"Turpentine VC" | Venture Capital and Investing

E54: Trae Stephens on Founders Fund

Sep 3, 2024

Trae Stephens, General Partner at Founders Fund and co-founder of Anduril, brings a wealth of experience to the table. He shares insights on Founders Fund's culture of open debate and high conviction in investments, emphasizing their unique hands-off approach with founders. Trae highlights the importance of concentrated portfolios and decision-making processes that embrace diverse opinions. The conversation also touches on navigating the defense technology sector and the need for creativity and risk-taking in fostering innovation.

55:53

Creator website

Episode guests

Trae Stephens

AI Summary

AI Chapters

Episode notes

Podcast summary created with Snipd AI

Quick takeaways

Founders Fund fosters a culture of open debate, empowering team members to develop strong convictions for better decision-making in venture capital.

The firm's investment strategy focuses on concentrated portfolios, enabling higher ownership in high-potential companies like SpaceX and Airbnb to maximize returns.

Adopting a hands-off approach, Founders Fund allows founders the autonomy to lead, positioning itself as a supportive and founder-friendly investor.

Deep dives

Culture of Debate and Conviction

The internal culture at Founders Fund prioritizes open debate and the development of conviction among team members. Trey Stevens highlights that the ability to engage in constructive conflicts and conversations, rather than having a formal background in finance, is crucial for success in venture capital. This debate-centric environment allows team members to cultivate strong convictions and defend them in front of their peers, enabling better decision-making. This focus on discussion and conviction building is perceived as more important than formal investing processes, fostering a unique approach to venture capital that sets Founders Fund apart.

Intro

2min

Innovative Investment Strategies at Founders Fund

10min

Embracing Chaos in Investment Practices

4min

Decision Making in Venture Capital

9min

Navigating Innovation in Defense Technology and Venture Capital

4min

Strategic Ventures: Balancing Innovation and Investment

10min

Strategic Evolution and Cultural Dynamics

13min

Building Connections in Venture Capital

2min

In this episode of Turpentine VC, we revisit one of our most referenced interviews with Trae Stephens, General Partner at Founders Fund and co-founder of Anduril.

Trae discusses the unique DNA of Founders Fund, emphasizing the firm's culture of open debate and high conviction in investments. He highlights the importance of concentrated portfolios, and how Founders Fund's no-process approach differentiates them from other VC firms. They also discuss Founders Fund decision-making, governance, and incubation practices.

🔥 Apply to join over 400 Founders and Execs in the Turpentine Network: https://www.turpentinenetwork.co/

—

RECOMMENDED PODCAST:

🎙️ This Won't Last - Eavesdrop on Keith Rabois, Kevin Ryan, Logan Bartlett, and Zach Weinberg's monthly backchannel. They unpack their hottest takes on the future of tech, business, venture, investing, and politics.

Apple Podcasts: https://podcasts.apple.com/us/podcast/id1765665937

Spotify: https://open.spotify.com/show/2HwSNeVLL1MXy0RjFPyOSz

YouTube: https://www.youtube.com/@ThisWontLastpodcast

—

SPONSORS:

☁️ Oracle Cloud Infrastructure (OCI) is a single platform for your infrastructure, database, application development, and AI needs. OCI has four to eight times the bandwidth of other clouds and offers one consistent price. Oracle is offering to cut your cloud bill in half. See if your company qualifies at oracle.com/turpentine

🛠️ Building an enterprise-ready SaaS app? WorkOS has got you covered with easy-to-integrate APIs for SAML, SCIM, and more. Join top startups like Vercel, Perplexity, Jasper & Webflow in powering your app with WorkOS. Enjoy a free tier for up to 1M users! Start now at https://bit.ly/WorkOS-Turpentine-Network

💥 Head to Squad to access global engineering without the headache and at a fraction of the cost: head to https://choosesquad.com/ and mention “Turpentine” to skip the waitlist.

—

LINKS:

Founders Fund: https://foundersfund.com/

Anduril Industries: https://www.anduril.com/

—

FOLLOW ON X:

@eriktorenberg (Erik)

@traestephens (Trae)

@turpentinemedia (Turpentine)

—

TIMESTAMPS:

(00:00) Intro

(00:49) Debate culture and why that's key to Founders Funds success

(03:39) How Founders Fund's pitch is different from a16z's

(06:34) FF's unique market position

(08:51) How FF recruits their partners

(12:48) Sponsors: WorkOS and NetSuite

(14:31) The deal-making process, or lack thereof

(16:42) Governance at Founders Fund

(19:55) Comparing the YC approach

(22:09) How they measure success against other funds

(23:18) Trae's journey at Founders Fund

(25:21) Sponsor: Squad

(26:31) On incubating Anduril

(29:03) Why having no process forces partners to be higher conviction

(31:50) Core debates at Founders Fund

(33:58) The key to Founders Fund's current approach

(35:56) Trae's request for startups in gov tech

(37:12) The importance of team and talent

(39:33) What does the future look like for Founders Fund?

(41:22) What gets misunderstood about the firm

(45:42) On Mike Solana

(48:36) The three eras of Founders Fund summarized

(52:09) Wrap

Get the Snipd
podcast app

Unlock the knowledge in podcasts with the podcast player of the future.

AI-powered
podcast player

Listen to all your favourite podcasts with AI-powered features

Discover
highlights

Listen to the best highlights from the podcasts you love and dive into the full episode

Save any
moment

Hear something you like? Tap your headphones to save it with AI-generated key takeaways

Share
& Export

Send highlights to Twitter, WhatsApp or export them to Notion, Readwise & more