Kevin Hartz: "How I Lost Airbnb at Seed Because of an Exploding Term Sheet" | E1180

Kevin Hartz 0:00 NVIDIA becoming the most valuable company on the planet is just the precursor towards the bubble of all bubbles. If you look historically over the decades, that if you just sit on all the companies, you know, and m- most will go to zero. Your power law winners will be so massive, they'll just dwarf everything else. I'm not in the practice of selling. I'm in the practice of finding and building companies and sitting on these things for life.

Harry Stebbings 0:23 Ready to go? Kevin, I cannot believe that we have not done this in person before. First, it's wonderful to have you in London. Second, thank you so much for joining me today.

Kevin Hartz 0:44 Thank you, Harry. It's wonderful to be here in London.

Harry Stebbings 0:46 That is so kind of you. And as I said, I love doing this in person. It's so much nicer for me. Dude, I think so much of

Harry Stebbings 0:53 who we are is shaped by our childhoods. I remember when my mother got MS, and it really was, it was hard, but it was very defining moment for me. When you think back to your childhood, what was a really defining moment for you that sticks out in making you the person that you are?

Kevin Hartz 1:07 Harry, you know I always look for founders that have overcome some incredible obstacles or kind of moved mountains. And, uh, my childhood was fairly uneventful. I just had an idyllic childhood all the way through, you know, wonderful parents, um, and went on to Stanford University. I'd say I, I hit my kind of life sort of crisis or, or uncertainty post, uh, university.

Harry Stebbings 1:36 What was that?

Kevin Hartz 1:37 I would just say I had a, a crisis of, of how I wanted to have an impact on the world. And very fortunately happened to be in the right place at the right time, and that is in Silicon Valley, uh, during this incredible first wave of technology innovation and the internet boom. And so I, I was lucky.

Harry Stebbings 1:57 Can I ask you a weird question? But did you think that you would be successful when you were young? Often people have sometimes inevitability of success. They, they knew that they would be successful.

Kevin Hartz 2:07 Most, uh, f- people I talk to that are founders that have gone on always knew from the very beginning. And I would look up at my father, who is now a retired attorney, and I would say like, "Wow, how am I ever gonna be, do better than my dad? He's, he's a la- a partner at a law firm. Wow."

Harry Stebbings 2:27 (laughs) I, I love that. And it also goes against the like, what you hear, which is like, "I always knew I would be in this inevitability," which is almost quite hard for people listening, because it's sometimes insurmountable. Do you know what I mean?

Kevin Hartz 2:39 It is. Um, and I think it wasn't a drive for success. It was a drive for learning and really not to be bored. And that's why Silicon Valley ... And Harry, when I say Silicon Valley, I'm no longer kind of referencing the geography. It's the wider technology ecosystem-

Harry Stebbings 3:00 Yeah.

Kevin Hartz 3:00 ... is just, uh, so intriguing, so intellectually stimulating to, to all of us. It's like why we really do this.

Harry Stebbings 3:07 I think, you know, your childhood shape us, but so do the people around us. And I spoke to Julia before the show, and she mentioned three people in, in particular who maybe shaped a lot of who you are and how you think, just from the time that you spent with them. One of them was Peter Thiel. And as I want to start on this, I'm a huge Peter Thiel fanboy. Um, what are your biggest lessons from Peter? And how did Peter impact your mindset?

Kevin Hartz 3:31 Yeah. I'm a huge Peter Thiel fanboy.

Harry Stebbings 3:34 (laughs)

Kevin Hartz 3:34 It's, it's the things he, he says are indelible, like these ... H- he'll say things that maybe don't register at the moment, but then later on you'll really understand, you know, what it meant. And he just is somebody that he sees the world in, in a different manner. Uh, I, I would say that Peter, you know, like a lot of people at Stanford, is incredibly brilliant, but it's also that he just views the world under a different lens. And with that lens, he can kind of tease things apart and interpret things in a way, um, you know, that's ... when you look at an object or you look at, you know, one of these tests of an, uh, inkblot, he'll see something very different from

Kevin Hartz 4:16 everyone else.

Harry Stebbings 4:17 I spoke to Roelof last night actually, wh- we'll get to what he said, but I am interested. He's again, another, you know, hero of mine as an investor. Uh-

Kevin Hartz 4:25 Both South African, Peter and Roelof.

Harry Stebbings 4:27 I ... Unbelievable what South Africa-

Kevin Hartz 4:29 Mm-hmm.

Harry Stebbings 4:29 ... exports these days. Uh, w- what did you learn from Roelof?

Kevin Hartz 4:33 Roelof was and is just always metered and always has sound advice. I, I don't mean to make him sound like a boring person or anything, but he is, um, you know, in the biggest crisis when, uh, you know, the ship is being thrown left and right, he, uh, is steadfast and calm. And you know, as Jeff Bezos said, "Is m- uh, always is mostly right." Um, so you know, somebody with s- such good judgment and insights, uh, and so worldly, uh, is absolutely somebody you want in

Kevin Hartz 5:10 your back corner.

Harry Stebbings 5:11 Ab- absolutely is. The final one is Pierre Allamand, who, uh, is, uh, interesting one 'cause it's a different profile to both Peter and Roelof.

Kevin Hartz 5:19 Not South African. French.

Harry Stebbings 5:21 T- totally. And also operator based.

Kevin Hartz 5:23 Y- yes.

Harry Stebbings 5:23 So Pierre, what was the lesson there?

Kevin Hartz 5:26 Uh, well, Pierre, uh, is all about excellence and, you know, how do you up-level to be the, the greatest company, uh, and business and operator that you can be? And he, uh, always had extremely high expectations of everyone around him and the companies that he's involved with. And maybe to give an impression, because I think it's very applicable today, uh, when-He led the investment for Sequoia. It was, it was Pierre, um, and Roelof. Roelof was the junior partner, had just joined, uh, from PayPal and invested in, in Zoom. Um, and when he led that investment, we had our... we started to have regular one-on-one meetings. And in the very first meeting, I'll always remember, he said, "Kevin, I want you to go up to the whiteboard and I want you to write your direct reports down, but I want you to force rank them, you know, one to seven." Or how many it was. And so I, I go and I write the seven names down and he picks up the, he picks up the marker, walks over to the whiteboard, and he crosses out the seventh name and he says, "Fire that person." And it was, uh, a shock to me, but I do see what he was trying to get there. And that is that, um, excellence has to abound in an organization and it's, uh, uh, you know, it was no room for error. And he was sending a very powerful message by doing that.

Harry Stebbings 7:04 That is such a good lesson. And just the seventh? I mean this in the nicest way, like, what about the sixth?

Kevin Hartz 7:11 (laughs) .

Harry Stebbings 7:11 They're not really good enough either.

Kevin Hartz 7:12 They might have been crossed off later on-

Harry Stebbings 7:14 (laughs) .

Kevin Hartz 7:15 ... but we won't, uh-

Harry Stebbings 7:16 You know, it's, it's funny kind of speaking about kind of the talent assessment there. You know, Roelof, your wife, many other people, founders that you've backed, said that Kevin's greatest trait is his ability to spot truly unique talent very, very early. I mean, this is from Roelof saying that you're the best in the world when it comes to this.

Harry Stebbings 7:35 How do you identify true talent from people who are just pretty good at selling?

Kevin Hartz 7:40 You know, I will say a few things. Uh, I like kind of head shrinking, um, you know, teams and CEOs. I like, like you asked, I like to learn about their background. I like to hear what hard obstacles they overcome. And so I got a little embarrassed when you asked me about my background because I probably would have never, uh, given myself, uh, a check for like growing up in an easy, WASPy, white middle class American town with, you know, no hard upbringing in a town full of lawyers and real estate people and doctors, uh, versus, you know, people like Max Levchin that, you know, escaped from Eastern Europe and,

Kevin Hartz 8:18 you know, Chernobyl.

Harry Stebbings 8:19 Let's play a game. How did you first make money? Did you ever do anything when you were young in terms of anything entrepreneurial?

Kevin Hartz 8:26 Um, quite a bit. Um, I did... Y- you know, I always had like a, a little shtick going and I wonder, you know, I do wonder where that came. In, in college-

Harry Stebbings 8:37 How old were you? First one.

Kevin Hartz 8:39 Well, I mean, uh, I would say I was always kind of like selling things on the side in like my teens. But in college I actually had a Facebook business pre-internet. Oh my god, that's old.

Harry Stebbings 8:52 (laughs) .

Kevin Hartz 8:52 Uh, it, it was called Faces in the Crowd and it was a picture book of students on campus. Uh, and, you know, we would get all the students' photos and we would get advertising from, you know, all the local places and then we would sell the books. And I think I should probably go after Meta at this point now, right?

Harry Stebbings 9:13 Right.

Kevin Hartz 9:13 Is it time?

Harry Stebbings 9:14 D- did you do well in school and did you enjoy school?

Kevin Hartz 9:17 I loved school. Uh, I loved learning. I, I had A- ADHD and had to take such a broad variety of classes of every sorts.

Harry Stebbings 9:27 Okay. So it's interesting, you just said that you wouldn't have given yourself money, but like when you actually do the background test, which is exactly what I just did on you on Founders-

Kevin Hartz 9:36 Mm-hmm.

Harry Stebbings 9:36 ... like you would be smack bang in the middle of my, "I'll give you a check."

Kevin Hartz 9:40 Mm.

Harry Stebbings 9:40 Why? Great entrepreneurs always start something early. No one starts something when they're 25 having come out of s- MIT or Stanford for the first time.

Kevin Hartz 9:47 Mm-hmm.

Harry Stebbings 9:47 Always through their own entrepreneurial flair early. And two, you either hate school or you love it. People that are okay tend to not be great. Really interesting, the binary's where you get great. And then also like ADHD is another... You know it as well as I do-

Kevin Hartz 10:00 Oh, wow.

Harry Stebbings 10:00 ... clear sign of like the best founders have it. Can I ask you a weird one? And, uh, you know, I had Ara from ServiceTitan on the show last night. I had Daniel from UiPath on the show a couple of weeks ago.

Kevin Hartz 10:10 Yeah.

Harry Stebbings 10:10 And they both said if they had got $5 million rounds in the early days, the business would not be what it is.

Kevin Hartz 10:19 Yes.

Harry Stebbings 10:20 And I worry that we have too much capital too early-

Kevin Hartz 10:23 Mm-hmm.

Harry Stebbings 10:23 ... and that great businesses are being destroyed-

Kevin Hartz 10:26 Yes.

Harry Stebbings 10:26 ... by too much capital too early. Do you feel the same?

