20VC: Garry Tan on The Biggest Takeaways From Advising 700 Companies @ Y Combinator & Why Now Is The Golden Age For The Early Stage?

Garry Tan is a Co-Founder and Managing Partner @ Initialized Capital, one of Silicon Valleys leading early stage seed funds. Prior to founding Initialized, Garry was a Partner at Y Combinator where he invested in and directly worked with over 700 companies in 5 years from the earliest possible stage, often just an idea. Garry's portfolio includes the likes of previous guests Tilt, Eero, Flexport, LendUp and many more incredible companies. Before being at YC, Garry Co-Founded Posterous and helped build it to a world-class website used by millions, ultimately acquired by Twitter. Garry also co-founded the engineering team for Palantir Technology's quant finance analysis platform. In Today’s Episode You Will Learn: 1.) How Garry made the transition from Founder @ PostHaven to YC Partner to Initialized GP? 2.) What were Garry's biggest takeaways from advising 700 startups at YC that he has taken with him to Initialized? 3.) Why does Garry believe now is the golden age for early stage investing? What opportunity does the mass of late stage capital provide the early stage? 4.) How does Garry approach desired ownership? What level of ownership provides incentive for a VC to work whilst also allowing collaboration with other VCs in a round? 5.) What are Garry's thoughts on the rise of thematic investing? Why does he not believe it to be optimal at the seed stage? Items Mentioned In Today’s Show: Garry’s Fave Blog: SaaStr Garry’s Fave Book: Chaos Monkeys As always you can follow Harry, The Twenty Minute VC and Garry on Twitter here! Likewise, you can follow Harry on Snapchat here for mojito madness and all things 20VC. Pearl believes the latest automotive technology should be available to every driver – whether it’s time for you to buy a new car or not. RearVision is our first step in driving this commitment forward. Pearl RearVision is the only wireless backup camera and alert system that installs in minutes and updates throughout its lifetime. Pearl literally takes less than 10minutes to install and is completely wireless because it’s solar powered. Since RearVision is software based, we’re able to push updates and new features over the Pearl App in the exact same way you receive updates for other apps on your phone. Pearl RearVision is perfect for anyone who wants to upgrade their car in minutes. Pearl RearVision is $499.99 and available at PearlAuto.com. It’s also available on Amazon and through Crutchfield. Xero is beautiful, easy-to- use online accounting software for small businesses. With Xero, you can easily manage your accounting anytime, anywhere from your computer or mobile device. When you add Xero to your small business you are able to: Send online invoices and get paid faster. Get an instant view of your cash flow. Track your payroll and keep tabs on your inventory. Partner with your accountant and bookkeeper in real time whenever you like. You can also customize your Xero experience with over five hundred business apps, including advanced solutions for point-of- sale, time tracking, ecommerce and more. Sign up for a free thirty-day trial at xero.com/20vc

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

• 0:00Harry Stebbings?

  Welcome back to the 20 Minute VC in this feature week of one of the Valley's hottest seed funds, with me, Harry Stebbings, at H Stebbings on Snapchat, or found blogging at mojito vc.com. Now, if you haven't heard Monday's episode with Alexis Ohanian, that really is a must, because today we are joined by Alexis's co-founder at Initialized, Gary Tan. Now, as for Gary, prior to founding Initialized, Gary was a partner at Y Combinator, where he invested in and directly worked with over 700 companies in five years, from the earliest possible stage, often just an idea. Now, Gary's portfolio includes the likes of previous guests Tilt, Eero, Flexport, LendUp, and many more incredible companies. And before being at YC, Gary co-founded Posterous, and helped build it to a world-class website used by millions, which was ultimately acquired by Twitter.

• 0:43Harry Stebbings?

