Andy Rachleff - Building Something People Want to Buy - [Invest Like the Best, EP.42]
Invest Like the Best with Patrick O'Shaughnessy
The Evolution of Active Management and Investment Access
Exploring the shift towards esoteric and private investments, the chapter emphasizes the significance of a long-term approach for effective fund management while explaining the decision not to provide access to alternative assets.
My guest this week is Andy Rachleff, who is the CEO of the automated investing platform Wealthfront. Andy was also a co-founder and long-time partner at Benchmark capital--one of the most interesting and successful venture capital firms in the world.
We spend most of our conversation discussing venture capital investing and entrepreneurship. Andy coined the now ubiquitous term “product/market fit,” and has great insight into how investors and entrepreneurs should think about business. In that vein, we discuss both what we refer to as the value hypothesis: building a product or service that customers love, and the growth hypothesis: scaling that product or service to a large market.
We finish our conversation by talking about Andy and his teams mission at Wealthfront, and this conversation is perfectly timed, as Wealthfront just released a new feature that allows investors to buy factor portfolios, similar to Smart Beta ETFs.
Above all, I’ll remember Andy’s advice to “put the gun in the other person’s hand,” a strategy that we explore in the middle of our talk.
For comprehensive show notes on this episode go to http://investorfieldguide.com/andy
For more episodes go to InvestorFieldGuide.com/podcast.
Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub.
Follow Patrick on Twitter at @patrick_oshag
Books Referenced
The Four Steps to the Epiphany
Millennial Money: How Young Investors Can Build a Fortune
Crossing the Chasm: Marketing and Selling High-Tech Products to Mainstream Customers
Show Notes
2:36 – (First question) – The partnership setup and how they came to be 5 equal partners
7:57 – Why benchmark would not take on the chairman role in companies they invested in
9:28 – What made John Doerr the greatest capitalist investor ever
11:59 – Looking at the venture process and what made it an attractive investment for Benchmark, using eBay as an example.
18:06 – If you are willing to help other people, without an expectation of return, it can create other opportunities
20:08 – Andy is asked to explain the idea of Product Market Fit, a term that he coined
22:18 – How does one go about finding a Product Market Fit
23:05 – The Four Steps to the Epiphany
25:55 – What are the components of the Growth hypothesis
26:51 – Why you can learn more professionally from success vs failure
28:13 – What it’s like to shift from venture capitalist to operator/CEO
30:24 – The rate at which technology gets adopted and what will help Wealthfront
30:53 – Millennial Money: How Young Investors Can Build a Fortune
31:26 – Diffusion of Innovations
31:38 – Crossing the Chasm: Marketing and Selling High-Tech Products to Mainstream Customers
32:38 – What does it look like to innovate on top of current platforms
41:07 – Will platforms like Wealthfront help to democratize access to private markets
44:23 – Kindest thing anyone has done for Andy
Learn More
For more episodes go to InvestorFieldGuide.com/podcast.
Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub
Follow Patrick on twitter at @patrick_oshag
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