Turning Peter Thiel's $100K into $10M Angel Portfolio & Why VCs Can Be Sharks | Josh Browder

Josh, dude, I am so excited for this. You mentioned, very kindly, before the show, my levels of prep. I think it's stalking to some extent, but I've loved getting to know you. Thank you so much for joining me.

1. Why Young Founders Have No Option But to Succeed

First, thank you for having me. Growing up in the UK, I'm proud to have known of you before you became a world-famous podcaster.

Dude, I think most of the stuff I post these days actually just rage-baits most people on LinkedIn. But I want to start with one that I always wonder about with CEOs I interview and meet: what actually inspires or motivates you more? Is it the fear of losing, or is it the immensely satisfying feeling of winning?

If you're not motivated by the fear of losing, I think you're asleep at the wheel. Only the paranoid survive, and the world is changing. It feels like the world is changing by a year's worth of progress every few weeks. So, definitely the fear of losing.

You know, when I started, you very kindly said something about getting to know me through the show. I still kind of have this to this day, in all honesty, and this is why the show has become more and more successful: I don't really care what people think. But I was terrified of being Macaulay Culkin. Have you ever seen him? He was very famous when he was young, and then nothing became of him. I was terrified of being a flash in the pan. Did you ever have that? Because you were very successful when you were young, and I remember seeing you in the same vein, on magazine covers, raising $22 million. Did you feel that pressure early?

There's a saying among the Thiel Fellows that they have an expiry date. We all know these people who were very hyped and then maybe didn't stay relevant; some of them lost their minds. That was always a huge fear of mine. You always have to constantly be reinventing yourself to stay relevant and adapt, because the world changes very quickly.

I started DoNotPay in high school when I was 17, and that was a completely different world back then. That was in 2015.

Dude, it was so, so different. I'm actually going to start with that and mix up the schedule, because you bet intensely now, often on very young founders. I spoke to so many of them before this show. Why is it that you place such a bet, with such conviction, on very young founders, so much earlier than maybe others would?

I think young founders have no option but to succeed. If you back a Google engineer, the first thing they'll do is hire 10 of their friends, and it's like this endless scheme of hiring. The first thing a young founder will do is build the product, and they don't have anything to fall back on, especially if they have a chip on their shoulder. They really only have one thing they can do, which is succeed.

I think the grit level with young founders is 10x. Being an entrepreneur is like eating glass. If you don't have a true dedication to win, they'll give up at the first opportunity.

It's the shittiest question I've often been asked, but I've found there's more and more nuance to it, and [?] Grabble told me I should ask this. He said you back founders that others maybe wouldn't back when you actually look at them in that instance. What is it that you look for that is non-obvious or atypical in the founders that you do invest in?

The number-one thing I look for is a deep connection to the problem—one where they won't give up. So I go back to my own journey. I made DoNotPay. I'm the type of person to get 10 parking tickets just to test out the service, or wait on hold for hours to save 20 pounds or dollars, I guess. I look for those founders with a really deep connection to the problem.

For example, I was in the very first pre-pre-seed round of a company called Owner.com with Adam Guild, and he built the initial version of his product to help his mother's dog-grooming business. So many of these founders come up with these BS stories, but that is a real story, and he really did it to help his mother. Similarly with me, I really did it because I hate getting parking tickets from the government. I look for that sort of founder-market fit, where they're their own first customer. I joke that if you're building for yourself, at least you have 1 customer.

Do you worry about the susceptibility of founders when they're that young? Bluntly, I see a lot of very young founders now getting so caught up in the fundraising game that it's almost a game of, “I raised a round—then from whom?” We're building a business to create a product for customers. Let's not forget why we're here. Do you worry about that?

Yes. I escaped the UK to go to Stanford, and there was a Stanford Review article, which is a student publication, that said, “It's easier for a Stanford student to get into YC than it is for them to get a job now.” We've seen a rise of, I would say, fake founders who don't have that connection to their problem. They're just starting something because it's cool or because they have nothing to do for the summer.

As an investor, you have to be very careful about backing students over the summer, because part of the signal is that they've dropped out and they're going all-in on this. But, of course, during the summer, you can't actually tell if they've dropped out. So I actually scale back a bit during the summer—not because I'm in Capri like all the other VCs, but because you have to worry about these fake founders.

How do you determine whether someone is a fake or tourist founder versus not? I look at some of mine more recently, actually, and I've made this mistake where I thought they were mission-driven, and it transpires afterward that they're not.

2. How to Spot a Fake Founder

I have a huge list of heuristics, and I have small signals and big signals. A small signal would be, “Let's meet at 11 p.m.” The best founders would say, “Sure.” The mediocre ones would say, “Oh no, can we meet Tuesday week?”

Then I just hit them quick-fire with questions. Everything they say, I want them to validate, and it's almost like a visa interview. For example, they'll say, “I'm at $5,000 in revenue.” I say, “Let's look up your Stripe right now.” The fake ones get really nervous. They're like, “I don't have my Stripe on my phone.” What serious entrepreneur doesn't have the Stripe app on their phone?

Then I go into these tactical questions: “What's your goal for the next 3 months, 6 months, 1 year?” A D-minus answer would be some vague nonsense like, “I want to get a partnership with Anthropic.” An A-plus answer would be, “I'm going to fly to Milwaukee to meet with a dentist to get them to sign my $500-a-month SaaS plan.” So it's very tactical.

Then I look for whether they have a top-1% skill in something to achieve their business goals. You see the best entrepreneurs: they've proved something in their childhood. Maybe they were selling Minecraft servers like Adam Guild or John Andrew, the founder of Wander. Maybe they were doing sneaker bots like the founder of [?].

My generation, when we were growing up, was very into jailbreaking and competitive drone racing. So many of these things can demonstrate a skill. It doesn't have to be engineering. I backed the youngest engineer at Amazon, which was really cool, but it can also be distribution, like making sure their sneaker bots get to the right audience.

3. Joshua's One-Person Accelerator

I heard from some of the founders that you will house them in a Four Seasons residence. Can you talk to me about this and how you structure that environment that you put them in?

I've tried all sorts of investments over the years, and things have done very well, but the best investments for me are the day-one investments. I think everyone is playing different games. Some people are playing the game where they're getting into the hottest companies at a $100 million valuation, and then they become worth $25 billion one day.

The game I'm playing is getting into founders when they're just starting. They're not polished at all, and they can really use my advice and my reliving my founder journey to polish them. I try to get in at a sub-$5 million valuation.

The question I'm sure you have is: How do you account for the adverse selection of getting in at those low valuations? I noticed over the years that the best founders I invested in, I actually lived with at some point. I was roommates with the founder of a company called Assured, where we both rented the house where Facebook was started over the summer at Stanford.

I was roommates with the founder of a company called Combinator, who worked at DoNotPay, so he lived at the DoNotPay house. The founder of micro1 lived in my spare bedroom when I was his first investor.

And what is it you see in the best founders during those periods?

I've made so many mistakes with DoNotPay. I'm 10 years in now, and I can give them a crash course so they don't make the same mistakes as me in 3 weeks. Bear in mind, these are very young, college, first-time founders. They don't even know the difference between pre-money and post-money valuation and all of this.

So it's almost like a one-person accelerator. It's 1 person, 1 partner at the accelerator—me—and then 1 founder or 1 company.

You mentioned the Four Seasons. I would say it's not that luxurious. It's adjacent to the Four Seasons; it's technically a Four Seasons residence, but sometimes, if there are 4 co-founders, it's 4 beds in 1 room. So I'll rent beds for $50 a night, and then they all—1 company—live in 1 room.

I say to them, it's in California, so it's like Hotel California, where you can't check out until you've raised your institutional seed. Then the company is off life support, and I can relax a bit.

4. The Three Reasons Pre-Seed Companies Fail

Can you delve into this process? What are the main fuck-ups that they make during that period when they're there? What do you need to shape, polish, or create during that period?

At the very beginning, there are 3 reasons why pre-seed companies fail: they run out of money, they run out of hope, and co-founder disputes.

Running out of money comes down to pitching, and I'm lucky to have pitched almost everyone in Silicon Valley over the years, successfully and unsuccessfully. So I teach them how to present their business.

Running out of hope is also really important. I want to make them feel like they're making progress every single day. So I'm encouraging them to ignore all of the vanity signals of being a young founder in SF and actually focus on their customers.

For co-founder disputes and building the team, I sometimes recruit my smart friends who are not ready to start a company into their organization. I get them the vesting and all the boring stuff. Everything that YC would say to them, I say to them.

It's so interesting that we had money, hope, and co-founder disputes. Co-founder disputes are one of the things that really kill companies, I find. How do you measure and analyze co-founder relationships when they're staying with you? Any lessons there?

