20VC Exclusive: Keith Rabois on Rejoining Khosla Ventures

Keith Rabois is a Managing Director @ Khosla Ventures and one of the most respected venture investors of the last decade. Keith has led investments in Stripe, Faire, Ramp, Affirm and many more. Just last week, Keith announced he would be rejoining Khosla from Founders Fund, where he spent an immensely successful 5 years as a General Partner. Prior to Founders Fund, Keith started his career at Khosla where he spent 6 years and led investments in DoorDash, Opendoor, Webflow and more. In Today's Episode with Keith Rabois We Discuss: 1. The Decision to Rejoin Khosla Ventures: Why did Keith decide to rejoin Khosla Ventures from Founders Fund? What did Keith miss most that Khosla did, that Founders Fund did not? How did Delian take the news? 2. Comparing Two Great Firms: Founders Fund vs Khosla Ventures: Investing Style: How does Keith compare the investing styles when analyzing FF and KV? Price Discipline: Which firm is more price-disciplined? Does price discipline even matter? What are the single biggest mistakes Keith has made on price? How did it change how he invests? Founder Type: What sort of founder would choose KV? What founder would choose FF? How did the depth & quality of investment decision-making compare between KV and FF? 3. What It Takes To Win in Venture in 2024: Liquidity: What have been Keith's biggest lessons on when is the right time to sell positions? Capital Planning: What have been Keith's biggest lessons on the most effective use of reserves? Why does Keith believe if you do not lose some deals as an investor, you are not competing for the right companies? Khosla Ventures recently raised $3BN. How important is the ability to support companies across their lifetime in 2024 vs stage specific? 4. Where is The Best Place to Invest: Why does Keith think seed is the best place to be investing today? Why despite the better risk/reward profile, does Keith think Series A is not the best place to invest? Does Keith believe we will see the return of growth investing in 2024? What does Keith predict for the M&A market in 2024? Did Figma kill all activity? When will the IPO windows open again? Why would Stripe go out this year? 5. Keith Rabois: AMA: Why did Keith not want to start his own fund? Will he ever? What have been Keith's biggest lessons from working with Vinod Khosla and Peter Thiel? What were Keith's biggest lessons from Roelof Botha on what it takes to be an effective board member? How does Keith think about bitcoin in 2024?

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

• 0:00Keith Rabois?

  There's certain things about KB that led to that successful track record in KB4, 5 and 6 that I kind of missed. And then there are several personal things that just were appealing to me as a human, you know, aside from my professional aspirations and goals and ambitions. And so the combination made a lot of sense.

• 0:17Harry Stebbings?

  This is 20 VC with me, Harry Stebbings. And this Wednesday, we had some of the biggest venture news in a long time. Keith Rabois, legendary Founders Fund investor, who'd backed the likes of Stripe, Fair, Ramp and others, was leaving Founders Fund to rejoin Vinod Khosla and Khosla Ventures. In this exclusive, we dig into the motivation behind the move, the plans ahead for both Keith and Khosla with their $3 billion in new funds, and then dig into some of his biggest lessons, investing from now over 11 years as a professional investor. But before we dive into the show stage, there's no shortage of helpful AI tools out there. But using them means switching back and forth between yet another digital tool. What was supposed to simplify your workflow just made it way more complicated. Unless, of course, you're in Notion.

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• 2:58Keith Rabois?

  You have now arrived at your destination.

• 3:01Harry Stebbings?

  Keith, I am so excited for this. My word, you decided to save some of the biggest VC news for the start of the year. So, thank you so much for joining me today first.

• 3:10Keith Rabois?

  It's a pleasure to be with you again.

• 3:11Harry Stebbings?

  Talk to me, Keith. Moving back to Coastler, I guess the first question is, why did you decide to make the move back from Founders Fund to Coastler again?

• 3:20Keith Rabois?

  Well, you know, in some ways, so I spent six years, just so everybody has some context, spent six years from 2013 to 2019 as an entity at Coastal Ventures, and we had a really successful run together. KB4, KB5, and KB6 were the funds I was a partner in, and we produced, you know, really stellar returns, working as a collaboration team between Vinod, Samir, Cole, David Wyden, and Sven. I never really left in some senses, because after I left, I stayed in really significant contact with Vinod, Samir, and David particularly. We co-invested almost every quarter together. So, Samir invested and led a financing round in the company I run as CEO, Open Store. Samir led the Series A for a company that

• 4:01Keith Rabois?

  you're familiar with, Trauma. We worked together there. I led a growth round for one of Samir's favorite companies called Ultima, Ultima Genomics. Samir also led, you know, an investment round in Varda, Delian's company. I worked very closely with David Wyden on a bunch of companies, including Fair, Bungalow. So, I felt like I was actually seeing more of Samir and David than I did when I was at KB for six years and the last five years at Founders Fund. Basically, when I was at KB, I would see them every Monday for hours at a time, but I didn't really see them Tuesday, Wednesday, Thursday, Friday, so we were all going meeting with founders, doing one-on-one with founders, attending board meetings, taking pitches, etc. Whereas over the last five years, actually, I was working with Samir David basically every

• 4:43Keith Rabois?

  single week. The bridging and bonding got stronger over the last five years than the six years where we were just debating at partner meetings. The recombination made a lot of sense. I even spoke at the KV CEO Summit, you know, last May. I've stayed in quite close contact with all the partners at KV. I even helped recruit Nikita originally to KV. So I'm extremely excited to be able to work with them.

• 5:05Harry Stebbings?

  Well, you said there about kind of the things that you missed that were inherent in KV four, KV five and KV six, and then the personal. If we just take those two, what was it that you missed that was kind of central to the success of those funds that you wanted to return?

• 5:19Keith Rabois?

  We had very extensive partner meetings every Monday for hours at a time, and we vigorously debated new investments as well as the impact and the potential upside of the current portfolio. And these were very unstructured and very vigorous debates, particularly with Vinod and Samir David and sometimes Sven. And I felt that they made me a sharper investor, a smarter investor, even though it was ultimately my decision on what to do with the companies that I was championing or the companies that I was on the board of. They made my brain work better by listening to them. And occasionally I made the mistake of over listening, but it was always my mistake. I was doing my job better, listening to

• 6:00Keith Rabois?

  the stereo surround, Vinod's perspective, Samir's perspective, David's perspective. I even carried it with me to FF in my brain for the first year where I could hear their voices every time I was talking about an investment. I hear David whispering about the financials, the calculation of the contribution margin, and then hear Samir talking about certain things about the founder. I would definitely think about Vinod talking about the option value upside and the team, and we need to get more data science talent in the company. So I was like wandering around with the voices in my head. But I actually think that made me a better investor, and so I missed that. And on the personal side, as you know, KV is significantly branded successfully in the deep tack hardcore technology investing space. And even though that's not my forte and it's not my comparative advantage

• 6:44Keith Rabois?

  in life, I felt I was learning something new about the world every week. Example, over six years of education, I learned a lot about robotics. I learned a lot about the fundamentals of AI. I learned about liquid biopsy to detect cancer. So I'd learned so much and I felt like I was becoming broader as a person. Even if it didn't really translate to the day to day investment decisions I was making, I really missed that. It was like getting a free education in the world of technology every week, learning by going to partner meetings. And so that was, that was like a free benefit of doing my job.

• 7:15Harry Stebbings?

  You mentioned the Monday partner meetings there and the rigorous debate. That's what kind of we think of with venture partnership discussions. That's not the way that founders fund structures, is it?

• 7:25Keith Rabois?

