E32 Incubating a space factory at Founders Fund with Delian Asparouhov

All right, welcome everybody, to another episode of Sandhill Road. I'm super excited to have my guest with me today, Delian Asparouhov. Hope my Bulgarian pronunciation was correct. He's a principal at Founders Fund and also a founder. Really excited to have you here with me.

Thanks so much. Excited to be here.

Where does it find you? Is it in Miami?

I'm a Miami resident now. As of eight weeks ago, no city in the world like this. And if you ask, you know, moved here to the great state of Florida, which feels funny to say, but the saying in Florida is further north you go the further in the south, you are so thankful by being down at the tip. It feels like a, you know, major metropolitan.

I mean, you're working together with Keith Roboyce, who's been quite open about Miami becoming the next tech hub. But maybe to kick things off, let's talk about your content creator journey. Whenever I have another fellow podcaster on the show, I'm really excited to talk about, you know, what's their, their mission, what's their segment that they like to cover? And you're the, the content producer of a podcast called the Operators. First of all, we both started around the same time, and I think it was second or third quarter of 2019, and everybody's asking why another tech podcast. But what I like about yours is that you're sort of covering what's not otherwise covered. I feel a lot of the tech podcasts are about founders, maybe about venture capitalists, but if you look closely, there's a second line of defense in some of these breakout companies. And you had operators from companies such as Allbirds on Spotify, Shopify as well. People who are in the trenches on day to day basis. What gave you the spark to cover those instead of the more typical founder first line of defense people?

Yeah, I'm trying to remember the exact moment that inspired the tweet that sort of kicked it off. But I think it was basically just like coming back from a board meeting where I was just watching a founder where he basically got to stand back in his board meeting and just his executive team came out and presented everything. And it was just this stark reminder that a lot of the really great breakout companies, the CEO is basically just responsible for storytelling, fundraising, and then executive recruiting. And then they basically don't touch anything in the company. They just have the executives run the business on their behalf. Basically felt like that that was a somewhat undertold story. And then one day was, yeah, just like, literally, I think like I'd Just gotten out of the shower, and I was like, you know, what if, like, a way to sort of COVID these people is I do a podcast where I explicitly refuse to interview any VCs, any founders, and explicitly, you know, only interview operators. That tweet went super viral. And so I was like, oh, well, I kind of said it as maybe a half idea, half joke. But, yes, I really need to follow through on it now. And so, yeah, I started off by interviewing a couple of the sort of favorite operators that I'd ever worked with. My first guest was Kelly Wright. She was the BAS sales hire at Tableau, which is this, like, analytics company. Basically took the company literally from, you know, at the time when she joined, I think they were like 500 or 600k in ARR. She grew that team all the way to a billion ARR. And being a public company over the course of, I think it was like 16 years or something like that.

Believe it or not, I actually listened to that episode back when it dropped, and I remember finding it quite inspiring that she was sort of saying that she had, like, literally no qualification for the job. So I've been with your show from the beginning. I think it's a great segment that you're covering there. How do you sort of come up with the guests? Because it's not all founders fund portfolio companies from what I can see.

Yeah, I have to admit that my EA helps me a lot with the podcast. You know, she helps a lot with the sort of, like, the research, the editing, the actual publishing. The general, you know, marker that we use in our research is we typically try to find companies that recently cleared north of a billion dollars. So we relatively regularly repull that list. And we basically look through the team and ideally try to find people that sort of match Kelly's Persona. That is, they joined relatively early so they can speak about the early days of the company, but then also scaled with the company. That third part is the particularly difficult part. There's a lot of early employees at companies that aren't able to turn into managers and executives as the company grows. But you do, you know, sometimes find those rare instances where somebody's the, you know, in the first 10 employees and still ends up being there, you know, a decade later, and a significant, you know, part of it. And so that's the, like, you know, ideal profile. Obviously, you know, some have been from, you know, recommendations from prior guests. The most exciting one is the, you know, the recent one that we did. The president of Instacart, again, you know, is Extremely influential at Instacart. A lot of the reason why they, you know, really exploded through the pandemic and managed to survive, you know, sort of, you know, having to scale, you know, whatever 7x over the course of like, you know, three months and hire 200,000 people was because of him. The way that we discovered him was he actually was a listener of the podcast and kind of realized he's like, oh, I think I match these guests. And so he just reached out, he was like, hey, I really like the podcast. I think I would be a good guest for you. Would you like to have me on? And I was like, oh my God, yes. And that was also one of those moments where I was like, this podcast is so worth my time. It doesn't necessarily like, bring more founders and deal flows. It's not like directly related to like my core day to day job. But I just really admire people like him where it's like they're the sort of bread and butter of Silicon Valley. That is like the most limited, like, resource in some ways. Like, you know, there's a lot of, there's a lot of founders, especially in the seed stage that, you know, get funded, there's a lot of VCs, there's a lot of dollars, there's a lot of, you know, individual engineers. But the people that founders can actually recruit that have had experience building companies that can help them actually build that company, that's probably, in my opinion, one of the most limited resources in Silicon Valley. And so people always talk about, oh, there's a limited resource of like, you know, world class CEOs. Well, it's mostly that, like, there's very few CEOs that could be such great recruiters to find those executives. But if the executives were sort of in oversupply, I think I would actually be sort of more companies that would be successful. But those stories are very rarely highlighted. And so once every three or four months or so, we have to come up with a whole roster. And I do my best. It's a lot easier, for example, in companies where I've been deeply involved. So, for example, Fair, I've gotten to see sort of from that initial seed round right before YC all the way through to the latest valuation that just got announced was 7 billion. And I've gotten to watch the company from afar, but because of that, of have gotten to know the team. You know, a lot of the team worked with me. I worked at Square while they were there. And so it's a lot easier for me to know who has been very influential at the company because I'm so close to it versus some companies that are outside of the portfolio. It's not always as easy or as obvious who to interview. And so sometimes we have to do a lot of reference checking and asking the CEO and things like that to figure out sort of who would be the best person to interview.

