In this monologue, the speaker recounts his path into angel investing, beginning with a move to San Francisco and a product manager role at an idea lab. He reflects on missed early opportunities—such as not investing in friends' startups like Calm—because he didn’t view himself as an investor. The turning point came when he realized that mindset, not capital, was the barrier. He explains the necessity of building a diversified portfolio of roughly 30 early‑stage bets, outlining the typical return distribution (most fail, a few return 1‑3x, and rare outsized 10x‑1000x exits). Lacking personal funds, he devised a creative financing model: partnering with a capital‑rich friend as a scout, earning 10% carry on deals without putting his own money at risk. He details his first angel investment in Lambda School, the negotiation of valuation, and the eventual 10‑fold paper gain. The speaker then shares a scouting example involving a teenage enthusiast, Saroosh, whose tip led to an investment in ApplyBoard, now a unicorn. Concluding, he advises aspiring angels to adopt an investor mindset early, leverage networks for capital, and not wait until they are wealthy to start investing.
Chapters
Out of just that group of friends, I think there were probably 2 or 3 companies that have reached over $500 million in valuation, and I would have been investing when they were like under $5 million. All right, let's talk about angel investing. So my angel investing life started truly about 6 years ago, 7 years ago, when I first moved to San Francisco. I moved to San Francisco. I get a job as a product manager at an idea lab called Monkey Inferno. PM, kind of a boring job. PM, but not at a boring company. This was a very interesting company. It was a company that builds companies, an idea lab. I was the only product manager there. I was the only product guy. Everybody else was an engineer. I'm making $120,000 a year. I don't think of myself like an investor. $120K, living in San Francisco, paying California taxes, you're not like rolling in money at all. I had a little bit of money saved up from my previous company, but again, I didn't think of myself as an investor. So the first thing was— the first lesson of angel investing was think of yourself as an investor, because those first 3 or 4 years I was in San Francisco, I had the opportunity— I was doing mastermind dinners, I was organizing dinners, and my friends were the founders of other companies. If I had just stopped working on my company, if I had quit my job and all I did was just write $20K checks to all of those friends, I might have needed $250K, but I would have turned that into at least $5 million just off the success of those friends' companies. I was helping them, and I thought a lot of their ideas were good. I thought a lot of them would succeed. I remember I talked to the founders of Calm early on when Calm was struggling. They couldn't even raise their next round. You didn't know what was going to happen. It was just kind of Alex toiling away. I remember thinking, "Hey, this guy is really committed to this and this guy is really creative. I think he's right about the world. I think he's right that a lot of people will want this. A lot of people will want to have more calm in their life. I think more people will meditate." Obviously, it wasn't clear-cut, but I would have bet on that company. I would have bet on 6 or 7 of those companies. and several of them did really well. Calm now is a multi-billion-dollar company. So out of just that group of friends, I think there were probably 2 or 3 companies that have reached over $500 million in valuation, and I would have been investing when they were like under $5 million. So the lesson I learned 4 years later was, why the hell wasn't I investing in these guys' companies? I believed in them. I had access to them. I just didn't think of myself as an investor. The excuse I gave myself was I didn't have the capital, but the reality was if you are creative enough, if you're resourceful enough, if you're persuasive enough, if you're determined enough, you can get capital. You can get any resource you need. And so that actually brings me to my first angel investment. So the next company I got really excited about, fast forward 4 or 5 years, I still don't, you know, have, you know, millions of dollars in the bank to go write these checks. And I see this company called Lambda School, and I had been thinking about a product like this or a project like this to go do myself. And when I saw it, I was like, "Whoa, this guy is doing a much better version of what I was thinking might work, something I thought about doing." So I started calling the guy, started talking to him, and I told him, "You know, I want to invest in your company," which was true, not a lie. I did want to invest in his company, but I didn't tell him I've never invested in any company, so I definitely withheld that, and I said, "Tell me about your company. I want to invest," and he started sharing his slide deck, sharing the materials, and I'm like, you know, I have to find a way to invest in this company. I thought to myself, okay, I need to invest $25K in this company. Okay, no problem. I can sell a stock that I own, or I can just take some of my savings and do this. One company was never going to be a problem, but with angel investing, you need a portfolio of companies because you're investing in early-stage startups. This is extremely high risk of failure. So in a portfolio of 10 companies, You would expect some kind of distribution where you're going to get 4 or 5 of the companies to go to zero, 2 or 3 of the companies to return somewhere between 1x and 3x, and then hopefully you end up with 1 or 2 companies that