  No, founders fund, especially when I joined, was very much people running their own investment strategies. Think of it as like a PM running their own investment strategies. And there's a way of syncing and getting a certain number of critical mass and votes to support investment at different thresholds of dollar figures. But it really wasn't designed for the most part for that kind of analytical rigor. But KV had the conventional paradigmatic old school partner meetings every week. They were quite substantive, quite dense, even the preparation for those meetings on Sunday. Sunday for me used to be when I was the operating executive of, let's say, Square or LinkedIn. Sunday would be the day that I would kind of do brainstorming and strategy. Pull out my big large notebook and kind of redesign org charts and things like that.

• 8:11Keith Rabois?

  Sunday at KV was a full dense day of writing substantive memo emails, reading other people's data and analysis. I didn't have time to let my brain wander at all on Sundays because there was so much preparation that that was going into each Monday partner meeting.

• 8:28Harry Stebbings?

  You also didn't have time to do barrys, my friend.

• 8:30Keith Rabois?

  Oh, no, I definitely did barrys. Don't worry about that.

• 8:34Harry Stebbings?

  Can I ask, I obviously spoke to Vinod before this and he said in particular, no one really runs the firm. Partners work closely together. Each MD can decide to make an investment, even if the others disagree. How do you think about listening to people at KV without letting it impact your mindset and decision making process negatively? To the extent where you could say no to something that could be great?

• 8:56Keith Rabois?

  The way it really works and the way the rubber kind of beats the road is sort of like a certain amount of social capital. So I have a certain amount of social capital within the firm. If I want to do something that's very non-standard or very controversial or not expected, I'm kind of burning and consuming some social capital. Now, if I make the right call, that gets paid back with interest. And you know, the next time I want to make a controversial decision, it's actually even easier. But Vinod's right in the sense of there were times at KD where I wanted to do X, Y, or Z in my six years there. And there was some critical feedback and maybe I listened to it, but it was always my decision to listen to it. So there are times that maybe I regret me like actually listening to it. That I should have, you know, had more confidence and more conviction. And then

• 9:41Keith Rabois?

  there's times actually counterintuitively, and people sometimes forget this, there were times that I would actually champion an investment, champion a company. And the reaction afterwards would not be critical. It'd be more enthusiastic than even I was. The reaction in the room was like, do not lose this investment. Doesn't matter if you have to, you know, invest at a higher valuation than we normally typically would. This is actually really good. So sometimes it would actually cut the other way. It wasn't just like critical, like what the hell are you thinking? It was like, oh, no, no, this, this one's really special. You're right. And double down right now. Like sign that term sheet today. I remember when we were considering the first institutional investment in Max Lechit's company at a firm. And their uniform reaction was Keith, make this happen. And then so, you know, then the only question

• 10:24Keith Rabois?

  was, you know, Max and I had to work out like what a fair valuation would be. But the reaction was like that war when I brought in Open Door, we're incubating Open Door, and Eric came in to present. People were familiar and people knew that I wanted to incubate it. So there was, you know, a default kind of like leaning in. But afterwards, everybody was like, this is a no brainer. We absolutely should do this. Close this.

• 10:45Harry Stebbings?

  Is there an example where they persuaded you not to and you regret it?

• 10:49Keith Rabois?

  I knew that I was on the edge of consensus and I was going to burn a lot of social capital, mostly on should I increase the valuation of a particular offer? So it wasn't like should we proceed or not? It was like these terms feel rich, you know, and make sure the risk reward is there. So for example, I can think of two or three where I knew that I was at the edge of the valuation range of what close investors would typically accept. And there was enough criticism and concerns about the company that really was taking a lot of liberties to go further. And once in a while I did decide to pay, you know, whatever the valuation was required. And once in a while I went out.

• 11:32Keith Rabois?

  One of the examples and probably, you know, the one I lose the most sleep about, you know, after almost 11 years of being a VC is Rickling. So Rickling came in, Parker came in and we gave a term sheet, you know, obviously controversial at the time for the seed and Gary Tan, the initialized also gave a term sheet. And at the time, there was about a $10 million gap. I probably offered five at 25 plus or minus from memory. And I think Gary was at like 35 and Parker really wanted me to increase the offer. And I felt like there was just enough consensus to get the offer out. That if I really moved the needle, that I might be burning a lot more capital than I thought I should. And obviously it's turned out to be an unmitigated disaster for me. Fortunately, it's worked out really well for Parker.

• 12:17Keith Rabois?

  So, you know, he probably doesn't care very much. And then there was, there's a moment also where I had already like locked in a term sheet to lead the series seed for Robinhood to lay at 20 post, which was pretty expensive. But they came back and really wanted me to join the board in the seed round. And this was in maybe my second year at KB. So I asked, you know, Vino and Samir at the party meeting, can I join the board? And the uniform reaction was like, no way. You can't be joining like all these boards on seed, like that just won't work. So we decided to part ways very finally, you know, I just said I can't join the board. And they wound up finding other investors, obviously another sort of unmitigated disaster. But.

• 12:59Keith Rabois?

  You know, they were right for the most part that you cannot be institutional and back story in a multi-stage fund constantly joining boards to see. She had to be very judicious. So the feedback wasn't wrong. It was just wrong as applied to that company. If it was totally up to me, I would have joined the board. Interestingly enough, when the same thing happened four years later. I had met another company that I had strong conviction about and I was going to lead the seed. This company called Fair. Fair came back and said, Max said to me, I tell my co-founders and, you know, we'll say yes, you have to join the board. And having learned and been burned by the Robinhood experience, I never really told my partner. So I was going to join the board. I just said, yes, they're probably happy with me now, but I probably kept that a little quiet for about a year.

• 13:43Harry Stebbings?

  So I want to unpack a couple of elements that you said about price sensitivity, especially with Rippling thirty five versus twenty five. Which firm would you say is more price sensitive? KV or Founder's Fund? And just pause, is it even good to be price sensitive?

• 13:57Keith Rabois?

  Historically, I'd say KV has been more price disciplined than Founder's Fund. But I think Founder's Fund is actually more price sensitive and more disciplined than most people give them credit for. Like I actually noticed this when I joined, the discipline internally was much stronger than I thought from afar. You know, watching the firm. KV has historically been maybe the most price disciplined of any large institutional fund. I think they have have relaxed out a bit. When I was at Founder's Fund, I actually saw some term sheets that KV extended. I was looking back and saying, wow, where the problem like that would have happened in my day. But I think of the major firms, maybe KV and Founder's Fund may be the two most disciplined.

• 14:41Keith Rabois?

  I think Sequoia has also historically been very price disciplined. To their credit, they've also relaxed out a bit. They're very, I think, very top down and consciously. But I think historically, those three might be the most price disciplined. Interestingly enough, the more important topic is what, you know, should you be, should you care how much you care, et cetera? And I still remember this episode you recorded with Peter Fenton. When Peter said, price is always a trap. You know, this was early in my career, but maybe even be recorded before I started as VC, but I've listened to it. And I didn't totally grok it when I listened to that episode that you recorded with Peter.

• 15:18Keith Rabois?

  Over the arc of my 11 years, the wisdom behind Peter's insight has suffered even more and more, especially for what I do, which is primarily seed in Series A. When Peter, when Fenn was saying the price is always a trap, that's really an excuse for not having conviction. That's basically translated your whole episode with him. The short version of that is, he's mostly right that when I'm seed round or a Series A round, when you're walking away at price, it is a bit of lack of conviction. And you really should be looking in the mirror and say, why don't I have conviction? Because if you call, if you make the right call at seed, you're going to wind up in a pretty good place if that company is iconic.

• 16:00Keith Rabois?

  And even at A, if you make the right call at almost any price, you're going to be pretty happy. At price, Series B, that's not true. At Series B, you can pick a good company and invest in it, but you pay the wrong price. The risk reward is totally out of the, totally out of whack. You may not even make real money. But I'm primarily leading seed, the first institutional around in companies is, you know, my goal in life is to be the first institutional investor. So I paid a relatively high price for FAO, like 20 million post was actually high, or I didn't even get 22. But I haven't looked back since then.

