Transcript:
slava (00:02.697)
Hello, welcome to our next episode. Super excited for our next guest. Not many people are able to be known just by one name, but this person can be. He has an incredible fund, he's growing a great company, and has a huge presence on Twitter and other distribution channels. Sahil, welcome to the show.
sahil (00:20.758)
Thanks for having me, excited to be here, Slava.
slava (00:23.589)
Absolutely. Let's just start off with, you know, how did you get into alternative investing?
sahil (00:28.822)
Yeah, I started alternative investing by investing in startups, technology startups. So I moved to the Bay Area in 2010, 2011 to work at a startup called Pinterest back in the day. And I was just, I realized that I was surrounded by these amazing companies and, you know, Y Combinator was like 15, 20 minutes down the road. And so I emailed Paul Graham and I said, Hey, can I come to Y Combinator demo day? I would love to angel, I've never done it before to be candid, but I'd love to.
would love to and I dropped out of school so I have like a little bit of money to invest and he replies saying hey yeah CC you know my assistant like she'll send you an invite and uh and so I went and invested in a company called Hello Sign which was the only company I ended up investing in that day and that ended up selling the Dropbox in 2019 so it was a good one to get started with um but that's kind of how I got started was to was investing in kind of private equities I guess
slava (01:27.157)
Would you say that was a luck or skill that your first investment turned out to be an exit, you know, so quickly?
sahil (01:34.334)
Yeah, I mean, I think there's a I think both there's certainly a lot it seems to me that there's quite a bit of luck Beginner's luck in investing like there's quite a few stories of people who you know, I think Bobby good lot his first investment I believe his first angel investment was coinbase Um, so it does seem to happen quite a lot. I think partly that's because many people build up All of these relationships and when they're finally ready to act they're able to like look back at like the last six months of people And say hey, what do I want to invest in?
It's certainly a different market today. 2010 was a little slower. You were maybe more able to do that. I also think you're just super cautious, right? The first time you make an investment, you've actually probably said no to a lot of really great investments because you really want to avoid sort of a false negative. And so I think that's probably a big chunk of the reason why. If I was a smarter investor, I wouldn't have invested in one. I probably would have tried to invest in 10. And if I had invested in 10, probably eight of them would have been worse than Hello Sign, but maybe one of them would have been much better.
Right. And so, yeah, I think luck definitely kind of plays a part there, because these are pretty small sample sizes, so that's kind of inherent. But I do think what I think the skill, quote unquote, involved was like I took the initiative to show up and be, you know, I was probably the only person there who wasn't like a professional investor, you know. And all I did was send a cold email to someone I never interacted with before ever. And I was an 18 year old kid, you know, college dropout.
And I find that when I tell this story to people, they're not surprised in the sense that they're like, wow, you did something hard. More like, I didn't even know that you could do something like that. And so I think that's the skill, or the part that was in my control, was I took the initiative to actually show up on a Wednesday, and I think many people maybe think they can't. It's kind of like, you're kind of pushing on the door.
But you don't realize you can just pull the door, right? Like it's that sort of thing where I think some people are trying to break in and maybe just thinking about it the wrong sort of way.
slava (03:35.593)
What year was that first investment?
sahil (03:36.919)
That was 2011.
slava (03:39.253)
Okay, so fast forward, we're in like another 11 years. And so how many angel investments have you made since then overall?
sahil (03:46.202)
Overall, I think probably 140, 130, 140, something like that. Probably 100 of those in 2019 to 2021.
slava (03:57.053)
And is that in your rolling fund?
sahil (03:59.01)
So about 30 are outside of the Rolling Fund and about 100 are through the...
slava (04:05.681)
And from that last decade, before you even got into this bigger volume investing, what were some of the lessons or what are some of the takeaways that you brought into that larger volume investing?
sahil (04:14.41)
Yeah, I mean one really important one is it really is a bet on the person and the people that you get to invest in. The product matters, the market matters, like all these things are non-zero, but I find that when you're making an investment that will take 10 years to mature, like there are so many changes that will happen to the team, to the product, to the market, all sorts of things. And so ultimately, like the only constant really, in my view, is like, well, who's the CEO of the company? Right? Like generally, that person is relatively consistent.
And so I find that like when I look back at a lot of my investments, like if I was really excited about the product, really excited about the market, but the CEO wasn't that strong, but those other two things override it, like almost never does that work, right? Like long term, I find that like that often doesn't work because the product and the market eventually become quite obvious to the world and then a much better CEO will effectively beat that person often, right? And so I think I really...
now kind of over index on people and how important the person is when I do my investing.
slava (05:16.353)
How about the reverse, which is you're not so sure about the market, but you like really love the CEO.
