20VC: Initialized's Garry Tan on The Most Important Thing A Seed Investor Can Do For Founders, How Ownership Requirements Change With Evolution of Funds & Why There Is Not Too Much Capital Chasing Too Few Deals

Garry Tan is the Co-Founder and Managing Partner @ Initialized Capital, one of the West Coast's leading early-stage funds with a portfolio including the likes of Coinbase, Instacart, Cruise, Flexport and Opendoor, just to name a few. As for Garry, before co-founding Initialized, he was a partner at Y Combinator for nearly five years where he advised and funded over 600 companies. He was also co-founder of YC-backed blog platform Posterous (acquired by Twitter in 2012). Before that he was employee #10 at Palantir, where he was a founding member of the engineering team for Palantir's financial analysis product, and also fun fact, Garry designed Palantir's logo. In Today’s Episode You Will Learn: 1.) How Garry made his way from Founder and YC Partner to managing over $500m AUM today with his leading of Initialized? How did Garry's investment mindset change with the transition from angel to an institutional investor? 2.) What does Garry believe is the one thing pre-seed and seed investors must do that is more important than anything else? What relationship to the very best founders have with failure? How do they think about and approach it? How has Garry seen his own conviction building process in founders change over time? How does Garry approach the turning down of opportunities? What is the right way to deliver that feedback? 3.) Ownership: Initialized's funds have scaled from Fund I being $7m to Fund 4 being $225m, how have their ownership requirements changed with the evolution of their fund size? How does Garry think about collaboration and co-opetition with others funds as a result? What are the core challenges here? 4.) Price Sensitivity: With the larger fund and slightly more flexibility, how does Garry evaluate his own price sensitivity? What deal has Garry passed on due to price and it has stuck with him and taught him a valuable lesson? On pricing, how does Garry and Initialized approach reserve allocation? 5.) Investment Decision-Making: Garry has previously said "decision-making is a differentiator", what do Initialized do to ensure the highest quality of internal discussion and decision-making? How do they approach unanimous vs single partner decision-making? How does Initialized approach internal attribution with this in mind? Items Mentioned In Today’s Show: Garry’s Fave Book: Peter Thiel's Zero To One, Paul Graham's Hackers and Painters Garry’s Most Recent Investment: Standard Cognition As always you can follow Harry, The Twenty Minute VC and Garry on Twitter here! Likewise, you can follow Harry on Instagram here for mojito madness and all things 20VC.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Harry Stebbings?

  You are listening to the 20 Minute VC with me, Harry Stebbings, at H Stebbings 1996 with two Bs on Instagram. And I always love to see you there. And starting today, I will be doing a day in the life of VC. So that should be fun and very interesting. But to our episode today, and the biggest joy for me of doing the show is always building relationships and friendships with just incredible and inspiring people. And I was lucky enough to have this guest on the show two years ago, since he's been a constant source of support and advice to me, for which I'm extremely grateful. And I couldn't be more thrilled to welcome back Gary Tan to the hot seat today. Now Gary is the co-founder and managing partner at Initialized Capital, one of the leading west coast early-stage funds, with a portfolio including the likes of Coinbase, Instacart, Cruise, Flexport and Open Door, just to name a few.

• 0:43Harry Stebbings?

  As for Gary, before co-founding Initialized, he was a partner at Y Combinator for nearly five years, where he advised and funded over 600 companies. And he was also co-founder of YC-backed blog platform Posterous, acquired by Twitter in 2012. Before that, he was employee number 10 at Palantir, where he was a founding member of the engineering team for Palantir's financial analysis product. And also fun fact, Gary designed Palantir's logo. And I do also want to say a huge thank you to YC's Daniel Gross, Alexis Ohanian, Alex Bangash and Ryan Peterson for some fantastic question suggestions today. I really do so appreciate that. But before we jump into the show today, I want to spend a minute to talk about Brex, the first corporate card for startups. Brex founders Enrique and Pedro built a payments business in Brazil, but found themselves rejected for a corporate card

• 1:28Harry Stebbings?

