识别世代级管理人：与 Jordan Nel 对谈

I have this debate often with this guy. I don’t want to live in a world that is solely a great-man theory of venture. I don’t like this Nietzschean will-to-power thing. I think it’s hard to invest because sometimes you have to believe in people, but I far prefer the world of a hobbit.

Well, why isn’t Frodo the great man? Is it because he was a hobbit?

No, I mean, Aragorn’s not the great man. I think if you look at the story, Boromir was supposed to be the great man. He’s the son of Gondor.

Yeah.

And he tries to take the ring, and he has the will to power, and it’s his downfall.

Hi guys. I'm José, and I'll be hosting this episode of the Delphi podcast. Yes. This is actually the first episode of the emerging manager series, where we’re going to be hosting really promising emerging managers that we’ve come across in the last few months while doing our fund of funds. I’m really happy to have you, Jordan, as the first guest, because you have a really unique perspective on this stuff. You were at Hummingbird, at Nomads, at the fund-of-funds arm, while Hummingbird itself is one of the most legendary VC firms out there. It’s getting more legendary. I think Mario Gabriele—

Yeah, Mario helped a lot with that.

I think it was a distinct before-Mario and after-Mario period.

Yeah.

The after-Mario period was one of so much interest.

I feel like there was Mario. Mario Gabriele from The Generalist is an amazing writer. He wrote “Hummingbird: The Best VC Firm You’ve Never Heard Of,” and it was an incredible profile. It covered you guys. It covered Baron and Fred and all those guys, and talked about your results, which are insane. It also covered some of the things you’re famous for: looking where others don’t, Turkey, crypto, the deep psychological founder due diligence, concentration, and things like this.

What’s interesting is that you were at Nomads, which is the Hummingbird fund-of-funds arm.

Yeah.

We inherited all that. The Hummingbird brand and all that stuff had basically been done before we came, and then we came to Nomads and I was like, “Okay, cool. Blank slate on investing in funds.”

Yeah.

Um—

1. Advice to a younger self: Taming the pendulum between fear and deep curiosity

Which is pretty cool, because you’re trying to find the next Hummingbird, to some extent. What does the new best GP look like? I want to spend a lot of time on that today, because you have this perspective where you’ve seen inside an elite VC firm and you’ve tried to recreate that, to some extent, with a fund of funds. I want to talk about what makes a great VC—what makes a great GP, and venture more generally, from your lens.

2. Challenging venture beta vs. public equities

The first question I wanted to start with is: Why even do venture? When you look at Cambridge Analytica, or most of the research on venture, the results have been pretty underwhelming overall. It’s underperformed public-equity indices, especially the large funds, for pretty much the last 20 years or so. Roelof famously said that it’s a return-free risk, right? Venture isn’t an asset class. So why even do venture? Why invest in venture?

Yeah, and then it got taken over by Pat Grady—

Yeah, but then there was an issue a week later. I don’t know if that had anything to do with it.

I don’t know, man, if I can answer for why people should allocate to venture broadly. I’m not sure that venture beta justifies the illiquidity premium. I also don’t think that’s how we think about it. Sure, there are strategic elements to being at the coalface of the next paradigm shifts. You can definitely draw insights from that, but mostly we think about it super bottom-up.

For every outlier company, there are at least 3 outlier funds. For every outlier company that comes along—every Coinbase—there’s a Ribbit, there’s a USV. There are a dozen funds around Coinbase that return multiples to their fund because of that company. The way we think about it is super, super wide: This founder in particular, why this company, why this GP, why this market?

Okay, but are there conditions under which you’d say entry prices got really crazy, or that there are no bottom-up opportunities in venture now—or at least—

I don’t think you’ve got examples of that.

Yeah.

You can look at the entirety of the market and say, “Okay, this is all crazy.” But even in 2021, if you were fishing in Indian life sciences, you probably would have been the only one fishing in Indian life sciences. I think there are always these little pockets of arbitrage that happen, and as LPs and GPs, the job is to find that stuff.

Okay. That leads us nicely to the next question: Where does edge come from in venture? You have a nice framework for this that you put together for some of your posts. What are the sources of edge in venture? How do you win as a venture investor?

3. Deconstructing the source-pick-win scheme and identifying real edge

I think framing it as “How do you win?” is also a specific framing. Broadly, you’re supposed to source, pick, and win. Everybody knows: You source deals, pick the right ones, win them, get access to them, and then put that into a portfolio that’s convex mathematically.

Mhm.

I think the last decade of venture has built a system where tons of capital has flowed in and tons of people have been trained in these big firms. They’re sourcing machines; they’re business-development machines. Because a rising tide lifts all boats, you have this dynamic where the hot gets hotter and people are trained to source more and more consensus.

Most of the time, these are elite sources, but the picking element—and maybe they’re elite winners too if they have access—is perhaps a bit lacking. It’s very rare to find—

In the big-name—

Well, a lot of the more consensus—

Guys who are doing multistage stuff.

Okay. I think that game is fundamentally different from the game played by most pre-seed funds and most seed funds. How you win is a function of your capital availability. If you’re Andreessen, the way you win is very different from how you win if you’re Haystack, MaC Venture, or any of these other funds that have had exceptional performance at seed.

Your brand and the people you hang around with are very distinct. Andreessen is a very different game—I’m using it as a proxy; it could be any of the big funds.

4. How small managers out-discover the multi-billion dollar funds

Yeah. How do you think the small emerging managers beat those funds? From my perspective—and obviously I have the same thesis as you, that they will beat them—it seems harder than ever in some sense, because those funds have crushed it, especially recently. There have been a bunch of exits that have materially improved the numbers on some of those funds, but they also have insane reputations. Having them on the cap table can materially help with hiring and partnerships, and also with sourcing more capital for you down the line.

I mean, their platform teams—it remains to be seen whether that’s super valuable, but it’s going to be more value than you get from a one-person show—

Yeah.

Or a two-person show. Sometimes. So how do you win?

Sometimes. Sometimes. Yeah, sometimes. I think if you start with the heuristic that the big funds will see everything and will be in every multibillion-dollar company—every multibillion-dollar company will have Andreessen, Sequoia, General Catalyst, Insight Partners, or something like that—then you change the question a little bit.

You’re not trying to beat the bigger funds. You’re trying to see the companies before the bigger funds and act as a signal to the bigger funds, so that they eventually follow on from you.

Yeah.

A lot of the time, the bigger funds are just not looking in the weird places. The GPs are sitting in 20-person investment teams, and they’re not incentivized to go fishing in really strange places to find a $5 million post-money-cap founder in the backwaters of Kabuki Lab[?].

Generally, you have people sitting there with multi-million-dollar funds. They’re incentivized to find and deploy $30 million to $100 million tickets. That’s how they drive their carry. For the little funds, a lot of it is just discovery.

All of these big funds have fund-of-funds programs. They have little pockets from which they seed emerging managers, and they use them as deal flow. I don’t think it’s an either-or, and that’s often the discussion people get wrong. The products are very different to LPs. If you’re looking to take part in that discovery—more fringe, more about finding the signal ecosystem—I think pre-seed funds are where you have to look.

Interesting. So, how important is it to be contrarian, then? I guess for the pre-seed funds, it's life or death, right? You have to have some kind of differentiated view or differentiated picking pool that you're looking at.

You tell me, man. You were the one that did THORChain when there was nobody, right?

Yeah. Yeah, I think the smaller you are, the more important it is to be contrarian, for sure.

Interesting.

Um—

I don't know if I'd agree.

Okay.

5. Bridging the gap: Storytelling, storytelling calibrators, and making founders legible

Yeah, keep being devil's advocate. I think you have to be able to bridge the non-consensus-to-consensus gap. You can do that by being incredibly capital efficient, like Hummingbird did with Turkish gaming companies back in the day—just super-capital-efficient business models.

