E31: David Friedberg on How To Build a Billion Dollar Startup
Jan 9, 2024
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David Friedberg, founder of Ohalo and former VC, discusses role of concentrated capital, VC's future, and impact of capital saturation. Topics include evolving investment strategy, transition from VC to operator, turning around companies, and exploring power law in portfolio companies.
Concentrating capital in challenging and impact-driven ideas for the future of agriculture is crucial for improving economic outcomes for farmers, reducing food costs, and promoting sustainability.
Transitioning from being a board member to an operator allows for the ability to make decisions and directly impact outcomes, resulting in unique satisfaction and the ability to drive immediate change.
Deep dives
Unlocking the Potential of Gene Editing for Agriculture
The podcast episode discusses the potential impact of gene editing on agriculture and food security. The speaker highlights that a significant portion of the Earth's land is used for agriculture and emphasizes the need for more efficient plant growth and increased yields. The podcast introduces Ohalo, a company that utilizes CRISPR gene editing technology to make specific edits in plant genomes to significantly increase their biomass and yield. By providing farmers with edited seeds and plants, Ohalo aims to improve economic outcomes for farmers, reduce food costs, and promote sustainability by decreasing land use and increasing carbon sequestration. The episode emphasizes the importance of taking big risks and concentrating capital in challenging and impact-driven ideas for the future of agriculture.
Pros and Cons of Being an Operator vs. Investor
The podcast explores the speaker's experience transitioning between various roles, from being an investment banker to working at Google, starting companies, becoming a venture capitalist, and now returning to the role of an operator. The speaker expresses appreciation for the ability to make decisions and directly impact outcomes as an operator. They value being able to drive change and see immediate results, compared to their frustration as a board member where they couldn't actively participate in the day-to-day operations of the businesses they were involved with. While still actively involved in other companies as a board member, the unique satisfaction of being an operator is highlighted.
Risk-Seeking and Concentrating Capital for Greater Impact
The podcast encourages founders, operators, and investors to be more risk-seeking and concentrate their attention and capital in big and challenging ideas. The speaker emphasizes the need to move away from solely focusing on software and applications that promise quick returns, and instead take on technically difficult businesses that can accelerate outcomes that have a positive impact on humanity. They advocate for expanding investment horizons beyond risk diversity and taking bigger bets on big outside ideas. By doing so, the speaker believes the venture capital landscape and startup ecosystem can perform better as an asset class, leading to transformative outcomes for society.
Importance of Gene Editing for Global Food Security
The podcast highlights the critical role of gene editing in addressing global food security challenges. With over a billion people living on fewer than 1,500 calories a day, the speaker emphasizes the need to increase agricultural productivity and efficiency. By using gene editing techniques, such as CRISPR, companies like Ohalo can improve the growth potential and yield of crops, leading to higher biomass accumulation and increased food production. The speaker emphasizes the socioeconomic benefits of adopting high-yielding crops, including lower food costs, reduced water usage, and the potential to sequester more carbon into plant biomass. The episode calls for a greater focus on challenging, technically difficult solutions that have a significant impact on agriculture and food production.
David Friedberg sits down with David Weisburd to discuss the role of concentrated capital, venture capital's future, and the impact of capital saturation. Friedberg shares his experience joining Ohalo, the evolution of investment strategy, and the transition from VC to operator. We’re proudly sponsored by Bidav Insurance Group, visit lux-str.com if you’re ready to level up your insurance plans.
The Limited Partner podcast is part of the Turpentine podcast network. Learn more: turpentine.co
(0:00) Introduction and discussion on venture performance vs public companies
(1:18) Guest Introduction: David Friedberg's early career and lessons learned
(7:59) The power of big thinking in companies like Google and Tesla
(14:08) Challenges and counter incentives in venture capital
(16:39) Sponsor: Bedav Insurance Group
(21:27) The power law of returns and talent concentration in successful companies
(28:15) The changing definition of 'founder' and the challenge of institutional foundry programs
(34:02) The importance of investing in winners and adjusting portfolio construction
(37:12) Introduction to Ojalo: mission, business model and global impact
(42:03) Transitioning from investor to operator: pros, cons and psychological impact
(45:33) Words of wisdom for founders, operators, and investors and critique of LPs' approach
(48:06) Introduction of the Limited Partner Podcast newsletter
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