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Speaker 1

00:00

So why don't we just start with the basic facts. So what is Investor School?

Speaker 2

00:05

Yeah, so Investor School is a four-day class that we're teaching for the very first time here in Mountain View, across the street and in the original Y Combinator building 320. And it's a school that's going to teach the basics of startup investing. So we hope people will come in person.

Speaker 2

00:26

We think there's a lot of demand. So we think we're going to get a lot of folks who want to come, but also doing a live stream. We're going to make it a MOOC, a massively open online course, just like we've done in the past with startup schools. So we're really excited about the potential to give back a whole bunch of the knowledge that we've gained at YC over the years and how to be a really effective angel investor to the community at large.

Speaker 2

00:53

So we create more, better, happier

Speaker 1

00:57

angel investors. And what gave you the impression that folks needed a school?

Speaker 2

01:03

Well, what gives us the impression that folks needed a school is we've seen lots of, shall we say, not so effective behavior and approaches to angel investing. And, you know, we're not being conceited in thinking that. We've seen it in ourselves.

Speaker 2

01:22

For sure. Most of us have at 1 time or another in the partnership at YC been angel investors. And so we know all the missteps. We've done them ourselves.

Speaker 2

01:32

I personally have made so many mistakes angel investing that I feel if nothing else qualified to tell you a whole bunch of things you shouldn't do. So we're trying to help people avoid a lot of the pitfalls and we're also you know there's ways to be a better investor. There's ways to be a worse investor. And we think we can help teach people those.

Speaker 2

01:54

And so again, make them better at their job, even if it's not a job, better at the discipline of angel investing, and that makes it better for the companies in whom they're investing.

Speaker 1

02:04

And is there a particular type of person you're looking for to participate in investor school? Like do they need to have you know been an engineer and had an exit or they just like have some cash that they want to invest? Who are you looking for?

Speaker 2

02:17

Well, the 1 qualification is that you're an accredited investor. And the SEC has a set of rules as to what comprises accreditations in terms of income and wealth. As long as you're accredited, we want everybody.

Speaker 2

02:35

In fact, we actually think this is an opportunity to add greater diversity to the ranks of investors. So yeah, anyone who's accredited, Which is a little bit the equivalent of what you said, is you have some spare cash to invest that you can afford to lose. And you have to be honest about this. This is a very high risk investing paradigm.

Speaker 2

03:01

So if you're going to invest in startup companies, you have to be prepared for extraordinary upside, but also a perhaps more likely downside.

Speaker 1

03:10

And are you giving anyone certain criteria of what they should think about? It's like, this is an approximate amount of money that if you're gonna get started angel investing in the valley You should be ready to start putting down putting to work. Is there a number that you have in mind?

Speaker 2

03:26

I think we'll give some guidelines as to how to think about creating your portfolio. Think about doing asset allocation across that particular portfolio. But how much you invest is a very personal thing.

Speaker 2

03:42

It's sort of how much you will care about losing, how much upsize you want to have, what percentage of a company it's important for you to own, if you think about it that way. So I think the amount that people invest is incredibly variable.

Speaker 1

03:58

There

Speaker 2

03:59

are some minimums, you know. Most people aren't investing $5,000 when they do angel investing. That does happen, but it's unusual.

Speaker 2

04:06

It sort of tends to be a minimum in the tens of thousands of dollars, up to a maximum of, you know, hundreds of thousands of dollars usually.

Speaker 1

04:14

Okay, So maybe we ought to walk through the curriculum in like broad strokes. So where day 1, what are you guys going to start with?

Speaker 2

04:21

Well, day 1, we're going to start with, as you might expect, the basics. Yeah. Sort of how and how you should start, why you should start angel investing.

Speaker 2

04:31

Why do it? What's it about? I'm gonna talk a little bit about the history of investing and where angel investing came from. You know, there didn't used to be such a thing as an angel.

Speaker 2

04:41

There was people pretty much finance companies on their own. That's how Silicon Valley got started. HP was founded in a garage. It was $538 of capital that Dave Packard and Bill Hewlett scrounged together to build an audio oscillator.

Speaker 2

04:58

And much of Silicon Valley came from graduates of the Hewlett Packard School of building products. It was only later that venture capital started, and you had a whole bunch of people coming out to Sand Hill Road and figuring out that they could make lots of money. I mean, there's an early venture firm invested $70,000 in Digital Equipment Corporation. That was 1 of the earliest angel investments and they made $35 million, not angel investments, VC investments.