Kevin Hartz 10:28 We're vehemently a- in agreement. Uh, this is, you know, the challenge of our time. I feel there's like Boyle's Law as applied to capital. So, uh, if you raise a million dollar round for your seed company, you'll spend it and b- build a company with that million. But if you raise $5 million or $10 million, you'll spend it just the same and get to the same milestones.

Harry Stebbings 10:52 Sure.

Kevin Hartz 10:52 And so, you know, it's, it's kind of like the capital, um, expands to fill (laughs) like the bank account, um, and is... but used in the same manner. And we're kind of awash with capital. So this is a period where we have, uh, so much capital, so little hands-on assistant in insights. And then, you know, we don't need like the '80s or '90s to come back where venture capitalists would like strangle f- founders and throw CEOs out of office after, you know, two quarters. But there's no checks and balances and so even the best founders, uh, have a lot of trouble when you have so much capital and so over- little oversight that you, you know, kind of drift a little bit. You don't have the same kind of tight discipline that you have if every little penny counts.

Harry Stebbings 11:46 Do you think VCs add value?And when you say about oversight and governance, I get you from the fraud perspective, but on the trust side, I'm kind of like, "Listen, if I invest in you, I trust you." And I, I don't feel like that we need to be kind of the overbearing parent, being like, "Governance."

Kevin Hartz 12:00 I'd explain it, like, on a spectrum-

Harry Stebbings 12:02 Okay.

Kevin Hartz 12:02 ... and I'd put my two favorite peeps on each side. So I'd put Roelof and Sequoia on, on, you know, one side of the spectrum, you know, which is more hands-on providing services, providing, you know, oversight and insights and recruiting and everything else. And then Founders Fund and Peter on the other end of the spectrum, that's the belief that, look, if you're an E- Elon Musk or a Zuck, you just need the money and go at it and you'll figure it out. You don't need a p- outsourced PR team to help you with these things. You'll, you'll solve these. But, so th- given those two extremes, I actually lean more towards, uh, the Roelof Sequoia side, because I've just seen that kind of help and oversight and having that kind of star chamber of great talent cut so many corners of mistakes that would be made.

Harry Stebbings 12:57 I agree. But that's just the brand. And like, when you get Sequoia Invest, there are fantastic people who are like, "Great, this is a stamp of approval. I want to join a rocket ship." And Sequoia Investing is a leading indicator of that in a lot of talents' mind. I don't think it's the talent teams behind it that make great teams for the companies. It's incredibly compelling founders who leverage the Sequoia brand.

Kevin Hartz 13:20 The lead director, however, does find, does help that founder match with, you know, those areas of, m- I wouldn't call it weakness, but areas of go-to-market or growth hacking or engineering or reliability. You know, just help to cut, uh, you know, just shortcut a lot of these areas that, you know, founders will make a few mistakes before they get right.

Harry Stebbings 13:48 I would argue that very, very few great founding teams really truly stick together for a long period of time. I think Stripe and, you know, the Collisons is a great example of one that has done. But when you look at the majority of great-

Kevin Hartz 13:58 Stripe had ... You mean the Collisons had a love triangle? (laughs)

Harry Stebbings 14:02 (laughs) Surprise. Uh-

Kevin Hartz 14:03 Uh, Julie and I had a love, what's ... It's only two points though.

Harry Stebbings 14:07 (laughs)

Kevin Hartz 14:07 A love stick.

Harry Stebbings 14:09 But, but, but like, you know, i- i- it's actually quite rare that they stick together. So I'd say actually it's inevitable-

Kevin Hartz 14:14 Yeah.

Harry Stebbings 14:14 ... that they break up. What I think this m- most important is like the spikiness of the single best person, which is like when you choose that one person, could be Elon, could be Steve Jobs, could be you name it, that the spikiness is so great.

Kevin Hartz 14:27 That's fair.

Harry Stebbings 14:28 It was interesting. I had Matt Clifford from, uh, EF, the entrepreneur-

Kevin Hartz 14:31 Yeah, I know Matt.

Harry Stebbings 14:31 Yeah. And he said the single most important thing actually is not the combined skills of the founding team. It is the spikiest point of the single best founder. That's our single biggest lesson from 10 years of EF.

Kevin Hartz 14:42 That is a very keen observation.

Harry Stebbings 14:45 When have you got talent wrong and what did you get wrong with it?

Kevin Hartz 14:50 Sometimes talent is so raw that, you know, they run off a cliff or lack maturity and, you know, judgment fails. And a founder is kind of always right at the edge of, you know, I don't wanna just say right and wrong, but r- like right on the bleeding edge of, of things going dramatically wrong or dramatically right.

Harry Stebbings 15:16 Do you prefer serial entrepreneurs or first-time founders? 'Cause I always favor serial entrepreneurs.

Kevin Hartz 15:21 Yeah.

Harry Stebbings 15:21 Which is ironic given my age. But I'm like, you know, you make so many mistakes the first time around that you just avoid the next time and you can save so many dollars and so many hours learning the second time. What's your preference on serial versus first time?

Kevin Hartz 15:34 Well, I should be, you know, statistically focused on serial and we back a lot of serial founders, you know, like Chad Hurley and-

Harry Stebbings 15:43 Yeah.

Kevin Hartz 15:43 ... um, you know, we've ... However, I just have a soft spot for first, first-time founders. I, you know, I just, it, it's, you know, the teens, it's the Bill Gates in his teens or Mark Zuckerberg in his teens or, you know, all those that's the first time around that, that it's, um, so spiky or they're really swinging hard. It's that age where, you know, y- y- you know, the army sends the Marines in and they're 18-year-olds 'cause they're fearless and they just really go for it. But it's also a period of creativity, um, you know, where I, I have to say I'm, I'm ageist, I'm ageist against myself, um, y- you know, where it's almost, uh, you know, the Nobel Prize winners have all been, you know, I think in- within a very constrained age range of creativity and insight and genius. Or The Beatles, you know, they, uh, broke up by the time they were 30 years old. And my goal is to kind of find, um, the Beatles of the, the tech world, those great teams and individuals and talents, the Paul McCartneys and John Lennons.

Harry Stebbings 16:52 Can I ask a weird one? Why did you do Airbnb? At the time it was not obvious, you know, it's famed how many people passed and it's a weird idea when you can view it in isolation and put it in context of the time, which is people would let other people stay in their homes and they don't know them and that would be a business?

Kevin Hartz 17:10 Y- you know, these types of seeds, like the seed of Airbnb, the seed of Pinterest, y- you know, at the time, even seed of, of PayPal, you know, were very non-obvious. And in the case of Airbnb, you know, it was the passion. You know, we'd go over to, I think the loft was on Natoma or there was a street which ... Tehama maybe, uh, that, that Brian, Nate, Joe all lived together and they were building together and we'd go over and hang out with them and, you know, they were just working non-stop and, you know, and I, I think I, I mean, I like to think about Airbnb as kind of distributed storage, but not for bits or i- images or sound or video, it's distributed storage for people. You know, you can have a EMC big-... drive like on prem in your enterprise, or you can have things distributed and it's far more efficient and cost-effective, and, and so on. And when you think about Air- Airbnb, they built the kind of perfect massive distributed hotel throughout the entire planet, um, and, and what a wonderful business. And what it was, what they conceived in that, in those days their, uh, in their loft is, you know, what is here today, a massive scale.

Harry Stebbings 18:31 Can I ask, how big a check did you write into the seed round?

Kevin Hartz 18:34 It was a fairly small check. Now, granted, we made them an offer. It was, I was angel investing and working on Eventbrite, and I was angel investing with Keith Rabois and Jawed Karim. And Jawed is the, uh, co-founder of, of YouTube. And, you know, we just fell in love with those guys, and, um, made them an offer. And, uh, Sequoia out- outdid us, uh, and got the lead. But, um, they, they cut us in nicely because, you know, Brian, Nate, and Joe seemed to like us, and, uh, Roelof as well.

Harry Stebbings 19:11 Can I ask, do you concentrate capital on the way up? And was it an obvious winner from day one?

Kevin Hartz 19:15 We were able to put some amount of capital in the A that Reid Hoffman led, which thank you, Reid-

Harry Stebbings 19:24 (laughs)

Kevin Hartz 19:24 ... um, uh, for, for making some room there. But then from our perspective, it popped so fast to a billion valuation at that time, in, you know, 2011 or '12, it, it just seemed like, oh, okay, it's run away from itself. So we almost n- we never really had the chance to concentrate capital, but... And mostly because it was such an efficient business, it just didn't require the rounds, um, that other businesses like, uh, you know, Facebook seemed to be raising quite a bit. And there was a lot of activity and a lot of secondary. In Airbnb, there was almost zero secondary.

Harry Stebbings 20:00 Bummer. (laughs)

Kevin Hartz 20:02 Bummer. Well, I'm, I'm not complaining.

Harry Stebbings 20:04 Well, it depends which way you wanna... Yeah, yeah, it depends which way you wanna do. Do you always hold? Do you ever sell? Like, my biggest mistakes the last few years, honestly, Kevin, were BeReal, Hopin, Clubhouse.

Kevin Hartz 20:14 Mm-hmm.

Harry Stebbings 20:15 Uh, I could've sold in all of them.

Kevin Hartz 20:16 Mm-hmm.

Harry Stebbings 20:17 And I didn't. Any big lessons for you on, like, selling on the way up?

Kevin Hartz 20:20 I just kind of feel that, you know, if you look historically over the decades, that if you just sit on all the companies, you know, and most will go to zero, your power law winners will be so massive they'll just dwarf everything else.

Harry Stebbings 20:34 Mm-hmm.

Kevin Hartz 20:34 I'm not in the practice of selling. I'm in the practice of finding and building companies and sitting on these things

Kevin Hartz 20:40 for life.

Harry Stebbings 20:40 You mentioned the liquidity word there, and this is the thing that changes when you move from angel to venture fund. You know, you manage other people's money, often an institution's money. They have liquidity needs. And if it's your angel money, fuck it, let it ride. You know what? Fine. But if it's fund money, sometimes you'll need to show liquidity for the next fund.

Kevin Hartz 21:00 Mm-hmm.

Harry Stebbings 21:00 Sometimes you'll have pressure from LPs to get liquidity back. There is a change in how one views liquidity sometimes. Not always, but sometimes. I, I'm just fascinated, Kevin, why did you move from angel to VC?