• 16:34Harry Stebbings?

  So I totally agree with you. Listen, if it all goes to plan, you won't regret it. But when you actually look back at portfolios and see average entry price being 12 and a half, and then five years later, average entry price being 25 or 30, you've just halved your returns.

• 16:48Keith Rabois?

  Well, yeah, so people have forgotten this. And, you know, one thing that Peter Thiel is really disciplined about is he totally understands these dynamics really well. And is always pointing this out internally, sometimes externally, that your returns are not going to be the same as what you expect when that's what's going on in the macro environment. And so you can't follow the same strategy with a different kind of entry price on average at all. But, you know, once in a while, knowing when to stray. So when I invested in a ramp in the seed round, which obviously proven to be a very good investment, the pricing on that was extraordinarily high for a seed round.

• 17:24Harry Stebbings?

  What was the price?

• 17:25Keith Rabois?

  Probably, it might have been 40 posts, but it was more than 30.

• 17:29Harry Stebbings?

  Wow, I'm respectful. I remember Eric did Powerless before, but like it wasn't a huge unicorn founder.

• 17:35Keith Rabois?

  No, you know, in fact, it was quite controversial. I sometimes think that it might have been the most courageous investment I made as a VC, because everybody was so addicted to this Brex, you know, nonsense. And, you know, typically not the best strategy to fast follow, you know, another startup that has traction. But I knew, I knew that space cold. I knew exactly what Brex was going to do wrong. And I knew that if we could find the right founders, we could absolutely dominate. And that's proven to be the case. Ramp is absolutely going to be the winner. Probably will be two, three, four, five, 10 times more valuable.

• 18:08Harry Stebbings?

  So when you invest at seed state and you're concerned about price, do you ask yourself, do I really have enough conviction?

• 18:15Keith Rabois?

  I'm trying, I try to do that. I really try to apply Peter Fenton's, you know, sort of adage now much more frequently. I do think about the capitalization over time. You do have to take into account what kind of company is this? How much capital is it going to require to achieve certain milestones? And, you know, it depends on what the company is aspiring to do. Because if your capitalization is going to require so much and your first entry price is so high, that company may not be set up for success. And that, you know, may decrease the overall probability of being successful, which is a material problem. So in certain verticals, like there may be a step functions that you have to achieve as opposed to a kind of a continuous curve of progress.

• 18:56Keith Rabois?

  And those step function, once if you slightly miss and your valuation entry price is too high, that company's dead. And that's a real problem.

• 19:04Harry Stebbings?

  You said there about kind of dilution concerns and sensitivity. The way you protect against that is obviously by continuing to invest. KV obviously have continuous funds now. We'll get into the separate structures. I don't like reserves though, Keith, and I don't like reserves and please educate me because it's trash in investing. If I had done reserves, I would have put money into Hoppin, Clubhouse. That would not have been a good set of events. So how do you think about that? And bluntly, proactively allocating ahead of time, especially when you don't know what's coming?

• 19:33Keith Rabois?

  There's like three or four things in venture that nobody knew, nobody does super well, honestly. It's much more art than science. How to do reserves is one of those topics. At K D, there is a more disciplined, let's say, approach to reserves. That doesn't mean better, by the way. Just it is more top down, like what are our reserves? How much are we going to allocate to company X, Y, and Z? How much do, how much total allocations do we have? Should we shave this one, increase this one, et cetera? Whereas at Founder's Fund, there's no explicitly a policy of not reserving. And every investment decision is on an ad hoc case by case basis. And there's strong merit to that, actually, even though most of my investment style may be closer to K D.

• 20:15Keith Rabois?

  I think I'm closer to the Founder's Fund style of you're probably better off not reserving. And then making ad hoc decisions based upon the quality of that particular opportunity, which includes who's the investor, what's the traction of the company? What do we believe about the founder? What do we learn about the founder's abilities and traits? And then what's the valuation?

• 20:35Harry Stebbings?

  Do you worry that with the second model being Founder's Funds model? When founders say, hey, what's your approach to reinvesting? And you say it's a dogfight for it. You've got to prove yourself and it's, you know, it's there to be earned. It's not as enticing and saying, oh, we allocate X amount of reserves when we invest. I worry that.

• 20:53Keith Rabois?

  I think in theory, there's, there might've been some truths to that. But in practice, just observing, observing Founder's Fund before I joined, working there five years, I never saw it be, you never translated it into a practical problem with a founder.

• 21:06Harry Stebbings?

  Going back to seed, but before we kind of move away, you said about kind of risk and Series B being a challenging place in terms of risk and not being paid for it. I don't think you're paid for the risks that we take at seed, Keith.

• 21:15Keith Rabois?

  Well, we're not, we're not at all. But the outliers are, I think the seed range of let's, let's assume a seed range these days is, I don't know, eight billion posts to 20, probably lower on that spectrum now.

• 21:30Harry Stebbings?

  I still see five on 25 daily with Andrew.

• 21:33Keith Rabois?

  Oh, God. Yeah. So those I would not be doing. Absent extraordinary reasons. So one of the metaphors I learned, I forget who actually taught me this. It might've been someone at K D, but Scott Nolan. Founder's son also applies this is you're basically it's like a playing poker and every round is like a card you're being dealt and there's different informational content and there's a different price point for that round. So what's the information you get from that new card? And then what's the price? Five on twenty five from scratch. That card is very expensive for a certain amount of informational content. So that's probably a very rare opportunity that you want to say yes to. And now I will say, I it's not like I'll hold you now. I've definitely done that. As I said, you know, I gave a term sheet to Rippling, you know, with those terms exactly. So I will do it.

• 22:19Keith Rabois?

  But you want to know why you're doing it because that isn't that card price point is not smart, generally speaking. The question is, how's that five calculated? Is the founder reverse engineering from a valuation expectation, which in that case I'm usually going to barf? Or is five the correct dose to achieve certain accomplishments that will unlock the next round? And there are some times, some markets where really sub five, you can't achieve those milestones. So you're kind of fooling yourself. You can give a term sheet at two or three, you know, at a lower valuation, but the company's not going to achieve what it needs to achieve.

• 22:52Harry Stebbings?

  You said that's what they need. Truth be told, we're seeing a lot of rounds that are fifteen to thirty, forty even, especially in kind of AI with pedigreed founders. What do you make of those? Because when we see those, you probably don't need fifteen, twenty, thirty to get started. Midjourney is a bootstrap company. How do you feel about those?

• 23:12Keith Rabois?

  One of the most important pieces of feedback a really good VC can give a founder is what do you need to achieve where the rest of the world will then appreciate you? So that capital is unlocked. Some capital will be easy to raise. But one of the things I try to do is calibrate that right away. Okay, for this kind of company with this team, if we can achieve two of the following three things, people are going to appreciate us, whether it's my firm or someone else's firm. Let's dial in, how much time and how much money is it going to take to get there? And let's make sure you have the sufficient resources. It's a little bit like the driving the car metaphor of like, there's some destination you need to get to. Certain amount of fuel that's required to get to that destination, but I don't want to over fuel you. That doesn't work.

• 23:52Keith Rabois?

  It's like a plane where when you over fuel, you're just like bogging the plane down and it sort of creates more resistance. So for example, let's talk about Open Door. We raised 10 of the seed for Open Door. That was actually the correct dose. Buying homes, you really can't prove that you can buy cohorts of homes accurately, like priced accurately and resold properly. For less than about 10 million, maybe you can make it eight, but eight to 12. Otherwise, it's not, it's really not worth trying for less than 10. Like you're fooling yourself. So 10 million was the proper sized round for that particular shop angle.

• 24:25Harry Stebbings?

  Do you think that Series A is the best place to be investing today?

• 24:28Keith Rabois?

