E38: Lessons from Investing in 400 Startups with Charles Hudson of Precursor Ventures

Welcome to Investing in Startups. I'm Joe Mager. Our guest this week is Charles Hudson, managing partner and founder of Precursor Ventures. Precursor is a generalist pre seed firm based in San Francisco, but that invests in startups from all over. We talk about the importance of founder centric investing, portfolio construction and the balancing act of taking money off the table with your winners. Charles has made over 400 investments in precursor and has a lot of insights to draw upon.

Please enjoy.

Charles, thanks for coming on the show.

Thanks so much for having me.

I want to start with your recent fund, or at least the announcement for it, which is5.66 million. Congrats. It jumped out to me because Fund 5 is a stat where I've heard mentioned before that fewer than one in five firms that raise a Fund one successfully make it to a Fund five. I thought a fun place to start would be. What do you think it was that you've done along the way that allowed you to get to fund five and be that one out of five that made it?

Yeah, I mean, I think our LPs probably could be best positioned to answer this question. I can tell you the things we've tried to do. One is, I think we've tried to have our own point of view. So when I started the fund, there really wasn't much of a conversation around Pre Seed. There were a handful of folks that we're pioneering, Pre seed, Manu at K9 and Tim Connors at Pivot north and a few others. But there wasn't much of a conversation around Pre Seed. And I think we've done a good job of establishing our firm as like one of the more visible firms in pre seed. Second, I think by the time you get to fund 5, it is totally reasonable for LPs to ask, where are the results? Show me the companies that matter. Ideally, show me the money you've sent back to your LPs. I think particularly for Fund 5, that those questions were more pointed. But I think particularly in our first two funds, we have really good answers to those questions and the data very much supports our thesis that we're good at this work. Then you have to build something that has staying power. And I really tried to build a firm that's bigger than just myself. While I'm the only gp. When we started off, it was really just me. But now we have 14 people at Precursor. Not all of them on the investing side, but all of them play an important role in making sure that we're a good partner to founders, that we're A good partner to our LPs and that we run a good professional shop over here. I think all of those things have given us the right to continue to keep going and hopefully our LPs will continue to trust us for many more funds in the future.

How have you thought about scaling the firm over time? Because when people think of you're an interesting hybrid of correct me if I'm wrong, just want to make sure I'm following. You said you're the only gp, so in a sense you're a solo chip gp, but obviously you're not in the sense of like I am also a solo gp, but it's me and the dog, not me and you know, 13, 14 other people.

It's been interesting from the beginning. I felt like I wanted to invest in kind of 30 or 40 companies a year. Previous to Precursor, when I was at Uncork, I just felt like there were a lot of great founders I met that were at that pre idea stage and that or idea stage pre traction and I wanted to work with them and I felt like we could handle more volume. What I realized is we were gonna have to design a set of systems that would enable the firm to scale. So for the last probably six or seven years, I've worked with a coach who's helped me build out systems which are a mix of people powered systems and technology powered systems that enable us to stay on top of an ever growing portfolio. So the interesting thing, Joe, is I go talk to LPs and they're like, well, we're used to the single GP and a dog and we're used to the person who starts out solo and brings on other partners. What we haven't seen as much as the person who's the single gp, but has built an organization and a firm around them. So there aren't unfortunately a lot of great blueprints for how to do this. We've kind of made up most of this on our own, but I will say it really works for me. I've got a core team of five people that work very closely with me to help me stay on top of email and founder to do's and due diligence in everything that I have going on. The size of our portfolio and you know, we have five funds plus an opportunity fund. We have really serious audit and reporting requirements to our LPs. So we've gone from a finance team of zero people to a finance team of three people to really manage that load and that demand. And we've also added someone to help out with investor relations because as the number of LPs in the fund has grown, we want to make sure we give them great service. So we've added an IR person too. So at every step, I've tended to add people to take things off my plate and to give those things their own proper and better owner. I don't know. At 14, I feel like we've got most of the bases covered.