  when they were in Y Combinator. They decided to build Brex with instant online signup, no founder liability required, and limits 10 to 20 times higher than standard cards. Pretty incredible, I know. And you can sign up for Brex and get fees waived by entering the code HARRY during signup. Honestly, it really is such a special service. And speaking of Brex, an incredible high-growth company. Well, a lot of what we do on the 20 Minute VC is talk to experts, pick the brains of founders and investors, who tell us which trends to watch out for, offer tips on fundraising and teach us how to excel at any company stage. And although there's no playbook for building a great business, we can certainly learn from people who've done it before. Beyond listening to this podcast and talking to mentors and advisors in your own network, it's important to have resources you can turn

• 2:10Harry Stebbings?

  When you're tackling a new challenge, Stripe has built those resources for you. Whether you'd like to learn how to run a pricing experiment or build a knockout landing page, Stripe gives you the information you need to start, run and scale a technology company. Their guides are often written by or feature people like Elan Gill, an incredible individual whom you've probably heard on this very podcast. And you can read one of my favorite guides on scaling engineering organizations and many more on Stripe.com/20VC. That's T W E N T Y V C. And speaking of scaling engineering organizations, as we did there, did you know that there are five job openings for every one developer in the United States? No wonder hiring great engineers is impossible. And that's where my friends at Terminal come in. Terminal is your dedicated partner in quickly building skilled remote engineering teams.

• 2:54Harry Stebbings?

  How do they deliver both speed and quality? Well, Terminal does this by focusing on everything necessary to successfully source, set up and support these teams. From little things like managing office logistics to big things like benefits, legal and community, they've developed this proprietary and comprehensive remote team solution based on decades of experience building remote teams across multiple continents. So they know what works, but don't take my word for this. Take the word of Eventbrite, former 20VC guest Hims and Dialpad, all customers and lovers of Terminal. And you can find out more today at Terminal.io. But enough of me. And so without further ado, I'm thrilled to welcome Gary Tan, co-founder and managing partner at initialized Capital.

• 3:38Speaker 01

  You have now arrived at your destination.

• 3:41Harry Stebbings?

  Gary, my friend, it is such a pleasure to have you on the show today. I've been so excited for this one for a very long time, but thank you so much for joining me again for a very special round two.

• 3:50Speaker 02

  Thanks for having me back.

• 3:51Harry Stebbings?

  Not at all. The pleasure is all mine, but I want to kick off today. And for those that made the cardinal sin of not listening to our first episode, tell me, Gary, how did you make your way into what I know to be the wonderful world of venture and really come to found initialized?

• 4:04Speaker 02

  Well, I started off as an engineer. What I realize is it's kind of a common story. A lot of people have no intention of ever actually coming into venture capital. And then as you discover how much capital there is actually in the world and how many problems there are out there, then venture sort of sucks you up. And it makes you realize, hey, if I can raise capital and I can deploy it well, then that's actually one of the more limiting reagents than good engineers and good product people and good builders. And if anything, that's my story, that I ended up realizing while I could build and while I could build great software, my true calling was actually trying to help other people like me and sort of being that Marco Polo between the two worlds. That was something that probably didn't happen enough. And over time, I think it'll change radically.

• 4:48Speaker 02

  I think we'll have quite a lot more people helping people at that very earliest stage, that kind of background.

• 4:53Harry Stebbings?

  Too interesting not to dive in. I didn't expect to go off schedule this early, Gary. But we hear like Naval often unbundle VC into the different packages, be it advising, be it capital, be it kind of structural ownership. How do you think about that? And is that what you're suggesting there?

• 5:08Speaker 02

  Well, when I first joined Y Combinator as actually just a designer in residence. So I was just joining to help out on a part-time basis, just spending time with startups. And I was helping them with their homepage design and first time experience. And along the way, that was winter 2011. That was the batch that Yuri Milner and SV Angel came along and said, we're going to give everyone $150,000 to every single company in that batch. It was about 40 companies. And I just got to know that many people very quickly just by actually helping them. And so in a way, that was a form of unbundling at that moment. And then right after that batch, Paul Graham actually came and said, hey, you could take advisor shares in some of these companies.