  I think the risk reward can be really strong. Uh, it's hyper competitive. So one of the other lessons, you know, you kind of take from zero to one and is globally true is you want to be careful about like hyper competition. My belief is I like to beat seed rounds. The reason why I like to beat seed rounds is they're less competitive, first of all, because what I'm working with typically is a keynote deck and a team. Most investors are terrified of assessing a team and a keynote deck and handing over one, two, three, four, five, you know, million dollars. I actually think that's my comparative advantage is doing that. So I want to do it as often as possible. Secondarily, because I believe I can have some impact in the company. The earlier I get involved, the less I inherit things that might've been avoidable.

• 25:13Keith Rabois?

  You know, I've used this metaphor with you about concrete. Early stage companies, it's kind of like liquid concrete. It's very valuable and then solidifies post Series B. It's, it's totally solidified. And if you want to change something, you know, that's concrete, you have to bolt this jackhammer, which is incredibly painful, expensive, noisy. So I don't want to be manipulating solidified concrete. I want it while it's liquid and malleable. So the earlier I can get involved, the better. That's where I want to be competing. Series A, the risk reward generally speaking can be pretty strong, but you're competing with other people who are very good at what they do. Benchmark's pretty good at what they do. Sequoia has been historically very good at what they do. You know, you're running right down the middle of some of the best investors on the planet. Whereas in seed, you're not, and Series B, maybe you're not.

• 25:58Harry Stebbings?

  Do you think that still though, when you see the multi-stage firms move so aggressively into seed, and then you look at a lot of the partners who led $20 million series A checks in years prior, go, "Oh, I'm underwater with board commitments. I need to fire sale a load of shit companies." Like, "I don't want to do new deals." I almost think A is better because they're just saying to all the young ones, "Go, do seed."

• 26:18Keith Rabois?

  I think when you, I do think a lot of funds get nervous and risk a burst in the let these go when the market's not attractive. But I think the really best investors, which are really the people I compete with, don't do that. The world of venture is more stratified, that tier two investors are very different than tier one. And I think this is true on the series A dimension. You don't want to pull your foot off the gas in series A if you're, if you're really strong investor. But the natural reaction of most firms and most partnerships is to do that, which is generally a mistake. I think in series A, if the price, if you think about the pricing, let's assume that the median valuation for a seed round is between 10 and 20 these days. And let's say a series A, it's like 30, 40, maybe 50.

• 27:02Keith Rabois?

  I agree with you that I'd rather pay 30, 40 for all the learnings.

• 27:06Harry Stebbings?

  Yeah.

• 27:07Keith Rabois?

  Versus 15 to 20 for no learnings, often. But then I have to compete with more people. Like, so, you know, one of the other things I've pointed out is, in about 11 years of doing this, I think there's somewhere between five or six or so term sheets I've extended where I didn't close them, like I lost to somebody. And the reality is that four of the six, or two thirds of them are the same, or to the same people. It's like, it looks like it's a very hyper competitive world, blah, blah, blah. But at the end of the day, I'm competing with like one or two other people. And so if I wait to the series A, I know that there's a decent chance that these people have taste, like my taste, and they're actually pretty good at what they do, and they can close, they know how to close, and they have, you know, good references, all these things. So if I go seed, most of these people do not love to do seed,

• 27:52Keith Rabois?

  and I can get involved before they figure out what the hell's going on. That's much better for me, even if I have to pay a slightly disproportionate skewed price to do that.

• 28:01Harry Stebbings?

  Keith, you know I love you and think the world of you. You're a competitive motherfucker. Why didn't you just beat them at A? Like, you must reflect.

• 28:08Keith Rabois?

  Well, I tried, but like, even if you're great at what you do, you're going to win, call it 50, 60, 70%, you're not going to close 100. At seed, I can probably close 100% of the things I want to invest in, if I want to. There's no way that go head to head with the top two or three other investors at series A, you're going to have 100% win rate period.

• 28:28Harry Stebbings?

  We mentioned seed there being, you know, less competitive but harder and people shying away. We mentioned A being the best risk reward. Growth is pretty dead, as I think we're both seeing. Do we think it'll stay that way? And are you excited to be more active in growth or not?

• 28:41Keith Rabois?

  I think that growth is pretty broken. I think most growth funds were pretty bad at what they were doing.

• 28:46Harry Stebbings?

  Why were they bad? Because they were just price insensitive?

• 28:49Keith Rabois?

  Chasing momentum, not really understanding fundamental company building, thinking spreadsheets to take results. Like, you know, not understanding the inputs versus outputs that these companies are built by people, not by math. At the end of the day, so I think most growth funds are either dead or dying. So I think there's a zone there that's pretty non-competitive. It's not what I do for a living. You know, you have to figure out what your comparative advantage is in life. And I don't think growth investing might. I've made a few growth investments over the last three years and three or four years. Unfortunately, they've worked out, but I'm extremely careful. If I'm leading a growth route, then I think I have some alpha, some comparative advantage. Like, so for example, back in my KV days, one of the better investments I made was co-leading the Series C for Stripe.

• 29:31Keith Rabois?

  You know, I worked at PayPal, Square, I understood financial services pretty well. There's a reason why I was dialed into that price, being willing and comfortable investing at that price. At the time at KV, when we invested in Stripe's Series C, it was an order of magnitude more expensive than the entry price for any investment in the history of KV. Back to the point, though, about the partner meetings being sometimes counterintuitive. One of the things that was most valuable was Samir was pushing me. He's like, you should do this. And then David said to me, look, I know this is not normally my style to be like price insensitive, but you need to be able to make this call. Like, you should be better situated to make this call than anybody else on the planet. Just aside, don't worry about what my normal feedback is.

• 30:14Keith Rabois?

  So Samir and David being very enthusiastic that I should lead in if I wanted to, gave me more courage and more conviction. Because this was pretty early in my career. I was either the first or second year there. So that's why sometimes the partner meeting can be exciting and like, give you more conviction and confidence. I don't know that I would have proceeded had they been more cynical, actually, because it was so early in my trajectory. But they were like, nope, this is where, this is what we hired you to do. This is the area you should know better. Make a call. Translating this back, Bouter's Fund could be very successful in growth. Because I think most other funds are basically not able to compete and founder son has great talent in the growth side.

• 30:51Harry Stebbings?

  When I put on Twitter that we were doing this show, I got a load of DMs and they were saying $3 billion in KV fund. How can you make money on a fund that size? So I'd love to put that to you so you can kind of break that down and debunk that.

• 31:06Keith Rabois?

  Properly sizing a venture fund is one of these other complicated arts in the industry. I think the key is there's a couple of inputs. One is what stage are you investing in? How many opportunities are there likely to be? And then see, what's the team composition? Your internal team. So let's walk through this. So KV, although that's a, sounds like a big number, 415 million of that is for seed investing, 1.5 billion or so is for venture, and only about 800 million is for growth. So as a firm and a set of partners that really enjoy seed investing, that's the node right down the middle, Samir, right down the middle of what he likes to do, probably my comparative advantage in life, you have

• 31:51Keith Rabois?

  three to five partners that all really strongly like to lead seed rounds. So $400 million isn't unreasonable at all for a seed fund, a high conviction, high ownership seed fund. Then you look at the venture side. Okay, you have 1.5 billion. If you're really doubling down piratas and reinvesting or leading As in the portfolio of seed, you can consume a decent amount of that. And let's say you compete in the external world for another half of it. It's not that far off the sizing when you have five MDs plus a team of partners like Nikita and Alex Morgan who are really good at what they do. You could see with like seven, eight kind of lead investors, a $1.5 billion venture fund being moderately appropriately

• 32:33Keith Rabois?

  sized, actually. You have to combine all of these and triangulate a bit.

• 32:37Harry Stebbings?

  When you look at 400 though, Keith, takeout fees were at 320 investable. So we can do 100 checks and what are they, 3.2?

• 32:47Keith Rabois?