Absolutely love that. And I mean, I think I can't tell you how often I've heard the Brian Jeske sort of talk about the founding story with the design conference or the doordash founders talking about the Paolo Alto to macaroon store that gave them the idea. And these, you know, these stories get told over and over again and you become a little bit inundated with it. You know, it almost feels scripted at one point in time, you know, whereas the other things that you cover, it feels like it reminds me of meetups back when there were still physical meetups in the Bay Area. And I would just walk into Instacart and talk to the head of data science, you know, learning new stuff and actually new insights from within the company. Maybe let's segue to your own operator experience. And you started out at the young age of nine, dropping out of college to pursue the founder life and then later worked at Teespring as an operator. I had Lee Edwards, who you might know, who was the CTO at Teespring on the show as well. Maybe talk a little bit about your own operator experience.

Yeah, I mean, I had my first software internship, I think actually like somewhere between 9th and 10th grade. That I think was like the beginning. Obviously that was a very sort of small company. It wasn't necessarily in Silicon Valley. I feel like the first time I started getting into the world of Silicon Valley was actually when I was 18 via this internship at Square. When I interviewed, it was about 100 people. When I joined, it was about 130 by the time I left. Over the course of my internship, we were almost 300 people. So, you know, got to watch the company go through a ton of hyper growth, a ton of, you know, products that got shipped while I was there. The like, very, very earliest version of like, you know, sort of Square Cash was just being launched then. It was called Square Wallet back in the day, you know, they like PM on. My product that I, you know, worked on for was actually Brian Grassidonia who now runs all of Square Cash. And so, you know, in some ways it was just like this very formative experience. You know, Keith Rare, boy, the person that I like you know, learn the most from venture capital is the COO at Square. That original sort of three or four months is what really sort of brought me to Silicon Valley and got me excited. Excited about maybe not finishing my degree and instead getting back out to Bay Area as soon as possible. So, yeah, I learned, learned a lot from there. You know, I got to just watch how engineering teams got run. Right. I was a part of the Android engineering team that was quite high quality at Square. We had these, you know, all hands every week where Jack and Keith would both present to the entire team. I actually remember this one very particular presentation that Keith did maybe the first week of August 2012, where for the first time in the prior month in July, square hadn't grown 20%. Basically, month over month, we'd only grown like 2 or 3% or something like that. The company was kind of in a panic because, like, up until then, like, it just been super solid, solid and consistent growth. And I remember Keith gave this incredible presentation breaking it down, which at the time I thought it was like statistical black magic. Now I recognize it as like, it was a cohort analysis provided a very accurate cohort analysis that basically just showed, look, every year in July, because we're so indexed to the volume of SMB businesses in the United States, a lot of people just go on vacation and they don't spend as much money at their local SMBs. And so despite the fact that we actually did add a huge new cohort of businesses, it wasn't enough to mitigate the fact that we're now at large enough business that all our pre existing cohorts dipped during July and so looks like we're flat. But he basically was like, I can predict that in August we'll actually grow 25%. We'll have this new cohort and we'll have another one, and it'll all like, you know, rebound. And then lo and behold, you know, we did end up growing, you know, 25% in August. That was also like my first inspiration to like, oh, there are ways of operating in Silicon Valley where you use math and statistics and the principles behind computer science, but not for writing code, but instead for like operating the company. And it was that first spark where I was like, ah, like, you know, I, you know, I literally remember like leaving that, you know, all hands and being like, whoa, I want to work with that guy and I want to do his job. That's the job that I want to do, not the software engineering job. And so, yeah, I ended up applying for the thiel Fellowship, sort of later that year, called Keith as a part of the process. I actually emailed him and I was like, hey, Keith. He at the time, had switched over to being a venture capitalist. And I was like, hey, I don't know if you remember me. While you're a coo, I was a random Joe Schmo intern, but I'm thinking of dropping out and starting a company. I would love to talk to you and get your advice. He gave me a bit of advice on the company. I ended up grabbing lunch with him when I moved out to the area and dropped out and then convinced him to actually join the Teal Fellowship. Tells you to create, like, what they call, like, an advisory board, where it's sort of like a group of people that you