Delian Asparouhov: Inside the Walls of Founders Fund: What the World Does Not See | E1183

Western Europe is going to look like a third world. The United States now has sort of stronger multi generational aristocracy than Europe has extraordinary careers. When you're a junior adventurer, do not get built sitting behind a desk in an office. Travis committed no crime. They just cornered him in a hotel room two days after his mother had passed away and convinced him to sign papers that he shouldn't have. I wish that, you know, Bill Gurley's, you know, firing of Travis was, you know, sort of talked about more publicly about how morally depraved that entire basically situation was. Service titan is actually closer to LVMH than it is to Tesla. The one liner that I sometimes like to use is people love software because, you know, sort of the marginal distribution costs are zero. Perhaps what people need to realize is also that the marginal returns are zero as well, because there is no mo.

Ready to go, Dalian. Dude, I've been so looking forward to this one. I've been a fan of the tweets for a long time. Obviously we met at Founders Fund many years ago, but thank you so much for doing this, man.

Of course. Yeah. Thanks so much for having me. Been looking forward to the conversation as well.

Now, listen, I always like to start with, like, a really soft, easy one. I think we're shaped by our past. When you reflect back on yours, what was the most maybe challenging element of your past and growing up that shaped you and how you think today most. Do you think?

I never felt like a true American when I was in the United States because of the Bulgarian heritage. And when I would go to Bulgaria, I would never feel truly Bulgarian because of the sort of time I spent in America. I remember one of the moments that I felt like I really realized sort of that this was in some ways the fundamental cause of some of the challenges I had in both countries was I went back to Bulgaria. I used to go basically every summer as a kid until I was about 13 or so. And then for the next couple years as a teenager, I had internships or math camps, et cetera, just things that kept me in the States. And then I went back when I was, I want to say, like 19 years old for maybe a month, month and a half. And I remember interacting. My cousin, who's basically like, you know, sort of my same age. Our dads are basically the same age. We, like, you know, grew up around each other all the time. And they have, like, very similar personalities, backgrounds, like so many. We both like computer science, et cetera, in some ways. If you, like, squint it's just kind of like what I would have looked like if I grew up basically, you know, sort of in Bulgaria. And I had this realization after, like, spending, you know, a couple weeks with him where I was like, oh, all these things that, like, made it very difficult for me to bother date in the States, interact in the States, things that people would get mad at me about. It's not that I'm like some special unique snowflake that like, you know, has these quirky personality traits. It's like I'm just Bulgarian. Like, I just, I look at my cousin and I just, I. I do the things that he does, and in Bulgaria, those are like, totally acceptable and normal. And when you do those same things in the States, it's like, you know, totally, you know, sort of weird and you get, you know, sort of bashed for it. And so, yeah, I feel like in some ways having this sort of like, split identity, I mean, it's not obviously, you know, anywhere near some of the personal stuff that you shared, obviously on sort of Twitter, et cetera. I feel very grate, grateful to have had a healthy, happy, etcetera, Sort of family in the grand scheme of things. But, yeah, that sort of flows through to, like, how your parents parent you, how you communicate in the home, you know, how you date, how you think about work, et cetera. And sort of having that, like, mixed identity always made me feel like I didn't really properly sort of have a. Have a home.

Do you consider yourself a Bulgarian or an American today? If you had to choose between the.

Two, you know, I think it should have flipped. Where? Post college, falling in love with Silicon Valley, getting into the technology sphere, recognizing that a lot of the people that were super successful in Silicon Valley sort of had backgrounds like mine. You know, I think in my, you know, sort of heart of hearts, at the end of day, just like, this is the greatest country on Earth and I think that, you know, people should learn from sort of this country. And I think, actually, yeah, this is a tangent, but I actually think, you know, Bulgaria also has an opportunity to be like one of the, you know, sort of best European nations, where when you look at United Kingdom, France, Spain, Germany, etc. They're all just like completely, you know, sort of falling into societal collapse, all for, you know, sort of slightly different reasons, but it comes down to a complete lack of, you know, sort of nationalism, falling into basically like, you know, sort of socialist states, constant sort of regulation, versus, if you look at sort of the Bulgaria, Romania, Poland, sort of corridor, all Those countries still believe in capitalism because they, you know, still feel the, you know, dreads of the fall of the Soviet, Soviet Union. They all believe in like engineering and mathematics as the, you know, sort of way to develop society. And so if you look at the GDP growth of Eastern Europe relative to Western Eastern is completely rocking, has way more interesting startups, is on a much more interesting trajectory. And so I think if you extrapolate this progress out for another decade, Western Europe is going to look like a third world, you know, sort of country. Eastern Europe is going to be sort of rivaling a lot of the first world sort of country.

Larry Summers said on the show that Japan is a nursing home, China is a jail and Europe is a museum. Would you agree with him?

Yes. Other than the caveat of, I think Eastern Europe is maybe sort of the only hope. Where, you know, if you look at Bulgaria in particular, one of the now largest nano satellite integrators, Endurosat is this company that basically builds like, think like sub 30 kilogram type satellites, is based in Sofia. They have now built out this like 15 story skyscraper that has as nice of facilities as we have here. And you can just feel the energy when you walk in. And by the way, the people that are working there, it's like a fourth or maybe a half of the team is like Italian, French, German, English that have escaped the like, you know, sort of socialist, like, you know, communist regimes of Western Europe to try and basically, you know, work in a country that still believes in, you know, sort of capitalism. And so I very much feel like I'm in the like, you know, sort of like Ayn Rand, you know, where is John Gault, you know, sort of version of the world When I walk there where it's like these are the brightest and best people and they're clearly, you know, sort of escaping the museums of Western Europe. Now will they want to stay in the eu? How is that going to work over the next year, sort of decade? I think what will probably happen is like, you see some of these countries actually start to leave the EU as Western Europe becomes more and more of a drag. Rather than a producer, the show's become.

More and more successful because instead of being a sycophantic child, I've actually stood up for what I believe in. I agree with you partly and I disagree with you. You cannot take away the culture, the heritage and the hospitality of Europe. My de American friends love nothing more than to come to London, to come to Paris, to come to Milan. We do culture, we do Heritage like no one else in the world. My objection to you would be that is something you can't take away. And Americans love to spend money here. That's a great thing. We can build fucking huge economies on top of that. Does that not go against your statement of kind of Europe being, or Western Europe being a third world country?

I think the moment that Europe decided to shut down and deny its aristocracy is when it started to sort of decline. I believe in sort of the Great man theory and the great family theories.

What is the Great man theory and the great family theories?

