The below is a full (unedited), machine-generated transcript of a Youtube session / podcasting episode I recorded with Delian Asparouhov of Founders Fund in Q3 2021. You can view the video/listen to the podcast on Youtube, Apple Podcast, Stitcher or wherever you get your podcasts.
Erasmus Elsner 0:06
All right, welcome everybody to another episode of Sand Hill Road. I’m super excited to have my guests with me today, Delian Asparouhov. I hope my Bulgarian pronunciation was correct. He’s a principal at Founders Fund and also a founder of Varda Space. I’m really excited to have you here with me.
Delian Asparouhov 0:20
Thanks so much. I’m excited to be here.
Erasmus Elsner 0:22
Where does it find you? Is it in Miami?
Delian Asparouhov 0:24
I’m a Miami resident now as of eight weeks ago, no city in the world like this and you know, moved here in the great state of Florida, which feels funny to say but the saying in Florida is further north you go the further in the south you are. So thankfully by being down at the tip of it, feels like you know, major metropolitan.
Erasmus Elsner 0:48
I mean, you’re working together with Keith Rabois, who’s been quite open about Miami becoming the next tech hub. But maybe to kick things off, let’s talk about your content creator journey. Whenever I have another fellow podcaster on the show, I’m really excited to talk about you know, what’s their, their mission? What’s the niche segment that they like to cover, and you’re the content producer of a podcast called “The Operators”. First of all, we both started around the same time, and I think it was second or third quarter of 2019. And everybody’s asking why another tech podcast? But what I like about yours is that you’re sort of covering what’s not otherwise covered. I feel a lot of the tech podcasts are about founders, maybe about venture capitalists. But if you look closely, there’s a second line of defence in some of these breakout companies and you had operators from companies such as Allbirds, Spotify and Shopify on. People who are in the trenches on a day-to-day basis. What gave you the spark to cover those instead of the more typical founder first line of defence people?
Delian Asparouhov 1:50
Yeah, I’m trying to remember the exact moment that inspired the tweet or kicked it off but I think it was basically just like coming back from a board meeting where I was just watching you know, founder where he basically you know, got to you know, stand back in his board meeting and just his executive team came out and presented everything and there’s just this like, you know, stark reminder that a lot of the really great breakout companies the CEO is basically is responsible for like storytelling, fundraising and an executive recruiting and then they basically don’t touch anything in the company. They just, you know, have the executives run the business on their behalf basically. And so I felt like that that was a somewhat, you know, under told, you know, story and then, you know, one day was Yeah, just like, you know, that I think, like, had just gotten out of the shower and was like, you know, what, if like, a way to sort of cover these people as I do a podcast, right, supposedly refuse to interview any VCs, any founders, and I suppose, you know, only interview operators. That tweet went super viral. It sounds like oh, well, I kind of set it as maybe a half idea, half joke, but yes, I really need to, you know, follow through on it now. And so yeah, I started off by interviewing a couple of the sort of favourite operators that you know, I’d ever worked with my first guest was Kelly right, she was basically first sales hire at tableau, just like analytics company basically took them a company literally from you know, at the time, when she joined the video, like 500, or 600k in ARR, she grew that team all the way to a billion ARR. And being a public company, over the course of I think it was like 16 years.
Erasmus Elsner 3:07
I actually listened to that episode back when it dropped and I remember finding it quite inspiring that she was sort of saying that she had like, literally no qualification for the job. So you can see, I’ve been with your show from the beginning. I think it’s a great segment that you’re covering there, how do you sort of come up with the guests, because it’s not all Founders Fund portfolio companies, from what I can see.
