How I Invest with David Weisburd
00:02:55 · David Weisburd, Jerry Ye
[00:02:55] S0: Let's start with talent. A lot of venture capitalists have been trying to quantify which founders are gonna be most successful at the very early stage, which is where you focused on. What do we know today about what kind of founders succeed? [00:03:10] S1: This really depends on the sector. Right? And I I remember like an early study that showed PhDs in enterprise tended to have better outcomes. Right? So domain experience, if your particular niche or your sector requires that domain expertise. [00:03:28] S0: Something like a very hard and technical problem.
00:03:28 · David Weisburd, Jerry Ye
[00:03:28] S0: Something like a very hard and technical problem. [00:03:30] S1: Yeah. And this is the reason why, if you look at NeurIPS, right, I think from fifteen years ago, was it was like a small niche, little academic research conference for 200, 300 people. Now it's talking about 20, 30,000 people. Right? And VCs are constantly there on the conference floor trying to source and identify the next deal. But that doesn't really matter at all for consumer companies. Right? Where you might have a very strong pedigree, founder and team, but you don't have traction. Right? And traction in that case is actually super important. So it really depends. Right? And and it's not just the founders, it's also who you're able to attract after you start the company. So your your founding team, the people you're able to pull away from the max seven. Right? How you're getting these additive people, because one way that I like looking at it is similar to a venture round. Right? Each engineer or each product person you're adding that could have made an extra 100 k, 200 k per year at a max seven could be seen as like a mini round. Right? And in aggregate, that's actually a very strong signal in terms of conviction or product mark... Or, I mean, in terms of conviction for the company. [00:04:44] S0: Said another way, they could have gotten a higher salary at a max seven firm. Instead, they're foregoing that salary for stock. So they're betting with their own career and with their own time into that startup. And that... That's a very strong signal.
00:04:44 · David Weisburd, Jerry Ye
[00:04:44] S0: Said another way, they could have gotten a higher salary at a max seven firm. Instead, they're foregoing that salary for stock. So they're betting with their own career and with their own time into that startup. And that... That's a very strong signal. [00:04:58] S1: Yeah. I mean, that's exactly what venture capitalists are doing as well. Right? They are, you know, investing their capital for carry or or stock going forward. And this is the same thing. [00:05:09] S0: The difference there, you could argue, is that venture capitalists maybe have two, three, four meetings with the team. Yeah. And somebody that's quitting Google to go join a startup is probably doing a lot more diligence. It's probably talking to a lot more friends that work at this company. There's much higher level of granular diligence being done by the employees joining than by the actual investors. [00:05:30] S1: Yeah. And especially the ones that are more connected or the ones that have already had multiple outcomes. And that's, you know, like, going back to the talent signal. Right? That's probably what you wanna consider as well as you're identifying, you know, who's joining the team and kind of quantifying each individual that joins because someone that, you know, joins fresh fresh out of college versus someone with multiple, you know, unicorn outcomes is a very different signal. Right? Ad[00:05:57] S0: This episode is presented by Juniper Square, the operations partner for private markets. Perhaps it's obvious, but why the difference?
00:05:57 · David Weisburd, Jerry Ye
Ad[00:05:57] S0: This episode is presented by Juniper Square, the operations partner for private markets. Perhaps it's obvious, but why the difference? [00:06:07] S1: They have a lot more choice. Right? So it's also similar to venture, like, who's on your cap table. Right? If you have a top tier venture fund, that's... There's a signal there. And it's also the same as if you're able to track someone that, you know, has already had an IPO at Facebook and then decided to go to OpenAI, and now they join your startup. Right? That's saying something. [00:06:29] S0: This concept of this talent magnet, Elon Musk famously is the greatest talent magnet. He's able to just recruit the very best. At some point, I think he had five of the top rocket engineers at the very early stages of SpaceX. And this had become this consensus view that if you could attract talent, arguably even more important than venture capital. Do you think that it's the fact that these engineers are making the best choices on the companies that's driving that? Or do you think that the engineers themselves, the top engineers are the ones that are building these amazing companies?
00:06:29 · David Weisburd, Jerry Ye
[00:06:29] S0: This concept of this talent magnet, Elon Musk famously is the greatest talent magnet. He's able to just recruit the very best. At some point, I think he had five of the top rocket engineers at the very early stages of SpaceX. And this had become this consensus view that if you could attract talent, arguably even more important than venture capital. Do you think that it's the fact that these engineers are making the best choices on the companies that's driving that? Or do you think that the engineers themselves, the top engineers are the ones that are building these amazing companies? [00:07:00] S1: A little bit of both. Right? So the team definitely makes a huge difference, but the company itself culture wise also matters too. Right? Like, you could have a company that's attracting top engineers or top product people, and they're churning employees like crazy. Right? So that's actually another signal that you might wanna look at as well. And another example of this is, I think if you just looked at LinkedIn data or talent data, that a couple years ago you saw that Anthropic was probably on average attracting more interesting talent than OpenAI. Right? And if you look at it from a churn perspective, and it might be a reflection of the evaluation increases now, but if you look at churn, Anthropic is churning engineers at a lot lower rate than OpenAI. And so it is a combination of the people and who they're able to attract and what they're able to build, but it's also a reflection of the company and the culture, what they're able to accomplish.
00:07:00 · Jerry Ye, David Weisburd
[00:07:00] S1: A little bit of both. Right? So the team definitely makes a huge difference, but the company itself culture wise also matters too. Right? Like, you could have a company that's attracting top engineers or top product people, and they're churning employees like crazy. Right? So that's actually another signal that you might wanna look at as well. And another example of this is, I think if you just looked at LinkedIn data or talent data, that a couple years ago you saw that Anthropic was probably on average attracting more interesting talent than OpenAI. Right? And if you look at it from a churn perspective, and it might be a reflection of the evaluation increases now, but if you look at churn, Anthropic is churning engineers at a lot lower rate than OpenAI. And so it is a combination of the people and who they're able to attract and what they're able to build, but it's also a reflection of the company and the culture, what they're able to accomplish. [00:08:02] S0: Take me back to this because you noticed the signal, this Anthropic signal before Anthropic became Anthropic today. Tell me about that. What exactly were you seeing in the data?