E312: The Power Law of Reputation in Venture Capital

Can ethics, generosity, and long-term relationships really outperform aggression in venture capital? David Weisburd speaks with David Hornik about why “nice guys finish first… eventually,” how power-law outcomes shape a venture career, and why reputation compounds more reliably than tactics. Hornik explains why backing unflinchingly ethical founders isn’t just moral—it’s a durable competitive advantage in an industry defined by uncertainty.

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

• 0:00David Weisburd?

  You have 25 years of venture experience from August Capital to now Lobby Capital. You've invested everywhere from seed to pre-IPO. Do you find that the greatest founders are quote unquote, good people, aggressive people? Is there a certain archetype that really comes through as correlated with the extreme power law outcomes?

• 0:22Speaker 01

  I will only back people who are unflinchingly ethical. And in fact, part of my process-

• 0:30David Weisburd?

  How do you define that?

• 0:32Speaker 01

  There are definable truths. And if you are willing to, you know, if you are willing to stretch the truth, you are not unflinchingly ethical.

• 0:40David Weisburd?

  Is pushing somebody to work 100 hours a week, is that ethical? Is telling somebody you're going to go and deliver something that you're not sure that you can deliver, is that ethical?

• 0:51Speaker 01

  Choosing how much and how hard you're going to push is not an ethics question. It's a culture question. And I do think that's an extraordinarily important question. I backed a phenomenal entrepreneur. And in his first startup, one of the, you know, one of the tenants of his company was work-life balance. And then I backed his second company. And when he built his second company, he said, under no circumstances is that going to be my tenant. Now, he remained an extraordinarily good human, a very devoted family man. But he realized that an emphasis on work-life balance suggested that the startup world was not an unimaginably rigorous thing that one had to engage with, you know, all of one's energy.

• 1:35Speaker 01

  I don't think he became any less ethical when he said work-life balance is not the thing we're focusing on. Selling something you think you can deliver, although you are not certain, is one question. Selling something you know you can't deliver, or you know you don't have, is another question. And I would not back someone who is selling something that they know they can't deliver. That is dishonesty.

• 1:59David Weisburd?

  Private equity, you invest, you have this plan to get to the 2 to 4X return. You have this kind of very rigorous plan. And venture capital all relies on these outliers, these highly uncertain businesses. How do you, as a venture capitalist, build a career strategy around this uncertainty?

• 2:19Speaker 01

  Man, it's crazy. I literally gave a talk this week about all the ways in which I've failed. You know, and I said, you know,

• 2:29Speaker 01

  venture capital is about disappointment because the reality is that I I've invested in, let's call it 50 companies over the last 25 years. And every single company in which I invested, I believed could be a standalone public company. I don't invest in a company that I don't think has the capacity of a standalone private, you know, independent company. Because the best outcomes are a result of your capacity to do that. Right? And so, and yet of those 50, four have gone public and and been standalone businesses. I have a fifth, I think is a is the likely fifth. So, you know,

• 3:10Speaker 01

  one in 10 of those companies has done the thing that is that I hoped was true of the other nine in 10. And so, yeah, there's a whole lot of, oh, my gosh, I was wrong, or that worked. In a way, I didn't think it was going to, or the environment changed. But but as long as you're backing astonishing people who you think are doing the right thing, and one time out of 10, it works, then the the business model is a success and you get to and you get to continue to do it.

• 3:48David Weisburd?

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• 4:33David Weisburd?

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• 5:18David Weisburd?

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• 5:28Speaker 01

  If you've done this thing the way I think is the right way, then you have real and meaningful relationships with the founders, the CEOs, the people who are building these businesses. And so, and they are putting their entire lives into these things. And so for those things to fail is catastrophic and has a real human toll. And so there's no amount of time where I will feel better about that. You know, the people I care about experiencing something terrible, I will always feel terrible about that. Having said that, understanding the model, you can understand that that's the model, that one in 10 has to be successful. But if you're a new venture investor and you have yet to have that one,

• 6:13Speaker 01

  and you know, you start seeing these companies fail and you don't know if you'll have the one, it is an astonishing amount of stress. And you know, the expression goes in venture, lemons ripen early, which means the companies that aren't going to work are going to not work sooner than the companies that work. In my career, it took 11 years before Splunk went public. I'd been the first investor in Splunk, three amazing entrepreneurs and a good idea. In year 11, it went public and my firm made hundreds of millions of dollars and you know, and I made the Midas list. And, but in year seven, I was like, wow, I wonder if I'm terrible at this, you know? And so, once you've had a Splunk, then it is a little easier.