  Gary also co-founded the engineering team for Palantir Technologies' quant finance analysis platform. I do also want to say, from speaking to lots of different people in preparation for this interview, all I heard was how much Gary adds to the founder ecosystem, and it was so brilliant to hear. And a huge thank you to Judith Elsia at Weathergauge Capital for the intro to Gary today, without which the show would not have been possible. But before we meet one of the Valley's most loved VCs, what if accounting could be easy, efficient, maybe even enjoyable? Well, that's where Xero come in. Xero is beautiful, easy-to-use online accounting software for small businesses. With Xero, you can easily manage your accounting anytime, anywhere, from your computer or mobile device. When you add Xero to your small business, you're able to: Send online invoices and get paid faster, Get an instant view of your cash flow,

• 1:27Harry Stebbings?

  Track your payroll and keep tabs on your inventory, Partner with your accountant and bookkeeper in real time, whenever you like. You can even customize your Xero experience with over 500 business apps, including advanced solutions for point-of-sale, time-tracking, e-commerce, and more. It's no wonder over 860,000 customers in more than 180 countries use Xero. So sign up for a free 30-day trial at xero.com/20vc. That's xero.com/20vc. And now the books are in order, you might have some extra dollar to spend. And what better way to do that than with Pearl? Now, Pearl believes the latest automotive technology should be available to every driver, whether it's time for you to buy a new car or not. Pearl Revision is their first step in driving this commitment forward.

• 2:10Harry Stebbings?

  R Vision is the only wireless backup camera and alert system that installs in minutes and updates throughout its lifetime. Pearl literally takes less than 10 minutes to install and is completely wireless because it's solar powered. Since R Vision is software-based, it's also able to push updates and new features over the Pearl app in the exact same way you receive updates for other apps on your phone now. Pearl R Vision is perfect for anyone who wants to upgrade their car in minutes and costs $499 and is available at pearlauto.com or amazon.com or through Crutchfield. However, it's now time for me to hand over the mic to the main man Gary Tan, co-founder at initialized capital.

• 2:51Speaker 01

  You have now arrived at your destination.

• 2:54Harry Stebbings?

  Gary, such a pleasure to have you on the 20 minute VC stay. Huge thanks to Judith at Weather gauge for the intro, but thank you so much for joining me stay Gary.

• 3:01Speaker 02

  Thank you so much for having me.

• 3:03Harry Stebbings?

  Now, I'd love to get started today by discussing a little bit about you and how you made your way into the the world of early-stage startup investing.

• 3:10Speaker 02

  It was actually honestly pretty accidental. I was just a Bay Area kid growing up sort of in the shadow of Silicon Valley and I got my first job opening up the Yellow Pages to the internet section of the phone book and just started calling to get my first job. So I started making webpages and then learned to code from that back in the late 90s and then just kind of ended up at Stanford studying computer science at the right time to do that. So a lot of it feels very serendipitous. And then the funny thing that happened was obviously Stanford in 99 through 03 turned out to be a very ripe time for people making really powerful and influential software companies, though none of us knew it at the time.

• 3:51Speaker 02

  So my college basically fraternity brother started my company that now is quite big, but at the time we didn't really know what it would be called Talenteer and they were working with Peter Thiel early on and I was one year out of school working at Microsoft at the time and I got the call from Peter saying, hey, come on down and we're starting a company. We'd like you to be one of the first engineers and flew down to have dinner with him about the same time that. He wrote the $500,000 check to Facebook. So he was certainly not the billionaire demigod that he is today, yet. But everyone knew who he was and knew he was a truly great entrepreneur. So to me, it feels very much that an opportunity came out to seek me.

• 4:36Speaker 02

  And sometimes, as a 23-year-old coming out of college, who didn't really understand startups at the time, you make the wrong choice, as I did. And I said, "Thank you very much, Mr. Teal, but no, I might make it to level 60 at Microsoft." So I turned down that shot.

• 4:51Harry Stebbings?

  That's frustrating.

• 4:53Speaker 02

  Yeah, which, you know, on the other hand, anyone spending any amount of time in Silicon Valley has that happen to them more or less over and over again. The trick, I think, is to just say yes enough.