  Yeah, well, I think you probably want to be a little less than 100. 100 might be a little bit much to make a little bit more dollars per, but.

• 32:53Harry Stebbings?

  But if we were doing reserves to initial, you could do 50 and still have a one to one. 50 is a pretty diverse portfolio.

• 33:01Keith Rabois?

  That's what you want. I mean, the guidance I learned, and I don't know this is as rigorous as many things, but hopefully a good portfolio for a fund should be about 50, 30 to 50. So you're in the zone of like what most people would advise. You're certainly not outside of it, but it does come down to how many barrels are shooting through. Like I have this metaphor I use, company building about barrels and ammunition. Mention works that way too. How many people are going to be high quality investors? Do you have at any given time in a fund? It's usually a smaller number than you think, almost like a micro power law within a power law. And so if you have two, three, four, five, six quality investors, you can size the fund significantly greater than if you have two or three. Ultimately, your fund size does affect your strategy or should. It has to be a recursive dialogue.

• 33:46Keith Rabois?

  So founders fund, which has more total assets under management, let's say, or more. Current funds are probably closer to four bill than three. The allocation is very different though. It's 900 billion or so in FF8 and about 3.2 billion, I think in the growth fund growth too. It's a different weighting. So you need to have a strategy that's coherent around the people, the team and the weighting of your fund sizes.

• 34:10Harry Stebbings?

  When we spoke last time and I said, what would you change about founders fund? You said, we could be younger. Could Coastler be younger? Would the same apply here?

• 34:18Keith Rabois?

  You know, good question. I don't know yet. The four people that are most senior or MDs, the official MDs at KB are the same people I worked with when I was there. I haven't worked with most of the people that are not at the partner level at KB. I have worked with Nikita before, I mean, that's one of those I recruited them. I've worked closely with Alex Morgan, lots of interesting dialogues and debates. So I know those two pretty well. The rest of the team, I don't know very well, so I shouldn't really apply yet.

• 34:48Harry Stebbings?

  What do you think KV can learn from Founder's Fund?

• 34:50Keith Rabois?

  I think the rigor around growth investing, I actually, I learned this personally. I think FF is very strong at figuring out how to value a growth stage opportunity. And that translates to the reason why I care.

• 35:04Harry Stebbings?

  What makes them good at it, where the growth investors we mentioned before sucked?

• 35:08Keith Rabois?

  That's a great question, actually. And I'm not sure I know the answer, other than just watching who produces successful investments or not. But the one thing that was most relevant to me to learn is you have to make all these prerada decisions in your best companies. So, you know, I say I need a seed for DoorDash and the Sears A, prerada, that's easy, not difficult. But then C, D, E, you know, at different prices are open door, 400 million, 500 million, 600 million. Do you do these rounds? How do you think about them? And I don't think back in my day at KB, that we had a lot of analytical rigor to those late-stage prerada decisions. Whereas at Founder's Fund, the growth team is very dialed in to evaluating those opportunities. And so I felt like I learned a lot about how they do their work.

• 35:53Keith Rabois?

  That would make me sharper about my own prerada decisions on the companies I'm most involved with.

• 35:58Harry Stebbings?

  Peter Thiel often says about the decision not to do, I think, the B of Facebook, or the A of Facebook being his most costly.

• 36:04Keith Rabois?

  Yeah, I mean, it's easy to make a mistake. I actually think that, you know, I have my own coherent version of this. I actually, you know, have my own set of views about whether or not to do preradas, applies to the companies I'm involved in. But I learned a lot from like working with Napoleon and his team at Founder's Fund.

• 36:21Harry Stebbings?

  I spoke to Mike, but you're like, how the fuck did you speak to so many people before this show, how we agreed it last night? But I also spoke to Mike at Truba and he asked the question, why would founders prefer working with one firm versus another?

• 36:33Keith Rabois?

  Yeah, well, I think it's a matchmaking exercise at the end of the day. The right founder paired with the right investor increases the probabilities of success for the company, in my view. And so every founder who's successful, every founder who has a shot at being really successful is different. Like Mike is definitely different than other founders. Mike and Jack Dorsey, for example, very, very different, both going to be extremely successful. The correct pairing for. Different founders is who's complementary to you. Who can you work with and add value but be on the same page with? So for example, Mike has very strong views on culture, how to run a company, how to build a company. Being in line with his views allows me to be more effective because when I'm channeling feedback, we're not debating first principles ever.

• 37:19Keith Rabois?

  But once in a while, I may see something or, you know, in this cartoonish mirror, I like, I can play back to him his decisions or what I see and say, hey, just applying your own principles, your own philosophy. Does this make sense versus debating whether his philosophy is correct? He would be a horrible pairing with someone who doesn't agree with this philosophy. They would just have like constant thrash, it would be useless. Or so let's take another example. Jack, Jack is very design driven and he wanted to build Square in a design driven culture, which is, you know, let's say jargonistically like Alva ask, most of them don't know what that really means. But like fundamentally a design driven culture. Pairing Jack with someone who doesn't appreciate design would be an unmitigated disaster. Like the investment in the design, the quality of design, the thoughtfulness, the crafting,

• 38:04Keith Rabois?

  the perfectionism across so many different dimensions would just be almost unfathomable to someone who grew up in a bottom up empirical, you know, everything's not quantifying, A B testing. So you have to be careful. That's why I think speed dating during COVID was a disaster for everybody. It wasn't good for founders to do Zoom based investing. It wasn't good for investors. And so I think it's healthier to take your time as a founder and find someone who can be insightful, but is directionally aligned with your ambition, with your prioritization. That's where you get a match that really works for like a decade.

• 38:37Harry Stebbings?

  Do you think FF and KV have the same type of founder? When I look at like Mike, he fits the founder mold for what I think a founder's fun founder would be. Run through walls, very opinionated, very kind of hard and shares a lot of traits with a lot of other FF founders I know. Do you think KV has an archetype like that?

• 38:57Keith Rabois?

  Yeah, I actually do. I mean, I think one of the reasons why you see such a high portfolio overlap is like the proof side of the K V and F F have almost exactly the same ownership in Trauma. Um, I believe in open store, we have the same preferred ownership, K V and F F. I think in um, Aven, F F and K V have very similar ownerships. Now, a lot of people at K V are founder driven. I wouldn't say that's the only criteria at K V. Sometimes K V can be technology driven, innovation driven, whereas F F is mostly founder driven. But the Venn diagram overlap of a successful founder is pretty high, which is why the portfolio overlap. H sleep, you know, more portfolio overlap, Varda, more portfolio overlap, high portfolio overlap.

• 39:41Keith Rabois?

  So that obviously the criteria is clearly similar because we're seeing the manifestation of that in the portfolios.

• 39:48Harry Stebbings?

  When you were thinking about just this option, always other options come to mind. Did you consider other options?

• 39:55Keith Rabois?

  Not with a pre-existing fund. I felt that at K V, I knew why we were successful. We were successful. I knew why, or at least I think I know why, and I thought that that would be helpful. I think every other fund, the grass may be a little bit greener kind of problem of like they have their own bodies. There's more mess somewhere else. Don't want to fix other people's messes, kind of like lesson. You know, over the years, and I'd say over the 15 year time horizon, last 15 years of my life, I have occasionally thought about, should I start a fund? There's definitely a lot of drag coefficient associated with that, that I was not particularly excited with, which is why, sort of by definition, I haven't started a fund. I did look at it very seriously in 2010 or so and

• 40:37Keith Rabois?

  2013 before joining K V. I had a pretty specific idea about a fund. But for lots of reasons, what I like to do is, most importantly, find undiscovered founders, give them the opportunity to be successful with advice, counsel and capital, and then work with those founders and help them shift the probabilities of success so that they can achieve the ambitions for their company. That's what I want to do. Everything else is drag coefficient to me.