I want to come back to the Opportunity Fund. I feel like that's. I'm curious to learn more there, but I'd like to know which of the five funds was the hardest to raise. And part of the reason I'm curious, I think people might jump to the first one and say, well, that's the hardest. But I know that there are different points of tension along the way for each of these raises. And I'm curious which one for you felt like the biggest struggle.

Can I say all of them, but for different reasons. I can tell you the one that was actually the most stressful was actually two. It wasn't the hardest, but it was the most stressful. And it's this kind of counterintuitive thing. With the first fund, I'm like, if for some reason I can't raise this, then precursor, like, never existed. I tried, I failed. Didn't really leave any footprints on the Internet. The firm just never launched. Once we got the first fund done, I'm like, well, now if I fail to get Fund 2 done now, I've like, truly failed because I created something and I couldn't keep it going. And as you can imagine with the pre seed fund, you don't know a whole lot about the underlying portfolio of Fund 1. By the time you go out to raise a fund two and precede. And our second fund wasn't easy because a lot of our fund one LPs weren't really equipped to do fund two. And so that one was stressful because I was like, wow, if fund two doesn't come together, there won't be a precursor anymore. And then it would feel like I created something but couldn't sustain it. And the most recent one was hard just because for the first three or four funds, I found LPs were relatively patient. They understood, hey, I'm investing in pre seed companies. These will take time to mature. I understand that I'm underwriting a longer development arc. And when we raised fund five, it was post SVB and in the midst of LPs being very, very concerned about their own liquidity and when they were going to get money back from venture. And here I am asking for the most long dated, illiquid investment possible, which is the pre seed fund. And that it was tough to square like our desire to raise capital with just where LPs were and their appetite and in some cases ability to make commitments to new funds, that made it really difficult. And 3 and 4 were. 3 and 4 were hard too, but for different reasons.

What are your views on trying to get liquidity these days? For a firm focused on pre seed?

I think there's like a good news, bad news story. I'm an optimist, so we'll start with the good news. I think earlier funds getting liquidity is pretty normalized now. I don't see most people bat an eye if an early fund wants to sell a position later in life. There are more, whether it's NASDAQ private markets or there's more infrastructure to sell private companies earlier in the life without IPO and M& A than there were before. So I think the good news is if you want to get liquidity and it's a company where there's demand, which is a big. Which is a big if. I think as a gp it's prudent to explore that and do so if you want to. The things that I think maybe are less discussed. Our LP base is a mix of foundations, family offices, fund A funds, endowments. It's a pretty heterogeneous group. They're not all of the same mind when it comes to when they want money back. Some of our LPs are like, I really want you to hold all of these things to maturity. We are not time sensitive. We're sort of scale of outcome sensitive. And we want you to build, hold and invest in the biggest, best companies possible. That's what we want you to do. I have other LPs who are like, hey, I would prefer some of my money back now, even if I know it's at the expense of longer term returns. And So I think LPs are always on this pendulum between DPI and TVPI. You know, in 2021 I had LPs who said, Hey, 5X is the new 3X. Like these SaaS companies are ripping and the markets are hot. Like 3X is no longer laudable. And now everyone's like, well you know, DPI is good. Like you should sell early. Like we like getting money back soon. I think the job of the fund manager is to hold all of those things in your head and make decisions on behalf of the best interests of all of Your investors. What I tell them is we're going to sell some things a little bit earlier than we think value maximization would dictate. Because I understand that, like, waiting 10 years to get your first distribution in a fund doesn't feel good. And as long as you and I can both agree that, like, we're doing some early selling out of a mix of caution and a desire to return money to you, that it's inevitable that there'll be some companies will look back at the end of the fund and say, gosh, instead of selling at the C, we should have held that thing to maturity. And that's okay. We'll have that conversation. And so it's my job to get that balance right. And I think historically for funds like mine, the balance was you just hold till the end. There is no conversation to now. I just don't think that's what RLP's really want. They want me constantly thinking about, should we be a buyer or a seller of this company in this round? Is this a good chance to take liquidity or should we continue to hold and so we don't sell all the time. I also will say we're not in a place where we'll never sell either.

