YouSaid · the spoken record

Trae Stephens

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82
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2024-04-03
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2024-04-03
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  1. “My goal is to stay super opportunistic and not allow my current desires to overdetermine my future. That said, I will come back to a point that I earlier said, I am deeply committed to the idea of civil service. And I don't know if it's in five years or ten years or 15 years, but at some point I want to be back as a public servant working for the good of our nation and our allies and partners. And there are a lot of ways that I could do that. I'm very open to going down that path.”

    2024-04-03 · The Twenty Minute VC · 20VC: Founders Fund's Trae Stephens on Why The Most Competitive Deals are the Worst, Why No Company is Successful Because of their VC, Why We are Making ZIRP Mistakes Again Today, Why Loss Ratio is BS and Upside Maximisation is Everything · IDENTIFIED FROM THE TRANSCRIPT · source

  2. “Oh man, I'll give you two and I'll do it quickly. The first is if we build something and we ship it and it doesn't work, we deserve to be crushed by the market. Unfortunately, I don't think that actually happens. The big defense companies are constantly delivering things that don't work like they're supposed to and they're never punished for it. You can see this with like the way that the 737 Max has been going for Boeing for a long time. So that's one way that I think it could in theory go south. The other way is that government cultural risk, we are coming to them with a very different business model and the only way that we win at a scale that we're working towards winning is if we win major multi-decade long programs like core military platforms, there will have to be people with courage inside the government to make a decision to go with a new player to build a next generation fighter plane or a next generation counter air missile or whatever.”

    2024-04-03 · The Twenty Minute VC · 20VC: Founders Fund's Trae Stephens on Why The Most Competitive Deals are the Worst, Why No Company is Successful Because of their VC, Why We are Making ZIRP Mistakes Again Today, Why Loss Ratio is BS and Upside Maximisation is Everything · IDENTIFIED FROM THE TRANSCRIPT · source

  3. “Lockheed Martin does over $65 billion a year in revenue. They have a two, two and a half X multiple that's applied to them on the public market. It's worth $130 billion or whatever. Androil operates at higher margins, much faster growth rates. We could be worth over $100 billion with a tiny fraction of Lockheed's revenue. So I incredibly bullish on the path that we're heading down and the speed at which we're growing”

    2024-04-03 · The Twenty Minute VC · 20VC: Founders Fund's Trae Stephens on Why The Most Competitive Deals are the Worst, Why No Company is Successful Because of their VC, Why We are Making ZIRP Mistakes Again Today, Why Loss Ratio is BS and Upside Maximisation is Everything · IDENTIFIED FROM THE TRANSCRIPT · source

  4. “Investment, maybe it's probably going to make a lot of money because it leads to addiction or loneliness or whatever. I don't want to be involved in that. I don't want to be involved in stuff that might be a good economic outcome, but is going to lead us closer to a science fiction dystopia.”

    2024-04-03 · The Twenty Minute VC · 20VC: Founders Fund's Trae Stephens on Why The Most Competitive Deals are the Worst, Why No Company is Successful Because of their VC, Why We are Making ZIRP Mistakes Again Today, Why Loss Ratio is BS and Upside Maximisation is Everything · IDENTIFIED FROM THE TRANSCRIPT · source

  5. “Usually, I think a lot of people, and this goes primarily for my upbringing even as well, there were a lot of people that they viewed their job as a way to pay their bills, right? It's like I'm going to go to work nine to five, I'm going to make money. And then my life will be what I do when I'm not at work because the work is just like a mechanism to generate cash to survive. I think this is like a deeply untheological way of viewing the world. We have a responsibility to our vocation. And it doesn't matter what you're doing, whether you're a barista at Starbucks or, you know, starting a defense company. That is your vocation. You are living in service to humanity. And so I think as an investor, as a person of faith, I look at the world and say, I don't want the world to be a science fiction dystopia. Like I don't want to live in, you know, all these Hollywood pictures. I want the world to be approaching the kingdom of God. Like I think we have a role in building that. And so as an investor, when I look at something and I'm like, yeah, this is a vibe.”

    2024-04-03 · The Twenty Minute VC · 20VC: Founders Fund's Trae Stephens on Why The Most Competitive Deals are the Worst, Why No Company is Successful Because of their VC, Why We are Making ZIRP Mistakes Again Today, Why Loss Ratio is BS and Upside Maximisation is Everything · IDENTIFIED FROM THE TRANSCRIPT · source

  6. “No. Money can like simplify things that are complicated or tedious in life, but you'll never find core meaning from the acquisition of wealth. Everyone that has gone through this process, I think, comes out on the other end and says that there's a deep emptiness that they fill, that it doesn't matter how much stuff they pour into it, it'll just never be filled. You have to like understand the anthropology of your humanity and come to terms with what for me is a religious spiritual faith. But for other people, they might try to find that and all sorts of different things. But money is certainly not one that gives you meaning.”

    2024-04-03 · The Twenty Minute VC · 20VC: Founders Fund's Trae Stephens on Why The Most Competitive Deals are the Worst, Why No Company is Successful Because of their VC, Why We are Making ZIRP Mistakes Again Today, Why Loss Ratio is BS and Upside Maximisation is Everything · IDENTIFIED FROM THE TRANSCRIPT · source

  7. “No one. Smart people are accessible whether or not you're on their board, they're on your board. You can take advice from people anytime. The last thing you need is unnecessary governance. No one, no one.”