I think you can also do it by being a fantastic storyteller. There's a GP we both know and love who is able to take a founder and rebrand the story ever so slightly—

Yep.

—that it is suddenly a lot more palatable to Conviction, Benchmark, Sequoia, et cetera. I think that ability to make somebody legible to capital is quite an art form that a lot of the pre-seed angels do really well.

Mhm.

If I'm a smart founder, one of the reasons why I'm not going to target Andreessen and Sequoia and stuff off the bat is because I want to sequence the capital well. I want somebody who's going to be able to come onto my cap table and say, "I'm signal."

What if you could? Wouldn't you? If, as a founder, you have access to Sequoia or Andreessen or someone, it seems—

Sam Bradberry Taylor—I’d 100% do that.

Mhm.

But I'm not Bret Taylor, and I think most founders can't, right?

Mhm.

But the fact that if you could, you would means there's some kind of—

An echelon.

Yeah.

Yeah, yeah, yeah. Actually, it's interesting. Bridget Mendler—do you know Bridget Mendler?

No.

She's a Disney star from childhood, then went to get a PhD. She's now the founder of a company called Northwood Space.

Northwood—

Northwood Space.

The— a rocket company.

6. From Bridget Mendler to Nigerian tech rebels

Yeah, rocket company. She's a legend—an incredibly intelligent, multidisciplinary talent and an outstanding lady. She did her pre-seed round, and she probably could have raised from all of these big funds. She has the kind of profile that would resonate: an outlier individual, well-known, in a really interesting sector. If she pings you, you're going to pick up the phone.

But she specifically built her cap table with all these pre-seed angels for the early stages. She very quickly graduated into a bigger fund that can demand a higher valuation. I think that staging is super important.

There's another example of a guy that I'm an advisor to. He's from Abuja in Nigeria and could not get a term sheet for 6 months. Nobody would speak to him; nobody would pick up the phone. But clearly an exceptional guy—maybe 1 in 100 in San Francisco and absolutely 1 in Africa.

I introduced him to one of the GPs because I thought, "Okay, this GP would be pre-seed. He would take the bait. He's a risk-on guy, and he would also act as signal within this hard-tech ecosystem in San Francisco." I think that has played out very well. But you have to stage it as a founder if you're not Bret Taylor.

Okay, interesting. Generally, the bigger funds can also afford to pay higher valuations for seed because it's a loss leader for them. So, yeah, it's interesting that some founders would choose that—the Bridget example specifically.

I guess your friend, or the guy you're advising from Nigeria, would have had a hard time raising straight from—

Yeah, he did have a hard time. He spoke to them all, but it's tough.

Yeah. I mean, that's the sense. If you're a big fund, you can just—if you talk to someone, you're probably going to win the deal, right? That's the sense in which you can wait for consensus to form, or for consensus to be clearer, and then win.

Whereas if you're a smaller fund, you have to be there before the consensus is there, when no one's looking at it and you have no competition. That's why I think you have to be a bit more contrarian.

7. Good cop, bad cop, and the dynamic pairing of the meta-thinker with the executor

Yeah, but I don't know if it's contrarian or pre-consensus. Maybe that's the term: pre-consensus. I think pre-consensus is different from non-consensus.

Okay.

It helps to know the flavor profile of the people who will be following capital to you—not the firm, but the individuals. It helps to know their taste, what they like and what they index on.

But if it's right, non-consensus ends up as consensus eventually, no?

Yep, for sure. But I think you can be right. It can be a long-term—

Yeah, it can be that easy. So, pre-consensus is like: if they knew about this, they would be interested in it.

Yes.

If they knew about this and had it presented to them in such and such a light—

It would be interesting to them, yeah.

Okay. And maybe that's the broader question: do you think it matters to be contrarian in venture? I don't know if you answered it before.

I don't know. I'm not sure if that's the right framing either. If you think about what Corey Levy does as he fellows, would you call that consensus, pre-consensus or contrarian?

Yeah, I don't think I know enough about his investment style.

The reason I bring it up is that—

8. The Bay Area talent cluster signal vs. picking in disinterested cycles

I think his sourcing and his hustling are sort of contrarian somehow.

Interesting. I would have said it's total coverage of a really hot, consensus talent pool, but well before everybody else. To some extent, he is the—

Yeah, I guess that's—

That's definitely true now.

Yeah.

It's definitely become consensus.

Yeah. I'd say Josh Brody is the same. These guys in this mini Thielverse—I think there's an archetype of person that gets a lot of attention in the Bay Area now, and I think—

Which is the young wunderkind Thiel Fellow.

Yeah.

Okay. And what do you think of that, actually? Do you think that's signal?

Yeah. I mean, for sure it's signal. Whether it's priced in now or not, I can't tell.

Because, for some kinds of companies, the average founder profile is much older, right? Deep tech—which is a lot of what these kids are founding—is about deep-tech companies. In general, the winning founder profile there is older and has a few years of work experience and stuff like that, right?

Oh, that's interesting.

And so I don't know. Maybe I'm misinterpreting you. Sorry.

No, no, go ahead.

I think there's deep tech as in frontier, and then there's deep tech as in commercial, selling B2B sort of stuff. For instance, a space company or something selling to the government—these guys are very commercial, typically.

Even if you look at Saronic, Tronomoly, or any of the emergent primes, these are guys who have practiced selling to government, have the networks to sell to government, like Castilian. They know the guys, and they've built very pedigreed backgrounds. But they're commercial guys. They're not one of the deep-tech kids in frontier tech, right?

If you look at frontier BCIs or frontier, almost the Neo Labs, like Merkle kids, this is very young—

Yeah.

—at the cutting edge, at the coalface of what is happening. I think that is not a commercial-first business.

Yeah.

That is a product-first business.

Okay, that's fair. You also mentioned that, to some extent, the edge that you need to have in venture changes based on the market cycle, right? In a bull cycle, money isn't worth that much. I think your quote is, "When money's worth little, it's easier to get it from LPs and tougher to sell it to founders. Here, GPs who win will win. When money's worth a lot, it's tougher to raise, but it's easier to sell it, and the GPs who pick will win," right?

So, in a bull market, it's a winner's market, and in a bear market, it's a picker's market. Isn't that bad for emerging managers right now? We're in a bull market.

Yeah, it's always funny hearing your stuff read back to you, man. I tend to think that is true in Bay Area AI. It's what is hot, right? Bay Area AI—frontier AI—is super hot. So there, yeah, you're not trying to pick super well; you're trying to win.

Yeah, because it's obvious.

Because it's obvious, yeah. And the talent clusters so quickly, the markups happen so quickly, the big funds come in and more talent joins. It's such a virtuous flywheel.

And are you interested in who would have access to that?

If they're able to win very early, yeah, sure, of course.

Yeah.

But I think you have to make the valuations make sense, and that's very hard for most people to do. If Sequoia, Conviction, and Benchmark are trying to bid you up, it's very hard to compete. I think that if you can find a way to compete, yeah.

That's very interesting.

But most funds can't find a way to compete, so they probably shouldn't play. I think there are also subsets of the market that are a lot less hot. Look at life science right now. Life science is absolutely the biggest market, which is why so many institutional LPs were interested in giving money to Dimension. In some sense, they're the only game in town.

What is Dimension?

Zach, Nan, and Adam spun out of Lux 7 years ago. It's a Series A/B, multistage biotech fund. They do tech bio and stuff.

Okay.

They're super-smart guys, and they're some of the few who had the credible, proven ability to raise the money.

Okay, to deploy this at—

Such a disinterested cycle time.

Yeah. Let's get to the good stuff: picking GPs.

Mm-hmm.

So this is really hard, I think. We've been doing it for the last 7 months, and I don't know yet that we have a good model, but we've definitely thought about it a lot. You've been doing it for the last 4 years, so I'm really curious what your take is.

