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

1. 0:00 – 1:06

   Intro

   1. DADelian Asparouhov0:00

      (instrumental music) Western Europe is gonna look like a third world. The United States now has a sort of stronger, multi-generational aristocracy than Europe has. Extraordinary careers when you're a junior inventor 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. ServiceTitan 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 moat.

   2. HSHarry Stebbings0:40

      Ready to go? (instrumental music) 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.

   3. DADelian Asparouhov1:02

      Of course, yeah. Thanks so much for, uh, you know, having me. Been looking forward to the conversation

2. 1:06 – 5:58

   Background Experiences

   1. DADelian Asparouhov1:06

      as well.

   2. HSHarry Stebbings1:06

      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 in growing up that shaped you and how you think today most, do you think?

   3. DADelian Asparouhov1:22

      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, you know, sort of time I spent in America. I remember one of the moments that I felt like I really realized, you know, 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, I used to go basically every summer as a kid until I was about like 13 or so, and then for, uh, the next couple years as a teenager I had like internships or, you know, math camps, et cetera, just like things that kept me in the States. And then I went back, uh, when I was, I wanna say like 19 years old, uh, for, you know, maybe a month, month and a half. And I remember, uh, interacting with my cousin who's, uh, basically like, you know, sort of my same age. Um, our dads are basically the same age. We, like, you know, grew up around each other all the time and, and 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 both 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, 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've shared obviously on, you know, sort of Twitter, um, et cetera. I feel very grateful to have had a, you know, healthy, happy, et cetera, you know, 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, um, 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, you know, sort of have a, have a home.

   4. HSHarry Stebbings3:24

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

   5. DADelian Asparouhov3:28

      You know, I think it, you know, sort of flipped where post-college, falling in love with Silicon Valley, getting into the, 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 the day it's just like, this is the greatest country on Earth. Um, and I, I think that, you know, uh, people should learn from, you know, sort of this country. And I think actually, you know, 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, et cetera, 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, um, falling into basically like, you know, sort of socialist states, constant, you know, 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 Union, 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, um, is on a much more interesting trajectory. And so I think if you extrapolate this progress out for another decade, Western Europe is gonna look like a third world, you know, sort of country. Eastern Europe is going to be, you know, sort of rivaling, um, a lot of the first world, you know, sort of countries.

   6. HSHarry Stebbings4:44

      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?

   7. DADelian Asparouhov4:52

      Yes, other than the caveat of I think Eastern Europe is maybe, you know, sort of the only hope where, you know, if you look at, you know, Bulgaria in particular, um, one of the now largest, uh, nano satellite integrators, Endurosat, um, 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 Jon Galt?, 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. Um, now, will they want to stay in the EU? How is that going to work over the next, you know, sort of decade? I think what will probably happen is like you see some of these countries actually start to lea- leave the EU as Western Europe becomes more and more of a drag rather than a producer.

3. 5:58 – 11:09

   The Value of Europe's Culture & Heritage in Today's Economy

   1. DADelian Asparouhov5:58

   2. HSHarry Stebbings5:58

      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.

   3. DADelian Asparouhov6:03

      (laughs)

   4. HSHarry Stebbings6:04

      I, I agree with you partly and I disagree with you. You cannot take away the culture, the heritage, and the hospitality of Europe. My, my dear 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 a th- or Western Europe being a third world country?

   5. DADelian Asparouhov6:37

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

   6. HSHarry Stebbings6:49

      What is the great man theory and the great family theo- theories and how does that work?

   7. DADelian Asparouhov6:52

      Just that, um, you know, uh, it's sort of the oppo- uh, opposite of the, you know, sort of Chinese philosophies of, you know, sort of th- the individual, you know, does not matter. All that matters is the sort of society, the state, and the, you know, sort of collective. You know, the- 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 a, 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, um, uh, a- a- 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 multi-generational, you know, sort of effort comes from the, you know, sort of fundamental bloodlines. I think in some ways, I would actually argue that the United States now has a sort of stronger multi-generational aristocracy, um, 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, et cetera 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 elites, et cetera. You know, a 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, uh, 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, uh, but I've definitely, you know, glommed onto it. But from the, like, sort of Davos elite, um, that, you know, in some ways began in the 19, you know, 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, uh, Vanderbilt, Rockefeller, et cetera analogy is now going to be the Musks, 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, you know, sort of 100 years where these, you know, sort of family lines are going to have signified impact on the shaping of our, you know, sort of future in the United States. But I think, you know, sort of Europe has completely, you know, sort of discarded that and is so vehemently against, you know, sort of the aristocratic elite in some ways from a, um, 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, uh, versus at least in the United States, we will admit that we, you know, are okay with having, you know, an- an- an aristocracy. We don't try to pass a, like, you know, 90%, you know, inheritance tax.

   8. HSHarry Stebbings9:18

      I mean, as I see, my mother always told me, you know, people in glass houses shouldn't throw stones. Uh, I look to your wonderful nation, uh, and I see a country with a terrible, woeful health care system. Uh, I see incredible, uh, 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. Um, I see an infrastructure which is just ripe for civil unrest with this election and with, you know, some of the l- latest political things that we've seen. I'm kind of going, respectfully, "Who the fuck are you to judge us?" (laughs)

   9. DADelian Asparouhov9:57

      You know, 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-

   10. HSHarry Stebbings10:09

       (laughs)

   11. DADelian Asparouhov10:09

       ... uh, probably, you know, roughly estimate 180 days. We've been launching roughly every, call it, day and a half on average. We've probably done 130 launches in the first six months of 2024. Um, 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 al- 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, um, 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, you know, 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, um, but, you know, in some ways maybe you don't have the Elon Musks without the drug addicts.

