How I Invest with David Weisburd
00:37:06 · David Weisburd
Let me just say yes to every manager that I get, and I'll I'll get exposure to that. And that has not been done well. And I I think that's a trap that you fall into if you... If and when you start to subscribe subscribe to to this this indexing. Indexing. One thing that I've learned from talking to hundreds of investors, founders, and business leaders is that planning for the future isn't just about growing assets, it's also about protecting the people who matter most. Life comes with a lot of important milestones. Maybe you're buying a home, starting a family, planning for college, or simply thinking more intentionally about your financial future. As those responsibilities grow, it's worth making sure you protect those you love. Not sure what kind of life insurance you may need? Concerned about how much it may cost? Think life insurance is too complicated? Your local State Farm agent can help answer those questions. They can help you explore your options for life insurance and choose coverage that you can adjust as your family's needs change over time. Financial protection for your loved ones when it matters most. Learn more about life insurance@StateFarm.com. Like a good neighbor, State Farm is there. Support for today's episode comes from Square, the all in one way for business owners to take payments, book appointments, manage staff, and keep everything running in one place. Whether you're selling lattes, cutting hair, running a boutique, or managing a service business, Square helps you run your business without running yourself into the ground. I was actually thinking about this the other day when I stopped by a local cafe here. They use Square and everything just works. Checkout is fast, receipts are instant, and sometimes I even get loyalty rewards automatically. There's something about businesses that use Square. They just feel more put together. The experience is smoother for them and it's smoother for me as a customer. Square makes it easy to sell wherever your customers are, in store, online, on your phone, or even at pop ups, and everything stays synced in real time. You could track sales, manage inventory, book appointments, and see reports instantly whether you're in your shop or on the go. And when you make a sale, you don't have to wait days to get paid. Square gives you fast access to your earnings through Square checking.
00:39:11 · David Weisburd
They also have built in tools like loyalty and marketing, so your best customers keep coming back. And right now, you could get up to $200 off Square hardware when you sign up at square.com/go/howiinvest. That's square.com/go/howiinvest. With Square, you get all the tools to run your business with none of the contracts or complexity. Run your business smarter with Square. Get started today. Support for today's episode comes from Square, the all in one way for business owners to take payments, book appointments, manage staff, and keep everything running in one place. Whether you're selling lattes, cutting hair, running a boutique, or managing a service business, Square helps you run your business without running yourself into the ground. I was actually thinking about this the other day when I stopped by a local cafe here, they use Square and everything just works. Checkout is fast, receipts are instant, and sometimes I even get loyalty rewards automatically. There's something about businesses that use Square, They just feel more put together. The experience is smoother for them and it's smoother for me as a customer. Square makes it easy to sell wherever your customers are in store, online, on your phone, or even at pop ups and everything stay synced in real time. You could track sales, manage inventory, book appointments, and see reports instantly whether you're in your shop or on the go. And when you make a sale, you don't have to wait days to get paid. Square gives you fast access to your earnings through Square checking. They also have built in tools like loyalty and marketing so your best customers keep coming back. And right now, you can get up to $200 off Square hardware when you sign up at square.com/go/howiinvest. That's square.com/go/howiinvest. With Square, you get all the tools to run your business with none of the contracts or complexity. Run your business smarter with Square. Get started today.