• 5:51Speaker 02

  And so in a way, I think that that will continue to happen. And along the way, someone came along and gave us our first angel fund very early. And that was Alex Bangash from Trusted Insight. And so I basically was sort of plucked from basically that exactly unbundled situation into an actually bundled situation.

• 6:09Harry Stebbings?

  And I love Alex. I did actually chat him before the episode about you, and he said many wonderful things. I do want to start on, you mentioned the word angel fund there. It's always a super interesting transition for me from angel to VC. So tell me, we had Andy McGlocklin on the show, and he said with the transition, he became more conservative managing real institutional capital. How do you think the transition affected your investing mental?

• 6:30Speaker 02

  That's something that I think about every single day because we do see a lot of funds come out and then they sort of become a very tightly held partnerships of just a few people. And the economics, the way people make decisions, all of those things are all very tightly held because it's such a difficult journey to even be able to deploy that type of capital, be able to raise institutional capital is so rare that people hold it very, very tightly. And so the challenge for us has been, how do we actually become an institutional firm that is multidisciplinary and has as many people as possible who sort of have the different bases and the different expertise that you actually need to get a pre-seed and seed company to their Series A.

• 7:13Speaker 02

  And that's not just the classic stuff around strategy and how to be a CEO. It's actually design, it's product. You're at such an early stage that you need to figure out what you need to build and which market to build it for and how to attack that market from the very beginning. And so being able to help with marketing, with branding, with PR, you know, design, engineering, AI and ML is such a fundamental piece of what all startups are sort of needing these days, that even being able to help with that, being able to help with AI data pipelines and as granular as helping figure out what the weight should be on those models. Those are all things that people at initialized actually can help with. And so rather than be sort of a very, very tightly knit one or two person partnership, we've really opted to be a much bigger partnership.

• 7:57Speaker 02

  And so Alexis and I started this fund, but we did bring on seven additional partners, you know, two who are GPs who really weigh in on the investment decision and then five additional people who are operating partners who actually do also weigh in on the investment decision. And so that's been a really big transition for us and that's sort of the ongoing experiment. We think it's going to work pretty well and a lot of it kind of comes back to software, building software to weave all of these people together.

• 8:24Harry Stebbings?

  We're going to discuss the pre-seed and the seed element in that what is required, both in the soft and the hard side. I am too interested though, you mentioned that the operational value add that you're bringing alongside some others you've maybe brought in the past few years. Andreessen obviously come to mind very heavily. Do you not think that actually sometimes VCs? Can do too much almost operationally now, though, in the case that they actually unburden teams too much.

• 8:45Speaker 02

  Well, it's really to me kind of a stage thing. The pre-seed and seed level really still is about what should I be building? And those are conversations that you can have. The founder brings the data, the founder brings their 10,000 hours. And what we can do is take our 10,000 hours of working with lots and lots of teams attacking lots of different spaces. And so we're ideally a coach. And so the ideal is not actually to come in and do the work for them. And what's funny is basically what I did when I first joined Y C, I almost never do now. What people really need is how to do it, how to hire for that. That's what you need at the early stage. Post-series A, series B and later in particular, it really is about care and feeding the organization.

• 9:28Speaker 02

  So as a company, you've already chosen your direction. In fact, often you've chosen your go to market. And so now it's about taking that go to market and scaling it to a thousand people in order to get to hundreds of millions of dollars a year in revenue. And that's basically almost a totally different game, requiring a totally different set of people and a totally different set of expertise. And so I think that at that stage, you really can't do very much. Whereas at pre-seed, when you're even still figuring out what should I do and how should I do it and for who? That's where actually having the operational coaching is actually more valuable.

• 10:02Harry Stebbings?

  I'm so pleased you did that segmentation because I want to dive into pre-seed and seed and the requirements. And I've split it up into the softer side and the harder side. So if we start on the softer side, maybe the less tangible elements. When we chatted before, Gary, you left me on a cliffhanger when you said, there is something pre-seed and seed investors can do that is more useful than anything else. However, you very kindly left me there. So what is that one thing and what does it mean to you?