    2024-04-03 · The Twenty Minute VC · 20VC: Founders Fund's Trae Stephens on Why The Most Competitive Deals are the Worst, Why No Company is Successful Because of their VC, Why We are Making ZIRP Mistakes Again Today, Why Loss Ratio is BS and Upside Maximisation is Everything · IDENTIFIED FROM THE TRANSCRIPT · source

  8. “Oh man, he's such a unique person. Most smart people have the ability to collate information, like we collect information from a lot of places and then we organize it and ship it. He's source material. He's not collating information. He's just generating. I could talk for days about all the things that I've learned from him. The most critical to this particular moment and what we went through in 2020-21 is that hype is not aligned with outcomes. In fact, it's often negatively correlated with outcomes. And so when something feels super consensus, you should be running away, not running toward.”

    2024-04-03 · The Twenty Minute VC · 20VC: Founders Fund's Trae Stephens on Why The Most Competitive Deals are the Worst, Why No Company is Successful Because of their VC, Why We are Making ZIRP Mistakes Again Today, Why Loss Ratio is BS and Upside Maximisation is Everything · IDENTIFIED FROM THE TRANSCRIPT · source

  9. “Most of the answers that I could give to that would definitely get me canceled. So I'm not going to say those things. But I think there are limits to human scalability. I went through a long period of my career where I was opportunistically saying yes to a lot of things that benefited me tremendously that I feel really good about, that I just don't have the ability to say yes to anymore. And so I think learning how to scale and then using no's strategically has been a big change for me in the last year.”

    2024-04-03 · The Twenty Minute VC · 20VC: Founders Fund's Trae Stephens on Why The Most Competitive Deals are the Worst, Why No Company is Successful Because of their VC, Why We are Making ZIRP Mistakes Again Today, Why Loss Ratio is BS and Upside Maximisation is Everything · IDENTIFIED FROM THE TRANSCRIPT · source

  10. “I think I would say this is going to be the hardest eighteen month stretch of your life, and it is worth it in every way. Just keep your head down and realize that there's light at the end of the tunnel.”

    2024-04-03 · The Twenty Minute VC · 20VC: Founders Fund's Trae Stephens on Why The Most Competitive Deals are the Worst, Why No Company is Successful Because of their VC, Why We are Making ZIRP Mistakes Again Today, Why Loss Ratio is BS and Upside Maximisation is Everything · IDENTIFIED FROM THE TRANSCRIPT · source

  11. “I think it would be better and more interesting if it were because I think that most of the advice that I've gotten the most out of is from existing founders or former founders or operators. They're the ones that have lived in those shoes. They're the ones that have wisdom that I can glean. And I think that if venture is about anything other than just access to capital, the people that have been operators are going to be much more useful.”

    2024-04-03 · The Twenty Minute VC · 20VC: Founders Fund's Trae Stephens on Why The Most Competitive Deals are the Worst, Why No Company is Successful Because of their VC, Why We are Making ZIRP Mistakes Again Today, Why Loss Ratio is BS and Upside Maximisation is Everything · IDENTIFIED FROM THE TRANSCRIPT · source

  12. “100%. The entropy on knowledge of operationally being engaged with the startup is so fast. All the things that I did at Palantir for six years, like I feel like were relevant for my first three years at Founders Fund. And then the software that we were using to do things is different. Cutting edge on the technology side is different. You're just constantly going through these shifts. And so I think being in a place where I'm operationally engaged at Androil, I'm up to date. Like I know what people are using. I know what is impacting our business in a meaningful way. I know what stuff that we started using that ended up kind of being not that useful that we turned off of. I'm keeping up on a day-to-day basis. And I think that that's a super valuable asset to my other job as a partner at Founders Fund.”

    2024-04-03 · The Twenty Minute VC · 20VC: Founders Fund's Trae Stephens on Why The Most Competitive Deals are the Worst, Why No Company is Successful Because of their VC, Why We are Making ZIRP Mistakes Again Today, Why Loss Ratio is BS and Upside Maximisation is Everything · IDENTIFIED FROM THE TRANSCRIPT · source

  13. “It's not that structured. It's much more reactive and flexible in any given day, you know, like today I had a pitch meeting and then this conversation and then I have two android meetings and then I have another pitch meeting. So I'll kind of like bounce back and forth between them. I think the important thing is like having that support team that's identifying the priorities and making sure that I'm like staying on track of making decisions where I need to make decisions that are high priority at any given moment”

    2024-04-03 · The Twenty Minute VC · 20VC: Founders Fund's Trae Stephens on Why The Most Competitive Deals are the Worst, Why No Company is Successful Because of their VC, Why We are Making ZIRP Mistakes Again Today, Why Loss Ratio is BS and Upside Maximisation is Everything · IDENTIFIED FROM THE TRANSCRIPT · source

  14. “It's tough, without a doubt. I set boundaries. I mean, I have, as I said, a lovely wife and two awesome kids. They're 10 and 8. I make sure that I make them breakfast driving to school every morning and I'm with them for dinner every night that I'm not traveling. It's really important to me to be present for my family as well. I have an awesome support team around me. I think that's like the only way that this is possible. I have an EA who's been with me the whole time I've been at Founders Fund that is truly world class. My chief of staff, Ellie Untermeier, is she's been with me for the last nine months now and she's making sure that I know what I'm doing and staying on task and keeping my priorities in line at Androil we have an incredibly talented executive team and I manage a portion of the business not the entire business and we have a high trust relationship across the entire execut team.”