The good news is that, with all sorts of red flags, young founders are very bad at lying. So if they say, “We've been best friends,” and then they start interrupting each other, you know that that's not true. I look for a long history.

The best co-founder dynamic that I've seen among young founders is friends from high school. They live with me as well. I was the first investor in a company called Halodiere [?] very recently, and they were friends from high school, went to different colleges, dropped out, and rejoined. So that's the perfect dynamic.

One thing I'll say is that I've noticed a really worrying trend of people reverse-engineering what I say on podcasts and in articles to pitch me exactly what I'm looking for. Just now, I said “friends from high school.” I can guarantee you that in 3 weeks, someone is going to say, “We were best friends in high school.”

This is a worrying trend where they're using Claude and ChatGPT Deep Research. So I have to worry about that. It's the biggest challenge that we actually have, because I've been very prescriptive in the past about what I look for. This sounds awful, but family trauma is a big sign of future founder success, gaming, and then early entrepreneurial success. I would say 9 out of 10 young founders that we meet pitch those 3 exactly, and you're like, “Wow. This is very aligned.”

Yeah, it's disgusting. It's a certain type of fraud. I call it ideological fraud. I agree completely. When you bring them into the house, is that when you put the money in?

Yes. I put it in just before.

Is that the same-size check at a certain price?

Yeah, and it varies depending on how many co-founders there are. If it's just 1, I sometimes don't mind solo founders. If it's 3 dropouts from Harvard, then the price reflects that.

Do you find that $5 million price is still attainable?

It can sometimes be lower and sometimes be higher. I find dropouts from Stanford or Harvard, in particular, just see TechCrunch and see Twitter or X and go, “I'm 25. I'm a CS grad from Stanford.” Oftentimes, it's so early that it's definitely possible.

For my latest fund, I've done 33 deals so far. The median across the entire fund is $5 million. The minimum is $1.5 million, and the maximum is $21 million.

Do you worry about the level of fraud that's going on in the current ecosystem, with the founders that we're seeing? Do you worry about that increasing with the pressure we're putting on?

At the earlier stages, the only fraud that can be is ideological, which is not illegal. It's not illegal to say you've had childhood trauma when you've actually grown up middle class, and that's a huge, huge issue.

It's interesting because the best founders are hustlers in some ways. It's a balance. I actually think it's becoming easier and easier. The world is becoming much more transparent. You have Twitter sleuths who will detect anything.

Several companies recently have been taken down because someone published an article about Stock2 [?] or something like that, and the entire company is done. So I think that fraud—the illegal type of fraud—is becoming harder.

You mentioned you've pretty much met every venture investor in the Valley. What was the best venture investor meeting you had? Somewhere you just meet them and you're like, “Wow, this person is really smart.”

5. Breakfast With Marc Andreessen at 18

I think it was Marc Andreessen. Like so many founders, after DoNotPay got all of the hype and we were starting to get a lot of usage, he reached out on X and said, “Do you want to have breakfast?”

I was very mission-driven. I was not one of these Stanford founders or anything. I was actually on the verge of making DoNotPay a nonprofit. In fact, I had a pitch to nonprofit-style investors—not investors, just funders—to make a legal nonprofit to help people with their rights. I was that focused on fighting the system.

I went to this breakfast, and Marc convinced me that the biggest organizations are for-profit entities, and you can have 10 times the impact of a for-profit company because the incentives are aligned. DoNotPay was a very small example of this, but I guess you're seeing this today with OpenAI and the $150 billion lawsuit, where they switched from nonprofit to for-profit. So that was the first major lesson I learned, I would say.

How old were you at that breakfast?

I was 18 or 19.

Were you nervous?

I was so nervous, and it was a breakfast meeting. It was a house in Atherton, and he came down in breakfast clothes.

What are breakfast clothes?

I'm not trying to get in trouble, but I was fresh off the boat from the UK. He came down in breakfast clothes. I would say all of the luminaries are incredibly nice people. Marc Andreessen is by far my favorite, and I'm very fortunate he's my first investor at DoNotPay and also the first institutional investor for my fund.

That is absolutely amazing. I love that. I also love breakfast clothes. I have no idea what that is. Do you think venture investors add value? Keith Rabois says, “The best founders I work with, honestly, they don't need venture investors.” Most VCs on LinkedIn or Twitter tell me that I'm an idiot for saying that. Do you find that to be true? What side of the fence do you sit on?

I have a friend who has a great saying, which I'll copy: there are 3 types of people—those who make it happen, those who watch it happen, and those who wonder what happened. I think at best, venture investors are in the second one. Sometimes, unfortunately, they can be in the third.

The biggest issue is that they don't go crazy on the founders, which happens a lot. But of course, they can add value at strategic points. Going back to the core ingredient of success in venture, that's the founders themselves.

You're a dropout. How do you think about the value of university today? If you were sitting with university students today, advising them on whether it's worth staying or worth pursuing a dream, what would you say?

People see their life as paint-by-numbers. They say, “If I graduate, go to business school, go work at X company, then in 5 years I'll be ready to start my company.” The problem is the world changes so quickly that the paint-by-numbers approach doesn't work anymore.

I would say to any founder who has an idea of what they want to do, they should just go for it, and the world won't wait for them. On the other hand, you see a lot of people drop out just for the sake of it.

In fact, when I dropped out in 2018, I actually had 1 or 2 classes left at Stanford, so I was very close. It was very taboo to drop out. Now, dropping out is almost the establishment. So you see people drop out just for the sake of it, and I think that's definitely wrong, because there are huge advantages to being in college.

Even if you’re doing a startup, you can recruit your friends. You have your college email, and people will take you more seriously if you email them from Stanford.edu or MIT.edu. Also, people give college students more of a free pass. If all of these founders who are getting this controversial stuff were in college, they might be able to pivot more quickly.

Do you think your father’s an incredible, incredibly respected figure, but there was a little bit of a safety net? Do you think that your ability to have a safety net slightly enabled you to drop out?

No, I think the opposite was true. I was sitting at a poker game at Stanford with my friends—I’ve never told this story before—and I got a news alert saying my father had just been arrested.

My father is a human rights activist, and he’s an enemy of the Russians. The Russians had managed to get him, and I think it’s just made me incredibly paranoid. Most people don’t have the mafia after their family, and so I was always paranoid and fearless. I think it actually made me more paranoid to take big swings.

Yeah, take big swings. What did you do in that moment?

I called him. It didn’t go through. Then I called my mother, cashed out my chips, left the poker game, and dealt with the situation. As a 19-year-old college student, there’s very little you can do in that situation, but my biggest thing was trying to make sure he didn’t get extradited to Russia, because if he got extradited, really bad things would happen.

I went to an event for British students at Stanford, and it was hosted by the Consul General. I thought, “The one thing I can do—and maybe I’ll email the Consul General.” Even as a teenager, I was just trying everything. Of course, that made no difference.

Do you know what I find very funny? If you’d been like, “You know what? I’ll deal with this later. I’m playing poker right now.”

That is quite the story. Yeah, that was a Financial Times newsletter. That’s pretty terrifying. Can I ask you, when you think about a really challenging time like that, seeing that news, can you take me to a really hard day you had with DoNotPay? How did you learn about yourself from it?

This was probably the hardest point of DoNotPay, which was 3 years into the company. I raised the pre-seed from Andreessen, from Marc Andreessen, and it came time to raise the seed 2 or 3 years later.

DoNotPay was incredibly popular. Millions of people were using our free product, and I thought it was a slam-dunk pitch. That was a huge mistake. I was going down Sand Hill Road, because all the VC funds were on Sand Hill Road back then, and one after the other, they were rejecting me. I went down the list: rejection, rejection, rejection.

This was really depressing because I’d actually just dropped out a week before. As passionate as I was about DoNotPay, there was only so far I could go with just me. I needed to hire a real team and raise some serious money to keep it going.

I had 2 or 3 pitches left, and I thought, “If these don’t go well, I’m just going to throw in the towel and do something really depressing, like go work for big tech or something. Go work at Google. I just have to give up. I’m even going to go back to Stanford.”

The next day was one of my last pitches. I guess this speaks to how bad the situation was, but I turned to my outside counsel for advice. If you’re turning to outside counsel for business advice, then you know things are really bad.

He’s an amazing lawyer. He’s a partner at a firm called Wilson Sonsini, and his name is Damien Weiss. He’s on the cap table of all the amazing companies. I told him the predicament I was in, and he said, “Do the whole pitch in front of me right now.”

I gave him the whole pitch, and he interrupted me halfway through and said, “You’re doing it completely wrong.” He said, “First of all, they’re not investing in the PDF deck or some presentation. They’re investing in you and the product, so the fact that you’re not doing a demo is criminal.”