Kevin Hartz 21:14 I mean, I like a challenge. And sometimes venture people aren't so nice. Y- you are, Harry. Don't get me wrong, I liked, I, I love in, loved angel investing, but it's just time, you know, to, to graduate up to the big leagues. And, and that's kind of the, the story here. Probably not.

Harry Stebbings 21:31 (laughs)

Kevin Hartz 21:31 Um, but will have to prove, uh, to the world that, that, uh, uh, y- you know, that we're worthy. So, back to, like, the, the Sequoia file, you know, uh, side of things is I love how Sequoia says, "We're only as good as our next investment."

Harry Stebbings 21:48 Yeah.

Kevin Hartz 21:49 And, you know, that's the mindset, is you just can't say, oh, back in Airbnb and Pinterest and, uh, what is that Jason Calacanis loves to talk about, his investment in Uber. (laughs)

Harry Stebbings 22:00 I mean, I'm amaze... I didn't know he did Uber. That's such a surprise to me, Kevin.

Kevin Hartz 22:03 (laughs)

Harry Stebbings 22:03 What I'm... Really, that's fascinating, um, what I used to listen to-

Kevin Hartz 22:07 We love Jason.

Harry Stebbings 22:07 ... him when I was running, and every time, like, you know, I'd be dying running, and then I'd hear, "You know, when I invested in Uber..."

Kevin Hartz 22:13 (laughs)

Harry Stebbings 22:13 And I, I managed to, like, survive to laugh. Um, very funny. Um, (laughs) but you know, I respect him intensely for his duration. The, he taught me one thing that's very important in media. It's a simple game. You just have to survive longer than anyone else.

Kevin Hartz 22:29 Oh, my God. Has he ever.

Harry Stebbings 22:31 As he has done. And it's just incredible. So, like, funny one there. Okay-

Kevin Hartz 22:35 He used to call me up per, uh, I, the reason I have to, like, throw him under the bus a little bit with the Uber, Uber stuff is he used to call me up, uh, at Eventbrite and scream at me, like, for, you know, he, he had a big rivalry with TechCrunch, and when we would ticket things for TechCrunch, he would get really angry and, like, just call me up and scream at me for doing that.

Harry Stebbings 22:56 (laughs) that's very funny. So when we think about A*Star today, how big's the fund?

Kevin Hartz 23:02 Uh, we'll, we're, eh, we're in our second fund.

Harry Stebbings 23:04 Okay.

Kevin Hartz 23:04 We're just starting to deploy it. We're a $300 million fund.

Harry Stebbings 23:07 Mm-hmm.

Kevin Hartz 23:08 Uh, 600 million total under management.

Harry Stebbings 23:10 Okay, so with $300 million fund, where, where, where are we in the stack? We're pre-seed and A?

Kevin Hartz 23:15 Uh, we are pre-seed and seed.

Harry Stebbings 23:17 Yeah.

Kevin Hartz 23:17 And, uh, then some B. You know, kind of this 70-30. Mostly seed, but then when we see a great B, we, we, we love getting involved.

Harry Stebbings 23:27 Okay, so we're kind of this interesting barbell approach, where we kind of skip the A-

Kevin Hartz 23:30 Yes.

Harry Stebbings 23:30 ... but then we're pre-seed, seed, and then B.

Kevin Hartz 23:32 Yes.

Harry Stebbings 23:32 Okay, got you.

Kevin Hartz 23:33 You got the barbell.

Harry Stebbings 23:33 How many pre-seeds and seeds do we have?

Kevin Hartz 23:35 How many do we have in the-

Harry Stebbings 23:37 Yeah.

Kevin Hartz 23:37 ... entire, um, dozens at, at this point. We, we launched, uh, about three years ago.

Harry Stebbings 23:42 Do you do, like, market sizing analysis?

Harry Stebbings 23:45 Do you do TAM outcomes in all your planning? How do you think about that?

Kevin Hartz 23:49 There's always this discussion and people say, "Oh, TAM and TAN." You know, and, like, I th- I, I think it's this, like, brute TAM analysis is maybe overdone. I'd focus more on the teams. You know, great teams always find their way to kind of slingshot from-... a, a market from the small market to the big market, or it takes a small market to become a big, to get into a big market. So I, I, I think we, I think it, it's more of a qualitative, um, assessment in, in most cases.

Harry Stebbings 24:23 I've got to be blunt. I think seed market right now is not a good place to be investing.

Kevin Hartz 24:28 Mm.

Harry Stebbings 24:28 I find multi-stage funds have become so aggressive at seed and provide a good product-

Kevin Hartz 24:32 Yeah.

Harry Stebbings 24:33 ... that actually it's a new enemy or competitor in many respects.

Kevin Hartz 24:37 Yeah.

Harry Stebbings 24:37 We have incredible founders like the Collisons, like Dylan Field-

Kevin Hartz 24:40 Mm-hmm.

Harry Stebbings 24:41 ... like Daniel Gross, who are investing and creating a new class of competition. And then we have all the existing competition from traditional seed funds.

Kevin Hartz 24:49 Yeah.

Harry Stebbings 24:50 And pricing is as high as it's ever been.

Kevin Hartz 24:52 Yeah.

Harry Stebbings 24:53 Am I wrong? Is seed better than-

Kevin Hartz 24:56 That's, that's terrible. Nobody should go into seed. I would just, everyone should cease all operations investing in seed.

Harry Stebbings 25:03 You, you j- you joke, but when 5 on 25 is the average entry, which it is for great companies-

Kevin Hartz 25:08 Mm-hmm.

Harry Stebbings 25:08 ... or great founders spinning out, that's a hard business to be in.

Kevin Hartz 25:11 Look, um, you know, without a doubt, we're out of that era where, you know, a active investment for certain traditional funds, you know, they had to own at least 30% or they couldn't be actively invo- you know, like, those days are, are kind of long gone.

Harry Stebbings 25:30 Do you have ownership targets?

Kevin Hartz 25:31 We do. Um, you know, we try to be, we target the double digits.

Harry Stebbings 25:36 Sure.

Kevin Hartz 25:36 But, you know, there's always the exception. As we all know, like, uh, w- we would rather be with a smaller ownership with an extraordinary founder than, you know, high ownership with a company that goes nowhere.

Harry Stebbings 25:50 That's interesting. Do you worry about accepting smaller checks where you're not leads in rounds because then you'll be known to accept that? We have this internal debate always of like, do we need to lead every round or not? Because if you don't, your competition will use it against you and say, "Kevin's amazing, you should have him, but he does take smaller checks." And so he doesn't need to.

Kevin Hartz 26:10 Well, that's, you know, and so maybe I'll put a personal check in or something like that-

Harry Stebbings 26:15 Yeah.

Kevin Hartz 26:15 ... but the fund, you know, we've got to lead or co-lead.

Harry Stebbings 26:19 Do you think we can go back to an environment of cooperation? It feels much more sharp-elbowed.

Kevin Hartz 26:24 It's much more sharp-elbowed.

Harry Stebbings 26:26 Mm.

Kevin Hartz 26:26 But maybe it's reverting to the mean, because, you know, I, I, I think in, you know, in times past, in the 80s, 90s, and so on, you had these high ownership percentages, but greater mortality rates and just the extraordinary outcomes that we've had over the last couple decades of trillion-dollar business now. So the stakes are very, very high, but it, it does feel like a, a period of less cooperation, um, and there needs to be a very specific reason why funds would work together.

Harry Stebbings 26:59 Uh, o- one kind of aspect, it's an interesting aspect, is that operators who are also investors, do you think it makes you more empathetic? Because I invest with a lot of amazing founders, and they are hard on founders.

Kevin Hartz 27:11 Mm-hmm.

Harry Stebbings 27:11 Like, much harder than VCs are, because they're almost kind of in the chair. They're like, "Don't give me that-"

Kevin Hartz 27:15 Sure.

Harry Stebbings 27:15 "... bullshit excuse for missing your revenue numbers. I miss mine too. Like, quit whimpering." And I'm like, "Whoa, I wouldn't s-" (laughs)

Kevin Hartz 27:21 Well, I mean, you know, m- a lot of venture investors are sociopathic, so that's part of the explanation.

Harry Stebbings 27:27 (laughs)

Kevin Hartz 27:28 But... I kid, sort of. Uh, but-

Harry Stebbings 27:30 (laughs)

Kevin Hartz 27:31 ... wh- what would I say about that? Um, empathetic, y- you know, look, what we've seen, I, I want to say that operators are the, the best and there used to be a vibe in the Valley that said, "Oh, you've got to be an operator to be an investor, a venture investor. You've had a walk in the shoes." And that's changed and you see a lot of, you see journalists become one, one of the greatest venture investor, Mike, Michael Moritz, um, slash-

Harry Stebbings 27:59 I love-

Kevin Hartz 27:59 ... Harry Stebbings.

Harry Stebbings 28:00 Thank you so much. So, I (laughs) totally agree.

Kevin Hartz 28:02 And, uh, wh- what else have we seen? Um, y- you know, we've seen people just go, Bill Gurley come from what was banking, uh, you know, side of things. W- we, Jeremy Levine from Bessemer was, was always in venture. He never operated and he's been an extraordinary investor over the years.

Harry Stebbings 28:23 It's an interesting one of like, what is the most successful entrance point? And is that just because of historical pathways of the... that's what it was? I think about Roger Aronberg at IA Ventures.

Kevin Hartz 28:33 Right.

Harry Stebbings 28:33 Probably one of the best actually in terms of DPI at scale.

Kevin Hartz 28:36 Yeah.

Harry Stebbings 28:36 Um, I don't know if you know Roger, banker.

Kevin Hartz 28:39 Mm-hmm.

Harry Stebbings 28:39 Gurley.

Kevin Hartz 28:40 Mm-hmm.

Harry Stebbings 28:40 Banker.

Kevin Hartz 28:41 Banker.

Harry Stebbings 28:41 Mary Meeker.

Kevin Hartz 28:42 Mm-hmm.

Harry Stebbings 28:42 Banker. Don't know what Fred Wilson was before.

Kevin Hartz 28:45 What was Fred Wilson?

Harry Stebbings 28:47 (laughs) I have no idea.

Kevin Hartz 28:49 Yeah.

Harry Stebbings 28:49 But...

Kevin Hartz 28:49 He's extraordinary, whatever he is.

Harry Stebbings 28:50 Just extraordinarily good.

Kevin Hartz 28:52 Yeah.

Harry Stebbings 28:52 I, I, I totally get you and I agree with you. Talk to me about the B side. Like, that's an interesting one. So is that... how do you think about reserve allocations? Is that reserves on the pre-seeds and the seeds?