• 41:03Harry Stebbings?

  Why did you not think you could get rid of the drag coefficient? I was the same.

• 41:06Keith Rabois?

  I don't think. Get rid of the drag coefficient, certainly from scratch. I mean, they say the first six months, let's say, having drag coefficient. Can you later reduce? It's like a high fixed cost, the way one very successful founder described it to me as I was asking for a little bit of advice. The fixed cost is very high. And once you get over the fixed cost, maybe the marginal cost is is more tolerable. But that first fixed cost is really painful. And I like what I do. And the reason why I work is I really enjoy meeting these founders, discovering these people and saying, yeah, this person's got a shot. And then working with them and helping unlock their brain once in a while and watching their eyes light up. That's what motivates me every day.

• 41:47Harry Stebbings?

  Do you ever think about money?

• 41:49Keith Rabois?

  Uh, no, not really, honestly.

• 41:51Harry Stebbings?

  This was another question that I had, which is you have more cash than Rockefeller. So like, what motivates you today?

• 41:57Keith Rabois?

  One of my good friends who I work with had his 30th birthday recently. And, you know, at the dinner for his 30th birthday, the question, the question at table is, what do you want people to kind of say in your eulogy? Someone morbid, but whatever. And I thought about it and it occurred to me, what I want to say, what I want people to say is, I can't imagine my life without Keith in it. You know, like I had that much impact in some ways. And there's different ways you can have impact, obviously. But I was like fundamentally, I really want to have impacted people's lives. And that they really think about it, that it was that impactful, that their life would have been completely different. And so this is the business version of that, you know, the entrepreneur's version of that.

• 42:35Harry Stebbings?

  You've definitely had a huge impact on Dalian's life. How did Delian take it?

• 42:40Keith Rabois?

  Uh, well, you should ask him. I shouldn't speak for him. Yeah, I think, uh, I will, I will tell him. You, you can ask him, uh, his opinion on lots of things. He's very, uh, strong willed and very opinionated.

• 42:53Harry Stebbings?

  He, he certainly is opinionated. Can I ask, I spoke to Samir before and he said, what does it take for an investor and a firm to win today after 10 years of bull run?

• 43:05Keith Rabois?

  First of all, and I said this several years ago on your 20 minute DC, you have to have a comparative advantage, period. And you need to isolate it for you and your family. Why me and why us? So for example, like our mutual friend Mike, when he meets a new investor, he always asks him this question. He loves doing this. He's great at it. Why should a top tier founder like me take your money? And you need to have a sharp differentiated answer to be successful. And the more differentiated, the more true that is, the better. And I think most investors either don't have that answer or forget. And so you don't want to be a commodity. You need to be special. I need to be treated special. You need to have, you know, either difference, like comparative advantage somewhere.

• 43:45Keith Rabois?

  I remember I posted publicly my investment criteria, uh, probably 2017 and, you know, on Twitter. And the last one that confused a lot of people was the last question was, do I have a comparative advantage? And I take that pretty damn seriously. Like, why me? Why am I investing in this company? Because the general returns of venture are not strong at all. The general returns in 75, 80. And if you normalize against like the two hot periods of the last 50 years, like 1996 to 99 and take out like 2019 and 21, the returns are horrific, except in maybe the top two to five, maybe 10% of venture. If you don't have a strong answer to why you have a comparative advantage, you're going to regress to the middle of the bell curve. In the middle of the bell curve, returns are just not acceptable, period.

• 44:29Keith Rabois?

  And so I always take that very, very, very seriously. It will often pass if I can't look in the mirror and say, this is why I have a comparative advantage. So like, we talked about a couple of companies. Fair. The CEO and COO worked for me. I should be able to assess their abilities better than anyone else on the planet, period. And if I can't do that, I don't know why I'd be a VC. Stripe, we talked about, you know, I helped build PayPal. I ran a large fraction of Square. I need to be able to understand Stripe pretty much, pretty damn well, or I shouldn't be a VC. You know, Mike was my best friend and was my best friend before we started the company. I definitely knew the traits that would be to the way he runs this company, the intentional culture, the tenacity, the resourcefulness. That was all there from like maybe the first day I met him.

• 45:12Harry Stebbings?

  What if you're not the best for it, but you know it is incredible? Are you not going to do that deal?

• 45:18Keith Rabois?

  Great question. I think in a fund, the first instinct is, do I have a partner who would be a really good pairing? And at KV, we did do this. I would consciously think like, oh, David Whiting may be a really good partner for this specific both market and founder. Or Samir might be. There are times when Samir would be a much better partner, for example, than I would be to a specific founder. It depends again, or Vinod, Vinod can be, or Sven. It really depends what the company's doing and the founder's skill set. So the first instinct would be, okay, I don't really feel I have a comparative advantage, but our fund may, or someone else at the fund may be. Let's introduce them and see if that kind of partnership can work really well. So this does work.

• 46:01Keith Rabois?

  Now, the answer may be within our fund, whether it's founder's fund.

• 46:05Harry Stebbings?

  Do you think funds actually do that? I mean, we know, we know Midas lists are formed by the.

• 46:09Keith Rabois?

  No, we definitely, KV, we absolutely do that all the time, like, like every week, like instantly. At Founder's Fund, we do, we did it too, but more on an ad hoc basis, not systematic. But at KV, it was very systematic, like top down, even Vinod sometimes would say, let's say something came in to me. He might say, hey, don't you think like Sven or Samir or David would be a better partner? The way we usually resolve it, if like, for example, it wasn't clear, sometimes we'd actually tell the founder, hey, you get a choice. Founder's Fund, like, we might say, hey, you get a choice. Why don't you meet with three or four people and see who you think would be most useful? And who's the right parent? So that's my normal default is if not me, is there somebody else I have conviction about?

• 46:52Keith Rabois?

  And then if not our fund, then it's a much more complicated decision of what to do.

• 46:58Harry Stebbings?

  Do you worry about the weight of your words? You look at, and I loved Mike and I think he's great. But like you look at someone like Mike, he's younger than you, he's a lot less experienced than you. When you say, no, this is what I think, do you worry that you have too much impact at points?

• 47:12Keith Rabois?

  You have to be, well, I'll say globally, a DC and a board member absolutely needs to worry about this all the time. I've learned from some of the best Vinod roll. Off taught me some lessons. I'll articulate a few. Pierre Levan taught me early in my career, how to do some of these things. So I think Roloff taught me as a board member, one of the best ways is to ask things in terms of questions, not in terms of answers. So you probe by questions because then you're never leading. You may be leading a little bit, but you're never prescribing. And it's a very big difference. So you try to get that. The second thing I've learned is to describe intentionally, carefully and calibrated, your level of conviction. So I will sometimes say to somebody like, Mike, like my instinct is to do X,

• 47:57Keith Rabois?

  but actually I don't have that much confidence that I'm right. Like if you force me to make a decision, this is how I would make the decision here of why, but it's a close call in my mind. I'm not sure. Or there's sometimes when I might say to somebody, whether Mike or someone else, I have about 80% confidence. I know the right answer here. So the, you know, be able to communicate the level of conviction and help them discount or, you know, solve it. Some founders also, the other thing I do pretty well is reverse engineering the logic. Not always, but because sometimes it's actually hard to understand how you got to a conclusion. Sometimes you have this intuitive reaction and then trying to decompose, okay, what's the logic behind that decision? For example, I work with Saudi Aven. It's a really great company. He's a phenomenal founder.

• 48:41Keith Rabois?

  He always wants to know the why. It's always why, why, why, why, why? And he does that internally. He does that with me. It's great. So I can walk through the logic underneath it. And then he could say, oh, that I buy that logic or I don't buy that logic. That's another, you know, sort of instantiation of it. And then the final point is, and I'll give you a kind of an amusing anecdote about this. I almost never, ever tell a founder what they really should do. Like I almost never say, you must do this. That the one example that always occurs to me is there was a time when Mike was building his company in Miami, that he's incredibly frugal. The company's incredibly financially disciplined. And in Miami, the buildings charge a surcharge for running air conditioning past certain hours.

