• SPAC is a great option for companies to accelerate the time to going public in 6 to 8 weeks versus 2-6 months for traditional IPO.
  • SPAC is a great option for some companies, particularly companies that want to raise capital quickly. There is some ability to accelerate the time to going public with a SPAC, although truthfully, with the right managers, executives, and external advisors, you can go public in a traditional process more rapidly than people think. But in the SPAC world, the expectation is six to eight to twelve weeks. The traditional IPO process should only take two months, but a lot of people tell you to take six.
• The biggest difference between a SPAC and traditional S-1 is ability to project into the future the revenue potential one to three years out. If you have a deeply technology-based company where the cost of goods spread through, and then everything works magically, those may be very well suited for a SPAC because you can explain this to public market investors and you can talk about the revenue potential if you hit these technical milestones.
  • The real biggest difference is actually fundamentally about your ability to project into the future. Typically, companies with significant revenue potential one to three years out might prefer a SPAC because you're allowed to guide publicly the potential of the revenue, whereas in the traditional S-1 you wouldn't be allowed to do that.
  • So, if you have a linear business where you can just extrapolate from your current revenues, let's say 2021, 2020, 2019, and you're just asking investors to extend that line, a traditional IPO works quite well. But on the other hand, if you have a deeply technology-based company, for example, where you have to have a technical breakthrough, cost of goods spread through, and then everything works magically, those may be very well suited for a SPAC because you can explain this to public market investors and you can talk about the revenue potential if you hit these technical milestones. And that's something that's pretty attractive and kind of a durable advantage for SPACs.
• I've had this long-standing view for over a decade that companies should go public as soon as they really are a sustainable business, and that's probably as low as a $50M run rate and some predictability into the future about the growth potential.
  • Well, I hope that more companies go public more quickly. I've had this long-standing view for over a decade that companies should go public as soon as they really are a sustainable business, and that's probably as low as a $50M run rate and some predictability into the future about the growth potential. I've shared this view with Bill Gurley of Benchmark, and it's been proven to be successful advice. Unfortunately, there are several companies that didn't listen to the advice and may have suffered because of it.
  • But right now, I think a lot of founders are paying attention to this advice. They're seeing public companies being extremely well-valued in terms of their ability to have access to capital and their growth potential. They're seeing companies like Tesla being fully valued in the public markets, companies like Carvana being fully valued at $42 billion in the public markets today, companies like Zoom being extremely valued in the public market, and Shopify. All of these companies are being appreciated by investors. So there's no real reason to buy the excuses of being a private company anymore.
• As a board member, I like to be a cartoonish mirror and play back what a founder is articulating about his or her business. And I think that's what a good board member does. They play back for the founder, for the CEO, for the executive team, what they hear and what they see in the metrics, and ask probing questions, "Is this what you mean? Is this what you're trying to build? Is this where you're trying to achieve?”
  • I have no power. All I can do is exercise authority through influence. And basically, what I like to do is basically be a cartoonish mirror and play back what a founder is articulating about his or her business. And I think that's what a good board member does. They play back for the founder, for the CEO, for the executive team, what they hear and what they see in the metrics, and really say, "Is this what you mean? Is this what you're trying to build? Is this where you're trying to achieve?" And then they can react to that and say, "You know, what? That looks a little weird. That looks not exactly what I thought I was building. Maybe I wanted to tune this. Maybe I want to edit this. But I want to change this all to this." And so that's what I do pretty much all day long. My office was set up like a psychologist’s office or psychiatrist office, with a table with two chairs, and basically, we would sit down and have a conversation. I would just ask those probing questions, sort of a Socratic method, almost like law school. And then the dialogue is what’s actually more interesting to the founder than any specific piece of advice.
• As a board member, I try to do is basically ask myself, "If this is my company, and I was the CEO, what would I want to know?" And then just ask those questions. Once in a while, a conversation about one of those topics can lead to an epiphany for the CEO. And you can see their eyes illuminate when you say something that resonates. And so that's sort of what I live for.
