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Nick Shalek
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- 2021-07-26
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- 2021-07-26
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“I'll name a couple because they're both great and very different ends of the spectrum of what we do. Like we recently backed Adam Nash, who was a longtime friend and who was a CEO of Wealthfront in the past in his seed round. We don't do many seeds, but we break that rule when we've known a founder for a long time and we're excited about their product vision and just want to work with them. I'm thinking because I don't think the company has a formal name yet, but it's definitely something to watch. We also recently backed a Mexican company called Cavac, which we're convinced could end up being one of the largest companies ever built out of Latin America. The founder of Carlos is fantastic and he's assembled a really world-class team with a global ambition. This is a company that we missed for years just for context, Harry, because we didn't have a thesis on the used auto market, but we see huge upside and very excited to be investing with them now.”
2021-07-26 · The Twenty Minute VC · 20VC: Ribbit Capital's Nick Shalek on How To Think Through Ownership and Price Sensitivity, When More Money and Pre-Emptive Rounds are Good vs Bad & Investing Lessons from Yale's David Swensen · IDENTIFIED FROM THE TRANSCRIPT · source
“Like how we thought about buying crypto in the funds, which other firms just felt like they couldn't do at the end of the day, I think you get the investors, you know, the reactions you ask for. Like we always told our LPs we might do unexpected things so long as they were great investments. And it turns out Bitcoin was just the first of many to come like that. And we took the risk, but also we've been fortunate to have amazing partners from the start who trusted us.”
2021-07-26 · The Twenty Minute VC · 20VC: Ribbit Capital's Nick Shalek on How To Think Through Ownership and Price Sensitivity, When More Money and Pre-Emptive Rounds are Good vs Bad & Investing Lessons from Yale's David Swensen · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, very early at Rivet, we were working in the office for Mickey's old company, and it was me and Mickey and Wences, Mickey's longtime business partner. And Mickey and Wences just wouldn't shut up about Bitcoin. It was very fringe. And I thought they might be out of their minds. But for too long time, fintech founders from Venezuela and Argentina, it was just mind-blowing that there might be a global digital non-sovereign form of money and that you could transact with it fully peer-to-peer without any financial institution in the middle. They'd both lived through hyperinflation. So it wasn't a weird idea to them that the currency of record in your country might not be a reliable store of value. Yeah, I'd worked briefly on Facebook credits, so I knew some of the problems of trying to build a centralized digital currency. But when Mickey started making noises about buying it in the fun and I said, all right, if we're going to do that, we better write a letter to our LPs about what Bitcoin is and why I spent a few weeks on that and myself have been kind of hooked on crypto ever since and convinced that it's one of the best risk adjusted bets you can make anywhere in the world. A lot of people have asked.”
2021-07-26 · The Twenty Minute VC · 20VC: Ribbit Capital's Nick Shalek on How To Think Through Ownership and Price Sensitivity, When More Money and Pre-Emptive Rounds are Good vs Bad & Investing Lessons from Yale's David Swensen · IDENTIFIED FROM THE TRANSCRIPT · source
“Oh, there's a lot. I'll give you two. Yeah, there's the platitude that you have two ears and one mouth and you should use them in proportion. And in the early days, I thought I needed to have an opinion on everything. And that's how I could provide value, especially since I was young and I didn't have a track record building a huge company. I felt like I needed to have a strategic view on any topic. It simply is not true. And worse, it's counterproductive since no matter how smart you are, like your job as a VC is to console and challenge and suggest, but you can't possibly have the answers since you're so much further from the customers than the entrepreneurs. But secondly, if I was giving myself advice, I'd just say buy more Bitcoin.”
2021-07-26 · The Twenty Minute VC · 20VC: Ribbit Capital's Nick Shalek on How To Think Through Ownership and Price Sensitivity, When More Money and Pre-Emptive Rounds are Good vs Bad & Investing Lessons from Yale's David Swensen · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, the biggest miss has been in payments. We've ended up making large investments in payments, but early on at Rivet, we had the opportunity to invest in stone and Aden in Stripe. In a number of companies at a relatively early stage, and we said we're not doing payments right now. That allowed us to focus on a number of other things. So you can't really run the counterfactual. But again, I think the miss was we had an idea and we wanted to stick to that idea rather than just really go and listen and look where the data would take us.”