admire in Silicon Valley you just grab dinner with once a quarter. And so asked him to join that and started to grab dinner like, once a quarter eventually. And one of those dinners actually started talking about, like, you know, soccer, and ended up, you know, realizing that we had this shared love of soccer. And so ended up, you know, starting to get to feel better through that. As I sort of dropped out and, you know, started working on Nightingale, you know, it started to teach me about a lot of things that were very different, let's say, than like, the square experience. Right. Part of it was, you know, I had to basically do sales for the first time. I had to go and, like, you know, find, you know, individual customers to go talk to that would want to purchase our product. It was like a autism therapy sort of emr, like, workflow tool. I had to learn about fundraising. Right. Eventually I convinced Y Combinator to let us in and for Keith to actually invest as an angel, rather than just meeting with me quarterly and a couple of other investors. You learn about marketing. I had to go to conferences and pitch a bunch of our potential customers all at once. I had to learn about hiring. Hiring our first sales, interviewing my co founder, hiring our first marketing hire. You just learn a much more diverse set of skills when it's entirely your company. Now, was I particularly good at any of these? No. I both was not a particularly good marketer, not a particularly good salesperson. I was an okay fundraiser. And, you know, honestly, I kind of dropped the ball on the software engineering side because I, you know, my head was in so many different places, you know, at once. But, you know, we got the company to like, you know, kind of robin profitability. You know, it ebbed and flowed. But, you know, there was a couple months there where we sort of Cleared, you know, I think like roughly 10k mrr. And so it was enough to kind of, you know, pay the rent and keep the company afloat. But yeah, after about three and a half, four years, sort of banging our head against the wall, never really figured out how to create a scalable revenue engine. Ended up sort of soft shutting down the company where like we didn't really turn off the servers or anything but at some point just the team kind of went off and started working on other things. Then I joined Teespring, partially through some influence from Daniel Grove, Sam Altman and then you know, partially Keith as well and got to join as the VP of Growth. And that was a really exciting sort of operating experience where you know, it's like whatever. I was a 22 year old one time failed founder at the time and typically obviously a 22 year old failed founder definitely can't get a like VP of growth job. But Teespring at the time was somewhat floundering. They hadn't growing, if anything declining revenues for several years. And so sort of executive team and the founders were willing to kind of take a bet on me. I really feel like that was like my first like, I don't know, more real operating experience where I didn't have to deal with like all the jobs of the CEO. I like fundraising and like, you know, managing the finances, et cetera. I could truly just focus on like operating. Was given a business line that was about I think $15 million or so a year, you know, when I joined a GMV, managed to over the course of like six or seven months, grew it to roughly I think $70 million a year largely through just like, like, you know, I had a team of maybe you know, 10 or so engineers, a product manager, three marketing folks, sort of, you know, a finance slash controller type. There's a decent team that I sort of like handed grew over time and sort of, you know, grew that you know, business line. And so that was where I learned everything from God, like what it's like to actually report to like a real board. Right. Keith is on our board and I had to do that every single week, both managing up and managing sideways to you know, maybe executives that I wasn't a huge fan of or some that I was a huge fan of and wanted to get more close to managing down in terms of keeping the team that I was working with excited, inspired and you know, shipping on a regular basis and focus on sort of like our core, you know, metrics. From there I even actually started to learn more about sales because I took over this like, sales team that worked in like basically what we called like creator sales. So basically convincing like YouTubers and musicians to basically use Teespring, which is a competitor like Redbubble or Zazzle for any of the listeners that don't know that, or Custom Inc. Allows you to make merchandise online. So convinced like YouTubers and things like that to switch their merchandising stores to us to actually learn sales. Like I went and, you know, traveled all around LA and convinced everybody from like, you know, little Dicky to this like YouTuber that made, you know, Minecraft reality TV series switch over their merchandising stories to us and so learned the world of sales and how sales management, like had a team that had like, you know, quotas that they had to like deliver to. And anyway, it's just like, you know, you get thrown into the deep end in some ways. Like, you know, when it's like larger startup like that, you're given a lot of responsibility but learned a ton from that.