actually break out and do 10x+. Ideally, you get to something that does 1,000x+ or 10,000x+. Those are the early investors in Uber, for example. So anyways, I always knew I could invest in one company, but I never— you need about 30 bets to really be, you know, an angel investor, to have enough of a portfolio where you give yourself a chance to succeed. So, you know, I was sitting there doing the math and I said, if I need to invest $25,000 in 30 companies, I need $750,000. I didn't have that, so that's why I didn't think of myself as an investor. But what I did was very smart. I got to give myself credit on this one. When I knew I wanted to invest in Lambda School, I said, okay, how do I get the money to invest in this? and so I talked to a friend, and I said— who I knew invested— and I said, "Hey, I have this company that I think is really great. I want to introduce you to them. And in general, I see a bunch of companies that are really interesting, and I know you like to invest. Do you want to do a deal where, you know, I can sort of be a scout, I can be a sort of a venture partner, an entrepreneur who can help you with your investments?" and we can set up a deal. So here's what, you know, the first deal we set up was, cool, any deal we invest in, I get 10% carry, meaning I don't have to put any capital in, I take zero financial risk, and I get 10% of the upside after he's paid back his investment. So it's not huge returns, right? Like Sequoia Scouts— Sequoia is one of the biggest venture capital firms— they had a scout program and they gave 50% to their scouts. You know, they were extremely, extremely generous, or 45%, something like that. So this wasn't that, but then again, Sequoia didn't pick me. They didn't even know who the hell I was. So I took what I could get. And I realized in order to get into good companies, if you talk to one company, they usually want to know what other companies have you invested in. And so I knew I needed to start building a portfolio of labels. So a bunch of logos that I could point to and say, "Yep, I invested in that company. I invested in that company and that company." You would be in good company if you were with those companies, right? That's the core idea. So I said, let me start building this portfolio. This guy's willing to put up all the cash. I get a piece of the upside. Let's do it. So we wrote the check into Lambda School, and I'm very grateful to him for, you know, bankrolling me in that. And I think it was a, you know, fair enough deal. And so we invested when it was, you know, it was still a pretty expensive deal because by the time I organized this, the valuation had gone up about 3x. So I lost a 3x return just in the time it took me to get, you know, sort of a backer in on the deal. If it was just my own money and I could have invested after that first phone call, I would have. But anyways, it's gone up about 10 times in value since then, that investment, which is illiquid, but that's the sort of paper valuation of that company today. So that was the first dip in my feet in the water, and I said, "All right, that was good," and I made a deal with myself, which is, "Cool, I'm going to try to invest in about 5 to 10 companies per year, this is what my goal was. I said, you know, I think 5 is the right sweet spot unless I'm, you know, if I have free time I'll go do 10 a year. But I'll do 5 a year and whether it's my own money or other people's money, now I'm thinking of myself as an investor. So that'd be the first thing I would say to you guys is if you ever want to invest, if you ever want to be an angel investor and play this extremely high-risk, high-reward game of startup investing, The number one advice I would give to you is don't wait till you're rich to do it. Because at that point, you know, the financial returns, it'll just be a part of a broader portfolio. It's not going to be that exciting. But if you really want to do this, start thinking of yourself as an investor from day one and find ways to access the capital. There are a ton of people out there with capital, myself included, who would love for you to be bringing them deal flow and would happily give you carry on any deal that they invest in. I remember there was a guy named Saroosh who was a 13-year-old kid living in Canada, and he used to use our product. We built this website called Blab. It's like kind of this Zoom type of product. He used to use Blab all the time, and he was like, he came to me and he said, "Hey, I want to—" I don't even remember what our arrangement was, but basically I told him, I said, "You want to learn about this stuff? I want you to go scout out 3 companies a week. Email me the best one, you know, the best one that you saw." and why you think it would be a good investment, why you think it would be a bad investment, and your kind of overall recommendation. And one of those companies now, several years later, he's I think 20 years old now, so 7 years later, the very first company he sent me is a company called ApplyBoard that just raised money at a $1.1 billion valuation. He brought that email back up to me, emailed me again being like, "Hey, why didn't you invest in this thing I told you about?" I was like, "I don't know, you were 13, I didn't believe you." But yeah, there's a bunch of examples like that where you can bring deals to other people, and if they invest, you can get carry. And you can bring it to multiple people, so you don't have to be exclusive with any one person. You could say, great, these 5 people all agree that if I bring them a great deal, they'll give me a slice of the upside. Great, you could, you could do that with 5, 5 different more established investors at any given time. Okay, enough on that.