Kevin Hartz 29:04 No, the, the B's are separate. These are, are new investments. So, you know, for example, we let a, a B about nine months ago in a, 10 months ago in a company called WAP, that is serving the kind of creator economy, uh, and that is just a hyperfast growth business.

Harry Stebbings 29:22 How big a check do you write for that, then? Not for-

Kevin Hartz 29:25 Um-

Harry Stebbings 29:25 ... that necessarily, but like the Bs, if you're leading a B?

Kevin Hartz 29:27 10 to 20.

Harry Stebbings 29:28 10 to 20? Do you have a big enough fund? If we say the average then is 15 and you need 10 to 15, you're at 175 to 200 on Bs.

Kevin Hartz 29:39 Your math is, um, I was told there would be no math on-

Harry Stebbings 29:44 (laughs)

Kevin Hartz 29:44 ... 20 BC. But, uh, y- y- you know, perhaps, but I guess it's a world-class problem to have, to be constrained on capital. Like, I've, I've always found that it's hard to find good places to get capital to work. And when you find it, you just go for it and you'll find a way, uh, to, to get more capital there. So it just feels like the capital trickles out because you've got to be very patient and patient and patient and wait and wait for those great companies.

Harry Stebbings 30:14 Are you finding B a better place to be right now? People often talk about, like, B is dead and C is dead.

Kevin Hartz 30:20 Oh, God, B is far from... I, I mean, all the time that, you know, especially 18 months ago when it was crickets, like, what a great time to have been, to, to be investing, uh, in, in that area. I mean, it, it's been-... actually great. And, and so whenever somebody tells you that an area is dead, make sure you heavily, like, canvas that area and go after it hard, 'cause there's great stuff happening there.

Harry Stebbings 30:48 Have you found your mindset change on companies that you like moving from angel to VC? And what I mean by that is, like, you know, you don't always need the massive outcome when you're an angel, for example. Like, a billion-dollar company, if you get in early enough, great, fantastic, awesome. But when you're a VC, like, yeah, b- b- yeah, but actually that might not even return the fund. And sometimes the mindset really changes. Were there any core changes in how what you found attractive in an investment changed between being an angel and a VC?

Kevin Hartz 31:19 I think I've just been lucky to, I've always been around people that have extremely high standards, aspirations for, you know, n- far beyond just returning a fund. Um, and, y- y- you know, I just kind of turn off if, if ... I- it's great if somebody wants to build a nice-sized business and have a good cash flow and, and operate things, um, but, you know, we're looking for those extraordinary, outsized over, uh, uh, you know, outcomes and-

Harry Stebbings 31:51 Do you think you can predict them? When you look at Bessemer's memos-

Kevin Hartz 31:54 Mm-hmm.

Harry Stebbings 31:54 ... you know, Procore was a $300 million company.

Kevin Hartz 31:57 Mm-hmm.

Harry Stebbings 31:57 It's now 10, 10 billion. Snap was a $500 million company.

Kevin Hartz 32:01 Mm-hmm.

Harry Stebbings 32:01 You know, Shopify went public at $700 and I think they sold it all at two.

Kevin Hartz 32:05 Mm-hmm. (laughs)

Harry Stebbings 32:05 Um, your biggest winners you always underestimate the size of. If I told you Airbnb is the size that it is today-

Kevin Hartz 32:11 Mm-mm. Mm-mm.

Harry Stebbings 32:11 ... you'd be like, "Never expected that."

Kevin Hartz 32:14 Well, you know, certainly I think that we, the, the internet space just expanded beyond, like, our wildest notions. And, you know, so these markets, um, you know, I think about remittance where Zoom went public in 2013 and, and Air- and, uh, PayPal acquired it in 2015, but that market expanded so dramatically, you know, since then. Um, it's that kind of vote or that reaffirmation that, you know, maybe you should stay independent because you can just keep compounding and compounding in the market.

Harry Stebbings 32:50 Yeah, it's funny when you look at venture there's, there's sourcing, there's selecting, there's servicing. Kind of three core pillars pre-inves- um, kind of pre-selling that make a great venture investor.

Kevin Hartz 33:02 Mm-hmm.

Harry Stebbings 33:03 If I were to ask you what are you best at and what are you worst at-

Kevin Hartz 33:06 Mm-hmm.

Harry Stebbings 33:07 ... where would you rank the three?

Kevin Hartz 33:09 I'm lousy at selling. Uh, you know, I just r- r- like, I can only be kind of sincere in what I offer. Uh, you know, I'm, I'm might be a little irked when I see somebody, like, over-selling or BS-ing a lot or trying to find ways to kind of win a deal. I don't think you should win a deal. I think you should earn, uh, you know, the right to work with a founder for, um, many, many years.

Harry Stebbings 33:34 Are they not the same?

Kevin Hartz 33:35 No, they're very different. And-

Harry Stebbings 33:37 How are they different?

Kevin Hartz 33:38 Well, I, I see, um, you know, a kind of slick used car salesman kind of mentality, uh, which is almost like a fool the founder, get them to sign, you know, dupe the founder, um, into signing, you know, versus really what's best for their business and so on. And, and, you know, that's what I maybe offer sincerely. Sourcing is just a factor of, look, as I spend more time in The Valley and have a lot of great relationships of founders or other investors or so on, like, you know, the network is, is very, very broad. Um, yeah, selection, what can I say about that? You know, I, it's, it's always a sin of omission, you know. You always think about the ones that y- you let through or didn't, you know, didn't pursue.

Harry Stebbings 34:30 What one did you not pursue that you think of most and what is your subsequent reflection on that?

Kevin Hartz 34:36 Oh, so many. I mean, you know, we could do a whole show on that. I mean,

Kevin Hartz 34:40 let me start-

Harry Stebbings 34:40 What's the first one that comes to mind?

Kevin Hartz 34:42 Well, I, I think of when I was stepping down as CEO of Zoom, Keith and Roelof held a lunch for me in the cit- in San Francisco. Um, what was the name of that place? And Keith was talking about this YouTube thing. I was just kind of burnt out, of like, you know, it was like a, uh, it was a very bittersweet, shitty time to be stepping out of Zoom, and, and I'm just like, "Video on the online, that's so stupid." You know? Like, what? And, uh, Chad was a graphic designer. How would Chad know how to ... you know, so just completely missed that YouTube thing, for, for example.

Harry Stebbings 35:21 What's the reflection on that?

Kevin Hartz 35:23 Y- the reflection is very clearly your mindset, is always be positive and open-minded. Like, you might, you know, let's say, uh, you know, something terrible ha- you're having the worst day of your life-

Harry Stebbings 35:33 Yeah.

Kevin Hartz 35:34 ... and you meet a founder. Like, you still have to believe and you, you still have to have that, you know, that view and really, really listen because tha- that mindset, if it's off, you, y- you know, this little casual interaction becomes something really crazy.

Harry Stebbings 35:51 It's the thing I love most about this business actually, which is unlike any other job I think in the world, one single meeting can change the life of you, your family for many generations. I say to the whole team, "You can never be off with a founder. Ever."

Kevin Hartz 36:06 It's so true.

Harry Stebbings 36:07 And it's so important. I, I think people forget that. Are you honest with feedback to founders?

Kevin Hartz 36:13 No, totally dishonest. It sucks.

Harry Stebbings 36:16 N- no but like seriously, like i- i- sometimes it is the founder that is the problem and you're like, "Honestly, I just don't believe in you." I don't think it's right to send an email back saying, "I don't believe in you."

Kevin Hartz 36:25 Oh, yeah.

Harry Stebbings 36:25 I'm probably wrong. Who am I to say that you're not good enough? But I, so I shouldn't be honest

Kevin Hartz 36:31 But there's-

Harry Stebbings 36:31 And just say that-

Kevin Hartz 36:32 But there's always good things to say to that. You could say like, "Well, why don't you look for some complementary expertise? Maybe you should bring on board a co-founder that can do this, this and this," or ... but once you start-... explaining too much-

Harry Stebbings 36:45 They have something to push back against.

Kevin Hartz 36:46 ... you know, it just goes back and forth and back and forth.

Harry Stebbings 36:47 Exactly.

Kevin Hartz 36:48 And time is short and you-

Harry Stebbings 36:49 So what do you do?

Kevin Hartz 36:51 I've, I've just, unfortunately, have to be very curt. Um, you know, like I always remember seeing Michael Moritz speak, give a talk about Google in the early 2000s, and there were all these founders there. And he puts his phone up to his face and pretends to talk and then, like, walks out of the building, you know, and so nobody would, like, bother him. And like, that's, like, splitting the ocean to get, (laughs) you know, like, away from that.

Harry Stebbings 37:19 I, I, I totally get you and agree. How do you feel about exploding term sheets? I see them quite a lot nowadays.

Kevin Hartz 37:25 Little-known secret is, um, Keith, Javid, and I gave an exploding term sheet to Airbnb, and Paul Graham, uh, said, "No bueno," and teed off on us. And so, you know, we, we, we, it was nice that we, i- it worked out. We got cut into that round, but you don't forget things like that. Um-

Harry Stebbings 37:51 (laughs)

Kevin Hartz 37:51 You just do not forget that. I don't think I've ever told that story.

Harry Stebbings 37:54 Were you nervous when he said, "No bueno"?

Kevin Hartz 37:56 I think he posted on it. He didn't, he didn't call us out, you know. He chided us privately, but he didn't call us out publicly. He called out the practice of doing it. And, you know, really-

Harry Stebbings 38:09 But we should kind of understand as well, exploding term sheets have a horrible signaling name.

Kevin Hartz 38:13 Right, right.

Harry Stebbings 38:13 Like they just sound... But actually, if someone's gonna literally go around and say, "Hey, Kevin Hartz has given it to me at 25-"

Kevin Hartz 38:20 Yes.

Harry Stebbings 38:20 "... does anyone wanna do it at 30?" Obviously, that's not great. It, it, there is a reason for it.

Kevin Hartz 38:26 There is a reason for it, but you would hope that you found a partner that's not gonna shop it. And maybe if they're gonna shop it, then it maybe wasn't meant to be.

Harry Stebbings 38:34 But they're always gonna shop it. They're running a process, and you could argue that's their job to run a process to get the highest price.

Kevin Hartz 38:41 (sighs) Yeah.

Harry Stebbings 38:42 But like, that's my point. I don't want to be in a process.

Kevin Hartz 38:46 Yeah. Well, look, the, the issue is, is that you put a term sheet out and, and it like, uh, explodes on Friday at 5:00 PM, but does that mean-

Harry Stebbings 38:56 Oh, I sent them back at 5:15. Did I miss the... (laughs)

Kevin Hartz 38:59 No, but, uh, does that mean that you, at, at 5:15, you no longer wanna invest? No.