  • I think what I try to do is basically ask myself, "If this is my company, and I was the CEO, what would I want to know?" And then just ask those questions. And you know, that leads you down a set of discussions. Typically, though, most CEOs will show up with an agenda. They'll walk in with a notebook, something like this, and they'll have three to five discussion topics. And those topics are usually the things they're struggling with. By definition, the really good CEOs we work with, if the answers are easy or obvious, they don't bother asking the board member. They're only going to raise the questions that they're struggling with, that are controversial, that have significant trade-offs. So sometimes they'll actually start smirking or laughing in the middle of the conversation, because I can just tell what's coming next. I know what the three or four hardest questions like that are that they're struggling with, and I can start to laugh because I know they're going down with lists. But it's actually very rewarding for someone like me, because once in a while, a conversation about one of those topics can lead to an epiphany for the CEO. And you can see their eyes illuminate when you say something that resonates. And so that's sort of what I live for, is the ability to help some of the most talented people ever succeed by solving their own problems.
• I really fundamentally believe that if you have the right people doing the right things, everything else will take care of it. So fundamentally, a lot of my time and effort is around: Do we have the right people doing the right things? A little bit like being a general manager of a baseball team.
  • Should I hire this person? What kinds of people should I hire? How do I complement my current team? Everybody has a team, and no team is complete, and no team is perfect. So, a set of questions is: How old do you think my team's performing? If you see the other really talented teams, where are their gaps? Where should I upgrade? What kinds of person, what DNA should I look for? Is this person a great fit? A large set of topics. You know, we have an expression that we use at Square that Vinod Khosla taught me. I really fundamentally believe that if you have the right people doing the right things, everything else will take care of it. It's healthy. If the wrong people are doing the wrong things, nothing’s going to work. So fundamentally, a lot of my time and effort is around: Do we have the right people doing the right things? A little bit like being a general manager of a baseball team. Do we have a very second base with their basement? You know what we need, where do we complement what we're going to have.
• Prioritization is investing in 2-3 to 4-5 ideas on product development list that has meaningful potential to add zero to dashboards.
  • The good news about high-growth companies is they tend to have a lot of really good ideas floating around. The market is really pulling them. There's an argument that says we want more of this. And so, you have this wish list of product development that may be pages long and the key is to invest in the two to three to four or five that can meaningfully accelerate the business. What meaningfully has potential to add zero to the dashboard, not 10% percent. I think 10 percent is great, and compounding works over a long period of time, and absolutely companies should be investing in that. But they also need to invest in breakthrough ideas, breakthrough technologies, breakthrough products. And that is something that really can advance and create an inflection. And so, choosing among really good ideas is actually hard. In a company, there's like non-linear differences between choosing between A and B, and the first and second answer might be a power order difference. So it's really important to get that right. So I’ll spend a lot of time with founders debating the sequencing and the prioritization and giving them, like, maybe a conceptual framework for how to think, how to improve that decision-making.
• One of the reasons I wanted to invest immediately in AirBnB was early on they built their payment system because they realized showing up with $200 dollar to your host is never going to be a mainstream product.
  • One of the most important things I heard from Airbnb early on that actually impressed me, and one of the reasons why I wanted to invest immediately, was that even when they were three people, they built their own payment system. It might have sounded really crazy back then, because there wasn't really like a Stripe option that would have made it easier. They built from scratch their own payment system, because they realized that showing up in, let's say, Austin with a bundle of two to three hundred dollars in the middle of the night to give to your host was never going to be a mainstream product. Unless they made it a seamless way of transmitting money from the renter to the host, there was no way this was going to take off. And so they built it from scratch. And still to this day, they're running basically a proprietary payment company at Airbnb, because of the legacy history of understanding that simplifying the value proposition was indispensable. There's no excuses, regardless of the fact that they only had three people and one engineer.
• Cash App was launched internally in January 2013 using a technology that was created in 2010. It took a while to get true product-market fit and there was a wide belief in market that Venmo was more important, even though they were completely incompetent.
  • Cash App was launched internally in January 2013. It was created based on some research and technology work that we had actually invested in in 2010 and 2011. We had some interesting innovation on the technical side about how to liberate some of the payment networks in ways that other people didn't appreciate. But we didn't really know how to use it from a business or product standpoint, so we kind of put it on the shelf. (It's kind of a phrase Jack likes.) Then we pulled it back off the shelf in late 2012 and said, "You know, what? We may be able to do some interesting things with this technology that we've invented, discovered, and patented. Let's try it." And so that's basically what happened.
