6min chapter

This Week in Startups cover image

Max Altman & Ben Braverman chart Saga VC's maiden voyage with Mark Suster | E1948

This Week in Startups

CHAPTER

The Founder's Magnetic Influence

Exploring the crucial role of a founder's charisma and energy in attracting talent to join risky startups, and the decision-making process for individuals to opt for experience over immediate financial gains. The chapter also delves into economic considerations, investment preferences, and the concept of an ideal 'saga company'.

00:00
Speaker 1
So
Speaker 2
and it so it sounds like it's the same for Parker. If I take Ryan and you zoom into the early days of working with them, what attributes could you say you observed there? Or if you want to answer it differently, what different attributes are you looking for in founders when when you're looking to back them going forward?
Speaker 1
For me, it's like a boundless well of energy. If you look at Ryan's history, that the guy speaks five languages, he did a year in Brazil when he was like a sophomore in high school. He lived in mainland China for two and a half years. He wrote a bicycle from China to Vietnam. Like this is a person who for whatever reason, whether it's God, whether it's the universe like whatever you believe in, like the electric, the cord is plugged straight in. And there's just like, okay, like there's a, if you can really do this much in a day, even if it's imperfect, you know, you're going to get so much further than the average person. One thing that we look for in founders a lot related to this is basically, it's a bad financial decision to join a startup. And I mean that even if it hits it out of the park, it's probably a bad financial decision. You're expected value with your stock grant as the 40th or 50th employee at a startup. Even if it's a $3 billion company, you're better off working at Google, just like, you know, when Google's up off, they're really nice. You don't work that much. Like, it's a bad decision. So you have to make someone make a bad decision or make a bad financial decision whether you think it's a good decision. The UF is be so compelling as a founder to convince that 50th person, whether it's an engineer or support person or an account manager to join your company. I think that's something that Parker did really well is he just like, would be so magnetic to get everyone to want to join Zenibets. And then if you look at Ripley, you know, half of that employee base is X benefits people. So we've done it again. And that's something we really ask ourselves. You know, Ben Thompson and I are like, is this person going to be able to hire their 30th employee? How are they going to get someone to not go work at a giant company and get paid, you know, really nice salary
Speaker 2
instead? The way I would characterize that, that's when I say X factor, that's what I'm talking about. It's like the ability to persuade people to do unreasonable things because it's not just employees shouldn't join you, but customers probably shouldn't bet on you because you haven't built enough software. And you probably, in the early days, don't have enough financing to guarantee you're going to be around. Journalists shouldn't write about you because they're probably going to end up looking stupid for saying, you know, something good about you. Partners shouldn't partner with you. Employees shouldn't join you. But you get a sense that this is someone destined for greatness. And for me, that's X factor. The other thing I would say about employees is I don't think it's a bad decision to join. And of course, I know you don't think that either financial decision. I don't think so either. But let me explain, because I think when I explain, I think you'll agree with me. I look at it. I once wrote a blog post called, Is it time to earn or time to learn? And there are times in your career where the time is to go for the money. And there are times in your career where the best thing to do is to be situated alongside someone like Parker, alongside someone, you know, like Ryan, alongside someone like Chuck Dorsey. And being in a startup, it gives you two things. It gives you access to greatness that you can learn from. And it gives you a peer group of people to then go do your next business. So my analogy is it's similar to an MBA, like very different, but an MBA is paying money so that in the future, hopefully you're going to earn.
Speaker 1
Yeah, that is exactly right. And I say I take back what I say now is like the long term compounding of your earnings potential by being at a startup for six years, going to be way better off. I think the point
Speaker 2
you were making is right though, which is like economically, you're probably going to learn more than you're going to earn in that scenario. Sorry, Ben, you were going
Speaker 1
to add. No, just the food of the Google cafeteria is so good. But legitimately, like it's excellent.
Speaker 2
My wife worked at Google in when was it 2005 when it not only was excellent, but they used to let you take home dinner. So she would not just have lunch, but every night she would go get steak or chicken or fish. And I had a startup. So I had nothing. And she would just bring me home dinner every night. Those were the gravy train days. What are you looking for in terms of sectors? Are there certain things you'll fund or won't fund? If
Speaker 1
you look at all of our histories, it's primarily B2B. The only crypto investment that any of us have done of any note is obviously maxes a big shareholder in world coin from one of the prior vehicles. So probably, realistically, not a lot of crypto going in this fund. Consumer, we all have a pretty specific thesis around consumer, which is it's getting harder and harder unless you have a distribution edge. So like friends of ours who work with a lot of celebrities makes tons of sense. They're going to dominate consumer. They should continue to dominate consumer. For us, we're kind of down the middle B2B. And I think when someone's like, well, what's a saga company? The archetypal saga company is going to be, it's the kind of company that found her who has a foot in the old world and a foot in the new world is going to build. Generally, legacy industry, giant existing market, incumbents exist and are making lots of money and generally aren't well loved. You know, building in those kinds of categories are going to tend to be where we're going to focus.
Speaker 2
Okay, everybody.

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