Venture Stories: Keith Rabois on How He Invests, Forming a Founding Team, and Funding “Ridiculous” Ideas

Podcast Notes Key Takeaways Keith’s ideal founder: Someone who has a specific idea they HAVE to pursue that they can’t stop thinking about“Startups have roughly the same amount of pain to go from 0 to 1, regardless of whether 1 is a $1 billion company, $100 million company, $10 billion company, or a $100 billion company. You basically have this fixed cost of pain, so you might as well do something important because the pain’s going to be the same. You might as well get the outcome that offsets the pain.” – Keith Rabois“I tend to like things that are super ambitious, that are almost ridiculous” – Keith RaboisJust how ridiculous? – “I want half of my VC friends to laugh at an investment I make. If half don’t laugh, it means I’m not taking enough risk, and the project isn’t ambitious enough.”When selecting a co-founder/group of co-founders:Consider the core risks to your companyThen, find people world-class in each of those risk areas (make sure you have word-class talent to battle each of the core problems)Make sure they agree with you on first principlesIn a startup, domain expertise isn’t all that important“People who are experts tend to know what you can’t do very well. They’ve mastered the rules. They don’t ask enough why questions; ‘Why can’t this be done this way? Why not?’ I like people who don’t know what they’re tackling, but they’re fast learners, and they quickly find people who have the history and experience. Then, they’re able to extract the critical information out of them. They’re not blind, they’re just good at figuring out what they need to learn really fast.” – Keith Rabois

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Keith Rabois (@rabois), partner at Founders Fund, joins Erik on this episode. It was recorded live at an On Deck Fellowship event in San Francisco.

They discuss:

- The kinds of companies and founders he looks to fund, including why he wants half of his VC friends to laugh at how ambitious and ridiculous the companies he’s funding are.

- Why going from zero to one involves roughly the same amount of pain no matter whether the “one” the company gets to is tiny or a billion-dollar-plus enterprise.

- Some of the different spaces he’s invested in recently and how he’s navigated the idea maze in different sectors.

- Stories from the early days of PayPal.

- Why he likes regulated markets, and why he says “the more legal risk, the better.”

- How to think about creating a founding team, and why you need to absolutely make sure you and your co-founders agree on first principles.

And of course, they also discuss basketball and politics.

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Check us out on the web at villageglobal.vc or get in touch with us on Twitter @villageglobal.

Venture Stories is brought to you by Village Global, is hosted by co-founder and partner, Erik Torenberg and is produced by Brett Bolkowy.