    2024-04-03 · The Twenty Minute VC · 20VC: Founders Fund's Trae Stephens on Why The Most Competitive Deals are the Worst, Why No Company is Successful Because of their VC, Why We are Making ZIRP Mistakes Again Today, Why Loss Ratio is BS and Upside Maximisation is Everything · IDENTIFIED FROM THE TRANSCRIPT · source

  15. “Yeah, I mean, there's obviously questions that you should ask, but at the same time, like if the US government comes to us, let's say that we were making stinger missiles during the early Afghan conflict with the Mujahideen against the Soviet Union. If the US government comes to us as the producer of stinger missiles and says, we are supporting the Mujahideen in their fight with the Soviet Union, we want to transfer a thousand stingers to them in the next six months. We want you to produce it. Is it on us to decide, no, we don't want to do that because we have some thesis about what's going to happen in this conflict in 20 years? Or is it our responsibility in a democratically elected governmental system to say we are supporting the Department of Defense?”

    2024-04-03 · The Twenty Minute VC · 20VC: Founders Fund's Trae Stephens on Why The Most Competitive Deals are the Worst, Why No Company is Successful Because of their VC, Why We are Making ZIRP Mistakes Again Today, Why Loss Ratio is BS and Upside Maximisation is Everything · IDENTIFIED FROM THE TRANSCRIPT · source

  16. “We can't just randomly sell to governments that show up with bags of cash. That all is facilitated by the US DoD, the US Department of State. Obviously, we have to have conversations as an executive team about which use cases we're passionate about working on and stuff like that. But we are like massively controlled by the US government when it comes to like where we're allowed to send our stuff.”

    2024-04-03 · The Twenty Minute VC · 20VC: Founders Fund's Trae Stephens on Why The Most Competitive Deals are the Worst, Why No Company is Successful Because of their VC, Why We are Making ZIRP Mistakes Again Today, Why Loss Ratio is BS and Upside Maximisation is Everything · IDENTIFIED FROM THE TRANSCRIPT · source

  17. “Definitely not. No, we're selling munitions. We're selling government controlled ITAR restricted technology that the U.S. government has to facilitate the transfer of. And so it's the U.S. State Department that's deciding who they're going to send the tech to, not like random governments making decisions on money that they're spending”

    2024-04-03 · The Twenty Minute VC · 20VC: Founders Fund's Trae Stephens on Why The Most Competitive Deals are the Worst, Why No Company is Successful Because of their VC, Why We are Making ZIRP Mistakes Again Today, Why Loss Ratio is BS and Upside Maximisation is Everything · IDENTIFIED FROM THE TRANSCRIPT · source

  18. “No, that's what I'm saying. There are very few that can buy direct because they have adequate budget and they have the existing relationship with the United States that allows for the source of arms transfers”

    2024-04-03 · The Twenty Minute VC · 20VC: Founders Fund's Trae Stephens on Why The Most Competitive Deals are the Worst, Why No Company is Successful Because of their VC, Why We are Making ZIRP Mistakes Again Today, Why Loss Ratio is BS and Upside Maximisation is Everything · IDENTIFIED FROM THE TRANSCRIPT · source

  19. “This is probably not to put a target on your back, Harry, but this is the most naive question that non-defense people ask because the reality is that we don't decide. The US government decides. There aren't very many people that we can sell direct to, like the UK, Australia. There's just not that many people that are buying direct.”

    2024-04-03 · The Twenty Minute VC · 20VC: Founders Fund's Trae Stephens on Why The Most Competitive Deals are the Worst, Why No Company is Successful Because of their VC, Why We are Making ZIRP Mistakes Again Today, Why Loss Ratio is BS and Upside Maximisation is Everything · IDENTIFIED FROM THE TRANSCRIPT · source

  20. “Well, we should keep in mind that the co founder, CEO, is Brian Schimph, who is the most brilliant software engineer I've ever worked with. And he ran engineering at Palantir, actually before he came over to be the CEO at Androil. So Brian's kind of like the software tech genius of the company. Palmer is kind of the prodigy polymath hardware genius. They both work very closely together on product, like making sure that the thing we're delivering to the customer solves the problem and solves it in a way that is efficient and reliable. And then Matt Grimm, who's the other co-founder, he is the COO. He like runs the day-to-day operation. He's like a machine making sure that all the trains are running on time, which is hugely important.”

    2024-04-03 · The Twenty Minute VC · 20VC: Founders Fund's Trae Stephens on Why The Most Competitive Deals are the Worst, Why No Company is Successful Because of their VC, Why We are Making ZIRP Mistakes Again Today, Why Loss Ratio is BS and Upside Maximisation is Everything · IDENTIFIED FROM THE TRANSCRIPT · source

  21. “One of the most important things that I've learned about hardjack in the 10 years I've been at Founders Find is that you have to have someone on the founding team who's as good at business as the technical founder is at the tech. There's just no way around it. The most successful hardtech companies always are paired with brilliant business people. You can't just evaluate one side. You have to evaluate both.”