Harry Stebbings 39:05 (coughs)

Kevin Hartz 39:05 Like the, the investor will always be there. Um, I think it's fair for founders to go out and assess the market, and more importantly, assess the partner. And so, we just have to unentangle ourselves. You can... There's bad behavior on both sides. There's like the obnoxious shopping, like, "Okay, just give us the term sheet and, you know, and, and I, you know, promise we're gonna get this done. I just need a couple days." And then, you know-

Harry Stebbings 39:32 (sighs)

Kevin Hartz 39:32 ... you find out that they went and shopped it like crazy. But to the flip side, uh, uh, you know, a, a fund can lock a founder down and that founder just hasn't done their work or hasn't been able to do the work to speak to other investors and find out how others could be of help. And so-

Harry Stebbings 39:51 How do you lock founders down, Kevin? This is something I... Again, the show is very successful now-

Kevin Hartz 39:55 (laughs)

Harry Stebbings 39:55 ... 'cause I think I'm very (laughs) open with my struggles. I struggle in locking founders down.

Kevin Hartz 40:00 Yes. Well, we can't lock them down kind of like, um, you know, it, that sounds-

Harry Stebbings 40:06 The handcuff-

Kevin Hartz 40:06 ... like Silence of the Lambs.

Harry Stebbings 40:08 ... the handcuffs don't work. (laughs)

Kevin Hartz 40:08 Yeah, it sounds like Hannibal Lecter. (laughs)

Harry Stebbings 40:10 Those, those pink and fluffy handcuffs didn't work. (laughs)

Kevin Hartz 40:13 Yes. (laughs) Like, it has to be a, a very voluntary-

Harry Stebbings 40:16 (laughs)

Kevin Hartz 40:17 Uh, I, you know, like, we, we just have to use honey, not vinegar, or-

Harry Stebbings 40:21 (laughs)

Kevin Hartz 40:21 ... what's a good British expe- I bet there's a very trite British expression.

Harry Stebbings 40:24 Oh, there's a sun

Harry Stebbings 40:25 pat peanut butter. How quickly do you know when a deal is working and when it's not working?

Kevin Hartz 40:28 There's a certain percentage. Like there's some that, you know, very early on, you know, you know is gonna be a struggle. And then others that wander in the woods for, you know, that take a long, long, long, long time, and people almost forget about them, or tell, you know, there're, you got investors telling, uh, these founders to return the money, and they stick with it. Um, the most important thing is just patience. Um, and certainly you want them to maintain a sense of urgency, but you just have to see patience because you just see time and time again, you know, time as the thing to solve the problems and to get into orbit. And then there's the ones that just work from day

Kevin Hartz 41:14 one.

Harry Stebbings 41:14 What have been your top three value drivers? You've got Airbnb, one.

Kevin Hartz 41:18 Airbnb, Pinterest, um, Bitcoin.

Harry Stebbings 41:24 (laughs)

Kevin Hartz 41:25 And I was, uh, in Wyoming drinking whiskey with Wences Casares in October of 2011, and he started talking about this Bitcoin stuff, and, um, what else? Um, Uber with series B.

Harry Stebbings 41:43 How much did you put into Bitcoin then? (laughs)

Kevin Hartz 41:45 A good amount.

Harry Stebbings 41:46 (laughs)

Kevin Hartz 41:47 Investors never give you, like, exact answers, you know.

Harry Stebbings 41:50 Mm-hmm.

Kevin Hartz 41:50 And you want exact numbers, but-

Harry Stebbings 41:52 Yeah, fine.

Kevin Hartz 41:52 ... investors always, like, skirt around it. You know, I always have a s- soft spot. It, it was a poor, it was like a relatively mediocre return because of all the capital, um, but PayPal, um, going public was like one of my first investments.

Harry Stebbings 42:07 From a multiple perspective, what was that?

Kevin Hartz 42:08 Uh, not that, not that great. I'd have to take a look at it.

Harry Stebbings 42:11 Like 10X? Like 20X?

Kevin Hartz 42:12 Maybe 20-ish or so.

Harry Stebbings 42:15 Okay.

Kevin Hartz 42:15 Um, you know, but you would think if I had held it longer, 'cause what happened is that eBay acquired it, and then eBay had a run in the early 2000s.

Harry Stebbings 42:26 What's your biggest zero and what did you learn from that?

Kevin Hartz 42:29 It was like a kind of, turned out to be a kind of classic Sequoia investment that I did with Roelof was in a company called TokBox, T-O-K-B-O-X, and it was early-

Harry Stebbings 42:39 Andrew Dunham.

Kevin Hartz 42:40 ... live streaming. No. Oh, yes, he was there.

Harry Stebbings 42:43 Yeah.

Kevin Hartz 42:43 He was there.

Harry Stebbings 42:44 Yeah.

Kevin Hartz 42:44 In which he went on to go to Hims.

Harry Stebbings 42:46 Trust me, Kevin, I am a student of this business.

Kevin Hartz 42:48 My God.

Harry Stebbings 42:49 Yeah, yeah, yeah, yeah.

Kevin Hartz 42:49 Wow.... I actually recruited him for that be- through, 'cause I knew Jack Abraham, who started Milo.

Harry Stebbings 42:56 Yeah.

Kevin Hartz 42:56 That's so funny. Wow, you just blew my mind that you came up with that.

Harry Stebbings 42:59 (laughs)

Kevin Hartz 43:00 And, uh-

Harry Stebbings 43:00 I have like the most useless encyclopedic knowledge of this business. (laughs)

Kevin Hartz 43:03 No. That's far from useless.

Harry Stebbings 43:05 (laughs)

Kevin Hartz 43:05 Like that's incredibly important to know the lineage-

Harry Stebbings 43:08 I, uh, it is.

Kevin Hartz 43:08 ... of these things.

Harry Stebbings 43:09 H- history is very important.

Kevin Hartz 43:10 Yes.

Harry Stebbings 43:11 But, okay, so TokBox.

Kevin Hartz 43:13 Um, so TokBox was, you know, live video be- before kind of FaceTime and all this sort of stuff. And we, you know, like Roelof got involved and led the series A. Keith, Javed, and I had seeded it, very actively involved in it. You know, just kind of everything that could go wrong went wrong, scaling issues, market fit, um, Tony b- a- and we even had Tony Bates join, who was, um, you know, he had joined the board of YouTube, uh, like after Roelof had, um, in, in... So we were kind of like getting that group back together. And it just wouldn't take. Now, the interesting thing is that, you know, s- Sequoia found and, y- you know, helped at Park, um, with, uh, I think it was Spanish Telecom acquired it for like 70 million. So we got like a, y- you know, a small return, like a 2X or something. But just not worth the, the time and the pain and the broken glass of, of that. And then it's, you know, the hard part is, is that, you know, it was at that time when Sean Parker was doing something with video. What was the name of that?

Harry Stebbings 44:21 Oh, um-

Kevin Hartz 44:22 And, and it was, um-

Harry Stebbings 44:24 I know exactly which one.

Kevin Hartz 44:25 ... the one where people would put their private-

Harry Stebbings 44:27 Plato.

Kevin Hartz 44:28 It was a different n- Air, Airtime.

Harry Stebbings 44:30 Airtime.

Kevin Hartz 44:30 Airtime.

Harry Stebbings 44:31 Plato is another one of his.

Kevin Hartz 44:32 Yeah.

Harry Stebbings 44:33 Yeah.

Kevin Hartz 44:33 Plato. Um, but Airtime, in, what was the one where people would live video and it was this Russian kid and it was, it just kind of blew up? It was like the earliest live video streaming.

Harry Stebbings 44:44 What, Trivia HQ?

Kevin Hartz 44:46 Not, uh, that was actually, I was at Founders Fund when we, in Cyan-

Harry Stebbings 44:49 That was big.

Kevin Hartz 44:50 ... did. That was awesome.

Harry Stebbings 44:51 That was big, babe.

Kevin Hartz 44:52 Yeah. It was a tragic ending.

Harry Stebbings 44:53 I remember people who used to leave work-

Kevin Hartz 44:54 Yes.

Harry Stebbings 44:54 ... in the UK, to be there for Trivia HQ.

Kevin Hartz 44:57 Yeah.

Harry Stebbings 44:58 (laughs)

Kevin Hartz 44:58 Somebody should bring that back.

Harry Stebbings 44:59 I'm with you. I think that-

Kevin Hartz 45:00 What, layoff, because-

Harry Stebbings 45:00 I think, I think there is-

Kevin Hartz 45:01 ... it was a tragic ending, you know?

Harry Stebbings 45:03 Yeah, I, I know.

Kevin Hartz 45:03 Yeah.

Harry Stebbings 45:03 I think there's a real incubator business to be done in looking at historic-

Kevin Hartz 45:08 Historic, yes.

Harry Stebbings 45:09 ... successes-

Kevin Hartz 45:10 Yes.

Harry Stebbings 45:10 ... that went wrong for reasons that could be mitigated.

Kevin Hartz 45:13 Completely.

Harry Stebbings 45:14 Yeah.

Kevin Hartz 45:14 Agree.

Harry Stebbings 45:14 I'm trying to co-found that incubator. (laughs)

Kevin Hartz 45:16 Yes. Yeah.

Harry Stebbings 45:16 I'll put $10 million in if you want to do it. (laughs)

Kevin Hartz 45:18 Yeah, let's do it. I'll match yours.

Harry Stebbings 45:20 Yeah, it's not a bad idea.

Kevin Hartz 45:21 Okay. We've got it down.

Harry Stebbings 45:21 'Cause you actually have product market fit around ideas.

Kevin Hartz 45:23 Mm-hmm.

Harry Stebbings 45:24 Like the idea of like time-

Kevin Hartz 45:25 Right.

Harry Stebbings 45:25 ... dense, concentrated events is super cool.

Kevin Hartz 45:28 I mean, if you brought HQ Trivia back, it would also be this like, uh, nostalgic, you know, v- vibe.

Harry Stebbings 45:36 But I think the other thing that people forget is like just how hard it is to get attention today. I always say this to the team, but I say, "The only thing more competitive than the compute economy is the attention economy."

Kevin Hartz 45:45 Mm.

Harry Stebbings 45:45 And actually, people don't think enough about, how do I get like macro headlines? And actually, if you bring back HQ Trivia...

Kevin Hartz 45:51 Mm-hmm.