• 5:04Harry Stebbings?

  Say yes to everything. But then how did that translate then into the early-stage investing then?

• 5:09Speaker 02

  Yeah, so I ended up joining as employee number 10 instead about a year later. So they were unsuccessful with me to get me to quit my entry-level job at Microsoft, but they were able to get a number of our mutual, close friends. And a year later, I came down, actually for a wedding, and visited the office and said, "Oh, my goodness, I've made a horrible mistake." So better late than never, and I got to join then and build sort of a product team from scratch. So got to work on a new 1.0 product that was the Palantir Finance product that was sold to hedge funds and financial institutions. And sort of build a team from scratch and then also design the logo. So at that point, I was kind of hooked. I just suddenly really understood the kind of magic

• 5:52Speaker 02

  that really can only happen in Silicon Valley to a certain extent. Small teams of super smart people can actually make software that goes out and makes a really, really big impact out there. So I got the bug myself, having seen my friends create Palantir, that I could probably do this too. And so another friend of mine from college and I decided to start a company in the blogging space. And by 2008, Y Combinator was kind of the place where anyone who was a great product person or an engineer, you knew or you knew of friends who were going through, who'd gone through that program and became successful through it. So we applied and got in back in 08. Ended up building that into a top two fifty site and Twitter ended up buying that much later.

• 6:35Speaker 02

  But that was kind of my intro to Y C and it really helped us quite a lot. A lot of friends who started companies without Y C and it's really kind of a long road. And for very obvious reasons, honestly, like you just don't know who you can trust. You go to your average meetup or hangout or dinner or networking event. And it's basically people running around always with a happy face on saying, how are you doing? We're doing great. We're killing it. How are you doing? And we're also killing it. And so those are the kind of events and meetings that happen 10,000 times a day. And, you know, nobody gets any real value out of it because they're not real. And what we got at Y C was basically real talk.

• 7:17Speaker 02

  You know, you and your batchmates were able to actually share what was really going on that day. Mainly because you could trust them. And then that turned out to be just massively helpful in all sorts of ways. Not just around fundraising, but around how to acquire users, how to deal with losing your best customer, how to deal with bad press, how to deal with co-founder issues. All sorts of things that normally you have very few people to talk to about. And that helped us a ton. A roundabout way of saying, you know, basically in 2011, Y C was so powerful and valuable for us that when I heard that they were looking for a designer, I just raised my hand and I said, you know, I'd love to help out. And that turned out to be right when Y C went from, you know, one, you're lucky to your good, I would say.

• 8:00Speaker 02

  I remember in oh eight going out and pitching V C's saying, yeah, we're recent graduates of Y C. And they would say, why the heck did you do that? You're a Stanford grad, you have startup experience, you didn't have to. And what we understood at that time that everyone now has come around to is that it takes a village to create a great startup. And Y C turns out to be one of the most powerful ecosystems for that. And I think that's why perennially now it's like that magnet. When I had the chance to go work for Y C, I just said, absolutely, like Peachy and Jessica, incredible. Super instrumental in our success and the success of very many founders. So I feel like I lucked into that and along the way became an angel investor and then a more institutional seed investor.

• 8:43Harry Stebbings?

  And now a more institutional seed investor with initialized. And with with new funds, you've just raised a new fund, so huge congratulations on that.

• 8:51Speaker 02

  Thank you.

• 8:51Harry Stebbings?

  But often people look to to new platforms and kind of transformational shifts, AI, bots, VR, AR, any of the above. So what's your take on these fundamental platform shifts that everyone in our industry is really so focused on?

• 9:06Speaker 02

  Yeah, absolutely. I mean, we're spending a lot of time with as many teams as we can in the space. On the flip side, we kind of worry that 2016 is actually a lot like 2004, which is when I, you know, turned down the shot to join Palantir as first employee. Around that time, I personally went out and sought out a position with mobile devices. By then I had spent like four or five years writing basically programmatic web software. And what I should have done was kept doing that. But instead, you know, in 2004, I and quite a lot of investors and smart engineers were chasing the next thing. So investing in Windows Mobile and J2ME and BlackBerry because we said, well, the boom is over, the bust was pretty bad, maybe the web is dead.