Speaker 2

05:31

They made $35 million.

Speaker 1

05:33

Yeah, big time.

Speaker 2

05:34

Which is pretty cool.

Speaker 1

05:35

Off 70?

Speaker 2

05:36

Well, that's the kind of return that people look at and say, I want a piece of that action. So a lot of companies set up on Sand Hill Road and you had sort of the classic early VCs from Draper starting Sutter Hill, and Kleiner Perkins, and Sequoia all began back in those early days. And so there was sort of An intermediate path to raising capital between putting together your own money, putting money on credit cards, maybe getting friends and family to put a little money in, and then IPO.

Speaker 2

06:10

There was a big gap in between, and venture came and filled in some of that. But eventually what happened was it was harder to get started at a small level. Friends and family, who were kind of the original angels, expanded to be people who really just gave smaller checks, which was really the amount needed right in the very beginning to get a company ready and able to accept venture investing. So I'm going to tell a little bit about that.

Speaker 2

06:36

And then we're going to talk. I'm going to have a couple of partners from YC go over some of the mechanics of startup investing that are a little, frankly, mysterious. How is it that these weird convertible notes work? Used to be when Back in the early days of venture investing you just bought a share of the company equity in the corporation now we have these different instruments that are much cheaper and faster and simpler to use but also a little mysterious So we want to demystify that explain how it works we've we've built up a bunch of standards as to how an angel investor or any sort of investor will interact with founders.

Speaker 2

07:21

There's something we call the handshake protocol, which is how you go about sort of cementing a deal verbally before you do it on documents. We want to cover things like that. So the beginning of the course is sort of getting the-

Speaker 1

07:33

Vocabulary.

Speaker 2

07:34

The vocabulary, getting the, dotting the I's and crossing the T's of how you actually act as an angel investor. How you should think about when you're investing, how much you're gonna own of the company, how dilution works, how cap tables work. All those basics that kind of, you know, you sort of run into and no 1 tells you what's this document they're giving you.

Speaker 1

07:53

But what about even before that? What about evaluating a company if you're a non-technical person who wants to invest in software?

Speaker 2

08:00

Yeah, we're going to get into that. Right in the very beginning, the question is, so you want to invest in a company? How do you learn about the company?

Speaker 2

08:07

Well, yeah, there's actually a simple answer to that you meet with the founders and talk to them So we're gonna quite extensively go into when you go into a meeting with founders how should you conduct that meeting? How should you think about the founder? If I'm meeting with you and we're talking about your company, how do I make judgments about whether this is a company I want to invest in? How should I think about that?

Speaker 2

08:28

So you want to kind of help people through that exact, answer that exact question

Speaker 1

08:31

that you have. So yeah, let's get specific on some of these. Like, you're meeting with a founder for the first time.

Speaker 1

08:37

What's a red flag when you're like, say there are 2 or 3 co-founders, you're talking to them about a product, and it's just, I don't know. What's something that you might spot that you're like, I don't know if I wanna put money into this startup?

Speaker 2

08:51

Well, for me, the very first thing comes with sort of how I read the founder's belief in what they're doing. Okay. If you have this passion, people usually talk about passion.

Speaker 2

09:09

I remember listening to Mike Moore talk about this once and he talked about it being at a different level, like almost an obsession with what you're building and why you're building it. You have to care so deeply that everything that's going to happen to you as a startup founder will be something that you will think nothing of overcoming. Because that's the sure thing. You know that if you don't have the resilience you need, the toughness you need, the determination you need, the belief you need, none of the other things matter.

Speaker 2

09:42

Nothing else. How big the opportunity is, how much of competition there is or isn't, how much money you raise, how smart you are, none of that matters because it won't happen. So that's where I start. And if I can't get past

Speaker 1

09:56

that, none of the

Speaker 2

09:57

other stuff even matters. If I don't get that sense.

Speaker 1

10:02

And are you kind of laying a little trap here and there to see if they'll bite on something? Like, oh, I don't know if they're quite confident enough? Or is it just this vibe someone has?

Speaker 1

10:14

What are you actually looking for?

Speaker 2

10:14

Well, you make it sound sneaky, saying traps and almost underhanded. I don't, I personally, like

Speaker 1

10:20

I do think everyone gets,

Speaker 2

10:21

well yeah, everyone gets different styles. I'm very direct and so what I like to do is I like to push. Okay.