2021-07-26 · The Twenty Minute VC · 20VC: Ribbit Capital's Nick Shalek on How To Think Through Ownership and Price Sensitivity, When More Money and Pre-Emptive Rounds are Good vs Bad & Investing Lessons from Yale's David Swensen · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, it's easy to say because hindsight's 2020. What I would have done more of the things that we knew we should do, like the biggest manifestation of this is we could have been even more concentrated in the companies that we really believed in. We've done plenty of doubling down on our winners, but I would try to do it even more. Some of this is classic bull market thinking, but I think the signal was really strong after working with companies even for a matter of months. Other than that, I think most of what I would have done differently fits in the bucket we talked about earlier, where we just had the wrong idea about something or about a company and we did an armchair underwriting. It's fine to have boundaries in places where you defocus, but you also need to just go meet the founders and hear it from them. And our worst mistakes have been where we sort of judge from afar rather than finding ways to dive in with real curiosity.”
2021-07-26 · The Twenty Minute VC · 20VC: Ribbit Capital's Nick Shalek on How To Think Through Ownership and Price Sensitivity, When More Money and Pre-Emptive Rounds are Good vs Bad & Investing Lessons from Yale's David Swensen · IDENTIFIED FROM THE TRANSCRIPT · source
“I love fiction. So if you ask favorite book, I'd say something like East of Eden or All the King's Men, just because I think their timeless parables and beautifully written and fun to read and reread. But if you want something about fintech and innovation or entrepreneurship, I think a great thing to read is a piece of the action, which is Joe Nocera wrote this book about financial innovation.”
2021-07-26 · The Twenty Minute VC · 20VC: Ribbit Capital's Nick Shalek on How To Think Through Ownership and Price Sensitivity, When More Money and Pre-Emptive Rounds are Good vs Bad & Investing Lessons from Yale's David Swensen · IDENTIFIED FROM THE TRANSCRIPT · source
“Really underwrite and get to know companies and a theme. And I think that can make you steadier as an investor over a long period of time.”
2021-07-26 · The Twenty Minute VC · 20VC: Ribbit Capital's Nick Shalek on How To Think Through Ownership and Price Sensitivity, When More Money and Pre-Emptive Rounds are Good vs Bad & Investing Lessons from Yale's David Swensen · IDENTIFIED FROM THE TRANSCRIPT · source
“Talking earlier about the value of being thesis driven. Another way of saying this is sort of pointing out that you want to pre-negotiate the ideas in your mind. When we underwrite an investment, we work really hard to imagine these types of scenarios. And often like you live through them in small ways with these companies or with other companies across the portfolio, that's what it felt like with Robin. Like we'd been to this movie before. So I think when you've done that, you don't overreact even in a frightening situation. You feel like, you know, we understand this business. We've done the work. And let's be steadfast and the right kind of partner is not the kind of partners who suddenly try to reexamine everything that they know to be true. I think there's a lot of things actually about being a sector focused fund that are a disadvantage that people think are at advantage, like expertise that we talked about earlier because you can become way too full of your own ideas and you miss that the best companies are often have some very core simple insight. But one of the advantages of being a sector focused fund or a focus firm in general is you can, you know,”
2021-07-26 · The Twenty Minute VC · 20VC: Ribbit Capital's Nick Shalek on How To Think Through Ownership and Price Sensitivity, When More Money and Pre-Emptive Rounds are Good vs Bad & Investing Lessons from Yale's David Swensen · IDENTIFIED FROM THE TRANSCRIPT · source
“Help an amazing company at a moment of fear and volatility. And that's what Rivet aspires to be is just like in financial services, you're going to have these challenging moments. So we want to have a steady hand and be smart investors, but more importantly, be good partners.”
2021-07-26 · The Twenty Minute VC · 20VC: Ribbit Capital's Nick Shalek on How To Think Through Ownership and Price Sensitivity, When More Money and Pre-Emptive Rounds are Good vs Bad & Investing Lessons from Yale's David Swensen · IDENTIFIED FROM THE TRANSCRIPT · source
“I'd say it was very busy. It went by in a flash. You know, in some ways, it felt like an eerily unremarkable day. We've known the company for almost a decade and we've been through a bunch of complex situations together. We've re-underwritten and invest in the business, I think, seven times from the A to the G. And, you know, Mickey had started his career as an entrepreneur building a broker dealer. And we built a very deliberate thesis around brokerage. And we'd invested in the category all over the world. So when Vlad called in the morning and said Robin Hood had a collateral issue and needed an impossible sum of money right away to try to live up to their brand promise, it was actually pretty straightforward for us to say yes and just get to work. And because we understood the problem and because this is really important because we'd spent years building relationships with our banks and LPs and co-investors and various people at Robin Hood, we were able to figure out terms and get the liquidity to wire them half a billion dollars that day. I don't want to play it down. For us, it was really important across the team, you know, not just we think it'll be a good investment, but because we had the chance to.”