• 10:27Speaker 02

  One of the things I discovered really early is at Y Combinator, we would meet people who were never started companies before. They had built software, they'd ship products for other people. But sitting in that CEO seat, it's something that they've never done before. And I don't know about you, but I'm pretty sure that pretty much all of us, even probably most of the people listening to this podcast right now, experience from time to time this Very, very intense form of imposter syndrome. And that's almost inevitable because so few startups succeed. And as a VC, it takes so long to figure out whether or not you're good. It takes five years to figure out if you're good. And so that's also true for the founder journey. And founders all the time are wondering, am I failing? Well, the good ones do anyway.

• 11:10Speaker 02

  That was actually one of the big secrets of Y Combinator. That if a founder frequently comes to their investors and asks, am I failing? That's almost always correlated and found in the founders who succeed. Because at that point, you're actually asking the right questions. Now, on the flip side, that doubt can be so crippling. It can be so thoroughly mind bending for a founder. That pre-product market fit, when you don't have customers yet, when you have to go out there and do the coding sprints of several months to even build the first version of the product, that might be the minimal viable product. That's when people have the most amount of doubt in themselves, in their team, in their market, in the problem. And if you, as an investor, see all of those things, and you've seen a lot of startups,

• 11:55Speaker 02

  it's actually an incredible moment to be able to sit down with them and say, look, hey, I was there for Instacart. I was there for Coinbase. I was there when people were exactly at your stage. And you have everything that it takes. And this market is as big as any of those markets. Keep going, don't quit. And believing in people before they even truly believe in themselves, that's one of the most powerful things that an early investor can do for their founders.

• 12:19Harry Stebbings?

  I mean, I love that kind of believing in them before they believe in themselves. I do have to ask though, obviously conviction building processes change over the years. When you look at what gets you excited and where you build conviction within founders, within meeting them in those very, very early stages, has that changed over the years? Or do you think that core remains the same?

• 12:36Speaker 02

  I think what put us in the business, frankly, were Alexis and I being partners at Y Combinator very early, is seeing a very, very high volume of great founders. And that is what actually helped build our network. And so, early on, we didn't necessarily have that network. We built it through just helping, frankly, thousands of founders in sort of 25 to 30 minute increments over the course of years. That point you build this crazy network of thousands of people who you have a relationship with, who you've already helped, who that, you know, they trust you and you trust them. You've seen them through adversity. And so that's sort of the really interesting shift that we've seen at initialized, where very early, when we first funded Brian Armstrong at Coinbase, it wasn't like I knew Brian before.

• 13:20Speaker 02

  We knew, we met him through Y C. But now what we find is the absolute strongest form of deal flow that we get is actually a lot of the people who we've seen and we've helped in the trenches back then. And that's sort of the ongoing struggle, actually, that I think most venture capitalists sort of face is that we actually ran the numbers recently and people who we worked very closely with previously, their startups outcomes are actually looking about three times better than the folks that we didn't have sort of that multi-year background and sort of process with. And on the flip side, if you only fund the people who you have very, very deep history with, that's not the makings of a 10 or 20 year firm. And that's definitely our goal for initialized. So that's one of the interesting things that we've discovered over time is,

• 14:05Speaker 02

  you know, we have to keep doing the things that got us here, which means keep meeting people who, you know, we don't know that are one or two steps removed from us or who come in practically cold. But at the same time, really, really make sure we take care of the people who we know are good. That sort of underscores the main issue with venture broadly. There's, this is not a problem of dollars in the world or amount of capital that exists. It's entirely a problem of trust and frankly, human relationships. There just frankly, aren't enough networks that allow people to have that much trust with that many people.

• 14:39Harry Stebbings?

  No, I totally agree in terms of that network driven and relationship benefits, especially when they come to you for that first time with their company and you've known them for three years and you've seen what they can do. I do have to ask you, because one thing that really troubles me right now is the always be raising statement. I have people like Enrique from Brax on the show and he's like, absolutely, it's fundamental that you don't go to someone for the first time meeting them and say, hey, invest in my company. But then you've also got like Dave Vass and at Brightwheel on the show. He's like, hey, you've got to be very efficient about it, be streamlined, do fundraising periods and run. Efficient process. Where do you stand on the always be raising?