• 9:48Speaker 02

  But the ironic thing is, in 2004, Facebook was new. You know, Facebook, that was the time to continue to invest in the web. And so for me, that was a lesson that I don't intend to repeat. I really do think that just software itself, the platforms that we have right now, they're really sort of invading these late adopter industries. And we see it with things like Flexport or one of our favorite companies is Bannerman in the security guard space.

• 10:14Harry Stebbings?

  I've interviewed both Flexport and Bannerman, so I know the place.

• 10:17Speaker 02

  Exactly. And they're some of my favorite founders too, taking tackling markets that they're not really adopter markets, but software eats the world and we continue to really heavily invest there. On the flip side, the funny thing about AR, VR is probably the most valuable thing to invest in, as Sequoia already did, which was Unity. That happened well in advance of any of those terms coming up through the 3D gaming world.

• 10:41Harry Stebbings?

  I had David Helgerson on the show too.

• 10:44Speaker 02

  That's awesome.

• 10:44Harry Stebbings?

  But then, but then talk to me about the dangers of investing in these pretty untested platforms.

• 10:50Speaker 02

  Yeah, I mean, that's the worry. You could, if you were. Writing J two M E software and Windows Mobile software in two thousand three to two thousand five, you would hope that early lead would translate, but it really didn't because, you know, iOS was a totally different platform, the hardware is totally different. And in fact, there are a lot of, quite a lot of companies that got left behind because they didn't switch to the iPhone platform when it arrived finally in two thousand nine. And so, you know, we frankly are waiting for that platform and it's anyone's guess when that will be.

• 11:20Harry Stebbings?

  Absolutely. But we mentioned the new fund there, pre-platform talk. And a lot of people are saying that there's simply too much capital chasing too few deals. I'm intrigued to you as a, as a recent fundraiser as to what you would say to these people personally.

• 11:34Speaker 02

  Yeah, I think that's a pretty common trope, you know, too much money chasing too few teams and too few ideas. So I disagree on the teams part. I actually think that we're in this crazy macro shift that seems pretty durable for now around just massive amounts of capital that desperately is seeking yield. And so when you're in that situation, you're looking for growth and growth of any kind. And it turns out on the flip side, at the front lines of super early-stage investing, certainly through my five years at Y C and through just angel and seed investing, it's clear that there are really, really smart people out there who can make incredible software. You know, it's, it going back to, it really is about those designers, those engineers,

• 12:17Speaker 02

  the product people who are making the things that all of us end up using. There are really quite a few of those. And as an early-stage investor, the best possible job is being able to go out, find those teams, help them actually point themselves at the right ideas and then create really, really valuable businesses. So I think there is a lot of money, but the key thing that we believe and that I think Y C has really shown is that you can take people who are totally disconnected, people who have no network per se, and then put them in a room with other people who are smart. Basically help mint startups that become very, very dominant that maybe wouldn't have done it without that organization. And I think, you know, if you, even if you look at Y C wins, you could certainly say Dropbox,

• 13:01Speaker 02

  you could certainly say Airbnb, you could certainly point to quite a few companies where that is true.

• 13:07Harry Stebbings?

  And you spoke about the surplus capital in the market there. I'm intrigued to hear your thoughts then on the recent mega fundraisers of the lightest of Andreessen, Greylock, Kleiner. What's your take on the billion dollar plus funds? And the kind of surrounding worrisome fund economics?