• 49:24Keith Rabois?

  And he was hesitant to pay the air conditioning, even though they're working like nine, nine plus. And there was one point in time when I said to him like, well, how much is the incremental air conditioning? It was like $6,000 or something. I was like, Mike, you should pay for the air. Yes. That's about the most direct I've ever been with a founder.

• 49:40Harry Stebbings?

  You mentioned there about venture not being like necessarily a great asset class in terms of returns. I totally agree with you. Actually, when you look at the historical data on distributions, there's very small windows where liquidity is apparent and strong. And if you don't take advantage of them, it's quite crap, even for the best. How do you think about when to sell?

• 49:58Keith Rabois?

  I'm not sure I have a great answer to this, by the way. And one of the benefits of being a super early stage investor is you don't have to be perfect. I've watched other people make these decisions and I've seen brilliance sometimes. So for example, KV before my days invested $10 billion or roughly $10 billion in the seed round for Square. And after I joined KV, there was always a question, you know, obviously Square went public. When sell, the market didn't really appreciate Square fairly for a long time. So there's lots of debate internally and Vinod had a very strong perspective that proved out to be incredibly valuable, incredibly prescient, predicated on a couple of key dimensions. And I won't, I won't show the exact logic, but fundamentally he had a very strong view that KV should absolutely not sell, period.

• 50:42Keith Rabois?

  And it turned out to produce meaningfully different results based upon his insight. And I remember listening to those debates, I wasn't able to just say, cause I had my own shares, you know, as an executive. So I was completely recused from deciding when to sell. But the logic and his insight was incredibly penetrating and it led to significantly better returns for KV3. Understanding how to think about that is a real superpower, but I think it's very rare and I certainly haven't mastered it.

• 51:13Harry Stebbings?

  Cas, what makes Vinod so special? Him and his brand are like on the ascent again.

• 51:19Keith Rabois?

  There's a couple, there's a couple of ingredients. First, he is the technologist at heart. He really does see the implications of a new technology way before other people do. And can see the implications in society, the implications of business, the disruptive elements, a decade often before the people. He was on the, you know, the AI crusade before I even joined KV in 2013. He published papers about, you know, how AI was going to replace doctors in medicine. And this is like before I joined KV, so way ahead of the curve, really understand, understood the implications, potential of AI and really masters like how the dots connect and spends lots of time with all the leading practitioners, both in academic academia and on the ground, you know, companies. So that's one. Second thing is just pure input.

• 52:03Keith Rabois?

  He still works hard. He loves his craft. He loves working with founders. I've seen him work 8 a.m. to midnight on Sundays, sometimes like taking meetings. You do that for 50 years, it adds up. So like Vinod still takes meetings, still outworks most people over less than half his age.

• 52:19Harry Stebbings?

  What do you think drives Vinod?

• 52:20Keith Rabois?

  He really does love changing the world through technology. It really motivates him. Sometimes he's so good at seeing the implications that you have to find the founder can actually take advantage of the insight, which is there's only so many founders who are amazing. And like sometimes you can't take all your ideas to get them in the hands of world-class founders. That's probably the only thing that frustrates.

• 52:39Harry Stebbings?

  When you think about kind of reflecting on your time with Founder's Fund, before we do a quick fire, what's your biggest takeaway from that time and how it impacted your investing style?

• 52:47Keith Rabois?

  I think you learn, well, I've had the advantage of being a senior person at two different funds. And I think what you learn from that experience is what's endemic to venture. There are fundamentals about our business that are basically baked into the business. And then what are optional decisions around culture, decision-making, hiring? And then how can you tease those out to be more successful? So I think having two different vantage points, I hopefully will lock in my brain. It allows me to manipulate those decisions to be ideal, you know, ideal, to produce the best possible outcome and produce the best possible happiness for me. It's very rare to have like those kind of unique vantage points.

• 53:28Keith Rabois?

  So that's my takeaway is I mentioned, like, for example, I learned significantly more about growth investing and how to be disciplined about figuring out the valuation for a high potential company, et cetera. That I'll take with me. But just how do you make decisions? What's the best way to make decisions? How much time should you spend in a partner meeting versus not? What are the benefits of spending eight hours a week in a partner meeting versus spending 30 minutes a week? Where's that fine line? You know, where's the diminishing marginal returns, et cetera?

• 53:53Harry Stebbings?

  Did kids change your mindset, Keith, becoming a father?

• 53:57Keith Rabois?

  I think there's a couple of epiphanies you have at the minimum. I strongly believe, but have watched it already. My kids are two and a half years old, that people are much more baked and impressionable at earlier ages that dictate how they are when they grow up at much earlier ages than people realize. They absorb so much. And even if they can't communicate back to you what they're absorbing, they are absolutely absorbing. Their brain, it's like, you know, in any world, their inputs are Kind of like training their brain in a kind of machine for an extent. And so you want to be very careful and very thoughtful about what those inputs are, even though most parents are not.

• 54:39Keith Rabois?

  Incredibly conscious about that and just watching what they've already been able to learn, absorb, that started almost like from day one.

• 54:47Harry Stebbings?

  Do you feel the weight of that responsibility?

• 54:50Keith Rabois?

  Oh, absolutely. Like, for example, the downside of having access to resources, like, you know, money, et cetera, is I feel the weight of anti entitlement. I think about this every day of how do we have kids that are not entitled? Because it's natural, like they have a lot of benefits. I want them to have the work ethic of someone who has nothing.

• 55:11Harry Stebbings?

  How do you think about doing that? I chatted to David at New Bank and he was like, it's the hardest thing I think I have to deal with.

• 55:17Keith Rabois?

  I've actually discussed this with a lot of people who've seen, you know, people that have watched raise kids that I think are really, you know, successful and inspiring. And asked them very specifically, what'd you do, what'd you not do, what'd you think about, what'd you not, and try to borrow some ideas. But it's a complicated topic, but I'm stressed out about it every day.

• 55:37Harry Stebbings?

  I worry with kids that I will not be present. Like, if I want to do what I do to the best and I want to win, just like you, you have to fucking give it everything and you have to be an absolute monster.

• 55:48Keith Rabois?

  Well, I think there's definitely important ingredients to success. You need to be thoughtful about what's most important to you in achieving success. But people who have irrational success, top 10 basis points, one basis point in any field are absolutely making trade off decisions, hopefully intentionally.

• 56:08Harry Stebbings?

  You can be like eight out of 10 good and be there for dinner, I think. But if you want to be like 9.9 out of 10, which you have to be in venture, I don't think you can be home for dinner every night.

• 56:18Keith Rabois?

  I think there are some people who might have been able to somehow do that, but I think they offset it at other times and other ways. And I don't believe there's shortcuts to success. One of the benefits of just, you know, people knowing me in other fields is I get to watch really successful people in music, politics and sports. And the traits of each success are shockingly common, and a lot of it is just pure input.

• 56:41Harry Stebbings?

  Right. Are you ready for a quick fire, my friend?

• 56:43Keith Rabois?

  Let's go.

• 56:44Harry Stebbings?

  Okay, so one from Sam here. What do you think about Bitcoin going forward?

• 56:49Keith Rabois?

  Major question. So my theory was always from 2013 or 14 that adoption of Bitcoin would globally be inversely correlated to the rule of law in a specific market or specific country. I think that's proven to be true. And in fact, I think even in the United States, Bitcoin really took off in terms of valuation, uh, market cap, et cetera, after the election of Trump. And that was preceded by the market as instability or less rule of law. You debate whether that's true or false, but there was a perception. And so I think what happens is in 2024 is somewhat dictates the answer. If people believe the world is more stable, the rule of law is likely

• 57:29Keith Rabois?

  to be more robust, Bitcoin doesn't appreciate. But if the world is more tumultuous, the rule of law takes steps back in major markets, then I think Bitcoin appreciates.