And how does that just that it's sort of the opposite of the Chinese philosophies of the individual does not matter. All that matters is the society, the state and the sort of collective, you know, the history of Europe is, you know, sort of great men. And in some ways, you know, one could argue that perhaps the, you know, sort of one of the last, you know, few great men of Europe was, you know, Napoleon. And you know, since then it's been, you know, sort of strict, you know, sort of strict decline post Napoleonic, you know, sort of wars. The, you know, sort of family theory in some ways is, you know, a subsidiary of that, which is that the, you know, sort of great, you know, cathedrals, great monuments, great movements only get built over, you know, sort of a multitude of generations. And the best way to, you know, sort of maintain that effort towards a multigenerational sort of effort comes from the sort of fundamental bloodlines. I think in some ways I would actually argue that the United States now has a sort of stronger multigenerational aristocracy than Europe has. And I think that's a contributor to some of the success we have. I think what the United States does really well is you still have the like, Vanderbilt, Rockefeller, etc. Families creating culture, creating institutions, while you also enable the next generation sort of you know, up and comers that, you know, disrupt wealth Systems, the Elite, etc. You know, part of, I think a lot of our, you know, sort of societal divisiveness right now in the United States mostly has to do with sort of the elite transfer of power from the sort of what I would call the, you know, and this is more of my wife's theory than my own, but I've definitely, you know, glommed onto it. But from the like sort of Davos elite that, you know, in some ways began in the 19 sort of 20s to now the, you know, sort of technological elite. But you'll almost certainly similar, you know, see similar trends there. If you don't think that like the, you know, sort of Vanderbilt, Rockefeller, et cetera, analogy is not going to be the Musk's, the Zuckerbergs, the, you know, sort of Bezos is that almost certainly, you know, sort of will be, you know, the case over the course of the next sort of 100 years where these, you know, sort of family lines are going to have significant impact on the shaping of our, you know, sort of future in the United States. But I think sort of Europe has completely sort of discarded that and is so vehemently against, you know, sort of that Aristotle elite in some ways from a broad political level, but not from like a societal wealth level. Right. So if you look at like the best companies in Europe, LVMH is like the epitome of aristocracy and is, you know, the biggest in some ways, you know, sort of company in Europe. And yet Europe hates, you know, sort of aristocracy at a like, you know, sort of political level versus, at least in the United States, we will admit that we, you know, are okay with having, you know, aristocracy. We don't try to pass a like, you know, 90%, you know, inheritance tax.

I mean, this I see. My mother always told me, you know, people in glass houses shouldn't throw stones. I look to your wonderful nation and I see a country with a terrible woeful health care system. I see incredible, incredible levels of homelessness, which are just devastating. I see gun crime that's out of control, where people don't want to send their kids to school and going to a mall is dangerous. I see an infrastructure which is just ripe for civil unrest. With this election and with some of the latest political things that we've seen, I'm kind of going, respectfully, who the fuck are you to judge us?

At the same time, in the first six months of 2024, Europe did not launch a single orbital rocket. You guys did not send a single kilogram of matter from the surface of the Earth into space. The United States, I probably roughly estimate 180 days. We've been launching roughly every call day and a half on average. We've probably done 130 launches in the first six months of 2024. And I think the American system, what it enables is both ends of the risk curve. We both have the downside sort of part of the risk curve where you have the homeless, the gun violence, et cetera. But we will also enable the opposite end of the risk curve. The Musks, the Vanderbilts, the Rockefellers, and in some ways, you can't get one without the other. If you want an Elon Musk type figure that can do sort of crazy things, you also have to be somewhat allowing of the other side of the crazy, which is, you know, sort of the drug addicts on the sort of streets of San Francisco. And perhaps we should get a bit better at that and not only clean it up when Xi Jinping comes and visits, but you know, in some ways maybe you don't have the Elon Musk's without the drug addicts.

God, I'm enjoying.

Maybe they're both drug addicts.

No comment. In case I ever want to get either of them on the show, I'm saying nothing. I love a show where you can just freewheel. Listen, I do want to revert to some form of schedule you mentioned, you know, in terms of feeling Bulgarian, feeling American, like getting into the Silicon Valley scene. One of the most pivotal moments was I think probably meeting Keith, one of the most important people in your early career and your career. I spoke to him before the show and he said, dude, you've got to ask like, how did we meet? And just get that story first.

Yeah. So in summer of 2012, I ended up being an intern at Square. I was actually now 18 at the time and was just so thrilled to be in just like what I saw as like the center of, I don't know, technological sort of innovation. And at the time, Keith was the COO of Square and the company was just on this explosive growth trajectory. I think when I interviewed the company was like at 100 person headcount. When I joined 120 by the end of the summer it was like over 300. However, it was also one of the first times that the sort of company had a bit of a sort of hiccup. And so like late July 2012, the company basically didn't experience a natural sort of 10 to 15% growth month over month. And up until then, the company, without really spending much on marketing, much on distribution, had been growing effectively through this like feedback loop that I think a multitude of people have talked about online. But basically they would sell these little Square card readers and people would go into a coffee shop. And one out of every hundred people that went to the coffee shop happened to be another local business owner, saw the physical reader and then would sign up basically online as you, you had this basically natural viral loop where the company never basically had to spend on marketing for the first five plus years of its life. And then all of a sudden July hits and the company doesn't grow. And there was Sort of this like existential dread and panic at the company where it's like, oh God, we in some ways have not been in control of our growth. What if it is suddenly the magic, you know, sort of the golden goose has stopped sort of laying eggs. And Keith at the time was coo and he did this sort of phenomenal all hands presentation. I want to say it was like, you know, August 5th 8th, sort of 2012. Where at the time, to me, as a, you know, sort of lowly software engine grown up around a family of economics statisticians, I saw it as just like statistical wizardry being applied to business. Now obviously being a bit more sophisticated, it was a cohort analysis, but still, if you've never seen anything like that and you think about the world of business as this thing where it's like backroom deals, it's Mad Men and they're like, you know, sort of marketing stunts, etc. Nowhere in the world of like business movies do you ever see like statistics applied to business. And so he runs through this cohort analysis, you know, in front of the whole company. And basically the net of the analysis is, look, actually every year for the past few years, years, we've always seen a dip of our cohorts in terms of activity in July because we operate in local SMBs, and local SMBs in the United States, a lot of them go on vacation, et cetera, during July. And so there is just lower volume. And historically our new cohorts were large enough to mitigate the effects of the historical ones. But now we're at such a large book of business that our new July cohort could not mitigate basically the decrease of growth from the former July ones. And so he basically showed statistically that he could predict that even though we had basically no growth in July, that we were going to experience 20 plus percent growth in August because all of the cohorts were going to come back and we were going to add a new one. And lo and behold, in August, the early data showed that we were growing basically like crazy. And I just remember this moment being in like the crowd of like the, whatever, 140 people that were there. I was like, wow, I had no idea math was involved in running businesses. Like, I thought math was only used to like build products, solve problems, et cetera. And I remember just thinking, I was like, whatever I do later in life, I don't want to be doing this like, you know, software engineering coding thing. It's like, fine, I'm a pretty solid engineer, but it's not what I see myself doing for the next year, 20, 40 years of my career. I want to do what that guy's doing and I need to figure out basically how to get to know him. And so we didn't sort of speak or anything while I was at Square. But then about sort of seven or eight months later, I pinged him because I was about to sort of move out to Silicon Valley full time, dropping out of mit, and I'd just been sort of awarded the sort of or was in the process of applying for the Thiel Fellowship. And I pinged him and I was like, you know, hey, going to be moving out. You know, you're now vc. I would love to just like, you know, grab, grab lunch once a month. You may remember me, I was an intern basically at Square. And I sent him this cold email and he replied within, I think, on the order of five or six hours and hopped on the phone with me the next day, which I just assumed was sort of his standard response rate. That was how he liked to manage his inbox and calendar. But five or six years later, once I had gotten to know him, I did ask him. I was like, you do not normally respond to cold emails from a random Internet and hop on the phone the next day. Why were you willing to do that with me? And he was like, well, I was the CEO of Square while you were there that summer. And Square is a very, let's say pranky or finicky sort of culture. It's a bunch of designers that all like their desks being prim and proper. And if the smoothies in the morning have too much banana content, I get five emails about it. And yet you would arrive into the office every single day wearing shorts. Shorts and a tank top. You would, like, climb on the AC ducks. You would be loud. You'd be quite disruptive to the office. But I never got a single complaint from anybody on your team, anybody that sat next to you. And so just my conclusion was, this guy must be a really good engineer for everybody to be willing to tolerate his ridiculous behavior. So I should figure out what this guy sort of is up to. But yeah, we started basically grabbing lunch once a month in Silicon Valley, and eventually he had me join his soccer team. And that's how we really got to know.