• 13:22Speaker 02

  Yeah, absolutely. I think the bigger shift is, I mean, this is what everyone's talking about. It's that IPOs don't happen until much, much later. And I think one thing to really flag is actually what Eric Ries is doing right now with Long Term Stock Exchange. What he identified actually is, we think, the root cause of what's happening. It's that the rise of buyout funds, PE funds, has caused, well, this delaying of the IPO. And frankly, you don't really want IPO at a valuation of under a billion dollars because then you become sort of in the in the crosshairs of quite a few PE and buyout and sort of activist investor funds that are able to buy, basically they treat these financial assets as just purely assets to sort of exploit to the max.

• 14:06Speaker 02

  And so on the flip side, you know, if you're the founder of an early stage company, you really don't want that to happen to you. And then there are lots of other reasons around why people aren't IPOing. But we think that if you look at the Wiltshire 5000, there actually aren't 5000 companies in the Wiltshire 5000. There are only 3500 today. And that's more or less a reflection of the public markets contracting more so than the private markets. You know, the private markets naturally have to expand. And so I think that's the biggest sort of shift that we're seeing. The classic Series A funds are shifting later. They're sort of funding people at the fourth or fifth stage of funding is, I think, what Andreessen recently pointed out in the annual meeting.

• 14:49Harry Stebbings?

  Yeah.

• 14:50Speaker 02

  And that's just really interesting. On the other hand, I think that that's great because it's the golden age for the micro VC, the golden age for accelerators and for YC. Because there's more money at the later stage, well, we at the early stage have to work that much harder to make sure that there are great companies for them to invest in.

• 15:08Harry Stebbings?

  And you've mentioned YC a lot in the interview. Obviously, it was a very formative part of your development, your self-development. And you advised over 700 startups at YC. And have invested in more than a hundred since initialized. So I have to ask that, and this is a question from Judith, one of your LPs, Judith at Weathergauge. What were the big takeaways from that experience with Y C, seeing so many incredible companies? And what were the commonalities in the very successful teams? So let's start with the takeaways.

• 15:35Speaker 02

  Yeah, of course. I think the most surprising thing is how long, well, when you're talking about working with founders who are new on network, they're often, you know, not only is it often the first time that they start companies, but it's actually the first time they've managed people, sometimes the first time they've ever shipped a product. So as a result, you know, one of the more remarkable things is that there are companies that they take two or three years even to get to product market fit. And so that's something that you just have to be prepared for at the earliest stage. But on the flip side, when they get the right mentorship, when they get the right people around them, and they have the capital to get there, these are founders who turn into absolutely fantastic CEOs.

• 16:17Speaker 02

  And when they hit their stride, they really, really get to create really, really powerful businesses. So I think that's the craziest thing is that people who have basically no experience building a product, managing people over the course of years will actually be able to do it.

• 16:32Harry Stebbings?

  I think Zuckerberg is a brilliant example, actually.

• 16:34Speaker 02

  Yeah, exactly.

• 16:35Harry Stebbings?

  So that's the takeaway. And then in terms of kind of calibrating the hundreds of founders and teams, what are the commonalities in those that are successful then?

• 16:43Speaker 02

  Yeah, I think I kind of have to go back to, well, it's a little bit of a trope in the valley as well, but mission orientation, like my favorite question to ask people is like, why are you working on this thing?

• 16:53Harry Stebbings?

  What's the right answer?

• 16:55Speaker 02

  Usually it's something that comes out of their own personal experience. So I just met with a founder, Y C alum, actually working on his next thing. Just got out of the meeting with him now, and they're focused on healthcare. And it really kind of comes back to his aging parents and sort of identifying that there's this boomer generation that they suffer from pretty severe kind of chronic health issues. The healthcare industry right now is not really properly oriented towards chronic care. They're really oriented towards very, very acute care. That's what I really like when I hear. Something very personal that orients them towards a mission. It's not about making money. It's not about power or fame. It's really about being able to create a thing for other people around them and identifying that, well, this is what society needs.

• 17:40Speaker 02

  This is what a large set of people really, really need.

• 17:43Harry Stebbings?

  And DC said about a large set there because a hundred Y C companies funded by initialized is is a large amount. So, so I'd love to hear how that makes you view the short song goal versus the kind of percentage owned dilemma for you then.

