Invest Like the Best with Patrick O'Shaughnessy Keith Rabois - If You Can’t Sell Them, Compete with Them - [Invest Like the Best, EP.115]
Compete, Don't Sell
- If your technology is superior but customers won't switch, compete with them directly.
- Vertically integrate to control your destiny and capture more value.
Find the Anomaly
- Success requires an anomaly: something unexpected about the team, tech, or market.
- Look for the unusual, as standard playbooks don't create world-changing companies.
The Secret Sauce
- Every compelling startup begins with a secret, a belief about the world others don't grasp.
- As the company grows, the secret is revealed, requiring reinvention.
My guest this week is Keith Rabois. Keith is currently an investment partner at Khosla Ventures, but has a storied and diverse background as an investor, entrepreneur, and executive. He has worked in senior positions at Paypal, LinkedIn, and Square; has led investments in companies like Stripe, YouTube, Palantir, and AirBnB; and started the company OpenDoor, which aims to transform the process of selling a home through technology.
One fun fact about Keith is that he may have the most impressive list of bosses I’ve ever seen, which we discuss during the episode.
We cover a lot, but one thing we kept returning to was business strategy. Keith’s frameworks for gaining and building strategic power helped me clarify my thinking on the topic, and his examples of contrarian thinking will hopefully make you question some commonly held beliefs.
Please enjoy our conversation.
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
Show Notes
1:35 (First Question) – A look at his investing philosophy
3:16 – Favorite examples of his own investment history
4:40 – 7 Powers: The Foundations of Business Strategy
5:07 – Understanding what is anomalous in a given investment
7:07 – How much a secret needs to be protected within a business
11:51 – Why accumulating advantage with data is of interest to Keith
15:12 – Digital health companies and ideas that he finds compelling
16:17 – Nuance around financial services that investors should be mindful of
17:56 – How do they evaluate managers ability to recruit talent
19:36 – How similar are the roles of entrepreneur, board member, investor, etc that Keith has had in his career
24:02 – Ways that Keith is a contrarian, including his feelings on “lean startup.”
27:04 – Is problem identification a specific skill set
28:29 – Objection with experimentation/iteration
30:02 – Bad ideas in venture
31:36 – What he likes about Apple
31:51 – Creative Selection: Inside Apple's Design Process During the Golden Age of Steve Jobs
32:26 - Interview questions for identifying great talent
35:41 – Elements of good design
37:14 – Impact of platforms on opening new opportunities
38:42 – His take on valuation in the early stage environment
40:33 – Advice he would give people early in their careers
43:58 – Do high growth companies get beat by established larger businesses
45:25 – Popular narratives that he thinks are just wrong
48:22 – His thoughts on how people should learn, balancing experience vs information gathering
50:00 – Other investors that are taking a unique approach to investing
51:57 – Reflecting on the entrepreneur as a client model of private equity
55:04 – Books that he recommends that is least known
55:18 – The Upside of Stress: Why Stress Is Good for You, and How to Get Good at It
56:30 – Kindest thing anyone has done for Keith
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