00:48:13 · David Senra, Nik Storonsky
[00:48:13] S0: Okay. So how did you get him to step back? [00:48:14] S1: Well, I think, you know, pretty early on, I realized that, like, quite quite a few of VCs, they are not very operational and they can be actually dangerous for the company if they have enough power. So every single investment route, they just, you know, removed for VCs. So it took, you know, all seats. So now I don't have any VCs on the board. I think that's the best. You always need to have operators rather than VCs on the board who... People who actually build this who who know how to do things. [00:48:45] S0: Your mindset reminds me a lot about Travis Kalanick from Uber. He was on the show. And I think it's like one of the clips that went, like, got millions and millions of views was on this, where he just actually thinks that like, just doing no harm is an excessively high bar for a VC. He's saying like over 90% of VCs, they can't even not fuck things up. Not much... He's like, not even be helpful. They just can't not fuck things up. And then he said like 1% in his experience have been actually helpful. And his thing would... Which he he would tell entrepreneurs, I think he said on the show, is just like, tell them to give you the money and go away. That's how you think. [00:49:18] S1: I mean, Elizabeth, and, yes, ensuring shareholders' agreements, they they just don't have any powers. [00:49:23] S0: Yeah. I will make you rich... Richer. You just leave me alone. It's basically... Yeah. Also set up your own... I don't know if you call it a VC fund. Like, what is is a
00:49:23 · David Senra, Nik Storonsky
[00:49:23] S0: Yeah. I will make you rich... Richer. You just leave me alone. It's basically... Yeah. Also set up your own... I don't know if you call it a VC fund. Like, what is is a [00:49:32] S1: VC fund. So basically... What's it called, first of all? Quantum Light. Okay. [00:49:37] S0: Explain what you're doing. This is funny. I just picked up on this now because you were analyzing like the legacy banks, know, like, I'm not like, look at all the obvious mistakes they're doing. Some of that came through experience, right? Hard fought experience. The way they're doing it doesn't make sense. I'm going show you a different way to do it. [00:49:52] S1: Yeah. Basically, the idea was in... I think it was 2022 or 2023 when I came out with this idea. And the idea came actually from my personal pain, from a fight with investor. It was actually one of their big names. They entered or they invested in Revolut. It was, I think, just after COVID or during COVID when all the stocks went up, they invested at 33,000,000,000 valuation. So basically they had legal right to not to allow us changes in shareholder agreement because they were like, you know, less investor, blah blah. So you had a bunch [00:50:31] S0: of these bad experiences with VCs. You're going start your own VC fund. Explain how you're
00:50:31 · David Senra, Nik Storonsky
[00:50:31] S0: of these bad experiences with VCs. You're going start your own VC fund. Explain how you're [00:50:36] S1: funding different. Funds. Basically, I had this fight and then, you know, I was extremely pissed off and I thought, know what? I I I also need to compete with VCs in their business because they they... They're so bad. And out of my frustration, I started the fund as well. And then the idea was basically to invest not based on the human judgment, but based on their science and based on their machine learning models. Statistically, investment is number one. Number two, actually help with founders with operational advice playbooks or that we developed to try to help to hire people, to do performance management, how to do product expansions. And then finally, help them sell their product as well. Because we are a large enterprise, we are buying from a lot of vendors. Having us as client helps to sell into other enterprises or potentially sell to our customers as well. Our Revolut customers. So I think overall, plus my personal advice, obviously. So I thought overall, the package was so much better compared to purely financial players, VCs. You just had your personal advice as well. So, like, are [00:51:39] S0: you just making concentrated bets? Is this, like, another thing where you're doing 20 or 50 at a time? Or you're just, like, concentrating money behind a handful?
00:51:39 · David Senra, Nik Storonsky
[00:51:39] S0: you just making concentrated bets? Is this, like, another thing where you're doing 20 or 50 at a time? Or you're just, like, concentrating money behind a handful? [00:51:47] S1: It's again, it's statistical investment prices based on machine learning models. So, the way it works, our model selects 30, 40 companies to invest over two, three years. And then it puts equal amount of money in each in each startup. So, we started with a fund, series b fund. So it's closed. It's fully invested. It produced now, like, 56% IRR. [00:52:10] S0: And you started, like, 250,000,000 or something. Right? [00:52:13] S1: We started to fifty million years with the first fund. So now it's, like, 5056% IRR. We started investing second fund now, which is 500,000,000. So it's series c in our companies. Again, based on the model, also very high return. Think it's top 5% of funds in the world now in terms of returns. We'll probably do a large fund as well for for leads. [00:52:34] S0: Where is the money coming from? [00:52:35] S1: It's different LPs. So initially, started... 20% was my own money. So I put 20% of it or 25% of it. And then the rest came from other founders. Second founder already got quite a few institutional players as well.
00:52:35 · Nik Storonsky, David Senra
[00:52:35] S1: It's different LPs. So initially, started... 20% was my own money. So I put 20% of it or 25% of it. And then the rest came from other founders. Second founder already got quite a few institutional players as well. [00:52:49] S0: I've never heard of somebody building a bank compare themselves to like Meta. So I'm gonna get into that in one second. But you don't do anything like fucking half assed or like small. Right? You're just like, okay, started two fifty. Now you're just gonna see how far you can take this. Is it gonna be like a giant Renaissance technologies kind of thing?
00:53:06 · Nik Storonsky, David Senra
[00:53:06] S1: Well, obviously, the goal is to build something large like BlackRock, but in private markets. Again, we'll see if we if we we get there. But I think idea and approach makes sense because, like, you now have a lot of data on startups. Then you can apply all these machine learning models to identify the best ones. And then model is pretty sophisticated. So for example, one of their signals we look at, we look at who invested in the company, who is investing. And we look... We look not only in the fund performance who invest in the company, down to the partner level. And we'll also look at the age of the partner. And there are very interesting things when I look at these variables as as the age of the partner. And then you'd rather not invest in companies where partners who are investing are older than 40 years old. So the best cohorts are 30 to 40 years old of young partners who are investing. They're they're they're they're the best at identifying good companies. Same same as with executives as well. Yeah. So so there's a certain prime age when you... What what you need to look at. Again, there are many variables. Right? Of Age is not only one thing. Right? But statistically speaking, that's what Angelica. [00:54:23] S0: And is this a separate company from Revolut or [00:54:24] S1: is Yes. It's company separate. [00:54:25] S0: Okay. So completely separate. And you have somebody else running it? [00:54:27] S1: Yeah. Okay.