It's so funny you said about the smoothie there. I always remember him telling me about the smoothie test, where you start with obviously a very simple task and then you expand and expand the complexity of it kind of over time to get harder and see someone's capabilities. I do have to ask you, speaking of kind of lessons from Keith, there kind of a quick fire on Keith, but so many people had so many questions. When you think about three different components operating, what to look for in founders and what to look for in companies first, what did Keith teach you about operating? Most significantly?

A ton of lessons there. But when I think about the one that has been sort of the most strategic leadership impact, let's say, on my life in particular, in terms of how basically Varda came together, was what he calls his Hollywood analogy of building companies where if you look at the best studios, they don't ab test their way into building a film. The script writers write a script and they have a story that they really strongly believe in. And once they've written that story, they think through who should be the major cast for each one. And so when they're making the Mission Impossible films, they don't go and interview 30 people and they debate should they have Tom Hanks or Tom Cruise. It's like, no go. It's. It's an action movie. It's going to be Tom Cruise and he's going to do these basically crazy stunts and then they might put out a sort of short preview, but they go and spend 100 million, 200 million, and go fully produce the film and then put it out, you know, in the public, sort of fully, you know, produced, versus in some ways the 2010s, you know, sort of false or, you know, antithesis of this mentality was the whole sort of lean startup of approach of like a B test your way towards you, sort of your grand vision. And in some ways this was how he sort of built, you know, the early days of Open Door was he thought through what were going to be the sort of major risks, how should the company be built. And then in some ways went out and hunted down the individual co founders that were the sort of the best suited for the role. They were the Tom Cruise for the sort of Mission Impossible. And so as I was thinking about sort of the thesis around sort of Varda, I took the same approach where I was like, okay, what are the sort of fundamental core risks of this type of business? And in some ways found the ideal casting and went through basically castings effectively to find what those ideal co founders were. And then we just went and raised the money and built the thing. And it wasn't like we waited on sort of customer feedback, et cetera. Like people asked me like, you know, did you get Lois et CETERA I was like, no, we just had a strong vision, vision for the future of the world, went and built a team and raised the money to go do it and then went and did it in, you know, in some ways now obviously have many customers, but, you know, didn't rely on, you know, sort of the quote unquote, customer feedback in the early days of putting together that.

It's just so interesting because it goes against everything that everyone has ever told and everything that we're taught as investors, which is, you know, customer feedback, close proximity to customers, really listening qualification processes. It just flies in the face of that, does it not?

It works in the world of like small SaaS, businesses where you're trying to make a marginal improvement on a small industry. If you're doing workflow software for plumbers, I'm sure that is a reasonable approach. I don't think that Elon Musk went around interviewing consumers about whether or not they wanted electric vehicles when he decided to go build Tesla or ask NASA whether they want cheaper and better rockets when he went to go build SpaceX. And so I think it works for sure, a subset of companies. But if you look at the top 10 companies on the Nasdaq, Steve Jobs did not ask people for their feedback when building the iPhone. Jensen Huang did not ask people whether they sort of wanted parallel computer GPUs. They just had strong visions of what they thought the future of technology looked like and went and sort of built that.

You mentioned some of those incredible kind of category defining founders. What did Keith teach you about the founders that you want to get behind and invest in?

Probably this sort of singular sort of lesson is just what he calls sort of the spark where, you know, there is no one archetype of great founder. Right. If you look at Zuckerberg, if you look at Steve Jobs, if you look at Elon Musk, if you look at Jensen Huang, completely different personalities, personal stories, the way they like to run their companies, right? But I think what they all have is this just unique attribute thing that they sort of excel in the 99th sort of percentile on, that may not always necessarily have to be specifically related to the company that they're working on. The way this sometimes shows up practically is a lot of times we'll end up getting really excited at Founders Fund to back a particular founder because they happen to be like world class in some super esoteric sort of field. Whether that's like the cognition sort of AI founders that crushed it at IOI to people that did really well in college. Athletics to Ryan Peterson sort of running his sort of freight forwarding sort of company from whenever he was whatever 18 years old. And I think it's sort of looking for and identifying that spark and seeing how does that spark translate to the thing that they're sort of working on very obviously sort of being their, you know, sort of life's work. I yeah, I don't know. I carry that with me every, every day. Anytime that I'm looking to work with a I agree.

I get like literally very uncomfortable and they're like for my next thing I'm going to do this. And I'm like oh, like for me, I, I, I There's only one thing I'm doing is 20 VC. I started when I was 18. I will die doing 20 VC and I'll be very happy if that's the case if they keep me here long enough. But I couldn't agree with you more there. I also find one immigrant founders general generally outperform and then two the time with which you do your first entrepreneurial endeavor generally correlates to success. No one comes out of MIT and is like I'll start a business for the first time. You always did something first started phone repairs, whatever it is, when you were a teenager. So I totally agree with you there, dude. When you were at Coaster with Keith, you were a junior vc, if you don't mind me saying it. What are you and you crushed. Like the track we mentioned before before is phenomenal. What are your single biggest lessons on how to succeed in the world of junior vc?

If I were to boil down, I think what the success ultimately came down to, it was just a willingness to do things that the GPS weren't willing to do. And using that as this differentiating trait. In particular, the Sword health example is an obvious one where the idea of this type of digitized AI musculoskeletal skeletal therapy was one that had been debated internally within the walls of kv. But once Virgilio, the CEO of sort of reached out to me and said I'd love to chat with you, I was just immediately willing to dive incredibly deep into the company, both reading their scientific papers, which no other investor was willing to do because again, Most more senior VCs have boards. They have a ton of things on their plate. I mean I feel this very much so sort of today my ability to we can talk about the Brian related questions on how does Vardo make me a worse vc? One of the examples is like I'm not willing to do the things that I was willing to do back in the sword health sort of diligence process which was go incredibly deep on the sort of science and tech of the company. But then also within a week of a cold email I hopped on a flight and took a red eye out to Portugal to go through a new very extensive exhaustive user diligence with the company and then also managed to convince the KV partnership that the week we should have them basically present to the whole firm no matter how compelling sort of the opportunity is the GP of Coastal Ventures, Vinod, Samir, David Wyn, Keith, Sven no matter how compelling there's just no way that they're hopping on a one week turnaround to a red eye to Europe to go meet a random founder and you have to be willing to do those types of things as a junior VC and gamble on this sort of top of funnel aperture on opportunities in a way that the GPS.

Are not Can I interrupt you be awful. I I, I been I don't know the others but I love Vinod and I love Keith but like do the best not example I sent Tom Tungas a deal on a Thursday he flew to London on a Friday he won the deal on a Saturday he beat out everyone in London. The guys at IVP fly to bum nowhere Romania to do uipath Sorry if anyone's in Romania they, they fly to you know, Bum Nowhere Germany. See I equated both so everywhere's Bum Bum Nowhere Germany. So to do the best not get.