Absolutely. And I know from the inside that there was a point in time at Teespring where, you know, a lot of different ideas were bounced around because as you said, they were floundering a little bit. So it definitely wasn't the easiest operator role to take on, maybe. Let's talk about your current project, your current operator role with the company that you actually incubated at Founders Fund, Varda Space. It was announced, I think in last December. 9 million seed round led by Founders Fund along with Lux Capital. It's quite an exciting company. And I think you mentioned that in the past you would have to make an exit like Elon Musk in a boring fintech company in order to get to space. And now they. You can start out right, you're building there.

You know, I think there's a lot of interesting companies that work on what I call sort of space manufacturing for space. Right. So whether they're doing 3D printing in space or building large structures up there, those are, you know, exciting initiatives. But I think of those as more like science fair projects where, you know, they're really great demonstrations of technology. But unfortunately there's not really many people up there that want to buy 3D printed materials or buy, you know, structures. We're explicitly space manufacturing for Earth. This isn't an idea that is particularly honestly novel. People have been talking about it for decades. It's just only more recently, with the dropping launch costs, become commercially viable. Over the course of the last 15 years, the ISS has done really extensive work on showing a variety of different materials that have a lot of benefit from being fabric or building there. I think there's a lot of interesting companies that work on what I call space manufacturing for space. So whether they're doing 3D printing in space or building large structures up there, those are exciting initiatives. But I think of those as more like science fair projects where they're really great demonstrations of technology. But, but unfortunately there's not really many people up there that want to buy 3D printed materials or buy structures. We're explicitly space manufacturing for Earth. This isn't an idea that is particularly honestly novel. People have been talking about it for decades, it's just only more recently with the dropping launch costs become commercially viable. Over the course of the last 15 years, the ISS has done really extensive work on showing a variety of different materials that have a lot of benefit from being fabricated and manufactured in microgravity. Everything from semiconductors that can be produced at higher quality, to human organs that can be 3D printed up there that just can't be done down on a Earth, to cancer drugs having higher potency or beta yields, to fiber optic cables also basically being produced with higher quality as you know, for you know, maybe examples of products. And so our job is basically to take some of the research that's been done in iss, transition it sort of to commercial scale and make it more commercially viable by making a sort of, you know, sort of full stack independently run sort of like space factory. In terms of, you know, my time it definitely like ebbs and flows. So you know, I sort of started taking the idea more seriously sort of like late July of 2020, from late July until basically January 1920 21, I'd say like 80 to 90% of my time was honestly on Varda. There was, you know, basically didn't, I didn't invest. I only did one sort of very small sort of seed stage track at the time was actually into a space company that I was actually researching because of varda. So even then it was, you know, I wasn't like really, you know, trying to invest sort of accidentally happened. Been thinking about sort of microgravity manufacturing for almost a decade but you know, it's very different than really starting to do it in practice. And so talking to all the main principal investigators of various research groups that are working on this finding, you know, co founders business, putting together the initial business plan, you know, putting together the fundraising, talking to people. Anyways there's a lot of sort of upfront work to you know, get the company going. Like, I was effectively our COO for a while, like, you know, incorporated the company, did the payroll, got us insurance, got us our first office, and then on January 19, thankfully we had, I think 11 people start basically the same day. And that took a lot off my plate because, you know, a lot of those day to day responsibilities sort of shifted to them since then. I'd probably estimate it's probably a third of my time. And, and the best advice that I've gotten is actually from Trey Stevens, who incubated Anduril, the previous incubation out of Founders Fund, which was to basically not try to cordone off particular days to be like Varda or ff. That ends up actually being sort of too difficult to do when the task list is kind of constantly shifting between the two. So I'd estimate over the past five or six months, since January, it's anywhere between a third or maybe half my time, sort of week to week. But it's all jumbled all throughout. Right. Like today my first meeting was Barda, my second, second and third meeting were ff, my fourth was Varda and I was back to ff. And then I have another Varda interview after this. So it's kind of back and forth all day. And then the two inboxes on my screen are literally just like, you know, basically, you know, next to each other. And yeah, you know, between the two of them, it's a lot harder to get to inbox zero. Now, occasionally I managed to do it, but it typically, you know, involves a lot more work. And then, you know, this is part of the trade off that I decided to make. You know, I remember, you know, in August or over 2020, talking about this with my girlfriend and saying, like, look, I'm going to lose a lot of my weekends if I do this. And, you know, that definitely has turned out to be the case, like for sure. From August 2020 to January 2021, I think I worked literally every single weekend all the way through. And then I probably guess, you know, since 2021 it's probably been every other like, you know, this weekend I'm going to be in the founder's front office in Miami for probably all of Saturday afternoon. And then Sunday I fly to LA and then be working from the Varda office in LA for all of Sunday. And so you definitely don't get as many weekends as you used to. It's the only way to kind of deal with the whole two job thing.