2021-07-26 · The Twenty Minute VC · 20VC: Ribbit Capital's Nick Shalek on How To Think Through Ownership and Price Sensitivity, When More Money and Pre-Emptive Rounds are Good vs Bad & Investing Lessons from Yale's David Swensen · IDENTIFIED FROM THE TRANSCRIPT · source
“With huge balance sheet and regulatory advantages, having more capital can increase your chances of success in a material way. I don't think this is true in all areas of venture or even in all fintech companies. So the idea can and is most often applied incorrectly. But I do see the fluidity of capital today is more of a challenge that we can adapt to rather than an existential threat. And the thing we struggle with more is what you brought up earlier is around the speed of deals.”
2021-07-26 · The Twenty Minute VC · 20VC: Ribbit Capital's Nick Shalek on How To Think Through Ownership and Price Sensitivity, When More Money and Pre-Emptive Rounds are Good vs Bad & Investing Lessons from Yale's David Swensen · IDENTIFIED FROM THE TRANSCRIPT · source
“Think it's really hard, Harry. You know, mostly what we encourage founders to do is keep their head down and focus on the business. It's rarely the case that more money will make the business successful. It's never the case that more money will patch over a lack of interest from customers or a lack of execution by your team. So there are thousands of ways you can die as a startup having more money is one of them, but there are lots of others too. It always sounds like self-serving advice when you're coming in as an investor and around. I'm sure you've had this conversation many times around encouraging founders not to get too far ahead of the company on valuation, but it's a little easier once you're already a partner. And like with anything else, try to give founders our perspective and share some examples and then let them make their own decision. You know, the one thing I would point out since I think it's bad to look a gift horse in the mouth is that we could view all this capital as a bad thing through a competitive lens, but I actually think it can bend the curve on returns for some types of businesses. Like when your competition, like it does in FinTech comes from and comes.”
2021-07-26 · The Twenty Minute VC · 20VC: Ribbit Capital's Nick Shalek on How To Think Through Ownership and Price Sensitivity, When More Money and Pre-Emptive Rounds are Good vs Bad & Investing Lessons from Yale's David Swensen · IDENTIFIED FROM THE TRANSCRIPT · source
“Majority of the founders, we've backed our investors in Rivet, which means a lot to us. And it's always a good way of framing whether we're doing the things that we need to do to build the brand.”
2021-07-26 · The Twenty Minute VC · 20VC: Ribbit Capital's Nick Shalek on How To Think Through Ownership and Price Sensitivity, When More Money and Pre-Emptive Rounds are Good vs Bad & Investing Lessons from Yale's David Swensen · IDENTIFIED FROM THE TRANSCRIPT · source
“This is something that Mickey and I discussed probably in our very first meeting together. It aligns with my personality and with what I believe, but I really kind of like learned the value of it from Mickey, which is, you know, just being comfortable letting the work speak for itself. We've always believed that the brands that matter the most are the ones that we back and have thought that like if we do our job well, the word should get out about Rivet. And that there are a lot of people that were out there shouting with megaphones, you much, much bigger megaphones than our own, some who are doing it incredibly well with great star power and teams of people that we shouldn't try to play that game. We should try to do something that felt more authentic to us. You know, I think that's like a subset of a broader thing, which is, you know, I've seen from Mickey's like really good at framing what success looks like and not getting caught up in the noise. And we've tried to carry that, you know, on a rivet. Like, for example, early on at Rivet, we said, you know, what if one of our core KPIs was how many of our founders would actually invest their own money in Rivet? You know, after working with us, that's been a great guiding light today.”