Speaker 2

10:28

So, there's, And it's easy to do after a while because every single idea has a million things that could possibly go wrong with it. And half of those will. So you talk about those and you see how they react to it. How they, as you push on them and you say, well, how could this possibly work?

Speaker 2

10:51

You want to provide ride sharing services to seniors. You know they don't really use their phones. How are you gonna do that, Craig? How are you gonna?

Speaker 2

11:00

And you start to push on those ideas. And so, I mean, I think that a certain amount of this, you can't teach. It's experience. As partners in YC, we've all talked to hundreds, not thousands of companies, right?

Speaker 2

11:15

But we can, I think, illuminate the process and get people started on the right foot? And that's, I think, the way we should think about this. It's a short course. It's 4 days, 2 classes per day.

Speaker 2

11:28

So at sort of 8 sessions total over that 4 day period, it's not a 6 month graduate school investing. I don't even know what you would cover in that. It's enough, I think, to put you on the right road to becoming a fantastic angel investor. And that's our goal,

Speaker 1

11:47

to

Speaker 2

11:47

create more fantastic angel investors. And fantastic means not only do they make the right choices for themselves, they help companies more. They have a better relationship with companies.

Speaker 2

11:58

They make their decisions in a more effective, Timely fashion.

Speaker 1

12:01

Yeah, it's not just a spray-and-pray like show up to demo day spend $200,000 and then hopefully I

Speaker 2

12:07

mean that can be okay Terrible thing for companies generally to get that kind of cash. Yeah, but but I think it's much more useful for companies to get thoughtful investors who invest for the right reason and who are not painful later, who understand the quid pro quo that's going on when you invest and when you get a piece of a company and how you should be interacting with that CEO and founding team henceforth.

Speaker 1

12:39

So from a personal perspective, do you only invest in companies where you feel like you can add more value than your money? Or are you okay just putting money into something you think is attractive, but you don't really know about the space?

Speaker 2

12:52

A lot of people say that they'll only invest in companies, you know, there are all types of people. A lot

Speaker 1

12:57

of people say that and then they put money all over

Speaker 2

12:58

the place. That's true. Well, there's what you say and what you do.

Speaker 2

13:01

But there's all different. There's probably as many different styles of angel investing as there are angels. Me personally, I think I invest when I get excited about a company. And it may be a little egotistical, but I kind of believe that I can always help a company because I've seen so many companies.

Speaker 2

13:30

Now, I've been doing this for coming up on 7 years now, and I've been angel investing 13 years now. This being what I see, and angel investing for longer than that. So as those insurance commercials go, I've seen a thing or 2. So I kind of believe that.

Speaker 2

13:48

But I think that's separate from if you're talking to me and I say, oh my gosh, this guy's amazing, or this girl's amazing. This is an idea. And I'm going to invest. And do I believe I'll be able to help you?

Speaker 2

14:04

Yeah, but you know, there's another perspective that's important to have as an angel investor. Angel investors can, in limited cases, have substantive impact on the companies in which they invest. Yeah. Mostly their impact is marginal.

Speaker 2

14:18

Yep. Minimum. You might meet with a company once a year, twice a year, maybe, and you might give them some really good advice. They're building the company.

Speaker 2

14:28

And sometimes I think angels, or I've heard angels take way too much credit. Again, sometimes angels are very helpful. And I like to think that I've been quite helpful to the companies that I've worked with, but they're building the company. And so if there's a pile of credit for success, 99.9% goes to them and their team.

Speaker 2

14:55

And sometimes to bigger investors who spend a lot more time with them than angel investors, who go on the board and meet with them every quarter or more frequently and help them recruit. And most angels don't spend that much time doing that. At times they do, and some do more than others. But for the most part, I'm honest with myself and know that, like, whereas I can be pretty helpful.

Speaker 2

15:17

The main reason to invest, and it's good to be helpful, and it's good to be that kind of investor, but the main reason is because you believe.

Speaker 1

15:23

And that's why I invest, too. Edith Warren So going back to the vetting process, I heard Naval Ravikant in a startup investing talk from Angel Conf like years ago on the Venture Hacks blog, I think he said something like, it wouldn't be strange if you met with a hundred companies before you made your first angel investment. Do you have a rule of thumb around that?

Speaker 1

15:46

No. No. So it could be the first 1. Yeah.

Speaker 1

15:48

Okay.