    2024-04-03 · The Twenty Minute VC · 20VC: Founders Fund's Trae Stephens on Why The Most Competitive Deals are the Worst, Why No Company is Successful Because of their VC, Why We are Making ZIRP Mistakes Again Today, Why Loss Ratio is BS and Upside Maximisation is Everything · IDENTIFIED FROM THE TRANSCRIPT · source

  22. “I think you kind of hinted at this around like having a holistic view on skills, but I really want to beat the drum and say, you have to be good at selling to the government to make companies in this sector work. You either have enough money to survive being bad at it for a long time, or you know what you're doing from the beginning. And I think there are way too many companies in this hype moment that are approaching this and saying like, I'm just going to build something really cool that warfighters love and expect that that's going to be sufficient. And it's not. And that's what we knew from the beginning at Andrew. And that's probably the most prescient thing we did is to say, we're going to hire a lobbyist literally in the first week of the company's existence. And we're going to build the relationship so we know we're going to be important for authorization and appropriation of funds to the programs that we're working on. And most startups just, they don't have the background to understand that. They don't have the capital to do it, even if they did understand. That's a big difference.”

    2024-04-03 · The Twenty Minute VC · 20VC: Founders Fund's Trae Stephens on Why The Most Competitive Deals are the Worst, Why No Company is Successful Because of their VC, Why We are Making ZIRP Mistakes Again Today, Why Loss Ratio is BS and Upside Maximisation is Everything · IDENTIFIED FROM THE TRANSCRIPT · source

  23. “I mean, I am deeply committed to the idea that I will return to civil service at some point in my career. I don't know what from a timing perspective that will look like, but I'm deeply committed to that. As far as elected office goes, my wife, who I love very much, has told me that she will divorce me if I have a run for office. And so elected office is off the table,”

    2024-04-03 · The Twenty Minute VC · 20VC: Founders Fund's Trae Stephens on Why The Most Competitive Deals are the Worst, Why No Company is Successful Because of their VC, Why We are Making ZIRP Mistakes Again Today, Why Loss Ratio is BS and Upside Maximisation is Everything · IDENTIFIED FROM THE TRANSCRIPT · source

  24. “I mean, the level of historical depth was really special. My concern was less about like, is Putin impressive? Is he unhinged? It was more so that like, man, we have really just allowed our Western political system to just be destroyed by mediocrity. Our standards for our elected leaders are like bargain basement level. It's really pathetic. I don't know what it's going to take to convince talented people to put themselves in a position where they're running for political office, but I think this is a great risk to human civilization at this point. We need to do a better job.”

    2024-04-03 · The Twenty Minute VC · 20VC: Founders Fund's Trae Stephens on Why The Most Competitive Deals are the Worst, Why No Company is Successful Because of their VC, Why We are Making ZIRP Mistakes Again Today, Why Loss Ratio is BS and Upside Maximisation is Everything · IDENTIFIED FROM THE TRANSCRIPT · source

  25. “Yeah, exactly. To be fair, shortly before Androil was founded, Putin went to a university, a technical university in Moscow, and he said, he who controls artificial intelligence will control the world. And so we weren't the only people that were thinking about this. He had clearly been telegraphing his intention with tech development in Russia since even before Enroll was started.”

    2024-04-03 · The Twenty Minute VC · 20VC: Founders Fund's Trae Stephens on Why The Most Competitive Deals are the Worst, Why No Company is Successful Because of their VC, Why We are Making ZIRP Mistakes Again Today, Why Loss Ratio is BS and Upside Maximisation is Everything · IDENTIFIED FROM THE TRANSCRIPT · source

  26. “No, no, yeah. Like I said, I'm going to do the opposite of what Chris Dixon did. And I'm going to say I don't have a crystal ball. I'm not predicting the future. I think all of us on the founding team of Androil, like we perceived that we were going to care a lot more about these things post in surge counterinsurgency counterterrorism. But obviously, like, I would not have guessed that all these global conflicts would have necessarily happened. But I think the writing has been on the wall for a while that globalization didn't really work and that traditional strategic deterrence with nuclear weapons was not going.”

    2024-04-03 · The Twenty Minute VC · 20VC: Founders Fund's Trae Stephens on Why The Most Competitive Deals are the Worst, Why No Company is Successful Because of their VC, Why We are Making ZIRP Mistakes Again Today, Why Loss Ratio is BS and Upside Maximisation is Everything · IDENTIFIED FROM THE TRANSCRIPT · source

  27. “Taken the risk of funding the development of those capabilities. We're not asking you to believe us in a response to an RFP. We're just going to show you that we can do it. And that shifting that risk to us rather than putting it on the government was really important to those early wins.”

    2024-04-03 · The Twenty Minute VC · 20VC: Founders Fund's Trae Stephens on Why The Most Competitive Deals are the Worst, Why No Company is Successful Because of their VC, Why We are Making ZIRP Mistakes Again Today, Why Loss Ratio is BS and Upside Maximisation is Everything · IDENTIFIED FROM THE TRANSCRIPT · source

  28. “Yeah, I mean, as I mentioned before with a different set of problems, I think this is primarily a culture problem. All of the authorities that need to exist to buy products from non-traditional companies, they all exist. You can do it. If the government wanted to do it, it could do it. The problem is that they don't. They don't feel as comfortable with it. They claim that it's a much riskier path. I happen to disagree with that particular fact. But I think the reason why in the early stages people were willing to take a chance on us is that we were working very focused on problems that were clearly software problems. And I think they had had like long running bad experiences with the traditional players in the space coming to them, delivering capabilities that relied on the technology, delivering against the problem set depended on software execution. And so when we come in and we have a demo and we say we can actually do the thing that we know you're trying to do and we can demonstrate that to you in real time.”