00:40:54 · Gavin Ezekowitz
[00:40:54] S0: So I think it's true. I... You you bring up a lot of a lot of things that are really curious in in that conversation. Because I think one of the pieces of that puzzle that is super interesting, certainly in in Silicon Valley, is there are these amazing super angels, and they are they are real taste makers at at the seed and pre seed level. Now we're in a very crowded time in the market. I think it's always we need to be really careful that we're not just sort of judging that it will always be The Us and so forth. But I think that there is no question that well connected folks with really a good sense of what makes for good companies can at the pre seed and seed level still do important things. And small funds, early funds, well, managers with a very clear network can do... Can produce really incredible outcomes by being close to founders. And I think one of the one of the myths that is also, goes around is that, you know, well, Sequoia is gonna see all the best companies, and Reese and Horowitz is gonna see all the best companies. And I'm like, well, let's imagine they do, and let's imagine that they, in fact, even invest in them, which they don't. Neither is true. But given the scale of the funds, the scale of the investment, what it would require in order for them to carry that through and so forth, it may not even be the case that that really great or good company delivers the kinds of returns that you might like at fund level unless they really prosecuted it well. Whereas in manager with really great taste and network precision of process, maybe network to some angels, maybe network to some communities that can be... The communities can be varied, can find these really interesting companies at an early stage. And I think that there is a bit of a myth that, look, if you're a third time founder, you know the market, you've got lots of... You got a team, you got access to all the pieces, and you get called by one of the big firms. You're just gonna go with them. It's just simply it's just simply not... I don't... It doesn't bear out. Founders choose VCs for all kinds of reasons that we we make choices, relationship, the help they need, the kind of person that they want at that time of their firm, their knowledge that perhaps some of these larger firms made very early checks are not as helpful as they may advertise or differently helpful.
00:43:55 · Gavin Ezekowitz, David Weisburd
There are plenty of reasons that different kinds of founders choose different kinds of kinds of managers. And so I think for us, it's always about what is the likelihood in this environment that the network and the process of a manager will lead them to very likely find the quality of company that can be that you know, outstanding returner. And that, you know, I think that that is a very interesting very interesting assessment process. And because there's so much qualitative that goes in there. There's so much about understanding the meaningfulness of that network, about how they how they build out those relationships, how much of that network needs to stay current. You know, I think if you... Let's use SpaceX as an example. If you left SpaceX today, I'm not sure what the half life of your relationship... Your your network might be. Might it be a few years. It could be shorter. It could be longer. But it's probably not forever. Parts of it might be. But right now, it's very meaningful. So, if you left today and you start a fund and you're well networked to all these people who might also be leaving certain companies or whatever, that could be really powerful. Is it really wonderful today? Well, where are you three funds down the line? Like, how you may have evolved that? [00:45:34] S1: Is your advantage sustainable?
00:45:34 · David Weisburd, Gavin Ezekowitz
[00:45:34] S1: Is your advantage sustainable? [00:45:35] S0: Is your process and that advantage sustainable? Are the things that you did to generate? Because, you know, if you get to a fund two, you've probably done okay in your fund one most often. And fund ones are wonderful because there's there's always these two or three companies that folks have in that fund one that are like their profound observation. [00:45:57] S1: They do empirically perform really well. [00:45:59] S0: They do. Yeah. And and it's it's interesting because it's the most difficult thing to to find and to underwrite those funds, and there are some exceptional allocators out there that And they're all almost by definition unbranded. Yes. Well, I [00:46:13] S1: first first ever there have been.
00:46:13 · David Weisburd, Gavin Ezekowitz
[00:46:13] S1: first first ever there have been. [00:46:14] S0: Yeah. And often, you know, it's a single individual. And it's more difficult than people might perceive, not only to find these folks, but to correctly judge that they can do the job properly. Because it's not a simple job. And it's often quite interesting. I'm sure you find it yourself. You'll meet someone at Fund two or three, and you'll ask them about fund one. And they may have done... Had some amazing returners, and they'll tell you all the things they did wrong. Yeah. Because invariably, they've done a ton of things wrong. And the things that they've evolved and processes and so forth. One of my favorite stories in that regard is a fund who had an exceptional performance in Cursor. And the manager only afterwards realized that part of the challenge of their allocation process was that mathematically, if they didn't get enough of the company in that pre seed stage, because of the nature of how they were investing, their returns just got so diluted even when you got these massive winners at a fund level. Like if it was your individual investment, it'd be great. But at a fund level. And they had to adjust their whole allocation methodology, say, Look, we've got to rethink this because we need more capital weight slightly later. We don't want to put it all super early. Their approach is different, but we need to be able to rebalance some capital slightly later and to follow on because otherwise, when we do have these asymmetric returners, it's just not meaningful enough.