money it's a no because so many founders

21:36that we meet with when we ask them you

21:37know how it's going or how fun reason is

21:39going they say well there's a lot of

21:40interest okay well how many people have

21:45written checks well they're very excited

21:49they seem to really like the business

21:51and that is all the recipe for a failed

21:55fundraise is a lot of people telling you

21:57how much they like your business and how

21:58like exciting it is to talk to you if no

22:01one is writing checks it means it's not

22:02going well and so from the flip side

22:04from your side of the table if you're

22:06just meeting with a lot of folks I mean

22:07very excited and doing a ton of meetings

22:09but never actually saying yes you're you

22:11are telling them no whether you realize

22:12it or not right and then in terms of the

22:16actual meetings the best way to get the

22:17conviction is just to do meetings in

22:19person versus reading a deck or asking

22:22other people what they think so let's

22:24talk about medians very basic but just

22:32scheduling meetings in a non painful way

22:34will put you ahead of the pack from a

22:36lot of other angel investors being on

22:40time and picking a convenient location

22:41will put you ahead of the pack versus

22:43most angel investors I don't know why

22:45this is so I would just suggest part of

22:48being founder friendly and getting a

22:49good reputation it's just being easy to

22:51work with and not coming in across like

22:53someone that's just like thinks they're

22:56super awesome and important all the time

22:58and wants to just like rub it in the

23:00founders face how important they are

23:01right so this is like very basic stuff

23:03but I can't stress enough that doing

23:06these is definitely worth doing if you

23:08if you want to have a good reputation

23:09has a good investor or someone people

23:11want to work with in terms of things to

23:15ask in meetings it's always good to

23:16start from the basics to this day this

23:18is how we do YC interviews and we make

23:20all of our investment decisions is we

23:22ask we always start with the basics what

23:26does your company do who's on the team

23:28what progress have you made

23:30you know how much have you raised what

23:33terms you can get really complicated and

23:37complex on what you think you should ask

23:39and maybe that's okay at the end of the

23:40meeting but I would suggest always start

23:43in these meetings with first principles

23:44questions and making sure you understand

23:46the basics because it's not maybe you

23:49already saw their deck or maybe you

23:50already read about the company it's not

23:51necessarily about learning what you

23:55didn't already know it's about hearing

23:57the founder tell their own story in

23:58their own words and that's such a good

24:01reason to start from these first

24:02principles is you sort of want to forget

24:04everything you know and just hear the

24:05founders to tell their own story right

24:07and so this is how I'd always suggest

24:09starting a meeting is super basic

24:12questions and then only at the end do we

24:14get into advanced complex mode on the

24:18business if you want to do follow-up

24:22meetings say you're not yes or no after

24:24the first meeting and you want more

24:25information dig deep on the things that

24:29would give you either conviction to say

24:30yes or no

24:31don't waste time rehashing irrelevant

24:33stuff and one thing to look for in your

24:36own gut is if you feel more or less

24:37convinced the more you talk to the

24:38founder because it could be you hear

24:40about an idea you see their demo day

24:41pitch and it seems great and you're a

24:43yes and the more you talk to them the

24:44more you're getting lukewarm that is not

24:46a good sign that feels like a no right

24:48but if it seems kind of like mediocre

24:51and the more you talk to them more the

24:52more excited you get that feels like

24:54it's caring towards it yes right and so

24:57that's one good thing to look for is

24:58your gut reaction and if you can't get

25:01conviction that's a no in terms of how

25:05do you evaluate was that a good meeting

25:06or not are you exciting or energized and

25:10amped up out the business and you know

25:12just feeling awesome after you talk to

25:16the founders or are you feeling kind of

25:17like weirded out about it a really

25:20important question to ask is do you

25:22trust the founders Trust is super

25:24important and even if they're saying

25:26everything that's right but you come

25:29away with a feeling of not sure if

25:32they're telling you the truth

25:32that is definitely a red flag and a good

25:35sign that maybe you should disqualify

25:37them from your personal criteria right

25:39because it's possible for someone to say

25:41all the right things but your gut

25:42reaction is perhaps it's not all true

25:45would you want to work with their

25:46company hypothetically would you want

25:48them to be your boss can you imagine

25:49them running a really large company

25:51someday and having lots of people

25:53reporting to them that's a good criteria

25:55to think about and if things go not

25:59great which they often do are you

26:01willing to go through the hard times

26:02with these particular folks you're

26:03talking to that's a good thought

26:04experiment as well and so these are all

26:06the sorts of thought experiments that I

26:07would do after a meeting to decide if

26:09you're getting more or less conviction

26:13in terms of bad meetings one thing to

26:17think about is pretend that the investor

26:20meeting is your job interview where

26:22they're interviewing you for a job and

26:23not the other way around there's often a

26:25lot of power dynamic things of making it

26:28feel like the founder is like like an

26:33employee I guess and they are not an

26:35employee right you really want to feel

26:38like you're you're interviewing for the

26:40job of investor if they're startup and

26:42not that they're interviewing for the

26:43job of

26:45potential underling that wants your

26:47money and again just bad meetings have a

26:51lot in common a very common thing we

26:52hear a ton from founders is that

26:55investors that just look at their phone

26:56the entire meeting or otherwise act

26:58super distracted not recommended very

27:01basic but holy cow is that common that

27:03happens in a double-digit percentage of

27:05medians so just basic thing would not

27:07recommend and then the other thing is

27:09sometimes investors try to make

27:11themselves the center of the attention

27:11where they'll tell stories about how

27:13great they are and all the people they

27:14know and all these other good stuff just

27:17remember the point of the meeting is for

27:18you to listen to the founder to decide

27:20whether or not to invest you can build a

27:22rapport with them but to the extent you

27:23make the meeting about yourself I would

27:27just argue that's both counterproductive

27:29and probably not a great way to get a

27:31positive reputation among founders

27:33talking to each other another thing just

27:37to mention here is sometimes folks

27:38especially if they're new investors they

27:40want to differentiate by doing a lot of

27:42value-added services and so they'll use

27:44these meetings to just give a ton of

27:45product advice and tell the founder how

27:47they're doing everything wrong and how

27:48they need to redesign the website and

27:49like they need to change the name and

27:51they think their marketing strategy

27:52through and all this other stuff and the

27:54founder kind of has to take it because

27:56they're meeting with them and they want

27:57to raise money but man if you just blow

28:00them up with tons of advice on how to

28:01run their company for them that is not

28:05received well was what I would say also

28:09if you provide a ton of advice how their

28:11fundraising process is done and they

28:13should do it differently like oh you're

28:14raising on the wrong price and you

28:16should be doing this and you should

28:17never raise on a safe for like whatever