On planes they do but again there's some level of turnaround of Keith's schedule as an example is booked a full three, four weeks in advance. The idea that it's gonna be a week long turnaround is impossible for his activation energy. It has to be. The junior investors have gone and done some level of diligence, built conviction and for sure to say he will do it at some point but I was just willing to do it faster, quicker turnaround and dive much much deeper than what they would be capable of doing. But that was the value that I provided to the table where I came back within two weeks and said hey, I've gone and visited the management team in person. I've run through the list of 100 questions that Vinod basically wanted me to make sure that I did while I was in Portugal and I feel high conviction that we should invite these founders the United States pay for their flights to basically you know, sort of come you sort of pitch the you know, sort of partnership. So it's not to say that the like elite GPS don't go and do it, but again, it's just a different turnaround time, etc. The analogy that I like to or like the one line mantra is just, I think extraordinary careers when you're a junior adventure do not get built sitting behind a desk in an office and you know, behind a ladder laptop it is. You have to be willing to go meet with founders in person, figure out how to, you know, sort of understand their businesses and how to convince them to even spend time with you when you're not, you know, one of the big general.

I'm sure you have a lot of people ask you for advice on answering Vantia. I have a lot of people ask me and they're like, should I try and do as many deals as possible? Should I try and do few? What's your advice on do many? Do few?

Probably, you know, sort of use the same anecdote that you should. Trey and Brian I think shared on their sort of interviews, which is, I think in your first year VC you do want to just open your app and build your sort of like data set on sort of founders where, you know, again that first year I think I was effectively willing to meet almost any founder that was willing to meet with me and vice versa. Once you've sort of met, call it on the order of a thousand founders. And especially if in that, you know, sort of thousand, you are fortunate enough to have a data set of founders that look like Parker Conrad, Eric Kleiman, Alex Wang, et cetera, you start to have an understanding of, you know, sort of what does greatness sort of look like. I think you should be very judicious on waiting to pull the trigger until, you know, you know, feel like you have identified the taste, you know, for what that greatness looks like.

I thought it was fascinating when I spoke to Keith and he said actually relevance is my biggest challenge, actually, and making sure that we stay at the forefront of the best founders. I appreciated his honesty, but I also thought it was fascinating. I do also think for poor Peter's sake, there is a little bit of a difference in age between Peter and Vinod. As wonderful as Vinod is, I didn't want to lump them in necessarily the same bucket. I do have to ask you, what are the biggest fuck ups you see young VCs make today in career planning and venture?

Ultimately you need to recognize that, you know, venture is the most, you know, sort of commoditized, let's say, you know, industry within, you know, sort of tech. You have no moat other than your brand the product that you deliver at the end of the day is either US dollars just like anybody else can deliver use of that fundamental product. People don't focus enough on differentiation. They come in and they try to do all aspects of VC generically well and focus on a multitude of sectors generically well. I think, you know, I think it was Sarah Tod who Benchmark may not love me for various comments that I make, but I do like Sarah's sort of framework and I use it all the time, which is there's sort of four or five aspects to VC and late stage in your career you do kind of need to be world class at least like three of those. But early on you need to focus on one. And so the five that she breaks down is one, you basically need a sort of top of funnel way to basically source whether that's more marketing or sales driven. You then need to sort of develop a nose for what are the deals that you yourself like and want to champion. You then need to develop a skill set for championing those, you know, investments that you like within the firm. So basically like the internal basically selling, you then need to also do the external selling of convincing basically the founders that they should take, you know, your capital relative to anybody else's and then post investment. You need to help that founder basically manage the business and you know, exit. Trying to be great at all 5 is a completely, you know, sort of impossible, you know, sort of task. Obviously there are people within Founders fund that explicitly choose to not work on the fifth one, you know, sort of whatsoever. Right. You know, Brian and Trey's sort of strategy is we believe the best founders, you know, sort of need no help and we are not going to try to differentiate on, you know, sort of helping founders. I, you know, thankfully love to work at a place where we can agree to disagree on investment strategies and I enjoy differentiating myself on the 5th and I think it helps with other, you know, sort of categories. But I think junior VCs make the mistake of let me try to do all of these and across a multitude of sectors versus I think I just early on decided I'm going to focus on two core things that I'm going to differentiate myself myself on. I'm going to spend a lot of time in frontier tech and in particular in aerospace and understand that entire industry extremely well. So that anytime somebody thinks about a space deal, they immediately, you know, think of me top of mind versus if you don't have that type of defining trait, you're just not going to be top of mind when people are thinking about co investors and that's the ultimate, you know, sort of failure case. And out of all of those five things I'm actually going to focus on that fifth one first. So rather than even trying to, you know, sort of source and understand, you know, sort of my taste, it's, etc. I'm actually going to make myself extremely useful to Keith's pre existing portfolio of founders so that when one day I need to have a, you know, try to attempt a deal, Max Rhodes, the CEO Fair will be willing to hop on the phone and say look, Delian was obviously not the person that sourced or led our deal but ultimately was very valuable to the company in like XYZ ways. You should take his capital. And so when you look at I believe it was true work, it was literally the like, you know, sort of found a reference of Max that ultimately you know, sort of helped me, you know, sort of get that sort of deal across the line which obviously then maybe better at sort of part four of the job.

You mentioned getting deals across the line internally there. Can I ask you, has there been a deal, have you had a deal where you wanted desperately to get it over the line and it didn't go over the line?

Yeah, my biggest sort of miss investment and one that I think about a lot was in December 2019, maybe it was like November. I had the opportunity to double down on sorts of and invest in the company basically 10 on 100 million post and we had previously actually done a smaller check into Sword. Basically as soon as I joined Founders Fund from kv I really wanted to really believe in the company and wanted to double down. I was still pretty new to FF and I don't think I just set up the argument for why we should do it correctly or built enough basically internal consensus in some ways before going to Peter at ff. I think counterintuitively, I think your sort of best way to get a deal across the line at FF is actually to probably go to the most junior person at FF and have them start to build sort of consensus amongst a wider group. Like if you look at ff, I feel like a lot of the deals sort of percolate from below and as sort of their set of people doesn't have to be the entire firm but let's say a subset of like two or three people that are really high conviction and then even if it's a later stage check that requires basically Peter's approval, it's with that you know, sort of broader conviction that it's Sort of brought to the GP of the firm. Those tend to be actually how a lot of our later stage deals get across the line. And so I think there I sort of critique myself for being so high conviction myself that I just tried to go sort of straight to Peter rather than working within sort of the broader set of the firm and including people that actually had been part of the consensus in earlier checks that we had done at Sword at Founders Fund. But yeah, that one is a sort of painful one given that that would be sort of $10 million, that would be a $300 million position today. And I definitely lose sleep over that. And so I think about that a lot. You know, today where one way that we like to say it internally is you should always go for the path of most resistance when you know, trying to work on a deal at FF work and make sure to loop people in from the investment team that are going to be the most critical of the company. Given that one, if you're able to get those people to conviction, then bringing it to the sort of GP shows that you've really sort of done your homework internally versus I think that 10 on $100 million post one and I just, I didn't do my homework.

What is the biggest flaw of the FF investment decision making process today, do you think?

Let's see. I mean you sort of relative to you know, sort of other, let's say tier one elite firms over the past five years, in some ways we haven't.

Gotten ourselves into trouble names around this daddy and it's really unfair of me but tier one elite firms, which three do you most respect?

You know, it's probably Sequoia, Andreessen and and probably more historical benchmark than modern benchmark. But I still think there's lessons to be had there and obviously all three of those firms operate in very different ways. And if I were to look over the past five years, I think generally the Founders Fund decision making has led to generally superior returns and also less gaffes in various ways. Whether it's the sort of FTX type fraud debacles, whether it's the holding Publix beyond when you should on behalf of your LPs.

