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

The Lean Startup: How Today's Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses

Millennial Money: How Young Investors Can Build a Fortune

Diffusion of Innovations

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

23:19 – The Lean Startup: How Today's Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses

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

S3-E29 - Taiwan's Great Pork Apocalypse (1997)