28:18it is that is not hopeful if you write

28:21them a check then your advice is a lot

28:23more valued but if you're just meeting

28:26with someone and it's a no and all

28:27you're doing is telling them how

28:28everything they're doing is wrong that

28:30is not value at right another thing that

28:33sometimes people do when they're trying

28:34to be value add is just do a ton of

28:36introductions like you know you do one

28:38meeting you don't invest in the company

28:39and you introduce them to like 20 people

28:41to seem really value add that is not

28:44value add that is wasting their time so

28:45the point here is you can easily do too

28:49much and that's actually worse than just

28:51being straightforward right and

28:53sometimes people are trying to

28:55differentiate themselves and create a

28:56name for themselves but this

28:57and stuff can really back for iron you

28:59if you're too heavy-handed with decision

29:03communication how do you say no what

29:07often happens with investors much like

29:10dating is they ghost the other party

29:13they they just never follow up the you

29:16never hear you do in a meeting with an

29:17investor and you know maybe the founder

29:20follows up with the investor hey how's

29:22it going what are the next steps never a

29:24response again that is not great I

29:28understand that it happens a lot but

29:30would not remit recommend it I would

29:32suggest you directly tell the founders

29:34that you will not be investing if

29:35possible if it's appropriate give them

29:37some reasons it's nice to know the

29:39reasons but you don't necessarily have

29:40to and the fact is in this business

29:44you're going to be saying no most of the

29:46time right that it just is what it is

29:48that's how the funnel works and so you

29:50need to be prepared to know how to say

29:52no to feel good about saying no and get

29:54practiced at it and make it part of the

29:55job if there's something about saying no

29:57that makes you very uncomfortable and

29:59unwilling to do angel investing I would

30:02suggest just breaking out of that habit

30:04avoidance alone is not great how to say

30:08yes say the moment you have conviction

30:11and you want to invest communicate that

30:13to them tell them how excited you are to

30:14work with them we have the handshake

30:16protocol which is covered on how to

30:18actually do this over email so there's

30:19no misunderstanding so follow that and

30:21then get the money get them the money

30:23sometimes things fall through where the

30:25investor says yes and then they ghost

30:26them for a while and the money actually

30:28never gets closed and the investor gets

30:30locked out of the round and there's a

30:31whole mess afterwards right so if you

30:33say yes and you follow the handshake

30:35protocol just invest declare victory and

30:38move on sometimes people say yes but

30:43then they introduce a bunch of weird

30:45stuff alongside of it so it's not

30:46actually yes so you know maybe if you're

30:50writing a huge check you can consider

30:52doing a term sheet or price Toronto

30:55things like that but if it's a very

30:56small amount and you're just part of a

30:58large syndicate don't make it hard it's

31:04only going to follow up the process and

31:06often the founders will just push back

31:08on all this stuff so sometimes people do

31:11especially when

31:11new angel investors they try to ask for

31:13a bunch of extra stuff not great okay so

31:18that's it for this bit I think we're

31:19gonna do an example meeting now I have a

31:22company from the current batch who I

31:26already invested in so I guess that's a

31:28little bit biased but we're going to do

31:31just an example investor meeting where

31:33I'm gonna ask some questions and once

31:36we're done with this bit then we'll do

31:37some Q&A all right so let's do it okay

31:48so we'll do the intro in the medium okay

31:54how's it going so first of all just

31:56introduce yourself and tell us a little

31:58bit about what your company does okay

32:07hey I'm Ben I'm founder of nectar and

32:11nectow does is pee in a box so we

32:15basically help people create into

32:16service providers okay so let's be super

32:23specific so you make software yep and it

32:29lets people start Internet service

32:31providers exactly and this is a little

32:35bit context it I don't have it you

32:36simultaneously run your own Internet

32:39service provider and you have the

32:42ability for anyone to create their own

32:43using your software right exactly so why

32:47we started doing this is the problem of

32:50what we see is people usually hate their

32:53internet providers right the lowest

32:55product score and the reason why is

32:59usually people live under regional

33:01monopolies right their internet is

33:04either coming from a national telecom or

33:05a small town has basically Comcast as

33:09the only option and the reason for that

33:11is two things it used to be very

33:14expensive to start an internet provider

33:16and then the second part is it's

33:18actually really hard the amount of

33:20knowledge that you need to start and

33:22turn a provider is really high and I

33:24went through this my

33:25as I was trying to start my own which is

33:28when I realized hey the cost has come

33:30down dramatically you can use wireless

33:33gears that can deliver gigabits of

33:35service so you know with like ten twenty

33:39thousand dollars you can start your own

33:41internet provider and so what you need

33:45is the knowledge which is what we

33:47provide and that's the part that can be

33:48skilled so meta point part of the reason

33:51I picked this company is this is

33:53actually kind of a complicated pitch

33:54okay

33:55this is kind of a complicated business

33:56and it's inherently complicated and so

33:58there's a way that I could immediately

34:00get distracted and start talking about I

34:02don't know hey maybe you should rename

34:04the company like I don't even know but

34:06there's a million ways that I can end up

34:08down in the weeds before really even

34:10understanding what they actually do and

34:12so what I'm going to do here is actually

34:13dig deeper and make sure that I

34:15completely comprehend what the company

34:17does and hopefully folks do here I think

34:19probably people pulled out oh it's some

34:21kind of ISP thing and you know probably

34:23little bits and pieces but I would guess

34:25based on what we've heard thus far the

34:27mechanics of what they actually do is

34:29not completely landed for everybody is

34:30that true anyway yeah okay so let's dig

34:34deeper what exactly have you what do you

34:37have today what is the current state of

34:39the company

34:40yeah so we have our own internet

34:42provider that came out of beta

34:44January 22nd and we okay so you have

34:49your own ISP right that you guys

34:50yourself started using your own software

34:52right exactly

34:54okay how many customers do you have live

34:56with that isp we have 47 okay and it

34:59where's that located that is in southern

35:02parts of San Francisco and Bayview

35:04Hunters Point

35:07okay so again meta to zoom out here's

35:09what we here's what we've learned they

35:11have they're making some kind of isp

35:13company they have a first location in

35:16san francisco they have 50 customers for

35:18it and it's live now okay that what do

35:22we learn okay this is a real thing

35:24they're live they have customers are you

35:26guys some kind of experts like how do

35:27you know how to start a nice P like we

35:30we just did ourselves we figured out all

35:32the all the bits and pieces with help

35:35from basically community around because

35:37they're actually a lot of experts darn

35:39retired they're like the original

35:41dot-com people are volunteers okay so

35:46we're gonna okay so we kind of get that

35:47so then what's the big idea like why is

35:49this gonna be a good company like yeah

35:51so what what I have found is there are

35:54actual products that are out there

35:56that's basically an internet provider in

35:59a box right so it comes with the

36:01hardware and software but what it