• 17:56Speaker 02

  Yeah, absolutely. I think that the classic issue is that you just actually have to invest in enough companies such that you have the shot at hitting the Dropbox or the Airbnb because this industry is extremely power law. And so, you know, I think that for us, the right trade off is we think that we can work with about 20 companies per year and really spend quite a lot of time with them, biweekly to monthly meetings all the way through until they're Series A. I think that that's the right trade off. So if you fund too many companies, you actually literally cannot spend enough time to make a difference for them. And then if you fund too few companies, you might actually just completely whiff on what that next really, really transformational business is.

• 18:39Speaker 02

  You just don't get a change, it doesn't hit your bar and you just completely miss it. You play it a little bit too safe or maybe you don't take enough risk.

• 18:47Harry Stebbings?

  Would you say this is a spray and pray model?

• 18:49Speaker 02

  In terms of our model or?

• 18:50Harry Stebbings?

  In terms of your model, in terms of deploying enough capital in enough startups to make sure the moonshots happen.

• 18:56Speaker 02

  I think the pray, the pray part is what doesn't happen because it's more like, I guess, invest and work. I don't know. Basically pray, you know, the passive, the passive part of that verb or pray is that you don't have a way to affect the company. You don't have a way to direct the founder to the right sort of execution and you can't actually help them. And I think the spray part is really investing in too many companies to the point where you can't help. And so I think for us, we're trying not to do that. If you're spraying and praying, it's not going to work. You can't help the founders and you can't keep in touch to actually increase their chance of success.

• 19:33Harry Stebbings?

  What level of ownership do you think is required to generate the alpha required to? Return the fund, which is always what we're trying to do with deals.

• 19:40Speaker 02

  Yeah, absolutely. We went back and kind of looked historically at what people do for seed rounds. My favorite thing about seed, actually, and it fits our temperament really, is that we love to be super collaborative, especially with other investors. So 5% ownership at the initial check size means that we're usually among the biggest checks in that seed round, if not the biggest. Between five, if we can target 5 to 10% ownership initially, that's still enough to bring in the Aspie Angels, the Fuel Capitals, or other great investors that we especially like to work with. And then on the flip side, that's enough such that we're properly invested, we're going to keep working with them, and then at their later rounds, we can help them out as well.

• 20:19Harry Stebbings?

  Absolutely. That's a nice sweet spot there. And in terms of, we spoke about portfolio optimization with the potential spray and pray slash invest and work model. But how do you present thematic investing at seed? Is this the best way to build pattern recognition?

• 20:35Speaker 02

  Yeah, I mean, the hard part about seed is that there are very few patterns, simply because you're at the earliest possible stage. One thing that we learned at YC is that if you are mainly about the founders first, then, related aside, a lot of founders come to me and ask, well, what's the hot field? What should I be working on? And I have to tell them, that's backwards, right? The hot trends basically happen when smart people apply themselves to an idea or a market that really, really needs what they're building. And frankly, that lesson, actually going back to my, you know, why did I turn down being first engineer at Palantir? I spent a lot of time trying to figure that out, and it actually came out of this thinking. This is why I'm very, very careful about it, that when I was 23

• 21:20Speaker 02

  and I got an offer from one of the best investors in Silicon Valley, proven operator, plus my best friends from college who I had worked on other projects with, I couldn't imagine a better co-founding team for me to work with, Stephen Cohen and Joe Lonsdale. Why did I say no? And it actually kind of went back to something as simple as that, that I was waiting for the universe to tell me what was going to be hot. And, you know, TechCrunch didn't exist at the time, maybe I was looking At the Wall Street Journal tech section, or I was looking at media to tell me what was hot, to tell me this is what you should be working on. And at the precipice of starting this twenty billion dollar company, I was thinking, this is a team that had never sold enterprise software before.