• 6:56Speaker 01

  To say, oh, I think this will be all right, although my mantra immediately thereafter was one more splunk before I die, you know. So it is easier because people will give you the benefit of the doubt. But it is not easier in the sense that you have any greater certainty that you'll achieve it.

• 7:14David Weisburd?

  It's like these unteachable lessons. Everybody on an academic basis understands this one in 10 phenomenon when they go into venture capital, but they fail to really internalize both the one and the 10. One of the most common things that venture capitalists say over and over again is, I fail to realize how important those power law outcomes are, like how singularly important they are.

• 7:41Speaker 01

  I have four companies that I funded when they were a handful of people and, you know, double-digit millions in market cap and very little revenue. And those four all went public, traded up past $10 billion in market cap, and each one produced, you know, hundreds of millions of dollars in profits. So those four really were the dramatic, you know, they had a dramatic impact on IRR. About half of the others sold for some amount of money. We made some money, broke even, et cetera, and then about half of the remainder went to zero.

• 8:24David Weisburd?

  I interviewed a poor of a meta who's a fund of fund guy, and he had over 500 investments. And I believe 5% of them, 25 of them, returned 77% of the fund. And I think a couple handful of them returned 50%. So like a small handful of companies out of 500 returned 50, 25 returned 77%, which is another way of saying that 475 returned 23%.

• 8:52Speaker 01

  I was talking to

• 8:55Speaker 01

  In LP, before Uber had gone public, and he said that Uber reflected something like 80% of the total value of his entire portfolio. And which made him very nervous. He's like, I need it to go public. I need that to work. And it did. It worked out very well for him. That worked out fine. But at the time, that made him extraordinarily nervous. And that kind of concentration is unimaginable. Although now we have these companies that are worth, you know, they're going public at $100 billion. And the next set may go public at hundreds of billions of dollars, right?

• 9:35David Weisburd?

  SpaceX will likely be a trillion dollar outcome. Anthropic, hopefully, will be somewhere close. I'm invested in both of those. But hopefully, they'll both be over trillion.

• 9:44Speaker 01

  But, but, but by the way, completely moronic as a multiple, right? I mean, I don't know when we stopped, when we abandoned multiples in these businesses. Like, why is either of those companies a trillion dollar company? Why is anything a trillion dollar company, to tell you the truth? But if you look at the companies that are trillion dollar companies, there are many, many billions of dollars in revenue and many, many billions of dollars in profit, which neither Anthropic nor SpaceX are. So why would they be a trillion dollar company, except that, you know, these markets are not rational? That's my, that's my takeaway. But for you, I hope you, I wish you good luck. Because if they end up a trillion dollar company, that will be an astonishing outcome for you, almost where, no matter where you invested.

• 10:29Speaker 01

  And, and again, power laws, it will, it will make up for it. And a bunch of businesses you liked and thought were going to be successful in our field.

• 10:37David Weisburd?

  What's compounded the most over these 25 years?

• 10:40Speaker 01

  Across the business?

• 10:41David Weisburd?

  Across your career, across your funds, across your investing.

• 10:45Speaker 01

  Network and reputation, right? I mean, you know, you enter the business, you've, you've worked with a set of people, you've know a fixed, you've involved in a fixed number of businesses, et cetera. And, you know, over 25 years, I have

• 11:02Speaker 01

  I've invested in a great number of companies. I've worked with a huge number of executives in those companies. I've worked with an astonishing number of great lawyers, great bankers, great accountants. And then I started this conference called the Lobby Conference where I gathered together 250 of the most thoughtful entrepreneurs and investors to come together and just talk about the stuff that was important to them. And that was extraordinarily multiplicative because I would say to folks like you, hey, David, it was great that you participated in this. Who should I invite? Who else would be an amazing participant? And I'd get the next set of extraordinary people. And so 2,500 people have been to some lobby conference or other. This year is the 20th anniversary.

• 11:47Speaker 01

  And so I feel like I've had the incredible fortune to touch a huge number of people. And then it's up to you to have a reputation that makes that valuable, right? I mean, there are some people where the more people they encounter, the more people dislike them.

• 12:04David Weisburd?

