How I Invest with David Weisburd
00:30:23 · Jack Selby, David Weisburd
[00:30:23] S1: Almost as soon as you know that it's not a fit, because you usually cannot reborn. [00:30:27] S0: Happens when it's... Within a couple weeks of hiring a person? [00:30:29] S1: Then it's unfortunate. You made a bad decision. And so when you do kind of the Monday morning quarterback about how you got to that hiring decision in the first place, then maybe you can learn something from it. But you just rip the Band Aid off, and you can't rip it off too quickly because otherwise, it's kind of a cancer. It impacts in in a negative way, culture, and you just have to do it immediately. But it's hard, and it's hard, and it's not not my personality because I'm not a naturally, confrontational person. So it's something I've had to learn. I think I've gotten better at it, but it's definitely something I've learned from Peter. [00:31:00] S0: What about recruiting? I've had some top CEOs that both publicly and privately will confess that they have about a 50% success rate in in great hires, and it seems like, at least from the outside, PayPal was close to a 100%. What are some lessons that you took from PayPal in terms of recruiting? [00:31:17] S1: So Peter leaned very much on kind of the organic network that he could bring to bear. So Stanford in particular, and then with Max and Luke coming from University of Illinois, they they relied on their alma mater as well. And so just hired amongst your friend group. [00:31:33] S0: People that you have worked with before.
00:31:33 · David Weisburd, Jack Selby
[00:31:33] S0: People that you have worked with before. [00:31:35] S1: Yep. I run Copper Sky with a guy named Jason Pressman. Like, he's literally my best friend. He was the first guy that I met when I moved out to Palo Alto in 1999. You know, like, Jason's son is named Jack, not by coincidence, just to give you context. And so oftentimes, you know, adults will tell younger people not to work with your friends, And I think that's literally terrible advice. Literally terrible advice. Because, like, in any relationship, you set up guardrails, of course. But then once you have that relationship within the guardrails... Like, Jason and I can cover topics, subject matter in twenty minutes that would take other people two hours. It's not because we're smarter than other people. It's just we know each other so well. [00:32:11] S0: We have the context. [00:32:12] S1: And... Yes. And even more importantly, what is our most valuable resource? It's our time. And I'm basically multiplying my time with Jason because he and I know each other so well. So if you have the ability to work with people that you know so well, I. E. Your friends, you should take that opportunity to do that all the time because it multiplies your time.
00:32:29 · David Weisburd
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00:34:24 · David Weisburd
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00:35:32 · Jack Selby, David Weisburd
[00:35:32] S1: I was essentially on the road every single week for the first six months of this year, and I took a very significant sample set of meetings with LPs. So I feel like I have a reasonably well informed opinion on this topic. So here's the distillation of what I found. So one, the industry has done a poor job of returning capital to its investors over the last decade, and we can talk more about why that's the case, but that's just the fact. So that's number one. Two, the mega funds. So essentially, eight firms went out and raised, I think, an aggregate of $70,000,000,000 earlier this year for whatever capital that was still positively disposed towards this asset class. That's two. Three, any capital that is left over that is... Remains positively disposed towards private technology, that capital is infatuated with shiny toy late stage AI deals. That's the entire landscape today. Full stop. [00:36:32] S0: And you think that's wrong?
00:36:32 · David Weisburd, Jack Selby
[00:36:32] S0: And you think that's wrong? [00:36:34] S1: Well, to step back as to why Venture got into this position in the first place, after the great financial crisis when the printing presses at the Federal Reserve and other central banks was on full tilt for thirteen plus years and interest rates were zero, it caused a real problem for the venture capital industry in the following way. So yields were zero. Investors were reaching for yield. They associated tech with growth with yield, so they stuck way too much money into the venture capital asset class, which by the way is tiny, especially compared to its big brother private equity. So venture is probably... I don't know what that number is. [00:37:10] S0: Three and a half. 3 and 1,000,000,000,000. [00:37:12] S1: Right. It's a tiny asset class. In good venture, top quartile was the only place you really wanna be or higher. It's even smaller. And so essentially, way, way, way, way too much capital got stuffed into this otherwise tiny asset class that then spawned way too many managers that have turned out to be b minus or worse, and here we are. And because of these private capital structures, the Darwinian cathartic culling of the herd takes forever. There's [00:37:41] S0: ten year vehicles.