• 15:13Speaker 02

  Usually what we do with our companies is we say, well, once we fund them, it's really sort of product engineering, marketing time. You know, let's build that thing and let's have something of merit to actually talk to other people about. But usually around, what I realize now that I didn't see at Y Combinator was that getting to the Series A is actually very significant. It's incredibly difficult, obviously, and it's actually about building that relationship with that Series A partner. And so what that means is, don't do a shotgun wedding. You really can't expect to build a partnership with your Series A board member, more or less in an abbreviated process of a week or two. Almost always, what you need to do is sort of build relationships over the course of maybe six months or longer.

• 15:57Speaker 02

  That's really something that founders really need to focus on a little bit earlier. And so that means, don't fundraise, just get to know them, ask for advice. Treat your potential Series A board partner as a true partner or someone that you really might want to work with for the next 10 years. And treating it less transactionally is incredibly important for seed stage founders.

• 16:18Harry Stebbings?

  I totally agree with you in terms of removing that kind of transactional element. If we maybe though, move to the harder side of pre-seeding seed in terms of the mechanics and the tangible elements, I do want to move on to that. And so starting on the side of the founder, big question I always get and it's so hard to answer, so I'm sorry for asking it, but I have to, is in terms of founders needing pre-product market fit versus post-product market fit. What is that divergence between the two and what are the requirements, Gary?

• 16:45Speaker 02

  Absolutely. At the end of the day, pre-product market fit is often about just trying to start a fire, period. You and I get to see amazing people all of the time, basically show us what their dreams are. But maybe they only have an early demo or they might not even have a line of code written at all. And we basically have to take our relationship with them, our evaluation of their ability to build this stuff, and write a check to help them fulfill that possible dream. Everyone has a plan until they get punched in the face, right? And so that's sort of the number one thing that almost guaranteed will happen with company pre-product market fit. Almost no design No product has ever seen the light of users without getting a few punches to the face as well.

• 17:25Speaker 02

  And so that's okay. Actually, a lot of what we do is sort of help people properly deal with that. It's quite a shock. A lot of people, especially coming from very hollid halls like Google and Facebook, they've actually never been punched in the face because the overwhelming fire hose of users means that they've never had to fight and scrap for a user. And first step is always, hey, it's okay. We just got punched in the face. The key thing here is what we do about it. My general sense with product market fit is, hey, we've actually built this fire and now we need to make sure that it has the right shape of logs to build this into the biggest possible blaze. And lots of things can go wrong at that point. On the flip side, sometimes the same things that happened pre-product market fit recur at post-product market fit.

• 18:09Speaker 02

  One of the most common things we see in SaaS these days is that sometimes a company that gets started selling to SMB realizes they need to go up market to mid-market and enterprise because that's where you can actually get to multi-hundreds of millions of dollars in revenue per year. And frankly, you kind of have to do that often post-series A, post-series B, or sometimes post-series C. And that's a difficult process, but really, really great venture partners can sit alongside those founders and actually help with high conviction make that kind of transition happen.

• 18:39Harry Stebbings?

  Absolutely, they can make that transition happen. The successful ones absolutely do. Speaking of kind of success and applying maybe the pre and post-product market fit to you and initialized Gary, I've wanted to ask this series of questions ever since our first interview, so I took the chance today. So now you have your product market fit shown with the returns and the latest fund from initialized, but things change with scale. So let's take these in turn. The first is ownership. I'd love to hear, how do you think about ownership requirements changing with the evolution of funds as they grow?

• 19:09Speaker 02

  I think one of the things that shocked me the most, you know, we really started with a tiny fund, a $7 million fund. And it was basically pretty easy to put a $50 to $100,000 check into basically every deal that we could possibly want to do. And over the years, particularly with Fund III, we got to $125 million and that meant that we needed to get our ownership targets to 5 to 10%. And now with Fund Four, we're actually up to a $225 million fund with basically 15% ownership targets. We'll do 10% sometimes, but that's sort of the spreadsheet math that you basically have to go with as you scale your capital. And so that's been an incredibly difficult evolution in a lot of ways because the hardest part is breaking a lot of hearts.