36:02doesn't do is actually tell you how to

36:04use it how do how to be successful with

36:06it and how to actually start a thriving

36:09Internet provider which is every part

36:12that we will be helping out people who

36:14who use our service okay cool so so to

36:17zoom out a little bit and again because

36:18I'm familiar with the company what

36:21you're saying is that it's really hard

36:24to start a new ISP right your guys are

36:26gonna be able to build you have these

36:28ISPs in a box so that anyone anywhere

36:30could start their own local ISP right

36:32okay

36:33so now here's the important part why

36:34does that matter and why is this a good

36:36idea so here's my context a bunch of

36:39people have tried to start ISPs there's

36:41Google Fiber there's web past there's a

36:42bunch of money that's been putting into

36:43this this seems like a graveyard of bad

36:46startups what the heck is special or

36:48different about what you're doing

36:49oh yeah so it's actually really cool

36:52because I'm just reaching out to the YC

36:55Alumni community a lot of people have

36:57been trying to star in ISP and that

37:00we're actually helping them out and what

37:01they have done is they've taken out

37:03loans or put up their own buildings and

37:05their own communities where they

37:07gathered their own customer and put in

37:08their own capex and all we do is become

37:11their network operating center to help

37:13them set up and okay cool so again what

37:16I pulled out of here what would I be

37:18taking my notes are what I what I would

37:19continue to be pushing on is what you're

37:21saying is the big idea is that what made

37:23all these other startup ISPs not work

37:25and is that you needed tons and tons of

37:27money to put like fiber on the ground

37:28and so you're saying by making the

37:32software to help people start ISPs

37:35locally they'll put all the money up

37:37themselves

37:37and so that you could scale very quickly

37:40well without having to raise hundreds of

37:42millions or billions of dollars to put

37:43in fiber right that's correct okay right

37:46okay and then what evidence do you have

37:49that that will actually work that you

37:51can get people to

37:52use their software use your software to

37:55start their own high speed and put up

37:56their own money yeah so evidence I have

38:00is you know we we we have two people

38:04who's signed on as franchise and you

38:07know they are and they have buildings in

38:10at least five cities that will be using

38:14us as a network operating center and

38:15will be you know powering their software

38:18the landing page their billing and

38:19customer management follow that okay

38:23cool so again to zoom out the version of

38:27this meeting that is a not great meeting

38:29is where I immediately get distracted or

38:31I immediately start asking questions and

38:32I never even understand what they really

38:34do because again like I said earlier

38:35this is a little bit complicated there's

38:36several moving parts here but I think my

38:39version of this that I can get the most

38:41excited about is I do think more aspies

38:44are good I know you you agree and an

38:46innovation of having in customers put in

38:49their own capital to create their own

38:50local ISPs it could be really big so one

38:53metaphor that I've talked about with the

38:54company in the past is in the same way

38:56that uber doesn't actually own any cars

38:59and Airbnb doesn't own any physical

39:03property you're going to be in

39:04high-speed that doesn't actually own any

39:06routers or fiber right right we we just

39:09own the rights to operate they're

39:11they're exclusive right to operate their

39:13hardware okay that sounds pretty good

39:15right so anyway so this is sort of the

39:17line of thinking that got me convinced

39:18that this is actually really interesting

39:20I can come up with a million reasons why

39:21this might not work but this does feel

39:24like in my opinion a fresh take on it

39:27and then I think last bit before we move

39:29out what's your guys why did you start

39:31the company like what was your

39:32inspiration here why are you working on

39:34this yeah so I mean my inspiration was

39:36kind of the frustration with most people

39:39with their internet is its 2017 why does

39:43you know Internet in 20 20 18 I started

39:46sorry sorry

39:49why is Internet's no problem right and

39:52then you dig deeper and you realize it's

39:53not really a problem for for large

39:55apartment buildings it's only a problem

39:57for you know rural areas or or suburbs

40:00areas where there's regional monopolies

40:03so how to combat this is to

40:05to basically increase the competition in

40:08these areas and there isn't one there

40:10isn't competition because it's it's

40:11actually really hard to start an

40:13internet provider yeah okay cool so

40:15again zooming out one more time for

40:16every by the audience this is not a

40:19company for everyone but if you're

40:21excited about ISPs and excited about

40:23taking on Comcast or you think it's the

40:26idea is you know you'd like to start

40:27your own ISP

40:28this is that's a sort of angel investor

40:30there's gonna be like wow this is

40:31exactly what I'm looking for right and

40:33so it's okay if we think about our

40:34criteria every company is not gonna see

40:37him appealing to everybody but you want

40:38to ask the right questions to know if

40:40there's some some bit of this to get

40:41really excited about and so yeah I I was

40:44convinced after talking to them and you

40:47know sounds fun

40:48so that's it for this bit let's say

40:50thanks thanks man all right so time for

41:03Q&A before I do that I'm going to

41:05announce four cars that are in the

41:09parking lot yes this is my job there is

41:13a red prius license plate five sjd one

41:15two three a green Lexus

41:21it says hand symbol you know and Ari and

41:26I don't know there's a green Lex if you

41:27have a green Lexus a black Nissan 77 X

41:31FY eight nine six that sounds like too

41:34many letters and numbers and a black

41:36Tesla of course one Tesla seven BC t-888

41:44if those are your cars please everyone

41:48close your eyes please go move them

41:50right away thank you now let's do some

41:54QA and I will also for streamers be

41:57taking questions from YC sis and from

41:59the slack Channel all right great

42:02first yeah go for it

42:21yeah that's I think the questions lease

42:24option was what do you do when you agree

42:27to invest and then you lose faith in the

42:29company so there's some subtlety here

42:31one if you agree to invest hopefully

42:33your investment closed immediately

42:35versus the commitment hanging out

42:37forever because that that can be

42:38complicated and then in terms of the

42:41actual things that happens if the way

42:43that you lose faith in the company is

42:45what you find out is there a horrible at

42:46fundraising and they're just gonna like

42:48go out of business but they were like

42:50nice about it then you lost your money

42:53congratulations welcome to angel

42:54investing you can't get your money back

42:56just because someone didn't raise some

43:00other people but if someone does

43:02something very very very bad lies

43:04there's reason there's just reason to

43:07see that you were materially or deceived

43:08about the situation then I think you

43:12want to figure it out on a case-by-case

43:13basis I mean that's that's what we do

43:15like NYC we have a founder code of

43:18ethics and we do enforce that at times

43:21and it's for extreme cases of true

43:23deception on the other hand if someone

43:25that we invest in just doesn't have a

43:29good company well that that's that's the

43:31brakes and so to the extent that you

43:35ever experience someone that goes way

43:36beyond the line of what is a true breach

43:39of trust or conduct I think you want to

43:41yeah on a case-by-case basis talk with

43:44the founders talk with lawyers and

43:46figure that out and hopefully that will

43:47be rare hopefully that's where it's

43:50pretty rare okay

43:53[Music]

