In this episode of "20 Minutes VC," host Harry Stebbings interviews Naval Ravikant, the influential founder of AngelList, who has backed over a hundred startups, including Twitter and Uber. Ravikant shares the origins of AngelList as an offshoot from the blog Venture Hacks, and discusses the changing landscape of venture capital, emphasizing the importance of transparency and control over valuation. He also touches on the rise of personal branding for VCs and the potential of cryptocurrency investments that traditional VC firms might miss. Additionally, Ravikant reflects on the transformative power of technology on society, predicting significant shifts in warfare, urban planning, and financial systems due to technological advancements. Finally, he outlines AngelList's broader platform beyond fundraising, including talent recruitment and product launches, and the importance of learning and seeking truth as personal drivers.
"Well, it's with great pride that we welcome Naval Ravikant, founder at Angel List, to the hot seat today."
This quote is Harry Stebbings introducing Naval Ravikant, emphasizing the significance of having him on the show.
"AngelList came as an offshoot from venture hacks... And that's how AngelList was born."
This quote explains how AngelList was conceived as a natural progression from the Venture Hacks blog, aiming to democratize access to deal flow.
"Fundamentally in Microvc, it's funds of one to two people... And you're really just backing early entrepreneurs and giving them a chance to build their initial product."
The quote summarizes the nature of micro VC funds and their role in supporting early-stage entrepreneurs.
"I think like one of those new things, you can define it, however, which way you want."
Naval Ravikant discusses the fluid definition of seed funds and acknowledges the diversity of investment models in the early-stage market.
"Yeah, I think it's extremely difficult. You're not predicting what the winner is going to be."
Naval Ravikant explains the challenge of early-stage investing and the importance of avoiding bad investments rather than trying to predict the few massive successes.
"So for example, some entrepreneurs have gotten very good at raising unkept notes, but you can't make money on that. You also have to keep valuations in check." This quote emphasizes the importance of not just raising funds but also ensuring that valuations are reasonable to secure a return on investment.
"Some of those factors are sector based. You might decide that a certain sector is already over or no longer fit for investment." This quote highlights the importance of sector analysis in investment decisions and the risk of misjudging a sector's potential.
"I actually think of the whole seed investing category early on as not so much as picking winners, as eliminating losers and assembling a portfolio of good founders, good projects, good spaces with potential breakout opportunities." This quote reflects the strategy of focusing on creating a diverse portfolio with the potential for high returns rather than trying to pick individual winners from the start.
"The real money in a seed portfolio usually falls right along a power law distribution, where your number one winner will return as much as two through the rest of them, number two through whatever put together." This quote explains the disproportionate returns characteristic of seed investing, where a few top performers yield the majority of profits.
"I think it's more important that it lines up with how you do your own investing, what your best style is, and where your area of expertise is." This quote suggests that an investor's personal style and expertise should guide their portfolio strategy rather than adhering to one-size-fits-all advice.
"So I don't think it's an either or. The industry absolutely needs both." This quote acknowledges the necessity of both broad and focused investment approaches within the venture capital ecosystem.
"Venture is a bundle of advice, control, and money. And good entrepreneurs unbundle those things and kind of purchase what they need at market rates sometimes." This quote describes the traditional combination of elements in venture capital and the modern trend of entrepreneurs selectively sourcing these components.
"I would rather take a low valuation and keep control in terms of board control and control of protective provisions, rather than vice versa." This quote expresses a preference for maintaining control over a company rather than maximizing valuation at the cost of control, highlighting the long-term strategic importance of control in venture deals.
"Money is money as long as the Federal Reserve signature is on there. It's a federal reserve note. It doesn't matter who it comes from." This quote reinforces the idea that money is fungible and that the value VCs add lies in their advice and brand.
"What matters is who is the individual? What have they done? What do entrepreneurs think of them? How can they add" This quote highlights the shift in the venture capital industry towards the value of individual investor reputation and contributions over the prestige of the firm they represent.
"So I think that the idea of a brand, just because they're recognizable name, is diminishing in value. And instead, the brands are being driven much more concretely, much more transparently based on what you do."
This quote highlights the transition from brand value being tied to recognition to being tied to concrete actions and transparency.
"Brands are unbundling from the firm level to the individual level."
Naval Ravikant explains how personal branding is becoming more significant than the branding of the firms or networks individuals are associated with.
"I think the history of the human race is actually the history of technology."
Naval Ravikant posits that technology is the primary factor shaping human evolution and societal development.
"I think technology changes society, whereas we like to think that technology is a subset of society."
This quote emphasizes Naval's view that technology is not just a part of society but the main force that shapes it.
"I think drones are going to replace every single weapon system on the planet."
Naval predicts a future where drones will become the dominant technology in warfare.
"Our level of consciousness, sophistication, we almost have to start of thinking of humanity as a multicellular organism as opposed to a collection of unicellular organisms..."
Naval discusses the need for a collective human consciousness to manage the risks of technological power.
"We have now run about 1200 deals through the AngelList platform, raise hundreds upon hundreds of millions of dollars for entrepreneurs."
Naval outlines the success of AngelList in facilitating deals and raising capital for entrepreneurs.
"So really what we're doing this year is putting all the pieces together so that we're the best place to raise money to hire talent and to launch your product."
This quote describes the strategic vision for AngelList as a comprehensive platform for various aspects of startup growth and investment.
"So the combination of that I think, creates a powerful technology network, sort of like LinkedIn, but much more based on usage and not just a big connection pile of resumes."
The quote explains the envisioned technology network's focus on usage and practical connections rather than simply accumulating resumes like LinkedIn.
"My favorite book of the last few years is sapiens. You all know of Harvey's history book. Previous few years was the rational optimist Matt Ridley's book, but it changes all the time. Poor Charlie's Almanac by Charlie Munger is another one that I would throw in there."
The quote lists Naval's favorite books over the years, highlighting his dynamic preferences and the influence of recommendations on his reading choices.
"I'd love to see venture capitalists provide an SLA, a service level agreement, put their principles and values directly online."
This quote emphasizes the desire for venture capitalists to be transparent and upfront about their practices, similar to how entrepreneurs present their products.
"Probably the most common is people think it's a crowdfunding platform. It's not."
The quote clarifies a common misconception about AngelList, stressing that it is not a general crowdfunding platform but caters to a specific audience of accredited investors.
"I'll always make time to read Kevin Simbler's melting asphalt blog. It really makes me think on many, many levels."
This quote points out specific blogs that Naval finds thought-provoking and valuable, indicating his preference for deep, analytical content.
"So I'm mainly about learning truth in the Aha moment. I would say that's the main driver, at least intellectually."
Naval's quote underscores his intellectual pursuit of genuine insights and the joy of discovering new connections between ideas.
"I think a lot of the protocol level innovation is moving away from venture backed startups and moving into blockchain based protocols."
The quote reveals Naval's belief that significant innovation and investment opportunities are shifting towards blockchain and cryptocurrencies.
"Yeah, thank you. I'm impressed you kept it at 20 minutes."
The quote reflects Naval's acknowledgment of the interview's efficiency and conciseness.