I quickly scrambled together a demo of a robot appealing someone’s bank fees, because DoNotPay was expanding to bank fees in the US. I added that to the presentation.

He said, “Second of all, no one really knows what this can be. You should put the logos of the biggest companies that you one day want to emulate.” So I stuck in the logo of Intuit, which is a $200 billion company in the US, and said, “We want to be the TurboTax of consumer rights.” TurboTax is one of their products.

I also put in the Honey logo, which had just been acquired that year for $6 billion, and Credit Karma, which was acquired for $8 billion. I put those in the deck.

He said, “Finally, this was around the time of the Cambridge Analytica scandal. You shouldn’t say you want to do advertising. Advertising is not very fashionable right now among VCs.”

I said, “Okay, what should I do?” He said, “Subscription.” So I put in subscription. I didn’t even really believe that people would subscribe to it, but I put in subscription, and it turned out to be right. Subscription is now our main business model.

I made those 3 very minor changes to the deck and did my presentation the next day. Harry, it was like night and day. Everything changed. Not only did they want to invest, but they left me—I left the room for a few minutes—and when I came back, they wanted to invest on the spot.

First of all, all of Silicon Valley is such a herd-mentality place. Even the people who had previously rejected me, once they found out that this firm wanted to invest, started rescinding their rejections. I thought that was a bit depressing.

Second of all, it taught me a really valuable lesson: nothing changed about the company, nothing changed about me, nothing changed about the team, and nothing changed about our usage. But the most minor differences in framing and strategy made all the difference.

That’s actually one of the lessons I give the founders I invest in. If things aren’t working, you just need to change the framing slightly, and that can make a monumental difference.

What do you find is the biggest problem with the framing that founders often come in with?

I tell every founder I invest in not to have too high of expectations. This is classic VC advice. Pitching VCs is like a game of poker. You should never reveal too much information about what you’re seeking.

Every founder I invest in, I say, “Don’t reveal the price that you want.” The price is a function of how hot the deal is, which, ironically, is less hot if you go in swinging for the fences with something too high.

Secondly, I try and relive my story, and I say, “You have to do a demo.” There’s a famous story of a founder I gave this advice to. He’s a biotech founder, and he did a very personal demo. That got a top-tier firm interested. Everyone was passing on him, and then he did this demo, and a top-tier person came in. So I definitely say: do the demo.

Make it all about them. There are a million things. The CEO should be doing it, not 5 founders speaking over each other. There’s a whole list. I send it to any founder I invest in.

One of the worst things to me, exactly there, is when 3 people come to a Zoom call in particular and it’s like, “We have 30 minutes.” My job is to build a relationship and try to get to know you. Suddenly, there are 3 founders on a call.

Yeah, well, Zoom is the fastest way. They should fly to London. In person, I say you should reject Zoom and always do it in person where possible. If I were pitching you, I’d fly to London.

That’s very sweet. I would invest in you if you flew to London.

You said that you didn’t really believe subscription could be it. You put some logos of other big companies in the deck. How do you think about the Walt Disney, “Sell me the dream, sell me the story,” versus Jerry Maguire, “Show me the money”? How do you advise that, and is there a blurring of lines?

I think, being British, the substance is always—I try to be more substantive than hype. I think it’s just the UK culture. When I give references, I always say, “This reference is actually really good because it’s coming from a British person. I’m not one of these hype Americans.”

I give founders I invest in this advice: it’s okay to be as hyped as possible with your vision and ambition. You should have boundless ambition, but with how you’re describing the current state, it should be very accurate. I think there’s a balance between what your plans are and where it is today.

Do you think that we actually expect too much in the ambitions of young people? When I first started the show—and you kindly said you listened early on—I just wanted to be an associate at a big fund. That was the dream job. I would have been a terrible associate, I’m sure, but we put a limiter on our ambitions because we don’t know what we’re capable of.

Do you think we need to give founders credit or leeway to have their ambitions expanded?

Unfortunately, all of the best founders I’ve invested in have had delusional levels of ambition.

The more delusional, the better. Unfortunately, it is a sign of success to be delusional, so I think it's better that they're more on the delusional side.

But I agree with you. I would have just gone for it. Initially, we got an acquisition offer for $1 million from one of these OG legal-tech companies when we had just started DoNotPay, and I was about to take it. So, I agree that you never realize how big things can be.

Why did you not take it? $1 million pounds—you were pretty young, probably a teenager. Why did you not?

I asked a lot of people I knew for advice, and they laughed at me. I was actually really upset with them for not validating this achievement—that we'd gotten a $1 million acquisition offer. It was a bit depressing, but I think they actually gave me good advice, which was: you can do better than this.

You said you went to mentors. What advice would you have, or what thoughts do you have, on the value of mentorship and how young people should seek out the right people to surround themselves with?

One should create their own luck and meet as many peers as possible because you get different things from different people. One person is an expert at growth, one person is an expert at fundraising, and one person is an expert at life. Clem, who introduced us, I think he's an expert at life.

In terms of the people that you surround yourself with and learning from their different skills, talk to me about deciding to be a Thiel Fellow and how that came about, because that was a significant turning point.

I was at Stanford, and to graduate from Stanford, like many universities, they have distribution requirements, which means you have to do various things in the curriculum to get your degree. One thing you have to do is called Creative Expression.

I'm not sure how I seem, but I'm not the most creative person. I'm more of a Claude Code-style person. I love the code. Anyway, this was the last requirement I had, and the easiest way to satisfy it was to go to dance class once a week.

There's this famous class at Stanford called Social Dance, and it was at 9:00 a.m. It was a schlep. DoNotPay's servers were crashing, and I was very bad at dancing, so I had a decision to make: did I want to go to this dance class, or did I want to keep my business up for millions of users? I didn't go to the dance class. I kept DoNotPay running and failed out of the dance class. That precipitated my dropping out, not the Thiel Fellowship.

I actually got the Thiel Fellowship a few weeks later. The best thing about it is that you have 19 other people who also have these dance-class-style problems—who have the same problems as me as an entrepreneur. One example would be: how can you convince a 60-year-old to work for you?

At the time, DoNotPay was very early in the machine-learning days. We were trying to do some machine-learning classification for parking tickets, and I was trying to get one of these OG machine-learning people to work for the company. I turned to one of my Stanford dorm mates, who was also trying to do apps and projects, but was more of a committed college student, and I said, “Do you have any idea how I can convince this person to work for me?”

He had no idea, rightly so, because he was dealing with his own college problems versus building a company. I think the biggest benefit of the Thiel Fellowship is having 19 other young people who are dealing with the same challenges as you.

I went to the first Thiel Fellowship retreat, and back then they made you share rooms. Now Peter Thiel is so wealthy that if you go on the retreat, they actually give you your own room.

Too luxurious these days.

My roommate was a fellow Brit. I guess they put the 2 Brits together. He went on to found a company called Fluidstack, which is publicly reported to be a company worth tens of billions. Just having those peers is absolutely incredible.

When we look at the Thiel Fellowship, what do you think made it so successful when you look back?

I think it was not being transactional. It's a prize, so it goes to the individual as a prize, and you can do anything you want with the prize money. You can use it on research into how to grow organs, or you can invest it, like I did.

Is that what you used it for?

Yes, I put all my Thiel Fellowship money into Adam Guild and other amazing entrepreneurs.

I started investing. Maybe I'm an investor at heart in some ways, because that's what I did. That's wild. I had no idea it was—wait, wait, so they give you $200,000?

Back in my day, before the hyperinflation—I’m getting old—it was $100,000. Then last year it was $200,000. Now it's $250,000, so it's going up. And so then you get $100,000—

Yeah.

—and you're like, “Wow, the people I'm with are really good, too. I'm going to invest in 10 $10,000 checks.”

They have this tradition where, obviously, the ultimate decision on who gets the fellowship is up to the foundation and Peter Thiel. But fellows help out every year in the selection in various ways. I was helping out one year, and I was interviewing fellows for the next class. That's how I met a lot of these people.

That is absolutely wild. Did you do the same-size check into each? I'm just intrigued.

No. They pay it in installments because I guess they think, “These crazy young people—we don't want to give them $250,000 at once. They might buy drugs or something.”

Probably not, but they might do some crazy stuff.

At least with me, they gave it to me in installments. I took all of my first installment and just put it into him.

Into Adam?

Yeah.

Wow. Okay, so of the $100,000, what do you think you've turned $100,000 into, on paper?

I think when it's all said and done, it'll be in 8 figures.

Wow.

That's why I started my fund. I also did other investments that did very well. I invested in my Stanford roommate Justin and various other ones at the time.

What did Justin do?

He's building insurance-claims-processing software.

Oh, sure. Lots of deals like that.