Speaker 2

15:49

I'll have a different rule of thumb. Nahl says it wouldn't be strange. What I would argue from personal experience is that you ought to wait just because it's hard to calibrate in the beginning.

Speaker 2

16:05

But at this point, I have no, like I'll meet lots of companies and I know when, and I do think like my calibration's done. I know when I'm interested. In some combination of the founder, the idea, the opportunity, the execution they've had up to then. All those things.

Speaker 2

16:26

But it is true in the very beginning, before you've made your first angel investment, calibrate. So do spend I don't know if it's a hundred or 10 or 15 you should this being said It's being said There are 1 of the reasons people angel invest is surely because they want to be Professor Horowitz at Stanford who invested in Google and became a billionaire doing that. It's nice to be a college, you know, a billionaire college professor. And those companies don't come along very often.

Speaker 2

17:07

And so if for whatever reason you believe that the first company you talk to just might be the next Google or the next Airbnb, it will be painful to let that go. So if you got that belief, now I do think that, the probability is low that you'll ever see 1 of those. If you saw 1 the very first 1, it'd be a strike of lightning. But...

Speaker 1

17:36

But it goes back to what you said already. Like you have to be able to throw the money away, right? So if the first company you see, not throw it away, but like, You know what I mean, right?

Speaker 1

17:46

That's the

Speaker 2

17:46

name of it. You have to be prepared to 0 out that investment. In fact, my default position when I invest in a startup is that that investment is not worth 0.

Speaker 2

17:58

If I pick a number, $25,000 in a company, and then I track that, it's value is 0 until I have more information that it's not. You have to have that.

Speaker 1

18:10

So whether it's the first investment or the 20th investment, you're still gonna feel that pressure when you're about to write a check and you're like, oh, I don't know if this is it. But eventually you're gonna have to pull the trigger. So what other things, how else do you help someone mentally prepare to become an angel investor?

Speaker 1

18:27

What like mental models do you offer? What do you recommend they read?

Speaker 2

18:30

1 of the things we're gonna do in this course, which I'm pretty excited about, is we're gonna get 4 pretty well-known, pretty successful angel investors to come in and kind of tell their stories a little bit, to give what I call angelic advice about how they dealt with that. I do think the bottom line is you gotta do it eventually. And you have to meet with a bunch of founders, you have to think about their companies.

Speaker 2

19:01

Usually it's a good idea to invest in some space that you have some familiarity with so you can actually hopefully make a more educated judgment. And

Speaker 1

19:16

then go for it or not and you'll get better at it. So what else is on the curriculum? What else do we have to look forward to?

Speaker 2

19:24

Well, okay, so I've taught, not much, because again, it's a pretty short curriculum, but We're gonna talk a little bit about how to be a good investor. I brought that up earlier. It's actually shockingly easy to be a terrible investor.

Speaker 2

19:44

And so we wanna talk about what it means to be a good investor and how you should think about that and how you should interact with companies and what companies need and want from you as an angel investor. And that goes from first meeting to whatever rhythm you have meeting with the company once you're actually an investor, if at all. Some investors just want to invest and like, you know, write me a check when it's all over. Or something, you know, right?

Speaker 2

20:16

But most want to sort of get updates and talk to the CEO. That's part of the fun of it, by the way, and watching the progress. I just got to go and talk to a YC company that's doing great, I won't mention them, but what I also made an angel investor in. And you know, from 2 people now, there are 50 people and they've got a big valuation and they have all sorts of problems and they're doing incredibly well and it's exciting.

Speaker 2

20:42

It's just, that's a really fun thing. But, so I wanna talk about that. But maybe the last thing I'll say about the curriculum for the course that I'm excited about is we want to talk a little bit about investing in the 21st century because it has changed. I was talking about HP back in 1957, 1937 excuse me.

Speaker 2

21:02

That's when That's when HP was founded in 37. But venture capital really started in 57 and 60. And then sort of angels came in in the subsequent decades. Things changed a lot once the 2000s, the 21st century came, probably the first big change was Y Combinator, was accelerators, rethinking how people did early stage investing.

Speaker 2

21:28

Well, it's changing again. You mentioned Valor Avocado. He launched this thing called AngelList. There's something called KickStarter.

Speaker 2

21:36

AngelList brings people and companies together in a really unique online way to invest in a different paradigm than before. Ads Y Combinator was a different paradigm of investing. It was investing in bulk. We invest in a whole bunch of startups all at once.