9. How Nomads evaluates the decisional mechanics of a GP

It feels like there are really good models for picking founders, right? People kind of know what they look like. Especially nowadays, it's become popular: the spiky, neurodivergent, very driven archetype—very smart.

Mm-hmm.

Do you think the GP archetype is the same?

Mm-hmm.

Because that's how we initially approached it, and we don't really think so anymore.

Funny. Yeah, I think we had a similar learning curve.

Yeah.

I think you can try to extrapolate that archetype into GPs, and maybe you'll have some success, but I think it's actually hard to have a GP archetype at all. We gave up trying to come up with a precise one, and it's interesting. With a founder, you can kind of say to them, “Hey guys, you've got to read them, get in the room, understand what they're doing, and that's your assessment.”

With the GP, you can just ask, “Why did you do your last 5 companies?” The more that you ask why, the more granular they get. Sometimes they bump up against a gut rationale, sometimes it becomes a very structured thesis, and sometimes they begin to tell you why they do what they do.

You can get a sense of how the person makes decisions. We look at GPs now not in a profile-centric way, but in terms of how they make decisions and who they hang around with—who they spend time with. If we can get conviction on either of those, this is very often a founder-centric way of seeing the world.

You look over their shoulder, see who they're hanging around with, and do the references. You have to know them, and you have to know everybody in the ecosystem around them to get that read accurately. You can do this if you've spent time with founders.

What's this one? What is it?

How they make decisions and who they hang around with. I think most LPs are fairly practiced at understanding how they make decisions. Most of the LPs who are part of the big funds, like the guys who run Sequoia's program or Andreessen's program, are generally indexing this. They have a good read on the general ecosystem, so they can look at your portfolio quickly and get a flavor for who you are.

Okay. So, how you make decisions and who you hang around with. On that, I guess there's a specific archetype I can think of in a few people we've spoken to where how they make decisions is sort of unclear. You bump up against gut instinct to some extent, and just pure taste. They're social and affable—

Like great BD guys.

Yeah, great BD guys. That's a profile that you don't really see as much in a founder. They're not these spiky founders; they're a bunch of people themselves.

I think we were at risk of mid-curving it for a while, on articulation and on whether the guy could say his thesis and rationale in a really hyper-articulate, explicit way. We indexed on that for a while, and I think it was a mistake.

10. Avoiding the mid-curve trap of over-indexing on explicit thesis articulation

Sometimes, if somebody says, “This is the best founder I've met this year,” that's a ton of signal, and you just back up the truck. But knowing when it's signal and when it isn't is hard. That generally comes down to how they've calibrated their taste in people over the long term.

Have they seen greatness before? How close are they to it? How do they understand how to parse signal from noise and recognize what that greatness is?

That's a big one.

If they say, “It's just the best founder I've met this year,” you ask, “Okay, well, who else did you meet this year?”

“Who else did you meet this year?” is an interesting question. I hadn't considered that.

You guys are still very founder-centric, and that's one of the things I'm interested in: how much do you care that the GPs you invest in are really founder-centric?

Oh yeah, this is tough.

Some of them—I know you guys famously invested in Michael from Compound, who's obviously an amazing guy.

Yeah.

But he's very thesis-driven, right? He writes these long, really articulate theses on a market, and then he's looking for those companies. How do you think about that, and how much do you care?

11. Mapping the research ecosystems: Spotting early talent in tech-bio and frontier tech

If you think about who they hang out with and how they make decisions, Mike is very explicit about how he makes decisions. Many LPs underwriting him will look at this. You can backdate it: you can read the Runway ML stuff, you can read the Wayve thesis, all of which he did very early.

You can understand that this guy is trying to time inflection points, and he's doing so in a very sophisticated way. He's very early to these new domains. He understands how the technology disseminates across research groups, and he understands what adoption looks like.

But the thing people miss with Mike is that who he's hanging around with is an incredible group. He's got a very, very good nose for who to listen to, both on the researchers' side and on the other VCs' side. He's got a very good calibration of what talent looks like in a particular field.

If 100 groups want to do OpenAI for bio, or foundation models in life science, very few can. Going back to Dimension, Dimension and Mike actually did a company together called Akira. I think this is one of the best proxies for the best people currently working on that problem.

Whether or not they will be successful, I don't know. But the fact that Mike was able to spot them, see them, and say, “Of all the groups looking at OpenAI for bio or foundation models for life science, these are the guys”—that's because of benchmarking the ecosystem for years.

Yeah, that's really interesting, because the levels thing is something I think about. People are generally like, “This person is amazing,” or whatever, and there's no—

This is one animal.

Yeah. This person is amazing, and there's no sense of the levels. Even when I think of anything I've been remotely good at—even jiu-jitsu, right? I've competed and done well at an international level, and there are maybe 3 levels above me.

The highest level will make me look like someone who's never trained.

Like I would make you look like someone who's never trained.

You go against Andre Galvao or Mickey Galvao Galvao.

Yeah, yeah.

Jiu-jitsu? What?

They'll make me look like I've never trained before, right?

And I think the levels thing is really interesting because when you're good at something, you can see all the levels below how good you are, and maybe you can see 1 or 2 levels above. But once it starts getting more than that, I don't think you can really tell the difference. That's why it's always really important that someone has been good at something.

Mhm.

And ideally something where it's not grades-based, or a path that has very clear steps to it.

And you're saying this means that VCs have to have built great companies, because the inference can be that VCs have to have built great companies to be able to spot founders.

I don't think they have to build great companies, but I think they have to have been great at something. And I'm not sure—and again, there's this archetype of a person that hasn't really...

Really?

But in general, I do think it's hard to spot obsession and talent if you haven't either seen a lot of it, been there, or been at some level yourself.

12. Dissecting intensity, spotting obsession, and separating LARPs

I think for VCs, it's more of a calibration-of-benchmarks game than it is an “I have to do it myself” game. I think there's this really great podcast where you listen to Shawn Maguire talking about math gradations.

Yeah, it's the same point. He's like, “Okay, there are various levels, and I can see some of them.” But I think that this doesn't really translate to a generic picking of founders at pre-seed. Most of the time, you're not looking for very specific businesses that you're trying to pattern-match to.

So you're more pattern-matching the person, right? Because when I think about different things I've done—poker, jiu-jitsu, investing—the people who are really good have some things in common between them. There are some commonalities.

At poker?

Poker, jiu-jitsu, investing. There's a level of intensity and certain things that are common between them. There are also certain things that are common among LARPs, right? There are people who can act really, really well, and if you don't know what you're talking about, you'll invest in them. A lot of that happened in crypto in 2020 and 2021, where really good investors came in from the outside and made bets on what they thought a good founder looked like. It turned out to be terrible. There are many examples of companies that got a bunch of capital pumped into them, and that's always my worry, I guess: that you end up making that mistake if you don't know what great looks like in your domain.

Yeah, I don't know. I think that in-your-domain thing is quite important. Going back to that whole discussion we had around the guys from SpaceX and Anduril, they look very different and resonate with a different VC archetype than the Bay Area kids.

Mhm.

13. The structural resonance between specific GP types and outlier founders

I think the resonance of GP-founder really matters. We both know Vinod, a good guy. He's had this quip for years: if you look at Dagny O'Leary—Dagny O'Leary, a scrappy immigrant guy—you look at his founders, you look at David Veliz, the scrappy immigrant guys.

So true.

You go look at Mike Moritz, a super-erudite journalist. You look at the Collison brothers, who are super-erudite, more polymathic types. I think Jim Goetz is a very bro-y guy, with people like Jan Koum of WhatsApp—very bro-y guys.

Mhm.

I think the vibe fit between GP archetype and founder matters more than the ability that the GP has in a particular domain that the founder will then be executing in.

Interesting. So you think you invest in people who look like you to some extent?