Do you have any rules of thumb for how you're or heuristics of how you're thinking about when you might want to take some money off? What proportions?

Yeah, I think about selling 10 to 20% of these positions starting at the Series B. Because for us, usually by the time a company gets to the Series B, the valuation is appreciated meaningfully from our entry point. Usually the series Bs are led by people who have the capacity to buy secondary from earlier investors. In some cases, it's a requirement in those rounds in order to make the math, the ownership math work for those funds. We're five to seven years in and like, that feels like a good time to think about sending something back. But I wouldn't want to sell so much that if it's a really winning position that we look back and go, gosh, we sold half of that position in the B. That was a huge mistake because as I remind my LPs, like, once you sell your winners, it's really hard to go back and find another winner in that same fund. So, like, when you have the winning companies, you also want to make sure you maximize the opportunity around those. And in some cases it's not to sell. So we've had some cases where we've sold in the balance and then not sold again. For a while we've had some cases where we looked at selling in the B and didn't and sold at the C. We have some cases where we've sold shares in multiple rounds. I think each company is its own unique kind of snowflake. I'm actually quite worried in some cases that if we're not careful we'll end up selling too much of our winners too soon.

What do the conversations look like on pricing?

Yeah, yeah, I think there's sort of this spectrum on the like easiest for me to do if you think about a two by two like what's easy for me and what's easy for the founder. Pre grocer selling to the new lead in the round who wants to buy more shares is easy because the buyer is by definition already approved by the company. In often cases the company can do things to help that buyer out like swapping common for preferred. And when there's a very motivated buyer in those transactions we're typically taking a discount of anywhere from 0 to 10%. So those are very good transactions for us and the companies are usually happy because we're keeping the shares with people they know. On the flip side, if we go to a marketplace or if we look at some other type of structure that isn't selling through the new lead in the round, you've seen discounts of 20 to 40%. In some cases those are fairly hefty. Those transactions have been substantially less interesting to us. If we're taking that big of a haircut, there's gotta be just massive price appreciation for selling that position or extreme pressure from LPs to sell positions at discounts like that.

I mean a 40% haircut is another way of saying that there's 2/3 upside just to get in back to the carrying value.

Yeah, yeah.

So curious to go back to the Opportunity Fund feels very logical given pre seed focused strategy. But how do you think about that in the overarching portfolio construction?

Yeah, I should probably give you a little bit of the backstory on how that Opportunity Fund even came to exist in the first place. So when I first started the fund in 2014, my original. I think sometimes Joe, everything that's old is new again. My original vision was we're not going to have a ton of reserves in the core fund. We're going to use SPVs to do the follow ons from our best companies. And at the time the best platform for doing those SPVs was AngelList and we had a good relationship with the Angellist folks. I'm like that's cool. We'll take effectively the follow on and pro rata in our good companies. We'll put it on the platform, we'll offer it to our LPs, we'll offer it to people who also like the work that we do. And that will be the vehicle that we use to get those follow on rounds done. That worked okay. And then we had a handful of LPs who said, hey, small problem. We don't have a team that can directly underwrite investments. So if you're going to do these SPVs, just know that we can't participate in any of them because we don't have the underwriting horsepower to look at direct deals. I was like, oh well, it wasn't my intention to exclude you guys from these. I hadn't thought about that. And they said, we know, but just so you know, we don't have the ability to do that. I said, what would work for you? And they said, well, if you had an Opportunity Fund that did all this pro rata and these follow ons, we could give you money for that. And I'm like, okay, understood. And then what? I quickly realized once we started the opportunity fund was two things. One, a lot of our SPVLPs were like, well, I'm already in one pooled vehicle with you in the main fund. I don't want to be in two pooled vehicles with you. I want to be in one pooled vehicle and then cherry pick the specific companies I'm excited about. And the SPVs were a better mechanism for doing that. And they also said, your Opportunity Fund is basically Series A and B companies. I have other ways to get access to those companies. I could go invest in a Series A fund or a Series B fund and get that kind of exposure in my portfolio without going through you. And so it turned out that the set of LPs for whom our Opportunity Fund was a really great product was actually smaller than I had realized. And we ended up just doing one Opportunity Fund. We deployed the whole thing. It's going to be a good returner. I'm really happy about the companies that are there. And we went back to trying to do more of it off of the fund balance sheet. We have a few LPs who will come in direct for later stage stuff that has real traction. But it turned out that our LPs demand for the Opportunity Fund wasn't as great as I thought because they really had other ways to get access to companies like the ones we were doing out of the Opportunity Fund at Camp.