Speaker 2

21:55

But there's new stuff happening. You know about this. There's ICOs. There's initial coin offerings.

Speaker 2

22:02

Companies are changing the way they think about the availability of capital. The SEC is looking hard at this right now. It's complicated. So, I want to talk a little bit about how the space is changing and evolving.

Speaker 2

22:15

Another thing I didn't mention was that... I sort of talked about this history in sort of a not very chronological way, and so I'll continue that. 1 of the things that happened sort of after YC sort of began this accelerator craze is there became a lot more angels out there and the angels started to professionalize and some of the angels who were most experienced angels became what we called at the time, super angels. Okay.

Speaker 2

22:45

Or micro VCs and they started creating funds. So then you had a little bit of fragmentation of VC where there was a bunch of early stage and then series A and then growth after that. And then you had a whole bunch of evolution of that where VCs started doing both early stage and growth, sometimes in the same fund, strangely, which I don't necessarily think is a great idea. So there was this, I don't know if fragmentation is the right term.

Speaker 2

23:15

I used it before. But this new diversification of styles, of professional investors, professional investors meaning someone who has limited partners who have, who have, who are investing other people's money besides their own. And so that's changed a lot in the 21st century, but certainly the new ways to raise money, the crypto oriented techniques are pretty radical. Radical in that like so early, there's an equal amount of money in ICOs being raised by startups as venture money.

Speaker 2

23:52

That's crazy, so fast. Don't really believe it's sustainable, and there's a lot of crap. Certainly a lot of fraud out there too. So, you know, buyer beware.

Speaker 2

24:04

But the world is shifting and changing.

Speaker 1

24:09

I mean, absolutely.

Speaker 2

24:10

Radically rapidly. So we want to talk a little bit about that. So people are kind of up to speed with some of what's happening.

Speaker 2

24:16

That's kind of the gamut of the course where we're covering a lot of the fundamentals, some insider looks at how you become an angel investor and how you think about deal flow and portfolios and making your decisions, And then maybe a little bit of a look towards the future and where we're going.

Speaker 1

24:35

Okay, awesome. So we would be remiss if we didn't talk about your personal angel investing experience to share some advice with people, just to give them a taste before they sign up for investor school. So before you said the good and bad habits of being an angel investor, let's talk about those specifically.

Speaker 1

24:53

What does it mean to be a good angel investor?

Speaker 2

24:56

So this qualitative thing is good, like good can mean a few things. It can mean that you're actually good to your companies, and it can actually mean you get a good return.

Speaker 1

25:03

Okay. So let me

Speaker 2

25:05

try to answer kind of both of them. I think to be a good angel investor, first is you have to follow your passion, invest in what you care about, but don't be emotional. You'll make a lot of bad decisions if you're emotional So it is it is a cold hard cash investing decision And you should think about it that way.

Speaker 2

25:32

You should learn how to say no and learn how to say no explicitly and kindly and with as many real reasons as you can. I'll get back to that in a sec. But that's part of being a good investor too, 2 companies. If you meet with me and I say, I'm thinking about it, Craig, you seem to have a pretty good idea.

Speaker 2

25:53

I'll get back to you. And I never get back to you. Sometimes investors do that because it's just hard to say, dude, no. And so you have to learn how to do that, say no.

Speaker 2

26:03

Sometimes, as I said, you should be as honest as you can, especially if it can be helpful. Sometimes you can't. Sometimes it's because, you know, I didn't believe in you. I didn't think you were smart enough.

Speaker 2

26:14

I didn't think you were strong enough. I didn't think, all these things that I'm not really gonna say in an email to you. So you have to come up with some way to gracefully say I'm not interested. But remember what we talked about and Naval said you have to meet with a hundred companies at least 10 or 20 or 30 and certainly you want deal flow And that's another thing about being a good angel investor.

Speaker 2

26:35

You need deal flow. Find a way to get deal flow. We'll talk about that. If you don't have deal flow, you'll take the first thing you get.

Speaker 2

26:41

You'll talk to me, I'll invest, please take my money.

Speaker 1

26:44

So you need. Well, in a micro level, you wouldn't necessarily be wrong either if your deal flow is only 10 companies a year, you may still pick the best 1, but it may still fail. You might just need to see a lot more.

Speaker 1

26:53

Which is being wrong. No, what I'm saying, which is being wrong in the macro sense, but you're like

Speaker 2

26:58

only- You're being locally right, but that doesn't do you any good. So that's why you do need more to see. But again, I do think these things stand alone.