44:10yep

44:12that's a great question okay so the

44:13question was how do you say no to

44:15someone if the actual answer is not you

44:19know not nice I don't know like if you

44:21just don't have faith in the people

44:23doing it so this is tricky I think you

44:25definitely want to say no and I think

44:28you want to say something like I was not

44:31convinced that this is that this is

44:34going to work

44:34given the current strategy you're not

44:37you shouldn't say I think you're a bad

44:39founder well not say that but I think

44:42there's ways that you can conveyed that

44:44you just were not convinced in an honest

44:46way because that's basically if the team

44:48cannot convince you I mean how do you

44:49say this Jeff I think this is that's

44:51actually a great and one of the hardest

44:52questions we actually struggle this with

44:55it why see all the time because

44:56sometimes we interview people and we

44:59think it's a great idea but we just

45:01don't believe in the founders and that's

45:02the last thing you want to tell someone

45:04one because you might be wrong and you

45:06know you shouldn't stab someone in the

45:08heart too because that's not a good

45:09interaction right and let's just keep in

45:13mind though there are always a million

45:16reasons not to invest in a company most

45:19companies will fail and it's a lack of

45:23your own imagination if you can't come

45:26up with a reason why you're not

45:31believing in their version of the future

45:33and that's what you should that's what

45:35you should communicate to them I think

45:36the the bottom line is every interaction

45:39with the founder should be as helpful to

45:40the founder as it possibly can be and if

45:44you can't be helpful then just don't say

45:45it but if you can if you can find some

45:48way to help them even if the real reason

45:50is not that so much that but it's still

45:52valid I would use that there's always

45:54something yeah in the back

46:06so the question was what are the

46:07expectations for asking the founder for

46:10a deck or other data before the meeting

46:11um I think it depends on a case-by-case

46:14basis but let me tell you if it's like a

46:16regular YC company at demo day for the

46:20context we're talking about I usually

46:22tell founders not to do that because

46:26it's a very quick meeting maybe maybe

46:28the founders could send a one page or a

46:30quick overview but you generally want to

46:32have the quick meeting I think it's not

46:35it doesn't do the companies I'm saying

46:37this from the founders perspective it

46:38doesn't help my company to send decks to

46:40like 100 people and then have them just

46:42never reply is that usually what happens

46:44so to the extent that the investor is

46:46interested enough to ask for that info I

46:48would be like well just get on a call

46:50with them or trying to meet them first

46:51and then present the information when

46:53you send people a ton of information

46:54without meeting them

46:55it feels very low ROI from a founder

46:59perspective but it's fine to ask for

47:02stuff and they could just say hey we

47:03don't really have that which a lot of

47:04them probably don't

47:06yeah back corner

47:23yep

47:25so the question was milestone based

47:28financings so here's what I would say

47:31for what it's worth if it was a company

47:33that I was advising and an investor

47:35suggested that I would say don't do that

47:37deal but if there's a specific reason in

47:42the company that that makes sense if

47:45this if these are the best terms that

47:47are available to the company or perhaps

47:48it really makes sense

47:49I think also if those were lots of money

47:52maybe that wouldn't make more sense but

47:54if it's a relatively small check and I

47:55would consider 50k a relatively long

47:56check and someone tried to put milestone

47:59based payments that would not be my I

48:01would not tell the company that would be

48:02my first choice and I would say maybe

48:04they could just maybe just get them to

48:06invest 25k now at the current terms and

48:08then you'll circle back with them later

48:09versus actually doing a deal that

48:11contains milestone payments does that

48:13make sense I'd rather do this simple

48:14deal now and then there's an option

48:16invest more in the future than to do a

48:17more complex deal today can I add

48:20something to no 14

48:21yeah milestone the abstract milestone

48:25based investments sound great but what

48:27you're really doing is asking result and

48:30said for an option to invest in the

48:32future and I will always tell founders

48:35take if you like the investor take the

48:38upfront money but do not give them that

48:40option all you can say is like okay

48:42that's great idea but if we raise more

48:46money in the future we'll talk to you

48:49and make no commitment that you have to

48:51talk they can commit to giving you money

48:52all they want but you do not have to

48:54commit to taking the money and so

48:56actually it's kind of a lose for the

48:57investor because they're you know you're

49:00guaranteed you get that 25 and if things

49:01go fantastically and you'll want to get

49:03more money into bad you might not get it

49:05in cool yep yeah you

49:22so the question is if you are not there

49:24in person what how does that affect your

49:27overall deal flow I think that maybe

49:32video can be okay it depends on the

49:36cheque sizes if you're writing

49:37relatively small checks and it's not a

49:38big deal to you you certainly can use

49:41video calls to get some sense of it but

49:44if if this is really your bread and

49:46butter

49:47I would suggest flying around to folks

49:51on a regular basis for maybe you know a

49:54large part of your deal flow again to

49:56pay on your focus and then it does make

49:57sense if you're a locally present

49:58somewhere you're probably gonna be very

50:00helpful to those folks anyway as well so

50:02you probably wanna do a little bit of

50:03both we do have a lot of investors that

50:05fly around the world and basically just

50:06show up at demo day and write checks and

50:08then disappear and you know there's a

50:10place for that right everyone doesn't

50:12have to do it the same way yeah there's

50:15a place for that yes

50:39yep so the question is what do you do

50:41when you have an investment that you

50:42made and two or three years in it's not

50:44dying but it's flatlining my

50:47understanding we see a lot of this is uh

50:49you just kind of got to write it with

50:51them usually these companies can turn

50:53into something big

50:54maybe someday they buy the shares back

50:57there's all these options but there's

50:59really not much you could do I would not

51:01recommend forcing them to sell or

51:03something like that if you have a

51:05company that takes as a ten year time

51:08horizon you that's kind of what you're

51:10signing up to when you make the

51:11investment even the companies that go

51:12really well we are talking about a ten

51:14year time horizon pb's about to talk and

51:16like you know a lot of the investments

51:18that he made in 2008 2007 are still

51:21hanging out there he's getting no

51:23liquidity from it so do you know that

51:25you don't have a ton of options but I've

51:26seen founders to paint on the

51:27case-by-case find a way to to take care

51:31of their investors hey Dalton let me

51:33give you a couple of online questions

51:36one is how do you approach discussion

51:40discussing competition during founder

51:42meetings and sort of a related one was

51:45how would you handle information

51:46asymmetry and the example is if you have

51:49informations that founders didn't share

51:52with you or didn't share with you or

51:55someone in the network and founders

51:56didn't share that with you okay okay so

51:59the first question was competition it's

52:01definitely good to ask about competition

52:03in a meeting but there's certainly a way

52:05to talk about it that is perceived as

52:07rude by founders and so a good thing to

52:10think about is if they're in a

52:11competitive space ask them well how are

52:13you going to to win versus other folks

52:15who are the other parties that are in

52:17the market and what are they doing well

52:18and what are they not doing well and try

52:20to aim for a very even keel conversation

52:22usually if the founder is super

52:24defensive and flips out about it that is

52:26a good red flag for you right that is a

52:29very good red flag if the person has a

52:31very hard time peaking on an even tone

52:34about competition or is unwilling to

52:35admit the competition either exists so

52:38to the degree to which you can just ask

52:39very neutral questions about it and see

52:41where they take it that's how I would

52:43get the most out of the competition

52:45question and the second question was

52:47this asymmetry one what was can you

52:51what were they saying I was reading it

52:55but it was just a little bit incoherent

52:57so um okay I think the question is if if

53:01you know stuff somehow from your network

53:04that the founder doesn't know how should

53:07you deal with that

53:09can we give an example do you have an

53:11example do you have an example you seem

53:12to know examples yeah I mean and I guess

53:16the real question is if it's not clear

53:18to you whether you're allowed to say

53:19like let's say you know another company

53:21is about to launch yeah it's going to be

53:24competitive that's working in the same

53:25space how should you deal with that yeah

53:28generally speaking I see folks do this

53:33sometimes where they have proprietary

53:34information because they work at a big

53:36company or something and they know

53:37things are about to get really good or

53:39really bad on a startup and the founders