Hustle, you gave a talk about fundraising and many different topics, which I found very helpful. But one thing you said that stood out was that most of the institutional investors you talk to or a lot of established LPs, have a bias towards managers who are more concentrated, rather than taking a really diverse strategy, which you do at Precursor, which suits precede. Is that still the view you get from talking to LPs today?

You know, I will say this. Of all of the challenges we had with Fund One, I think the solo founder, solo GP thing, it just doesn't burn as hot anymore. And I don't know whether that's because of, like, Elad Gill or just more solo GP. Like, the LPs don't seem as hung up on that. The portfolio construction thing is still the issue. The more LPs I talk to some of them, it's like, philosophical. Like, they just don't believe that, like, these models can work. We don't own enough. It's too many companies to keep track of. It's just really hard for them to get comfortable with that. The flip side is, a few LPs I've talked to are like, you know what I'm trying to do? I'm like, what? They go, I'm trying to create a portfolio of 100 investments, but I'm trying to do that by investing in four managers with 25 companies in each portfolio with zero overlap. I was like, I understand. Like, so you doing a hundred companies on your own per fund, you're like, doing what I'm trying to replicate, but I'm trying to replicate it by choosing individual managers. So somebody who provides me with breadth is not valuable because I am trying to create the basket that you have on my own. And I don't want to ask him too much.

I need to justify my job.

My boss, Joe. That would never be an issue. That would never be an issue. Yeah, of course not.

Of course not.

I tell fund managers this all the time. Sometimes early in your life as a fund manager, people won't tell you the truth because you haven't been around long enough. But also, you don't know how to really get to a place where they're comfortable enough to tell you what's really going on. In the last few years, I've had a couple of LPs who've just said, like, our job is portfolio. They're like, in the same way you're constructing a portfolio of a hundred companies, we're constructing a portfolio. And, like, the thing you're doing doesn't help me with my job, which is separate from whether they think it's a good way to make money. And my friends like, well, does that make you feel better? I'm like, it neither made me feel better nor worse. It just is. Maybe you may feel a little bit better that it wasn't just that they didn't like me, but I was like, I get it. If that's. If your goal is like you want to handcraft your own portfolio construction with very little manager overlap, our strategy doesn't help you that much.

I'm a concentrated investor, I've always been. But I also appreciate there are a lot of new ways to do incredibly well as an investor. A good friend of mine who does public markets, amazing career, he's found that over the past couple of years, a lot of the institutional investors who had an affinity for concentrated managers in public markets have actually turn their back on concentrated managers because they're shifting more towards platform funds where they feel like they're getting better sharp ratios and better risk adjusted performance. And they found that in theory they like the idea of, well, we've got 10 different managers with concentrated best idea portfolios that are all uncorrelated, but in practice they would get really stressed and fussed about the ones that inevitably aren't doing well because, you know, overcycles, concentrated managers will have ups and downs. And so they just gravitated over times towards these big shops that essentially promise, look, we're not going to be the best performing fund, but we're going to have really good risk adjusted returns. And in venture we obviously have our own version of that with the big name firms that we could all name. I'm wondering if that will bleed over at some point into venture or maybe it's already happened. And there are a lot of these big platform funds. That's how people think of them, but they just don't frame it the same way.