Delian Asparouhov 3:27
Yeah, I’ve got to admit that my EA helps me a lot with the podcast, you know, she helps a lot with sort of like the research, the editing, the actual publishing, the general you know, marker that we use in our research is we typically try to find companies that recently cleared or $3 billion. So we relatively regularly repol, that list and we basically look through the team, ideally try to find people that sort of match Kelly’s, you know, persona, ie, they joined relatively early, so you can speak about the early days, the company, but then also scaled with the company, that third part is the particularly difficult part, right? There’s a lot of early employees at companies that aren’t able to turn into managers and executives, as the company grows, but you do, you know, sometimes find those rare instances or somebody that you know, in the first 10 employees, and still ends up being there, you know, a decade later and a significant, you know, part of it and so, that’s the like, you know, ideal profile, obviously, you know, some have been from, you know, recommendations from prior guests, the most exotic one is the recent one that we did with the president of instacart. But again, you know, extremely influential edits of card, a lot of the reason why they, you know, really exploded due to pandemic and managed to survive, you know, sort of, you know, having to scale you know, whatever 7x over the course of like, you know, three months in hire 200,000 people was because of him. The way we discovered him was he actually was a listener of the podcast and kind of realises like, Oh, I think I match these guests. And so we just reach out. He’s like, Hey, I really liked the podcast. I think I would be a good guest for you, would you like to have me on and I was like, Oh my god, yes. And it was also one of those moments where I was like, This podcast is so worth my time. It isn’t necessarily like, bringing more founders in deal flow. It’s not like directly related to like my core day to day job, but I just really admire people like him where it’s Like, they’re the sort of bread and butter of self evaluate, it’s like the most limited like resource in some ways. Like, yeah, there’s a lot of there’s a lot of founders, especially in the seed stage that, you know, get funded, there’s a lot of VCs, there’s a lot of dollars, there’s a lot of, you know, individual engineers, but the people that founders actually recruit, that have had experience building companies that can help them actually build that company, that’s probably, in my opinion, one of the most limited resources and Silicon Valley until people was talking about others limited resources, like, you know, world class years, well, it’s mostly that like, there’s very few CEOs, it could be such great recruiters, funders, executives, but if the executives were sort of in oversupply, I think I’d actually be sort of more, you know, companies would be successful, but those stories are very rarely, you know, highlight it. And so once every three or four months or so we have to come up with a whole roster. And you know, I do my best, it’s a lot easier, for example, in companies where I’ve been deeply involved, so for example, you know, fair, you know, I’ve gotten to see sort of, from that initial seed round, you know, right before yc, all the way through to, you know, their latest valuation that just got announced was, you know, 7 billion. And I’ve gotten to watch the company, you know, from afar, but you know, because of that, sort of have gotten to know the team, you know, a lot of the team worked with me, I worked at square While they were there, it’s a lot easier for me to know who has been very influential to companies, I’m so close to it, versus some companies that are outside of the portfolio, it’s not always, you know, as easier as obvious who to interview. And so sometimes we have to do a lot of reference checking and ask him to see, and things like that to figure out who would be the best person to interview.
Erasmus Elsner 6:18
I absolutely love that. And I mean, I think I can’t tell you how often I’ve heard the Brian chesky sort of talk about the founding story with a design conference, or the doordash founders talking about that, the Palo Alto macaroon store that that gave them the idea and and these, you know, these, these stories get told over and over again, and you become a little bit inundated with it, you know, it almost feels scripted at one point in time, you know, whereas the other things that you cover, it feels like it reminds me of, of meetups back when there were still physical meetups in the Bay Area. And then we just walk into instacart and talk to the head of data science, you know, learning new stuff, and actually new insights from within the company, maybe let’s segue to your own operator experience. And you started out at the young age of 19, dropping out of college to pursue the founder life and then later worked at Teespring. As an operator, I had Lee Edwards, who you might know who is the CTO at Teespring on the show, as well maybe talk a little bit about your own operator experience.
Delian Asparouhov 7:15
Yeah, I mean, I had my first software internship, I think, actually like the summer between ninth and 10th grade that I think was like the beginning obviously, that was a very sort of small company. It wasn’t necessarily in Silicon Valley, like the first time I started getting into the world of Silicon Valley was actually when I was 18. via this internship at square when I interviewed It was about 100 people when I joined was about 130. By the time I left over the course of my internship, we were almost 300 people so you know, got to watch the company go through a tonne of hyper growth a tonne of you know, products that got shipped while they’re like very, very earliest version of like, you know, sort of square cash was just being launched. And it’s called square wallet back in the day, you know, they like pm on my product that I you know, worked on for was actually Brian Grace adonia, who now runs on square cash. And so, you know, in some ways, there’s just like, there’s very formative experience, you know, Keith raboy, and the person that I like, you know, learn the most of our venture capital is the clo, it’s where that original sort of three or four months is what really sort of brought me into Silicon Valley and got me excited about maybe not finishing my degree in and said, getting back out to area as soon as possible. See, I learned learned a lot from there, you know, I got to just watch how engineering teams got run, right, I was a part of the Android engineering team that was quite high quality at square, we had these you know, all hands every week, where jack and Keith who both present to the entire team actually remember this one very particular presentation that Keith did maybe the first week of august 2012, where for the first time in the prior month in July of square hadn’t grown 20% month over month would only grow like two or 3% or something like that the company is kind of in a panic, because like up until then, like it just been super solid and consistent growth. And I remember Keith gave his incredible presentation and breaking it down which at the time, I thought it was like statistical black magic. Now I recognise it as like it