• 22:04Speaker 02

  And I've read online that enterprise software has fallen deeply out of favor. And so that was just the wrong thing to think. At the end of the day, what is sort of common knowledge is basically the second or third hand retelling of something that super smart people were working on in a basement six months or nine months before.

• 22:22Harry Stebbings?

  Yeah.

• 22:23Speaker 02

  So to us, that's sort of in a nutshell, why you can't do seed investing. Or if you're an early employee trying to decide whether you want to take that early startup offer, you can't rely on what TechCrunch is saying. You can't rely on what people are talking about at the parties. Because literally what you're trying to do is make a thing that six or nine months down the road, people will be talking about. That's just exactly what we're trying to do at the early stage is you have to just evaluate a priori, like who's the team, what's the market, do you trust them, right? And why, who's investing it? And are they going to help? Like, those are base level questions that matter when it comes to evaluating a seed company. And so, and if we didn't do it that way, like YC and us,

• 23:08Speaker 02

  there's no way we could have invested in Coinbase right when cryptocurrency, right when Bitcoin was coming up. And there's no way we could have invested in Airware right when drones were coming up. We saw those companies well in advance of the Wall Street Journal article. In Coinbase's case, my partner Alexis actually helped make that first mainstream press article happen with that press intro. So it's just funny how that works.

• 23:31Harry Stebbings?

  I'd love to dive into a quick fire round with you now, though. So I say a short statement and then you hit me with your immediate thoughts. Sixty seconds per one, how does that sound?

• 23:39Speaker 02

  Okay, sounds great.

• 23:40Harry Stebbings?

  So let's do your favorite book and why.

• 23:42Speaker 02

  My favorite book right now is Chaos Monkeys, actually.

• 23:45Harry Stebbings?

  God, really? You know, I read it on holiday. I was kind of desperately nervous as I read people I knew and I'd interviewed in there. And you're going, oh, but no, I loved it. And why did you love it?

• 23:54Speaker 02

  I think that he just captured the underbelly, the thing that people never talk about. And then if we expose the underbelly, then maybe we can make it better.

• 24:02Harry Stebbings?

  One thing's for sure, he's never getting a job again. But then let's do the vision for initialized. Is it going to be the mega fund in 10 years' time? Or are we capping it like a benchmark or a foundry?

• 24:14Speaker 02

  Yeah, I think we should be disciplined around, well, we really should focus on the zero to 20 employee sort of stage. I think there are tons and tons of people out there who are fantastically great scaling, operator, like series A and later investors. But for us, we are always obsessed with people starting out and then just helping them avoid the 10,000 landmines that are inevitably right there. And we believe that if you avoid the landmines, well, it makes you that much more likely to succeed. And when these things succeed, people get jobs, amazing solution, products, things happen. So we're very mission oriented around like specifically that. Let's help founders who are like us. And so that means we have to stay at the zero to 20 employee stage. If we went later, then we just wouldn't be able to do our best work.

• 24:58Harry Stebbings?

  The biggest mentor to you and how it came about?

• 25:00Speaker 02

  I think the obvious one is Paul Graham in that he was, has always been very, very no nonsense. Everything that made Y C great really came from Paul and Jessica. I think that just him as a, as a role model has been, it's just been super valuable for me because I really want everything that I do to be in that vein, like no BS, no marketing speak, you know, let's be very, very straightforward and let's be mission oriented, let's be about people and the pragmatism of being able to create things for other people. I mean, probably 10 times a day, I think through the mantra of Y C really is make something people want. And I think even just the clarity of thought of that, I can just meditate on that and

• 25:43Speaker 02

  encourage founders to do the same and good things happen. So I think that's the obvious, obvious choice for me.

• 25:49Harry Stebbings?

  And then favorite blog or newsletter? What's your must reads?

• 25:53Speaker 02

  I've been a huge fan of Jason Lemkin for years.

• 25:55Harry Stebbings?

  No way.

• 25:56Speaker 02

  Yeah.