I talked to someone who's an LP in one of those big funds and I asked them how they think about it. They go, well, there are two things that we believe we're buying. One is the ability to deploy a check of the size that we want to write into that vehicle. And he's like, there's just not that many people who can take a 1 to $400 million, 1 to $400 million check into their fund and not have it be a disproportionately large chunk of the total fund size. And this is someone who has a very, very large sovereign wealth portfolio that grows every year because of the nature of the underlying assets. They're like, so we are looking for people who can take money in large chunks. And he's also like, well, because of our kind of expected rate of return, cost of capital calculation, we are actually okay with a lower rate of return provided that there's a lower level of risk. And he like drew me a picture where I won't say what the bands were. He's like, as long as the fund is like north of 1x and below this band, anything in this band works for us. The top of the band was not 3x. And this person was like, given like the cost of capital we have and like our expected rate of return, these are like safer vehicles. Like we're betting we're not going to lose our money and we can deploy it in the chunks that matter to us. And like, he's like, this is a valuable asset. He's like, I could draw you the same chart for Blackstone and kkr. I could draw you the same chart for some of our other. I went to an event a while ago where one of the big platform fund managing partners said the history of finance, of almost every asset class in finance is you end up with this barbell of like small boutique people who do some strategy and really large scaled asset managers which actually solve a different problem for a different set of limited partners. And the middle gets attacked and hollowed out in both directions. And I think you're seeing that in venture. I think it's like right now I think it's hard to be a $4 to $500 million Series A firm because it's hard to compete for the really buzzy expensive. Right now it's AI but whatever the flavor of the month is because the really big scale people can pay up and it's hard to compete with the smaller firms because those round sizes are so small that like you can't deploy a $500 million fund 750k at a time. And so I think venture is maturing as an asset class and it'll be interesting to see if it matures in the same way as others did, which is like a handful of really big skilled platforms and a handful of really skilled artisan boutique firms and kind of a more challenging place in the middle with buyout. Then you get middle market buyout and people figure out how to make money in the middle. Like, like nature abhors a vacuum. So even if we make it hard to run a 4 to $500 million venture fund, I predict somebody will come up with a new model on how to make one of those work.

I saw the precursor was in the pre seed round for Bord. I enjoy talking to Bordeaux. Was Bord, quote unquote, alive at the point where you invested, or was that still being formulated and still an idea stage?

Oh, man. So this is my third time working with Andrew d' Souza and some of the core. I haven't worked with all of those, all of the founding team of Bord on multiple companies, but I've worked with Andrew on three. I'll never forget. Andrew and I were hanging out in, as quoted in Presidio Heights in San Francisco. We were having a cup of coffee and Andrew's like, I want to start a new company. I said, cool, where do I invest? He said, do you want to know what it is? I said, of course I want to know what it is, but I also want to invest. And this is like. Well, before, I think people were using AI as an everyday part of their workflow. This was a couple of years ago. And he had this vision in the beginning for something that was quite different. It was more of this network of fractional experts you could tap into on a regular basis. And now Bordy has turned into like an extension of my professional network, which I could tell you how you connect all the dots from where he started to where he got. But that wasn't the original vision, but I just thought Andrew was onto something. And I just got a new intro from Bordy today of someone that Bord thinks I should meet. And I try to talk to Bord once a week and tell him these are the things that are top of mind for me. Anything you can do to help me get smarter or introduce me to people who are working on these problems, consider me in. So I don't know. I've really enjoyed watching that. It's me. It's a joy of pre seed. If you get the people right and you get the general domain right, they will find their way to a good product and problem to build.

Bordy's a great example, putting tech to work within your process. But I have a quirk which is within my own CRM. When I get a deal or an intro from Bordy, I bucket it as referral because I tend to think that Bord actually knows better than most what I'm into because, like, you know, I have a weekly call with Bord and has a pretty good handle on what I'm about. You'd mentioned earlier that you use tech and people to try and scale what you're Doing in process. What does that look like on the tech side? Like, what are the core pieces that help you run faster?