I think you attract people who look like you. I don't know if you necessarily pick them. And then they also have to be—

Yeah, that makes sense, actually. It makes sense to me, too, with the people I pick, I guess.

And I think also, to your point around whether you can judge that talent, you don't necessarily have to judge it. You can ask people who can judge that talent. If I'm coming into jiu-jitsu, I'll ask somebody who's really good at jiu-jitsu to calibrate you.

Mhm.

I can't calibrate you, but somebody else can.

Mhm.

I think you have that perk as a VC, as an LP, and as a GP: you can network-calibrate around something, even if you have someone talk to you or—

Yeah, you have to have a guide.

Within each vertical?

Yeah.

So when we went into India or LatAm or something, the first couple of things you do are just try to find a guide. Try to find people who are really smart, really credible—provably credible people. Maybe they're talented themselves, but they're also just people who have a very structured, simple way of seeing the world, and they can help you navigate that.

For sure. That makes sense. But if you meet a biotech founder or a biotech GP, will you have someone who's going to judge how good they are at bio—an industry expert, or—

I think saying “industry expert” probably—

Expert?

Probably saying “domain expert” is like saying—I think the inference would be that I pick some PhD guy.

Yeah.

It's not what I'm saying. I'm saying I want to call up the Dimension guys, or I'll call up Demis, or there's a couple of guys who we've worked with in the past who have varying viewpoints. One of them is a very big, multi-asset-platform tech-bio guy. Another guy is like, “No way. He totally can't do that. It doesn't work. You actually just have to put stuff through the clinic.”

Okay.

They'll have varying viewpoints, and I think they're both—

You'll ask them about the idea.

Ask them both about—not necessarily the idea, but either the founder or the GP. I'll go and try to get an ecosystem read on that.

Cool. Yeah, that makes sense. The PhD thing can work really poorly.

I think you can end up listening to the wrong people.

Yeah.

Yeah, and you can over-index on expertise.

Yes, exactly. Expertise in these fields is so narrow.

Yeah.

And they're often very opinionated.

Yeah. And so—

Yeah, yeah.

Again, everyone is sort of generalizing from a small sample size, but in crypto, if you'd hired a cryptographer or something, you would have missed the entire thing—you would have missed most of it.

14. The art of referencing general partners and mitigating competitive biases

It's funny, man. I think founders are especially prone to this. If you're really good, you can become somewhat competitive. Not intentionally, but I don't think you see people as threats; you're just like, “He's not as good as me.” You have a bit of a chip on your shoulder: “I'm the best.”

If I ask a founder friend who's really good—I was just talking about an Indian life-science guy; I'm thinking of somebody specific—why would you pick this founder? He'll be like, “He's not as good as me. Why would I put money in his company—”

And not my own.

Yeah. And I'm like, that's not helpful for me at all. So I think you also have to—referencing is a bit of an art as well.

Yeah, it is. How do these people generally reference? Do they reference well?

The GPs?

Yeah, because founders can be—

Polarized, right?

It's a good question. How do GPs reference? Are people saying, “Yeah, this person's great,” or—

That's a very good question. So maybe I'll give a story answer. There were 2 guys who ultimately ended up joining a fund together. One of them was referenced as incredible. Everybody loves him. This guy is everybody's best friend. He knows all the founders. He's super, super early. If you meet the guy, that's his vibe. He's the king of BD. To this day, of the 5,000-plus GPs that I've met, he's the most charismatic, bro.

You met 5,000 GPs?

Yeah, over the last 4 years. He's the most charismatic.

I'm very curious who this is.

His counterpart is a very uncharismatic guy.

I say he's charismatic, actually, in his own way.

No, yeah.

I think so.

I don't—I wouldn't say it's charisma. Maybe he's like—

He's the thinking persona.

Yeah, he's the aura. Yeah, yeah, yeah. But you put him in a room for 5 minutes, and I don't know if he's—

Yeah, for sure. He's a bit spiky. Yeah, yeah. I get what you mean.

Yeah. And I think his references are very different. Everyone's like, “This guy's super aggressive. He's super transactional.” To some extent, you actually want that. To some extent, you want this—I don't know if I want to share a deal with him because he's probably going to move on it.

Okay, interesting.

That combo is very unique. This is a bit of a tangent, but I actually think that combo works really well for most pairings of VCs. You have one guy who’s the face, the vibes guy—very good cop, bad cop. Good cop, bad cop. You have one guy who’s—I think you actually described this combo when we were texting a while back as the executor and then the lazy meta thing.

Yeah, yeah.

And I still think this is one of the best descriptions I’ve heard. Because you need somebody to set the rails who’s a commercial beast, and then you need someone who’s everybody’s best friend.

Yeah. That’s really cool. That’s interesting. I have a few directions that I want to take this. Since we’re on the GPs, how would you describe yourself if you were looking at yourself as a GP for a fund you wanted to invest in? Maybe in the founder lens that you like to use, how would you look at yourself?

No, I don’t think the founder lens works, man. I think—

That’s the GP lens.

GP lens, yeah. GP lens. I don’t know, man. I don’t have a sob story. I don’t have a crazy, sad background. I don’t have a chip on my shoulder, nothing. I think clock speed, sure, but the rest, I think probably I’m the face, the pretty vibes guy—the finger guns—and then probably my partner is the commercially aggressive bad cop, like super intense.

Interesting.

Brains, meta-thinker.

So he’s aggressive—he’s aggressive on—

He’s aggressive, yeah, yeah.

Okay, cool.

But I think he’s very nice as well.

No, no, he’s a good guy.

Okay. I think it’s also—I mean, these things are tropes, man.

Yeah, yeah, for sure.

It’s very fluid. You change it all up. But I think it’s—

Yeah, and ruthlessness is unpredictable.

Yeah, I think it’s easy to also box people in. When you spend time with people for a longer time period, you just start to understand, “Okay, actually, this person is not what I originally had the impression of them.”

Yeah, this stuff’s really hard. How do you deal with the fact that the edges in venture just aren’t really durable, right? Or do you think about it when you back someone? People have an edge in a certain space of time. They’re looking in the right place, they’re sourcing from the right place, or they’re in the right industry. They were there before.

They’re in the right place at the right time.

With venture, you definitely have to reinvent yourself.

Yeah.

15. Why venture edge requires constantly reinventing yourself

I think it’s impossible to keep winning if you don’t reinvent yourself almost constantly. So how do you think about that? Are you trying to back people that you think will succeed forever, or are you doing it at a point in time?

No, I think it’s a point-in-time thing, and it’s behooving on the GP that they adapt.

Yeah.

I think it’s behooving—I think “behooving” is a word. It’s behooving on the GP that they adapt.

Mhm.

The guys that I think have done really well include Boris at Version One, if you know him. Boris Wertz.

Yeah.

He—

I saw your post.

Yeah, he was early to SaaS in Canada for a while, then he was doing marketplaces for a while, then he moved to crypto, then he moved to India, then deep tech. It’s a very fluid adaptation, and I think he has a very sophisticated way of entering these markets as well. That goes back a little bit to the whole “finding a guide” comment.

I think it’s easy for people to sit and try to find a market from a top-down perspective, but I think Boris does it bottoms-up really well, just being led by the right people. Going back to who you hang around, I think he has a very good nose for who to listen to when he goes into a new market.

I think even Micky Malka, doing the whole riff on the “fintech is dead” thing—Micky backed that African guy I mentioned, the Abuja guy. This guy’s building drones in Africa. It’s the least fintech thing you could possibly think of. I think you’ve got to be pretty fluid to be able to locate the edge.

For some, that’s different. Going back to cost of capital, I think if you have the ability to raise a ton, you can just raise a ton. Then you have an ops platform, you’ve got multi-strategy, multi-asset. You maybe have different funds per vertical. I think your edge is different, yeah. Your edge is not picking bets.