    2024-04-03 · The Twenty Minute VC · 20VC: Founders Fund's Trae Stephens on Why The Most Competitive Deals are the Worst, Why No Company is Successful Because of their VC, Why We are Making ZIRP Mistakes Again Today, Why Loss Ratio is BS and Upside Maximisation is Everything · IDENTIFIED FROM THE TRANSCRIPT · source

  29. “Is a capital advantage to having a billionaire as a co founder at Palatir and SpaceX, certainly it took a really, really long time to get momentum on the business side of things. And so you needed to be able to raise money through a drought while you were figuring that out. At Andrew, it's a little different now because we have the benefit of standing on the shoulders of giants. We have done this before. We saw the way it worked with them. There are hundreds of people who have executed this sales motion successfully. It's not quite as hard, but there's still a huge capital advantage to going in and saying, this is capital intensive. It's going to be really hard. We want to raise a war chest to finance getting through to program of record wins. And this isn't something that's going to take six months. It's something that's probably going to take closer to three years. It is important to have the ability to go out and raise that sort of capital.”

    2024-04-03 · The Twenty Minute VC · 20VC: Founders Fund's Trae Stephens on Why The Most Competitive Deals are the Worst, Why No Company is Successful Because of their VC, Why We are Making ZIRP Mistakes Again Today, Why Loss Ratio is BS and Upside Maximisation is Everything · IDENTIFIED FROM THE TRANSCRIPT · source

  30. “I think this is core to doing work in this particular sector. And it's not the field of dreams. You know, like if I build a really cool product or capability, it's not like the government's just going to show up and be like, yeah, I'm a buyer of whatever it is that you're building that you think is solving a problem. You have to have a holistic view of government relations, lobbying, being really good at telling a narrative, communicating to agency heads, decision makers, and your potential users in the field. This is like the type of company that's really, really hard to build for a handful of teenagers in a garage. It's not like a software company that has like the same type of breakout story as Facebook. And I don't think it's like random chance that Palantir SpaceX and Android were all founded by billionaires. It turns out that it's that hard to do this. And so you have to approach it with that in mind.”

    2024-04-03 · The Twenty Minute VC · 20VC: Founders Fund's Trae Stephens on Why The Most Competitive Deals are the Worst, Why No Company is Successful Because of their VC, Why We are Making ZIRP Mistakes Again Today, Why Loss Ratio is BS and Upside Maximisation is Everything · IDENTIFIED FROM THE TRANSCRIPT · source

  31. “Yeah, so like when we were preparing for a fight against the Soviet Union, we were building nuclear submarines, aircraft carriers, advanced fighter jets with the idea that we're competing with MiG-29s in an airspace. So if you have to build like a counter air system and you're shooting a two and a quarter million dollar missile at a tens of millions of dollar MiG29, fine. That's a trade-off you're willing to make. But in modern conflict, we're talking about swarms of drones, kamikaze drones, low cost remote controlled systems. You're talking about autonomy. And so can we afford to shoot a two million dollar patriot missile at a $150,000 cruise missile or kamikaze drone? No, it doesn't make sense anymore. Now the whole thing is just messed up. And so when you're not fighting MIG29s, you have to make decisions about how you're going to do airspace superiority. And this translates to every domain. It's like we have to make the same decisions with undersea, with surface vessels, with ground vehicles, with airspace, with space.”

    2024-04-03 · The Twenty Minute VC · 20VC: Founders Fund's Trae Stephens on Why The Most Competitive Deals are the Worst, Why No Company is Successful Because of their VC, Why We are Making ZIRP Mistakes Again Today, Why Loss Ratio is BS and Upside Maximisation is Everything · IDENTIFIED FROM THE TRANSCRIPT · source

  32. “No, it's specifically like we're no longer competing with rogue agents and non-state actors. Our competition are huge nation states with a lot of power resting behind them, places like China, Iran, Russia. We had for over a decade, really like a decade and a half, we have just been entirely focused on counterinsurgency. The problems that you're dealing with with things like airspace superiority in Iraq or Afghanistan, totally different than determining airspace superiority in Ukraine or in a potential Taiwan conflict. And so we really needed to like shift to a mentality of how do we compete with great powers and how has that changed since the last time we did this during the Cold War? And the answer is significantly. The capabilities, the huge expensive platforms that we built for competing with the Soviet Union are not particularly relevant in a future conflict with, you know, China or in Iran.”

    2024-04-03 · The Twenty Minute VC · 20VC: Founders Fund's Trae Stephens on Why The Most Competitive Deals are the Worst, Why No Company is Successful Because of their VC, Why We are Making ZIRP Mistakes Again Today, Why Loss Ratio is BS and Upside Maximisation is Everything · IDENTIFIED FROM THE TRANSCRIPT · source

  33. “I mean, I had spent my entire career in national security. I worked in the intelligence community after college. And then I was at Palantir really early on supporting intelligence and defense programs. This was a space that I've always been really passionate about. I learned a ton of lessons from that ten-year run prior to joining Founders Fund. And sort of growing.”