was a cohort analysis, I provided a very accurate cohort analysis that basically just showed look every year in July, because we’re so in depth to the volume of SMB businesses in the United States, a lot of people just go on vacation, and they don’t spend as much money at their local SMBs. And so despite the fact that we actually did add a huge new cohort of businesses, it wasn’t enough to mitigate the fact that we’re now a large enough business that our our pre existing horrible cohorts dipped during July. And so it looks like we’re flat but he basically was like, I can predict that in August will actually grow 25% we’ll have this new cohort and we’ll have another one and all like to rebound. And then lo and behold, you know, we did end up growing you know, 25% in August does also like my first inspiration to like, oh, there are ways of operating in Silicon Valley where you use math and statistics and the principles behind computer science, but not for writing code but instead for like operating the company. It was that first spark where I was like, ah, like, you know, I remember like leaving that you know, all hands and be like, Whoa, I want to work with that guy. And like, like, I want to do his job. Like that’s the job that I want to do not the software engineering job. So yeah, I ended up applying for the teal fellowship. You know, sort of later that year called Keith is a credit process. I actually like emailed him and was like, hey, Keith, he at the time and switched over to being a venture capitalist. And I was like, Hey, I don’t know if you remember me while you’re CLL. I was like a random Joe Schmo intern but I’m thinking of dropping out and starting a couple I would love to talk to you and get your advice he gave me a bit of advice on the company I ended up like grabbing lunch with him but I moved out to the Bay Area and dropped out and then you know convinced him to actually join the teal fellowship committee tells you to create like what they call like an advisory board where it’s sort of like a group of people that you admire in Silicon Valley they just grab dinner with once a quarter and so I asked him to join that and started to grab dinner like once a quarter eventually and one of those dinners I started talking about like you know soccer and I ended up you know, realising that we had the shared love of soccer and so ended up being starting to get to feel better through that as a sort of dropped out and he started working on that and gal You know, it started to teach me about a lot of things that were very different let’s say that like the square experience right part of it was you had to basically do sales for the first time right to go and like you know find you know individual customers go talk to them and want to you know, purchase our product is like a autism you know, therapy sort of EMR like workflow tool I had to learn about fundraising right eventually you know, I convinced you know, Y Combinator let us in and for key to actually invest as an angel rather than just meeting with me quarterly and a couple of other investors you learn about marketing I had to go to conferences and you know pitch a bunch of you know, our you know, potential customers all at once I had to learn about hiring hiring your first you know, sales interviewing my co founder hiring our first like marketing hire you just learn a much more diverse set of skills when it’s like entirely sort of like your company that was particularly good at any of these No, I both was not a particularly good market I got a particularly good salesperson I was an OK fundraiser and you know, honestly, I kind of dropped the ball on the software engineering side because I you know, my head was in so many different places, you know, at once, but you know, we got the company to like a kind of Robin profitability yet abdun flowed, but you know, there was a couple months there where we actually cleared You know, I think, like roughly 10k MRR and so, it was enough to kind of, you know, pay the rent and keep the company afloat. But yeah, for about three and a half, four years, sort of banging our head against the wall never really figured out how to create a scalable revenue engine and you have sort of soft shutting down the company and we’re like, they didn’t really turn off the servers or anything, but at some point, just the team kind of went off and started working on other things. And I joined Teespring partially through some influence from Daniel Grove, Sam Altman, and then partially Keith as well and got to join as the VP of growth and that was a really exciting sort of operating experience where you guys like whatever I was a 22 year old one time failed founder at the time and typically obviously, a 22 year old female founder definitely can’t get a like VP of growth job but Teespring at the time was somewhat floundering. They hadn’t been growing anything declining revenues for several years and so sort of executive team and the founders were willing to kind of take a bet on me I really feel like that was like my first like, I don’t know more real operating experience where I didn’t have to deal with like all the jobs of the CEO I like fundraising and like you know managing the finances etc I could truly just focus on like operating was given a business line that was about I think $15 million or so a year you know, when I joined gmv management over the course of like six or seven months grow it to roughly I think $70 million a year largely through just like you know, I had a team of maybe you know, 10 or so engineers, a product manager or three marketing folks sort of you know, a finance slash controller type there’s a decent team that I started like handed grew over time and sort of you know grew that you know, business lines out that is where I learned everything from God like what it’s like to actually report to like a real board right Keith is on our board now to do that every single week both managing up and managing sideways to you know, maybe executives that I wasn’t a huge fan of or something that I was a huge fan of and wanted to get more close to managing down in terms of keeping the team that I was working with excited inspired and you know shipping on a regular basis and focus on sort of like our core you know, metrics they’re even actually starting to learn more about sales I took over this like sales team that worked in like, basically we called like creator sales, everything convincing, like YouTubers and musicians to basically use Teespring which is a competitor to like red bubble or Zazzle for any listeners that don’t know that are customink utilising merchandise online to convince like YouTubers and things like that to switch the merchandising stores to us to actually learn sales and I went in you know, travelled all around LA and convinced everybody from like, you know, Lil Dicky to this like youtuber that made, you know, Minecraft reality TV series because he switched over their merchandising stores to us. And so learn the world of sales and how sales management like I had a team that had like, you know, quotas that they had to, like deliver to and it was just like, you know, you get thrown into the deep end in some ways. It’s like, you know, when it’s like larger startup like that you’re given a lot of responsibility, but learned a tonne from that.