2021-07-26 · The Twenty Minute VC · 20VC: Ribbit Capital's Nick Shalek on How To Think Through Ownership and Price Sensitivity, When More Money and Pre-Emptive Rounds are Good vs Bad & Investing Lessons from Yale's David Swensen · IDENTIFIED FROM THE TRANSCRIPT · source
“Is available to them. This all rings a lot truer internally and externally. Like if everyone feels like they're contributing to a joint body of work. But I don't want to be Pollyannaish. Like there's a cost of looking at the world this way. Like deal attribution makes the whole venture industry go around like when Forbes puts together the MIDAS list, they want to know what investments you've made. So attribution clearly motivates people. I think what we're asking of ourselves as a team is to be motivated by something else, like the desire for Rivet to win and the joy in feeling like we did it together. And at the end of the day, that's not only a choice about what makes the firm perform best, but about what makes it worth doing.”
2021-07-26 · The Twenty Minute VC · 20VC: Ribbit Capital's Nick Shalek on How To Think Through Ownership and Price Sensitivity, When More Money and Pre-Emptive Rounds are Good vs Bad & Investing Lessons from Yale's David Swensen · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, it just always seemed right to us for Ribbitt not to have attribution. Deals almost always have advocates. This is what I'm saying. In fact, we sort of have this loose rule that if someone's not pounding the table, there's no point in considering an opportunity a little different than the follow-ons where we have to consider it or we have to think about it. But we never label something Nick's deal or Nikolai's deal or Ray's deal. The biggest reason is we just think it's more fun to live and die as a team. And once we've decided to do a deal, there's no credit claiming or finger pointing. And it does get rid of a lot of the pathologies of venture. It just becomes a rivet deal. From an investment perspective, we try to depersonalize it. It can be easier. And this is what I was alluding to before. Like it can be easier to bring the wrong biases when it's a deal attached to a person. Like we need brutal honesty as a firm and a kind of no holds barred kind of debates. But you might think about supporting the person behind the deal, which is a nice sentiment, but it's not very productive when something's going in the portfolio, like our promise to founders, the way we structure is that everyone on the team.”
2021-07-26 · The Twenty Minute VC · 20VC: Ribbit Capital's Nick Shalek on How To Think Through Ownership and Price Sensitivity, When More Money and Pre-Emptive Rounds are Good vs Bad & Investing Lessons from Yale's David Swensen · IDENTIFIED FROM THE TRANSCRIPT · source
“Neither consensus nor partner led. I would say we have a process that's intentionally conviction driven, meaning somebody on the team needs to pound the table, but we try not to attach that investment decision to a person because I think that often leads to people thinking about investments in the wrong way rather than just being very straightforward about analyzing the investment or the opportunity. They get hung up in the kind of politics of the internal process anathema to the way we're trying to manage the firm.”
2021-07-26 · The Twenty Minute VC · 20VC: Ribbit Capital's Nick Shalek on How To Think Through Ownership and Price Sensitivity, When More Money and Pre-Emptive Rounds are Good vs Bad & Investing Lessons from Yale's David Swensen · IDENTIFIED FROM THE TRANSCRIPT · source
“I think if I were to criticize it, arguably we spend too much time on it. But our principle from the beginning is we re-underwrite every deal, including follow-on decisions. In follow-on decisions, we certainly take into account the importance of the relationship and the fact that we've been, that it's our default posture to be supportive of companies. And then going back to what I was sort of alluding to before, Harry, I think if a follow-on decision happens within a short period of time and you're struggling with it, a lot of times it's because you haven't done the right work up front. So I always think like try to do the right work up front so that we can be supportive of the company over time. And then you take everything on a case-by-case basis. So what we do is we assign a few people on the team and we do the same sort of underwriting. Maybe it takes us a little bit less time that we would have done in any other scenario. And we try to let that guide us in terms of what to do.”
2021-07-26 · The Twenty Minute VC · 20VC: Ribbit Capital's Nick Shalek on How To Think Through Ownership and Price Sensitivity, When More Money and Pre-Emptive Rounds are Good vs Bad & Investing Lessons from Yale's David Swensen · IDENTIFIED FROM THE TRANSCRIPT · source
“Or three, you try to find ways to align your desire to own more with their objective to make the business successful. So we start with who we want to back, and then we get to working on number three. And our arguments are usually based around trying to show them in lots of ways the value of being partners with us. And if we can give them more money over time and we still think the return is asymmetric and meets our absolute bar, it's the highest return on time thing we can do. This is how we think about it. I don't envy stage focus generalists because I think it's an even harder challenge these days.”