• 57:41Harry Stebbings?

  Keith, which way do you think the world is going to go?

• 57:42Keith Rabois?

  Well, I think 2024 is going to be pretty tumultuous. It's certainly off to that start.

• 57:47Harry Stebbings?

  Is Trump gonna win?

• 57:48Keith Rabois?

  No, you know, as you've probably seen on Twitter, I don't even believe he's going to be the Republican nominee for president.

• 57:53Harry Stebbings?

  Okay, do you think he'll go to prison?

• 57:54Keith Rabois?

  I don't know. You know, one of the things you learn to do when you focus your time, and I focus my time on investing and working with founders and various, I've had to subtract out of my brain a lot of legal interests. Like, I used to be a pretty damn good lawyer or litigator, and I used to have intellectual curiosity about a lot of topics in law. I haven't read all the complaints, I haven't focused on them, I know they exist, et cetera, I know the general arc of them, but I don't have a strong opinion about the quality of the cases and the likely outcome.

• 58:24Harry Stebbings?

  Did Figma kill M and A in 2024?

• 58:26Keith Rabois?

  Well, I don't think it's Figma caught Figma. I think Figma in some ways was easier case for the government in the FTC, which has been very aggressive than many other cases. You know, Figma is competitive with Adobe's products. Like, at the end of the day, that's not like a stretch, where the FTC has been taking some crazy positions based upon, you know, 50, 60, 70, 80 years of American jurisprudence. They've been really confronting some acquisitions that really don't have market overlap. This one seems down, much more down the middle. As did Plaid and Visa. Um, I think that one, a normal conservative antitrust lawyer like me, like I grew up as an antitrust lawyer, I could see bringing that case. I can also

• 59:07Keith Rabois?

  see bringing the Adobe Figma case. Most of the other stuff the FTC does seems like ridiculous.

• 59:12Harry Stebbings?

  Will IPO windows open again in 2024?

• 59:16Keith Rabois?

  Oh, absolutely. So I don't believe IPO windows really close or open. I think just the criteria for success is different in that, you know, what the bar is on, let's say, revenue or what the bar is on your unit economics.

• 59:29Harry Stebbings?

  But as a founder, do you think you want to go out? You mentioned, John, like as a strive, why would I go out in 24? I'm going to get.

• 59:34Keith Rabois?

  I think most companies are better off going public early, period. And so I still prescribe that. I still advise that. I hope, you know, a lot of the companies I work with will take advantage of that device.

• 59:45Harry Stebbings?

  Where would you, could you get better as an investor, Keith?

• 59:49Keith Rabois?

  Oh, so my biggest flaw, and you know, if you have any solutions, I'm all ears because it's very persistent. Is the hardest part for me is deciding which first meetings to take. Like, you know, you get a large amount of inbound interest, introductions, et cetera. And deciding of that pool, you can't take them all. It's like not possible in like C to literally meet every company. Whereas the growth people can meet every company that's ready for a growth round. You have to decide, and I have made several bad mistakes historically as an angel investor. As a professional, I've seen declining some meetings. Once you get me in the room with founders, I've made those calls really, really well.

• 1:00:29Keith Rabois?

  Like I was mentioning the other day that I'm not sure I've ever passed on somebody that's turned out to be building a multi-billion dollar company. But I have definitely declined meetings for companies that turned out to be good. I don't know how to, I don't know how to solve this. Like, that's the problem is you can try, like, take more meetings, but then is your brain really sharp? You could try to delegate it, but if your founder taste is off, like the person you delegate to isn't really helping.

• 1:00:54Harry Stebbings?

  I would say yes for two things. One, like, I mean, this in the nicest way. If someone I hugely respect or like sends me something, I'll jump on it that day and do it myself. Or if it's something where I love it, where like you may do with fintech or payments or whatever that may be specifically related to your business. I'll jump on it and kind of everything else. I just have. This sounds awful, but like a person in the team who just means everything else. And that way I feel no guilt on like, will we miss it? Because if it's great, send it back to me.

• 1:01:20Keith Rabois?

  But, but I, I have guilt. I definitely try to find, I'm trying to find like a better way to do it. But, and you know, and Roloff mentioned this to me. I remember talking to him a year after he joined Sequoia, it was probably like 2004. And we had coffee and I said, what's the hardest part of the job? And he said, deciding which first meetings to take.

• 1:01:39Harry Stebbings?

  Where would you send your kids to college? Samir again.

• 1:01:42Keith Rabois?

  Uh, Thiel Fellowship. We're definitely on the Thiel Fellowship crusade. Uh, you know, I've been tweeting about it. I mentioned Peter recently that I think that was probably the most important thing he's done. Um, you know, I think hopefully they want to, they want to achieve in their own way. And I think Thiel Fellowship is a great way, you know, to cultivate those values.

• 1:02:02Harry Stebbings?

  Do you think Europe is descending into a retirement home?

• 1:02:08Keith Rabois?

  You know, Larry Summers quote is still pretty good that Europe's a museum. I think that's probably pretty apt.

• 1:02:13Harry Stebbings?

  Is there anything I could do better, Keith? You've known me for a few years.

• 1:02:17Keith Rabois?

  Oh, wow. It seems like the combination of, uh, you know, content plus investing is working really well. It is differentiated, as we talked about. There's not that many people who do it, period. And so it's a cohesive, coherent, unique strategy, which is I think how you get alpha in venture. So that's great. The guest quality is obviously awesome. So yeah, no, I'd keep going. Like if you have a strategy, keep doing, you know, keep, keep chasing it. Eventually all strategies and venture, people learn that they're effective and can reverse engineer them. But you may have a five or 10 year window before that's the case.

• 1:02:50Harry Stebbings?

  Final one for you, my friend. If we think about Keith 10 years out, is Keith at KV then? Is Keith doing his own fun then? Is Keith chilling? What's Keith?

• 1:02:59Keith Rabois?

  Wow. I think the two most obvious components to answer are I would definitely not be chilling. And I will not do my own fund. Will I do something outside technology? That's a, you know, open question. Should I, will I, will I one day do something that's very different at some point in my life? Maybe.

• 1:03:17Harry Stebbings?

  Did the KV LPs know that you were joining when they invested?

• 1:03:21Keith Rabois?

  Oh, definitely not. The funds were all closed.

• 1:03:23Harry Stebbings?

  Ah, they must be happy then.

• 1:03:26Keith Rabois?

  Hopefully. I know so, I don't know them all, but you know, obviously there's a good group from six years ago. There's a good overlap actually with FFLPs that I know pretty well too. So hopefully, hopefully they're happy. I actually enjoy meeting with LPs and brainstorming with them.

• 1:03:41Harry Stebbings?

  Keith, I so enjoyed this. Thank you so much for doing it and I always love our chats.

• 1:03:45Keith Rabois?

  Pleasure to be back.

• 1:03:48Harry Stebbings?

  I mean, what a fantastic discussion that was. If you want to see the full video, you can check it out on YouTube by searching for 20VC. I always love to see you there. But before we leave you today, there's no shortage of helpful AI tools out there. But using them means switching back and forth between yet another digital tool. What was supposed to simplify your workflow just made it way more complicated. Unless of course, you're in Notion. In Notion, you can automate the tedious tasks like summarizing meeting notes or finding next steps, really freeing you up to do the deep work that we all want to do. And that's why Notion is used by over 50%, 50% of Fortune 500 companies. And teams that use Notion send less emails, cancel more meetings and reduce spending on tools.

• 1:04:32Harry Stebbings?

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• 1:06:00Harry Stebbings?

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