Harry Stebbings 45:51 ... and you and I were to put $10 million in each-

Kevin Hartz 45:54 Mm-hmm.

Harry Stebbings 45:54 ... to bring back an incubator that brought back retro hits-

Kevin Hartz 45:57 Mm-hmm.

Harry Stebbings 45:58 ... you would get in some of the biggest publications. You would get to a big number of users pretty quickly.

Kevin Hartz 46:02 What else would we bring back? I want to bring back Hot or Not.

Harry Stebbings 46:05 Listen, I think BeReal-

Kevin Hartz 46:06 Yeah.

Harry Stebbings 46:06 ... was a fantastic product innovation-

Kevin Hartz 46:08 BeReal? There you go.

Harry Stebbings 46:09 ... that just fucked it with not doing enough video.

Kevin Hartz 46:11 Oh, man.

Harry Stebbings 46:12 Yep. And so there is quite a lot that you could-

Kevin Hartz 46:14 Yeah.

Harry Stebbings 46:14 ... actually bring back very efficiently, quite cheaply.

Kevin Hartz 46:17 What would you not bring back?

Harry Stebbings 46:18 Oh, that's a really good question.

Kevin Hartz 46:20 Yeah.

Harry Stebbings 46:21 Um, you know another one that I would bring back? Uh, it was a massive cash cow in London, Mad Bid. Do you remember Mad Bid?

Kevin Hartz 46:27 No.

Harry Stebbings 46:28 You would buy a laptop for about 10 pounds.

Kevin Hartz 46:30 Oh, my God.

Harry Stebbings 46:30 You're like, "How do I buy a MacBook Air for 10 pounds?"

Kevin Hartz 46:32 Yeah.

Harry Stebbings 46:32 To bid, you have to put down a pound.

Kevin Hartz 46:35 Mm.

Harry Stebbings 46:36 And so to basically bid 100 times-

Kevin Hartz 46:39 Yeah.

Harry Stebbings 46:39 ... you have to put down 100 pounds.

Kevin Hartz 46:40 Yeah. Mm.

Harry Stebbings 46:40 And so for a MacBook Air that sells for 10 pounds, it's actually, gosh, what is that, 10,000 dollars. So for a 2,000 dollar laptop-

Kevin Hartz 46:48 Mm.

Harry Stebbings 46:48 ... they made five times that in bids.

Kevin Hartz 46:51 Mm.

Harry Stebbings 46:51 Amazing.

Kevin Hartz 46:52 Just bring it back.

Harry Stebbings 46:53 Yeah, it was the gamified version of like eBay-

Kevin Hartz 46:55 Mm.

Harry Stebbings 46:55 ... in a really cool way. So yes, I would do that.

Kevin Hartz 46:58 I'd bring back Friendster.

Harry Stebbings 47:00 Ooh. Why?

Kevin Hartz 47:01 No, I wouldn't.

Harry Stebbings 47:02 (laughs)

Kevin Hartz 47:02 That, that would be too, too difficult. No.

Harry Stebbings 47:05 It'd be a freaking nightmare.

Kevin Hartz 47:06 Yeah.

Harry Stebbings 47:06 No, I, I don't... Do you think about market timing when you invest?

Kevin Hartz 47:09 Yeah, of course. I, and you know, human nature is to look at things that are working now and think like, "Oh, let's build something." Y- you know, you see all of a sudden everything kind of pop up, being memetically duplicative of something that's doing really, really well. And, uh, you know, and the response is no, you know, look f- look three, five, seven years ahead, not now. Uh, or not, uh, what's working now and, and starting something. So that is a, a big issue is, um, you know, is not looking far enough ahead.

Harry Stebbings 47:45 I agree. You mentioned kind of TokBox and the time that went in, and it's like a 2X. There's often the question of like where to spend your time in venture.

Kevin Hartz 47:53 Mm-hmm.

Harry Stebbings 47:54 And people say, "Ah, spend your time with your winners. That's what drives value."

Kevin Hartz 47:57 Mm-hmm.

Harry Stebbings 47:57 But then Fred Wilson says, "Well, losses are where you build your reputation."

Kevin Hartz 48:00 Mm-hmm.

Harry Stebbings 48:01 How do you think about that time allocation on an outcome basis with the portfolio?

Kevin Hartz 48:05 It's the companies that are performing are the most, you know, you just have so much happening and need so much assistance that, you know, that's l- like, you know, I, I think naturally where you spend your time, and it, it should be with the, the companies, you know, winning. I, I do have a soft spot for all founders so, you know, we're there, and that's why, you know, I don't sleep as much, (laughs) y- you know, as I do, but-

Harry Stebbings 48:32 When do you turn? Like if I feel like they're not working hard-

Kevin Hartz 48:35 Mm-hmm.

Harry Stebbings 48:36 ... I will turn.

Kevin Hartz 48:37 Mm-hmm.

Harry Stebbings 48:37 And then I'm not very nice. (laughs)

Kevin Hartz 48:39 (laughs) Th- uh, uh, you know, I think that's, th- that's just it. If, if-

Harry Stebbings 48:44 If you're giving everything up-

Kevin Hartz 48:45 ... you find somebody that wants to do it as a lifestyle investment, they shouldn't be doing it with other people's money just as-

Harry Stebbings 48:50 Is it wrong-

Kevin Hartz 48:50 ... RLPs.

Harry Stebbings 48:50 ... to ask for your money back as an investor?

Kevin Hartz 48:52 It kind of depends on the-... the, the level. I guess, you know, I'm, again, focused on more of the big outcomes and, uh, y- you know, the things that aren't gonna work, aren't gonna work. It's the power law winners that are gonna really drive the, the returns.

Harry Stebbings 49:09 Is there a power law winner that you thought would be a power law winner that didn't turn into a power law winner?

Kevin Hartz 49:14 You know, I think the jury is still out. There's still a lot of value there in OpenSea. I was a seed investor in OpenSea and during, you know, the, the boom of 21, 22, it was valued at 13 and a half billion.

Harry Stebbings 49:27 Why would you not sell some then? Like, given doing the seed there, Kevin?

Kevin Hartz 49:31 Yeah, I, I, you know, often think a lot about that. And, you know, my mindset was honestly, you know, when you see that l- fast l- level of growth, you, you're thinking about what the GMV is gonna be, you know, over the coming quarters and you don't think of it as dropping dramatically. You think of it as continuing to head up at a rapid pace.

Harry Stebbings 49:55 But it does. I mean, I, I mean this nicely, even pushing back, it doesn't matter, dude. Like you get in at seed, that is an astronomical return-

Kevin Hartz 50:04 Mm-hmm.

Harry Stebbings 50:04 ... that you should at least take some off the table, no?

Kevin Hartz 50:06 I-

Harry Stebbings 50:06 And like w- would you have done, would you have taken some off the table if you'd done it with the fund at seed?

Kevin Hartz 50:10 Well, y- you know, I, I guess I should say yes because it only behooves me to answer yes. (laughs)

Harry Stebbings 50:15 (laughs)

Kevin Hartz 50:15 Um, but... And there was, you know, that round-

Harry Stebbings 50:18 But I think that you would have done, wouldn't you?

Kevin Hartz 50:19 ... that $13 billion round with, uh-

Harry Stebbings 50:21 CoT.

Kevin Hartz 50:22 Yeah, was extremely tight. Like, they were, they wanted more stock. And so the avail- the secondary was there and available so there was a chance to sell. But you would say the same thing about the, the $10 billion round that Facebook did with Microsoft. Um, and, you know, should people have sold then? No.

Harry Stebbings 50:42 I don't... Y- W- Well, if you did the seed, honestly-

Kevin Hartz 50:46 Mm-hmm.

Harry Stebbings 50:46 ... just pause. Of course, you shouldn't have done from a quant- pure quantitative like assessment. But if you did the seed and you had the chance to sell 25% of your holding-

Kevin Hartz 50:55 Mm-hmm.

Harry Stebbings 50:55 ... and return a h- huge number, f- 300, 400 x and ride 75%-

Kevin Hartz 51:02 Mm-hmm.

Harry Stebbings 51:03 ... I don't think many people regret that much selling the 25%.

Kevin Hartz 51:07 Yeah, I think it depends on what your goals and outcomes are. Like, y- you know, there's something to letting it ride like in the case of, you know, Facebook, which is now worth what? Seven or 800?

Harry Stebbings 51:21 Yeah.

Kevin Hartz 51:22 Here you're 26, you know, you should be just compounding like your, your winners just like keep them growing and growing, uh-

Harry Stebbings 51:31 Do you wish you'd taken more risk when you were younger, Kevin? It's very kind of you to mention the compounding nature and my age.

Kevin Hartz 51:37 Yeah.

Harry Stebbings 51:38 Um-

Kevin Hartz 51:38 Absolutely.

Harry Stebbings 51:39 You do?

Kevin Hartz 51:40 Yeah, I mean, persistence-

Harry Stebbings 51:41 What did you not take risk on that you wish you had?

Kevin Hartz 51:43 I mean, it's always around an investment or working with a team. I mean, talked to Peter at the time he was putting the team together for PayPal and I had invested in PayPal and I'm like, "Why would I join PayPal, you know, like, I'm already an investor in it. I already have shares," you know. But the answer was, you know, go all in. And then when, uh, the day that acquisition of PayPal by eBay was announced, um, Peter had resigned and I met him up at the Sundeck Restaurant in, um, up on, uh, Sand Hill Road, and he said, you know, "Kevin, I'm working on this business and, you know, we're taking kind of the fraud alg- algorithms from PayPal that kind of find these associations between disparate nodes and, and we're gonna use this to, to catch terrorists. And, you know, do you wanna get involved?" And I, I said, "Peter, like, you're a libertarian. Why would you want something so, like, invasive of one's privacy?" And that was the wrong response. Shouldn't have done that. (laughs) I should've joined Palantir.

Harry Stebbings 52:49 Can anyone do a deal?

Kevin Hartz 52:50 Can anyone do a deal? If somebody says with absolute conviction, um, "I wanna do this and I'll put my life on the line for this," um, you know, then absolutely.

Harry Stebbings 53:04 I think it's really important. I got asked by an LP this morning, "Talk to me about your voting structure." And I said, "I think voting structure is a complete bullshit." (laughs)

Kevin Hartz 53:11 (laughs)

Harry Stebbings 53:11 Like, seriously, like I-

Kevin Hartz 53:13 Well, don't tell your LPs that.

Harry Stebbings 53:15 Oh, no, I do, 'cause I always present them the outcome scenario, which is, you know, if you're actually strategic, you always vote a six out of 10.

