20 VC 077 PART 1 Kamal Ravikant 'I'm Not Your Traditional VC'

In this episode of the 20 minutes VC, host Harry Stebbings interviews Kamal Ravikant, an accomplished entrepreneur and author celebrated for his diverse achievements ranging from Silicon Valley tech success to his bestselling book, "Love Yourself Like Your Life Depends on It." Ravikant shares insights from his journey, emphasizing the importance of passion in entrepreneurship and the value of hands-on experience over theoretical knowledge. He discusses his unique approach to venture capital, focusing on product and traction, and leveraging a network of experts to provide tangible assistance to startups. Ravikant also critiques the VC industry, highlighting the potential pitfalls of non-contributive investors and underscoring the central role of the entrepreneur in a startup's success. Additionally, a book giveaway of Brad Feld's "Venture Deals" is announced, and Vdar Law Group's startup legal services are endorsed.

• Harry Stebbings expresses admiration for Kamal Ravikant.
• Kamal is recognized for his bestselling book "Love Yourself Like Your Life Depends On It".
• Kamal has a diverse background including tech, investing, trekking in the Himalayas, meditating with monks, and being a part of unique groups.
• Kamal's career and investing strategy are the focus of the interview.
• Brad Feld's book giveaway is announced for the listeners.

"He's an absolute hero to me after I read his incredible bestselling book, love yourself like your life depends on it."

This quote establishes Harry's admiration for Kamal, particularly due to Kamal's book which had a significant impact on Harry.

"But he has also trekked to one of the highest base camps in the Himalayas, he's meditated with Tibetan monks in the Dalai Lama's monastery, he's held the hands of dying patients."

This quote highlights Kamal's diverse life experiences, indicating his well-rounded character and varied interests.

"So unbelievable achievement. And this is all coming out in today's interview, which really is a deep dive on his career and his investing strategy."

Harry sets the stage for the interview, indicating that it will delve into Kamal's career achievements and investment strategies.

"So if your chance to win a signed copy of Brad's incredible bestselling book venture deals, all you have to do is click the click to tweet link that can be found in the iTunes description or on the website at ww dot the twentyminutevc.com."

This quote informs listeners about the opportunity to win a signed book, incentivizing engagement with the podcast's promotional activities.

• Kamal does not consider himself a traditional venture capitalist.
• He started in the tech industry during the dot-com boom in Silicon Valley.
• Kamal's initial role was at Healthy on, which became WebMD.
• He was known as the "can-do kid" for his ability to take on and succeed in various tasks.
• The experience of the dot-com boom and bust was educational for Kamal.

"I wasn't like your standard natural entrepreneur who's always selling things."

Kamal distinguishes himself from the stereotypical entrepreneur, implying a different path to his entrepreneurial journey.

"I moved out to Silicon Valley in the late 90s when the dot-com boom was happening, and I ended up joining a startup called Healthy on and helped build that."

This quote provides context for Kamal's start in the tech industry, marking his entry point during a significant period in tech history.

"I got known as the can-do kid because in those days, if you could just take anything and run with it, and that was fun because we were building things that had never been built before."

Kamal reflects on his reputation for being proactive and adaptable, contributing to innovative projects during the early days of his career.

• Kamal has been involved in startups since the dot-com bust.
• He worked with an angel fund before deciding not to start another company.
• Kamal believes starting a company requires a deep commitment and can impact personal life.
• He feels that entrepreneurs should be driven by a problem they are passionate about solving.
• Kamal has experienced a range of investors throughout his career, leading to his insights on the value and potential harm investors can bring.

"I really believe that if you're going to start a company, you're basically committing the next three to five years of your life, literally your life, to it."

This quote emphasizes the level of commitment Kamal believes is necessary for starting a company, highlighting the sacrifices involved.

"Those are the people I want to invest in. Those are the people I've seen done best."

Kamal shares his investment philosophy, which is to invest in entrepreneurs who are deeply passionate about solving a particular problem.

"90% of VCs are not helpful and 70% of VCs are actually dangerous."

Kamal quotes Vinod Khosla to illustrate his perspective on the venture capital industry, indicating that many investors may not be beneficial to startups.

• Kamal Ravikant shares his personal experience with investors, highlighting both positive and negative interactions.
• He emphasizes the importance of investors who provide actual value rather than just capital.
• Kamal criticizes some investors for offering non-actionable advice based on observations from other companies without having hands-on experience in building a company or product.

"I had some great, great investors, but I've had ones that really made my life miserable as well."

This quote reflects Kamal's mixed experiences with investors, suggesting that while some were beneficial, others caused significant distress.

"And then I had ones who actually said they were going to be value add, but the value add was just useless advice of what they saw the other companies doing."