We have a very intricate airtable system that we've built for managing our portfolio company data. It started off as very simple. It was started by one of my colleagues who took the unenviable task of getting us started on airtable and really built a great foundation that we've scaled up. And it's cool. Like, airtable plus MCP is pretty magical. So I have the ability through cloud desktop to query essentially all of the information we have about our portfolio companies and ask interesting questions. Probably the most fun thing I've built recently or done recently is I've made a ton. I've produced a ton of content to help our founders with, like, kind of FAQ stuff. A lot of it's video content, Joe. So people say, oh, this VC wants to get coffee, but I'm not fundraising. What should I do? I'm like, I've got a video for that. And we found this product Delphi, maybe six months ago, and we took all of my old blog posts, a ton of internal content I've made for our founders, podcasts that I've recorded, and we dumped it all into Delphi. It's about 1.1 million words. And we've created basically a digital twin of me. It's available 24 7. And it's been fascinating to watch how the founders in our portfolio use the Delphi. Like, the other day I was meeting with a portfolio company founder and the day before we met, he went on Delphi and took his agenda and his core questions and asked the digital twin of me those questions, kind of to fake, to have some sense of, like, how's Charles likely to react to this information? It's also allowed me to make some of my thinking available to people that are not in my network, but who, when I ask questions. And it's been neat just to see what people ask the digital twin of me because it's different than the questions they ask me directly. So we're continuing to tune that, but I think that's going to end up being an important extension of me. We've built a handful of tools in AI. Many of them are for, like, our own internal process automation. But I always joke around, like, Precursor kind of runs on airtable, Discord and another CRM system that we use. Like, those are kind of the core tech building blocks. And every. Almost everything else we use either writes to or reads from those systems.

400 deals. That's a Lot of signal. There's a lot of noise there, but a lot of signal over that time. What are the traits that you've started to see more? We're seeing more in signal from founders that end up working that maybe you wouldn't have realized before you had that huge sample or something you wouldn't have expected when you got started.

One of them sounds obvious, but I underestimated the power of it. Previous startup experience is actually a really good predictor at Pre Seed. And the thing I didn't fully grasp is I actually think one of the hardest things when you're doing zero to one work is you have to know what to do and you have to know how quickly to do it. And earlier in the life of Precursor, we funded a bunch of people who either came from big tech or didn't have much in the way of tech experience. Many of those people were unsuccessful, and I'd argue it was because the things that had made them successful in their previous careers just didn't translate to zero to one startup life. And it's what I call the empty room problem. It's like you walk into your office, it's an empty room. What do you do first? And at a big company, you come in and maybe your manager's like, hey Joe, here are your priorities for the week, or here's the company's priorities for the quarter. 0 to 1. You have to be the person who creates those priorities, executes against them, and has some internal compass or speedometer for how fast you're supposed to be going. And I find people who've been in really early stage startups, even if those companies weren't successful, as long as they were reasonably well run, those people generally have a good compass for speed or a good speedometer, and they understand how much work they're supposed to be getting done per unit of time. So previous startup experience is an observable thing that I try to measure before we invest. It doesn't mean if you don't have it, we won't invest. It means I ask you a different set of questions. Another kind of observable thing that I wouldn't have guessed is about half of our top performing companies were started by people who had like previous experience in the industry that they're building in, but the other half didn't have it. They were like new to the category or they were building in a category where nobody had any previous expertise because nobody had built anything in that category. And I think as a vc, it's tempting to think that, like, oh, all of the good answers for how to solve problems are going to come from people who have familiarity with the domain. And I think in regulated industries that's maybe more likely to be true because you understand the outlines of what's possible or what's legally permissible. But I also think you got to be open to the idea that outsiders have really good ideas. The third thing I'll say that I look for that turn out to be important. Most of the really successful founders in our portfolio, they stepped off of a really comfortable golden path at some point and did something risky. Risky can be defined on a personal level, on a professional level. But most of them at some point in time took a real risk. And the earlier in life they did it oftentimes the better, the higher the probability that they show up at my office wanting to do a startup. But I found that like, again, because taking risk is a big part of startup journey. And we've had some people who've gone to top schools and gone to work at safe companies and left those safe companies to go to safe graduate schools and then gone to work at other safe companies and have never really taken a risk. And I think when you take a risk, you embrace the possibility that you might fail and have to get back up. And I've backed some people where the first time they had a real setback was in the company that we funded. And not all of them rose to the occasion.