• 25:57Harry Stebbings?

  Love Jason.

• 25:57Speaker 02

  Jason's the best. Honestly, I've never run an enterprise sales process. I, I wish Posterous actually charged money. That was my blog platform software that I worked on. We probably should have turned it into something that charged for usage and maybe Posterous instead of getting sold could be around today, perhaps a lot like our friends at Weebly, which has always been, you know, they've always been such great role models for us. So, you know, Jason's blog post is so on point. I just love that he came up through Quora and he's very, very insightful.

• 26:28Harry Stebbings?

  Yeah, no, I have to. I've learned so much through working with him. Amazing guy. But then, most recent investment and why you said yes, what was it? Public investment, that is.

• 26:36Speaker 02

  I think the last one was actually long-term stock exchange that we can talk about. But Eric Ries, obviously just a luminary and a huge existential problem for Silicon Valley at large. We're more or less at the worst possible scenario right now. We have no information rights, no liquidity. Evaluation committees at Fidelity and BlackRock basically get to mark things up and down with no information. So it's basically all sentiment. And so Eric Ries and Long Term Stock Exchange is really going out to try to solve that. I love those types of investments because it's a binary one. Either Eric is going to go and create something that kills the NASDAQ or the New York Stock Exchange and deeply disrupts it, or not.

• 27:18Speaker 02

  And then we couldn't really imagine a better founder who can kind of bridge the worlds of legal, the SEC, finance, and the startup world in such a profound way. So I think Eric is really, really on to something and we should all sort of take note.

• 27:33Harry Stebbings?

  Gary, thank you so much for joining me today. As I said, I heard so many wonderful things from the ecosystem. So it was such a pleasure to hear more from you today.

• 27:40Speaker 02

  Thanks so much for having me.

• 27:44Harry Stebbings?

  What a huge pleasure it was to have Gary on the show today and a huge hand to him for giving up the time today to be on the show. Also a massive thanks to Judith at Weather Gauge Capital for the intro to Gary today, without which we would not have been able to conduct the interview. So very grateful for that. And if you love the show today and do not want to leave the world of early-stage investing, then you can follow me on Snapchat at H Stebbings with two Bs, or you can head over to our new blog on mojito vc dot com. I'd absolutely love to hear your thoughts on that one. However, before we leave you today, as I said earlier, accounting was always a real headache for me. And then Xero came along. Now, Xero is beautiful, easy-to-use online accounting software for small businesses. With Xero, you can easily manage your accounting anytime, anywhere, from your computer or mobile device. When you add Xero to your small business, you're able to send online invoices and get paid faster,

• 28:28Harry Stebbings?

  get an instant view of your cash flow, track your payroll and keep tabs on your inventory. You can even partner with your accountant and bookkeeper in real time whenever you like. Also, you can customize your Xero. With over 500 business apps, including advanced solutions for point of sale, time tracking, e-commerce and more. It's no wonder over 860,000 customers in more than 180 countries use Xero. So simply sign up for a free trial at zero.com/20vc. That's zero.com/20vc. And now the books are looking good. You might have some extra dollar to spend. And what better way to do that than with Pearl? Now Pearl believes the latest automotive technology should be available for every driver, whether it's time for you to buy a new car or not. And Pearl Rear Vision is their first step in driving this commitment forward.

• 29:11Harry Stebbings?

  Pearl Rear Vision is the only wireless backup camera and alert system that installs in minutes and updates throughout its lifetime. Pearl literally takes less than 10 minutes to install and is completely wireless because it's solar powered. And since Rear Vision is software based, it's also able to push updates and new features over the Pearl app in the exact same way you receive updates for other apps on your iPhone now. Pearl Rear Vision is perfect for anyone who wants to upgrade their car in minutes and it only costs $499 and is available at pearlauto.com or on amazon.com or through Crutchfield. As always, I so appreciate your support and I cannot wait to bring you Friday's episode with unicorn founder Ryan Smith at Qualtrics.