Erasmus Elsner 14:08
Absolutely. And I know from the inside that there was a point in time at Teespring or you know, a lot of different ideas were bounced around because as you said, they were floundering a little bit so definitely wasn’t the easiest operator role to take on. Maybe let’s talk about your current project, your current operator role with the company that you actually incubated at Founders Fund Varda space, it was announced, I think, in last December 9 million seed round led by Founders Fund along with Lux capital. It’s quite an exciting company. And I think you mentioned that in the past, you would have to make an exit like Elon Musk in a boring FinTech company in order to get to space and nowadays, you can start out right working on the really big frontier tech Varda space. The way that I understand it is manufacturing in space. And it sounds crazy and when you heard first, this, I guess this is sort of what late stage Capitalism is the transition the human species to the interplanetary world. When I read the press announcement I my first thought went to Okay, there’s probably going to be 3D printing but it’s not a lot of the company is in stealth. Sure you probably won’t get too much into the details. I think you mentioned in the past that at Founders Fund, you could theoretically get to inbox zero but now having the second baby Varda it makes it a bit more difficult to talk a little bit about what you’re building there.
Delian Asparouhov 15:28
You know, I think there’s a lot of interesting companies that work on what I call sort of space manufacturing for space, right, so whether they’re doing 3D printing in space or building large structures up there, those are you know, exciting initiatives but I think of those as more like science fair projects where you know, they’re really great demonstrations of technology but unfortunately there’s not really many people up there that want to buy 3D printed materials or buy you know, structures we’re explicitly space manufacturing for Earth This isn’t an idea that is you know, particularly honestly you know, novel, people have been talking about it for decades it’s just only more recently with the dropping launch costs become commercially viable over the course of the last 15 years, the ISS has done really extensive work on showing a variety of different materials that have a lot of benefit from being fabricated and manufactured in microgravity, everything from semiconductors that can be reduced at high quality to human organs that can be 3D printed up there that just can’t be done down on earth to cancer drugs having higher potency or better yields, fibre optic cables also basically being produced with higher quality as you know, for you know, maybe examples of products and so our job is basically to take some of the research been done the ISS transitioning sort of to commercial scale and make it more commercially viable by making a sort of, you know, sort of full stack independently run sort of like space factory. In terms of you know, my time definitely like ebbs and flows. So, you know, I sort of started taking the idea more seriously sort of like late July of 2020, from late July until basically January 19 2021. It like 80 to 90% of my time was honestly on Varda there is you know, basically didn’t i didn’t invest only did one sort of very small sort of seed stage check at the time was actually into a space company that I was actually researching because of artists, even then it was, you know, it wasn’t like really, you know, trying to invest sort of accidentally happened. I’ve been thinking about sort of microgravity manufacturing for almost a decade but it’s very different than really starting to you know, do it in practice. And so talking to all the main you know, you know, Principal Investigators of various research groups that were working on this finding, you know, co founders for the business putting together the initial business plan, you know, putting together the fundraising, talking to people anyways, there’s a lot of sort of upfront work to you know, get the company going, like I was effectively our CFO for a while, like, yeah, Incorporated, the company did the payroll data’s insurance, got us my first office, and then on January 19, thankfully, we had I think 11 people start basically, same day, and that took a lot off my plate does do a lot of those day to day responsibilities sort of shifted to them. Since then I’d probably estimate it’s probably a third of my time. And the best advice that I’ve gotten is actually you know, from your Stephens, you intimated Andrew, the previous intubation out of Founders Fund, which was to basically not try to cordon off particular days to be like Varda, or FF that ends up actually being sort of too difficult to do when the task is kind of constantly shifting between the do guide estimate over the past, like, you know, five or six months since January, is anywhere between, you know, third, or maybe half my time, you know, sort of week to week, but it’s all jumbled all throughout, right? Like, you know, today my first meeting was Varda my second and third meeting where Founders Fund , then back to Varda, and then I have another person to interview after this. And so it’s kind of back and forth all day. And then the two inboxes on my screen are literally just like, you know, basically, you know, next to each other and yeah, you know, between the two of them, it’s a lot harder to get to inbox zero now, occasionally image to do it, but it typically involves a lot more work. And then yeah, this is part of the trade off that I decided to make, you know, remember, you know, in August forever 2020 talking about this with my girlfriend and saying, like, Look, I’m gonna lose a lot of my weekends, if I do this. And you know, that definitely has turned out to be the case, like, for sure, from August 2020 to Jan 2021. I think I worked literally every single weekend all the way through. And I probably guess, you know, since 2021, it’s probably been every other like, you know, this weekend, I’m going to be in the founders front office in Miami for probably on a Saturday afternoon, and then Sunday, I fly to LA and then we’re working from the Florida office in LA for all of Sunday. And so you definitely don’t get as many weekends as you used to. It’s the only way to kind of deal with the whole to job thing.
Erasmus Elsner 19:11
Yeah, I mean, there there were not a lot of things to do during during a lockdown, I would say so. So probably the right time to just sort of spend your weekends working on new company and you brought in an external CEO I saw as well who has really substantial experience as an operator at SpaceX. I think having worked there for seven years. And I think you mentioned in the past that at one point, you realise that you’re a really ADHD kind of person sort of always bouncing off the wall, and that you could become a top 1% venture capitalist, because that’s sort of the right personality trait for that, but that you couldn’t become a top 1% CEO. And that’s why you you rather be like on the investor role and also now in this incubation role during the sprint as a CEO, as he said, but then taking a bit slower and handing it off, but to talk a little bit about how you found the CEO. How did this sort of all come together. I think it’s quite interesting as you don’t see VC incubations all too often.
