On this special segment of The Full Ratchet, the following Investors are featured:
- Vince Hsieh of Cypress Growth Capital
- Aaref Hilaly of Bain Capital Ventures
- Mike Maples of Floodgate
We asked guests to describe the biggest change to their investment philosophy over the course of their career
The host of The Full Ratchet is Nick Moran of New Stack Ventures, a venture capital firm committed to investing in founders outside of the Bay Area.
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Transcribed with AI:
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Welcome back to TFR on today’s special segment, we ask guests to describe the biggest change to their investment philosophy over the course of their career. Here’s the special segment called rewriting the playbook.
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Today’s special segment we have Vint Shea of Cyprus, how has your philosophy or approach to investing changed over the course of your career? And what’s one belief or approach that you used to have that has since
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changed? It’s a very common trope to say that you want to invest in founders who have lived the problem, had the pain, I’ve been in the industry for 20 years, or subject matter experts, and I still very much believe that’s generally true for most investments you want to invest in subject matter experts who know the space, but I think that’s a recipe for great kind of linear growth, or linear success, where you’re incrementally making something better the industry you came from. You live this pain. You wanna get rid of the pain, so you do something that makes it incrementally better. If you want exponential change, though, oftentimes it actually helps if you wanna disrupt something from the out, it’s come from the outside, someone who’s not from that industry, not from that whatever space, that could mean they’re younger, that could mean they’re just from a different space, and they’ve lived experience somewhere else that they can then apply to that new industry or the new industry they’re in. And if you really want to disrupt something and have exponential growth versus just linear growth, I think sometimes actually helps to have that outside perspective. Commonly, people talk about Elon Musk disrupting industries that he had no experience with before, right? So I think that’s one thing that I’ve evolved my my thinking as an investor on in the few years I’ve been doing this.
1:56
On today’s special segment, we have Arif halali of Bain Capital ventures, Arif, how has your philosophy or approach to investing changed over the course of your career? I think I
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used to be more analytical, and it’s now more intuitive. So before I might ask, so does this make sense? Can I see a path to a huge company? What analysis can I do to try and back that up? Now I ask myself, more, does this feel like an outlier? Is there something unusual about this business that challenges my view of the world? What is it that sticks out about it, and how does that make me feel? And what does it make me think could be possible here? So again,
2:40
on today’s special segment, we have Mike Maples Jr of floodgate. How has your philosophy or approach to investing changed over the course of your career?
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It hasn’t changed as much as it’s been underscored in certain ways. So like what I’ve it’s funny. I was at YC demo day not long ago. I was hanging out with some folks, and Kirsten Green from Forerunner was there, and we’re hanging out and talking about some things and near misses and ones that worked out, ones that got away. And then there’s some younger folks around us too, asking questions, what it was like and all that. And I asked Kirsten, I said, as we’re talking about this, I got a question for you. Have you noticed some founders when you met with them, they just emanated greatness. You just knew they were great. And, and she said, Yeah. And I said, Have you ever passed on one of those because of some other reason in the diligence and you forgot that fact? And she’s like, yes. And, and I said, Do you regret when you’ve passed in that way? And she’s like, hell yes. It’s like, and I’m like, I know me too. And we both started commiserating. We’re like, you know, what we realized was that greatness in a founder, true greatness, is just so rare, and it’s easy to overlook the fact that somebody is not great because you like the idea, or you’re attracted to the space conceptually, but it’s also easy to forget that when you’re in the presence of greatness, you should just give them money and wait to be amazed, right? And so, you know, like, and we’ve gotten this right before too, like Kyle Vogt with Cruz, he had no prospect of how he was going to make money. He was going to make these self driving Robo taxis that compete against everybody. He was going to compete against the ride sharing guys, Tesla, everybody didn’t have it working yet, and the team read me the riot act in our team meeting. They said, You can’t even propose a possible way that the dots are going to forward connect this idea, and fortunately, we don’t have a voting system at floodgate, so, but you know, Cruz ends up getting bought by GM for a little over a billion dollars. Pretty quickly, pretty quickly. Yeah, and so one of the young folks on the team who had just joined said, man, it’s really a shame that we talked you out of doing that cruise thing. We. Had done well on that. And I said, Oh no, we invested in cruise, right? Like, I, I heard what you said. I just didn’t agree with you, right? Like, I just, I just thought that Kyle vote is a genius, and they made us 94 times our money on Twitch. And you know, when you when Kyle vote starts a startup, and you have a chance to invest or on the ground floor, don’t overthink it right, like this is IQ test. And so I don’t have to know exactly how he’s going to pull it off to believe he’s going to pull it’s kind of like when this year is a bad example. But sometimes, you know, you see like Patrick mahomes, and I remember, I’m a 40 Niners fan. I was at the Super Bowl when they played the chiefs, and it’s like, the end of the game, and chiefs have the ball, and it’s like, Oh, crap, it’s that mahomes again. And I don’t even know what play he’s going to run next. I just know that I’m tightened up, and I’m just like, this is not going to end well. And some of these great startup founders are kind of like Patrick mahomes of the field, right? You’re no totally. You don’t have to know what they’re going to do next to believe that they’re going to amaze you with what they’re going to do next. And so I’d say that’s the number one thing I’ve learned that’s a high order bit is that greatness is very rare, and have a high bar about what greatness looks like. But when you encounter it, get involved however. You can love it.
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That will conclude this installment of investor stories. If you’re enjoying the program and would like to see it continue, take a moment and leave a five star review in iTunes. Okay, that will wrap things up for today until next time over. Prepare, choose carefully and invest confidently. Thanks for joining me.