I thought, “Okay, I'm out of my Thiel Fellowship money. Maybe I should raise a small fund to keep this going,” because it pays to be early. It 100% pays to be early.

That is absolutely amazing. It's the first time I've heard it. Before we move on to talking about investing in the first ones in that way, you're on the selection committee for the Thiel Fellowship, also?

It's ultimately up to the fellowship to decide, but I help out.

How has what you look for—and what they look for—changed over the years?

When the Thiel Fellowship started, it was really about backing incredible, out-of-distribution individuals. Dylan Field was working on a photo-sharing app and, I think, some drone ideas. Vitalik was just a crazy individual doing crypto, which was not exciting at the time. It was really about the individual.

In the late 2010s, a flood of people started applying to the Thiel Fellowship with huge external validation. Now I think it's going back to really focusing on the individual.

6. YC vs Joshua's Spare Bedroom

You said there about the external validation and some groupthink. I'm interested because, often—I don't know how to put it—the Thiel Fellowship and YC are compared in the same bucket. How do you advise founders on the value of YC today and how they should think about that?

Every founder needs a first believer, whether it's taking my spare bedroom or joining one of the amazing programs out there. You need a first believer, and YC can be a great first believer for them.

I think some companies do better in YC than others. The problem with any accelerator—not speaking specifically about YC—is that you're competing for attention with all the other companies in the accelerator. If you're at the top of the accelerator, then that's incredible. You're the king-made or queen-made company. But if you're a middle-of-the-pack company, it might actually be better not to be compared to all those other companies.

Going back to my spare bedroom, it's a supply constraint. There's only 1 spare bedroom, so the bar for me is: do I want to put these people in my spare bedroom? There's only 1, so all my focus is on them. There's no dilution in terms of the brand. I'm not doing 100 companies in my spare bedroom.

In fact, one of my LPs asked me, “Why don't you start buying a hotel or rent out a hotel and just do 10 at a time?” I said, “Well, that removes the artificial constraint of 1.” I think that's why I try to be different: I'm a 1-person accelerator.

I have an unwavering man crush on Matthew McConaughey, and he actually says something brilliant, which is, “Limitations reveal style.”

I think it's very much aligned here to the constraints of your approach. I would love to partner with you, Josh, and say, “Hey, this is the content marketer within me: could we get a house and do Founder House and do 5 or 6, and turn it also into a content business?”

I was thinking of buying the Facebook house. It's actually not that expensive—the actual house where Facebook started. When I was starting DoNotPay, I didn't know it was the Facebook house.

The first time I found out it was a Facebook house was when a bus of tourists from Asia showed up at the house. It was like Avenue of the Stars. I guess growing up, we'd visit LA and go on a bus tour with all the stars, and this was on the tour route.

The bus showed up, and I said, “What are you here for?” They said, “We're here to see Mark Zuckerberg's house.” I immediately thought, I guess this is the content marketer in me. “You can come in, but you have to subscribe to DoNotPay.” So we had a DoNotPay employee outside with a clipboard, and to enter the house, you actually had to become a DoNotPay user.

That is amazing. I'm just wondering, what are the limitations on expansion for you? The 1-bedroom works—could it be 3? Could it be 6? That's such an LP question. Thanks, Josh. I think you should start founder funds. You have amazing judgment.

I think there's something special about 1.

How long are they in there for?

As long as it takes. Hotel California: they can't check out until they're in a stable spot. Usually, that's a few weeks.

Usually, a few weeks?

Yeah.

Wow. Okay, so you'll tee them up then for a round. You'll introduce them to—

Maybe a traditional pre-seed or seed, yeah.

And so you'll introduce them to 10–15 VCs?

Yeah, and I will go very personally to do everything to help them. Oftentimes, this arbitrage is that I'm moving them internationally. I'll put that O-1 genius visa on my credit card. I'll use all my social capital to introduce them to whoever it takes.

I had one person who was building in data centers. I phoned up my old friend Jamie and introduced him to Jamie from Fluidstack. I'll do anything and everything possible to build up credibility, build that team, and get them into a stable spot.

I absolutely love that. It's so rare to meet someone like that, and it's so rare to be able to do that, because most people run portfolios and you just don't have that. Can I ask you a tough one? Have you ever lost belief when you've seen them in the first few weeks?

No. I've never lost belief in someone who stayed with me. I think there are enough filters before that. The opposite is true. I've accosted them at 2:00 a.m. while they're sitting on my couch. I'm like, “I want to put in another $300K.”

It's difficult to say no. You're staying in my house. Do you want to stay tonight?

That is amazing. I love that. So you go to the 10–15. Is it always the same 10–15? Do you tailor it to, “Oh, well, you're doing X and you're doing Y, so this should be different for you?”

Yeah, some are off to the races. Some I introduce to a top-3 firm, and they get it. Going back to it, it's actually a signal. Once they get the top-3 firm, it's like a stampede—like a safari stampede. Everyone is trying to invest. I was thinking, where were all these people 3 weeks ago?

Sometimes they require a bit more time, and then maybe I bring in a sector expert. If they're doing government, I bring in a top government VC. If they're doing consumer, I bring in someone from consumer. Sometimes it takes longer, but I always get them into a stable spot.

Are you able to predict the ones that will be hot versus not?

7. The 1000x Investment: What Joshua Saw in Ali Ansari

No, the opposite is true, actually. The crazier it is, the better they do. Ali Ansari at Micro1 was objectively my best-performing investment in terms of multiple. The founders get upset when I reveal exact valuation numbers, but let's say over 1,000X—well over 1,000X—based on the scale of the business.

When I met him, I said, “I'll invest only on 3 conditions.” It was a California LLC, which was uninvestable. It had to be a Delaware C corporation. He was based in Los Angeles as a solo founder, and he was running a staffing business, which—there are a million staffing companies, even in the UK.

I said, “You have to move to the Bay Area. You can live in my spare bedroom. You have to reincorporate in Delaware or shift to Delaware, and you have to do a software-style product. I don't mind what you do, but it can be anything.”

We grinded, and he's one of the hardest-working people I've ever seen. He still lives in my building to this day, and I come home at 12:00 a.m. and he's working in the middle of the night. He did all 3 of those things, and it changed everything.

Dude, what did you see in him? I don't mean that rudely to Ali. I've seen Ali in action. He's clearly brilliant now, but you learn and develop. A staffing business—I'm sorry to be rude, but how uninteresting. As you said, there are millions of them. What did you see in him that made you so convinced that he would pivot, change the company location, change his location, and never give up?

Never give up. If you back someone with an above-average IQ who's very smart and never gives up, of course they'll succeed. I think this is actually a mistake a lot of VCs are making: they're focusing too much on credentials.

There's a race right now to back the Math Olympiads. VCs are going to spelling bees and math competitions in high school. I think IQ is very important—you need someone smart—but much more important is that they'll never give up.

I could tell from my own journey, and from interviewing people for the Thiel Fellowship and seeing so many founders, that Ali was someone who would never give up. He's overcome huge challenges along the way to build his business.

Do you agree with Ken Griffin, who said on the weekend that he likes athletes with an above-average IQ?

8. IQ Is Overrated

Yes, I would agree with that. Athletes are one form of never giving up, and you can tell. A huge chip on your shoulder is another way. There are so many.

Totally agree. You said that about Micro1 and Ali. Take me to that, then. He's in the house, and then he's going out to raise from VCs. How was that first round?

Once the minor things get sorted, there's so much money. People ask me, “Are you worried about competition from XYZ, XYZ, B5 Seed Fund[?]” I'm like, “No. That's helpful. They can join these companies and babysit them.”

Once these minor things are sorted, it becomes legible fairly quickly—not for, like, a unicorn, but certainly for an institutional seed.

How much weight do you put on the idea, to your point on Ali, where he's never giving up in a staffing business? Awful.

This is the biggest mistake I think I've made as an investor over the years. As an investor and entrepreneur, my imagination can run wild as to what they can build. I think, “If only they did this, it would be huge.”

9. Never Tell Founders What to Build

The problem with that is that unless it comes from them, it's not their life's work. I'm very cautious. I have a rule: I never tell entrepreneurs what to build, which might seem surprising as an investor. I say to them, “It's your job to build the product and get customers. I can help with everything else.”

I never index too much on the idea; it's about the person. With that said, there are a few things that I'll never touch. I'll never touch crypto. I'm not getting into whether I believe in crypto or not. I think it has huge use cases, but I think it's best left to the crypto funds.

Consumer hardware is tough because of various different consumer hardware issues. So I try to stay away from that, at least for my fund. But beyond that, anything.

Totally. Wet science as well—stay away from that.

I agree with you.