Delian Asparouhov 20:05
Yeah, I mean, I’ve been thinking about the sort of microgravity manufacturing space for quite some time, actually, in January of 2020. Even before COVID, I spent some time talking to the various companies were working on related technologies to this and unfortunate came away thinking that, you know, they didn’t necessarily make sense for us as venture investments out of Founders Fund and so then as COVID head and I had a bit more free time in July or so I started thinking about Okay, how would I do this in sort of a venture backed away And the important thing was getting sort of independent from the International Space Station. That’s sort of the major flaw that I saw in most of the companies or research groups that are working on this and the particularly sort of difficult part of getting independent of the International Space Station is one you can get up there relatively easy now right you know, rocket lab and SpaceX will happily take your money and put you up there getting power and communications while you’re up there to the factory that part also relatively easily right you know, a decade ago, you’d have to custom build a satellite yourself you’d have to work with the government probably cost you 100 million dollars. Now you can basically buy a satellite off the shelf for you know, six to $10 million, depending on the exact specs that you’re looking for, until you can kind of buy that off the shelf. But the particularly tricky part is re entry. When you’re on the ISS you get a free ride down, you can go on a dragon or so use a Cygnus on the way back down to bring back the materials when you go independent of the ICS get a deal with rancher on your own and sounds like man, that part seems really tough and all the researchers that I talked with were like yes that’s why we’re going with the eyes as we don’t want to do our own reentry. So it’s like okay, well ideally the founding team for this type of business would have two people one a chief scientist that actually has done this type of microgravity manufacturing before which our co founder Daniel Marshall has done he sent I think four modules now up the International Space Station and then to you ideally want a CEO that has actually built a commercial reentry vehicle The only people that have ever built commercial reentry vehicles are SpaceX with you know, the crew and the cargo dragon and says like Okay, I gotta find somebody that was on the dragon project that had entrepreneurial experience and just have an idea I’d like you to want to like work with me on this I like man, the chief scientist that has done my career to manufacture there’s probably like five people in the world that have done that the like he a CEO that dragon and like has business experience it doesn’t have an idea right now like maybe 10 people in the world that I was like, there’s just I remember telling my girlfriend like July August, August I was like there’s no fucking way I pull this off. It’s like no five and have time in the entire world and we all get along and the founder splits all makes sense. Like, just seems very, very unlikely. You know, I spent a bunch of time basically with one of my fraternity brothers from college. He’s actually the head of starship production at SpaceX, whatever, you know, right now they’re testing starships. They need a new one produced every few weeks. He’s responsible for actually building it. He probably has already been out probably north of 100 engineers report to him and thankfully somebody that I’m quite close to it’s I went to him basically last August I was like, Hey, you worked on dragon talk with you, everybody that worked on dragon, which one of those is like potentially not just like an engineer for an engineer sake but actually likes the world of business? He’s like, well, there was this guy that was like a LEED avionics engineer but they’re like after go to SpaceX, like went and did investment banking and of all things you want to learn about business and entrepreneurship, any Angel invest on the side and I was like, put me in touch with him immediately. So yeah, I hopped on the phone with Will I think it was like the third week of August, we flew out to meet each other in person, I think like maybe like five or six days later after that first phone call, and then basically just started doing like weekly, you know, zooms, met together in person, I think roughly every month or so for the next couple months after that. And then also with our chief scientist, we had a couple of dinners you know, I don’t know why. And I think by you know, probably guess mid October so less than two months after meeting basically decided we’re going to pull the trigger, incorporate the company and start fundraising. And so it definitely we moved, we move pretty quickly.