Makes sense. Yeah, that’s pretty much what I figured. On picking GPs, actually, I have another question. It’s a cultural thing. When you’re looking around the world, right?

Oh, yeah. Yeah, yeah.

It’s a really interesting one that we’ve been faced with, because when you speak to an SF GP, even a European GP now, they can talk the talk. They know the talking points, and it sounds really good. They know to think big and stuff like this.

But let’s say a 21-year-old SF kid who grew up in SF is going to be very different from a 21-year-old Indian kid in terms of the level of maturity of how they speak. But that doesn’t necessarily reflect on their talent. In fact, it often doesn’t. So how do you think about that calibration? How do you get—

It was tough, man. When we went into Brazil, we tried to take the same commercial intensity. You want to see a bit of aggression sometimes, but people are so friendly in Brazil. They’re so warm and they just love you, and it makes it very hard to say, “Okay, you can’t pattern-match the same signals.”

Fortunately, with GPs—unlike with founders—you can just look at what they’ve done.

Yeah.

And that’s a super-predictive thing.

So how did they negotiate with founders on something? Would you back someone who had their first fund and hadn’t done much investing before?

We absolutely would, and we have, but they have to be angel investors.

Okay.

Prior. I can’t back somebody that has never done anything, you know? If you’ve never written a check before, I have no data points to move on.

16. The shift in price discipline from high ownership demands to unique structuring edge

Mhm. Interesting. On the picking GPs question, I have another question. How important is price discipline? People being really worried about what rounds to invest in and what to pay for rounds?

This is an issue that—yeah, I think we learned it too. This was a learning curve for us. I think in the beginning we were fairly undisciplined with it. Then I think we moved to becoming overly disciplined, so the pendulum swung too much.

We indexed very hard on GPs who were very aggressive—high ownership, low valuations, et cetera. I think we’ve calibrated the other way recently. There have been a lot of times where people can move in on incredibly high-priced rounds, but maybe you can structure the deal in such a way that you get slightly better terms than everybody else at the table. It’s a clearly good deal, and you got the best deal of everybody at the table.

Yeah.

That’s a great opportunity. I look at that and I’m like, I actually admire that. It’s a good muscle. It’s a well-trained muscle. I think you can generate incredible returns that way. What matters to me is that you got the best terms at the table, more than the absolute value of the thing.

So they generated some kind of advisory and stuff on top, or—

Could be advisory. Could also just be that you came in at a discount. You wrote a SAFE before anybody else priced a round. You moved a month earlier. Something like that.

Mhm.

It could be that the founders liked you more. But it’s more indicative of the mentality of the GP than it is purely the returns. I think the returns follow the mentality of the GP.

As for absolute value, I think we’re still pretty absolute-value-bent. We look in a lot of fringe places, and there you necessarily get cheap stuff.

17. Hunting for investment signals in the world's most obscure markets

Yeah.

The great fortunes have all been made in chaos. Rockefeller, Carnegie, Vanderbilt: railroad-scale production. The rubber barons made money hand over fist, boot over neck—anything to capitalize on the regime shift. The Medici financed emerging powers. The Welsers bet on conquistadors. Trump rode the wild rise of New York real estate. Slim and Dangote fertilized their emerging markets.

Most of the Fortune 500 didn’t squirrel their way to wealth over the course of a prudent and stuffy lifetime. I really like that.

Yeah, for sure.

I’d add crypto to this too, by the way.

Yeah, for sure.

What is the market now that you think is the equivalent? What are the places—where do you think the smartest Trumps or the Medicis are looking right now?

Well, forward-looking—

Yeah, forward-looking. Or just not right now. Where would you look to find those kinds of opportunities? Where do you think the smartest Trumps or the Medicis are looking right now?

I think it’s so hard to say forward-looking, right? If you go to India and speak about life science...

Like, you’re one of 2 people who’s going to write checks in Indian life sciences. You go to Brazil and talk pre-seed. There are so few VCs actually writing pre-seed checks in Brazil. It sounds crazy, but it’s not. China was super capital-starved a year back. I think if you’re global—

It is, I think.

It still is.

Yeah.

If you’re global, you can really act like you can go to all these places—

Mhm.

—as long as you keep the bar at the global maximum—

Yeah.

—and you don’t try to get cute on trend-level stuff. You just—

Yeah.

Global maximum stuff is still—

Global maximum stuff. But, like, you have to have SF benchmarks for that, both for GPs and founders.

Yeah. It’s interesting. I don’t know if that probably answers your question about what’s forward-looking.

I think China is—would you put China after India in there?

I mean, you’re asking the barber if you need a haircut. I’d 100% put China there.

Yeah, I’d put China there. I think India is interesting too, but, yeah. And Africa—you guys have done some stuff in too, both on the—

Yeah. Yeah, one company—

Two ones.

Yeah.

Okay.

This was back at Nomads.

Yeah, sorry. Yeah, at Nomads.

Yeah.

And how is that? How’s that market kind of—

How’s Africa?

Yeah.

It’s tough. How’s Africa?

How’s Africa and India?

How’s Africa and—

And you joke, and I get a guy—he’s a friend of mine who lives in Lesotho—and I ask him, “How’s Lesotho?” He’s like, “Bro, I don’t know. How’s Cape Town?”

Okay. Yeah.

It’s such a random question.

Yeah.

I mean, how’s Africa?

I think it’s really hard to be non-consensus in Africa. If you’re in Africa, you kind of have 2 choices. One, you either have to be in incredibly capital-efficient businesses, or you have to be prepared for the fact that there’s not a ton of downstream capital available. A lot of business selection matters more than just pure-play founder selection.

Mhm.

But conversely, if you’re a signal to downstream funds, play the geo-arb thing really well in Africa. I think there aren’t a lot of local investors who have the calibration that guys do elsewhere, and they’ll have, unfortunately, a very heavy “I look for investment banking backgrounds. I look for MBAs. I look for this sort of pedigree” suite of criteria. Those guys get funded, whereas the Thiel Fellow doesn’t get that. They don’t get that.

Yeah, I heard—I was speaking to a fund manager recently. He did an energy utility company out of Africa.

Is this the same fund manager that’s doing an LBO now?

I think it might be. Yeah.

Yeah, it’s a great company, actually.

Yeah, apparently it’s an insane company.

Yeah, that is—it’s sort of one that I ran into.

Yeah, yeah. I don’t remember the name of it now.

Yeah.

But, yeah, it seems like there are some interesting businesses, but they probably look—

You’ve got to cherry-pick a lot.

Yeah.

Yeah, I actually, maybe controversially, think a lot of the Tier 1s—and the really good Tier 1s—have actually done a really good job in Africa. They haven’t been so selective, but they’ve been in really good businesses, like Stitch or Wave or something like that.

Yeah.

I think the cherry-picking has been good, and that’s one of the harder parts for local VCs. The US guys can come and pick the best deals and command the best terms, and founders just have to take it.

Yeah. And concentration—I think 2 more questions on investment, then we’ll move on to some different stuff. Concentration is really important to you, as it is to us too—although maybe I’m putting words in your mouth. Is concentration really important to you? Is it a rule that every fund has to have a certain number of positions? I know Hummingbird takes a pretty extreme approach to this—it’s 10 to 12 positions or something per fund. One of the funds I like the most in our portfolio does this too. I’m curious how you think about that.

I think concentration is downstream of convexity. Maybe that sounds like you’re mid-curving it, but I think you can also have a very diversified and very convex portfolio, right?

Yeah.

18. Convexity, concentration rules, and strict asset selectivity

It just matters what your strategy is and how you’re able to price these companies. Can you move them out to money that you think you can? Can you do so without paying a ton? There are guys who can write 40 companies, 40 checks at $2 million post. Those are basically free call options. I think that’s such a rare fund that can do that.