Yeah, I mean, I mean, there were not a lot of things to do during lockdown? I would say so probably the right time to sort of spend your weekends working on a new company. And you brought in an external CEO I saw as well, who has really substantial experience as an operator at SpaceX, I think having worked there for seven years. And I think you mentioned in the past that at one point you realized that you're a really ADHD kind of person, sort of always bouncing off the wall and that you could become a top 1% venture capitalist because that's sort of the right personality trait for that, but that you couldn't become a top 1% CEO and that's why you rather be like on the investor role and also now in this incubation role doing the sprint as a coo, as you said, but then taking it a bit slower and handing it off. But talk a little bit about how you found the CEO and how this sort of all came together. I think it's quite interesting as you don't see that all too often. Incubations.

Yeah, I mean I've been thinking about the sort of microgravity manufacturing space for quite some time actually In January of 2020, even before COVID I spent some time talking to the various were working on related technologies to this and unfortunately came away thinking that, you know, they didn't necessarily make sense for us as venture investments at a founders fund. And so then as Covid hit and I had a bit more free time in July or so, I started thinking about, okay, how would I do this in sort of a venture back of a way. And the important thing was getting sort of independent from the International Space Station. That was sort of the major flaw that I saw in most of the companies or research groups that were working on this. And the particularly sort of difficult part of getting independent of the International Space Station is, well one you can get up there relatively easy now. Right. You know, rocket lab and SpaceX will happily take your money and put you up there getting power and communications while you're up there to the factory. That part also relatively easily. Right. You know, a decade ago you'd have to custom build a satellite yourself. You'd have to work with the government, probably cost you $100 million. Now you can basically buy a satellite off the shelf for, you know, six to $10 million, depending on the exact specs that you're looking for. And so you can kind of buy that off the shelf. But the particularly tricky part is reentry. When you're on the iss, you get a free ride down, you can go on a Dragon or a Soyuz or a Cygnus all the way back down to bring back the materials. When you go independent of the iss, you get to deal with reentry on your own. And so I was like, man, that part seems really tough. And all the researchers that I talked with were like, yes, that's why we're going with the iss, because we don't want to do our own reentry. So I was like, okay, well, ideally the founding team for this type of business would have two people. One, a chief scientist that actually has done this type of microgravity manufacturing before, which our co founder, Daniel Marshall has done. He's sent, I think, four modules now up to the International Space Station. And then two, you ideally want a CEO that has actually built a commercial reentry vehicle. The only people that have ever built commercial reentry vehicles are SpaceX with the crew and the cargo Dragon. And so I was like, okay, I gotta find somebody that was on the Dragon project that had entrepreneurial experience and doesn't have an idea and like, you know, wants to like, work with me on this. And I was like, man, the chief scientist that has done microgravity manufacturing, there's probably like five people in the world that have done that. The like, you know, CEO that on Dragon and like has business experience, it doesn't have an idea right now, like maybe 10 people in the world. And I was like, there's just, I remember telling my girlfriend, like, July, August, August. I was like, there's no fucking way I pull this off. It's like end of 5, end of 10 in the entire world and we all get along and the founder splits all make sense. Like just seems very, very unlikely, you know, I spent a bunch of time basically with one of my fraternity brothers from college. He's actually the head of starship production at SpaceX. Whenever, you know, right now they're testing starships, they need a new one produced every two weeks. He's responsible for actually building it. He probably has, I don't even know, probably north of 100 engineers report to meet each other in person. I think like maybe like five or six days later after that first phone call, and then basically just started doing like weekly zooms. Met together in person, I think roughly every month or so for the next couple months after that. And then also with our chief scientist, we did a couple dinners out in la, and I think by, I probably guess mid October or so, less than two months after meeting, basically decided we were going to pull the trigger, incorporate the company and start fundraising and so it definitely, we moved pretty quickly.

It's really wicked. And I had a feeling that there was a really interesting story behind it because if you have these requirements that only 3n equals 3 potential candidates for each role, it makes it a bit easier, but it also makes it quite hard to identify. And maybe let's segue now from your operator role to your role at Founders Fund. I think what's quite interesting is how many venture capitalists describe themselves and then reflect how the founders describe them. And I found quotes from you, how you describe yourself as a venture capitalist, and then a really honest anonymous feedback on a website that actually reflects what you were saying almost to the word. You mentioned that when it comes to personality, personality traits, you're like, your working style is like really extremely intellectually curious. You know, you're ADHD bouncing ideas off the wall. And then you have the sentence here, probably you didn't mean it literally, but you said, I don't care so much for people's feelings. I'm like radical candor style putting things out there. If I don't like something, I just say it straight to their face. And then I found this quote from a founder who said, Delian's greatest strength is his brutal honesty and the fact that he does not pull punch. When we weren't growing fast enough, he told us and he saw weaknesses in our business and unlike many other of our venture capitalists who were sort of pussyfooting around and he was really straight to the point, he realized these errors and Keith has really taught him well. Obviously great feedback if you get an anonymous potential troll mirroring your own perception. But maybe if you had to reflect on how you would portray yourself today and whether this still reflects how you think of yourself as an investor.