   12. HSHarry Stebbings10:57

       Uh, god, I'm enjoying this.

   13. DADelian Asparouhov10:59

       Or maybe they're both drug addicts. (laughs)

   14. HSHarry Stebbings11:02

       I'm... No comment. In case I ever want to get either of them on the show, I'm saying nothing. (laughs) Uh, I- I love a show where you can just free

4. 11:09 – 16:42

   Meeting with Keith Rabois

   1. HSHarry Stebbings11:09

      wheel. Listen, I do want to revert to some form of schedule. You mentioned, you know, in terms of Feeding Bulgaria and Feeding America, and, like, getting into the Silicon Valley scene, one of the most pivotal moments was, I think, probably meeting Keith, uh, 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.

   2. DADelian Asparouhov11:32

      Yeah. Um, so, uh, in summer of 2012, I ended up being an intern, um, uh, at, um, Square. I was actually, you know, 18 at the time, um, and was just so thrilled to be in just, like, what I saw as, like, the center of, I don't know, technological, you know, sort of innovation. And, uh, at the time, Keith was the COO of- of Square and the company was just on this, like, explosive growth trajectory. I think when I interviewed, the company was, like, at 100, you know, person head count. 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, you know, sort of company had a bit of a, you know, 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, you know, sort of 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 100 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. And so you had this basically natural viral loop where the company never basically had to spend on marketing for the first, you know, sort of 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, you know, sort of laying eggs?" And, um, Keith at the time was COO.And he did this, you know, sort of phenomenal all-hands presentation. I wanna say it was like, you know, August 5th, 8th, you know, sort of 2012. Uh, where at the time to me as a, you know, sort of lowly software engineer that had grown up around a family of economists, 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 back room deals, it's Mad Men and they're like, you know, sort of marketing stunts, et cetera, you, 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 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, you know, sort of decrease of growth from the former July ones. And so, he basically showed statistically that he could predict that even though we had f- basically no growth in July, that we were gonna experience 20 plus percent growth in August because all of the cohorts were going to come back and we were gonna add a new one. And lo and behold, in August the early data showed that we were growing basically is- 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 wanna be doing this like, you know, software engineering coding thing." It's like, fine, I'm a, you know, pretty solid engineer, but it's not what I see myself doing for the next, you know, 20, 40 years of my career. I want to do what that guy's doing and I need to figure out, you know, basically how to get to know him. And so, um, we didn't, you know, sort of speak or anything, um, uh, while I was at Square. Uh, but then about, uh, you know, sort of seven or eight months later, um, I, uh, pinged him because I was, uh, about to sort of, uh, move out to Silicon Valley full-time, dropping out of MIT and I'd just been sort of awarded the, you know, sort of, or was in the process of applying for the Thiel fellowship. And I pinged him and I was like, you know, "Hey, I'm gonna be moving out. You know, you're now VC. Um, I would love to just like, you know, grab lunch once a month. You know, you may remember me. I was an intern basically at Square." Um, and I sent him this cold email and he replied within, you know, I think on the order of like five or six hours and hopped on the phone with me the next day, which I just assumed was, you know, sort of his standard response rate. You know, that was how he liked to, you know, sort of, uh, uh, manage his inbox and, you know, calendar. But, you know, sort of five or six years later once I had gotten to know him, um, I did ask him, I was like, "You know, you do not normally respond to cold emails from like a random intern and hop on the phone the next day. You know, sort of why were you willing to do that with me?" And he was like, "Well, I was the COO of Square, you know, while you were there that summer. And Square is a very, let's say, pernickety or finicky, uh, you know, sort of, uh, uh, culture." It's a bunch of designers that all like their, you know, desks being prim and proper. And if the, like, smoothies in the morning have too much banana content, I get like five emails, you know, sort of about it. And yet, you would arrive into the office every single day wearing like short shorts and a tank top. You would like climb on the AC ducts, 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, you know, figure out what this guy, you know, sort of is up to." Uh, but yeah, we started basically grabbing lunch, you know, once a month in Silicon Valley. And eventually, uh, he, you know, uh, had me join his, you know, sort of soccer team and that was how we really got to know, uh, one another.

   3. HSHarry Stebbings16:28

      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, uh, to get harder and see someone's capabilities. I do have to ask you, speaking of kind of lessons from Keith

5. 16:42 – 25:34

   Key Lessons from Keith

   1. HSHarry Stebbings16:42

      there. Kind of a quick fire on Keith, but so many people had so many questions. When you think about three different components, operating, uh, what to look for in founders, and what to look for in companies. First, what did Keith teach you about operating most significantly?