If you can sort of do it, that’s way more convex, and you can avoid adverse selection. A good example is Silicon Valley Angel. They pay up a fair bit, but they’re still really early to all these companies. Even though you pay up, it’s very diversified. It’s a convex portfolio, but I don’t know any other fund that actually has Silicon Valley angel-type networks.

Yeah. Unique to them. I think the other thing about concentration is it’s sort of correlated to other good qualities, like conviction, right? And then just, like—

Yes.

And the best founders often want to work with that sort of GP, right?

Exactly.

Yeah.

Yeah. Conviction, and also just being early enough that you can put in a big check. I think all these things are important signals to the conviction. It’s almost a symptom of these other things that are good.

I think if you think about the people who you want to work with, they’re generally very selective. They’re generally very picky about their taste. They’re very specific, you know? And that sort of person is generally more concentrated.

Yeah, that’s true. And on your investment process, how do you come to a decision? I remember we spoke about this briefly. I think I’m more of a gut or instinct person. I kind of feel it, and then I’ll go and try to disprove it. Sometimes I do. I think you are more process-driven, right? Or is that maybe the wrong—

No, I think I’m more like you, actually.

Okay.

I think my partner is more structured. He’s very structured. I’m a lot more intuitive, like, “Oh, I just think this is interesting. Let me go spend time here.”

Yeah.

Fortunately, he counterbalances me with a lot of process-centric, granular, rational thinking. It’s so substantiated that when you get to a decision, it’s like, “Man, that’s the right decision.”

Yeah, both sides.

Yeah, but he also doesn’t really make wrong decisions. He’s just generally right on the stuff.

Okay.

I’m getting there, to be good enough. He takes it from “good enough” to “this is one of the 3.”

Okay. So you’ll pick, and then he’ll filter from there? You’ll get something—

Generally, that’s how it works. I get excited probably a lot more than he does. I get excited 6 to 8 times a year. He’s probably at 3.

19. The cutting process: Meritocratic arguments, structural hypotheses, and surface-level traps

Okay. And then how many do you invest, would you say, out of the 6 to 8 times?

Probably 1 more than he is and 2 less than I am.

Okay. So he cuts, like, 2—a third of your—

Typically, yeah. Typically.

Interesting. Yeah, that’s cool. We have a similar setup, actually.

Is it?

Yeah. We were just talking about your process, and I think you mentioned that you get excited earlier—you’re more instinctive—and then your partner is the one who narrows it down and makes sure that you—

No, I don’t. It’s like—yeah, I can’t remember how much we spoke off camera now.

Yeah. And what does the narrowing down look like? Is it a very structured process? What is the structure?

No, I don’t. I think that cutting process is super meritocratic. It’s “best argument wins.”

Okay.

Generally, he has better arguments than me. So generally, I’m just like, “Yeah, the vibes,” and he’s like, “Yeah, okay, but substantiate that.”

And how does he substantiate his positions? Is there an example that you could give? Obviously, you don’t have to name the company, but it’d be cool to—

Yeah.

—or the GP, rather.

I think oftentimes you build little hypotheses that you test, right? Say there’s a team we really liked, and they were in a very appealing sector, with very good entry valuations for their companies. I was cutting at this time, and he was very optimistic. I thought that the GP didn’t really understand what they were investing in.

And I thought they were filibustering a little bit—speaking around what they were actually talking about. They didn't really know what they were talking about at an underlying company level. Even if you have a good founder lens, you have to understand the companies.

So, it is important that they understand the companies very well.

Sure. You have to. I think if you're a good investor, you have to know at least the basics. You don't have to know—I can't tell you, “Aave is structured this way. This is how they improve yield,” and whatever. That's a very technical process that I can't explain, but you need to know, “This is how they make money.” He was struggling a little bit with that.

What about the investors that just know that something is going to be big? Narrative spotters or something along these lines who don't necessarily have the left curve?

An interesting example of this historically is Fred Wilson, right? Everybody was telling Twitter that they had to monetize in a certain way—advertising and stuff—and Fred was like, “Don't monetize.” Ultimately, his view was just, “If this gets big, then you'll figure out how to make money.”

Yeah.

I think that's a lot rarer than the stories make it sound. Most of the time, people know. Most of the time, founders know. In 4 years, I haven't found an instance where a GP doesn't have a good answer to this and is still a really good GP. Most of the time, not having an answer to it is just lazy thinking.

Interesting. I think it would have been hard to get your head around Bitcoin, right? A GP who invested in Bitcoin would have been—

Did you see the Ribbit memo on tokens?

The original Bitcoin memo?

No, no—the Ribbit memo on tokens.

They wrote a bit of a memo on Bitcoin in 2012.

Oh, no, I didn't read that.

If you go read it, this is 2012 Bitcoin. It's early. It's super early. I think it actually returned their fund 50x, depending on when they sold it. It's a really structured, rational thesis, and it's a really clever rationale. You can look at it and maybe people moved on Bitcoin on a hunch, but if you're Micky Malka, you probably didn't move on Bitcoin on a hunch.

Yes, okay. That makes sense. It's interesting, because our biggest mistakes of omission, I think, were the ones where we worried too much about how they would make money and ended up sort of mis-calling it to some extent.

Interesting.

20. Why George Soros makes a far better venture proxy than Warren Buffett

But it's tough. Crypto's a different market, you know? Sometimes you can feel like you made the right decision and still—

I think it also depends on the business model, right? What you're describing is a very nascent, murky space. The business model isn't super figured out for most of the space.

Yeah, yeah, yeah.

I'd say maybe frontier AI right now is a little bit the same.

Yes.

But most businesses aren't like that.

Mhm.

And so I think for most businesses, you should know.

Yeah, that's fair. Is there anything else on process that you want to talk about? Something you guys do differently or that you've learned over the years?

I think we just debate a ton of them, all the time—constant WhatsApp back-and-forth. I think that's super additive. Rather than sitting down for an investment committee meeting on a regular day where you have a prepared memo, you're just constantly debating stuff.

Yeah.

I think that very lively, fluent dynamic is a lot more conducive to understanding how each other thinks. I understand how he thinks, he understands how I think. You know where to move, what the other person is asking, what you're asking, and you understand the implication behind the questions. I think that's easier than having a very structured process.

Mhm.

To a degree, I don't want a process where we have 3 meetings, then I write a memo, then I do this, and then we—

Yeah.

—send the decision.

Okay, makes sense. And we chatted a bit about your personal side, with you talking about some of your background and stuff. You don't have a big sob story or anything like that. I'm curious: what's the thing you're most proud of in your life that isn't investment-related?

Oh, that's marrying my wife.

Okay.

For sure, man. It's marrying my wife. I mean, I can't give you another answer. She's the better half.

How did you meet?

We met? Um—

Or when did you get married, actually?

About 2 years ago. No—actually, November was my wedding. We dated for about a year. I proposed after about 6 months, and then we got married after that.

Nice.

High conviction and that stuff.

Yeah, of course. You move, bro.

All in. You just go.

That's nuts.

Yeah. You?

Well, the thing I'm proudest of outside of—probably the European.

All right, yeah. That's actually super worth it, bro. I aspire to that.

Hopefully my girlfriend doesn't listen to this. Definitely my girlfriend, too.

Did you ever think about CGI or any of the other comps?

I got invited once to do something at it, but it's just really hard training here in Portugal. Doing the camps and stuff—it's not easy.

That's a good answer, though. I like that. And you started investing—I was reading your early blogs.

Oh, no, please don't.

It's funny, because when I started investing, I had the same thing. I was like, Buffett—

Yeah, Munger.

Munger, Seth Klarman—there's a subreddit—

r/securityanalysis.

Yeah, yeah.

Oh, man, I devoured that stuff.

That's right.

You could read every investor letter. I think it's actually better training than reading Margin of Safety or—

Yeah.