  Ben Horowitz publicly shared that he went on one call, him and Marc Andreessen went on one call to raise his last $15 billion fund. Obviously, you have to go upstream of that. Why did that happen? It's not because that one call was so exceptional. It's because of that reputation they've built over similarly two, three decades.

• 12:23Speaker 01

  Look, when they started their firm, they understood that they had been company builders. And so one of their very first partners, like partner, general partners in the firm was one of the best PR people in the country. And they built a media empire before they built an investing empire. So that's one way to do it. That's not how I did it.

• 12:48David Weisburd?

  The co-founder of this podcast is now runs this media empire, Eric Torneberg. So it all goes full circle. Maybe an obvious question, but how have you been able to compound your reputation? What does that look like on a day-to-day basis?

• 13:03Speaker 01

  You know, I talk about this thing called the transitive property of reputation. And mostly I talk about it in the context of trying to get to know people, et cetera, which is if...

• 13:14Speaker 01

  If I have a deep relationship with you, I have huge respect. I think you've done extraordinary work, et cetera. And you have a deep relationship with someone else, and you think they've done extraordinary work and are a fantastic human, then by the transitive property of reputation, I believe them to be an astonishing person until proven otherwise. And so, you know, when I returned to Silicon Valley, I'd been a Stanford undergrad. I met a bunch of amazing people. Jerry Yang, the founder of Yahoo, was in my freshman dorm. I came back to be a lawyer to represent startups, including Jerry. And the very first deal I worked on was Yahoo's acquisition of a company called Viaweb,

• 13:59Speaker 01

  which was started by Paul Graham. So I had a relationship with Paul Graham before, you know, Paul Graham was Paul Graham. And then when he started Y Combinator and he had his very first demo day in Boston, in his backyard, I flew out from California. I was one of the, you know, 15 VCs in his backyard. You know, so I think you have this opportunity to meet amazing people. So I came back to Silicon Valley. I said, oh, I get networking. You just catch up with the people you thought were amazing. And then it very quickly became clear to me that that is a confined circle. You've met those people already. And so the only way that you can do that is to say, how can I meet the friends of the people that I think are amazing so that I can then expand that circle?

• 14:44Speaker 01

  And if you do that forevermore, you will end up with astonishing people in your lives.

• 14:50David Weisburd?

  First time I heard your name was when you wrote this article in January 2012 called "Nice Guys Finish First, Dot Dot Dot Eventually." Do you still believe that today in 2026?

• 15:00Speaker 01

  Hundred percent. And I have no interest in backing not-nice guys.

• 15:05David Weisburd?

  And why is it "Dot Dot Dot Eventually"?

• 15:08Speaker 01

  Well, this article was a reaction to a research paper that had been written by professors at Harvard and Stanford Business School. And they had done some experiments where they, you know, tested outcomes by, are you a good person? Are you a mean person? Are you an angry person? Whatever. And they came back and said, there's a very clear conclusion that selfish-being people are the more successful people in these negotiations. And my article said that this was that it was a failed experiment because it misunderstood the nature of business and certainly the nature of business in Silicon Valley.

• 15:49Speaker 01

  There is no such thing in our worlds as a one-off negotiation. There's no such thing as a single transaction that does not influence and impact your reputation, your capacity to do other things. If you take the position that my job here is to help make you successful and I will pay it forward in a thoughtful way, that is a compounding asset that you have. And so even if in some early times, someone, you know, took advantage of you by being just duplicitous or whatever, right? The word gets out that they're duplicitous. Whereas over time, the word gets out that you are someone who can be trusted.

• 16:33Speaker 01

  And so negotiations are different when you're someone who can be trusted than when you're someone who's duplicitous. So I just think that because real business value is created over time and through relationships, one cannot be a bad human, cannot be a duplicitous human, cannot be a tyrannical human and create long-term business value.

• 16:56David Weisburd?

  The next Google comes out and let's say it's OpenAI and Anthropic. There is a competition just to get in the round. And there's, it seems, at least in the short term, an incentive to do or say anything to get in that round. How do you marry that with this idea of these compounding relationship and reputation games?

• 17:17Speaker 01

  I think it's an important question. And as I was raising my lobby capital fund, I'd been at August Capital for 20 years. August had a reputation that built over that time, et cetera. It was a bigger firm, a bigger fund. I was raising a smaller fund and the LP said, David, are you going to be able to win these deals? It's a competitive world. Are you with your new brand and are you going to be able to win these deals? We just finished investing Lobby Capital One. And we did 21 deals in the fund. We issued 22 term sheets. We only lost one deal. And we, and we beat out Sequoia and Threeson and, you know, big name firms.