    2024-04-03 · The Twenty Minute VC · 20VC: Founders Fund's Trae Stephens on Why The Most Competitive Deals are the Worst, Why No Company is Successful Because of their VC, Why We are Making ZIRP Mistakes Again Today, Why Loss Ratio is BS and Upside Maximisation is Everything · IDENTIFIED FROM THE TRANSCRIPT · source

  34. “I mean, there will be other companies that might be worth taking a bet on for sure. You know, if you were a social media investor, you missed Facebook, but you got conviction and invested in Snap, you actually did pretty well. There are exceptions. There are places where you should stay open to the idea that there's a brilliant founder and a team that has the ability to go and to make something in a market. But I think that this idea that investing broadly across an entire category where you're doing relative rather than absolute assessments is just bad strategy. It doesn't make any sense. Like there's not going to be a hundred SpaceX. There's probably not going to be two SpaceX, but if there are, you should just be making that one investment in a really high conviction thing that you would have done regardless of whether or not you were looking at that category. Yes, that might be a violation of the rule of, look at me, I'm so smart. I don't think I'm so smart. I think like the founders are the ones that are really smart that are changing the world and I'm just lucky to be on the ride with them.”

    2024-04-03 · The Twenty Minute VC · 20VC: Founders Fund's Trae Stephens on Why The Most Competitive Deals are the Worst, Why No Company is Successful Because of their VC, Why We are Making ZIRP Mistakes Again Today, Why Loss Ratio is BS and Upside Maximisation is Everything · IDENTIFIED FROM THE TRANSCRIPT · source

  35. “Palo Alto Networks or CrowdStrike, you're probably losing money. It turns out that the core monopoly investment that won is the only one that mattered. In the rest of the category, matters a lot less. So if you have some vision for what the future looks like and you're looking for a company to invest in that's doing it rather than starting it yourself, you're probably already too late.”

    2024-04-03 · The Twenty Minute VC · 20VC: Founders Fund's Trae Stephens on Why The Most Competitive Deals are the Worst, Why No Company is Successful Because of their VC, Why We are Making ZIRP Mistakes Again Today, Why Loss Ratio is BS and Upside Maximisation is Everything · IDENTIFIED FROM THE TRANSCRIPT · source

  36. “Yeah, as a founder, I think, yeah, Androll in some way was me predicting where I thought the defense market was going to go. And so as a founder, I think that is what their job is. As a VC, I think like your investment thesis is only as good as the strength of the companies that come and pitch to you. And so did I have some super crazy interest in supply chain and logistics or a thesis in supply chain and logistics before I invested in Flexport? No, of course not. Like I needed Ryan to like convince me of the timing to the market. And so I think that anytime you're looking at a thesis about the future, you are saying there is a category and I have like some belief in that category. And that means you're probably too late. Like if you're like, I have a thesis on space tech, but you're not a spacex investor, you're probably losing money. If you're like, I have a thesis in crypto, but you're not in Bitcoin and Coinbase, you're probably losing money. If you have a thesis in cyber, but you're not in.”

    2024-04-03 · The Twenty Minute VC · 20VC: Founders Fund's Trae Stephens on Why The Most Competitive Deals are the Worst, Why No Company is Successful Because of their VC, Why We are Making ZIRP Mistakes Again Today, Why Loss Ratio is BS and Upside Maximisation is Everything · IDENTIFIED FROM THE TRANSCRIPT · source

  37. “I think that it's not on me as a venture capitalist to evaluate markets and then pick companies to time some arbitrary thesis I have for any particular market. That's like asking too much. VCs are not super talented specialists in any one space. Like the best VCs are kind of generalists. And that means that they might have like a shallow understanding of a wide set of things, but they probably don't have like some massive polymath death of understanding of every type of company they're going to look at. And so I think it's really on the founders to communicate why the market timing thing is relevant to their business. And the best founders are able to do that in a way that's super compelling. And so again, I think this comes down to like, do you have conviction?”

    2024-04-03 · The Twenty Minute VC · 20VC: Founders Fund's Trae Stephens on Why The Most Competitive Deals are the Worst, Why No Company is Successful Because of their VC, Why We are Making ZIRP Mistakes Again Today, Why Loss Ratio is BS and Upside Maximisation is Everything · IDENTIFIED FROM THE TRANSCRIPT · source

  38. “I think those examples are less common than the ones where the momentum drove them all the way through. I don't disagree with specific examples. I just think you're cherry-picking very specific examples that are the exception, not the rule.”