Is there anything you change about it then?

If anything, the biggest change is I would double down on what we've done sort of best historically, which is if you look at the general partners today at Founders Fund Beyond Peter, which is either sort of Brian Singerman, Trey Stevens, Napoleon, Yoshi Otafield, all three of them began as either interns or Relatively junior investors at Founders Fund over a decade ago. And I think the best thing that we could be doing today is ensuring that we have people on the team today that in a decade are going to be the future sort of Brian Napoleon's trays. I think right now, technically, sort of full time at Founders Fund on there is only, you know, sort of one person that is under the age of 20, sort of seven, and that is probably not a, you know, sort of sufficient class of, you know, sort of future up and coming investors that would, you know, sort of be those future general partners in 10, 15, sort of 20 years that I would say probably the biggest change would be double down on what we've done best in the past and do it again.

You mentioned Brian many times there. I love Brian. Met him on the show a couple of times. Wonderful dude. Spoke to him beforehand. He said you have to ask him what makes Founders Fund so special. With the addendum that very few people do not know or consider. So not the contrarian mind. Yeah, we like big plans and big ideas. Everyone knows that what that not many people see makes them so special.

I think the thing that is probably most underappreciated, the fact that the team is very small allows for there to be very strong sort of personal relationships where obviously in any network, the number of network connections grows by N squared. And so the fact that I probably won't do the sort of counting perfectly, but I think there's 11, 12 of us on the investment team today. And so on the order of n squared,130, basically permutations of connections that's actually relatively possible to maintain quite strongly. Once you actually go to even 20 at that point you're talking about 400, which then basically becomes impossible to maintain. And what that allows us to do and the way that we sort of do our economics, which is sort of not on a there's no sort of deal by deal basis, makes it so that the firm is far more collaborative than I think people expect. In terms of many of the even like intro calls that we take will have multiple people on the firm and there's not jockeying around sort of who was the most point person and who gets to claim the most basically, you know, sort of credit for an individual investment. That type of politicking sort of doesn't really exist because I think a combination of the team size being small and the personal connections being strong and the way the economics are structured. And so, so much of what we do, it's not to the level of like Benchmarks like full sort of consensus, everybody needs to vote on it culture. But by far, if you look at the best, best investments, it's when three or four sort of investors collaborated significantly to get to conviction on a particular investment, but also like the rest of the firm didn't like the investment. And I think it's only possible to both collaborate to that day depth and also get deals across this sort of line, even if the rest of the firm doesn't like it. When you have that very small collaborative and you know, basically, you know, very personally close structure. One, you know, sort of anecdote that I'd use that maybe reflects this is Brian. When we do our sort of like, you know, once every, you know, year or two year, basically like annual retreat with the whole team, one of the core things that we like, you know, basically go through in that his like speech that he gives is both like, who has joined, you know, the firm since then, but also what children have been born into the sort of like Founders Fund sort of family since the last time we all got together. And in some ways maybe that anecdote is reflective of that sort of collaborative familial culture.

Gosh, that's really corny. I didn't know Brian had that sweet side. No. Listen, I do have to ask, when we think about, you said they're voting. Do you think voting in investment decision making partnerships is bs?

I think at most cultures it is. There are some exceptions obviously like it is. I think benchmarks truly is right. It is. There is one vote. It's either one or I think they actually do have like a conviction, you know, sort of rating. But at the end of the day it's consensus based which is everybody's vote has to be above a certain tier which ends up making it to the voting is basically sort of one or zero. That to me is a very legitimate, you know, ultimately like voting is there perhaps, you know, I don't know the culture well enough, is there back office politicking, etc. To you know, sort of get to consensus potentially and so does that, you know, sort of discount the quality of the votes potentially. One thing that I really like about you know, sort of Founders Fund is even though our, let's say time allocation as a team is very unstructured, we don't do Monday partner meetings. There's not some regular cadence where we all get together and discuss deals and decide which ones we're going to do. Incredibly unstructured. But they're like voting and decision making across. And I think Back in the day, Simon Bannister gave a public interview about this, about how we have basically tiers of check sizes and in order to get those basically checks across, there's just certain sizes of basically a number of votes that you need to get across us. It makes it so that, you know, as an individual investor, it's incredibly structured in terms of if I want to do X, Y and Z investment, I know exactly who I need to basically, you know, sort of get on board with this type of deal. And there's incredible comfort with, you know, just because one general partner does not want to provide the vote does not then mean that you're shut down across the firm. You are more than welcome to try and convince another, you know, sort of general partner to get it across versus, I think a lot of firms, once you feel like, you know, one general partner has said no, you can't either sort of go to the rest. And so I do think that at Founders Fund, it is very legitimate in terms of voting. And I think there are firms where it generally is. There are definitely firms where the voting doesn't matter. What matters is just like, you know, the partner meeting and you kind of all look around the table, but it's mostly like, do the most senior GPs want to do it or not? And it kind of doesn't matter what the rest of the votes are.

We mentioned, like, getting the votes, getting over the line internally. There's also winning the deal once they submit the term sheet. Have you lost a deal recently?

Came back up because one of the founders that I lost the deal on for some reason brought up the sort of thread where I sort of mentioned him. Not directly, but somebody asked me, what deals have you lost? And I mentioned him sort of vaguely. He replied to that tweet and was like, the biggest mistake of my company building was actually turning down Delian's term sheet. That was a very flattering thing to hear.

What was the company and what did you take from it?

It was this guy Nathaniel. I guess since he's now sort of publicly confirmed himself, I think it's fine to say this guy, Nathaniel Manning at this company, company that was doing basically Wildfire, sort of insurance tech enabled, using satellite data, etc. And I think ultimately that sort of failure point came down to just, yeah, Covid era. I think the company or the founders were not based in the Bay Area where I was at the time. And so we just weren't quite able to meet in person, even though I was willing to sort of fly, etc. Just in the time frame that he wanted to ultimately sort of come to a decision. And so he ultimately ended up choosing a firm where he had.

Because you were ultimately and you weren't willing to get on a plane so quickly.

So I think there I was just like I didn't get to it in terms of top of funnel quickly enough relative to the round dynamics. But yeah, it was sort of that one. And then in that thread I mentioned a second, which is not necessarily coming to me today, so I'd have to think about it. I would guess that it was a sort of double down on a sort of portfolio company where I think if I were to critique myself there, I probably sort of felt entitled to the ability to double down. Now I've been on the other the side of, of the table you sort of many times and investor entitledness can really rub you the wrong way. As a founder, nobody's entitled to their pro rata.

That's interesting because it is a legal right.

Yes. But things in Silicon Valley don't always operate according to the legality. They do sometimes operate according to a little bit of the character, reputation, etc. Obviously we're seeing this kind of play out in the drama sphere of Twitter over the past 24, 48 hours with Parker, Conrad Vinod, Mike Solana, David Sacks, etc.

Do you think this is good for our ecosystem or it makes us seem like rich brats who need to get on with the real world and actually get on with our jobs managing money for some of the biggest institutions in the world who were lucky to manage money for.