• 18:02Speaker 01

  So how did, so how do you do it? Well, the answer is, listen. I'm excited to fund your company. Here's a list of everyone I've worked with over the last 25 years. You should call them and understand what it means to work with me. And by the way, you should do the same for the other people who are interested in funding your company and have them give you a list of everybody. Right? I dare them to give you a list of everybody. And because the way that my firm wins deals, the way I win deals is we are referred to great opportunities by the people who trust us the most, who believe in us. And then when we are interested in funding a company,

• 18:43Speaker 01

  that extraordinary network of people who are all doing amazing things then say, if you have the opportunity to work with these people, it would be in your interest.

• 18:53David Weisburd?

  The founders that are most methodical, they're of course very methodical around who's on their cap table. And they do the diligence, they do the hard work, and they surface the truth versus those people that are a little bit laissez faire about it. Oh, he seems nice, she seems nice. They tend not to build enduring franchises.

• 19:10Speaker 01

  Yeah, no, I think it's... I gave a term sheet to a founder once, and he had six term sheets from very good firms. And he ultimately said, David, I'm going to take your money. I'm looking forward to it. And I said, well, what was your process? And he said, I literally called references for each of these people and said, tell me about them. And he said, I kept going until I got to a negative reference, until I heard negative things about it. And then I compared the relative firms. And he said, you would not probably be surprised, but there were a couple of these investors. I only needed to make one reference call. And I heard...

• 19:54David Weisburd?

  You've gone pretty consistent.

• 19:55Speaker 01

  Yeah, and I heard really challenging things about them, you know? And so do the work, right? I think venture investors need to do the work. And I think there is a lot of irresponsible investing going on right now where people are funding things based on reputation and hearsay, et cetera, and haven't done the work themselves. And that will go poorly. And then entrepreneurs should do the work because, you know, Rene LaSurt, who was the very first entrepreneur I backed, I've funded him across two companies and I'm on his board today after 25 years. He has been stuck with me for 25 years. Imagine if I was terrible. That would be a lot of years.

• 20:35David Weisburd?

  Whenever I look at these incentive mechanisms, I like to take out the morality from them too. Because I think a lot of times morality could cloud thinking and cloud judgment. And I very much like to seek truth in what's actually on the ground happening. And the way that I look at the bad reputation strategy, or basically the zero sum strategy or the short term strategy, is that it actually could work. It's just highly unlikely to work. Because think of it as every time you invest your chip stack, you get less and less chips. Now, that doesn't mean you can't invest into the next OpenAI and do really well. But one is, you know, that's going to be your last bet. So you're not really creating franchise value.

• 21:20David Weisburd?

  But two is you have a pretty, it's a very risky strategy versus the person that invests maybe undersells themselves and gains a reputation. Over time, things could go against them. You know, if they have a 10% hit rate, that still means, you know, you do 20 shots on goal. There's a 50/50 shot that you might not hit anything. But over time, the odds start to probabilistically favor you.

• 21:47Speaker 01

  Luck plays a big role in this business. You know, if you, if you miss the one in 10, then, you know, you are a failed venture investor. And if you get two in 10, you're an extraordinary venture investor. Like, that's, that's, that's an absurdity. My brother was on the MIT Blackjack team, right? So they would, they were card counters. They went to play Blackjack and you'd sit and count, count until the count was up. And then you'd sit down and you'd bet big for a period of time. And it didn't, you know, it shifted the odds. It used to be, you know, 51% in favor of the house. And by counting, it was 51% in favor of the team. And there were weekends that they lost hundreds of thousands of dollars because there's still luck involved.

• 22:32David Weisburd?

  Through your article in 202012, you became good friends with Adam Grant, who I've heard so many great things about. You wrote this book, Give and Take. Tell me about the main lessons from the book. And which part of it do you agree with? And which part of it do you not agree with?