Yeah, I mean, I definitely, I still think it's accurate. I'm definitely in the world of investing you for a different reason maybe than some other investors are. There are definitely some that come into it from a pure financial background, especially some of the crossover hedge funds come at it from a very deeply analytical and purely ROI driven mentality. I definitely come at it from having been a former founder. Part of the reason I wanted to become a venture investor was I wish that there had been investors like me. I wish there had been somebody that was super direct with me and didn't pull back any punches, told me exactly what I was doing wrong versus right and really helped me along my journey and didn't feel like I necessarily had that when I was working on Nightingale. And so yeah, I try to represent that as best as I can. It definitely gets harder as you sort of invest in more companies, you're on more boards. Your ability to do that for every single company definitely gets tougher and tougher. But, yeah, I generally say that those quotes are reflective of. I think part of why the founders that I work with, like, working with me, is because I give them very direct feedback. I help them sort of think through particularly tricky problems and provide a perspective that is maybe a little bit broader than they're able to, you know, see from their perspective from their individual company. You know, I only invest in companies where I'm actually sort of, you know, excited to get up every day and like, you know, work, work on the company. Like, I don't really invest in, like, for example, like enterprise SaaS, like consumer social. Not because, you know, I don't find that those could be potentially ways to make money, but because those aren't, you know, companies or problems that I want to wake up every single day and work on. Right. When you look at a lot of the companies I invest in, they reflect very deep personal passions of mine. Ate sleep. I've been insomniac since I was 14 or 15. Investing in the company and supporting that founder is a deeply personal mission. I would do that even if Founders Fund didn't exist, basically. And so most of the companies in my portfolio reflect that.

I think that's something that I also quite like about Founders Fund in general, that it's a place where you can hold contrarian views. It's something I really appreciate about the firm, I guess, maybe. Let's talk about one of your portfolio companies. I saw a tweet of yours, one of your LPs, I guess it was back at Koshla, asked you about it, where you said that you recognized the writing on the wall when they were just at the seat. And it was Fair.

A marketplace to connect independent stores and makers and help their businesses grow. Faire pays makers for their goods up front and builds connections with retailers who want to carry them. Faire also empowers local shops, helping them find curated products that are perfect for their shelves. It's time we all came together and made the marketplace fair.

And you sort of recognized some patterns there, that they were on to something really great and something. Something bigger. Maybe talk a little bit about the journey there.

To be clear, I can't necessarily claim Fair as my personal portfolio company. That was definitely sort of. Keith led the round both at Coastal Ventures, several rounds with a seed in series A. And then you know also Founders Fund. But my first week as his chief of staff was actually the very first ever Fair board member meeting. Part of it was just having known those founders for quite some time, you know, their experiences at Square, and then just seeing how clear of a vision they had, how large of an opportunity was ahead of them and how big the market was that they were tackling. I thought they brought a sort of very unique value proposition to the table. You know, for the listeners who maybe don't know what Fair is, it's basically a like wholesale marketplace between sort of local boutique retailers. Think if you're in San Francisco on, you know, Valencia street, whether it's the sort of men's grooming store or the audiophile store or the hair salon, each of those has a variety of different products that they stock on their shelves. And that retail owner, the way that they previously to Fair would figure out sort of what to stock is a catalog. They'll call up individual sales reps. There's basically no digitization in this. Fair came in and basically provided them a sort of like online marketplace from the makers that they would typically purchase from and some additional makers they weren't aware of. These type of makers typically don't maybe have much of an E commerce presence. They're not on Amazon, right? Provide this beautiful discovery experience for these retailers. But then most importantly, they sort of interesting twist that made it clear that Fair was going to be really large because this team had actually come from Square Capital. They had experience in underwriting and lending. And the value proposition that really resonated at Fair was not only for the retailers, not only the discovery of these goods, but also because there was a lending component to the business. Because I could basically as a retailer go on to fair purchase the whatever microphones and headphones that I'd want to stock in my audio file store, but I wouldn't have to pay upfront for them. Instead I could basically just pay when consumers actually purchased it in my store store, or if after 90 days no consumer purchased it, I could basically return it for free. And so Fair's ability to convince retailers to onboard was immense because of this particular value proposition. And I felt like I was like, this is a team that understands both the aesthetics that are necessary for these retailers because they came from Square. And I think Square both develops beautiful hardware, Software, things that SMBs want to use. They actually understand the underwriting. They'll deliver on this like value proposition, actually know how to grow a company that like sells SMBs. And then by the way, the like offline, this particular value proposition. And I felt like I was like this is a team, team that understands both the aesthetics that are necessary for these retailers because they came from Square. And I think Square both develops beautiful hardline boutique retail wholesale market is like 100x larger than Amazon's market cap basically. And so it was like an extremely, extremely large market that they were, you know, going after. So I remember leaving that first board meeting and I was just like, I understand where software things that SMBs want to use, they actually understand the underwriting. They'll deliver on this like value proposition, actually know how to grow a company that like sells SMBs. And then by the way, the like offline understand why people like Keith get paid because like looking and sitting here today, this is extremely obvious. This is going to be, you know, a massive company but it's only extremely obvious from the perspective of sort of a Keith esque figure basically and his ability to like you know, recognize that. So yeah, I remember this LP asked me and it wasn't even like I didn't even have to think about it. I was just like, I know our entire portfolio. There are many companies that I really love in the portfolio but if you ask me, the number one that I think is going to be the largest and the like most fun returner, I think it will probably end up being Keith's best investment ever. No question for me is fair.