   2. DADelian Asparouhov16:58

      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, you know, sort of Varda came together was sort of what I, uh, what he calls his like sort of Hollywood, you know, sort of analogy of, you know, sort of building companies. Where, you know, if you look at the best studios they don't, you know, sort of AB test their way into, you know, sort of 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, you know, sort of who should be the, you know, sort of major, you know, cast for each one. And so, when they're making the Mission Impossible films they don't go and interview 30 people and d- they debate, "Should they have Tom Hanks or Tom Cruise?" It's like, "No, it's- it's an action movie, it's going to be Tom Cruise and he's gonna 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, uh, produced. Versus, in some ways the 2010s, you know, sort of false or, you know, uh, uh, antithesis of this mentality, uh, was the whole sort of lean startup approach of like AB test your way towards, you- sort of your grand vision. And in some ways this was how he, you know, sort of built, you know, the early days of Opendoor was, he thought through what were gonna 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, you know, sort of Mission Impossible. And so as I was thinking about sort of the thesis around, you know, sort of Varda, I- 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, you know, 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, you know, 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 like had a strong 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 "customer feedback" in the early days of putting together that vision.

   3. HSHarry Stebbings18:52

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

   4. DADelian Asparouhov19:06

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

   5. HSHarry Stebbings19:47

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

   6. DADelian Asparouhov19:54

      Probably the sort of singular, you know, sort of lesson is just what he calls sort of the spark, where, you know, there, 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 Yancey 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, you know, sort of excel in, a 99th, you know, sort of percentile on, that may not always necessarily have to be, you know, sort of specifically, you know, related to the company that they're working on. Like, the way this sometimes shows up practically is a lot of times we'll end up getting really excited at Founders Fund to, you know, sort of back a particular founder because they happen to be like world class in some super esoteric, you know, sort of field, whether that's like the cognition, you know, sort of AI founders that, you know, crushed it at IOI, to, you know, people that, you know, did really well in, you know, sort of college athletics, um, to, you know, Ryan Peterson, you know, sort of running his, you know, sort of freight forwarding, you know, sort of, you know, company from whenever he was like, you know, whatever, 18 years old. And I think it's, you know, sort of looking for and identifying that spark and seeing how does that spark translate to the thing that they're, you know, sort of working on, um, you know, very obviously sort of being their, you know, sort of life's work. I, yeah, I don't know, I carry that with me, you know-

   7. HSHarry Stebbings21:10

      I a-

   8. DADelian Asparouhov21:10

      ... sort of every day, any time that I'm looking to work with a founder.

   9. HSHarry Stebbings21:12

      I agree. I get like literally very uncomfortable and they're like, "For my next thing I'm gonna do this." And I'm like, "Oh." Like for me, I, I, I, there's only one thing I'm doing, is 20VC. Right, I started when I was 18, I will die doing 20VC and I'll be very happy if that's the case (laughs) , um, if they keep me here long enough (laughs) . Um, but, I couldn't agree with you more there. I also find, one, immigrant founders 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, "Hmm, I'll start a business for the first time." You always did something first, started phone repairs-

   10. DADelian Asparouhov21:48

       (laughs)

   11. HSHarry Stebbings21:48

       ... or 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 your-

   12. DADelian Asparouhov21:57

       Yeah.

   13. HSHarry Stebbings21:57

       ... and you crushed, like the track we mentioned before is phenomenal. What are your single biggest lessons on how to succeed in the world of junior VC?

   14. DADelian Asparouhov22:07

       You know, if I, if I were to, you know, sort of boil down, I think, what the success ultimately, you know, um, came down to, it was just a willingness to do things that the GPs weren't willing to do, and using that as their sort of differentiating, you know, sort of trait. In particular, you know, the Sord Health example is, you know, an obvious one where, um, you know, the, the idea of this type of sort of digitized AI, musculos, you know, skeletal, you know, sort of therapy, was one that had been debated, you know, sort of internally within the walls of KV. But, um, once, you know, sort of Virgilio, uh, the CEO of Sord, you know, sort of reached out to me and, you know, said, "Yeah, I'd love to, you know, sort of chat with you," I was just immediately willing to dive incredibly deep into the company, both reading their scientific papers, which no other investor, um, 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, you know, sort of today, my ability to, we can talk about the, uh, you know, sort of Brian-related questions on how does, you know, Varda 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 when the Sord Health, you know, sort of diligence process, which was going incredibly deep on like the, you know, sort of science and tech of the company. But then also, within a week of like a cold email, I hopped on a flight, you know, and took a red eye out to Portugal to go through a new very extensive, exhaustive, you know, sort of diligence with the company, and then also, you know, sort of managed to convince the KV partnership that the following week we should have them basically present to the whole firm. No matter how compelling, you know, sort of the opportunity is, the GP of, you know, Coastal Ventures, you know, Vinod, Samir, David Y, and Keith, Sven, no matter how compelling, there's just no way that they're hopping on a one week turnaround to a, you know, 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 the sort of top of funnel aperture, you know, on opportunities, in a way that, um, you know, the, the GPs are not. You know, I would say that-

   15. HSHarry Stebbings23:54

       Can I, can I, can I, can I-

   16. DADelian Asparouhov23:54

       ... I don't think-

   17. HSHarry Stebbings23:55

       ... interruption be awful? I, I, I-

   18. DADelian Asparouhov23:57

       Yeah.

   19. HSHarry Stebbings23:57

       ... ben, I don't know the others, but I love Vinod and I love Keith. But like, do the best not? Example, I sent Tom Tungers 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. Um, the guys at IVP fly to Bumfuck, Nowhere, Romania, to do UiPath, sorry if anyone's in Romania. Um, they, they fly to, you know, Bumfuck, Nowhere, Germany, see I equated both, so everywhere's Bumfuck. Uh, Bumfuck, Nowhere, Germany, so to do DeepL. Do the best not get on planes?