53:40don't know I would generally keep that

53:43to myself

53:44because you can't I can think of a

53:45million ways that can go wrong but if

53:47that helps you inform your decision then

53:49that's really good that's an example of

53:51a differentiated decision-making process

53:52versus other folks but to the extent

53:55that you I think I would always advise

53:58to keep that to yourself there's if you

54:00tell the founders you try to signal it

54:01to them in some way there's so many ways

54:03that can go wrong even if you do invest

54:04or don't invest so I would try to just

54:07treat that as proprietary stuff to keep

54:09in your head and then use it to extent

54:12you can make good decisions yeah okay

54:15cool yes

54:36yep yeah what do you do if you're an

54:39investor in the position where it's

54:43unclear or basically you don't have a

54:44strong signal they're gonna raise from a

54:46bunch of other people so ideally what

54:48you do is you're honest with them and

54:50you tell them that that's what you're

54:52worried about and that's not hey I'm in

54:54once you get other people it's you which

54:56you would say I am not comfortable

54:58investing right now because the amount

55:01of capital you need my check alone will

55:02not get you there

55:04so let's brainstorm on how to eat how

55:08you can either convince me to write the

55:09check now because again an example of YC

55:11we write everyone checks without anyone

55:13else being in write so either here's my

55:15criteria for you to convince me that I

55:17I'm willing to take that risk to be the

55:19only check-in or here is when we here's

55:22the milestones that I would want to see

55:24to have a further conversation and being

55:26clear that that's basically a no until

55:28they do other stuff yeah that's also a

55:30great question in you know dalton

55:33mentioned that you know what we tell

55:35founders if an investor says i'm gonna

55:38invest i love you as soon as you get 900

55:40k of the 1 million that you're trying to

55:42raise i'm in and there's there's a

55:46there's a quandary for investors because

55:49if you have a company and you're you

55:50give them $25,000 they could spend that

55:53in a month and then die and it would be

55:55much better for you if they had a half a

55:58million dollars and then you gave them

56:00your $25,000 but here's the problem

56:03by the time they get to a half million

56:05dollars they might not take your $25,000

56:08so you have a trade off you have to

56:12decide how convinced are you in the in

56:15this company in these founders that they

56:17will be successful fund reasons that's

56:19one of the criteria will they be

56:20successful fundraising that might be

56:23your only chance to get in and it might

56:26be the ten billion dollar company that

56:27you just missed because you said i

56:29wasn't sure they were gonna raise more

56:30than 25 thousand the hard hard place to

56:34put yourself in that's why this job's

56:36hard by the way

56:55yeah but to the close you said yes and

57:00did they not close it okay and did you

57:15do the handshake protocol okay cuz okay

57:25okay

57:27so the question is what do you do

57:30there's two things here what do you do

57:31if the founder is a little bit asks for

57:36a lot I guess and the other thing is why

57:39would someone be pushy to get the check

57:40wired we definitely encourage founders

57:42to get the money wired from the investor

57:44we every there's so many sad stories

57:47that we know where someone commits to

57:48invest and then disappears

57:50we're like never actually wires the

57:51money and so we do encourage people to

57:53say once the person has committed get

57:55the money it's very very straightforward

57:57so perhaps it's a completely reasonable

58:00thing to say on the other hand you do to

58:05the extent you can front-load in your

58:06interactions with the founder to make

58:07sure you will get along with them and

58:08that their personality type fits with

58:11your personality type that's a good

58:12thing to figure out before you make the

58:14investment and so it could be there's

58:16some there's some personality types that

58:18just aren't a good fit for you that are

58:20just higher maintance okay one more

58:22question please and then we're gonna

58:24take a quick break I will do you

58:31the question is how do we iterate on our

58:34process and learn from ourselves we

58:36actually have a fairly complex process

58:38inside of YC we keep track of everything

58:41we fund we keep it the track of things

58:42we don't fund we track their progress we

58:45keep track of who does really well and

58:46who doesn't do really well and we take

58:48ample notes on everything so we do a lot

58:51of we're viewing our process and we try

58:53to get better every batch to the extent

58:56that we can I can't say oh it's just you

58:58know we throw a eye at it and the AI

59:00tells us what to invest um it's not that

59:01it's really just literally looking

59:03through decisions and looking at our

59:05notes to understand well why do we say

59:07yes or why do we say no to that and

59:08trying to pull out of that wisdom that

59:11we apply to future things and so this is

59:14the thing everyone says the team comes

59:15first everyone says that what does that

59:17mean

59:17well that's something that we learn

59:19every batch through trial and error is

59:21sometimes we invest in really goofy

59:23ideas with really great founders and we

59:25make a lot of money and sometimes we

59:27invest in really amazing seeming startup

59:29ideas with tons of traction and maybe

59:32the founders are trickier to work with

59:34or they're just aren't good at

59:35communicating their idea and we lose our

59:37money and so every batch there's these

59:40same lessons that we learn over and over

59:41and over again and I think that's how

59:43you build confidence in yourself as an

59:45investor is you get enough times to

59:46iterate and you you actually you know

59:49have to lose money you have to have some

59:51winners or losers to feel the pain so

59:54we're gonna take a quick ten minute

59:57break

59:57grab what you need but thank you very

59:59much dalton for a great session

01:00:16you

01:13:29yes yes yes if you look on the site

01:13:32today all the slides from yesterday are

01:13:33already up hello everybody

01:13:39please take your seats right away so um

01:14:09please take your seats we're gonna get

01:14:12started hello thank you

01:14:21meeting founders and making decisions is

01:14:26way more of an art than a science

01:14:29and as Dalton says unfortunately in this

01:14:34game I think you have to lose some money

01:14:37before you can really become an expert

01:14:42as much as anyone is an expert at at at

01:14:47answering the questions you need to

01:14:48answer to make an investment the the

01:14:51next person who's about to come up has

01:14:55more wisdom and knowledge about this

01:14:56than perhaps anybody I know

01:14:58before I introduce PB however first for

01:15:03the live streamers I apologize for the

01:15:06problems we're having with the live

01:15:07stream as I said this is the first time

01:15:10we've done this here in Mountain View so

01:15:11we're bound to have kinks the good news

01:15:12is that everything is going to show up

01:15:16on the site and once it shows up on the

01:15:20site it will be more immune from

01:15:24networking issues they're less likely to

01:15:26be ours and more likely to be yours at

01:15:28that point all of the slides will appear

01:15:31on the site within 24 hours after the

01:15:34session so I believe it's - all of the

01:15:36slides from yesterday are now up with

01:15:38the transcripts from yesterday at

01:15:40investor dr. Doug school.org and we'll

01:15:44do our best to to make the live stream

01:15:48work as well as possible so the next

01:15:51investor the next presenter excuse me

01:15:54he's also an investor obviously it's

01:15:55Paul Buchheit who has been a partner at

01:15:58YC with me as long as I've been here

01:16:01he's been at YC as long as anyone here I

01:16:04think it's probably seven years he's

01:16:05been hanging around YC for even loveland

01:16:08that he has also notably the inventor of

01:16:12gmail which sucks for me because I was

01:16:16part of the team that invented yahoo

01:16:17mail so we have a lot of good

01:16:19conversations

01:16:21he's still my friend I think he he also

01:16:25created a company called FriendFeed

01:16:27which he sold to Facebook he knows a lot

01:16:30about a lot I guess that's the best way

01:16:32to talk about Paul but but one of the

01:16:34things he does know a lot about is

01:16:35investing here's a quote from Paul that

01:16:40is actually an important one and I would

01:16:44think about it a lot is you think about

01:16:46investing I think the best kind of

01:16:48virality is a product that people like

01:16:52so much that they just want to tell

01:16:54people about it so here's one of the

01:16:59smartest and best investors I know in

01:17:00the world

01:17:01Paul bouquet to talk about that all

01:17:16right so thank you Jeff that was

01:17:18probably studying the expectations too

01:17:21high so as Jeff mentioned I've been

01:17:29involved in startups for a while

01:17:31probably about 20 years now I've been

01:17:35investing for the past 12 years I've

01:17:38invested in hundreds of companies I've

01:17:39seen thousands here at YC I've

01:17:42interviewed thousands of founders and so

01:17:45last year I kind of came to the

01:17:48realization that I needed to stop and

01:17:50actually like think about what I had

01:17:53done because I spent most of those years

01:17:55just making somewhat haphazard decisions

01:17:57so I spent a bunch of time trying to

01:18:00actually figure out like what are the

01:18:04patterns that gave rise the favorable