  • Then it took a while to get true product-market fit. I think the team was incredibly effective at some orthogonal, somewhat original, unconventional marketing. I also think that it just takes a little bit of time to see the network effect. You know, even if it's growing by 10 users per week or per month, whatever, it takes a while before the scale is obvious when you start with literally tens of users. So it took several years, I think, for the company, even internally, let alone externally, for people to appreciate it.
  • Also, there was a wide belief in the market that Venmo was this important company, important product, and it was going to you know, dominate. And you know, anybody who knew anything about Venmo or PayPal knew they were completely incompetent, and there's no way they were going to leverage this to its fullest potential. But a lot of people were kind of blind to Cash App because they're like, "Oh, everybody's been doing this," which is factually not true.
• Understanding the milestones where there's perceived inflection, how to sequence it, and how to frame the value proposition of the company to investors is something that a really good venture capitalist should be effective at. I give a founder 12 to 18 months advanced warning of, "Here's where you really need to get to, and here's why," that allows them to move to pull levers and get things set up for success.
  • Any good investor wants to be involved in capital strategy. High-growth companies tend to raise a lot of capital. Understanding the milestones where there's perceived inflection, how to sequence it, and how to frame the value proposition of the company to investors is something that a really good venture capitalist should be effective at. We're writing checks all day long. I consider investing in new companies literally every day. So, I have a pretty good feel for what resonates with investors, what kind of inflection people expect to see at different stages, and how they're going to get graded based upon their current way of describing the business. That's something that's really important. If I can give a founder 12 to 18 months advanced warning of, "Here's where you really need to get to, and here's why," that allows them to move to pull levers and get things set up for success. Whereas a mediocre investor sometimes can only give feedback at the last minute, but that doesn't really do any good.
• Successful entrepreneurs are very original first-principles thinkers who don't take excuses. They're just going to walk through the wall, over the wall, under the wall, around the wall, make friends with the wall. You can see their tenacity and grill early when you meet these people.
  • The key pattern of successful entrepreneurs at the end of the day is that you have these very original first-principles thinkers who don't take excuses. They're just going to walk through the wall, over the wall, under the wall, around the wall, make friends with the wall. Somehow or another, that wall is not going to be a problem. Most people in society, let's call it 99% of society, when it confronts a wall, they say, "Oh, that's a wall. What do I do?" The people that sort of found these companies don't get terrified. They don't get nervous. They find a solution, and they will just keep trying to identify a solution to this wall until they do. You can tell this pretty early when you meet these people. The tenacity, or grit, if you like that term instead, but they're fundamentally similar. The original thinking about topics that other people just take superficial answers for, it just stands out right away. Like sometimes 30 seconds into a conversation, usually by three minutes, it's pretty obvious.
• Life experience predict many characteristics successful founders. A really high fraction have been at least founded or co-founded by immigrants. Not accepting excuses that other people normally would accept is a sign of great founders.
  • I do think life experiences predict many of those characteristics. I don't know if you have to be an immigrant, but certainly look at the history of breakthrough companies: a really high fraction have been at least founded or co-founded by immigrants. So, you know, it's certainly not wrong empirically.
  • I think you can see signs, though, of not accepting excuses that other people normally would accept. I mean, like for example, a kind of silly example from my own life: I remember, and this is probably common across America, coming along with like a minus in some report card, let's say fourth grade, fourth or fifth grade. And you know, I was pretty content with that because in my view we were on a report card, uneven on a book report or something or midterm, and I remember not being terribly unhappy with the grade. And I would show it to my parents, and my mom would just be furious about it. And then, well, you know, my reaction would be like, "Well, everybody else got a minus." And she's like, "Well, everybody else is not my son." And so, I think you can learn these kinds of principles very early in life, and they stick with you. Same thing: you know, there's some things from one of my soccer coaches growing up was, you know, more on the tenacious side. He was a very high-maintenance coach. And you know, there's just like little pieces of the puzzle that come together and form somebody, but maybe form you fairly early in life. You know, I'm literally thinking about prior to, you know, ninth grade kind of experiences, and that may dictate a lot of where you go and your sort of values for the rest of your life. I think eventually they may degrade, but they degrade mostly to success, not failure. Meaning, you know, you do get comfortable with success, and that is somewhat inconsistent with continuing success.