   20. DADelian Asparouhov24:29

       They do, but again, there's, you know, some level of turnaround of like, you know, Keith schedules an example, is booked like a full like three, four weeks in advance. The idea that like it's gonna be a week long turnaround is impossible. And for his like activation energy, it has to be the junior investors have gone and done some level of diligence, built conviction, and for sure it's to say he will do it at some point. But I was just willing to do it faster, quicker turnaround, and like, you know, 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 a 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 to the United States, pay for their flights, to basically, you know, sort of come, you know, 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, et cetera. The analogy that I like to, or like the, the, the one line mantra is justI think, um, extraordinary careers, uh, when you're a junior inventor do not get built sitting behind a desk in an office and, you know, behind a 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, uh, when you're not, you know,

6. 25:34 – 26:45

   Advice for Aspiring VCs: Deal Volume vs. Selectivity

   1. DADelian Asparouhov25:34

      one of the big general partners.

   2. HSHarry Stebbings25:34

      I'm sure you have a lot of people ask you for advice on entering venture. 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?

   3. DADelian Asparouhov25:44

      Probably, you know, sort of use the same anecdote that, you know, sort of Trey and Brian I think shared on their, you know, sort of interviews, which is, I think in your first year of VC, you do want to just open your aperture and build your sort of like data set on, you know, sort of founders where, you know, again, that first year I think I was effectively willing to meet almost any, you know, sort of founder that was willing to, you know, sort of meet with me and vice versa. Once you've- you've sort of met, call it on the order of 1,000 founders, and especially if in that, you know, sort of 1,000 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, you know, sort of look like. Um, I think you should be very judicious on waiting to pull the trigger until, um, you know, you- you, uh, feel like you have identified the taste, you know, for what that greatness looks like.

   4. HSHarry Stebbings26:26

      I- 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- I appreciated his honesty, but I also thought it was fascinating. I'd 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.

   5. DADelian Asparouhov26:42

      (laughs)

   6. HSHarry Stebbings26:42

      Uh, I didn't wanna lump them in necessarily the same bucket.

7. 26:45 – 29:48

   Common Mistakes Young VCs Make Today

   1. HSHarry Stebbings26:45

      I do have to ask you, what are the biggest fuck-ups you see young VCs make today in career planning in venture?

   2. DADelian Asparouhov26:50

      Ultimately, you need to recognize that, you know, venture is the most, you know, sort of commoditized, um, uh, let's say, you know, industry within, you know, sort of tech. Um, you have no moat other than your brand. The product that you deliver at the end of the day is, you know, US dollars just like anybody else can deliver, you know, sort of that fundamental product. People don't focus enough on, you know, sort of differentiation. They come in and they try to do all aspects of VC generically well and focus on a multitude of sectors generically well. Um, I think, you know, I think it was Sarah Tovel, um, who, you know, Benchmark may not, you know, sort of love me for various comments that I make, but I do like Sarah's, you know, sort of framework and I use it all the time, which is, there's sort of, you know, four or five aspects to, you know, sort of VC and late stage in your career, you do kind of need to be world class at at least like three of those. But early on, you need to focus on one. And, you know, so the five that she breaks down is, one, you basically need a, you know, sort of top of funnel, you know, way to, you know, basically source, whether that's more marketing or sales driven. You then need to, you know, sort of develop a nose for what are the deals that you yourself like and want to champion. You then need to, uh, you know, develop a skillset 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 five is 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, you know, sort of strategy is, uh, "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 fifth, 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 on. I'm gonna spend a lot of time in frontier tech and in particular in aerospace and understand that entire industry extremely well, so that any time 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 gonna 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 gonna 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, et cetera, I'm actually going to pr- make myself extremely useful to Keith's preexisting portfolio of founders, so that when one day I need to have a, you know, try to attempt a deal, Max Rhoads, the CEO of 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 X, Y, Z ways. You should take his capital." And so when you look at, I believe it was TrueWork, it was literally the like, you know, sort of founder reference of Max that ultimately, you know, sort of helped me, you know, sort of get that, uh, you know, sort of deal across the line, which obviously then made me better at, you know, sort of part four of the job.