That's great. You spend the first time in the Keith world. Living in the future maybe. Let's talk about a recent quite interesting phenomenon. Your colleague at Founders Fund, Everett Randall, had this substack article on, you know, the Tiger Global phenomenon. Obviously Tiger Global preempting sort of every round, every series, seed. This year you had this great tweet on this Crunchbase article around the crossover funds you mentioned there that at the seed Series A differentiation really matters still. Whereas you know, on the growth equity round, because there's so much capital in the market, a number of players have now started, started to compete on terms and preempt the B after the Founders Fund Series A has just landed in the bank. But I do agree with you that probably differentiation at the early stage is still very much a thing and will not go away that quickly. Talk a little bit about how you sort of view the market at the moment and the craze and the crossover rounds.

Yeah, I mean I think it was a somewhat obvious or unspoken, let's say secret of Silicon Valley for the past five years that late stage stage growth technology rounds were just the money Making rounds. You could invest in a company six months before their IPO and you could do it at 1/5 or 1/10 of the price of the IPO and you would immediately get to rinse and repeat that cash and reinvest it into. A lot of the really great investors over the past five years were these growth stage technology investors. SoftBank recognized this and maybe came in a little too heavy and a little too hot and maybe didn't have some of the best decision making, at least it appeared so at the time. They definitely got a lot of flack over the course of 2019. They had wasted a lot of money. They were down a ton on their funds and then DoorDash IPO'd and then didn't matter. They basically made back all of their money on their fund from the doordash investment, amongst many others that they sort of had go well since then as well. Yeah, I think it's actually in some ways really great for founders that this is happening. Right. Like once your sort of business is quote unquote working, your ability to raise capital, capital is much less dilutive, it's much closer to public markets. That is the sort of depth of the capital is almost like semi infinite at this point. A lot of the late stage fundraising processes have actually completely flipped where unlike traditional private investing, you have to go out, pitch a ton of people, you get a term sheet and then you phone around around this, you just say, okay, how many people would like to purchase at this price? And they choose to raise basically as much as they would like to at that price. And so I think it's very beneficial to founders and companies and that maybe you're out outside of his expertise. And having Keith on his board has helped him navigate through those situations. And so I find that I'm starting to be able to provide that perspective for some founders, especially in the world of aerospace, partially from now having this experience operating an aerospace company. But I think that sort of experience will be well rewarded in the world of venture because you'll be able to buy a lot of shares in very promising companies in a Series A. Versus yeah, Tiger can allocate a lot of dollars in those later stage rounds, but we won't own as many shares as the Series A. I mean, I.

Guess what I find, and I probably see the entire market, what I find probably a bit troubling is that you have some of the private equity funds moving into, into this growth space very aggressively and you ask yourself, you know, what's really the play here? I don't find it troubling if you have a traditional seed fund like founders fund, either increasing their reserve capital or raising a specific select or opportunities fund because they have the existing relationship relationship, they have the expertise, I guess, from your side, it's something welcome to have crossover funds coming into these deals and supporting these companies. Get to mark up your deals as well, obviously. But when you talk to founders, I would assume that sometimes you tell them, you know, take it slower because you can't just hire 200 people in the next quarter without, you know, making huge mistakes. And so how do you think about hyperscaling in this environment?