I think that for the future generation of founders, I think that it is valuable that people's characters are laid on display. And it's not to say that anyone comes off unscathed in any of these things. Right. Whether you're on the like, you know, sort of of Parker vs David Zach side of it, both sides have shown pros and both sides have shown cons. And I think that's valuable because then you as a founder can sort of self select into it where I think one of the questions that you sort of threw in the agenda was, you know, has your divisiveness on Twitter, you know, sort of lost you or won you a deal? I'm sure that it has. I'm sure that there is a set of founders that have chosen to just not reach out to me whatsoever because of, you know, sort of my, you know, sort of philosophy. But there's also a set of founders that have self selected into proactively Wanting to, you know, sort of work with me, you know, Eric and Ramp. Sorry, Eric and Kareem of Ramp, you know, maybe being a perfect example of this, of, you know, really wanting to, you know, opt into the immigrant, you know, anti woke, et cetera, you know, sort of mentality and have that be a, you know, sort of core part of the sort of early culture. And so, you know, I wish that, you know, Bill Gurley's, you know, firing of Travis, you know, was, you know, sort of talked about more publicly about how morally depraved that entire basically situation was so that people can choose to opt into. Is that, you know, a firm that you want to work with? Maybe it is, maybe it isn't. But I think that stuff should be, you know, sort of more, more on display than. Not more for sake of not the like, you know, VCs winning a point on one another publicly and getting attention for it, but more for the founders to understand how this actually happens behind the scenes.

How do you think about a challenging situation? You mentioned Bill and Uber there. I'm not directly addressing that. I'm just saying when the fiduciary responsibility that you have to your investors, which is to return the most amount of money possible, is no longer aligned to the best interests of the founder. A great example of this is when you want to sell your position and you may need the liquidity then. Your LPs may want the liquidity then, but as a lead investor, that looks bad for the founder and for the company. There is now a misalignment between the two. What wins.

You know, the obviously part of why I really enjoy working at Founders Fund is because of the sort of fundamental, sort of mantra of the firm and why it was started in 2004. The idea of sort of found their friendly VCs and not firing founders was extremely contrary. And obviously it's become somewhat consensus. Not entirely. There are firms, tier ones that I mentioned, Benchmark, A16, Z, Sequoia, etc. All have examples of founder oustings in the past decade. And so in some ways it continues to actually be at least somewhat contrarian.

Do you really agree with that? That is like saying I will enter into a marriage and we will never get divorced. Well, that's moronic. Of course you should have the option to get divorced. You should never have the divine right to be an investor at Founders Fund. If you don't, you don't perform, you won't be there.

Yes, but I think if you look at the fundamental job of venture capitalists is to provide basically a sort of high beta strategy. And if you look at the highest beta outcomes in the world, they are all founder led companies. And so ultimately, even if you disagree with the approach, even if you think that perhaps the company could provide some liquidity if you get rid of the founder, I think in some ways, obviously Benchmark LPs made a lot of money by Dara becoming the CEO, taking the company public, and today its cash flow profitability. But Perhaps those benchmark LPs would have made even more money if Travis was still CEO and the future of self driving cars lived within Uber rather than living within Google. And maybe Uber becomes a $1 trillion company over the course of the 2000s if you know Travis is at the helm rather than Dara. And so I think in some ways you shouldn't overly rely on history. However, Darwinistically, founder led companies are the only ones that generate the sort of returns that matter for VC. And so focus on that.

And totally I'm 100 with you. I hate it when founders I meet, they say, oh, I'm a zero to one person. I'm like great, I'm an out person. Like that's not what we're here for. But like, do you agree with what I'm saying? Like no one has a divine right to their position as an investor. You also have an obligation to the employees within a company and if someone is not doing the work, lazy, lying, they don't have a divine right to the position to, to be there.

Travis committed no crime and they, you know, sort of ousted him despite the fact that, you know, they actually didn't necessarily, you know, have the legal control to do so. They just cornered him in a hotel room, you know, two days after his mother had passed away and convince him to sign papers that he sort of shouldn't have.

If you weren't good enough as the founder of Varda, say in three years time, whatever, you didn't scale into it. Do you not think Founders Fund or Khosla should be able to remove you?

No, because I think ultimately in order to deliver generational returns, there's no way for that to happen other than the founder still being at the helm. The moment that you install professional CEO, that person doesn't have the same level of moral authority or capability to sort of take risks that require you, the risks that are required to take in order to, you know, sort of generate those types of, you know, true, true entail.

Do you not think Satya Nadella disproves that? Very bold Risk writing a billion dollar chapter open AI completely transforming a business that Steve Ballmer had let plateau.

And you know, yet Zuck releases, you know, whatever llama, you know, three or four, you know, and releases it completely free open source. And it is beating all the benchmarks of anything that OpenAI and Microsoft have ever done. And so perhaps that actually doesn't matter. And it turns out Zuckerberg is going to be the massive AI platform and it's because he's willing to take risks and invest into a level of H1 hundreds that Satya was not willing to do because Satya had to ultimately serve the public markets versus Zuckerberg still has penultimate control over everything that Facebook does. It's not to say that professional CEO CEOs can't take it, you know, some amount of the way. And obviously Satya has delivered phenomenal returns to investors. But I still think at the end of the day those entail outcomes aren't possible without founder led companies.

This is very clever positioning from you, okay, because you look like a great guy and I look like an evil old vc. To be clear, I completely agree with the founder led companies being the most important and valuable for anyone thinking that I'm a dick listening. So I totally understand and agree. I do have to ask like that is a very strong statement from Founders Fund on the like founder led companies and always, always sticking with founders when you think about something that you believe. I like this question from Twitter. What do you believe that the Founders Fund partnership will heavily disagree with you on?

I want to, because this is. You sort of brought up a point. You know, if there's a thing that I've learned from Peter the most, it is. There is always a way to structure your argument such that you are on the winning side no matter what and look the best. And I think he does a phenomenal job of that of structuring his logic, arguments and frameworks in a way where if you disagree with him, you by default just look like a buffoon because of the fundamental way that the argument is basically sort of structured. And so that's probably the number one thing that I've learned from Peter is being very diligent in how I structure my logic such that if you disagree with me, you look, can I ask.

Before we do dive into what you believe that fans disagree with you on. Peter is such a large presence, important person, influential figure. When he's in a room, how do you prevent the weight of his words being the only words that matter?

I actually think it goes back again to that sort of familial nature at Founders Fund. I think because he maintains such closeness to everyone on the team. And obviously it's when you're in your first year there, it's probably more difficult. But once you're five years in at that point you've spent so much time with him that this sort of star power or sort of weight of words, et cetera, sort of goes away when you get to know the sort of individual behind the sort of star. And so if anything, he values sort of people that are willing to actually sort of disagree and stand up to him. So much so that I think it incentivizes behavior internally where people proactively want to disagree with him more than others. And so actually anything that like reverse effect, you know, sort of happens. I remember I just like there was this particular, you know, sort of moment right after the Keith departure and I was obviously, you know, sort of feeling in some ways very emotionally raw. We were having this team meeting where there was this like discussion about, you know, sort of candidates and who we wanted to bring onto the team. And there's this person that, you know, sort of Peter was particularly excited by. And I remember I just like practically jumped in and I don't want to go into the details partially because it'll probably reveal who the person is and it's a little, you know, sort of confidential. But anyways, I just practically just like, you know, jumped in and I was like, Peter, I think that is probably the worst candidate idea that anybody is like, you know, so brought up to the firm in the last six months. And I feel about this so strongly that we just discussed this framework of path of most resistance. We should have XYZ GP meet this person as a part of the interview process. And Peter goes, well, why should that person meet? This person would be sort of a venture sort of candidate. This GP may not be the right person to sort of assess. And I was like, because I know that this GP will hate this person and that will absolutely guarantee that we do not hire this person. So anyways, point being, I think even on a tactical day to day level, actually I don't think you sort of this happens. If anything, the sort of reverse effect actually sometimes happens.