8. 29:48 – 34:17

   Deals That Didn't Cross the Line

   1. DADelian Asparouhov29:48

   2. HSHarry Stebbings29:48

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

   3. DADelian Asparouhov29:57

      Yeah, my biggest, you know, sort of miss, um, you know, uh, uh, investment and, you know, one that I, you know, sort of think about a lot was in December 2019, uh, maybe it was like November, um, I had the opportunity to double down on Sword, um, and invest in the company, basically, you know, sort of 10, 100 million post. And we had previously actually done a, you know, sort of smaller check into Sword basically as soon as I joined, um, Founders Fund, uh, from KV. Um, you know, I- I really wanted to, you know, I really believed 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, uh, before, you know, sort of going to Peter at FF. You know, I think counterintuitively, um, I think your, you know, 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, you know, sort of consensus amongst a, you know, sort of wider group. Like, if you look at FF, I feel like a lot of the deals sort of percolate from below and as, you know, sort of their set of people, it 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, you know, sort of brought to the GP of the firm. Those tend to be actually how a lot of our later stage, you know, sort of deals, you know, sort of get across the line. And so I think there I, um, you know, sort of critique myself for being so high conviction myself that I just, just tried to go sort of straight to Peter, um, you know, sort of rather than, you know, working within, you know, sort of the broader set of the firm and e- including people that actually had been part of the consensus in earlier checks that we had done at Sword at Founders Fund. Um, but yeah, that one, you know, is a, you know, sort of painful one given that that would be, you know, sort of $10 million that would be a $300 million position, you know, today, um, 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, you know, sort of say it internally is, "You should always go for the path of most resistance when, um, 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, you know, sort of GP shows that you've really, you know, sort of done your homework internally versus I think that 10 and $100 million Post One, I just, I didn't do my homework.

   4. HSHarry Stebbings32:10

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

   5. DADelian Asparouhov32:14

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

   6. HSHarry Stebbings32:22

      Hey, can I just, can I just throw some names around instead? And it's really unfair of me, but tier one elite firms, which three do you most respect?

   7. DADelian Asparouhov32:27

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

   8. HSHarry Stebbings33:10

      Is there anything you'd change about it then?

   9. DADelian Asparouhov33:13

      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, um, at Founders Fund beyond Peter, which is, you know, sort of Brian, Singerman, um, Trey Stevens, Napoleon, you know, sort of Ta. All three of them, um, 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, uh, we have people on the team, uh, today that in a decade are going to be the future, you know, sort of Brian, Napoleons, you know, sort of Treys. Um, I think right now, uh, technically, you know, sort of full-time at Founders Fund, there is only, you know, sort of one person that is under the age of, uh, 20, you know, sort of 7. 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 would b- I, I would say probably the biggest change would be double down on what we've done best

9. 34:17 – 42:43

   The Unique Elements That Make Founders Fund Special

   1. DADelian Asparouhov34:17

      in the past and do it again.

   2. HSHarry Stebbings34:18

      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 Funds so special with the addendum that very few people do not know or consider? So not the, like, contrarian mind, "Yeah, we like big plans and big ideas." Everyone knows that. What that not many people see makes them so special?

   3. DADelian Asparouhov34:42

      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, you know, certain network connections grows by N squared. And so the fact that, you know, I probably won't do the, you know, sort of counting perfectly, but I think there's, you know, call it 11, 12 of us on the investment team today. Um, and so, you know, on the order of, you know, N squared, 130 basically permutations of, you know, sort of connections, that's actually, you know, sort of relatively, you know, sort of possible to maintain quite strongly. Once you actually go to even, you know, sort of 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, you know, sort of not on a, there's no sort of deal by deal, you know, sort of basis, um, mixes the, 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, um, 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 that, like, the rest of the firm didn't like the investment. And I think it's only possible to both collaborate to that 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've used that maybe reflects this is Brian, when, um, y- 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 and that, his, like, speech that he gives is both, like, who's joined, you know, the firm since then, but also, uh, what children have been born, um, into the sort of, like, Founders Fund, you know, sort of family since the last time, you know, we all got together. And in some ways, maybe that anecdote is reflective of that, you know, sort of collaborative familial culture.

   4. HSHarry Stebbings36:59

      Gosh, that's really corny. (laughs)

   5. DADelian Asparouhov37:01

      (laughs)

   6. HSHarry Stebbings37:02

      I didn't know Brian had that sweet side. Uh, no, listen, I- I- I do have to ask, when we think about, you said that voting, d'you think p- uh, voting in investment decision-making partnerships is BS?

   7. DADelian Asparouhov37:11

      I think in most cultures it is. There are some exceptions, obviously, like, you know, sort of thing, benchmarks truly is, right? It is, there is one vote, it's either one or z- I- 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 so that the voting is basically sort of one or zero. That, to me, is a very legitimate, you know, ultimately, like, voting. Is there pro- you know, I don't know the culture well enough, is there a back office politicking, et cetera, to, you know, sort of get to consensus, you know, sort of potentially, and so does that, you know, sort of discount the quality of the votes, you know, sort of potentially? One thing that I very- really like about, you know, sort of Founders Fund is even though our, let's say, uh, 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, you know, sort of deals and decide which ones, you know, sort of we're going to, you know, sort of do, incredibly unstructured. But the, like, voting and decision-making and, you know, across, and I think, you know, um, back in the day, uh, Simon Bannister gave a public interview, you know, sort of about this, about how, uh, we have basically sort of tiers of check sizes. And in order to get those, you know, basically checks across, there's just certain, basically, sizes of, uh, you know, basically, or number of, you know, sort of votes that you need to get it across. 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, um, 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, uh, 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, you know, sort of go to the rest. And so, um, 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 wanna do it or not? And it kind of doesn't matter what the rest of the votes are.

   8. HSHarry Stebbings39:02

      Uh, y- 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, Dalian?