Erasmus Elsner 23:32
It’s really wicked and I had a feeling that there was a really interesting story behind it because if you have like these requirements that only like three n equals three potential candidates for each role, that makes it a bit easier, but it also makes it quite hard to identify and maybe let’s segue now from your operator role to your role at Founders Fund. I think what’s quite interesting is how many venture capitalists describe themselves and then reflect how the founders describe them and I found quotes from you how you describe yourself as as a venture capitalist and then this really honest anonymous feedback on a backchannel website that actually reflects what you were saying almost to the word you mentioned that when it comes to personality traits your like your working style is like really extremely intellectually curious, you know your ADHD bouncing ideas off the wall, and then you have the sentence here. I probably didn’t mean it, literally. But you said, I don’t care so much for people’s feelings. I’m like radical candour style, putting things out there. If I don’t like something, I just say it straight to their face. And then I found this quote from a founder who said Julian’s greatest strength is his brutal honesty and the fact that he does not pull punches when we weren’t growing fast enough. He told us and he saw weaknesses in our business. And unlike many other of our venture capitalists, who were sort of pussyfooting around and he was really straight to the point he realised these errors. And Keith has really taught him well. Obviously great feedback if you get an anonymous potential troll mirror in your own perception, but maybe if If you had to reflect on how you would portray yourself today, and whether this still reflects how you think of yourself as an investor,
Delian Asparouhov 25:06
Yeah, I mean, I definitely I still think it’s accurate. I’m definitely in the world of investing, you know, for a different reason maybe than some other investors are there definitely some that come into it from a pure sort of financial background, right, especially some of this sort of, like crossover hedge funds coming in from, you know, a very deeply analytical and purely sort of ROI driven mentality, I definitely come at it from you know, having been a former founder, part of the reason I wanted to become, you know, a venture investor was I wish that there had been investors like me, I wish there had been somebody that sort of, was super direct with me, and didn’t pull back many punches, told me exactly what I was doing wrong versus right. And, you know, really, you know, helped me, you know, along my journey, it didn’t feel like I didn’t necessarily had that when I was working on Nightingale. And so yeah, I tried to, you know, represent that as best as I can, it definitely gets harder, as, you know, you sort of invest in more companies, you’re on more boards, your ability to sort of do that for every single company definitely gets, you know, tougher and tougher. But yeah, I generally say that, you know, those quotes are reflective of you, I think, part of why, you know, the founders that I work with, like working with me is because I give them very direct feedback, I, you know, help them you know, sort of think through particularly tricky problems and provide a perspective that is maybe a little bit broader than they’re able to, you know, see from their perspective from their individual company. You know, I only invest in companies where I’m actually sort of, you know, excited to get up every day and like, you know, work work on the company, like I don’t really invest in like, for example, like enterprise SAS, like consumer social, not because, you know, I don’t find that those could be potentially ways to make money. But because those aren’t, you know, companies or problems that I want to wake up every single day and work on, right, when you look at a lot of the companies I invest in, they reflect very deep personal passions of mine, a sleep, I’ve been Insomniac, you know, since I was, you know, 14 or 15. You know, investing in the company and supporting a founder is like a deeply personal mission. I would do that even if you know, Founders Fund didn’t exist, basically, most of the companies my portfolio reflect that.
Erasmus Elsner 26:57
I think that’s something that I also quite like about Founders Fund in general, that it seems to be a place where you can hold contrarian views. It’s something I really appreciate about the firm I guess. Maybe let’s talk about one of your portfolio companies. I saw a tweet of yours, that at one point one of your LPs, I guess it was back at Khosla asked you about what company you were most excited about and where you recognised the writing on the wall. Faire is a marketplace to connect independent stores and makers and help their businesses grow. Faire pays makers for their goods upfront and builds connections with retailers who want to carry them there also empowers local shops, helping them find curated products that are perfect for their shelves. And you sort of recognised some patterns there that they were on to something really great and something something bigger. Maybe talk a little bit about the journey.
Delian Asparouhov 27:51
To be clear, I can’t necessarily claim Faire as my personal portfolio company that was definitely sort of Keith led the round both at Khosla Ventures several rounds, starting with the Seed to Serie E. and then you know also Founders Fund. But my first week as his chief of staff was actually the very first ever Faire board meeting part of it was just having known those founders for quite some time you know their experiences at square and then just seeing how clear vision they had how large of an opportunity was ahead of them but how big the market was that they were tackling I thought they brought a sort of very unique value proposition to the table you know for the listeners we really don’t know what Faire is it’s basically a like wholesale marketplace between sort of local boutique retailers think if you’re in San Francisco on you know Valencia street whether it’s that sort of men’s grooming store or the audio file store or the you know hair salon each of those has a variety of different you know products that they stock on their shelves and that retail you know owner the way they previously to fair would figure out sort of what the stock is you know catalogue they’ll call up individual sales reps there’s basically no digitization invest fair came in basically provided them is sort of like online you know marketplace From the makers that they would you know, typically purchase from and you know, some additional makers they weren’t aware of these haven’t makers typically don’t maybe have much of an e commerce presence, they’re not on Amazon, right? They provide this you know, beautiful discovery experience for these retailers. But then most importantly, they have an interesting twist that you know, made it clear that fair was gonna be really large. Because this team had actually come from square capital, they had experience in underwriting lending and the value proposition that really resonated fair was not only the for the retailers it’s not only the discovery of these goods, but also because there was a lending component to the business because I could see as a retailer go on to fair purchase the you know, whatever microphones and headphones that I’d want to stock in my audio file store, but I wouldn’t have to pay up front for them instead, I can basically just pay when consumers actually purchased it in my store. Or if after 90 days no consumer purchase it I can basically return it for free at a fair here’s ability to convince retailers to onboard was immense because of its particular value proposition. And I felt like I was like this is a team really understands both the aesthetics that are necessary for these retailers because they came from square and square but developed beautiful hardware software, things that SMEs want to use. They actually understand the underwriting. They’ll deliver on this Like value proposition and actually know how to grow a company that like sells SMBs and by the way that like offline boutique retail wholesale market is like 100x larger than Amazon’s market cap basically and so it was like a extremely extremely large market that they were going after. So I remember leaving that first board meeting and I was just like, I understand why people like Keith get paid because like looking at sitting here today this is extremely obvious. This is going to be you know, a massive company but it’s only extremely obvious from the perspective of sort of a Keith esque figure basically and his ability to like you know, recognise that oh yeah I remember this LP asked me and it wasn’t even like I don’t even have to think about it I was just like, I know our entire portfolio there are many companies that I really loved in the portfolio, but trust me the number one that I think is going to be the largest and like, most fun returner I think will probably end up being Keith’s best investment ever. No question for me is Faire.