Yeah, there's definitely, you know, downsides. There are companies that will, you know, sort of over raise at, you know, large valuations that then will struggle to grow into those valuations. That can be a very, very painful process. If you have two or three years of your share price being flat, employees can get very frustrated because they've, you know, projected, hey, the company's growing 3 or 4x over the past few years. I expected to go 3 or 4x the next few years. Then all of a sudden having sort of like this, you know, harsh realization that their shares are actually worth just as much as they were when they, you know, bought them can be kind of painful because if you spend, you know, for options, you typically have to exercise them. And so it's like, Wow, I spent $30,000 and I haven't even had that cash now for four years. And that $30,000 has just been sitting in my company's bank account and it's only worth $30,000. Like, you know, prefer to at least put that capital to work somewhere. It comes with potential downsides. But I think if founders are smart about it, and I think more and more are getting smart about it, it can be a very strategic resource. There are definitely a lot of companies on the flip side where Jordache might not have been able to really win the market and beat out Uber and beat out Postmates if not for the south bank round and the that they had because of that.

To wrap up this session, I want to talk about you being in Miami. So what's going on down there with Keith? Saw some pictures that Keith posted of the Founders Fund offices there. But how is it in terms of meeting found? Are you actively pursuing companies there, or would you say that most of the companies that you're looking at are still in San Fran?

Well, in the past four years, very few of my companies have been based in San Francisco. I think building of technology companies has Become particularly widespread and decentralized far outside of the Bay Area. Especially if I were to have a geographic concentration. It's actually largely in Los Angeles because of my focus on aerospace. A lot of aerospace companies being based down there. No, I wouldn't also say that Miami in particular is a strong focus area for us in terms of funding companies. Strictly in Miami, but by default, being here, it is definitely happening more often. And we're also definitely importing a lot of companies. So companies that were based elsewhere, but then as a part of us investing or deciding to sort of like move to Miami, that's happening relatively often. There's only maybe two fundraising rounds that we've done recently. You know, one was a truly born and raised. The founder really born in Miami, raised here and built a company here. And then one is from working at a larger technology company that has an office in Miami and have been here for several years. We're definitely doing some amount of Miami investing, But it's an incredible ecosystem to get to be a part of such an early stage with such immense growth. The one liner from the mayor that I think is quite accurate is Miami is becoming the capital of capital. You have everybody from Keith Raboy, Dan Loeb, Dan Sondheim, Antonio Gracias, Barry Sternlich, those five people that I just named, I would probably guess manage on the order of 300, $350 billion, are mostly focused on private venture capital. They're some of the best investors in the world. You know, some critiques that people have given is like, okay, well, it's a bunch of investors moving there. But, you know, it turns out, you know, a lot of founders do want to be near where their investors are. Some do, not everybody. And so they're choosing to, you know, move their companies to Miami. And so it's been incredible to see the number of companies in our portfolio signing offices, leases down here, hiring engineers down here, you know, building their, you know, their teams down here. You know, I think that will only continue. And I think, you know, it does sound crazy to say it, but I think it's actually possible that Miami becomes the largest tech ecosystem in the United States. United States, by the end of the decade. And most of that just comes down to both how quickly the ecosystem is growing, but then also the willingness for the city to absorb it. Right. When I walk around Miami and, you know, three blocks, I see more cranes than I see in all of the Bay Area. Bay Area has basically looked the same for the past decade. You know, while I live there, there are sure Some buildings and some changes, but it's effectively a city stuck in molasses. And fundamentally startups grow like exponential equations. And if the, you know, city isn't willing to absorb that, there come to be a lot of painful problems that, you know, San Francisco has been seeing over the past few years, years. And I feel quite optimistic that Florida and Miami in particular are going to be able to sort of withstand that exponential growth and because of that become our sort of cities equivalent of Singapore or Hong Kong. That is equatorial international metropolis, tech forward, hyper, hyper growth. And I can't wait to sort of see that happen.

I love it and you're definitely a trailblazer in that regard. It's definitely great to see you making a big stance here and a big statement for everyone that great companies can be built from everywhere. So, Dillion, thank you so much for being with us here today. But maybe for the audience out there, how can people find out more about you, what you're up to?

The easiest is, you know, just follow me on Twitter and I post all the various podcasts, events, things that I'm doing on there. The handles. Ibolgar Z E B U L G A R Wonderful.

Thank you so much.

Thanks for having me. And you know, DoorDash IPO'd and then didn't matter. They basically, you know, made back, you know, all of their money, you know, on their fund from the DoorDash investment amongst many others that they sort of had go well since then as well. Yeah, I think it's actually, you know, in some ways really great for founders that this is happening. Right. Like once your sort of business is quote, unquote, working, your ability to raise capital is much less diluted.