01:18:06outcomes for me and what are the

01:18:08patterns that gave rise to unfavorable

01:18:09outcomes with the idea that in the

01:18:12future I can maybe do better so really

01:18:15this is like something I more did for

01:18:18myself in my own investing process it

01:18:21may or may not work for anyone else but

01:18:24it's what what I intend to do and so the

01:18:27structure of this is I'll tell a series

01:18:29of stories first of favorable outcomes

01:18:31things that went good for me and

01:18:34and some unfavorable outcomes things

01:18:36that did not go good for me and then

01:18:38finally followed by some conclusions

01:18:40about you know how I plan to invest

01:18:42going forward so first there's this idea

01:18:46I'm not limiting myself to good ideas

01:18:49this actually started out as a joke

01:18:52about 20 years ago but then I kind of

01:18:54realized it was true a lot of my ideas

01:18:56are not good but it's also a really

01:19:00relevant to startups because oftentimes

01:19:02the bad ideas I mean the good ideas look

01:19:05bad and the reason for this is that if

01:19:09the idea were obviously good like the

01:19:12opportunity wouldn't exist big companies

01:19:14are not that dumb they're capable of

01:19:16executing they have lots of resources

01:19:18they have market power like if they

01:19:21thought there is this you know 10

01:19:22billion dollar business sitting there

01:19:24they would just go do it themselves so

01:19:26necessarily for it to be a good startup

01:19:29it kind of has to be something that

01:19:31inside of a big company would get shot

01:19:33down for being you know stupid or

01:19:36unimportant and actually the example I

01:19:38like the best is this company I don't

01:19:42know if who recognizes that logo that's

01:19:44the original Google logo when Google as

01:19:47a research project at Stanford called

01:19:49backrub it's Larry page's hand in a

01:19:52flatbed scanner and so you know Google

01:19:56started out as this research project at

01:19:58Stanford Larry and Sergey were PhD

01:20:01students there and they actually wanted

01:20:03to continue being PhD students and like

01:20:06finish their degree so they went off and

01:20:08tried to sell Google to one of the big

01:20:11internet companies at the time so Yahoo

01:20:13excite Infoseek they made the rounds to

01:20:17all these companies they wanted a

01:20:18million dollars for Google fortunately

01:20:22everyone said no no what no one thought

01:20:25it was worth a million dollars they

01:20:28thought search was unimportant they

01:20:30thought it was just like a commodity

01:20:31sort of a flavor of the month thing

01:20:33they're like oh you're hot now but next

01:20:35month it'll be you know some other

01:20:37startup and we'll just hop from one to

01:20:39the next so again like if if this

01:20:42opportunity were obvious Google wouldn't

01:20:45exist

01:20:46so necessarily it has to look

01:20:47kind of bad and so I'll start my story

01:20:51at Google and the reason here is I think

01:20:55I really want to emphasize the absolute

01:20:57importance in this game of being

01:21:00extremely lucky so the good news is

01:21:04you're all accredited investors

01:21:06supposedly that means you're already

01:21:08among the luckiest people on earth but I

01:21:11also like to think about this a lot

01:21:13because you know being a start-up

01:21:17employee is actually a lot like being an

01:21:18investor except you can really only do

01:21:21one at a time and so I've asked myself

01:21:24like how did I end up at Google like

01:21:25what what took me there in the first

01:21:28thing it's just that they actually had a

01:21:30product that I used I was a very early

01:21:33user and so I just knew about it like

01:21:37they had made something people want

01:21:38namely me they made something I want and

01:21:41the second thing the second reason is

01:21:44Linux so I was really really really into

01:21:47Linux a friend in college once put it

01:21:51shut the up not everything is about

01:21:54Linux so when I went looking for a

01:21:58start-up to go work at really my only

01:22:01criteria was that they'd be doing cool

01:22:03stuff with Linux and so that was how I

01:22:05ended up at Google is they were building

01:22:08these like clusters of Linux machines

01:22:09and like nothing could be more exciting

01:22:11than that and when I interviewed there

01:22:15the people were really smart they asked

01:22:16good questions interviewed at another

01:22:19startup where the people asked dumb

01:22:20questions and you could really tell the

01:22:22difference what I didn't know was that

01:22:25it was a good business I actually

01:22:27expected that Google would get squashed

01:22:29by like Alta Vista or something I didn't

01:22:32go in thinking like I was gonna make

01:22:34money I went in thinking I would learn

01:22:36something about startups and in fact I

01:22:39did learn some stuff which was good so I

01:22:40had a good time there Jeff mentioned

01:22:43launched Gmail but eventually it was

01:22:46kind of turning into a big company and

01:22:48I'm interested in startups so kind of

01:22:52got the itch again to get back involved

01:22:53in startups so I'm looking around and

01:22:55then in early 2005 I see this thing the

01:22:59summer founders program

01:23:01and this is this is sort of funny

01:23:03because I don't know a lot of you

01:23:05probably don't know this the very first

01:23:07batch of Y Combinator it was pitched as

01:23:09like a replacement for a summer job so

01:23:11the idea was college students instead of

01:23:13going to work at Google as an intern we

01:23:16just come to YC and start a company

01:23:20materially bad idea to most people in

01:23:232005 in fact their original lawyers they

01:23:27tried to work with refused to do the

01:23:29work this is this is terrible we're not

01:23:31going to do it

01:23:32investors all thought it was a joke

01:23:34they're like no good company is ever

01:23:37gonna come out of this so how did I end

01:23:44up here how did I end up connected to YC

01:23:47and the answer is that Paul Graham had

01:23:50written a lot of really good essays and

01:23:52so I had read a lot of his stuff he he

01:23:56was really smart I didn't know him I

01:23:58thought he was really smart I had really

01:24:00good insights and I thought this was a

01:24:02really intriguing idea not necessarily a

01:24:04good idea but like intriguing

01:24:06interesting and for me I think

01:24:10interesting kind of includes this

01:24:11element of unpredictable like if I know

01:24:14what the outcome is then there's no

01:24:15point in getting involved it's the

01:24:18things where I don't know the outcome

01:24:19where I can learn so basically I just

01:24:23cold email PG and it was like hey you

01:24:27know can I help out and so I started

01:24:30hanging out here got to know the first

01:24:34or the first batch that was in this

01:24:36building which was the winter Oh six

01:24:37batch and there was about 12 years ago I

01:24:43actually since then haven't met with him

01:24:45invested in every batch I'm a repeat

01:24:47offender but my very first angel

01:24:50investment was was in a YC company

01:24:51called wufu and here's what the internet

01:24:55thought about it for those of you who

01:24:57can't read it which is probably most of

01:24:59them person says is anyone keeping a

01:25:01list of all these new Y Combinator

01:25:03startups seems like it might be

01:25:06entertaining a year from now after all

01:25:07the hype has died down to go back and

01:25:09look at it I mean sure it seems like

01:25:11it's written in Python and it uses XML

01:25:13HTTP requests as we

01:25:14confuse with this stuff like I have a

01:25:16business plan and my product satisfies a

01:25:19demand that consumers actually have and

01:25:22I like this because it's both kind of

01:25:24like making fun of YC and wufu and it

01:25:27was very characteristic of the thinking

01:25:31at that time I mean in fact you know

01:25:35whoohoo never did IPO but my investment

01:25:38on that returned like 44 X when

01:25:41SurveyMonkey bought them and the founder

01:25:44Kevin Hale who's extremely talented

01:25:46ended up being a partner here at YC some

01:25:50years later and no doubt therefore help

01:25:54earn me more money hi by helping our

01:25:58startups so you know that there's both

01:26:01an immediate return and then there's

01:26:02like the long-term return the following

01:26:05year I invested in this YC company it's

01:26:08called justin.tv the idea was that

01:26:11Justin here was going to stick a camera

01:26:13on his head and then livestream it to

01:26:17the internet that was like the idea and

01:26:20at first I was like are you joking like

01:26:22no we're gonna do it I don't like

01:26:23awesome like because again this is like

01:26:27really unpredictable what's gonna happen

01:26:29when you start live streaming your life

01:26:3124/7 and I guarantee this is not the

01:26:34idea that would come out of Google right

01:26:37like you're not going to see Larry Page

01:26:39with a camera strapped to his head 24/7

01:26:42and Norton or should it come out of

01:26:44Google so again this was just like an

01:26:48unpredictable thing and in fact the

01:26:50company struggled for quite a while

01:26:52which I mentioned because someone asked

01:26:56earlier Dalton you know what if the

01:26:57company is kind of going sideways

01:26:59should i I mean I think the implication

01:27:02was should I like kick the founders

01:27:03until they give me my money back the

01:27:05answer is no so this kind of mini they

01:27:08actually even tried to do an aqua hire

01:27:09several years in but no one would a co

01:27:12hire them because they thought they

01:27:13didn't have any talent they couldn't do

01:27:15a talent acquisition because the choirs

01:27:16thought there was no talent