Speaker 2

27:05

You have to look at whether you believe the opportunity is there and that you have a founder in front of you who has some probability of winning in the fight for that opportunity. So be rigorous and organized and dedicated. And even if you're dabbling, and I think most angel investors dabble, they're not professional. This course, by the way, is not meant to teach people to be professionals.

Speaker 2

27:37

I don't expect real venture capitalists will come and take the course. I expect angels who are investing their own money and who are doing this because they enjoy working with founders, because they have causes that they care about because they want to see innovation in the world because They want to see change.

Speaker 1

27:54

Mm-hmm.

Speaker 2

27:55

Those are all really good reasons and those are good reasons to invest But you have to temper that because you know, I wouldn't recommend just investing in change with no hope for return. You can if you're really willing to throw away whatever amount of money you're investing. And I would never gainsay that.

Speaker 2

28:13

If you're doing this because there's some possibility of making a difference, creating change even if you're not that concerned about the return, that's fine. But most angels want some kind of return. I would also say, most angel investors should Ignore the little stuff. Because when you're angel investing, if you're going for a 7.6% return to try to beat the stock market, you're in the wrong game.

Speaker 2

28:45

It's a game of big wins. So don't sweat the little stuff. Don't run your founders through the wringer as they're shutting down and try to extract some bit of blood from a stone where there isn't any. It doesn't matter.

Speaker 2

29:06

Yeah. It doesn't matter. In fact, if you think about it, if you act like a jerk to a founder, that might be, even if that gets you an extra 50% of your return, your investment back somehow, That might actually cost you way more in the long term because the way you get deal flow is because some founder says to another Founder you should take Jeff Ralston's money because he's a good person to have on your cap table,

Speaker 1

29:29

right?

Speaker 2

29:30

So my advice is be a good person to have on someone's cap table. Be that person. Say, Ron Conway, you want his money.

Speaker 2

29:37

He will help you. He's not a jerk. He will be on your side.

Speaker 1

29:42

Yeah, it's so relationship based. Something I didn't fully realize until I moved out here was how important optionality is when people are investing. It's not uncommon for someone to say no at 1 point and then say yes later down, even if they have to pay premium for that.

Speaker 1

29:57

And I think that's a difficult thing, because on the relationship side...

Speaker 2

30:01

I've done that lots of times. I mean, 1 thing we tell founders here and the reverse is true for investors. There's no, no forever.

Speaker 2

30:10

It's not now.

Speaker 1

30:11

Exactly.

Speaker 2

30:12

Not now, I'm not ready. You're not ready, whatever.

Speaker 1

30:15

But the thing that messes with your head is when someone says not now in other areas of life, you're just like, oh, they're politely telling me to go away and never. But here, not now often means not now, like call me in 18 months when you're raising money again. And so, yeah.

Speaker 2

30:31

But there is, you know, the fact is most angel investors don't get a bite at the later rounds. They might get a bite later on during this round and you think about it, but don't. I mean there's a, look, 1 other thing I will say not to do as an investor which is Don't try to be the last money in because you don't have any confidence in yourself So Some of the worst bet investor behavior is to say Craig.

Speaker 2

31:05

I like you. I like your company You're raising a million dollars. I'll put a hundred thousand dollars in as soon as you raise $900,000 because you're useless. The fact of the matter is, once you, Craig, have raised $900,000, you don't need me.

Speaker 2

31:20

And I have demonstrated right then and there that you don't need me. Right? You'll fill it in with someone else. And fill it in with someone who's more useful, who has more courage behind their conviction.

Speaker 2

31:32

Be the kind of investor who has enough courage to say, you've raised 0. I'll be the first money in. I like you that much.

Speaker 1

31:41

And on the strategic side for you personally, What have been some of the best moves that you were unsure about in the beginning, but then later on you're like, oh, maybe I kind of called it there. That worked out pretty well.

Speaker 2

31:55

Well, the best example of that is 1 of my earliest angel investments. And I did it for the wrong and the right reasons. The wrong reason was the woman who was running this company was an old friend, someone I'd worked with for years, years before.

Speaker 2

32:19

And that's a terrible reason to invest in someone. Except that she's awesome. And I've done both ways. Like sometimes you're like, you know, pretty good and you invest in them because they're a friend and it's not a good choice.