Erasmus Elsner 30:48
You spend the first time in the Keith world “living in the future”. Maybe let’s talk about a recent quite interesting phenomenon your colleague at Founders Fund Everett Randle brought up in a Substack article on the Tiger Global phenomenon. Obviously Tiger Global pre-empting Series C this year and maybe more broadly, carpet-bombing across the spectrum from Series B to Series F. You had this great tweet on this Crunchbase article around the crossover funds. You mentioned there that at the Seed/Series A differentiation of venture funds still matters, whereas at the growth stage, because there’s so much capital in the market, a number of players have now started to compete on terms and pre-empt the B after that the Founders Fund Series A has just landed in the bank. But I do agree with you that probably differentiation of the early stage is still very much a thing and will not go away that that quickly. Talk a little bit about how you sort of feel about the funding market at the moment and the craze in the crossover rounds.
Delian Asparouhov 31:42
Yeah i mean you know I think it was a somewhat you know, obvious or unspoken, let’s say secret of Silicon Valley for the past like five years that like sort of late stage growth technology rounds, were just the money making rounds, you could invest in a company six months before their IPO and you could do it at ETL 1/5 or 1/10 of the price of the IPO and you would immediately sort of get to rinse and repeat that cash and you know reinvest it into a lot of really great investors for the past five years or the sort of you know, growth stage technology investors shopping recognise this and maybe came in a little too heavy and a little too hot and maybe didn’t have some of the best decision making at least it appeared so at the time they definitely got a lot of flack over the course of 2019 and they’ve wasted a lot of money and they were down a tonne on their funds and then you know doordash IPO and then didn’t matter they basically you know made back you know all their money you know on their fund from the you know doordash investment amongst many others that they sort of had go well since then as well yeah, I think it’s actually you know, it’s always really great for founders that this is happening right like once you’re sort of businesses quote unquote working your ability to raise capital is much less diluted it’s much closer to public markets I sort of you know depth of the capital is almost like semi infinite to this point a lot of the like you know, late stage fundraising processes have actually like completely flipped where unlike traditional private investing, you have to like go out pitch to people you got a term sheet and then like you uniform around around that a lot of late stage rounds now the founders basically set the price and they basically just say okay, how many people would like to purchase at this price and they choose to raise basically as much as they would like to at that price and so I think it’s very beneficial to you know, founders and companies and I’m excited because it means that there’ll be a lot more very impactful and meaningful technology companies that have a lot of access to a lot of resources to you know, fundamentally change the world. But yes, at the same time, I do think a lot of the you know, sort of talk to your founders recognise that there are many difficulties that come with scaling a company that a you know, hedge fund manager can’t necessarily help you with. So you know, it’s interesting to see some of these articles talking about the total dollars deployed or you know, how much money is going into venture but it doesn’t necessarily reflect the number of shares they’re being purchased a lot of the shares that are purchased in the company’s life happened during seed and series A not necessarily in these later stage you know, growth rounds always. But especially not today when those rounds are much less diluted in the used to be the thing that people are missing in this trend is I still think the sort of most constrained resource for founders are people that they can actually add to their board as investors they can actually meaningfully shift their ability to build a company it’s somewhat related to what we talked about earlier I that operators the most constrained resource that’s somewhat true in the world of investors as well I like operating investors that can truly help them build a company and a lot of very, very good founders you know, want to have somebody that can actually help them now for sake of relying on them, right like max Rhodes affair is perfectly capable of building a massive company on his own. But there’s occasionally there’s very, very, very tricky situations that you know, maybe you’re outside of his expertise, and having Keith on his board has helped him you know, navigate you know, through those situations. And so, I find that, you know, I’m starting to be able to provide, you know, that perspective for some founders, especially in the world of aerospace, partially from you know, now having this experience operating an aerospace company, but I think, you know, that sort of experience will be well rewarded in the world of venture because you’ll be able to buy a lot of shares and very promising companies in a series today versus you know, yeah, you know, Tiger can allocate a lot of dollars in those later stage rounds, but we won’t own as many shares as the series.
Erasmus Elsner 34:52
I mean, I guess what I find and I probably see the entire market, what I find probably a bit troubling is that You have some of the private equity funds moving into into this growth space very aggressively and ask yourself, you know, what’s really the play here, I don’t find it troubling if you have a traditional Seed Fund, like Founders Fund, either increasing their reserve capital or raising a specific select, or opportunities fund, because they have the existing relationship, they have the expertise, I guess, from your side, it’s something Welcome to have crossover funds coming into these deals and supporting these companies get to mark up your deals as well, obviously, but when you talk to founders, I would assume that sometimes you tell them, you know, take it slower, because you can’t just hire 200 people in the next quarter without, you know, making huge mistakes. And so how do you think about hyper scaling in this environment?
