The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch

20VC: Keith Rabois on Why Buy Low, Sell High Does Not Work in Venture, Keith's Biggest Lessons from Prior Crashes, Why Today's Public Markets are not an Over-Reaction, Why Valuation is a Trap & Why Wokeness is a Function of Entitlement

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May 30, 2022
Guest
Keith Rabois
Keith Rabois, a General Partner at Founders Fund, shares his sharp insights on venture capital, including why 'buy low, sell high' is a risky philosophy. He discusses the current public market landscape, suggesting that it's not simply an overreaction. Rabois emphasizes the importance of understanding cycles in investing and the need for scenario planning. He also reflects on the shifting dynamics in Silicon Valley, the importance of meeting founders in investment decisions, and the complexities in balancing personal insights with objective evaluations.
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INSIGHT

Buy Low, Sell High in Venture

  • Buying low and selling high isn't a strategy in early-stage venture, it's the default.
  • Early-stage companies have little value initially; success inherently means selling high.
ADVICE

Outcome Scenario Planning

  • Focus on outcome scenario planning and consider various success levels (e.g., $1B, $10B, $50B).
  • Visualize the upside case early on, as biggest winners often exceed initial expectations.
INSIGHT

Public Market Comps

  • Public market comparisons can inform upside cases, especially in later-stage investments.
  • Current market conditions influence valuations and acceptable entry points.
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