   9. DADelian Asparouhov39:10

      Recently, you know, sort of came back up because one of the founders that I lost the deal on for some reason brought up the, you know, sort of thread where I, you know, sort of mentioned him. Not directly but, you know, somebody asked me, "What deals have you lost?" And I, we mentioned him sort of vaguely. He replied to that tweet and was like, "The biggest mistake of my company building was actually turning down Dalian's term sheet." Um, so that was a very flattering, um, thing to hear. Um-

   10. HSHarry Stebbings39:30

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

   11. DADelian Asparouhov39:33

       It was this guy Nathaniel, I guess since he's now kind of- con- r- sort of publicly confirmed it himself, I think it's fine to say. Uh, it was this guy Nathaniel Manning at, uh, this, uh, company that was doing, uh, basically, uh, wildfire, uh, sort of insurance, tech-enabled using satellite data, et cetera. And I think ultimately that, you know, sort of failure point came down to just, yeah, COVID era, um, uh, I think the company or the founders were not based in the, you know, sort of 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, you know, sort of fly, et cetera, just in the timeframe that he wanted to ultimately, you know, sort of come to a decision. Um, and so he ultimately ...

   12. HSHarry Stebbings40:05

       That's interesting.

   13. DADelian Asparouhov40:05

       ... ended up choosing a firm where he had-

   14. HSHarry Stebbings40:06

       Is that 'cause you were older and you weren't willing to get on a plane so quickly?

   15. DADelian Asparouhov40:10

       So I think there, it was just like I didn't, you know, get to it, you know, um, in terms of top of funnel quickly enough, relative to the round dynamics. But yeah, it was, you know, sort of that one. And then in that thread, I mentioned a second, uh, which is not necessarily coming to me today, um, so I'd have to think about it. I- I- I would guess that it was a, you know, sort of double-down, um, on a, you know, sort of portfolio company, um, where I think if I were to critique myself there, probably, you know, sort of felt entitled to the ability to double down. Now, I've been on the other side of the table, you know, sort of many times, and investor entitledness can, um, you know, really rub you the wrong way as founder.

   16. HSHarry Stebbings40:43

       (laughs) Uh, it-

   17. DADelian Asparouhov40:44

       Nobody's entitled to their pro rata. (laughs)

   18. HSHarry Stebbings40:46

       (laughs) That's interesting, 'cause it is a legal right.

   19. DADelian Asparouhov40:48

       Yes, but, um, things in Silicon Valley don't, don't always operate according to the legality. They do sometimes operate according to a little bit of the character, reputation, you know, sort of et cetera. 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, et cetera.

   20. HSHarry Stebbings41:06

       D'you think this is good for our ecosystem, or 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 we're lucky to manage money for.

   21. DADelian Asparouhov41:18

       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 Parker versus David Sacks 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, you know, sort of self-select into it, where, you know, 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, um, you know, sort of, uh, 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, uh, 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 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 shit actually happens behind

10. 42:43 – 46:55

    Balancing Investor Interests & Founder Alignment

    1. DADelian Asparouhov42:43

       the scenes.

    2. HSHarry Stebbings42:43

       How do you think about a challenging situation, you mentioned Bill and Uber there, I'm, 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 wanna sell your position, 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?

    3. DADelian Asparouhov43:11

       You know, the, obviously, part of why Ia- I really enjoy working at Founders Fund is because of the sort of fundamental, you know, sort of mantra of the firm and why it was started in, you know, sort of 2004. The idea of sort of founder-friendly VCs and not founding founders was, you know, extremely contrarian. Obviously, it's become somewhat consens- consensus, not entirely, there are, you know, firms, um, you know, tier ones that I mentioned, Benchmark, a16z, Sequoia, et cetera, all have examples of, you know, sort of founder o-oustings, you know, in the past, you know, sort of decade. Um, and so in some ways, it continues to actually be at least somewhat, you know, sort of contrarian.

    4. HSHarry Stebbings43:42

       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, that's moronic. Of course you should have the option to get divorced. You, you should never have the divine right to be an ambassador at Founders Fund. If you don't perform, you know, you won't, you won't be there.

    5. DADelian Asparouhov43:58

       Yes, but I think if you just, you know, if- if you look at the fundamental job of venture capitalists is to provide basically, um, you know, a, uh, you know, sort of high beta strategy, and if you look at the highest, you know, sort of 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, you know, perhaps the, you know, sort of company could provide some liquidity if you get rid of the founder, I think, you know, in some ways obviously, you know, sort of, uh, Benchmark LP has made a lot of money by, you know, so Dara becoming the CEO, taking the company public, and today it's cashflow 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 2020s if, you know, uh, uh, Travis is at the helm rather than Dara. And so, um, I think in some ways, you shouldn't overly rely on history, however, Darwinistically, founder-led companies are the only ones that generate the, you know, sort of returns that matter, you know, for VC, and so-

    6. HSHarry Stebbings44:54

       I, I agree, but do you s- ... you should be focused on that over anything else. I agree with you and totally, I'm 100% with you, I hate it when founders,

    7. NANarrator44:59

       (laughs)

    8. HSHarry Stebbings44:59

       ... I meet today say, "Oh, I'm a zero to one person." I'm like, "Great, I'm an out person."

    9. NANarrator45:03

       (laughs)

    10. HSHarry Stebbings45:03

        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 that 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 be there.

    11. DADelian Asparouhov45:20

        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 convinced him to sign papers that he, you know, sort of shouldn't have.

    12. HSHarry Stebbings45:33

        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?

    13. DADelian Asparouhov45:44

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

    14. HSHarry Stebbings46:03

        But you don't think Satya Nadella disproves that?