For me specifically, it's biotech and life sciences, where it's far too intellectual for me. Atlas exists for a reason. You should go and see them.

I'm not a scientist. I would say, again, the show is successful because I'm very open. We as a firm are struggling to make the transition between what was good—$1 million to $5 million, good enterprise clients—to what is expected now, which is, you know, Legora going from $1 million to $100 million in 18 months, and Lovable going from $1 million to $100 million in 15 months. Has what you need to see changed?

No, I'm more excited than ever. Everyone is pitching this AI infrastructure nonsense. “We're building agent observability.” The jargon levels are insane. I'm British. I think this is all BS. They just add on the jargon.

I love people building real businesses. The more real it is, the better.

What's real?

I think enterprise AI is really exciting—Assured, Owner, or Micro1. Things like that.

What you mean by that, just so I understand, is: “I sell a product that people pay for, and it's a simple transaction in that way,” not, “The market will move toward our way of seeing data access for agents.”

Yeah, and actually—

Do I detect jargon?

Yeah. I mean, if you can't explain the business to someone at the pub in the UK—if you go to a pub and say, “I'm building observability for AI agents,” they'll laugh at you. But if you say, “I'm building software to automate health insurance claims,” that makes sense.

Yeah, I totally get that. When we go back to the Alis and the Micro1s for the fundraise, what do you advise founders when they get multiple term sheets and the heat is on?

There are 2 groups of firms. There are the kingmaker firms that you should accept at any price. One example would be Founders Fund or Sequoia, or people like that.

If you get an offer from them at X and the offer from someone else is at 2X, you should take their offer because even if you're maximizing the amount raised and minimizing dilution in the long run, you're king-made, and it will save you in the next round.

So, you should definitely go for them. But another mistake these entrepreneurs make is that the list of kingmaker firms is too big. There are probably some tier-two firms that think very highly of themselves but aren't at the same level as Founders Fund or Sequoia. No tier-two firm thinks they're tier two, to be very clear.

Can I ask—if I put the pressure on and said you could have 3 firms in tier 1, and 3 only, what would they be?

No, it depends on the sector. It really depends on the sector. If you're a consumer company, getting Forerunner could be the kingmaking thing. Generally, it could be Founders Fund or Sequoia or something.

That's a very diplomatic answer. I often think that kingmaking exists, very candidly. Do you agree that kingmaking exists? You said it a couple of times.

100%. We live in such a noisy world that people outsource their judgment to established brands. The thing I think you've also seen that people really don't anticipate is how kingmaking correlates to customer adoption.

What I mean by that is, if you look at Winston at Harvey or Matt at Legora, a big part of their customer acquisition is relying on their venture investors to bring in mega law firms. It's a revenue generator.

Yeah, and it's not just law firms.

Even consumers who use DoNotPay—I think lots of people have signed up because of the investors that backed us.

You mentioned the word dilution there. I'm seeing more and more founders who are like, “Oh, I'm being very dilution-sensitive with this round.” They'll do 5%, maybe 10% dilution on a seed round or a pre-seed round, where it used to be 15%–20%. That's hard for me as a fund. What do you advise founders on dilution sensitivity, from your lessons and observations?

10. What Joshua Looks for That Others Miss

I think it's nonsense. They shouldn't do something stupid like sell 50% of their company to a Midwest angel for $100,000, like you see with some of these Shark Tank deals. But at the same time, the number one thing I say to especially these young founders I back is: either it succeeds or it doesn't.

If it succeeds, at a minimum, you're worth hundreds of millions or billions. You're on the cover of magazines. It's life-changing. If it fails, you're nothing. So, if taking that extra money can reduce the chance of failure by even 5%, the expected value is infinity in terms of life improvement. Five percent of infinity—you should still do it.

For you as an investor, dilution is real. We're seeing it with Anthropic. I think the Series A round was 9.2% dilution. Astonishing. I've never seen such levels of dilution. For you as an investor, with subsequent rounds, do you do reserves? Do you do them from the fund? How do you think about that?

I'm on my fourth fund. My first 3 funds, I did reserves. I did some great reserve investments. For example, I did a very Hummingbird-style investment: I put 15% of my third fund into Owner at the Series A, and that fund has Micro1 and lots of other good things. So, that will be a very good fund because of that reserve investment and also because of these pre-seeds.

Let's pause on that. You put 15% into Owner. Fifteen percent, for people, is an extraordinarily large amount. It's almost double. Normally, I would never go above 7%. You're doing 15%. What did you see that gave you the unwavering conviction to put 15% into it?

In the private markets, there's no insider information. Generally speaking, all of these founders are my good friends. I speak to them sometimes at 2 a.m. If you can build that depth of relationship and conviction, it's a kind of advice—a kind of positive selection—through that kind of relationship that you can build with the founders.

You can tell if it's real because I'm not a professional investor, and I'm sure you'll ask me about being a founder versus an investor. I think people consider me a founder, and that's a unique edge.

Anyway, going back to your question, that was a good investment, but I realized the opportunity cost of that investment, given where I come in. It could be 20 to 30 pre-seeds, and the value creation at the pre-seed is so high that I decided, for my fourth fund, no reserves—just everything up front.

Browder Hotel, let's go. Browder Hotel, let's go. Along the way, you said, “Hey, you'll be worth hundreds of millions,” blah blah blah. How do you advise founders on the ability to take secondaries off the table early? We're seeing it more and more, earlier and earlier. How do you advise them?

Yeah. I think the people buying these secondaries are sharks. If someone is emailing you asking to buy Anthropic shares, the value of Anthropic is probably going to go up, and the same is true with these founders.

I would say to them, if you're being bombarded with secondary offers, perhaps they have more experience with the market than even you do as a founder of your own business. I think a lot of founders—a lot of my friends—have regretted taking secondaries because they've got one of these kingmaker firms in, and then the valuation has gone up 3x in a few weeks. So, why not do the secondary at the higher price?

I would say that if there's too much inbound, there could be something they have within their investing experience that, as a founder, maybe it's your first time in business, you shouldn't jump to sell too quickly.

Could you sell secondaries?

At DoNotPay, we haven't really had to because of dividends, which is a whole other thing.

It is a whole other thing. I just wonder: do you think richer investors make better investors? My theory around this is that a Sequoia, for example, isn't worried about an LP questioning its investment strategy. They're not worried about losing a company, even. They're not going to get fined for losing a $20 million check. A firm that is more worried, or bluntly needs the money more, is going to worry about its next fund and losing companies, and it doesn't have that upside maximization.

I'll give you a classic example of how this impacts decision-making, which is SAFEs versus priced rounds. As a pre-seed and seed investor, the B-minus VC investors will want to get that next round on a priced basis to get that markup. But if you actually care about the economics and making money in the long term, you want the next round on a SAFE, because SAFEs don't dilute other SAFEs.

I was actually talking to a seed investor about this, and I said to them, “Why doesn't everyone just encourage more SAFEs? SAFEs are beneficial for founders because they can raise more quickly and all of this stuff.” And they said, “No, but they want the priced round to raise the next fund.”

So, I think this raising-the-next-fund nonsense really does impact decision-making and actually directly hurts founders with some of these things.

Does a SAFE on SAFE on SAFE not ultimately hurt the founder when it ultimately converts? It's kind of like a delayed death that you ultimately have to cash in your chips for.

Well, the VCs always win. If they do a priced round, some of them are sharks. They say, “We want a 15% option pool at the seed.” With a SAFE, you don't—you can just preserve the existing option pool and wait until the company becomes more valuable.

I love that. But I'm biased: VCs are sharks. I love that. It's a good title. What other ways do you advise founders to be mindful of a shark-like mentality toward VCs, or from VCs?

I say to the young founders that the VCs will say anything to get you to sign right there and then. Anything. They'll reverse-engineer what the founder is looking for and say, “Oh, I'm friends with that guy. I know someone at that company. We're golf buddies. I can get him to be a customer. Right now, I can introduce you to so many customers.”

These poor young founders are so impressionable. Sometimes they sign the SAFE on the spot. Afterwards, of course, it never materializes. They never get that customer they wanted because it turns out they weren't as close golf buddies as the person made it out to be.

I say to founders, do not sign on the spot. Going back to my offer, I don't make them sign on the spot. It's just too much, especially for these young founders. I say, “You have the night to think about it.”

I think decisiveness is a key quality, so I do want to know by the next morning. If not, it's done. But they can't sign on the spot.

I freaking hate this: “I'm running a process. I'm collecting term sheets, and I'll let you know by Friday evening, the same as everyone else.” That is an awful-feeling way to do business, to me. Either a hell yes or a hell no.

So, what would you genuinely—I'm asking your advice—say I should do when a founder says, “We're collecting term sheets. We so appreciate your belief in us, but we'll let you know on Friday”?