    2024-04-03 · The Twenty Minute VC · 20VC: Founders Fund's Trae Stephens on Why The Most Competitive Deals are the Worst, Why No Company is Successful Because of their VC, Why We are Making ZIRP Mistakes Again Today, Why Loss Ratio is BS and Upside Maximisation is Everything · IDENTIFIED FROM THE TRANSCRIPT · source

  39. “Wow, that's really fast. I don't know if I would say the first month, but definitely in the first six months, I think you can get a sense for momentum. There's almost nothing as important as momentum in startups. There's this, I think, idea, especially in Deep Tech, that like if you just hold out long enough, like eventually they'll cross enough tech milestones that things will seem like they're, you know, starting to move. And even in deep tech, momentum turns out to be the most important thing. And you can see that. You can feel it. It's visceral. And I think that it's definitely not five to ten years like people often talk about as venture capital windows. And if you go back and you look at the best companies in any portfolio, they were kind of the best companies at every stage. Incredibly awesome at A. They were incredibly awesome at B. They were incredibly awesome at C. V. Very rarely do you see a company that struggled for a long time and then like suddenly hit an unlock. That doesn't really happen that often.”

    2024-04-03 · The Twenty Minute VC · 20VC: Founders Fund's Trae Stephens on Why The Most Competitive Deals are the Worst, Why No Company is Successful Because of their VC, Why We are Making ZIRP Mistakes Again Today, Why Loss Ratio is BS and Upside Maximisation is Everything · IDENTIFIED FROM THE TRANSCRIPT · source

  40. “Yeah. Like, I would say the most common example is where you have a founder that doesn't build like a diverse enough set of skills around them with the rest of their founding team or their executive team, and they assume that their, you know, specific superpower will be enough to make it work. Because there are a lot of brilliant people. Some of them are like scientists. Some of them are software engineers. Some of them are business people. You know, you could have like a sales founder that it could be revolutionary and could change in industry, but they need to have a complete team. And so I think sometimes I've gotten really excited about a single person. And then it turns out that there isn't a completeness of team. Maybe that person does not have a particular strength in recruiting. And that becomes super problematic for the business. So I think like you want to see the depth and bench with even the best founders.”

    2024-04-03 · The Twenty Minute VC · 20VC: Founders Fund's Trae Stephens on Why The Most Competitive Deals are the Worst, Why No Company is Successful Because of their VC, Why We are Making ZIRP Mistakes Again Today, Why Loss Ratio is BS and Upside Maximisation is Everything · IDENTIFIED FROM THE TRANSCRIPT · source

  41. “There are plenty of situations in which I've done exactly that, or I've at least been tempted to do that. Again, the founder is the Atomic Element, a really great founder and team are going to be able to pivot their way into strong product market fit, whereas a great idea with a weaker founding team are going to get stuck and will likely spin out. So you have to start with that founder aspect first.”

    2024-04-03 · The Twenty Minute VC · 20VC: Founders Fund's Trae Stephens on Why The Most Competitive Deals are the Worst, Why No Company is Successful Because of their VC, Why We are Making ZIRP Mistakes Again Today, Why Loss Ratio is BS and Upside Maximisation is Everything · IDENTIFIED FROM THE TRANSCRIPT · source

  42. “Are some great enterprise SaaS companies? I think there's some great founding stories behind enterprise SaaS companies as well. I just think that as a category, there are a lot of them that are pretty uninspired.”

    2024-04-03 · The Twenty Minute VC · 20VC: Founders Fund's Trae Stephens on Why The Most Competitive Deals are the Worst, Why No Company is Successful Because of their VC, Why We are Making ZIRP Mistakes Again Today, Why Loss Ratio is BS and Upside Maximisation is Everything · IDENTIFIED FROM THE TRANSCRIPT · source

  43. “No, because I think the best founders are going to pick really strong markets and they will increase the probability of success even in like a middling market. I think the founder has to be the atomic element always. But obviously like there are going to be great founders that do kind of middling things. I wrote an essay called Choosing Good Quests that you can read online with Marky Wagner, who's actually one of our portfolio founders as well. And I think this is like endemic, actually, in Silicon Valley, where you have all these really talented people that have the potential to go and do something that's like world changing. And instead, they do something that's easy, that they know they're going to make money from. It's like George Clooney sells to Keelah on the back of his brand. Good for George Clooney. It's a commodity. There's nothing special about his tequila. It's the same thing with enterprise SAS. If you're like a multi-time successful entrepreneur and you're starting like a fairly simple, trivial enterprise SaaS company, shame on you.”

    2024-04-03 · The Twenty Minute VC · 20VC: Founders Fund's Trae Stephens on Why The Most Competitive Deals are the Worst, Why No Company is Successful Because of their VC, Why We are Making ZIRP Mistakes Again Today, Why Loss Ratio is BS and Upside Maximisation is Everything · IDENTIFIED FROM THE TRANSCRIPT · source

  44. “Every single one of them. There was someone on the team banging the table saying, This is a hundred billion dollar company.”

    2024-04-03 · The Twenty Minute VC · 20VC: Founders Fund's Trae Stephens on Why The Most Competitive Deals are the Worst, Why No Company is Successful Because of their VC, Why We are Making ZIRP Mistakes Again Today, Why Loss Ratio is BS and Upside Maximisation is Everything · IDENTIFIED FROM THE TRANSCRIPT · source

  45. “I think the example that you just offered is exactly what differentiates founders fund, pushing your team to do things like deal memos, for example, forces them to like put down a number that they're later going to be judged by. So the investment team is going to go back and they're going to look at that investment memo and they're going to say, wow, you outperformed expectation on this deal. Isn't that great? If you don't hit it, you know, you're going to be held accountable for missing. And so of course everyone is going to underestimate because they want to lower the bar that's required for them getting credit for some big outcome. At Founders Fund, we won't do the investment if we don't believe it can return the fund. And so we absolutely have to have crazy amounts of conviction to make these bets. And I think that is like core to our culture. If you look at any of the big outcomes across our portfolio, whether it's Spotify, Stripe, Airbnb, Palantir, SpaceX, Androil, STEM Centrics, you look at all of these big outcomes.”