01:27:20fortunately they eventually pivoted to

01:27:23twitch which was focusing on just the

01:27:27one part

01:27:28their product people were streaming all

01:27:30kinds of things on justin.tv but Emmet

01:27:33became interested in specifically video

01:27:35game streaming people were streaming

01:27:38their games which I never would have

01:27:39thought was a business that was a total

01:27:42surprise to me but that turned out to be

01:27:45a great business which they sold to

01:27:47Amazon unfortunately for a billion

01:27:49dollars it's probably worth way more

01:27:51than that right now but the other

01:27:54interesting thing I want to point out

01:27:55here is this company had four founders

01:27:57so Emmet who is the CEO of twitch is

01:28:02still the CEO of twitch at Amazon where

01:28:05it's estimated to be like a twenty

01:28:07billion dollar business at this point

01:28:09Justin Khan has started a bunch more

01:28:13startups he was here as a partner at YC

01:28:16for a couple years now he has a new

01:28:18company called atrium which if you

01:28:20invest in any of our companies going

01:28:22forward you'll probably interact with

01:28:24because they're doing kind of like the

01:28:25default legal legal provider now for YC

01:28:28companies Michael Seibel started a

01:28:31company called Socialcam which actually

01:28:36was a justin.tv spin-out sold that

01:28:38Autodesk

01:28:39for 60 million and then became a YC

01:28:42partner and actually he's now the CEO of

01:28:44Y Combinator and finally Kyle vote

01:28:48started a company called crews but you

01:28:50may have heard of because GM bought them

01:28:52for a billion dollars

01:28:53so like that for a group of people who

01:28:55had so little talent that no one would

01:28:56talent acquire them have done some

01:28:59pretty remarkable things

01:29:00all right so eventually I wanted to

01:29:04start my own company I was like alright

01:29:06I I think I see how this is done I can

01:29:08do better so so that leads me to

01:29:12FriendFeed know when I decided to start

01:29:15a startup I actually had a lot of ideas

01:29:17probably most of them were genuinely not

01:29:20good but the one idea that was totally

01:29:24correct is that I thought the most

01:29:26important thing was having a really

01:29:27great team and so that was sort of the

01:29:31original focus is just like figuring out

01:29:33who I can get to join on to this and

01:29:35fortunately I managed to convince this

01:29:38guy Brett Taylor to co-found friend fee

01:29:41with us in brett is someone that I knew

01:29:45from Google I hadn't worked with him but

01:29:47I kind of knew him you know but we had

01:29:50chatted I knew him by reputation and the

01:29:53story I like to tell about Brett is he

01:29:56was the p.m. on maps not even or maybe

01:29:59like an APM not even an engineer and he

01:30:02was frustrated that the product was so

01:30:05slow and clunky this was before it was

01:30:08launched and so finally one weekend he

01:30:12he was just like you know what I'm just

01:30:14gonna fix it

01:30:16and so he rewrote the entire JavaScript

01:30:18front-end over a weekend made it a third

01:30:24the size in ten times as fast as what an

01:30:27entire team of developers had been

01:30:29working on for a long time this is the

01:30:32kind of person you want to invest in

01:30:33right like that is an absolutely great

01:30:36bet let's see so friend Pete generated a

01:30:42lot of buzz unfortunately it didn't

01:30:43generate a lot of growth in part because

01:30:47we ended up competing with this company

01:30:49Facebook so they they turned out to be a

01:30:54very formidable competitor I got a

01:30:57chance to meet Zach he's like really

01:30:59impressive and eventually he came to

01:31:03believe that Facebook was unbeatable not

01:31:05by us not by Google not by anyone and

01:31:09that it would therefore be like a Google

01:31:12sized success and therefore we should

01:31:15sell so we sold FriendFeed to Facebook

01:31:20for about half a percent of Facebook's

01:31:23equity which turned out to be a pretty

01:31:25good deal and so the the lesson here I

01:31:29really want to emphasize is find your

01:31:31betters like you want to find people who

01:31:34are smarter and everything more

01:31:37insightful than than than you are and I

01:31:39think Brett and and Zach and the team at

01:31:42Facebook are great examples of this like

01:31:45they were just clearly better at it than

01:31:48I am

01:31:48so that's like one of my criteria when

01:31:51I'm meeting a founder if I'm thinking

01:31:53like oh I could do this job better than

01:31:54you like

01:31:55I shouldn't fund right I only want to

01:31:57fund people who are better than I am

01:31:59right and so this is why it's not that I

01:32:06think idea and market don't matter like

01:32:08those things are of critical importance

01:32:10you're not gonna build a big company in

01:32:12a tiny market but my belief is that if

01:32:16the founders are actually better than me

01:32:18then they're gonna have better insights

01:32:20they're gonna know more than me so I can

01:32:23kind of outsource that part of the

01:32:24thinking to the founder and then I just

01:32:27have to figure out like does the founder

01:32:29believe it and so what you want to do

01:32:32here I believe is use your knowledge to

01:32:34probe to ask intelligent questions to

01:32:37see if they really do know what they're

01:32:38talking about right but but not using it

01:32:41to decide not being like oh you know I'm

01:32:43an expert on air mattresses I know

01:32:44there's no business here right the

01:32:48challenge of course is finding these

01:32:50great founders so I want to go through a

01:32:51couple more examples that I think

01:32:54highlight some traits

01:32:56the first is Meraki this is another

01:32:58early investment 2006 and when I went in

01:33:02to meet them in their little office and

01:33:07Mountain View

01:33:07they showed me around they introduced me

01:33:09to the team they showed me some of the

01:33:11hardware they were building these little

01:33:12mesh Wi-Fi boxes at the time and I was

01:33:17like wow this is really impressive like

01:33:19how much money of you guys raised and

01:33:21they're like no reason that's why we're

01:33:23talking to you right like and I was

01:33:26shocked because they had like hardware

01:33:27there they had they'd been selling these

01:33:29devices and they did it all by kind of

01:33:31like scraping together money here and

01:33:33there they got somehow a deal on this

01:33:35and a deal on that and someone lent them

01:33:37money and they were able to string the

01:33:38whole thing together for $0 which is

01:33:41exactly what I like to see and so this

01:33:45is another one I like to think about as

01:33:47an example of like what you want and

01:33:50then just kind of for laughs I'll give

01:33:52you what would be an opposite of Meraki

01:33:54I would say is juice arrow like they

01:33:59spent a hundred million dollars on their

01:34:01like juice bag squeezer without ever

01:34:04talking to a customer without ever

01:34:06trying to sell someone a bag of

01:34:09juice which by the way is what it is

01:34:11it's just a bag of juice and it squeezes

01:34:12it out it's horrible right so you want

01:34:17the opposite of G Sarah you want Meraki

01:34:19and this was Cisco bought this for 1.2

01:34:23billion which was like a seventy three

01:34:25extra turn once again they sold too

01:34:27early that company's worth ten twenty

01:34:29billion dollars now founders always sell

01:34:32too early cuz a billion dollars I make

01:34:34the same mistake I sell too early next

01:34:39up is Cruz Cruz I mentioned earlier one

01:34:42of the founders of justin.tv Kyle vote

01:34:44started this company and my favorite

01:34:48Kyle story is actually from the early

01:34:50days of Justin TV where they came to me

01:34:54with this problem I had invested and

01:34:56then they came to me that with this

01:34:57problem where they were burning up all

01:35:01of their money on streaming because it

01:35:04turned out streaming video was very

01:35:05expensive they could either use the

01:35:07streaming CD ends that were really

01:35:09expensive or they could like license

01:35:11some kind of software to run their own

01:35:12streaming CDN but that was also really

01:35:15expensive so they're like what should we

01:35:17do you know we're gonna burn all of your

01:35:19money which I don't like so I was like

01:35:22you know what this doesn't seem like a

01:35:25hard problem to me like bits go in bits

01:35:28go out like what's the big deal you

01:35:30should just write your own streaming

01:35:31media server and Kyle you know took me

01:35:36seriously he's like well okay I guess if

01:35:39you know PB he says it's possible and

01:35:41actually I told him he should be able to

01:35:42do it in an evening thank you you should

01:35:45just build this tonight launch it

01:35:46tomorrow like I don't get what's so hard

01:35:48just make it work it turns out it took

01:35:51him maybe like a whole weekend but he

01:35:54did in fact write their own streaming

01:35:56media server and this is actually the

01:35:58reason that justin.tv survived at all

01:36:00right because there was no way the

01:36:03business was viable if they were paying

01:36:05so much for streaming and and so again

01:36:08it's a founder who's willing to like do

01:36:12something that a more reasonable person

01:36:14would say is impossible like 99% of

01:36:18Engineers if I told them oh yeah you

01:36:20should replicate this other company's

01:36:21product and you should do it too

01:36:22we'll just be like you're an idiot like

01:36:25you don't know what you're talking about

01:36:26it would give me a big long list of

01:36:27reasons why it's impossible but instead