I say it's probably not a fit, especially given my investing model. I want to have so many ways to win. I'm sure they might win or not, but that's not a fit for me. I say, “Good luck.”

So, when you advise founders on that selection process and they say, “Oh, I've got a term sheet,” you guys then sit over dinner and talk about it. You won't run a process?

Yeah, no, definitely not. If they're running a process, it's too late. I want to help them with that process.

And I’m very collaborative. I typically take 5 to 7%, and I say to them—and I really think this has proven true—that I will save them that over the life of the company. Even if they have the most top-tier people, I will save them that through various founder tactics.

I help founders at 2:00 a.m., even raising their Series C. It never ends. I will make it worth it for them. It’s not like I’m trying to get 25% of these founders.

How do you advise them on price optimization?

I tell them the market sets the price. Price optimization is a function of how many offers you have. You should never say what price you want.

Of course, they ignore my advice, and then they get hit with, “Oh, I’m passed because the price is too high.” The VC probably would have given them an offer, and that would have actually helped improve the price.

Can I ask—you mentioned the dividend element there of DoNotPay. DoNotPay is such a fascinating business, especially in the way that you’ve run it. Can you explain to me how many people are at DoNotPay and why it’s not the traditional venture business that probably loses money and is desperately reliant on the next round? Just tell me about that before I dive into it.

DoNotPay, in some ways, is a media business. We get 90% plus of our customers organically through SEO and media, like viral stories and referrals. We’re not playing the “spend $100K a month on Meta” game that some other founders are playing.

That is a double-edged sword. It has positives and negatives. The positives are that it’s extremely efficient and profitable. We have hundreds of thousands of customers, and it’s only a team of 11 people. It’s fully automated, so it’s very efficient.

The downside is that we can’t just decide to dump $1 million into Meta ads and grow by X percent. The organic is kind of a ceiling.

11. Hire People Who Scale Themselves

Another ceiling is that, coming from the UK, I’ve always wanted to build a real business. We had a competitor at the 2021 peak. They were spending like $300 to acquire a customer worth $150, and they actually managed to sell at the peak of the market. Good for them. I can’t play these games. I think that the best thing is to actually build a real business.

Good for them, indeed. Do you worry, with the reliance on SEO, about that golden goose potentially being threatened?

Yeah, GEO, the AI version of SEO, is rising in parallel. We’re not too worried because people will always rely on some acquisition channel. Fortunately for us, we haven’t yet seen it, because one of my life philosophies is that the world doesn’t move at the pace of San Francisco.

12. DoNotPay Pays Dividends

A lot of our customers are from Middle America and the UK. They’re still—I mean, Google is still huge. It’ll take a while, but we are definitely insuring ourselves with lots of GEO-related strategy.

Was there a moment where you thought, “We’re not a traditional VC-backed company, and I’m not going to go down this route of raise, raise, raise headcount, rah-rah”?

From the very beginning, we were always—I mean, the clue’s in the name: DoNotPay. I joke that it’s not just a company; it’s a lifestyle. I’m Mr. DoNotPay.

We never want to do anything stupid. When I was hiring my friends, I was always hiring the people who were browsing Reddit at 2:00 a.m. trying to save money. We’re really in it for the DoNotPay, so we never did that.

I think this is controversial. I think founders who burn all the money—I think that’s not cool. I think it’s kind of lame. Why did they run out of money? Why didn’t they just cut the burn?

Obviously, some founders failed because of some black swan event, and I can understand that. They take a massive swing and there’s bad luck—some huge litigation or something, like a patent thing where Apple crushes them. That makes sense.

But if they just run out of money, that’s not cool. That’s kind of lame. They should have just managed their burn better.

I totally agree with you. Okay. And so, the dividends—how does that work?

Basically, we’re so profitable that we just dividend out. We have more money than we’ve raised, and we’re actually doing another dividend next month. It’s quarterly. We’re planning on doing it quarterly now.

I think it works for us because the investors got in at such low prices. We didn’t raise $100 million. We could have at the peak of 2021.

You raised $22 million.

Yeah, which, when I was fresh off the boat from the UK and dropping out of college, seemed like the world of money. But in the grand scheme of things, given the scale of our business, it’s not actually that much money.

Do you worry that your VCs think you’re not a success? I don’t mean that badly, but you know as well as I do that we look for fund returners. You’re not going to dividend your way to a fund return.

I think that we are going to take some big swings this year. We’re looking to roll up some different consumer things within DoNotPay. I’m still 10 years in, and I’m still extremely excited and ambitious. Who knows?

You said that about hiring friends.

Yeah.

How do you advise founders on how to build the best first 5 to 10 people?

I think business school is actually a counter-signal. I’m not going to be very popular among the business school people, but—

I agree 100%. My favorite is when it’s in the LinkedIn title, like—

Yeah, so stay away from the strategy hires. Strategy is a meaningless hire, because what does that even mean? Everything is strategic.

I think connection to the problem is really important, similar to investing. DoNotPay employees are automating and scaling themselves. We had one DoNotPay employee who would go to Target, the US retailer, and buy prepaid Visa gift cards so that whenever he signed up for a free trial, they wouldn’t be linked to his direct-debit payment details.

I saw this as one of your products.

Yeah, that would make a great product. We’re trying to hire people to scale themselves.

My very first hire at DoNotPay—obviously, I built the thing myself—the design looked terrible. It gave me a headache. It was like a moving road background, and you would look at it and it would give our early users headaches. We’d get complaints. People would get headaches from the design.

So the first hire for me was a designer. You need to immediately solve these bottlenecks quickly.

I absolutely love that. What role does not exist today that you think will be very commonplace within 5 years?

Custom evals—evals. Everyone is very excited about foundation models, like Claude Code and all of this stuff. But I think the future of AI will actually be organization-specific, specifically around the data that DoNotPay has, where we’re doing evals on our own data. I think custom evals will be really big.

13. AI's Winners and Losers: The Giant Transfer of Wealth

Do you worry about the concentration of value in very few companies? If you look at where markets think valuations will go and where companies will go, it looks more and more like 8 companies will take $5 trillion-plus in market cap and could actually eat up large parts of the software market in some respects.

I think there’ll be a rise of medium-sized businesses, like almost DoNotPays, that fill the niche, and then these massive companies. But the middle, where there’s just a large company, I think they have to be very worried.

I was saying to a friend, for every Anthropic employee who’s making $20 million to $100 million, there are 7,000 Block employees being laid off. I think there is a huge transfer going on between the extremely large companies and the quite large companies. But I think the smaller ones will still have a role.

Do you worry about what happens to San Francisco when you have—I think it was announced this morning—600 OpenAI employees who took out an average of $11 million? I think there’s a lot of pain happening in San Francisco at the same time. A lot of Meta employees are being laid off, and a lot of big tech employees are being laid off.

I think there are 2 types of goods. There are absolute goods, like a standard apartment or some food and things like that, and I think that the price of those will stay the same.

But then there are positional goods. There are only 8 seats in Delta first class. There are only 8 houses that people want to buy on the best road in San Francisco. The positional goods will just go off the charts.

If you’re someone who values your success in life by attaining positional goods, like one of the 8 houses that everyone wants to be in, good luck.

I spoke to so many of the founders that you work with. Most of them said that buying land was something that we should talk about, which I was not expecting by any means. I mean, the first—I mean, I think Mark Shuttleworth all said it.

14. Why Joshua Buys Land With Every Dollar He Makes

We were talking, and I was like, “What?” Because I type, right? I take notes. I was like, “What? But he buys land?” Why do you buy land, Josh?

So, in terms of my diversification and retirement, I take all the money I make and buy land. I don’t put it in the stock market. I don’t keep it in cash because I think that the dollar doesn’t have a good future. I don’t buy bonds or anything like that, and I buy land.

It could be me being British. There’s a famous quote from Winston Churchill: “Land is the only scarce resource.” I think I’m diversifying on 2 outcomes.

The first outcome is that AI creates a post-economic world where it replaces all big companies, and the only thing that's scarce and left is land. If AI does extremely well, land can still be valuable. The second is maybe it's all a bubble and all of tech goes to zero, but land will still be valuable.

The land I buy is in Nevada, far away from the tech bubble, and it has nail salons and all sorts of things. It's a passive investment, and it's just diversification for the various outcomes that will happen with AI.

Why Nevada?

I think there are secular trends regarding it being very pro-business and population growth. In fact, there are only 3 things that are true in Nevada: there's no state income tax, very low property tax, and a rising population. In my opinion, that's not true anywhere else in the US.

If you compare it to Florida, for example, there is no state income tax but very high property tax.

Do you worry about the rising hatred toward the super-rich in the US?

