Ep. 90: Sparking Great Companies—with Keith Rabois of Founders Fund

The Boost VC Podcast

The best venture investors bring more to the table than capital. The most successful venture investors serve as active advisors, mentoring unproven entrepreneurs and propelling startups forward. So, what do such founder-driven investors look for in emerging talent? How do they teach the fundamentals of operating a business? How do they identify and then cultivate the SPARK it takes to build a company with the potential to change the world?

Keith Rabois is General Partner at Founders Fund, a VC firm focused on supporting entrepreneurs building revolutionary technologies. Keith is known for guiding early-stage startups to become successful businesses, and his impressive resume includes executive positions at PayPal, LinkedIn and Square. After 13 years in the C-suite at high-growth companies, Keith transitioned to venture capital, joining Khosla Ventures in 2013 and moving to Founders Fund in February of this year. He is a graduate of Stanford University and Harvard Law School.

Today, Keith joins us to share his approach to identifying unproven talent and mentoring young founders in ‘Rabois Bootcamp.’ He offers advice on building a team around the most difficult challenges and biggest risks the business is likely to face and explains the difference between hiring for value protection versus value creation. Keith also shares his uncommon insight on how Bitcoin adoption correlates with the rule of law and discusses the true measure of success in VC. Listen in to understand why Keith is more successful than the average venture investor and learn how he avoids mediocre returns by investing only when he has an unusual advantage.

Topics Covered

Keith’s path to VC
Entrepreneur, executive in high-growth companies
Active angel investor (i.e.: Airbnb, YouTube, etc.)

Keith’s definition of success
Identify undervalued people and propel forward
Iconic companies with potential to change world

Keith’s insight on identifying talent
Meet and assess large number of people
Look for irrational confidence, unreasonable tenacity + skill

Keith’s approach to mentoring unproven talent
Osmosis-like learning (build, run + operate business)
Direct feedback on performance

Who Keith goes to for support
Peter Thiel, close friends (feedback on big decisions)
Young people most important in shaping views

Keith’s advice on building a team
Identify most difficult challenges, biggest risks
Find world-class to run point on each

Keith’s paradigm for risk reduction
Value creation = raw ability
Value protection = experience

Keith’s take on Bitcoin
Adoption inversely correlated with rule of law
Value prop in speculation

How Keith leverages his background in law as a VC
Look for legal, regulatory risk
Asymmetrical ability affords advantage

Why Keith focuses on $1M to $3M seed investments
Invest early (team is only data point)
Noncompetitive part of capital stack

Keith’s insight on measuring success in VC
Smart decision based on available info
Adjust returns based on risk

The most impactful thing Keith has accomplished
Hire people with no entry point in industry
Introduce to mainstream ethos of Silicon Valley

Connect with Keith

Founders Fund https://foundersfund.com/
Founders Fund on Twitter https://twitter.com/foundersfund
Keith on LinkedIn https://www.linkedin.com/in/keith/
Keith on Twitter https://twitter.com/rabois

Resources

Jeff Jordan at a16z https://a16z.com/author/jeff-jordan/
Opendoor https://www.opendoor.com/
Peter Thiel at Founders Fund https://foundersfund.com/team/peter-thiel/
‘How to Operate with Keith Rabois’ on YouTube https://www.youtube.com/watch?v=w19IBxDu2Y4
Stellar https://www.stellar.org/
Keith’s Investment Criteria https://twitter.com/rabois/status/934099022603747329
ForwardHealth https://www.forwardhealth.wi.gov/WIPortal/
Michael Moritz at Sequoia Capital https://www.sequoiacap.com/people/michael-moritz/
Stratechery https://stratechery.com/

Connect with Boost VC

Boost VC Website https://www.boost.vc/
Boost VC on Facebook https://www.facebook.com/boostvc/
Boost VC on Twitter https://twitter.com/BoostVC