Tell me, what do you believe that the majority of the partnership will disagree with you on?

I think it's that sort of fifth part of the venture job. Trey and Brian are more than welcome to take their approach of sort of write a check to a founder, but then largely sort of be hands off from there. Because the best founders don't ask for help. The best founders in my portfolio have looked to people that they really value their opinion of and want those people around the team table. And so, you know, I do spend, you know, every single time I invest in a company, I try to meet with them on a monthly basis. I go to the board meetings. I try to be very thoughtful about, you know, sort of how I, you know, sort of engage in those sort of board meetings. I think Seth Bannon, you know, sort of had a question, you know, sort of on Twitter in relation to this like, you know, sort of shared portfolio company cover that we have where even in the busiest days of Arda, I, you know, still try to. You sort of make it to those, you know, sort of board.

Vinod Kosa says I can't remember the exact number. So if Vinod's listening, don't kill me or sue me if I get it wrong. 80 to 90%, I'm just giving a range of VCs actually detract value. Do you agree with that? People chat shit about venture investors like attracting value. How, how do they.

I think there's a couple of different causes. One of the, you know, sort of worst outcomes is when a venture investor feels pressure from the firm. Whether it's in the like, you know, uber case of we need liquidity liquidity or one of the most worst cases that I've seen is when it's your first sort of big deal, big investments. It's like the thing you feel like is defining your next three, four, five years at the firm. And that anxiety then creeps in where you're trying to force the founder into like, hey, I need a quick markup or XYZ sort of short term progress. It's like not quite to the like public markets Quarterly, you know, sort of, you know, hamster wheel. But it starts to approximate to that. Where you like is start to be really, really sort of short term, you know, sort of thinking focused and impose that anxiety upon the founder. Yeah, it just, it ends up being this very dangerous piece of advice. And then probably the second is people that are just so decayed on operational skill sets but still feel like they have really strong opinions on here's how you should do XYZ marketing, this candidate, et cetera. I just think that unless you have been, you know, in a true operational data role in the last like sort of three to five years, in some ways your ability to significantly sort of provide high quality advice really degrades and the only way to keep it At a top level is I think sort of how Keith does it where he just gets so involved in each of the companies where irrespective in theory, if he had not done open door, open store, etc. I still think he actually is able to maintain a sort of significant operational sense because he goes so deep and transitioned directly from operations operator, you know, sort of to, to investor.

Speaking of that kind of operational now. So obviously you run Varda today. There's pros and cons. How does running Varda make you a better investor?

You know, a multitude. If you we go back to that sort of five point, you know, sort of framework, there's a multitude that have been significantly positively impacted due to Varda. The first just top of Funnel, there's just a set of, you know, founders that did not know me when I was just the founders, fund investor versus now because the company is, you know, an intriguing company, have heard of me sort of through that. Second, my ability to decide on what I would like to invest significantly improved. In particular, I'd like to, you know, go back to this example of there's this company that I led the, you know, sort of seed round in Senra Systems where the founder practically chose to come meet me in Miami even though he was based in Los Angeles because of, you know, sort of the Varda connection. And then I was able to run an extremely extensive diligence over the following basically 36 hours after my initial meeting with him because I was able to call people at Varda that had been his former manager direct report, had worked with him as a of piece here. And so the level of sort of depth of network that I have into this field allowed me to do even for other really top tier aerospace investors. That type of diligence would have taken them probably weeks sort of to do to mine into that network versus being so practically so close bare to the metal. You just have a much more extensive understanding of you know, sort of the people that day to day work in this sort of field. The third is obviously, you know, sort of close rate. You know, I mentioned obviously this sort of recent is not to say that I love investing in these like super sort of hot competitive deals. But it's once I've chosen that I do want to invest in something. Since Varda I have not sort of lost an opportunity where I've wanted to invest. Even in situations where there have been phenomenal partners, general partners on the other side of the table offering competing sort of term sheets.

Have you found a correlation between deal heat and Success of company. When you look back at your portfolio.

No, it's not to say that deal heat means it will not be successful. But if you look at the sort of returns, some were hot deals and some were not. And so, you know, it's sort of like a wash and I shouldn't really focus on it. Right. Sword Health was like the epitome of not hot deal, random Portuguese company. There was nobody on the other side of the table. We sort of set terms. The ramp seed round had, you know, five or six other offers and obviously was sort of super hot. Those are basically the two biggest outcomes and on opposite sides of that, you know, sort of spectrum. And so I think it's actually just like uncorrelated. You know, I think obviously at Founders Fund we definitely have a bias towards, towards seeing it as a negative sort of factor partially because it does typically end up affecting pricing. But I do think there's a set of hyper competent founders. I think in some ways at Varda we take this strategy which is even in a competitive situation we don't necessarily take the highest priced offer that we have. And every Varta round we've actually not taken the highest priced offer. We've done what we thought was in the appropriate reasonable range. That sets the company up for, you know, sort of long term success. And so there are hot rounds where the founders are not, you know, sort of irrational and we do like to invest in those.

At Founders Fund you mentioned Ramsram being a hot one. I remember Keith saying his biggest regret or the thing that keeps him up most at night is not paying 35 for rippling. We mentioned Parker earlier when Gary Tannen initialized did ramp was an expensive ish seed round. I think it was like 25 or 30. Whatever it was. Do you care about price or do you align to Founders Funds mentality of if it's going to be a generational defining company, shut up and pay, you.

Know, sort of closer to the latter. But I do think it still needs to be sort of in family with what is reasonable for the status of the company, I guess where, you know, I think if you're just like, you know, sort of 2, 3x sort of beyond, even if other investors are willing to offer it, it just means that you're going to make future decisions that are also similarly sort of low quality. I think it's in some ways reflective of the quality of the, you know, sort of founder. And so I think, you know, sort of ramp in some ways it's not particularly unreasonable for a second time exited founder that, you know, made money for investors for a seed round to be at, you know, sort of 30 post. Right. I think that's like not a particularly unreasonable pricing in some ways. Parker obviously was, you know, a similar, you know, sort of situation. If you're like a first time founder and you know, demanding 25 posts, I have a little bit of a harder time getting excited. Even if in theory your vision is super compelling, your team is super compelling, it just shows a willingness to, you know, sort of submit to the market instincts of venture capital rather than having your own defined viewpoint on where you should sort of land. And so but I think generally, you know, I'm in the latter camp and especially because most of the investing that I do is like below 150post. And so, you know, sort of there, you know, pricing is not as significant of a factor relative to growth stage, especially for a multi stage firm where we can continue to double down and build our position.

How do you think about how your job has changed, changed with the mimetic nature of Silicon Valley now realizing that the future is defense and we have to be in defense?

Yeah, it's interesting. Obviously, you know, my partner Stevens was obviously extremely, you know, sort of early to this trend. I'd like to say, you know, in summer 17, when I decided this was what I wanted to focus on, it was, you know, not the, you know, sort of typical path the junior VCs were obviously taking in the Valley. But I think has led to a lot of the success that I've had to date. And so it's been interesting to see that sort of flip on its head where, you know, I had a former colleague, you know, sort of Everett Randall, who's now a partner at kpcb who would always critique me and say, you know, oh, deli just loves these sort of low margin capex intensive businesses that are like highly dilutive. And this is in the like 2019, 2020 timeframe where SaaS still felt like it was the sort of number one thing in the Valley. And in some ways sort of those critiques have gone away even though the fundamental nature of the critique is still true, which is that these things are low margin capex intensive. But ultimately that is where you build your of moat. I always like to, you know, the one liner that I sometimes like to use is people love software because, you know, sort of the marginal distribution costs are zero. But perhaps what people need to realize is also that the marginal returns are zero as well because there is no moat because two Stanford kids, especially with today's AI can replicate your, you know, sort of SaaS for plumbers, you know, effectively in a weekend. And so I think the job is odd now where I felt like, you know, I was out on an island and now all of a sudden there's like 15 different venture firms that have, you know, industrialization of America.