• 22:47Speaker 01

  I agree with all of it, which was lucky. Because I only, I met Adam because of that article. He read the article. He was working on this book. Trying to determine scientifically who were more successful, people who were givers and people who were takers. And he had read the article that I had written and he said, do you mind? Can we talk about it? And he and I got on the phone. It was supposed to be an hour. We spent a couple of hours. It was a great conversation. We caught up some more. And, and a story I told him about losing a deal ended up kind of the very first story in the book, Give and Take, which was amazing. Now, the reason he chose it is because I looked like an idiot. I had, I'd done all the right things. I'd been the good guy.

• 23:32Speaker 01

  I, I had a relationship with this founder. And then the founder said, look, my heart says I should go with you, but my head says I should go with this other investor. And so I'm not going to take your money. And then what happened is I said to him, well, that's the wrong answer. You know, that can't be the answer and you should reconsider it. We had a long conversation. He ultimately decided to let me in the deal because of my reputation as someone who had been a giver, quote unquote giver. And that's been a long relationship. Company's doing great. That's been fine. And that became the story in the book. What Adam discovered as he did the research, Adam is a professor at Wharton. He's a psychologist. He is, he literally has an encyclopedic memory for these studies that have been done to test these various propositions.

• 24:17Speaker 01

  What he determined was there are, you know, sort of three types of people. There are people who are takers. They are trying to extract value from you. There are people who are givers. They're trying to, you know, insert value into the system. And there are people who are matchers who say like, if you do this thing for me, I'll do this thing for you. And what he determined is that the givers are the most successful business people. What he also determined is that the givers are the least successful investment, you know, and business people, right? And, and the reason for that is that if you just give without any concern for how it's affecting you, then people will take advantage of you. Right?

• 25:00Speaker 01

  Takers can spot a giver who is not worried about what they're giving away from a mile away and will just take, take, take until you're, you know, a shell of yourself. And so. Adam essentially came to the conclusion that that best, you know, the best business people work that way. That the ones who say, "How can I help you be successful?" Because they want to see a universe in which the broader community is successful. Those people, you know, the Bill Campbells of this world, are astonishingly successful. He's one of my heroes. He gave unendingly and he, and as a result, did better than everybody.

• 25:41David Weisburd?

  Let's say I'm learning to be an elite giver. And let's say I want to, on the margin, be helpful. Let's say I have some people-pleasing tendencies, but I also want to be successful. What are some best practices?

• 25:53Speaker 01

  I teach, and so I encounter lots and lots of students over time. And I have many, many students reach out and say, "Hey, David, I'm thinking about this thing," or "I'm trying to make a choice," or whatever. "Do you have 15 minutes? Do you have a half hour? Can we catch up?" etc.

• 26:10Speaker 01

  And I almost always say yes.

• 26:14Speaker 01

  Because it turns out that by and large, you know, students are, there may be some takers in that group, but they, you know, but they haven't, they haven't operationalized taking yet. Yesterday, my morning was filled with these conversations. A former student of mine from Harvard Law, a former student of mine from Stanford, a, the brother of a kid on my daughter's soccer team, who's now a CS major. And my wife often says like, "Oh, my God, how do you have time? Is that really good use of your time?" And my answer is, "It 100% is, because it makes the planet better. I meet a great bunch of young people, and some one of them is going to do something amazing

• 26:58Speaker 01

  or have a friend who does something amazing," etc. I recently Heard from a student of mine who said, hey, one of my favorite people at Stanford Business School is this person. You should hear about his business. I said, oh, of course, that sounds amazing. Take my favorite student, transitive property of reputation. I meet with their, with this, this friend of theirs. I think the friend is fantastic. I'm a huge fan of the friends, but I couldn't get my arms around the business. I turned down the business, but I said, you should come to my conference. I think you'd enjoy it. That founder came to my conference, was a great participant. People loved having him there. He added a lot to the conversation. And then a few months later, I got an email,

• 27:42Speaker 01

  this was this week, saying, hey, one of the, my smartest friend has started this new company that I think you'll find interesting. Are you interested? Here's some info. Are you interested? I said, yeah, 100%. And then he introduced me, despite having turned him down, as David is my favorite venture capitalist. Despite the fact that he didn't fund my company, you can't, there's no version where you can get to that outcome, other than saying, how can I be helpful?

• 28:12David Weisburd?

  Does that work for you because you're in this pool of Stanford Business School students? And how could others apply this strategy?

• 28:23Speaker 01

  Yeah, I don't think that it's a unique pool. And I think that you make your pool, right? There, there are entrepreneurs who've come out of all sorts of spaces, who have built all sorts of amazing things. And so I think the answer is, you know, you have to, you have to get in the pool.