Kamal expresses frustration with investors who promise to add value but only provide generic advice that lacks substance and applicability to his business needs.

• Kamal identifies the two fundamental needs of a CEO: product and traction.
• He discusses his expertise in online customer acquisition and retention, gained through building an ad network and interacting with industry leaders.
• The importance of having a product to build and customers to serve is framed as the essence of business.

"No matter what you're doing, there's a product you got to build and you need customers, whether it's users or paying customers."

Kamal distills the essence of a business down to its core components: the product and the customer base, emphasizing their critical importance.

• Kamal narrates the process of starting his own fund, focusing on investing in top companies and leveraging his network for actionable help.
• He describes his selective approach to choosing investors for his fund based on their values and willingness to provide practical assistance.
• Kamal emphasizes the lean operation of his fund, mirroring his entrepreneurial mindset, and its success in proving the model.

"I'm starting a fund and I'm going to get, you know me like, I know the right people and people I like helping entrepreneurs, which is what I've been doing anyway, and I'm going to get your money into the very best companies in the valley."

Kamal explains his strategy for his fund, which involves connecting investors with top companies and providing genuine support to entrepreneurs.

"I run it like a cheap ass entrepreneur. No fan, no offices, nothing. If you want me to audit everything, great, you pay for it."

Kamal emphasizes the frugal and practical approach to managing his fund, prioritizing investment in companies over unnecessary expenses.

• Kamal demystifies the venture capital (VC) industry, describing it as a simple process of raising money and investing it.
• He contrasts the work of a VC with the challenges faced by entrepreneurs, such as making payroll and dealing with customer service issues.
• Kamal points out that the primary goal of a VC is to ensure the fund performs well, as their compensation is tied to a percentage of the profits (carry).

"Yeah, but basically all you got to do is just get convinced people to give you money and then convince people to take your money."

Kamal simplifies the VC business to its core activities of fundraising and investing, suggesting that the work involved is not as complex as it may appear.

"Real work is making payroll, having to go and put payroll on your credit card. Real work is like losing service, going at night and your customers calling and yelling at you."

By contrasting VC work with the tangible challenges entrepreneurs face, Kamal downplays the notion that VC work is as demanding or stressful.

• Kamal shares that he had no personal track record in investing when he started raising money for his fund.
• He mentions his prior experience working for an angel fund and learning from a seasoned investor, Bill Coons.
• The lack of a track record led Kamal to create a minimum viable product (MVP) to prove his investment model.

"No, I worked for an angel fund, but it wasn't mine. It was a private office fund, family office fund, and I did research for the guy."

Kamal acknowledges his lack of personal investing history but highlights his relevant experience in the field, which provided a foundation for his own fund.

"I had no track record, so which is why I did my mvp."

Kamal explains that the absence of a personal investing history prompted him to demonstrate his capabilities through a small-scale, proof-of-concept fund.

• Kamal defines an amazing VC or angel investor as one who offers genuine help tailored to the entrepreneur's needs.
• He criticizes some VCs for providing advice that lacks depth or practicality.
• Kamal emphasizes the importance of real, actionable support over superficial guidance.

"Honestly, it's genuine help. Whatever the entrepreneur needs."

This quote underlines Kamal's belief that the best investors provide sincere assistance that directly addresses the entrepreneur's unique challenges.

"A lot of vcs or investors call themselves value add and it's just garbage advice."

Kamal expresses his disdain for investors who claim to add value but fail to deliver meaningful advice or support to the businesses they invest in.

• Investors can either support or hinder a startup's progress.
• The entrepreneur, not the investor, is the key to a company's success.
• Some investors may become obstructive, involving other investors and challenging decisions aggressively.

"They are the ones who actually get in the way and then start basically forcing you to reconsider your decisions, but not in a healthy manner, but really yelling and screaming and getting other investors involved. In the end, I really believe it's not the investor who makes a company, it's always the entrepreneur."

This quote emphasizes the potential negative impact of investors who interfere excessively in a startup's decision-making process, overshadowing the fundamental role of the entrepreneur in driving the company's success.

• The necessity of operational experience in an investor is debatable.
• Some investors, known as "dumb money," provide funds without interfering, which can be beneficial.
• Entrepreneurs should build their companies and advisory networks independently.

"It depends, really, honestly, sometimes the best money is dumb money. People give you cash and leave you alone. It's your job to pull this off."

Kamal Ravikant suggests that investors who provide capital without demanding control can be advantageous, as they allow entrepreneurs to lead their ventures without external interference.

• The reputation of investors can be indicative of their helpfulness.
• Successful investors don't achieve repeated success by chance; they actively contribute to their portfolio companies.
• However, investors can only provide significant support to a limited number of entrepreneurs who are receptive to it.