One Up On Wall Street or something.

But you were looking at South African value stocks. And you had a little fund, right? You put it together with your own money?

I had a fund.

And how did it go? What did you learn? How did you get to venture from that?

21. From South African public equities to joining the Hummingbird ecosystem

What I learned—I think if you're the only person looking at something, you can find really good prices. This is probably informing venture. There was a lot of emerging-market equity that was super underbid at the time. There were several bets that, in hindsight, were a lot of beta and luck, but there were several bets that did 5x or 6x in the public markets over the span of about 2 years. That got a lot of attention from local public investors, and that's what spiraled the whole thing into an actual little fund.

Then, yeah, I was writing some pieces. I wrote one on Tencent, and I think the Hummingbird guys reached out. At the time, they had just divested a bunch of Kraken stake, or they were setting up Nomad, and they were thinking about doing public markets. They read my stuff and wanted to be an LP, and I reversed and said, “Can I join you guys instead?” They were like, “Yeah, come on in.”

Yeah, that’s dope. So you hadn’t done any venture before that?

Never. No, I think—

Isn’t value investing a really bad way of thinking about venture?

Yeah.

I think it’s been helpful, then.

Okay.

Yeah, I mean, I think hedge fund guys—and I’m not saying I’m a hedge fund guy—have an alpha-beta mentality, right? You stack little bits of alpha, and then you’re very distinctly aware of what is beta.

Mhm.

I think venture guys don’t really often think like that. It’s just, if something is consensus, it’s good. If everybody likes a deal, it’s hot, so I must get into the deal. There’s merit in that, like we’ve discussed, but I think coming from a value lens, you’re just a little bit more aware that you want to go and look in places that other people are not.

That’s fair. Yeah.

Mhm. If you had to give yourself some advice back then, what would be the one thing you’d say to—

I’ll get you to—

The 20s, Jordan?

Probably that it will take time to distinguish between operating from a place of fear and operating from a place of curiosity. It’s okay and good, and you should use both of those. When you feel one, it can be a very strong motivator.

I think the first time I started to feel a lot of fear in the markets, I didn’t know what I was doing. I think that’s when you make some mistakes. Curiosity is a very nice emotion. You feel very positive when you’re doing it, but it can also lead you down pretty bad rabbit holes, and you need to temper that with a bit of fear. I would really have told myself this.

Which one were you over-indexing to?

Fear in the beginning, and then curiosity too late.

So you were acting a lot out of fear?

Yeah, a pendulum between the 2 of them.

Okay. What do you mean by fear? Insecurity, or just fear of losing money?

Fear of not having money, yeah. Fear that you just need cash.

Okay.

That was in the beginning. Then I think you get some cash, you become curious, and then you actually need to fear losing money a bit.

Okay.

You have to. I think you have to tame the 2.

Interesting. Yeah. Okay. We spoke a bit about this. I’m putting words in your mouth, but you said, if you don’t mind—

No, no.

—you’re glad that you blew up in poker a couple of times—

Mhm.

—because it gave you—

Burnt fingers going into crypto.

Yeah.

I think it’s a little bit the same. I’m glad, but I didn’t know there was a painful thing to go through.

For sure.

But once you go through it, you’re more cautious.

Yeah. Yeah, fear is a really interesting investment because you definitely need some of it. But I think it can also be very poisonous, and it’s just not a nice way to live if you’re constantly scared.

I agree that curiosity isn’t necessarily better, because sometimes curiosity just takes you down rabbit holes because it’s novel. This thing is new, so I want to dive down the rabbit hole, whereas the old thing got a bit boring. But actually, you should have stuck with the old thing.

On a bigger level, if you know what your purpose is or what you want to do, curiosity can sometimes be something that takes you away from it. I’m also very curious, and I tend to get really excited about the shiny new thing. Sometimes it takes me away from the thing I committed to and should be doing. It’s an escape of some sort, too.

And hobbies. When we read your stuff, there’s Shackleton in there, Lord of the Rings, and historical references. You like reading.

I’m a huge fantasy fan. Lord of the Rings—I love it.

Dude, big time.

Someone described it as a hard-boiled Lord of the Rings.

A hard-boiled what?

Lord of the Rings. Yeah. I actually had this long debate with a friend the other day. I think you have to pick a side. If you look at Tolkien, Frodo throws the ring into the fire—not because he chose to throw it, but because Gollum bit it.

Because Gollum what?

He bit his finger.

Mhm.

Frodo spared Gollum not because of strength, but because of pity. There were all these little incidents that happened along the way that culminated in the big ending. In Lord of the Rings, the world is not up to you. It’s not about a messianic figure. Frodo is a hobbit. Little people matter, right? I like that world. I want to live in that world.

Although he is the desert mouse, right? The Muad’Dib?

Yeah, yeah.

22. Moral frameworks in fantasy: Lord of the Rings, Dune, and the Great Man Theory

But he’s the messianic figure. The Bene Gesserit—the entire world was built around Paul Atreides.

Yeah.

He’s the guy. I don’t want to live in a world that is solely a great-man theory of adventure. I don’t like this Nietzschean will-to-power thing. It’s hard to invest because sometimes you have to believe in people, but I far prefer the world of the hobbits. I would rather that be the world—

Why isn’t Frodo the great man?

I mean, do you—

Because he is?

Because he was a hobbit. No, I mean, Aragorn’s not the great man. If you look at the story, Boromir was supposed to be the great man. He’s the son of Gondor.

Yeah.

He tries to take the ring, and he has the will to power, and it’s his downfall.

Yes. Okay. So Dune is too overdetermined to use an Atreides—

Not just overdetermined. I just don’t like it. I don’t think it’s a moral story. It’s a very realistic story, maybe, but it’s not aspirational. If you’re going to read to your kids, would you rather read them the very realistic, amoral story about Paul Atreides, the messianic figure who ends up causing havoc? Or, you know, C.S. Lewis has this great quote: “Since it is so likely that children will face villains and enemies, let them at least have heard of brave knights and heroic courage.”

Yeah.

That’s Lord of the Rings to me. You learn to pattern-match moral people.

That’s cool.

Yeah.

I can see that, yeah. I love the messianic—

You’re a Dune fan?

I think, potentially, but for me, the point is that you want to be Paul Atreides. Kanye has this really good quote from back in the day, when he did his Yeezus album. He said, “Everyone’s telling me the Jesus Christ story, and for me the point is I want to be Jesus Christ.” It’s not about the sacrifice for my sins. I want to be him.

I kind of think that’s what you would say about Dune. You learn from it—you want to be Paul Atreides to some extent. Can everyone be Paul Atreides? Go through the—

Yeah.

Did you ever watch Avatar?

The Last Airbender?

Yeah, the anime.

No, I didn’t, actually.

You didn’t watch it?

Okay, I get it.

I heard it’s really good.

It’s super good. Uncle Iroh, for those who have watched it, is my favorite character by far. He’s this old, wise sage who was previously a military general, then failed, and his son died. He had to reconcile that, and he came back. He has this line where he says, “I think power and protection are overrated, and I think you’re very wise to choose love.” I love that line.

Yeah, I love that line, too.

You know the line?

No, I don’t, but I love the line.

Good line, right?

Yeah, it’s a good line. Very cool. So Lord of the Rings is your favorite?

By far.

And any hobbies outside of reading?

I’m nowhere near a European jiu-jitsu no-gi champion, but I’m an aspirational blue belt.

Okay, aspirational.

Cool. That’s cool.

Yeah. I asked you the advice thing. What about mentors and influences? There was Buffett and stuff early on. Is there someone else you like? Who’s your—

Or do you have someone now?

No, man. I think there are personal, close guys who I look up to for idiosyncratic parts of their lives.

I don't think there's anybody I look up to and think, “As a whole, I want my life to fit that.”