• 28:42David Weisburd?

  When I think about value add or helping, I think very much in compounding within a certain form factor. So I've learned this from many mentors with you. Obviously, you have this conference. Every year, you have these 250 people that are happy. They're introducing other people. You have a reputation and has its own brand, the conference itself. With me, I obviously have the podcast. To me, that's a much smarter way to give than to give one to one.

• 29:09Speaker 01

  I was the very first venture capital blogger. And my partner, Andrew, at the time, said, you know, nobody's blogging about venture.

• 29:21Speaker 01

  Why is that? You know, it's not like we have these secrets. Like, why shouldn't?

• 29:26David Weisburd?

  The venture police aren't gonna arrest you.

• 29:28Speaker 01

  Yeah, exactly. So we started this blog. It was called Venture Blog. Initially, it was written by me, Andrew Anker, and Naval Ravikant, who were all at August Capital. We started this blog.

• 29:39Speaker 01

  Ultimately, Naval and Andrew sort of fell off. They were like, oh, that's a lot of work and we've got other things to focus on. And I wrote it for 10 years. And it was extraordinarily valuable because people really wanted to understand the venture world in a way that nobody was sharing. If I were today, that 33-year-old kid entering the venture business, I would be on TikTok. You know, like, I keep thinking, like, maybe I should be the TikTok VC. That's the platform that someone should be owning because it's, you know, from a media perspective, it gives you a huge amount of leverage and opportunity. So I agree with you. You have to figure out what is going to be multiplicative. Right? Because additive is too hard.

• 30:22Speaker 01

  So find that thing.

• 30:27David Weisburd?

  And you've gone through thousands of startups. It's not over 10,000 to make those 50 investments. And there's this age-old question about EQ and IQ in the general business world. In the venture capital world, it seems to be settled that you want IQ over EQ. But is that really what you see in these $10 billion outcomes in terms of high IQ and EQs, you know, way down?

• 30:49Speaker 01

  It's funny that you say it's well-settled. I would absolutely not agree with that. And I do not invest that way. Well, just I think there are lots of very, you know, high-clock-rate people who could never convince someone to give them money. You're right. I mean, we see lots of entrepreneurs. You say, I've seen 10,000 businesses. I see about 1,000 business plans a year. So 25,000 businesses. I meet with about 100 of them a year. So 2,500 companies. It got serious with 250 of them funded, 50 of them. That's loosely, right? So I've seen an unimaginable number of people. And what you learn over time is there are a bunch of, you know,

• 31:31Speaker 01

  characteristics that help make you a successful entrepreneur. If you can't articulate... The opportunity that you're building. If you can't articulate the reasons in which the problem you're solving, how are you going to convince people to give you money? How are you going to convince entrepreneurs to join you? How are you going to convince? You're right, there's just a huge range of things that you need to be able to do.

• 31:55David Weisburd?

  But is it one of those things that's necessary on some level? You can't be completely oblivious to it, but IQ is where you get your lift?

• 32:04Speaker 01

  If I look at the great companies I've funded and the amazing companies I've turned down, you know, the vast majority of them have not been built on IQ. I mean, it's certainly, you know, Bill Gates and Microsoft is a very good example of what you're describing. My partner, Dave Markort, who founded August Capital, and he hired me to be a venture investor, was the only private investor in Microsoft. And when I asked him, so why'd you fund Microsoft? He said, well, Bill Gates was like a 19-year-old. But when I asked him about everybody else's business, he was smarter on their business than they were. He knew, you know, I was looking at all these companies.

• 32:49Speaker 01

  I'd say, what do you think of this company? And say, well, if they did this and this and this, they'd be successful. But they're not doing that because they're idiots. So clearly, and I think people viewed Gates as having more IQ than EQ, right? But like Twitter, like the founders of Twitter, they were perfectly smart, but I don't think that was an IQ thing. I'm not sure it was an EQ thing either. Sometimes you find the zeitgeist and you get to ride the wave, right? Dylan Field, who I'm a huge fan of, I think is an amazing young guy. You know, created Figma, has had this astonishing outcome. And Dylan came to a class I taught and he was chatting about it. And there was a near implosion of the company

• 33:34Speaker 01

  because his engineers were so mad at him at one point. Because he had not exercised sufficient EQ to understand what would motivate them and keep them engaged. And his board member, John Lilly, had to sort of come in and say like, hey, I, you know, here's some EQ to rent. I'm going to help you work through this, right? I do that all the time with my companies. I spend a lot of time. I was, I literally just had lunch with an astonishing founder. But he is working his team. Too hard. Like, I said to him, "The engine is running too hot." And even though you've had extraordinary outcome to date, at some point, you know, the engine blows.