Kevin Hartz 53:21 Mm-hmm.

Harry Stebbings 53:21 Because if it's Uber I always say yes, and if it's a terrible company, I was a weak yes.

Kevin Hartz 53:25 Yeah. (laughs)

Harry Stebbings 53:26 Like it was a w- it was basically a five.

Kevin Hartz 53:28 (laughs)

Harry Stebbings 53:28 Like it was weak. So it should, it brings politics to a new level into a partnership that just doesn't need to be there. If I've hired you as my partner and I've given you equal or really meaningful carry and I dedicate years of my life to working with you-

Kevin Hartz 53:41 Mm-hmm. Mm-hmm.

Harry Stebbings 53:41 ... if you really wanna do a deal, why the fuck would I not let you?

Kevin Hartz 53:44 Yeah, yeah. I thought that, I, I admire Founders Fund for how individually driven it is around conviction of a single partner.

Harry Stebbings 53:54 Did you have any big lessons from being there?

Kevin Hartz 53:56 Oh, uh, endless.

Harry Stebbings 53:58 What are the biggest that you took with you?

Kevin Hartz 53:59 I think it's such a great form of venture that they practice. Um, it is very conviction-driven so... And it's, and it is, like it, it is the emanation of the power law. It was, you know, it was Peter and Bryan Ziksmund and Napoleon that took, um... What did they take? I think they sold Spotify at the $8 billion price, pissed off, what's his name? This-

Harry Stebbings 54:26 Daniel.

Kevin Hartz 54:26 Daniel Ek. And rolled it all into Airbnb at the two and a half billion. And so they'd like-

Harry Stebbings 54:35 (gasps) .

Kevin Hartz 54:36 ... d- doubly, doubly like went into things. And so that kind of going all in is very important and when, you know, and w- when you look back at a fund, you just don't want...... something that's just kind of like blah, you know, a little bit of mushy of everything and doesn't have its, like, big power law winners. Like, you just boil funds down to the SpaceX fund, and the Facebook fund, and the, uh, Airbnb fund, and the, you know, and, and so on and so on.

Harry Stebbings 55:04 I remember Bryan Singer when telling me, "The enemy of great venture returns is capital concentration limits on a per company basis."

Kevin Hartz 55:12 Pfff. That showed Bryan.

Harry Stebbings 55:13 Yeah. That you should be 30%-

Kevin Hartz 55:16 Mm-hmm.

Harry Stebbings 55:17 ... in on your big winner. We were on Airbnb-

Kevin Hartz 55:19 Yeah.

Harry Stebbings 55:19 ... we were on Bitcoin-

Kevin Hartz 55:21 Yeah.

Harry Stebbings 55:21 ... or whatever that was. I always remember that.

Kevin Hartz 55:24 I did push them at their AGM around the Airbnb deal, and I, so I give myself a little credit. Well, I'm... because I'm a venture capitalist, you're supposed to give yourself credit for all these things.

Harry Stebbings 55:35 Ooh, a credit.

Kevin Hartz 55:35 It probably wasn't-

Harry Stebbings 55:36 You basically-

Kevin Hartz 55:36 Yeah.

Harry Stebbings 55:36 ... founded Facebook, right?

Kevin Hartz 55:38 I, I, yeah. I, I founded Facebook, you know.

Harry Stebbings 55:38 As well as being a seed investor. (laughs)

Kevin Hartz 55:39 Faces of the crowd, that was mine. But, uh, ye- yeah, I re- I remember, um, really saying like, "You guys need to look at this company." Um, but all that is patting on, on the back. Bryan's so interesting, because he would just... when, when I was, like, ready to go with a company, he'd just say, "Kevin, do you really, really, really believe this will be the one?" You know, he just, like, shakes you, you know. And, and, uh, it, it used to, you know, agitate me a tiny bit, but, uh, I appreciate that now.

Harry Stebbings 56:12 Do you ever tell founders when you don't believe anymore? When things are not going well, do you just quiet quit or do you say, you know, "Kevin, I, I'm sorry. I just-"

Kevin Hartz 56:21 Well, uh, a Roloff, a Roloffism is... which, which is always think of is, when things are going really poorly, that's when you're supportive and nurturing and not hammering, believe it or not. And when things are going great, then you dig in and, like, hit them hard. So, um, that was a Roloffism that's been so

Kevin Hartz 56:48 key.

Harry Stebbings 56:48 Do you think that's helpful?

Kevin Hartz 56:49 It's incredibly helpful.

Harry Stebbings 56:50 Really?

Kevin Hartz 56:51 I know for a fact.

Harry Stebbings 56:52 So you think when it's not going well, like, oh, it's okay and you're supportive and that's nice-

Kevin Hartz 56:57 Mm-hmm.

Harry Stebbings 56:57 ... it's better than actually, hey, we need to fucking turn this around. We can do this, but this is, th- ... And that you're much more tough. Sometimes tough love is needed.

Kevin Hartz 57:08 Tough loded- love is needed when it's doing extraordinarily well. Like, when things are going terribly wrong and there are the, you know, butterflies and stomach, uh, you know, is, like, seized up and, um, m- teammates are quitting and somebody's hacked the site or whatever hell-

Harry Stebbings 57:31 (laughs)

Kevin Hartz 57:31 ... you know, all these things, like, really being a solid productive voice of calmness and support is extraordinary help- extraordinarily helpful.

Harry Stebbings 57:42 That's interesting.

Kevin Hartz 57:43 Try it. Just-

Harry Stebbings 57:44 I disagree.

Kevin Hartz 57:46 Yeah? Okay. That's, that's fine.

Harry Stebbings 57:46 I think, I think, I think it's about, like, understanding what the person needs in the moment.

Kevin Hartz 57:51 Mm-hmm.

Harry Stebbings 57:51 Some people do need that, absolutely, and it's unbelievable. But some people don't resonate with that.

Kevin Hartz 57:55 Mm-hmm.

Harry Stebbings 57:56 And actually they need... Like, for me-

Kevin Hartz 57:58 Mm-hmm.

Harry Stebbings 57:58 ... when it's really hard, and I've had some shit times, Kevin, you know, uh, it was my mom giving me a kick up the ass and saying-

Kevin Hartz 58:05 Mm-hmm.

Harry Stebbings 58:05 ... "You gotta wake up tomorrow and fucking be a big boy."

Kevin Hartz 58:08 Yeah, yeah.

Harry Stebbings 58:09 And, like, "Stop moaning."

Kevin Hartz 58:10 Mm-hmm.

Harry Stebbings 58:11 "Get on with this." Uh, "Okay." D'you s- but d- so it's like, it's so individual-led, I find.

Kevin Hartz 58:16 Yeah. I have to be careful not to put too much pressure on my girls to, you know... in this, in this age of, um, so much intensity in the Bay Area and schools and college-

Harry Stebbings 58:29 Do you worry about that?

Kevin Hartz 58:29 Oh, absolutely.

Harry Stebbings 58:30 Yeah.

Kevin Hartz 58:31 My 16-year-old, uh, w- was di- w- we found she had a very severe eating disorder at, um, in, in December. We caught it luckily because it was fairly early on because of her annual exam. Um, and so we saw the significant drop in weight. Um, she's a dancer. She has something called SIBO, s- stomach intestinal issues that kind of been another driver of having her limit her food. She was straight A, she's a straight student. She was under a lot of pressure, uh, dancing 20 plus hours a week, and she just stopped eating. And she's ended up in the hospital now three times. You know, I... it's, it's this multifactorial illness that, um, is so prevalent for these times that we're not aware of, uh, that comes from social media and dance and all these other pressures and it's culminated in this, this terrible illness. So I'm very cognizant of the pressures we put on our kids.

Harry Stebbings 59:33 I didn't talk about this too much, but I was bulimic when I was young.

Kevin Hartz 59:36 Mm-hmm.

Harry Stebbings 59:36 Um, and it's, it's v- it's the most hard, I think, addiction or problem to deal with.

Kevin Hartz 59:41 Mm-hmm.

Harry Stebbings 59:41 Hard thing with food. You can't just stop eating. You can't-

Kevin Hartz 59:44 You can't stop eating.

Harry Stebbings 59:44 ... stop your interaction with food.

Kevin Hartz 59:46 I understand in bulimia, there is a... also some gratification post-

Harry Stebbings 59:50 Yeah.

Kevin Hartz 59:51 ... or some en- uh, endorphins or-

Harry Stebbings 59:54 100%.

Kevin Hartz 59:54 Yeah. And, and the recidivism for eating disorders is off the charts. So like everything else, it seems like if you have cancer or diabetes or... you know, there's so many different treatments and scientifically focused treatments. But in eating disorders, there's nothing. And so these kids just go over and over and back, you know, in this circular motion. And I'm a- I'm, I'm, like, in shock of how barbaric the treatments are for, for the... they're just nonexistent. There's something called family-based therapy, which is you sit down, eat with your child meal after meal after meal, and it's, uh, agonizing because it's, it's like having a phobia and having to... you know, if you're scared of spiders, to be in front of spiders all day.

Harry Stebbings 1:00:40 The hardest thing is they have to be the ones to initiate the change.

Kevin Hartz 1:00:44 Mm-hmm. Yes.

Harry Stebbings 1:00:45 Was it your daughter that did that?

Kevin Hartz 1:00:46 She, we don't know if she's still ready. She has to... you're exactly right. It's like there is a...... the, the thrill or the notion of being thin and being a certain way and not wanting, you know, to change. And that's how she's- we've ended up in the hospital three times. And we hope now she's making that right move and that she wants to get better and understands. She had to withdraw from school. W- she is finishing her semester, uh, online, through online school, which is a godsend. It's incredible. It's like the Oxford tutorial method online. But, um, she is... Yeah, I, I mean, yeah, you, you do have to want it. But wh- who- could, I could never imagine, like, an American kid, like, my sophomore year in high school was great years, like, w- so much fun, close friendships. And I don't n- never knew anyone even withdrawing from our high school before for any kind of medical condition. And then for her, for her to go through this is just agonizing.

Harry Stebbings 1:01:51 I remember with my mother, my mother's an alcoholic too, and there was all these things, because for a good few years-

Kevin Hartz 1:01:56 Mm-hmm.

Harry Stebbings 1:01:56 ... I just had to watch the person I love more than anything-

Kevin Hartz 1:01:58 Mm-hmm.

Harry Stebbings 1:01:59 ... suffer, and there's nothing that you can do.

Kevin Hartz 1:02:01 Mm-hmm.