Speaker 2

32:32

In this case, it was the right reason. But the space was really tough. It was in wireless networking and, jeez, there was so much competition. They were a small wireless networking company and they had some kind of cool technology, but she wasn't even a founder, she became the CEO.

Speaker 2

32:48

She'd been a founder before, I know she's like, nails, good, but I didn't know the founders very well, and it was this hardware thing, and some software, and oh my gosh, And so I only invested a little bit, and that was so far the only company that has IPO'd. And I made a really good return on my investment. So that 1 worked out really nicely. And it was 1 of those things where I was like, it's never going to happen.

Speaker 2

33:15

It's never going to happen. I sort of lost track until I woke up 1 day and they'd IPO'd and I got noticed that I had public company stock. I was sort of

Speaker 1

33:26

happily shocked. Was there a learning on the positive side where you're like, oh, this is a pattern that I might be able to match again, or did you just get lucky and you knew a good person?

Speaker 2

33:34

No, but quite the contrary, like it was because I knew a good person and I invested in that person. Aside from all the other warning signs, like this space, are you kidding me? Founders, I don't know that well, but like this great person, really smart, really capable, has done this before, is running the company, yeah, I'll invest in that all day long.

Speaker 1

33:51

Okay. So, I did want to ask you, you've had success with startup investing, angel investing, where you didn't necessarily know if it was going to pan out. Obviously, you never know. What are mistakes you've made?

Speaker 2

34:06

Oh, I actually think the appropriate question is which mistakes haven't I made, because I've made them all. I've invested in family. Don't do that.

Speaker 2

34:14

I Invested without thinking it through very much. Don't do that. I invested in spaces where I really had no friggin clue at all about it and I just did it because and don't do that I invested in spaces because Someone I thought was smart invested there. And sometimes that's a good thing to do, but I didn't put enough thought into it.

Speaker 2

34:40

I've been fooled by founders. I thought they were better than they were. I've invested in founders in a technical, in a space that demanded great technical know-how that didn't have great technical know-how. I've invested in founders where I didn't believe in them and then decided not to invest and then was persuaded by short-term results that I was wrong, but I wasn't.

Speaker 1

35:08

Do you often invest internationally?

Speaker 2

35:15

Almost never, almost never. I have invested in international YC companies sometimes. So I shouldn't say almost never.

Speaker 2

35:24

When I was investing pre YC or outside of YC, I haven't. It's too complicated. I can't get my head around it. Talk about investing in ecosystems you don't understand.

Speaker 2

35:35

And I mostly try to invest in places where I have an understanding or a belief system. I don't have to be deep into it. I will invest in CRISPR companies because I'm not a biologist, but I think CRISPR is an earth shatteringly important technology. I wrote a

Speaker 1

35:55

post about

Speaker 2

35:56

that just because it's so cool. I wouldn't claim to be an expert. And Synthetic biology in general, I have believed for half a decade now is going to be incredibly important before I even knew anything about CRISPR, but just the idea that you could start to think about programming the tree of life.

Speaker 2

36:18

In fact, a conviction that I had way back then that we're gonna figure out how to do it, it just kind of happened really quickly where the ability to do gene editing at a very detailed level came about thanks to bacteria. Very much bacteria. It's so cool, right?

Speaker 1

36:34

It's amazing, yeah. But I'm sure you're gonna have international angel investors come in, right? And so definitely, they're from all over the place.

Speaker 1

36:43

Right. So I

Speaker 2

36:43

don't think it's different, though. I mean, right. Let me let me caveat that.

Speaker 2

36:47

Sure, it's different. But I think the set of things we're going to talk about are generic and will be true for them as well. It's a good point you make. Probably, assuming this course goes well and we teach it again in the future, we'll think about whether we need to add more about how you should think about investing, either as a US investor in international companies or as an international investor in international companies in countries in your own country or say investing in US companies.

Speaker 2

37:25

There's certainly a lot of international investors who come and invest in YC companies on demo day. But that's the beauty of it. You know, this is our experiment. It's a learning experience for us as well as for the students.

Speaker 2

37:35

And hopefully, assuming it goes well, we'll improve it and do it again next year.

Speaker 1

37:41

That's great. Where should someone go if they want to apply?

Speaker 2

37:44

They should go, well, the application is going to open on Thursday, and I hope I get this right, they should go to investor.startupschool.org.

Speaker 1

37:55

Okay, and we'll also post it on the blog too. All right, thanks Jeff.

Speaker 2

37:58

Thanks a lot Craig, nice Talking to you. You too. You