2021-07-26 · The Twenty Minute VC · 20VC: Ribbit Capital's Nick Shalek on How To Think Through Ownership and Price Sensitivity, When More Money and Pre-Emptive Rounds are Good vs Bad & Investing Lessons from Yale's David Swensen · IDENTIFIED FROM THE TRANSCRIPT · source
“Ownership definitely matters to me. That's like almost the immutable law. But I think this is one of the tricky dichotomies of the business. And there are a bunch that you can never quite reconcile. There's this F. Scott Fitzgerald quote that I remember maybe from college that like the test of a true first rate intelligence is the ability to hold two ideas in your head at the same time and still retain the ability to function. And that's what I think about on this topic all the time. So here's my two opposing ideas that seem hard to reconcile. Like first, ownership really matters, mostly because we're all limited by the time we can allocate. And at Ribbit, we really believe in making concentrated focus investments and putting our money where our mouth is. But second, at the same time, I think investing in the best companies should be the tail that wags the dog. You know, you certainly shouldn't back a weaker company because you think you can own a few more percent of it. So the thought experiment for me goes like this. Like if the best founders only want to sell you X percent of their company and X is lower than your ideal, you kind of have three choices. One, you don't back the founders. Two, you just shut down your business.”
2021-07-26 · The Twenty Minute VC · 20VC: Ribbit Capital's Nick Shalek on How To Think Through Ownership and Price Sensitivity, When More Money and Pre-Emptive Rounds are Good vs Bad & Investing Lessons from Yale's David Swensen · IDENTIFIED FROM THE TRANSCRIPT · source
“Working on it, adjusting, and trying to do a lot of things to figure out how to be on the front foot rather than the back foot.”
2021-07-26 · The Twenty Minute VC · 20VC: Ribbit Capital's Nick Shalek on How To Think Through Ownership and Price Sensitivity, When More Money and Pre-Emptive Rounds are Good vs Bad & Investing Lessons from Yale's David Swensen · IDENTIFIED FROM THE TRANSCRIPT · source
“100%. I think that's the biggest challenge for us. The fundraising environment, the valuation environment, I should say, is one thing I think that's just a reality that you have to adapt to, but how to build meaningful relationships and partnerships, which we see as kind of a cornerstone of how to be a great investor. That's harder to do. We always think when we're underwriting a deal, and this I learned as an LP2, the first decision is important, but you should do the work to make the second decision because you often will have to, and especially in this environment, you have to make that decision before you have a chance to collect all that much more data. But even more importantly, if something goes wrong, which is almost is inevitably the case in fintech companies, if there's some regulatory issue or balance sheet issue, you want to have to get back to that word, you want to have the conviction to be great partners at that time. And I think a lot of the worst behavior we see from investors is where they came into something quickly and they didn't really understand it. And we really work hard not to be those investors, but it's hard to do on a three-day timeline on Zoom. So we're.”
2021-07-26 · The Twenty Minute VC · 20VC: Ribbit Capital's Nick Shalek on How To Think Through Ownership and Price Sensitivity, When More Money and Pre-Emptive Rounds are Good vs Bad & Investing Lessons from Yale's David Swensen · IDENTIFIED FROM THE TRANSCRIPT · source
“A little different than what you're asking, but I think it kind of cuts to the core is like if you want to generate several multiples of whatever LPs trust you with, which is our goal, the only way to do that is to be contrarian, since otherwise returns get competed away. It's just sort of like the law of investing. So we always ask ourselves, like, do we have a non-obvious or non-consensus point of view? And it's not always clear. Like, it's very obvious when you're truly non-consensus in retrospect, like how it felt when we first invested in Bitcoin and Coinbase. And most people just had no idea what we're talking about. But then you look at something like crypto today with Coinbase as a public company and is it non-consensus? Like I think in the broader scheme of things, it still is exceptionally early. So, you know, even when everyone seems to agree with your general points, like say neobanks can be big, they might not agree on degree. And this, you know, gets to the heart of what you're talking about. One of the hardest things I've found in tech investing is updating your priors. One point you can only see Gripe is a billion dollar company and then you got comfortable with his $10 billion company. But how do you get over that view and see it as a $100 billion company or a trillion dollar company?”