• Always aim for something important and ambitious. Because the fixed cost of the pain is pretty substantial if you're going to start something from scratch.
  • I think you have to choose a task that you really care about. Right? Because banging your head against the wall isn't particularly fun. And if you're running against the wall, it's something that doesn't matter. It's not particularly exciting. So I think the key is to choose a task that you're motivated by. Choose a task that, if you're right, you can solve meaningful problems for society.
  • So in some ways, Elon talks about this this as well. You know, that you want to take on something that's an ambitious target. Because the pain of achieving it may be very similar to achieving something at 1000 times the level. Like the pain, the fixed cost of pain, may be very comparable. So you might as well achieve something as important as possible, as ambitious as possible. Because you're going to bear 80% of the same pain for something mediocre. So I'm not making for something important.
  • So I think that's one of my pieces of advice: always aim for something important and ambitious. Because the fixed cost of the pain is pretty substantial if you're going to start something from scratch.
  • Now that said, I don't think starting a company, or running a company, or running a high-growth technology company is for everybody. I think people have different goals in life, and different skills in life. Just like for me, playing professional basketball would have been incredibly challenging.
  • There are characteristics of what makes a successful professional basketball player. And you can defy it. There are professional basketball players who actually defy the stereotypes who've been incredibly successful. But it takes extraordinary commitment and extraordinary dedication to defy those.
• Finding where your skills lie, what your natural talents are, and where you have a competitive advantage is really critical.
  • So I think finding where your skills lie, what your natural talents are, and where you have a competitive advantage is really critical. And you know, starting a company may not be that for everybody. But for those who do aspire to change the world, it's a great vehicle to do so. And changing the world is never particularly easy. Whether you do it through business, whether you do it through a startup, whether you do it through science, whether you do it through medicine, or whether you do it for politics, it's always going to be very challenging.
• I think figuring out what you're really strong at and doing more of that, versus trying to correct weaknesses, is the key to success. Tiger never practiced sand-wedges he spent all his time getting really proficient at not being in the sand.
  • I think most success comes from actually doubling down, or quantitatively down-weighting your weaknesses, and ignoring your blind spots. Don't try to fix them. There's an old adage from a pretty popular business book about Tiger Woods. It's kind of a trivia question: How many hours a week does Tiger practice sand-wedges? For those of you who don't know much about golf, a sand-wedge is used to hit the ball out of a sand trap, which doesn't sound particularly fun. The truthful answer is Tiger never practices sand-wedges. He spends all his time getting really proficient at not being in the sand. So that's the metaphor: rather than try to learn how to get out of the sand, just spend all your time never getting in the sand in the first place. I think figuring out what you're really strong at and doing more of that, versus trying to correct weaknesses, is the key to success. This is certainly very easy as an investor. As an investor, you don't need to be well-rounded at all.
• The art of company building is finding complements and things that either you're not very good at, don't enjoy doing, and find someone who's world-class and happens to even enjoy the stuff you don't want to do.
  • When you build a company, the company as a whole needs to have a lot of different capacities and capabilities. But if you're not broad, which is typically the case for CEOs, they typically have some peripheral vision where they can do a lot of things but they're not perfect. The key is to find complements and find things that either you're not very good at, don't enjoy doing, and find someone who's world-class and happens to even enjoy the stuff you don't want to do. I think that's the art of company building.
• The market for VC is pretty efficient so we need to identify blind spots and will lead us to superior return. We ask ourselves what are other people going to miss about this company? What kind of blind spots are they going to have?
  • From an investment standpoint, when we meet a company, we ask ourselves: What are other people going to miss about this company? What kind of blind spots are they going to have? We believe that if we can identify these blind spots, it will lead us to think we can earn a superior return. This is because the market for venture capital is pretty efficient, certainly very competitive in the United States.