01:36:30he just did it and so the crews idea

01:36:34actually seemed four years ago kind of

01:36:37in a similar boat now self-driving cars

01:36:40are really soft driving car startups are

01:36:43really hot but four years ago it

01:36:44actually seemed like an absurd idea like

01:36:48the technology is so hard

01:36:49Google has like a huge team working on

01:36:52it like there's no way like this is too

01:36:54much for a little startup there isn't

01:36:56there's no way it can work but of course

01:36:59it had Kyle invest it anyway and as

01:37:03mentioned GM bought them for like a

01:37:06billion which was about a 50 extra turn

01:37:09not too bad again probably sold too

01:37:12early this company you may or may not

01:37:16have heard of they get a lot of press

01:37:18because it's awesome they came out of YC

01:37:21two years ago they're building

01:37:23supersonic jets in ten years when you

01:37:26want to go to Tokyo you're gonna get

01:37:27there in like six hours like that's

01:37:30pretty exciting and so this is another

01:37:33great example the founder Blake he's

01:37:39actually a software guy he doesn't know

01:37:40anything about he didn't he don't have

01:37:42like an Aeronautics background or

01:37:43anything he just became determined he's

01:37:46like you know it's the future we should

01:37:47have supersonic travel he's like I'm

01:37:49just gonna do it and so he took the time

01:37:51to just go teach himself everything and

01:37:54figure out why like the Concorde it was

01:37:58such a huge failure and what was

01:38:00different now and what was so remarkable

01:38:03I remember when he was in YC is that he

01:38:06was able to very clearly explain to me

01:38:10why he was going to do this thing that

01:38:12seems really impossible but he could

01:38:15very clearly outline to me essentially

01:38:20like the three things that were wrong

01:38:22with a Concorde that he was fixing the

01:38:24three the reasons that this was actually

01:38:26a viable business in like work through

01:38:28the economics of it all and he laid out

01:38:30a very clean picture and again this is

01:38:34one of the

01:38:36of really great founders is there able

01:38:37to communicate what's a fairly complex

01:38:39idea I don't know anything about

01:38:41supersonic aircraft I'm not an expert in

01:38:43supersonic aircraft right but he's able

01:38:45to explain this to me in a way that I

01:38:48understand very easily

01:38:51he's got good insights and just absurd

01:38:53ambition just like really ambitious

01:38:55something that again people would be

01:38:57like there's no way I startup is gonna

01:38:58build a supersonic airliner I believe

01:39:02they are you know it's not yet proven

01:39:04but they're making amazing progress I

01:39:06always love to read their investor

01:39:07updates he also sends the best investor

01:39:10updates of any company I've ever

01:39:11invested in and so the other point I

01:39:14want to make here actually is don't be

01:39:16afraid to invest in things that aren't

01:39:18software if you're if you're working

01:39:20according to this philosophy that like

01:39:22you want a really great founder and the

01:39:25founder brings the expertise then you're

01:39:28able to invest in so much more and and

01:39:30we have so many great companies that are

01:39:33like in bio I think we're gonna have

01:39:36some just giant exits you know ten years

01:39:38from now and and I see every time at

01:39:42demo day cuz I work with a lot of the

01:39:43bio companies because I really like them

01:39:45I see you know at least half the

01:39:47investors just like cross it off the

01:39:49list on principle because like I don't

01:39:51know anything about supersonic aircraft

01:39:53so don't do that

01:39:55all right now as promised I will talk

01:39:58about some of the less flattering story

01:40:02ISM so in honor of the Dropbox IPO let's

01:40:07talk about Dropbox so this email again

01:40:12for those who can't read it there's me

01:40:16replying to Drew this is September 14th

01:40:202007 sorry I wasn't able to make it

01:40:22today

01:40:23are you gonna be around this weekend so

01:40:26I had actually gone to Boston to meet

01:40:30the summer 7 batch which was only like

01:40:3319 companies so it wasn't that hard

01:40:35Dhruv

01:40:37seemed really good he was definitely you

01:40:39know seemed like one of the strongest

01:40:40invest founders in the batch but you

01:40:43know I had some questions about

01:40:44competition like what are you gonna do

01:40:46about Google Drive and all that so I set

01:40:48up a meeting

01:40:49meet with him when we're back in San

01:40:51Francisco and then on the day of the

01:40:55meeting my previous meeting ran long and

01:40:58I cancelled I'm drew and I want to make

01:41:01a couple of points here one is that

01:41:03that's really shitty investor behavior

01:41:04because you're wasting the founders time

01:41:06don't do that and to karma kind of got

01:41:10me back I missed out on what would have

01:41:13been like a thousand extra turn and an

01:41:15exciting IPO because I didn't show up

01:41:19all right so I missed Airbnb I mean a

01:41:22Dropbox but what about Airbnb so here's

01:41:31Michael Seibel introducing me this was

01:41:34June 26 2008 - to his company air bed

01:41:39and breakfast and then just sort of like

01:41:41humorously four years later something

01:41:45three years later I respond I should

01:41:47have responded the thing that actually

01:41:49triggered this was that the Airbnb

01:41:51founders were like standing right here

01:41:52telling their story and I was like ah ah

01:41:54this hurts so much I can't believe I

01:41:57like missed this company in my defense I

01:42:01had my own startup at the time and I

01:42:03think if you are a start-up founder you

01:42:04need to give your own company absolute

01:42:06priority over angel investing the thing

01:42:09that actually makes is more painful is

01:42:12that this was just the first time this

01:42:15was before they were in YC once they're

01:42:17in YC p gu is like oh you got to talk to

01:42:20the air bean bees they're so good

01:42:21there's like the best company he was

01:42:22just constantly hyping them and

01:42:24generally if PG gives that strong of an

01:42:26endorsement just like you just invest

01:42:28I'm like cool you know I'll invest I'll

01:42:31you know I'll watch for them on angel

01:42:33day which is what you used to call demo

01:42:35day now I show up on angel day and

01:42:37there's no Airbnb

01:42:39so I email Brian and Mike hey misty guys

01:42:41today was you know hoping to chat and

01:42:44invest he's like yeah sorry we just

01:42:46signed a term sheet with Sequoia so

01:42:50again I had basically in my head decided

01:42:53to invest but then just kind of was

01:42:57laxed a days ago and and and took some

01:42:59time fortunately I was able to get in

01:43:03to a later round but at a much higher

01:43:05price but again the point I want to make

01:43:08here is that if you move slow you're

01:43:11going to get adverse selection like the

01:43:13companies that you can string along for

01:43:16months and you know give a hundred

01:43:18different meetings and like you need to

01:43:20talk to this person probably aren't

01:43:22going to be the best companies so like

01:43:24be very deliberate in your

01:43:26decision-making like do or do not right

01:43:30don't just be like yeah you know I'll

01:43:31see what happens like when you identify

01:43:34a company is being really promising as

01:43:36something you want to invest in you

01:43:39could spend like another week thinking

01:43:41about it or you could pull the trigger

01:43:43and get air BnB alright what else

01:43:50doesn't work ah a really good price

01:43:53this one I've been duped into a bunch

01:43:56where I'm like oh it's such a you know

01:43:58they're giving me a bargain like I'm

01:44:00trim today a bargain like all the

01:44:02valuations so low it's a steal

01:44:04like I'm gonna I'm getting a great deal

01:44:05I've never gotten any return that's

01:44:09something that I invested in because it

01:44:11was a good deal they're really literally

01:44:14is no such thing as value investing in

01:44:16startups as as much as it seems like

01:44:18there should be every time I've done

01:44:21this it's been a mistake

01:44:23another mistake not investing because of

01:44:27price and clearly there must be some

01:44:31limit at which this isn't true but I've

01:44:33never encountered it any time I've been

01:44:35like excited about something but then

01:44:39there's like ah the price is so high

01:44:41yeah you know I'll invest in something

01:44:44else I've always regretted it like so

01:44:47now actually in my head I kind of turn

01:44:49around the rule I'm like if I'm

01:44:51dissuaded by their price I should

01:44:53probably invest more I just need to

01:44:57write a larger check this one is

01:45:02probably kind of obvious I make this

01:45:05mistake a lot because I work with the

01:45:06founders I get emotionally attached and

01:45:09I just want to help them out they seem

01:45:11helpless

01:45:13if you're investing out of pity but is

01:45:17also have never made any money always

01:45:22turned out bad because again like the

01:45:24really great founders just are so

01:45:26formidable you know someone like like

01:45:28Blake get boom it's just sort of like a

01:45:31force of nature like he's somehow just

01:45:33gonna will this thing into existence the

01:45:35people who come to me with like a sob

01:45:37story oh no one wants to invest maybe if

01:45:39you write a check they will like I

01:45:41haven't made anything so I'm gonna try

01:45:43to keep myself for making this mistake

01:45:45I'll probably do it a little bit more

01:45:48cynical ideas this one is something

01:45:53where I'm actually not really that

01:45:54excited about what they're doing and