2021-07-26 · The Twenty Minute VC · 20VC: Ribbit Capital's Nick Shalek on How To Think Through Ownership and Price Sensitivity, When More Money and Pre-Emptive Rounds are Good vs Bad & Investing Lessons from Yale's David Swensen · IDENTIFIED FROM THE TRANSCRIPT · source
“Harry, I'm always concerned about pricing. I always have been since the start of the firm. So you're asking the wrong person. But what upside multiple was attractive is a subjective question for everybody to answer for themselves. Like it's something you negotiate with yourself and your LPs based on what success looks like for you. Our simple answer has always been like, we don't think of ourselves in the venture of the growth business, but in the business of making asymmetric bets on the exceptional people are going to change finance. So whether we're investing at seed or in a public company, whether we tell ourselves that a price round is cheap or not, the conversation has to come back to the question you're asking, which is how big can this be? You know, for us, it's like, can this become one of the most important companies in the future of financial services? I think finance is big enough that if you get that question right, you can earn venture type returns, sometimes even at a later stage and sometimes even when it's incredibly hard to write down on paper what you need to believe for something to be that big. The only way to earn exceptional returns, this is sort of the framing that I would bring it back to.”
2021-07-26 · The Twenty Minute VC · 20VC: Ribbit Capital's Nick Shalek on How To Think Through Ownership and Price Sensitivity, When More Money and Pre-Emptive Rounds are Good vs Bad & Investing Lessons from Yale's David Swensen · IDENTIFIED FROM THE TRANSCRIPT · source
“You just have to train your mind to constantly be paranoid. And for me, this is a lot of what trying to be a good investor about is maintaining the optimism to see how big something can be and the skepticism to not believe sort of your own BS. And I think it comes from constantly examining what you believe and then comparing it against the actual data. Does this believe hold up? We're all subject to confirmation bias and we want to find data points that suggest that we're right. And it's really easy with the sort of filter bubbles that exist today to go find lots of people who tell you that you're really right about something. But I think when you step back and you say, well, what's the consumer actually doing? What's the customer want? Are they responding to this thing? And why are they doing that? You know, that was the thing with payments was we might have this intellectual view of how the space was going to develop. But then when you really looked at what developers were doing or merchants were doing, and then you started to see the incredibly smart people who were attracted to companies like Stripe is, of course, the most iconic example. At some point, you just”
2021-07-26 · The Twenty Minute VC · 20VC: Ribbit Capital's Nick Shalek on How To Think Through Ownership and Price Sensitivity, When More Money and Pre-Emptive Rounds are Good vs Bad & Investing Lessons from Yale's David Swensen · IDENTIFIED FROM THE TRANSCRIPT · source
“And it's the kind of thing an expert would say, and it sounded smart to me at the time, but it turns out to be very naive and reflect a very static view of the world. We just had too much certainty. And at some point, we wised up and adjusted, but it cost us a lot of great returns in the meantime. If I had to generalize this, and I think you probably agree, like I'd say in most cases, in tech investing, it's great to have conviction about things to invest in or to do, but you got to be really wary of conviction around things not to invest in, like type two errors are a lot more painful than type one errors.”
2021-07-26 · The Twenty Minute VC · 20VC: Ribbit Capital's Nick Shalek on How To Think Through Ownership and Price Sensitivity, When More Money and Pre-Emptive Rounds are Good vs Bad & Investing Lessons from Yale's David Swensen · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, yeah, definitely. And I'll make sure to say this all with a lot of conviction. You know, we felt from the start of Rivet, one way to be a great investor is to be thesis driven. It doesn't mean you have to have the answers. In fact, you shouldn't, but it means that you have thought hard about what they might be. You've looked at all the data you have available to you, developed a reasonable hypothesis about the future. So we might take an area like crypto or insurance and write a thesis and share it with our friends and LPs and entrepreneurs and use the feedback and dialogue from all that to get us to a level of conviction that gives us an advantage. And that advantage is when a great founder walks in the door and wants to start something, it's easy to say yes. Since we've already pre-negotiated our enthusiasm for what the company might be or how the space might evolve. And to me, that's conviction. The danger in all this is you get too stuck on your ideas focusing intently on something doesn't give you a crystal ball about it. You know, things that work are often the things that fly in the face of experience. So for example, early days at Rivet, we had a view that digital payments were commoditizing and would be a declining margin business.”