    15. DADelian Asparouhov46:07

        Um-

    16. HSHarry Stebbings46:08

        Very bold risk, writing a billion dollar check to OpenAI, completely transforming a business that Steve Ballmer had let plateau. Uh-

    17. DADelian Asparouhov46:16

        And, you know, yeah, to, Zuck releases, you know, whatever Llama, you know, three or four, you know, and releases it completely free and 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, you know, sort of AI platform and it's because he's willing to take risks and invest into a level of H-100s that, you know, Satya was not willing to do, because Satya had to, uh, you know, uh, ultimately, you know, serve the, you know, sort of public markets, versus Zuckerberg still has pen- ultimate control over everything that, you know, sort of Facebook does. And so, um, it's not to say that professional CEOs can't take it, you know, sort of some amount of the way. And obviously Satya has, you know, delivered phenomenal returns to investors. But

11. 46:55 – 54:32

    Contrasting Opinions with Founders Fund

    1. DADelian Asparouhov46:55

       I still think at the end of the day, those end tail outcomes aren't possible without founder-led companies.

    2. HSHarry Stebbings46:59

       This is very clever positioning from you, okay? Because you look like a great guy and I look like an evil, old VC.

    3. DADelian Asparouhov47:06

       (laughs)

    4. HSHarry Stebbings47:06

       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. Uh, so I totally understand and agree. Um, 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?

    5. DADelian Asparouhov47:32

       I want to, because this is, you sort of brought up a point, you know, if, if there's a thing that I've learned from Peter, uh, the most, it is, there is always a way to structure your arguments 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, you know, sort of 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, you know, 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 foolish.

    6. HSHarry Stebbings48:07

       Can I ask, before we dive into what you believe that Founders Fund disagrees with you on, like Peter is such a (sighs) 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?

    7. DADelian Asparouhov48:23

       I actually think it, it goes back again to that sort of familial nature at Founders Fund. I think, um, because, uh, he maintains such closeness to everyone on the team, and obviously it's, you know, when you're, you're in your first year there it's probably more difficult. But, you know, once you're, you know, sort of five years in, at that point you've spent sort of so much time with him that this sort of, um, star power or, you know, sort of weight of words, et cetera, you know, sort of goes away when you get to know the, you sort of individual behind the sort of star. And so, you know, if anything, um, uh, 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, if anything, the 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 sort of 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 was this person that, you know, sort of Peter was particularly excited by. And I remember I just like practically jumped in, and I, I don't wanna go into the details partially 'cause 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 has like, you know, sort of brought up to the firm in like the, you know, sort of last six months. Um, and I feel about this so strongly that we just discussed this, you know, sort of framework or path of most resistance. Um, 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, you know, sort of a venture, you know, sort of candidate. This GP may not be the right person to, you know, 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, you know, sort of hire this person." So anyways, point being, I think, you know, even on a tactical day-to-day level, I actually don't think, um, you know, sort of this happens. If anything the, you know, sort of reverse, uh, you know, uh, effect actually sometimes happens.

    8. HSHarry Stebbings50:09

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

    9. DADelian Asparouhov50:14

       I think it's that, you know, sort of fifth part of the venture job. Trey and Bryan are more than welcome to take their approach of, you know, sort of write a check to a founder, but then largely, you know, sort of be hands off from there, because the best founders, um, you know, don't ask for help. The best founders in my portfolio have looked to people that they, you know, sort of really, um, you know, value their opinion of, um, and want those people, you know, sort of around the table. And so, you know, I do spend, you know, e- 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, you know, sort of board, uh, meetings. Um, 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, um, even in the busiest days of Arta, I, you know, still try to, you know, sort of make it to those, you know, sort of board meetings.

    10. HSHarry Stebbings50:58

        Vinod Khosla 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, uh, 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 detracting value. How? How do they?

    11. DADelian Asparouhov51:16

        I think there's a couple different causes. One of the, you know, sort of, um, 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, or one of the most, you know, worst cases that I've seen is when it's your first sort of like, quote unquote, big deal, big investments. It's like the thing you feel like is defining your next three, four, or 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 X, Y, Z sort of short term progress." It's like not quite to the, like, public markets quarterly, you know, sort of, um, you know, hamster wheel, but it starts to approximate to that where you, like, you start to be really, really sort of short term, um, you know, sort of thinking focused and impose that anxiety upon, um, the founder. Yeah, it, it just, it, it ends up (laughs) being this very dangerous, you know, piece of advice. And then, um, 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 X, Y, Z marketing, this candidate, et cetera. I just think that unless you have been, you know, in a true operational day-to-day role in the last, like, you know, sort of three to five years in some ways, your ability to significantly, you know, sort of, uh, uh, provide, you know, high quality advice really degrades. And the only way to keep it, you know, at a, you know, top level is, I think, you know, sort of how Keith does it where he just gets so involved in each of the companies where irrespective in theory if he had done, if he had not done Open Door, Open Store, et cetera, I still think he actually is able to maintain a, you know, sort of significant operational sense because he goes so deep and transitioned directly from operator, uh, you know, sort of to, to investor.

    12. HSHarry Stebbings52:52

        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?