sahil (05:23.786)
Yeah, that's a good one. I've learned that is often not enough. You kind of have to love both. And I find that partly it's because you might actually just be analyzing the CEO wrong. Actually, the fact that they're picking this kind of market or product, even when the data shows that they shouldn't be, is often like you kind of fall for the charisma more than the intellectual rigor. So that's something to be kind of
careful about. But yeah, I just find that over and over again, like you just have to bet on the person and some of the best investments are kind of pivots post-investment anyway, and so you're ultimately investing in that person's ability to vet future opportunities. The other thing I would say is that it's not just a bet purely on one person, but also on the people that person is going to hire. And so every once in a while, I meet someone who's like an amazing person, but is never going to be able to hire anyone.
that good under them for whatever reason, right? And you kind of need both. You need the IQ, but you also need the EQ in order to be able to build and hire the team and sell the product. And so I find that like that is often where I've probably made mistakes or I've bet on someone who is an incredible person, but it cannot scale themselves. Like it has an inability. Like for example, you might find someone who's like a phenomenal computer science engineer or like crypto person or you know.
mechanical engineer or something like that. But ultimately, these things become massive because they're able to grow an amazing team around them. Elon Musk is probably not building the rockets himself anymore. And that's really, really important to be able to do. And I think in this market, it gets harder and harder to be able to recruit those people for two reasons. One is those people can go start their own companies. And two, there are more amazing companies that exist that you are competing with. And so ultimately, I think the reason that Tesla will win, if it does, is because they were able to hire everybody.
that's amazing, that wants to work on cars. As Apple, I think, did a similar thing with hardware and Stripe with payments. Like, I think it's not just that the best product wins, it's that the best product hires all the amazing people. And so, like, you can't even build a better product because, like, all the people that have the skills to do that are now working at the major company, right? That's like the largest network effect that exists is you now become, like, this talent magnet. And so, yeah, I think I underrated that, how important that was. The other thing that, you know, kind of a tangential learning is
sahil (07:50.126)
There's often this appeal to investing in the number two player, right? Or like, oh, this company is super old, and we can build a new version of it, and it's better. Or this company dominated the market in the US, but India hasn't been tapped yet, and we're just going to build the same thing for India. I personally have found, and there's a lot of that kind of investing happening right now, especially as sort of globalization and COVID and everything is kind of getting connected, and Zoom fundraising, I find that often doesn't work. Often the number one player.
becomes 30 times bigger than the number two player, right? So I and generally is I think it's because of a similar reason which is like all of the amazing smart people Want to go work at the number one company and very few of them work at the number two company But I find that often happens where a lot of investors are like well the number one player is a billion dollar company So if I invest in this thing at a five million dollar cap, that's like gonna be number two That's an easy sort of investment, but I find that like
That's not the way that any employee is going to think about the company. Like, you know, like they're not thinking about it, like one of a portfolio of a hundred companies, right? They're saying, what, where am I going to work for the next four years? Um, and so I think exactly, exactly. I think that you have to, like the market kind of has to pull it, right. And you have to find the things that the market is already super duper excited about, which on the, on the buy side and the sell side, supply side, uh, and then you just have to kind of like, be okay with that, right. As an investor. Um, so I think.
slava (08:52.046)
So don't chase the sale.
slava (09:10.453)
So you have a ton of entrepreneur experience and operator experience with Gumroad. It's been quite the roller coaster and that's been documented in various places. What would you say is the benefit and your, you know, how does that make you a better or different investor now?
sahil (09:27.498)
Yeah, I mean, I think the biggest thing is that I have worked with many investors. And so I kind of know, I think to a decent degree as a CEO and a founder, what I need and want from investors. And often the answer is nothing, right? Like very often as a founder, you kind of know what you need to do. And, you know, 80, 90 percent of the time you're running the company, there's probably 10 to 20 percent which you're raising money or you really need help. But often you kind of just need to you kind of know what you need to be doing in order to build a successful company.
And I think that's been, it's very useful to know because I think as an investor, when I launched my rolling fund and I started investing a lot, it's very easy, I think, to be like, well, I need to compete on features. I need to compete on all of these things. So you try to like provide all these value-added services and you just basically become annoying to your founders because your founders are kind of like, I don't need any of this. Like I don't need another Slack channel. I don't need another email list. I don't want to go to your whatever. And I just need engineers, you know, like that's what I need help with.
And it's very hard to help with that kind of thing as an outsider. And so I find that part of the utility of having been a CEO and raising money from investors is kind of knowing that I don't actually need to do that much as an investor. And it's kind of better for me often to just say, here's my number, here's my email. I will respond incredibly quickly. But I'm not going to go annoy you and badger you randomly. Because I know there's this joke that the number one thing investors do is they basically just email you competitors. Like.
And every founder knows this immediately. They raise money, and then every three days, you get an email from an investor that never emails you otherwise saying, hey, did you see FYI? And there's some new competitor, some product hunter, some fundraiser, whatever. And every founder immediately knows exactly what I'm talking about. And every investor who's never been a founder is like, what are you talking about? Why wouldn't that be helpful? And it's kind of like, well, you haven't been on the other side when literally you do nothing for the company except you just tell them the competitors exist, of which the founder already knows, because guess what?