2021-07-26 · The Twenty Minute VC · 20VC: Ribbit Capital's Nick Shalek on How To Think Through Ownership and Price Sensitivity, When More Money and Pre-Emptive Rounds are Good vs Bad & Investing Lessons from Yale's David Swensen · IDENTIFIED FROM THE TRANSCRIPT · source
“People who work exceptionally hard from her partner, Nikolai, who was the first person to join us to our partner Jordan, who recently joined just about everyone who's landed at Rivet's been extraordinary. But even with the right people, we just benefited enormously from timing, like the wind being at our back in tech and fintech and even more from getting to back entrepreneurs like Fred and Brian at Coinbase or Ken at Credit Karma or Vlad and Robin Hood early on. And that gave us the right to play further and find the next set of great founders. So my comments are really about trying to build a firm that establishes a presence and lasts. And I just think that's a really hard thing to do. It requires a lot of luck and a lot of good timing and hustle.”
2021-07-26 · The Twenty Minute VC · 20VC: Ribbit Capital's Nick Shalek on How To Think Through Ownership and Price Sensitivity, When More Money and Pre-Emptive Rounds are Good vs Bad & Investing Lessons from Yale's David Swensen · IDENTIFIED FROM THE TRANSCRIPT · source
“I think that's right, Harry, but hundreds or thousands of people who try to get into the venture business, very few of them manage to figure out how to stick around. And the reason I'd say it and the reason I joined Mickey, despite what I told you earlier, that what he wanted to do, what we were talking about, broke the rules of venture as I learned them. My gut feeling from spending time with him very quickly was that he passed this sort of simple litmus test. And I think it's the key one to answer your question, which is say it this way. A friend of mine has a theory that any decision or any investment can be whittled down to like one single most important question. And for me in venture capital, that's like, will great entrepreneurs consider working with us? You know, there are lots of good people with smart ideas. Like you talked about, but if you can't get the best entrepreneurs to consider giving you a meaningful slot on their cap table, then it's, you know, it's not worth it. And after spending time with Mickey, I thought that could be true at Rivet. And I thought I'd have a lot of fun and learn a lot working with them. So we got started trying to make that true. But this is the other thing I'd say like even with all that, a lot had to go right for us. Like we've been able to track a brilliant team.”
2021-07-26 · The Twenty Minute VC · 20VC: Ribbit Capital's Nick Shalek on How To Think Through Ownership and Price Sensitivity, When More Money and Pre-Emptive Rounds are Good vs Bad & Investing Lessons from Yale's David Swensen · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I just think the odds of a new fun working are extremely improbable. You know, the reasons to be in the venture business is to have a chance to work with the best entrepreneurs. And it's very hard for most people to get in venture because there are these amazing storied institutions and legions of angels and VCs with every sort of angle and specialty. And I don't think you can learn the venture business the right way if you don't see what great companies and founders look like. And you're just at very high risk of that happening with new funds. So you need a really realistic approach.”
2021-07-26 · The Twenty Minute VC · 20VC: Ribbit Capital's Nick Shalek on How To Think Through Ownership and Price Sensitivity, When More Money and Pre-Emptive Rounds are Good vs Bad & Investing Lessons from Yale's David Swensen · IDENTIFIED FROM THE TRANSCRIPT · source
“Sort of ignore the received wisdom and try to approach investment problems from first principles. And when you're confused, come back to them. And people throw around this term first principles a lot these days. But Dave, you know, he actually lived it. He really reimagined what institutional investing should be with a few core ideas like that liquidity was overrated or that you should pursue active management in areas of inefficiency or that you should be equity oriented over long periods of time. These things sound really obvious now, but they were totally unconventional then. And third, being around Dave showed me the relevance of the truism that people won't remember what you say, but they'll remember how you made them feel. He was this legendary intellect, but he had so much impact on me. And I think so many other people, not just because of his enormous brain, but because he had an enormous heart and wore it on his sleeve. I think about that quite a bit in our business because there's so many smart people out there. I mean, you know this, Harry, who are chasing every deal and you can't win just by being smart. You need to be passionate and authentic and consistent or some other.”