"You go in and you really make a difference."

This quote acknowledges that while not all investors are hands-on, those who are can make a substantial positive impact on the companies they choose to support actively.

• Investors should avoid being intrusive and respect the autonomy of entrepreneurs.
• Effective investors offer help when needed and wait for entrepreneurs to seek assistance.
• Some entrepreneurs maintain regular contact with investors, while others may not communicate post-investment.

"I don't get in the way because I know what that's like from the receiving end. All I do is I just reach out once in a while."

Kamal Ravikant explains his approach to involvement with startups, emphasizing a non-intrusive stance that allows entrepreneurs to lead their ventures and seek support when they see fit.

• The internet has transformed the possibilities for starting and scaling businesses.
• Online and hybrid business models have lowered barriers to entry and exit.
• The availability of services like Amazon Web Services and open-source tools has reduced the need for large teams and infrastructure.
• Distribution channels are more accessible than ever, exemplified by platforms like Amazon for books and app stores for mobile applications.

"This ease of building something and this ease of built-in, highly incentivized distribution channels at such a low price point."

Kamal Ravikant highlights the unprecedented ease and affordability of creating products and accessing distribution channels in the modern era, making it an excellent time to be an entrepreneur.

• Practical experience is the most valuable form of education for entrepreneurs.
• Building something entirely new requires learning through the process of creation.
• Over-preparation and extensive research can sometimes stem from fear rather than necessity.

"The only way to build something is literally to jump in it and maybe do a little bit of research, right, but like jump in it. And that's when you figure out, that's when the rabbit hole."

This quote encapsulates the philosophy that entrepreneurship is best learned through direct engagement with the venture, suggesting that action often trumps excessive planning.

• Entrepreneurship involves a continuous process of making and correcting mistakes.
• This cycle of errors and corrections is inherent to the entrepreneurial journey.
• Acceptance of this process is crucial for entrepreneurs as it is a fundamental aspect of business development.

The whole thing about entrepreneurship is it's a never ending series of mistakes and correcting mistakes.

This quote emphasizes that entrepreneurship is not about perfection but rather about resilience and the ability to learn from and rectify mistakes.

• Entrepreneurs should focus on markets and ideas they are passionate about, not just what seems popular at the moment.
• Founding a business requires significant time investment with high risk of failure, making personal investment in the idea essential.
• Ideas alone hold little value; it is the execution and action that matter.
• Entrepreneurs without technical skills should seek education, use open source materials, or create prototypes to make their ideas tangible.
• Demonstrating real interest from customers or having a product can attract investors or collaborators.

First, don't do something that because you think a market is hot, because markets cool.

This quote advises against chasing trends and emphasizes the importance of genuine interest in the business idea for long-term commitment and success.

Ideas are nothing. It's ideas in action that actually make any difference.

Kamal Ravikant stresses that the value lies in the execution of ideas, not the ideas themselves, highlighting the importance of taking concrete steps to realize a concept.

You got to have product.

The importance of having a tangible product or prototype is underlined here, as it is crucial for gaining credibility and interest from others in the industry.

• Entrepreneurs need to have a tangible product, not just an idea, to succeed.
• A product can be a prototype, mockups, or letters of intent from potential customers.
• Possessing a product demonstrates capability and commitment, which are essential for entrepreneurship, especially in the tech field.

You can't just be another schmo with an idea or another pretty boy. You got to have product.

Kamal Ravikant uses a Hollywood anecdote to illustrate the necessity of having a concrete product to differentiate oneself and make progress in any competitive field.

• The next episode will explore Kamal's insights on the future of venture capital.
• Kamal will discuss his concerns about the industry and how to distinguish valuable startups in a highly active market.

And tune in on Wednesday to find out what Kamal thinks is the future of venture capital.

The host, Harry Stebbings, teases the content of the forthcoming episode, inviting listeners to learn about Kamal's perspectives on the venture capital industry.

• Harry Stebbings expresses gratitude to Kamal Ravikant for his time and support.
• Listeners are encouraged to read Kamal's book and participate in a giveaway for another book, "Venture Deals" by Brad Feld.
• The host mentions Vidar Law Group, a legal service provider for businesses that may not require a full-time general counsel.

A true legend. And you must check out his book which is found in the items mentioned in today's show segment of the description.

Harry Stebbings endorses Kamal Ravikant's book as a valuable resource, highlighting Kamal's influence and support in the entrepreneurial community.

Then email me at harry at the twentyminutevc.com and I'll be happy to answer any questions you have on vdarlaw and check them out at www.vidarlaw.com.

Harry Stebbings offers to address listener inquiries about Vidar Law Group, indicating the show's commitment to providing useful resources to its audience.