Can I be blunt? Do you not see the glib nature of that being, you know, service titan? Literally exactly that. SaaS for plumbers cannot be replicated in a weekend. With AI there are intense workflows, deep functionality, a lot of brand credibility, trust, love. It's just not true.

I think that you know, sort of product, you know, sort of statement I would probably disagree with where I think the like deep workflows, etc. If you're having to invent them for the first time by determining what your customers workflows are versus, you know, just replicating off of a, you know, sort of known outcome, I think the ability to replicate that with again a team of 10, you know, killer software engineers in AI just feels incredibly sort of quick today. I do think that, you know, sort of distribution point and branding point is real. But then that's what people need to recognize is like, you know, service titan is actually closer to LVMH than it is to Tesla and that's fine. People should invest in sort of brands that have sort of great distribution. Clearly returns can be made there. But let's sort of fundamentally recognize that these are sort of not true technology companies.

How does the investor mind need to change with the transition to this very different world of investing that we now face? Many investors are high margin SaaS investors or consumer investors. This is a fundamental, fundamentally entirely different asset class. It's not even comparable. How does the investor mind need to change to embrace this? And is the current generation of investors equipped?

What's funny is like this is actually what historical Silicon Valley was known for, right? Obviously we became what we are because of the word silicon. We were a chips industry where you had to do extremely deep technical diligence. Things required quite a bit of capex to basically scale up. The fact that we had this sort of low marginal cost, free distribution, very simple business model is sort of like a freak sort of outcome of the like mid 2000s to the like sort of late 2010s. And I think in some ways we're sort of reverting to the mean where, you know, if you look at the most successful investors from the 80s 90s et cetera, they look closer to sort of vinod Khosla than a sort of pure SaaS investor, sort of Jason sort of Lemkin. And so I think what you will see is the sort of profile of investors start to change. You need these, these very sort of broad polymaths that can get up to speed across biotech, material science, aerospace, et cetera, more so than people whose sort of skill set purely sits in the world of financial analysis and software engineering and product. And so there does need to be adaptation. I think what you'll realistically see is just the ranks of VCs will fundamentally change. I'm not sure that everyone is going to be capable of reinventing themselves in this way. I just think the up and coming classes will look very different in 10 years.

Who will the top three VC firms be?

The sort of top three VCs a decade ago kind of look like the top three VCs today. And those will almost certainly basically be the top three VCs a decade from now. You are starting to see obviously people shift in fundamentally different directions like sequoia and a 16Z becoming RIAs maybe points towards a world where they're going to be scaling headcount, asset classes, et cetera, to the point where they start to resemble something more like BlackRock versus sort of the homegrown VCs of the historical Silicon Valley arc. And I do generally believe that at least within the world of seed series A technology companies, those are going to look more like the most successful ones are going to look more like the Founders Fund model of small teams focused specifically on that asset class versus just being a subset within a larger BlackRock looking behemoth.

Who will be the biggest losers in the next 10 years of the venture?

I think the sort of sector specific specialized funds are going to sort of have a very tough time where you know, if you were a financial services or SAS focused fund, you for sure you sort of had a wave that you could ride for a certain period of time. And it's not obvious that there will be that same wave again, like Founders Fund is not a aerospace defense focused investor. It happens to be that, you know, we picked up on that trend and saw that there was going to be upcoming tailwinds far ahead of any anybody else. But we also invested in Airbnb, Affirm, etc. And so I think in some ways the firms that will struggle the most over the next 10 years are the ones that sort of have these artificial constraints on the types of investments that they're going to make that don't allow them to Optimize for the reality of where is being disrupted and where they're going to be generational returns to. Maybe again, go back to one of Brian's classic isms. Internally is the only rule that founders find is if there are no rules, if we establish any type of arbitrary rules rule, it almost certainly will basically decrease our irr. And so a lot of these specialist firms, I think, are going to have a really tough time when their sector sort of falls out of favor.

Do you mind if we talk about your Twitter?

Sure, go for it.

Okay. One of your tweets got me in particular, and I think you know where I'm going with this. It was where you said you can't take people seriously who are over 35 and straight and who don't have children and are married. It's a bold thing to put out there. Delian, can you just talk to me about the thinking behind that tweet?

I just think in the technology industry, great sort of companies, movements, technologies only get implemented with people that have extreme sort of long term thinking. And to me, the epitome of long term thinking is recognizing that you. Your time on this planet is sort of very short and what you're here ultimately to do is sort of set it up well for the next generation. And in some ways, the epitome of that is recognizing that there needs to be a next generation and we have to be the ones to make them. Babies don't come from storks. They come from people sort of ideally being married and having children. Obviously, unfortunately, there's a lot more being born out of wedlock today than not. And so I just see it as a sort of fundamental sort of flaw. And to be clear, there is obviously exceptions to the rule. Rule. There are many successful sort of founder that are sort of solo sort of bachelors. Obviously, Alex Karp from Palantir is doing pretty damn well being at the helm of a $55 billion company.

Do you know this is going to piss people off when you do it?

I think this goes back to maybe the beginning of the podcast where I think in Bulgaria the default is just say what you think. And it doesn't really matter that much how society sort of reacts to it. And I used to feel very guilty when I was first, you know, moving to San Francisco. And I would say offensive things at the office that people found distasteful or, you know, in my early days of Twitter. And then I think at some point I've recognized, I mean, this is what I'm thinking and it's what I would say in private conversation. I might as well, you know, sort of be myself and say it out loud. It may sort of frustrate some people, but hopefully it helps some people either think different ways or become more attractive to, you know, sort of working with someone like me. So I'd prefer to just be my honest and true self. And so I think I sometimes, if anything, you know, my wife will confirm this. I sometimes am quite surprised that people are so, you know, sort of put off by some of the things that I put out there. They just feel like very obvious thoughts to me.

Do you think people are too soft today?

Born and bred, you know, sort of Americans that grow up within, you know, sort of this, you know, economy, culture, climate, etc. Don't they take for granted how special the United States is, our economic system, our political system, and don't recognize, you know, how existential it can be if we sort of look, lose the current system and how bad the rest of the world is? And so I do think that obviously makes people extraordinarily soft. I'll maybe use this sort of Netanyahu quote from the congressional leadership speech that he gave yesterday, which is there are protesters outside of Capitol Hill that had signs that said Gays for Gaza. And he was like, you might as well be saying that we're chickens for kfc. They would eat you alive there. And I think that's a perfect example of just like the softness of the sort of next generation because they, they take for granted that you can even be gay in this country.

Do you think we work as hard as we used to?

I think the obviously fundamental answer there is, you know, no. I think if you look at the obviously, you know, average working hours, you know, sort of today, relative to obviously like, you know, sort of factory labor and the Industrial revolution in the 1920s, the objective answer is no. Magnitude of effort is always an important thing to compete on, you know, but, you know, so is direction. And I think the important thing about.