How I Invest with David Weisburd
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?
00:08:02 · David Weisburd, Jerry Ye
[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? [00:08:12] S1: So I think anyone that was looking at TalentSignal a couple years ago would have seen that on average, Anthropic was hiring people with, you know, more... In terms of, like, a pedigree type signals, like better schools, better experience, and on average, that actually had them surpassing OpenAI at some point. Right? So I have to caveat that this is kind of like an art versus science here because, you know, like, how much weight do you give to, like, a senior manager versus a junior person. Right? [00:08:49] S0: So you're aware of this inflection with Anthropic having better talent before OpenAI. Maybe you could double click on that. Quantify what exactly does that mean? [00:08:59] S1: In terms of what you would see on a profile of a person in terms of a resume, it's, you know, what schools they went to. That's a signal for selectivity. What other companies they worked at, where they went to, right, how many people went there, what churn looked like. And by essentially doing that as well as, you know, understanding how much capitalization those companies had was the outcome, what were the founders, etcetera. You can start putting together a formula for how to rank people, and one that's more technically focused in terms of engineers will show that Anthropic was leading OpenAI three, four years ago.
00:08:59 · Jerry Ye, David Weisburd
[00:08:59] S1: In terms of what you would see on a profile of a person in terms of a resume, it's, you know, what schools they went to. That's a signal for selectivity. What other companies they worked at, where they went to, right, how many people went there, what churn looked like. And by essentially doing that as well as, you know, understanding how much capitalization those companies had was the outcome, what were the founders, etcetera. You can start putting together a formula for how to rank people, and one that's more technically focused in terms of engineers will show that Anthropic was leading OpenAI three, four years ago. [00:09:38] S0: Obviously, talent is arguably the most important factor when it comes to the success of a startup. What's right up there with talent? [00:09:46] S1: Talent is definitely super important because it spans all sectors. And especially for, like, enterprise, that might be the only thing that you have. But for a lot of other sectors, like consumer or gaming, fintech, prosumer, there's actually a lot of signals from alternative data panels, especially the credit card data, web traffic, app traction that you can leverage to identify traction. And some of them are actually so granular that you can actually figure out what retention rates look like as well. [00:10:16] S0: What exactly are you looking for when it comes to revenue?