• 19:53Speaker 02

  We are finding that there are a lot of seed funds that we want to do work with, but because our check is so big and the founders get very dilution sensitive, it actually makes it hard to collaborate with all the people we absolutely love to do a lot of work with. And so that's one of the harder challenges for us. Love co-investing and I find that it's been very, very fruitful, but that just sort of goes with the territory as you build up the assets under management.

• 20:16Harry Stebbings?

  No, absolutely. It does go with the territory. It's very challenging. It's very challenging not to seem like kind of a round hog in many ways. Totally feel you there. The second though, that is semi-tied to ownership is the element of price sensitivity. The bigger the fund, the more one has the bandwidth maybe to pay up, so to speak. How do you assess and evaluate your own price sensitivity, Gary?

• 20:36Speaker 02

  Yeah, well, luckily I have really good partners and at the end day, price is actually about trying to match that correct valuation to the stage of that company. One of the arguments that actually I kind of have to have with founders on a relatively regular basis is you can get that valuation, but that raises the bar so much more for that next round. This isn't the last round of funding you'll ever raise. And if it is, that's fantastic. Hats off. I think that we all win in that scenario. But the majority of companies that want to continue to grow in a venture style with significant year-on-year growth, we're going to have to think about working backwards from that next round. And going out with too high a valuation in this round makes it that much harder to even get to be a sort

• 21:20Speaker 02

  of a 2X on the next round that would look like something that's successful for those other Series A or Series B partners who might come in. And that's always the trade-off. We don't need 48 months of runway here. We don't really even sometimes need 36 months. 24 feels really good to us. It gives the company the right kind of cushion to be Able to take risks and achieve the next round and more money at a higher valuation. Sometimes can actually get in the way of that adventure to be able to get to the next stage. And that's frankly, the thing that we always have to deal with.

• 21:52Harry Stebbings?

  Can I ask a super unfair question? Have there been any cases where you haven't flexed your muscles, so to speak, in terms of paying up for a deal that maybe they've wanted you, but the price is too high for you to get comfortable and the deal hasn't happened? Has that happened where it kind of strikes your memory, particularly maybe in one case? And was there a subsequent learning?

• 22:10Speaker 02

  Yeah, at the end of the day, for us, like any venture fund, you have to be disciplined. And internally, we have a saying, which is trust the process. It's not one partner setting the price. It's us as a group through a voting process. And that actually helps us prevent big mistakes. When you make a mistake in venture, your big winner, your power law winner, will cover up that mistake at some level. But on the other hand, the more the system or your partners can keep you out of trouble. That's a much better scenario. And so we want to give people as much agency as possible in getting into a deal. But we don't want to do things that frankly are imprudent, right? If it sets up the company for failure, well, we're better off not doing the deal at all than getting into it and you're sort of setting the company up for failure in that next round.

• 22:55Harry Stebbings?

  Can I ask, Gary, I'm too intrigued. What does that internal decision making look like for you in terms of the voting structure? Is it kind of unanimous? Is it a case of kind of majority wins? How do you think about optimizing that internal partnership decision making around investments?

• 23:08Speaker 02

  Our experience with the power law is pretty similar to a lot of other people's in that the things that are the most controversial, the things that have either strong yeses or no's, those are the ones that seem to perform the best. And that's no surprise to people who follow Peter Thiel and, you know, his book Zero to One. At the end of the day, what we are doing with founders is often believing in them before they maybe even believe in themselves. But the positive result from that is that they go on to create something that puts a dent in the universe. And frankly, if everyone knew that that was a good idea, then you'd have infinite competition. And that type of competition drives down margins, actually makes it much harder to scale a venture business.

• 23:50Speaker 02

  And so at the end of the day, being able to have high agency matters a lot. And so at initialized, all the GPs get silver bullets, you know, not unlimited ones, but you know, that's sort of the release valve. And then up the middle, we basically require two strong yes in that process. And so we do require high conviction and I think that that's something that is the right mix for us.