How do you think about market? You're a founder centric investor. How much does market play into your thinking?

It's such a good question. Over time, I have become much less convinced about my ability to forecast market size. So when I started the fund, we were probably like 60% weighted towards the founder, 40% weighted towards the market. And usually there's no products, though the product doesn't get weighted. Every year we get closer to being directionally focused on people. Today it's probably 80, 20 the people. And one of my LPs, I was like, well, why don't you just do it 100% the people? And I'm like, because smart people sometimes pick bad ideas. And a smart person with a bad idea and $10 million is probably okay. They have time to like, navigate towards something better. A smart person with a bad idea and a million dollars is not okay. You probably actually won't have enough time to find something better if the original idea is as bad as I think it is. And I've gone from being like, I have to love the market to I have to like, not hate it. If that makes sense. And most of our best companies, the market for the thing that they're building has turned out to be significantly larger and in some ways different than what I thought.

What's a conventional view in venture that you think is bs?

Oh man, there are many. One of the big ones that I think is BS is that every early employee at a company of consequence has some magic pixie dust. That means that those people are going to be successful. And this is what I think is like the funny paradox. When you make early stage investments, you realize the first 15 or 20 people who join a company are kind of insane. They have just like a super high risk tolerance usually or they're like really well connected to the founder and they have like belief in that person's ability and skill. Maybe because they went to school together, because they work together. But those people are not necessarily the best people you hire. They're the people with the greatest willingness to join early. And then when the company becomes successful, we kind of turn these people into these like savant genius people who have all of these secrets. And sometimes they do, but sometimes they just had the courage to go early. And they're actually not like super founders. They were just like really courageous early employees. And I think venture right now is over indexing on corporate pedigree. I always joke, I'm like, yeah, that guy got funded because he had a cup of Coffee at OpenAI and Sam Altman walked by while he was having his cup of coffee. I mean, I'm joking, but I think there are some parts of ventures that are over indexing on the intersection of employee badge number and name of company. And I'm like, just because somebody was early at that company doesn't mean they have a secret. Doesn't mean people from that company are going to follow them.

Yeah, an interesting twist with that. I think the ultimate example of qlik that became famous. You take PayPal mafia, but what's funny there is. And credit the team there for building what turned out to be a wildly, hugely successful company. But the real rabbit out of the hat was just appreciating network effects. And everybody who left who was a huge success just was a first mover to establishing a network effect in whatever vertical they went into. And congrats to them, incredibly well done. Great insight. But that feels like you can't pull that trick twice kind of move or at least by the time they went back to do it again, it would have been very difficult.

I find it very interesting. Like I worked at Google in 05 to 07. And I look at Felicis and Aydin got his start really focusing on the Google network. But it's interesting. There was like a set of people who left Google really early and who started great companies. There was also a set of people who left Google really early and just disappeared because they were very wealthy, they weren't interested in starting companies. And then there was the second boom of people who left later, like Brett Taylor, Ben Ling, people who had been there early but not like super early who turned out to be great founders at a period of time where I think some people were like, well, oh, all of the good founders at Google have left because like the, the first hundred people are like either not leaving or have retired. And I'm like, guys like entrepreneurial talent comes in all shapes and sizes at all different stages of life from all different places. And I know we want simple heuristics because you know what you can do with simple heuristics? You can write a rule and throw money at a rule. And if the rule is if first 100 of Uber then give money, that's like an easy rule to implement but doesn't mean it's good, doesn't mean it's useful. And I think there's this tension as we scale assets in this business. How do we keep the artisan viewpoint on like evaluating people as individuals with a desire to put larger and larger sums of money to work. And I feel like a lot of the tension in venture right now is some element of those two things being in conflict.

Charles, this is really fun. I enjoyed it.

This was great.

For founders out there who might have been listening, what's the best way for them to get in front of Precursor?

You can just email me, I'm just Charles Recursor VC Com.

Love it. All right, thanks again. This is super fun.

I really enjoy this. This is great.

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