2021-07-26 · The Twenty Minute VC · 20VC: Ribbit Capital's Nick Shalek on How To Think Through Ownership and Price Sensitivity, When More Money and Pre-Emptive Rounds are Good vs Bad & Investing Lessons from Yale's David Swensen · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, it's really pretty amazing to me in retrospect that I got to have one of the all time great investors as my first boss. Obviously it's not the usual path from endowment investing to tech investing, but a lot of what I took from Yale has really influenced my thinking. In my view, BLP and the venture business are actually similar in a lot of ways. Both are fundamentally about backing amazing people, often with limited controller data as an LP, you're mostly putting money in blind pools. So you learn to really fixate on how to underwrite people and how they might think or act in future scenarios. On lessons from Dave specifically, I'll riff on a few things. First, I learned from him that the foundation of great investing is really about getting the incentives and relationships right. So if I were to summarize the Yale algorithm, it would be something like find remarkable people, put yourself on the same side of the table as them, then build rapport so they let you invest. And so they'll call you in the middle of volatility, which is when you find a lot of the best investment opportunities. The second thing I guess I'd say is”
2021-07-26 · The Twenty Minute VC · 20VC: Ribbit Capital's Nick Shalek on How To Think Through Ownership and Price Sensitivity, When More Money and Pre-Emptive Rounds are Good vs Bad & Investing Lessons from Yale's David Swensen · IDENTIFIED FROM THE TRANSCRIPT · source
“Like the thing that Mickey wanted to do, which is start a sector focused fund that would invest internationally, it went against everything that I'd learned as an LP about what worked in Venture. You know, I told Mickey sector focus funds don't work and that venture is a local business and we kind of hit it off from there”
2021-07-26 · The Twenty Minute VC · 20VC: Ribbit Capital's Nick Shalek on How To Think Through Ownership and Price Sensitivity, When More Money and Pre-Emptive Rounds are Good vs Bad & Investing Lessons from Yale's David Swensen · IDENTIFIED FROM THE TRANSCRIPT · source
“It was kind of with no pretense other than that I should meet this guy Mickey, who was supposedly really great. So I had no problem telling him all the things I thought were wrong about his thesis for a new firm. But we hit it off and I had a lot of fun getting to know him. And he told me he wanted someone 10 years younger than him to work with him. And we started talking about emerging businesses and ideas in fintech. And I just found myself thinking about it all the time. So the decision started to kind of make itself. Fortunately, my wife convinced me not to overthink it, which is a good thing because Ribbit's given me a chance to invest, which is clearly something I love to do while also being part of the entrepreneurial journey of building a new firm with an amazing team of people.”
2021-07-26 · The Twenty Minute VC · 20VC: Ribbit Capital's Nick Shalek on How To Think Through Ownership and Price Sensitivity, When More Money and Pre-Emptive Rounds are Good vs Bad & Investing Lessons from Yale's David Swensen · IDENTIFIED FROM THE TRANSCRIPT · source
“As far as getting into venture fintech specifically, I wish I could tell you was the plan all along, but it's really been a series of unexpected introductions and some serious luck. Actually, always had plans to be an entrepreneur. My mom was an entrepreneur. And so from about the time I was 10, that's what I wanted to be. But somehow I've always ended up reading investment books and working as an investor. So at this point, I've just come to embrace that there's probably a reason for that. As for Rivet, about 10 years ago, I got introduced to my partner, Mickey, who you know well. I was on what I would have told you at the time was an unwavering path to start an education company. I was working with a charter school in Oakland and finishing up my master's in education and very much obsessed with the potential for technology to change education. I'd been an investor earlier in my career at Yale Investments and then had been part of a team focusing on incubations at General Catalyst in Boston. So I knew the venture business a bit, or at least I had a lot of moderately informed but strongly held opinions about it. And when I got connected to Mickey by a mutual friend named Dan Levy.”
2021-07-26 · The Twenty Minute VC · 20VC: Ribbit Capital's Nick Shalek on How To Think Through Ownership and Price Sensitivity, When More Money and Pre-Emptive Rounds are Good vs Bad & Investing Lessons from Yale's David Swensen · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, Harry, I've enjoyed and learned a ton from you and your guests over time. So I'm very happy to be here. And thanks for inviting me.”
2021-07-26 · The Twenty Minute VC · 20VC: Ribbit Capital's Nick Shalek on How To Think Through Ownership and Price Sensitivity, When More Money and Pre-Emptive Rounds are Good vs Bad & Investing Lessons from Yale's David Swensen · IDENTIFIED FROM THE TRANSCRIPT · source