I think that it's not sustainable. You can't have 50,000 people with all the money. I think, actually, there could be a revolution in our lifetime. Something has to change.

It's my biggest worry, actually. You see it in the UK, too. We all sit here in the bubble of London. Yeah, 33% of children in the UK grow up in poverty. It's an astonishing fact.

What do you think happens in that respect? Is that just social revolution and unrest?

I'm an optimist. I think that the jobs that will exist in 20 years—we couldn't even imagine what jobs would exist. AI data-cleaning companies didn't exist 5 years ago.

Similarly, AI will create a huge number of jobs, maybe working in air conditioning and data centers and all of that stuff. The problem is there'll be a shift in the economy, and people will have to transition. I think the government will have to get a lot better at helping people transition.

Has Trump been better for business for you?

Absolutely. Whether you agree or disagree with what's going on right now, it's objective that, for tech, the current administration is a lot better. Lina Khan, in my view, is evil. Several companies I invested in had their acquisitions blocked by the Lina Khan-style approach.

The worst Lina Khan story I had is that there was a biotech company being acquired by a much larger pharmaceutical company, and Lina Khan's FTC blocked the acquisition. To this day, the drug didn't get developed, and 50 people die a year because the acquisition was blocked.

So I actually think that the tech policies of the last administration were not very good.

You said the dollar maybe doesn't have a good future. I put a lot of my money in dollars. Why not? Why should I think differently?

I think inflation every year is just going crazy, and it's going to get worse. House prices in San Francisco seem to be doubling. Things are not what they used to be. The only way to stay ahead in this AI world is to have real assets.

When you look at real assets, what is your IRR, or return profile, on land in Nevada generally?

It's only like 10% to 20%, but it is very safe.

That's better than I thought. For real estate, that's not bad.

Yeah. On a stock portfolio, in a good case, you're at 15%—good case. There are all sorts of advantages, like depreciation and things like that.

That's absolutely wild. Depreciation doesn't exist in the UK. Is there anything else you do weird with your money?

No, that's it. I just set it and forget it with the land.

We mentioned the pain of big tech, and it's sad to see the layoffs. Was that in your mind just mass over-hiring from the COVID interest-rate times, or is that actually AI causing inefficiencies?

I think it depends on the company. With Meta, I think it's AI-driven. It's clear that they're spending so much money on their data centers, and AI has made their engineering more productive. They need fewer engineers.

But maybe with a company like Block—maybe it's controversial—I think it's more about the COVID over-hiring.

Do you buy that we'll have dramatically smaller companies in the future?

Absolutely. I think that it's objective. Even with DoNotPay customer support, we're seeing optimizations. Previously, you had to hire 3 people to do the job of 1 person.

We do have 10 extra contractors for customer support, but we found that maybe even that's too many. Now they press a button, and an agent identifies the issue and pre-processes the refund, for example.

What do you think of competitive markets? You mentioned customer support. There have been 15 companies that have raised over $100 million. Sierra has just raised at a $15.9 billion valuation. We mentioned Micro1 and Macaw earlier. How do you feel about super-competitive markets?

All of my best investments have actually been in very competitive markets. Owner, as well, has dominated a category that's traditionally very competitive: small-business restaurant technology. I think there's a reason it's competitive. Competitive markets tend to be absolutely massive. They tend to have a huge number of customers, and that's why everyone is going for them.

Going to the data-labeling example, it's not unusual for large labs to throw these companies $100 million—even close to $1 billion—contracts. I think there's a reason everyone is excited about it. I think that's one big mistake we all make: we run to no-competition markets. The best businesses are built in overly competitive markets.

Can I add 2 areas that worry me? I do Series A, and we lead Series A investments. I think Series A is the worst place to be in the market: little PMF, like $1 million to $3 million of revenue, but the price is 200x ARR. If you're at $1 million in revenue, it can be $100 million to $300 million or $400 million.

My question to you is, do you agree that Series A is the hardest place to be?

I think there's this illusion that the valuations are lower than Series A, so it's less risk. Sometimes the best place to be could actually be investing at $1 billion or things like that.

100%. Where it's de-risked, you can model the cash flows.

I worry about the constraining elements of exits. What I mean by that is, if you look at IPOs today, you can't IPO with less than $500 million in revenue. That constrains what can go out. Big tech is very specific in what they want to acquire. Then tech buyout, the third avenue, honestly, is very constrained, too.

Thoma Bravo just lost Medallia. It is a tough market for them to be in. Do you worry about a changing exit landscape constraining?

I think secondaries are an increasing driver of exits. That's why it's helpful to have a smaller fund size, because it opens up a whole new channel. Have you done many secondaries from the fund?

We're doing some now, actually.

It's a lot easier to do a secondary when you're a friendly pre-seed or seed investor than if you're a big firm. If Menlo Ventures, or any big firm, sells a secondary in a company, the company is dead because the signaling risk is huge.

With a seed or pre-seed firm, that's not necessarily true, and the fund size is smaller, so it's easier to achieve good outcomes with a secondary. I'm not too worried about it because of the secondaries market, which seems to be more active than ever.

How long ago was your first fund?

2020.

Should you have done them sooner, knowing what you know now?

Going back to the sharks thing, when people say that the things that are most attractive to secondary buyers are the things you never want to sell. But we're finally selling some now.

Do you worry about the messaging to founders? It's so interesting. I do lots of references on investors when we do calls, as you know. I've never had references like the ones I got on you. It was amazing.

Oh, that's really nice. Thank you.

Do you worry about going to an Adam, an Ali, or a Max at Y Combinator or YC and saying you want to sell some?

No, I think it depends. If it's a small part of one stake, and the good thing is these things can be sizable and you only sell a small portion, then there's not much signaling risk in that.

Additionally, it sometimes helps the founders. Oftentimes, they're performing so well and their rounds are so oversubscribed that they want to let someone in. They still have me because I have the rest of my stake, but they can bring in an amazing new name that helps them, maybe someone strategic.

Do you think you'll make more money from investing than you will from DoNotPay?

I think, unfortunately, I'll make more money from investing.

Someone said it to me the other day about you. They said you're a generational investor in your approach and mindset, and so you'll make more from investing. I was like, “Wow, that's really interesting.”

My question to you, Josh, is that I don't like it when founders that I invest in are investing heavily. We've seen startup founders raise funds from other people. How do you feel about that?

I think you always have to remember who believes in you and do right by them, whatever it takes. Some of these companies are up 100x, 1,000x.

I brought them in alongside me, sometimes directly—not even through the SPV; they can invest directly. There's a huge amount of overlap between DoNotPay and my fund in terms of LPs. Marc Andreessen is the first believer in both, in some ways.

So I think you just have to do right by people. I think there are advantages for both LPs and also investing and being a founder at the same time. On the founder side, I've learned things that I wouldn't learn had I not invested. That's helped DoNotPay—for example, this whole SEO strategy.

On the investing side, founders love to work with other founders. They hate professional money managers. So I think it actually makes you a better investor. You see some of the best investors now; they're also founders, like Lachy Groom or Delian.

One thing I love about tech is you can refer to people by their first names and everyone knows who you're talking about. Like Lachy or Delian.

Yeah, I totally agree with you there. On Lachy, it's amazing. Especially when it comes to hardware and robotics, you also become an aspirational check by being a founder. I have so many robotics founders who are like, “I'd love to meet Lachy.” You don't get that for any other venture firm.

Yeah, and I see that a lot. What do you think consumers still get most ripped off on that isn't solved?

Definitely bill negotiation. If you phone up the utility company and say you're going to switch to a different internet provider, they will, by default, give you a discount. The internet barely works sometimes, and they don't credit you properly. So that's number 1.

I was also saying in-flight Wi-Fi. We have a 100% success rate with in-flight Wi-Fi refunds because it never works. No, it works, but it's slow and it's not what they advertise.

Have you tried yours, though?

Well, now with Starlink, that will finally be solved. I think DoNotPay is an ETF on the world's problems. Some problems go up, some problems go down. Fortunately for us, the general trend of problems is up.

Do you think a chat interface is the right UI for the future of consumer AI?

It's good in some areas and terrible in others. I think for the travel use case, it's terrible. There's a big debate on X going on about this right now.

The reason it works for us is you're taking unstructured responses and making them structured. When I started DoNotPay, I did a Freedom of Information Act request in the UK for the top 12 reasons why parking tickets are canceled: poor signage, the parking bay being legally too small, and all the other reasons.

The problem—the reason I made a chatbot—is that consumers had no idea which reason to pick. They'd pick the wrong reason, or they just wouldn't select what was the best thing to pick. But with chat, they could write whatever gibberish they wanted, and it would match them to the correct defense. That was really the unlock of DoNotPay.

Dude, I would love to see you on the day job. What do you do?