    13. DADelian Asparouhov52:59

        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, uh, 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, uh, my ability to decide on what I would like to invest in significantly improved. In particular, I'd like to, you know, go back to this example of, uh, there's this company that I led the, you know, sort of seed round in, uh, uh, Senra Systems, where, uh, the founder proactively 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 a r- 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 reports, had worked with him as a peer. And so the level of the 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've taken them probably weeks, you know, 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, the, the, the, the people that day-to-day work in this, you know, sort of field. The third is obviously, you know, sort of close rate. Um, you know, I, I mentioned obviously this, you know, sort of recent is not to say that I love investing in these like super, you know, sort of hot competitive deals, but it's, you know, sort of once I've, you know, sort of chosen that I do want to invest in something, since Varda I have not, you know, 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, you know, offering competing, you know, sort of term sheets.

    14. HSHarry Stebbings54:31

        Have you found

12. 54:32 – 59:53

    The Impact of Deal Heat on Company Performance

    1. HSHarry Stebbings54:32

       a correlation between deal heat and success of company when you look back at your portfolio?

    2. DADelian Asparouhov54:36

       No, it's not to say that deal heat means it will not be successful. But if you look at the, you know, 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, you know, 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. Um, you know, I think obviously at Founders Fund we definitely have a bias towards, um, seeing it as a negative, you know, sort of factor, partially because it does typically end up affecting pricing. But I do think there's a set of like, you know, sort of hyper-competent founders. I think in some ways, you know, at, at Varda we take this strategy which is even in a competitive situation, we don't necessarily, you know, sort of take the highest priced offer that we have. In every Varda round, we've actually not taken the highest priced, you know, sort of offer. We've, you know, done what we thought was in the, you know, sort of 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.

    3. HSHarry Stebbings55:43

       You mentioned Ramp's round being a hot one. Uh, 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 Garry Tan and Initialized did. Ramp was an e- expensive-ish seed round. Um, I think it was like 25 or 30, whatever it was. Do you care about price or do you align to Founders Fund's mentality of if it's gonna be a generational defining company, shut up and pay?

    4. DADelian Asparouhov56:05

       You know, sort of closer to the latter, but I do think it still needs to be sort of in family with, um, 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, you know, sort of beyond, even if other investors are willing to offer it, it just means that you're gonna make future decisions that are also similarly, you know, sort of low quality. I think it's in some ways reflective of the quality of the, you know, sort of founder. Um, and, 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, I think that's like not a particularly unreasonable pricing. In some ways Parker obviously, um, was, you know, a- a- a- a similar, you know, sort of situation. If you're like a first time founder and, you know, demanding 25 post, 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, you know, sort of defined viewpoint on where you should, you sort of land. And so, but I, I, I think generally, you know, I'm in the latter camp. And especially because most of the investing that I do is like below 150 post and so, you know, sort of there, um, 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.

    5. HSHarry Stebbings57:24

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

    6. DADelian Asparouhov57:32

       Yeah, it's interesting obviously, you know, my partner Trey 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 that 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, Delian just loves these, you know, sort of low margin CapEx intensive businesses that are like highly, you know, sort of dilutive." Um, and this is in the like 2019, 2020 timeframe where, you know, sort of SaaS still felt like it was the sort of number one thing in the valley. And in some ways, you know, sort of those critiques, you know, 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, you know, sort 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 'cause 2-10 for 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 a island and now all of a sudden there's like 15 different venture firms that have, you know, industrialization of America.

    7. HSHarry Stebbings58:50

       Can I be blunt? Do you not see the glib nature of that being, you know, ServiceTitan, uh, 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.

    8. DADelian Asparouhov59:10

       I think that, you know, sort of product, you know, sort of statement, um, I would, uh, 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, ServiceTitan is actually closer to LVMH than it is to Tesla. Um, and that's fine. People should, you know, sort of invest in, you know, sort of brands that have, you know, sort of great distribution, clearly returns can be made there, but let's, you know, sort of fundamentally recognize that these are, you know, sort of not true technology

13. 59:53 – 1:01:29

    Adapting to a New Investment Landscape

    1. DADelian Asparouhov59:53

       companies.

    2. HSHarry Stebbings59:54

       How does the investor mind need to change with the transition to this very different world of investing that we now face? Like many investors are high margin SaaS investors or consumer investors.This is a 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?

    3. DADelian Asparouhov1:00:17

       What's funny is, like, this is actually what historical Silicon Valley was known for, right? Obviously, we, you know, 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, like, low marginal cost, free distribution, very simple business model is sort of like a freak, you know, sort of outcome of the, like, mid-2000s to the, like, you know, 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, etc., they look closer to, you know, sort of a Vinod Khosla than a, you know, sort of pure SaaS investor, you know, sort of Jason, you know, sort of Lemkin. And so, um, I think what you will see is the, you know, sort of profile of investors start to change. You need these very sort of broad polymaths that can, you know, sort of get up to speed across biotech, material science, aerospace, etc., more so than people whose, you know, sort of skillset purely sits in the world of, like, financial analysis, um, and, uh, you know, uh, software, you know, engineering and product. And so, um, there does need to be adaptation. I think what you'll realistically see is just the, like, you know, sort of ranks of VCs will fundamentally change. I'm not sure that everyone is going to be capable of sort of reinventing themselves in this way. Um, I just think the up and coming classes

14. 1:01:29 – 1:02:17

    The Top 3 VC Firms in 10 Years

    1. DADelian Asparouhov1:01:29

       will look very different.

Episode duration: 1:18:55