• 24:12Harry Stebbings?

  No, I totally agree with you in terms of that two strong yes thing. That's super important. Okay, so Gary, I would love to finish now with a quick fire round. You know the drill here. I say a short statement and you give me your immediate thoughts. About 60 seconds per one. Are you ready?

• 24:25Speaker 02

  Yes.

• 24:26Harry Stebbings?

  So attribution, how do you think about it?

• 24:29Speaker 02

  At this point, we really want to reduce the effect of attribution. So I don't want people to basically act as if they have to protect their deal at all cost. And the vote trading and things like that that happened at other partnerships, I would be desperate to avoid at initialized. Thus far, we've avoided it. On the flip side, you do need some light form of attribution just so that you can have those discussions around performance to help people actually get better. And that's a very difficult subject. You basically want to avoid the worst of it and you want to get the good effects of it. And I think as a managing partner, you basically have to have, I have a lot of conversations in one on ones about exactly that.

• 25:09Harry Stebbings?

  Your favorite book and why, Gary?

• 25:10Speaker 02

  Right now, I know we talked about it a little bit earlier, but Zero to One is probably the most interesting book that frankly just crystallizes a lot of the super contrarian thinking that nobody talks about around how to deploy capital and even at a deeper level, what's important in society. Can I cheat and give you a second book? I think between that and Hackers and Painters by Paul Graham, you've got a pretty powerful set of a few hundred pages that sort of teach you how the world works.

• 25:39Harry Stebbings?

  I love that, Hackers and Painters. Tell me, from Alex Bangash himself, the biggest learning from working at Palantir?

• 25:45Speaker 02

  Palantir, at the end of the day, was one of the most powerful cults I ever came into contact with. And cult in a good way in that every startup that I've ever worked with that worked very well, had that sort of atmosphere of this is something. Thing we believe that nobody else believes, sort of going back to the contrarian nature of really successful startups. And so there is definitely something that you had to believe that nobody else believed to join Talenteer. For them, it was actually just this deep sense of mission around helping basically companies and governments that had no access to really, really good software engineering and, you know, helping them solve problems,

• 26:25Speaker 02

  whether it's for fighting human traffickers or frankly, just a lot of businesses cannot hire good engineers. And so, you know, that was really, really powerful for me. And then probably the only culture that was even stronger than Talenteer, where, you know, if we had head to head offers out to software engineers, the only one we would lose to was Facebook.

• 26:45Harry Stebbings?

  Wow, yeah, no, I'm sure. Tell me, Gary, who's the best board member you've worked with and why?

• 26:50Speaker 02

  Satish Darmeraj at Redpoint was actually our first board member for Posterous. And so my favorite things about him was that he's so technical. He literally wrote Java server pages at Sun before he started a company and then became a VC. And so one of the things I always admired, and we try to model as much as possible actually, is this idea that we can actually help the founders at a fundamental level. If we understand frankly, what their product is and how they're building it, you know, we can sort of be by their side. And that's just worked so well across my whole career thus far. So we owe Satish a really great debt of gratitude.

• 27:27Harry Stebbings?

  What do you think is the biggest misnomer about VC, Gary?

• 27:30Speaker 02

  At the end of the day, and we sort of started the episode like this. I think a lot of people still believe this sort of financial trope that there is too much money chasing too few good deals and too few good ideas. And my living reality every single day is actually the exact opposite. I think, you know, yes, there's plenty of money out there, but after working at Y Combinator, you really can't say that there aren't good founders out there. They just don't look like all of the other founders that come from central casting. And so, you know, I really do think that there are incredibly talented people out there. And there's a very, very large number of them who frankly, just don't understand that maybe they should be starting companies or they should be joining startups. And then I'm still, at the end of the day, technological optimist in that I think

• 28:14Speaker 02

  technology is something that can lift people up, sometimes a difficult double-edged sword, but on the whole, what it's here to do is help humanity and help society. And so I think there are a lot of problems that technology can still solve. I don't believe that there's too much money chasing too few deals and too few good ideas. I think there's just infinite ideas, infinite people, and infinite capital. And if we can connect all of those things, then we really will live in a better world.