• 34:19Speaker 01

  And so, you know, I think it's always a balancing act. But I would choose EQ before I'd choose IQ.

• 34:28David Weisburd?

  If you could go back 25 years ago, and you could give a younger David advice on what to avoid or what to do in order to accelerate his career, what piece of advice would you give him?

• 34:42Speaker 01

  To me, it is all about the people, right? I have said no to some of the bigger companies in the world. And of course, I regret that because from a economic standpoint, that was a bad decision. But there's nothing I could have told myself

• 35:00Speaker 01

  in year one that would have gotten me to say yes to those companies that I think would have been good advice, right? The reason I didn't fund those companies was, I had good reasons that were, and you know, it turned out to be that those things were not determinative, but it wouldn't have changed how I'd behave, right?

• 35:17David Weisburd?

  This people-relationship-based style of investing, is it something that took a while to really prove itself? Did you ever have doubts that it might be the wrong strategy?

• 35:27Speaker 01

  I didn't care because it was the only way I was going to engage in the business. So, I think every young venture investor, first early venture investor, has doubts. If you don't, you're crazy. You know, I had a moment at five years into the venture business. I came home, we had four kids, put the kids to bed, sat down with my wife, and I said to her,

• 35:52Speaker 01

  "You know, I came to a realization today that five years into the venture business, it's not obvious that I'm a good VC, but it is obvious that I'm no longer qualified to be an attorney." You know, and she said, "Wow, shouldn't you have thought about that?" And I said, "Yeah, probably should have thought about that." And she said, "Well, that's not my problem. Go be a good VC." I was like, on it, you know? I think you're... The venture business, when my partners hired me into the venture business, they said, "David..." This is an extremely individualistic business. We are a partnership. We'll help you make good decisions. But in the end, you're going to live and die by your capacity to be successful and by the decisions you make and the information you bring us and the things you do.

• 36:36Speaker 01

  And so are you comfortable with that? Can you get comfortable with that? And I was a cocky young guy and I said to this one particular investor, "Look, you've been wildly successful and so, and I don't mean any offense by this, but if I had to choose between betting on you or betting on me, I'd bet on me." And he laughed and was like, "Okay, whatever." And then he hired me, you know? I have made a few mistakes where I have invested in people that I should have known to not invest in. And I did not show the discipline I should have to get to process, to make sure I understood who I, you know, in whom I was investing. And that's the biggest thing I would change and I change it today.

• 37:21David Weisburd?

  Double click on that.

• 37:22Speaker 01

  I can tell you now that I will never fund entrepreneurs until I have had dinner with them. I won't. Like, it is, I can be as excited about your business. I can think you're the smartest human alive. I can think you're doing, building great stuff. But until I have spent a couple or three hours with you, just having some food with you and your co-founder or co-founders, whatever, and understand you as a human, I may make a mistake about who you actually are. And I have. And I don't intend to do that again. Now, I could still be duped. I could still like make, but, but by and large, if you spend enough time with people, they reveal who they are

• 38:06Speaker 01

  and you can determine whether you want to spend time with them.

• 38:08David Weisburd?

  I like to say somebody that pretends to be an honest person for 20 years, eventually they become an honest person. Taken to the extreme, you become who you pretend to be.

• 38:17Speaker 01

  I mean, look, if that's the case, great. By all means, if you want to pretend to be a giver.

• 38:22David Weisburd?

  Somebody that pretends to be a bad person for 20 years, at some point, you have to call them a bad person. On that note, David, it's been 14 years since I read that article about nice people. I do consider myself a nice person, so it's an honor to have you on the podcast. And thanks so much for making time.

• 38:41Speaker 01

  Really fun conversation. Thanks so much.

• 38:43David Weisburd?

  That's it for today's episode of How I Invest. If this conversation gave you new insights or ideas, do me a quick favor. Share with one person in your network who'd find it valuable, or leave a short review wherever you listen. This helps more investors discover the show and keeps us bringing you these conversations week after week. Thank you for your continued support.