Delian Asparouhov 35:45
Yeah, he’s definitely, you know, downsides are companies that will, you know, sort of over raise at, you know, large valuations, but then will struggle to grow into those valuations. And that can be a very, very painful process, if you have two or three years of your share price being flat, employees can get very frustrated, because they’ve, you know, productive, hey, the company has grown three or 4x, over the past few years, I expect it to go three or 4x, the next few years, and all of a sudden, having sort of like this, you know, harsh realisation that their shares are actually worth just as much as they were when they, you know, bought them can be kind of painful, because you spent, you know, for options, you typically have to exercise them. And so it’s like, wow, I spent $30,000. And I haven’t even had that cash now for four years. And that $30,000 has just been sitting in my company’s bank account, and it’s only worth $30,000, like, you know, I would have much preferred to at least put that capital to work somewhere comes with, you know, potential downsides. But I think if you know, founders are smart about it, and I think more and more are getting smart about it, you know, it can be a very strategic resource. You know, there are definitely a lot of companies on the flip side where, you know, doordash might not have been able to really win the market and beat out Uber and beat out Postmates. You know, if not for the Southbank round, and that they had because of that.
Erasmus Elsner 36:45
To wrap up the session, I want to talk about you being in Miami. So what’s going on down there with Keith saw some pictures that Keith posted of the Founders Fund offices there, but how is it in terms of meeting founders? Are you actively pursuing companies there? Or would you say that most of the companies that you’re looking at are still in San Fran?
Delian Asparouhov 37:04
Well, in the past, you know, four years, very few of my companies have been based in San Francisco, I think building of technology companies has become particularly widespread and decentralised, you know, far outside of the Bay Area, especially, you know, if I were to have a geographic concentration, it’s actually largely in Los Angeles because of my focus on aerospace. A lot of aerospace companies being based down there. No, I wouldn’t also say that, you know, Miami in particular is a, you know, strong focus area for us as a funding company strictly in Miami. But by default, being here is definitely happening more often. And we’re also definitely importing a lot of companies or companies that were based elsewhere, but that is a part of us investing or deciding to sort of like move to Miami. That’s happening relatively often. There’s only maybe two fundraising rounds that we’ve done recently. You know, one was a truly born and raised the founders really born in Miami, raised here and built the company here. And then one is from working in a larger technology company that has an office in Miami and I’ve been here for several years. We’re currently doing some amount of Miami investing, but it’s an incredible ecosystem to get to be a part of it is such an early stage with such immense growth. You know, the one liner from the mayor that I think is quite accurate as Miami is becoming the capital of capital and you have everybody from you know, Keith Rabois, Dan Loeb, Dan sundheim, Antonio Grazia, Leon Black, you know, those five people that I just named, I would probably guess, you know, manage on the order of like 300 $350 billion, and are mostly focused on private venture capital. There’s some of the best investors in the world, you know, some critiques that people have given is like, Okay, well, it’s a bunch of investors moving there. But, you know, it turns out, you know, a lot of founders Do you want to be, you know, near where their investors are, some do not everybody, and so they’re choosing to, you know, move their companies to Miami. And so it’s been incredible to see the number of companies in our portfolio signing offices, leases down here, hiring engineers down here, you know, building their, you know, their teams down here we are, I think that will only continue and I think, you know, it does sound crazy to say it, but I think it’s actually possible that Miami becomes the largest tech ecosystem in the United States by the end of the decade, and what is that just comes down to both how quickly the ecosystem is growing, but then also the willingness for the city to absorb it right? When I walk around Miami and you have three blocks, I see more cranes and I see in all of the Bay Area barriers basically look the same for the past decade you know, while I live there, they’re sure some buildings and some changes, but it’s effectively a city stuck in molasses. And fundamentally, startups grow like exponential equations and if the you know city isn’t willing to absorb that they’re coming to be a lot of painful problems that you know, San Francisco has been seeing over the past few years. And I feel quite optimistic that Florida and you know, Miami in particular are going to be able to sort of withstand that exponential growth and because of that become our sort of city’s you know, equivalent of, you know, Singapore or Hong Kong i equitorial, international Metropolis tech forward hyper hyper growth, and I can’t wait to sort of see that happen.
Erasmus Elsner 39:35
I love it. And you’re you’re definitely a trailblazer in that regard. It’s definitely great to see you making a big stance here and a big statement for everyone that break companies can be built from everywhere. So Delian, thank you so much for being with us here today. But maybe for the audience out there. How can people find out more about you what you’re up to?
Delian Asparouhov 39:51
Easiest is either just follow me on Twitter and I post all the various podcasts, events, things that I’m doing on there. The handles as a blog are @zebulgar.
Erasmus Elsner 40:01
Wonderful. Thank you so much.
Delian Asparouhov 40:03
Thanks for having me.