That's healthy, I think. What about the idiosyncratic parts?

I really admire the Hummingbird guys. I think Val Ten Frank and Baron have done a fantastic job. Val Ten specifically, is a very good guy at believing in people when they're young.

I really like Valentin.

I love that about him. I also admire the opportunism. I think it's good to be very flexible in your mandates, and I think he's good at that mentally.

There's another guy, Pogo Sideon, who runs Greyhound, who's the exact opposite. He's hyperstructured, and everything is very broken down. I enjoy that he's a very curious guy. You can see when he's speaking that he doesn't have a fundamental lens. He's a great investor, really, really good at finding the very simple reason why something will or won't work.

I think that ability to take something apart at the core—Elon calls it the physics of the problem—I think that's hard to do. So I admire him for that.

That's cool.

Yeah. You?

Influences?

Yeah.

Damn, good question. I wasn't ready.

You asked it to me, man.

Yeah, good question, man. Who do I look at? Investment-wise, I really like Soros.

Yeah.

Actually, I know he's somehow become like kryptonite, and you have to hate Soros.

Yeah, exactly. He's somehow become like the devil. Everyone just blames him for everything that's going on in the world.

It's a legend.

Yeah, and when you read him, I think he's the best investor of all time in terms of the number of things he was successful at. The number of different commodities, single-stock picking, all over the world, long-short—yeah, I think he's a virtuoso.

Mhm.

I like the reflexivity stuff. I think it's a bit over-indexed on and overplayed. People talk about it a lot, but I think when he came up with it, the ontology of it was really interesting, right? There is no equilibrium or fair market value. These things are all just—the fundamentals reflect people's views, and those views affect the fundamentals, and it all—

Which is going back to your point on whether you should be consensus or not be consensus. I think consensus has a huge reflexivity going for it, because if someone is consensus—

Yeah.

Yeah, yeah, a ton.

It's true. That was his thing, right? If I see a bubble forming, I rush to buy. That's one way to do it, and it's so much the opposite of a Buffett.

Yeah.

Who's like—

I think Buffett would make a terrible venture investor.

Yeah.

Yeah, I think he'd be absolutely terrible. The whole “squirrel their way to wealth over prudence and stuff in your lifetime” thing—the original writing of that, which I took out because I absolutely did not want to offend Buffett, not that he is it, but it was like—Buffett—

I think you did have to get in there by the—

Yeah, it was the same—

You said something nice.

What would you say to—

I said something impressive that Buffett did. It was what I said was special about Buffett.

That's a tender little bit.

Yeah, but it was nicer. I like Soros as an investor.

Yeah.

I do think it's nice to believe that you can know the world and have a differentiated view on someone or something, and not have to worry about what everyone else thinks.

In crypto, I definitely think right now there's a crisis of confidence, because no one believes in anything. Everyone's just doing technical analysis and trying to figure out what the next person is going to believe. Whatever everyone believes is the truth, and I find that very nihilistic and hard to invest in purely.

I think combining both is best. The best spots are when it's both. Jan from our team coined it originally, but I think the best spots are where it's both a good trade and a good investment. When you find stuff like that, that's when you really want to decide and get everything aligned. There are only a few spots like that that you come across.

There are definitely other mentors, but I can't quite recall anyone. There are definitely characters in books I really like.

Similar to you. Yeah, I think we're both Taleb fans.

Yeah, if I had to pick one author that I really admire, and who has probably shaped my way of thinking about venture the most, it's Taleb.

Yeah, I do think Fooled by Randomness messed me up a bit for a while.

Emotionally?

Just in my view of the world, because I saw randomness everywhere. I just didn't—

It's super hard, man. Once you see it, you're like, “Ah, shucks.”

Yeah, and I think it's hard to live—

Yeah.

—with that.

Yeah. Which, incidentally—

I like the “you're not a lottery ticket” Taleb thing.

Yeah, that's true.

I find it easier to have the Taleb view of the world and put up with randomness because it's a little bit beneficial. I feel like if you believe you're Paul Atreides, it's hard to put up with randomness.

Yeah, true.

I've got a question for you, if you don't mind. Just 3. There was this archetype I was discussing with Sakshi, my partner's wife. If you look at Leonardo da Vinci, Raphael, and—who was the other one? Michelangelo.

23. Unreliability vs. the grind: Mapping oneself to Da Vinci, Michelangelo, or Raphael

Michelangelo is this wonder kid, very moody, tells the Pope to go suck it because he doesn't want to travel to Rome, but produces obscenely good works of art. Leonardo is curious about everything, super good at everything he touches, doesn't ever finish anything, completely unreliable, but pure-play genius.

Raphael, at least according to Sakshi, who knows this better than I do, is what we would call a great BD guy. He's clearly talented—

Mhm.

—but—

Grinder.

Yeah, not maybe to the level of the others, and can orchestrate the Popes and the monarchy at the time to display his art. He puts out lots of art, works very hard, and—

You're going to ask me which one I am, and you think, “Oh, for fuck's sake.” I'm a mix, probably.

Between?

So, the first one—he was a rebel, telling people to fuck off and stuff.

Yeah, Michelangelo.

Because I don't really tell people to fuck off. I think I'm more unreliable, like the first one.

Yeah.

A mixture between that one and the—

Grinder, BD guy.

Yeah, I think so.

Funny.

I think so.

I'd say so. I think I have the unreliability of da Vinci—

Yeah.

—and the grinder, BD-guy side—

Yeah.

—of Raphael.

Yeah, and the unreliability comes with some double-edged intuition and inspiration.

Yeah.

But then there's a lot of grind, too. I'd say I'm a mixture between those two.

Yeah.

And I have one last question. I was trying to think how I want to end these, because you did the first one. I think a good one is: what was your biggest investing mistake?

Wow.

And—

Well, okay. I got—yeah.

And what did you learn from it as well?

When I was managing those tiny sums of money back in the day, I went long an airline company, a local airline company, going into COVID. I thought to myself, “Okay, this is a proper deep-value play.”

I knew that if people paid them what they were owed, those assets would be worth multiples of what the stock was trading at. If even half of that got settled, you could make many times your money.

What I didn't look at was who the counterparty was, which was the South African government. They just completely wiped the debt, and I was like, “Okay, shucks. I actually really need to look at debt covenants and understand that things can go really wrong in ways you don't expect.”

You mean they wiped the debt? Like, they—

24. A lesson in debt covenants: Jordan's biggest early market wipeout scenario

They didn't pay. They were just like, “No, okay, this business is bankrupt. We're just not going to pay the money.”

Damn.

Yeah, it was super nutty.

And you can't sue the government.

Can't sue the government.

Yeah, that'll do it.

Yeah. So I lost all my money in that thing.

And so what did you learn?

Look at debt covenants. What can go wrong? Downside protection matters, but I think it was a convex bet, right? If I understood the debt covenants properly and thought, “Okay, maybe the government could wipe it out—”

You would have wanted it cheaper, probably.

I don't know if I would have bought it.

Yeah.

I think probably there is no price.

Yeah.

Because if I had thought properly about who the counterparty was.

Yeah. How does that apply to you? Do you ever use that in your venture investing?

Yeah. I don't know if it does. I'm sure it will apply. I think it's more like a tacit thing, like going around thinking about it a little bit. It was such a small amount of money in hindsight, but it was my first total wipeout.

I was like, “I never want that to happen again.” And I think, more than how it applies to venture practically, it's just how it applies to venture emotionally. I just don't want to lose the money.

Yeah. Awesome.

Yeah.

I really enjoyed this, man. Thanks so much for coming here and doing the first live one in the office.

And we've got the sun setting now.

Yeah, hopefully.

Nice.

Yeah, can't see much, but yeah.

Yeah, yeah.

Thanks so much.

Dude, of course. Thank you for having me. Cool.