• 28:41Harry Stebbings?

  And then final one, Gary. What's the most recent investment publicly announced that is? And why did you say yes?

• 28:47Speaker 02

  We just announced a really big round for Standard Cognition. And so they are cashierless checkout. So anyone can walk into a store, you know, you can pick up a bag of chips and walk out and basically get a bill automatically to your mobile app. And so something that really will change the face of retail across the board. It's something that Amazon is obviously bringing out with Amazon Go. And the pattern that we're seeing again is that Instacart was the biggest beneficiary of Amazon making big inroads into retail. We think cashierless checkout is about to totally remake retail again. And Standard Cognition now is actually able to sign very large contracts with some of the biggest grocers in the world. At the end of the day, because Amazon is coming for them. And that's something

• 29:32Speaker 02

  that we're pretty interested in, in that, you know, we're in the middle of sort of this extreme surge in big tech. And what we realize is our startups are actually some of the best people to supply the arms to the little guy, or sort of the rest of the S and P 500 that cannot hire good software talent. So hopefully, we can sort of restore a little bit of balance out there into the empire.

• 29:53Harry Stebbings?

  Gary, listen, I've wanted to do this for a very long time. It really has been such a pleasure, as always, to chat. So thank you so much for joining me again today, Gary.

• 30:00Speaker 02

  Thanks so much for having me.

• 30:04Harry Stebbings?

  And I want to say huge thanks again to Gary for giving up the time today to be on the show. As I said, he's been so kind and supportive to me since our first interview over two years ago, and it's been incredible to see the rise of Initialise since. If you'd like to see more from Gary, you can find him on Twitter @GaryTan. Likewise, it'd be great to see you behind the scenes here at the 20 Minute VC. You can do that on Instagram @Hstubbings1996 with two Bs. But before we leave you today, I want to spend a minute to talk about Brex, the first corporate card for startups. Brex founders Enrique and Pedro built a payments business in Brazil, but found themselves rejected for a corporate card when they were in Y Combinator. They decided to build Brex with instant online signup, no founder liability required, and limits 10 to 20 times higher than standard cards. Pretty incredible, I know. And you can sign up for Brex and get fees waived

• 30:48Harry Stebbings?

  by entering the code HARRY during signup. Honestly, it really is such a special service. And speaking of Brex, an incredible high-growth company. Well, a lot of what we do on the 20 Minute VC is talk to experts, pick the brains of founders and investors who tell us which trends to watch out for, offer tips on fundraising, and teach us how to excel at any company stage. And although there's no playbook for building a great business, we can certainly learn from people who've done it before. Beyond listening to this podcast and talking to mentors and advisors in your own network, it's important to have resources you can turn to when you're tackling a new challenge. Stripe has built those resources for you. Whether you'd like to learn how to run a pricing experiment or build a knockout landing page, Stripe gives you the information you need to start, run, and scale a technology company. Their guides are often written by or feature people like

• 31:32Harry Stebbings?

  Elan Gill, an incredible individual whom you've probably heard on this very podcast. And you can read one of my favourite guides on scaling engineering organisations and many more on stripe.com/20vc, that's T W E N T Y V C. And speaking of scaling engineering organisations, as we did there, did you know that there are five job openings for every one developer in the United States? No wonder hiring great engineers is impossible. And that's where my friends at Terminal come in. Terminal is your dedicated partner in quickly building skilled remote engineering teams. How do they deliver both speed and quality? Well, Terminal does this by focusing on everything necessary to successfully source, set up, and support these teams. From little things like managing office logistics to big things like bed ...benefits legal and community.

• 32:14Harry Stebbings?

  They've developed this proprietary and comprehensive remote team solution based on decades of experience building remote teams across multiple continents. So they know what works. But don't take my word for this. Take the word of Eventbrite, former 20 VC guest Hims and Dialpad, all customers and lovers of Terminal. And you can find out more today at terminal.io. As always, I so appreciate all your support and I can't wait to bring you a phenomenal Founder's Friday this coming Friday.