I'm a specialist in parking ticket refunds—like, a world expert. I was in high school; that was my reputation.

[laughter] But the final one before we do a quick fire is—you mentioned the UK and growing up in the UK.

Yeah.

Do young founders have to move to Silicon Valley if they want to succeed in building a tech company today?

I don't want to denigrate my country too much. I'll say 2 advantages and then 1 huge disadvantage.

One advantage is that it's good to be a big fish in a small pond. Starting out in the UK, it's less competitive for talent and less competitive for media, even. Anyone can get on the front page of the Daily Mail with the right story. The media in the US is much more jaded, so it's a lot noisier and there's a lot more competition.

When I was growing up, the very first thing I did was create iPhone apps. I built the iPhone app for Pret A Manger, the sandwich chain.

What?

Yeah, I built the official iPhone app for Pret A Manger. I actually did it unofficially. I just made it for fun and ripped off all the graphics and stuff, and then it eventually became the official app.

What happened? Did they call you?

They didn't realize it was a 14-year-old behind it, and they were considering taking legal action. But they realized that once they knew it was a 14-year-old behind it, it would be terrible PR for Pret A Manger to sue a 14-year-old. So they actually invited me to the headquarters, and we made it the official app.

That taught me a very valuable lesson growing up, which is that it's best to ask for forgiveness versus permission.

How much did they pay you for it?

I can't disclose. It was a huge win for me at the time, but in the grand scheme of things, it wasn't material.

That's amazing. What did your parents say?

My mother, actually—you're the only tech podcast my mother listens to because she really appreciates your wholesome mother content on LinkedIn. She's a big fan of you, and I'm not just saying that.

She's not in the tech world. She doesn't really know how to use an iPhone or anything like that. She was just worried, as any parent would be. When I went to meet the CEO of Pret A Manger at the headquarters, she was worried because I was 14 that maybe it was inappropriate or something.

She said, “I want to come with you.” I said, “No, Mom, it's a business meeting.” She said, “No, I have to come with you because I don't want you meeting strangers on your own.” So she was more worried about the personal thing.

Anyway, going back to the UK, building an iPhone app at that time was seen as a cutting-edge, whiz-kid genius-style thing. In the US, people are building iPhone apps every day, and that gives you an idea of why it's better to be a big fish in a small pond.

The second advantage of the UK is that, for the idea I was working on, the UK is repressed. They're a perfect target market for DoNotPay. I tell people in the US about some of the things that go on in the UK, and they're shocked.

One example is the concept of average-speed cameras. I tell my friends in the US, if you drive from here to Birmingham—which is a city north of here, for those who don't know—too quickly, it's not about going past a speed camera too quickly. If you get there too quickly, based on your average speed, they'll give you a ticket.

My US friends are shocked by that. They think that's like some sort of surveillance state. And it's true. The UK is handing out tickets, all these fines, all these environmental regulations. It's just fines—Fintopia.

So I think some ideas work better in the UK, and that's why I started here. Those are the 2 positives. One huge negative is that the scale of ambition in the US is 100 times bigger. The most successful companies in the UK are in the tens-of-billions range, like Revolut and things—great outcomes like that. In the US, it's in the trillions. It's just an order of magnitude more.

Can I ask you one? I think San Francisco is the worst place to start a company today because it is so expensive and difficult to acquire talent. The pool of companies competing for that talent is immense and brilliant. The Anthropic product team is brilliant, and you're competing for that same talent. It's so expensive to acquire that talent. The duration for which that talent sustains is so much less. You can't build that institutional memory. Am I wrong, and have I been infected by the UK-advantage virus?

I think you're right in some ways, and there could be an arbitrage where the leadership lives in San Francisco but you get talent globally. Deel is a great example of that in some ways. I guess it's also New York.

But San Francisco has such serendipity. You bump into Sam Altman on the street. I've personally seen Sam Altman on the street.

You should start a podcast so you get to interview him personally. [laughter]

Another thing about San Francisco is it's so boring. No one specifically, but just all of these people—they're so bored. If you're just moderately interesting, you can become friends with anyone in San Francisco. It's less stratified. In London, the rich keep to themselves in their fancy clubs. In San Francisco, you can play pickleball with anyone.

That is amazing, and that's very true. If you were to make a change to Europe to make Europe more competitive on a global scale, what would it be?

You have to get rid of these ridiculous regulations. I made the mistake of trying personally to invest in a company in Germany.

Oh my God.

I'm a DoNotPay expert in bureaucracy. I didn't want to do it.

Did you end up doing it?

No, I didn't. And also, why are they charging VAT on investments in the UK and on some investments? How can you charge a sales tax on investments? Who thinks that's a good idea?

Do you know what? I tried to bring a billionaire once into a deal in Germany, and I had to send out a notary by speedboat. It cost more than their investment to get their investment done.

That's shocking.

Isn't that bad?

Yeah, yeah, yeah.

So I feel your pain. Listen, I want to do a quick fire with you. I've so enjoyed this. I say a short statement, and you give me your immediate thoughts. Sound okay?

Okay.

What have you changed your mind on in the last 12 months?

The AI shift is extremely real. I thought 12 months ago it was a bubble. Now I don't think it's big enough. I think Anthropic will get to 1 trillion in revenue. I think the value shifting is very real. We're not in a bubble.

That's what I think. If that's the case, why wouldn't you buy the shit out of Nvidia, AMD, Nebius, and CoreWeave? My job as an investor is to see ancillary value as well, to appreciate what you just said—and I agree wholeheartedly—and then make more money from it. Why don't you do the same?

I'm very lucky; I do have an investment in the full stack, so that's my favorite of the AI infrastructure.

Love it. Okay, good. Who's the most underrated CEO operating today?

I would actually say Ali Ansari. I think he's in a very crowded space, but he is a force of nature in terms of execution. Watch this space: I think in the next 12 to 18 months, he's going to be very hyped.

What's your favorite story of serendipity from San Francisco?

I think there's a class at Stanford, and it was only 20 people. I wasn't focused on classes; I was focused on building my business. It was taught by a billionaire, Pat Hanrahan, who's the founder of Tableau. The fact that you can have billionaire professors teaching classes of 20 people is something that wouldn't exist anywhere outside of the Bay Area.

I remember working through a problem set, and he spent 30 minutes with me working through this very elementary problem. I was thinking, “Why is he spending his time?” Then I realized it's all about human connection. He just wants to meet interesting people, and I think the same is true across the Bay Area, where everyone is just a human and you can short-circuit the business cards that people put on just by having a human connection with them.

Kind of aligned, but what's the kindest thing anyone's ever done for you?

I have a founder. I don't want to say too many details because I'm under an ultra-NDA, but they lost money. It was a personal investment, one of my earliest investments. They lost my money, then went on to start an absolutely blockbuster company. They gifted me shares in the blockbuster company as if I had been an investor at the same price in the blockbuster company.

I think that's a very kind and outstanding thing to do. I think it's almost a very British thing to do.

It's extraordinary, but it goes back to the references that I got. What is it that you do, do you think, that makes founders have such a kinship toward you?

I'm not sure. I really believe in them. It's so lame. The reasons people invest—oftentimes, they invest because someone else has invested. I would say that's like 75% of the time. But I really believe in them to do great things, and I'm often their first believer.

What's the biggest lesson from your father?

Definitely, it puts everything into perspective to just be fearless. I've physically seen the Russians. They've come to our house and knocked on the door. That news alert where he was arrested—growing up through all of that, it puts everything in perspective.

So when maybe there's an upset bureaucrat who's upset that I'm getting too many people out of parking tickets, thanks. It's all noise. It doesn't really matter.

Yeah. He's like, “Seriously, bureaucrat? I've had the Russians. You are nothing. You're not even worth the city council.” [Laughter]

You start a new company and you can only have 1 investor. Who do you have?

I think definitely Marc Andreessen.

What does no one know about Marc that they should know?

I think he's the most curious of the luminaries. He spends an immense amount of time reading on X, and people see this when he's liking all of the X posts. I think that speaks to his curiosity.

When I met him, he was referencing obscure tweets and things that are part of my DoNotPay journey. He really reads a lot about everything.

Tell me, final one: What are you most excited for in the next 10 years? You mentioned, very kindly, my mom. My mom has MS. I'm very excited about drug discovery for chronic conditions. What are you most excited about?

I think they're going to find a cure for a lot of diseases. My grandmother passed away from Alzheimer's. Alzheimer's is one of the most difficult diseases to crack, and I think AI will hopefully make a big dent in that.

Josh, this has been so much fun. I love doing what I do, but some are more special than others. Some stories are just cooler than others as well. This has been so good to do, so thank you so much for agreeing to do it.

Thank you.