    2024-04-03 · The Twenty Minute VC · 20VC: Founders Fund's Trae Stephens on Why The Most Competitive Deals are the Worst, Why No Company is Successful Because of their VC, Why We are Making ZIRP Mistakes Again Today, Why Loss Ratio is BS and Upside Maximisation is Everything · IDENTIFIED FROM THE TRANSCRIPT · source

  46. “While I've only been in the industry for 10 years, the reality is that startups survive for longer than anyone thinks they will. There are certainly investments that I've made that are still puttering along, haven't figured out a way to hit the inflection. But I wouldn't call them a loss. The biggest thing that I've learned from these is that there are times where I've gone in and I've said, this has 10x potential from where it is right now. And therefore, it's probably worth making a bet. I look back on some of those investments that I've made and I've said, even if it ten X from a small series A, it's not going to return the fund. It's not going to really move the needle. Really, I should be focusing on finding massive upside because the opportunity costs of deploying these checks is actually quite high.”

    2024-04-03 · The Twenty Minute VC · 20VC: Founders Fund's Trae Stephens on Why The Most Competitive Deals are the Worst, Why No Company is Successful Because of their VC, Why We are Making ZIRP Mistakes Again Today, Why Loss Ratio is BS and Upside Maximisation is Everything · IDENTIFIED FROM THE TRANSCRIPT · source

  47. “All upsize maximization. No, downside protection is silly. Like, I think if you go back and you look at our portfolio, like whether or not we got our money back has never impacted fund performance. Like the only thing that moves the needle for a venture fund of our size is $10 plus billion dollar category defining winners. That's it. Everything else is just a rounding error to zero.”

    2024-04-03 · The Twenty Minute VC · 20VC: Founders Fund's Trae Stephens on Why The Most Competitive Deals are the Worst, Why No Company is Successful Because of their VC, Why We are Making ZIRP Mistakes Again Today, Why Loss Ratio is BS and Upside Maximisation is Everything · IDENTIFIED FROM THE TRANSCRIPT · source

  48. “Well, I do think it's important to hold reserves to double down in places where you see fund returning potential. I don't believe that doing that in a way that's like guaranteeing your portfolio company is that you have like reserve checks that are going to back into them. I don't think that model makes sense because, and this is, by the way, the biggest risk of taking seed money from an institutional fund, is that like doing your paradis super lazy, doing more than your paradis is actually a signal. And if you're not going to have real signal, if you don't have high conviction, you probably shouldn't be doing anything at all because the prorata, again, is just super lazy. The strategy really should be make your bets and then where the conviction is justified. You should be doubling, tripling, quadrupling down. And so you do need to have fun access to do that so that you're not striping across a bunch of different funds. But I don't think doing that in a really structural procedural way is smart either.”

    2024-04-03 · The Twenty Minute VC · 20VC: Founders Fund's Trae Stephens on Why The Most Competitive Deals are the Worst, Why No Company is Successful Because of their VC, Why We are Making ZIRP Mistakes Again Today, Why Loss Ratio is BS and Upside Maximisation is Everything · IDENTIFIED FROM THE TRANSCRIPT · source

  49. “It's a good question. I think probably somewhere in the middle, we have a lot of money under management, but we also are very intentional about playing our core venture strategy. And so we're not trying to be cute with weird structures and debt instruments and big category-specific funds, nothing like that. Our core vision is we just want to invest in the best founders, building the best companies that are going to be category defining. And I think you can do that through a very traditional venture model of can we get a check into the Series A? And can we follow on to the ones that are working? And that's what we do. And I think that's what we're always going to do.”

    2024-04-03 · The Twenty Minute VC · 20VC: Founders Fund's Trae Stephens on Why The Most Competitive Deals are the Worst, Why No Company is Successful Because of their VC, Why We are Making ZIRP Mistakes Again Today, Why Loss Ratio is BS and Upside Maximisation is Everything · IDENTIFIED FROM THE TRANSCRIPT · source

  50. “You can definitely get good advice from people throughout the industry, whether it's other founders or VCs, and a great founder will seek wisdom from people they trust that have experience that's relevant to what they're doing. Do I think that doing that in the structure of gather a bunch of investors on your board is the way to do it? No. I think that's really stupid. Any company that's successful is not successful because their VCs are really smart. That's not how this industry works. The VC is not going to do the hard work that's involved with building a company. The best companies are going to be the best companies because the founder and the team that they've built around them is awesome and has a plan and a vision for the future. The best of VC can do is ride along and not be annoying and not create drag for the company. Maybe on occasion they can provide some advice or introductions that are helpful, but that will not be the reason the company works.”

    2024-04-03 · The Twenty Minute VC · 20VC: Founders Fund's Trae Stephens on Why The Most Competitive Deals are the Worst, Why No Company is Successful Because of their VC, Why We are Making ZIRP Mistakes Again Today, Why Loss Ratio is BS and Upside Maximisation is Everything · IDENTIFIED FROM THE TRANSCRIPT · source