Harry Stebbings 1:02:01 That is really hard. (laughs)

Kevin Hartz 1:02:04 Yeah. I think there, there are many more treatments, uh, that should be applied, uh, y- you know, that should be more prevalent. I don't know whether it's TMS, if you've heard of trans-

Narrator 1:02:16 Yeah.

Kevin Hartz 1:02:16 ... migratory stimulation, if I said that correctly.

Harry Stebbings 1:02:18 Yeah.

Kevin Hartz 1:02:19 Trans-magnetic stimulation, different ways to kind of provoke the area of the brain and, and correct whether it's an eating disorder or alcoholism or addiction

Kevin Hartz 1:02:29 pathways or so on.

Harry Stebbings 1:02:30 Um, but before we do a quick fire, two of my biggest concerns is actually, like, eating disorders thing, a- also, uh, y- young eating disorders in men is one that's really not talked about as well.

Kevin Hartz 1:02:37 I know. Yeah.

Harry Stebbings 1:02:37 Especially for boys-

Kevin Hartz 1:02:38 Yeah.

Harry Stebbings 1:02:38 ... it's even more of a kind of... Um, and then just, like, depression and loneliness.

Kevin Hartz 1:02:42 Mm-hmm.

Harry Stebbings 1:02:42 The hard thing is, Kevin, like, our job is to invest in amazing products that hopefully make the world better, have great impact, I think. I can't find businesses in that Calm or Headspace of the world, which makes w- yeah, mental wellness, health-

Kevin Hartz 1:02:56 Mm-hmm. Mm-hmm.

Harry Stebbings 1:02:56 They're not great businesses. And is there, is this our job?

Kevin Hartz 1:03:01 Well, we hope that there's gonna be therapeutics. I mean, the next, the, the challenge of this era, of our era, is neurological issues, like, um... And Peter always tends to be three steps ahead of us on all of this. He's been after this area for a while, but y- you know, as we beat back cancers, as we beat back heart diseases, w- uh, disease, which unequivocally has happened, um, Alzheimer's, Lewy body dementia, um, y- you know, all these, um, mental illnesses, u- m- bipolar, like, these are, are the kind of prominent illnesses of our time and there need to be therapeutics, uh, developed for it. And, and so, yeah, this, this should be, you know, a, a kind of there should be a, a, a, just as I think it was Richard Nixon in, like, the '70s said, "Let's go after cancer." You know, we need to, to d- to go after these, um, y- neurological disorders that are becoming so prevalent in our society.

Harry Stebbings 1:04:06 I totally agree. I could talk to you all day, Kevin. Uh, I love the way I haven't really looked at the schedule. (laughs)

Kevin Hartz 1:04:11 Mm-hmm.

Harry Stebbings 1:04:12 May spend hours supposedly doing it, uh, but, uh, okay. So I wanna do a quick fire. So I say a statement, you give me your immediate thoughts. Does that sound okay?

Kevin Hartz 1:04:20 Yes.

Harry Stebbings 1:04:21 So what have you changed your mind on most in the last 12 months?

Kevin Hartz 1:04:24 The r- rapid ascension of the defense segment. Like, how it's gone from zero to 60, you know, certainly Palantir then Anduril, but now, you know, how the world has dramatically changed and how unprepared, uh, th- the United States is.

Harry Stebbings 1:04:41 What VC do you most respect and learn from?

Kevin Hartz 1:04:44 You know, who, w- I spent a f- some time with when they were getting their first fund going was a group, um, called VY Capital.

Harry Stebbings 1:04:52 Yeah, uh-

Kevin Hartz 1:04:53 Um-

Harry Stebbings 1:04:53 ... Alexander Tamas.

Kevin Hartz 1:04:54 Yeah, John Haering and Alexander Tamas.

Harry Stebbings 1:04:56 Nice.

Kevin Hartz 1:04:56 Like, their, um, their style and pace and patience and wisdom is, is extraordinary.

Harry Stebbings 1:05:04 Uh, I, I completely agree with you, and actually very much, uh, aligned to your thinking on upside maximization. Like, truly-

Kevin Hartz 1:05:10 Mm-hmm.

Harry Stebbings 1:05:10 ... focus on the mega outcomes. So I totally agree with you there.

Kevin Hartz 1:05:13 Mm-hmm. I'm in, I'm in a lot of funds, and holy Moses, that fund one is en fuego.

Harry Stebbings 1:05:18 (laughs)

Kevin Hartz 1:05:18 (laughs)

Harry Stebbings 1:05:19 Uh, what's the biggest advice to someone entering angel investing, Kevin?

Kevin Hartz 1:05:23 Just rope off some money you wanna lose, because, you know, you, you gotta look at, you've gotta, like, take a lot of swings of bats. I think, you know, Vinod has, like, a corollary to this that you've gotta, like, burn through, like, 40 million in venture before you really know what you're doing, and, uh, you know, angel is, is s- you've just gotta start, uh, learning and, and pattern recognizing. You do that by taking risk.

Harry Stebbings 1:05:46 I, I totally agree with you. I'd also say write the same-sized check every deal. Like, everyone thinks, "Oh-"

Kevin Hartz 1:05:50 Mm-hmm.

Harry Stebbings 1:05:50 "... I, I have different conviction levels."

Kevin Hartz 1:05:52 Mm-hmm.

Harry Stebbings 1:05:52 "I'll write a 100K check and I'll write a 25."

Kevin Hartz 1:05:54 Mm-hmm.

Harry Stebbings 1:05:54 You're not that smart, a pre-seed. Just write 50K-

Kevin Hartz 1:05:56 Mm-hmm.

Harry Stebbings 1:05:56 ... checks every time.

Kevin Hartz 1:05:57 Mm-hmm.

Harry Stebbings 1:05:58 Super important. Um, which VC would you most like to swap portfolios with?

Kevin Hartz 1:06:02 Like, Y Combinator continues to have this, like, ideal venture model. Like, as much as, you know, in every class that comes around, like, the whole valley says, "Oh, now they've really jumped the shark, they're no good anymore." But, like, w- year after year after year, they just keep producing these incredible companies with these-

Harry Stebbings 1:06:23 I think with Gary coming back as well, they've-

Kevin Hartz 1:06:24 Yeah. Gary back, yeah.

Harry Stebbings 1:06:24 ... found their stride again.

Kevin Hartz 1:06:25 Yeah.

Harry Stebbings 1:06:26 Oof. So I totally agree with you there. Why is now-

Kevin Hartz 1:06:28 I passed on Gary when he was working on Posterous.

Harry Stebbings 1:06:32 I mean, it wasn't a great outcome.

Kevin Hartz 1:06:33 No.

Harry Stebbings 1:06:34 So you're fine.

Kevin Hartz 1:06:35 I just thought I'd throw that out there.

Harry Stebbings 1:06:37 (laughs)

Kevin Hartz 1:06:37 It's a weird flex.

Harry Stebbings 1:06:38 (laughs)

Kevin Hartz 1:06:39 Look, he might have earned billions in- (laughs)

Harry Stebbings 1:06:43 That is absolutely-

Kevin Hartz 1:06:44 ... but I passed on Posterous.

Harry Stebbings 1:06:45 That is absolutely amazing.

Kevin Hartz 1:06:46 And he's helping San Francisco though. He's doing-

Harry Stebbings 1:06:47 Unbelievably.

Kevin Hartz 1:06:48 ... a, a kick-butt job.

Harry Stebbings 1:06:48 I mean, this guy is incredible.

Kevin Hartz 1:06:50 Yeah.

Harry Stebbings 1:06:50 Yeah, yeah, yeah.

Kevin Hartz 1:06:50 He's, he's having his day.

Harry Stebbings 1:06:52 Yeah, yeah. No, absolutely. Uh, tell me, why is now a good time to be a founder?

Kevin Hartz 1:06:57 Now i- we, we are blessed with the capital gods. Like, this is an incredible period. Like, don't get me wrong and I haven't... Uh, I'm, I'm gonna say, like, I have strong conviction that we're in the early years of the biggest bubble. And I say bubble because w- we're, we're in this world of capitalism. The signs that I see...... you, you know, like NVIDIA becoming, is it now the most valuable company?

Harry Stebbings 1:07:22 That is.

Kevin Hartz 1:07:23 NVIDIA becoming the most valuable company on the planet, um, is just the precursor towards the bubble of all bubbles of the AI bubble. Uh, so there's gonna be so much made and created. And of course, there's gonna be so much foolishness to come, but then you also have these compounding, y- y- you know, kind of like, like add-on bubbles of crypto and fintech and, you know, this worldwide economy in- in- in tech economy that's emerging, uh, new areas of clean energy. We just got involved in an industrial biotech company called General Biological. So there's so many different platforms to build off. Um, I always look for platforms to, to invest like, y- you know, the why now question is SAM, y- you know, created in, in the beginning, the transformers came and SAM created ChatGPT and there was plentiful, the fastest growing company came out of that. And that tells you that the platform is here and build apps on top. Um, and we're gonna have so many different opportunities around this and-

Harry Stebbings 1:08:30 So will venture numbers be better or worse moving forwards? More capital, but more platforms, more breakthrough technologies.

Kevin Hartz 1:08:38 They'll be much better than that, y- you know, than that 21, 22, uh, kind of catastrophe that, that we just saw of, oh my God, that, that was horrible. So yes, I want, I, I wanna say venture returns will absolutely be better because, y- you know, if you, if you index against that, that's, that's not too hard to compete against.

Harry Stebbings 1:08:58 Did you fuck up in 21 or 22?

Kevin Hartz 1:09:00 Oh, yeah. Who didn't?

Harry Stebbings 1:09:02 Final one for you, Kevin. What question are you not... You've done many interviews over the years. You've been asked so many questions by so many different brilliant people. What question are you never asked that you should be asked?

Kevin Hartz 1:09:13 Everyone always answers insincerely about what their weakness is, but like, what is your mental illness? Is it depression, anxiety, bipolar, addiction? (laughs) And to be honest about it.

Harry Stebbings 1:09:25 Kevin, listen, dude, I, I so appreciate you. You've always been so kind to me and so supportive-

Kevin Hartz 1:09:30 Likewise.

Harry Stebbings 1:09:30 ... when I was very, very young and I just really appreciate you. So thank you for doing this. It's been a lot of fun.

Kevin Hartz 1:09:35 You're still very, very y- young.

Harry Stebbings 1:09:37 (laughs) Less young than I was, but you're a star.

Kevin Hartz 1:09:39 You're younger than Harry Styles, right?

Harry Stebbings 1:09:41 (laughs) Yeah.

Kevin Hartz 1:09:42 That's crazy.