They care, you know? And so, yes, things like that where I sort of find myself, like almost like the founder Sahil checks the investor Sahil where I'm like, I wanna do something as an investor because that's like the, it makes sense to me as an investor why that would be helpful. And then the founder is like, well, no, that's actually would be really annoying. Like you should just stop, you know? And so I see different decisions and the kind of different force in the road that I've made as an investor because I've been a founder and I am a founder.
sahil (11:54.058)
So yeah, I don't know honestly how some investors like who've never done that before. Like I don't know how they function or operate to be honest, sometimes.
slava (12:01.233)
That was gonna be my question for you. So some of our listeners, not all of them have the benefit of building a great company like yours or are deep into operating experience. How would you suggest they break into angel investing? Should they be giving you money into your rolling fund? Should they be doing it on their own? Should they be trying to find some other fund? Like what's your guidance as to how to start doing angel investing?
sahil (12:21.918)
Yeah, I mean, I'd love more capital to deploy, of course, but ultimately, I think it is important to do it, some of it, at least yourself, because you want to learn these skills. And the only way I think to learn them is to make some bets, put some skin in the game and probably be wrong, nine out of 10 times. But that one time, hopefully, you're pretty right on. I would say, and this is something I learned also as a founder, is one of the most useful things an investor can do is to use your product as a customer.
and then give you feedback on your product as a customer. Which is kind of weird because like anyone can do that. You don't have to be an investor in the company to be helpful in that way. But like if you go use Gumroad, you make a bunch of bugs and you file it with me, you've probably created more value for me as a CEO than almost any other thing that you could do. And so I would sort of posit that to anyone who wants to break into angel investing, which is like, what are the products that you use enough to like kind of be able to almost suggest feedback to improve the product, which you know, if you.
own a Tesla and drive a Tesla, you might be able to do that with your car. Just look around at the products that you kind of use every day and tell your friends about and buy people for Christmas as gifts. The things that you're genuinely excited about, become investors in those companies. If they're public, if they're not, go find the CEO of the company on Twitter or probably their email is probably their first name at their company name.com. Send them an email with a bug report and mention, hey, by the way, I would love to invest if there's ever an opportunity to do so.
as little as $1,000 is pretty acceptable these days. I think maybe some people don't know that, that you don't have to be incredibly affluent to angel invest. You can put $1,000 into a company like Gumroad or anything else. I think it's really, really important to do actually, to start small because you wanna make many bets. And that's kind of like, that's it. Just in, you know, I kinda, when I talk to friends about it, I just say, look, like,
Basically, investing is the art of earning interest on your interests. So find out what you're interested in. And then investing is basically the idea that you can put your capital into those interests and earn money back over time just by doing that. And therefore, you should just bet on the things that you're already interested in. You don't have to go to Bloomberg and try to find some crazy company that nobody knows about. The best thing to do is to be like, hey, this weird video game that I love that no one knows yet is actually by some Polish company.
sahil (14:47.714)
that's public. So like maybe I should go invest in that company and then tell all, you know, tell my friends to play this game and like try to help them. And that I think is the right approach to get into it. Um, and yeah, I think that's just generally if you're like, I need to be a good investor, which means I have to go find really great opportunities. It just doesn't work because those opportunities are pretty obvious to everybody else who's an investor. But if you can go through your hobbies or your interests or something unique to you, I think you might sort of happen upon.
like a random company. For example, like I was doing some research on regulation A and I found that the first company to ever have done a regulation A IPO was actually wrote the rules for it was a company called Willamette Valley Vineyards, which is a winery that's an hour away from me right now. And so I drove down there on Saturday and like...
hung out with them and was like, this is super cool. Like we did Reg CF. The only reason we were able to do it, basically, because like in 1988, your founder and CEO like made this happen and they're publicly traded. You know, they're, I think WVV on NASDAQ or something. And so just like that was not, you know, that wasn't because I was an investor. Like that kind of just, you know, you kind of like run into these random things. Like you buy a bottle of Riesling at Costco and you like Google the wine company and you learn this kind of stuff, right? So.
I would just say that kind of like just double-click on what you're already doing like just go one level deep like instead of Being like wow, this is an amazing camera done, right? Just say hey, this is an amazing camera and then like go to the Wikipedia page of the camera company, right? And like you never know like what kind of stuff you'll run into and that's kind of what I do all day is I just kind Of like go down the rabbit holes, you know a little bit farther than maybe other people do and then every once in a while I'm like, wait a second like there's an amazing opportunity here. No one's thought about this in this way
and you can kind of connect the dots sometimes.
slava (16:38.313)
So you already mentioned it, but earlier in 21, you actually did a $5 million equity crowdfunding campaign, I believe the first one to max out that $5 million new limit. I think you have thousands of investors. I would love to get your perspective, not from the entrepreneur and company side, but from the investor's side. What's your thoughts on these investors looking for these opportunities and investing into these equity crowdfunding opportunities?
sahil (16:59.134)
Yeah, I mean, I think it's an amazing thing because I believe quite strongly that, you know, the best asset class in the world is early stage technology companies because that's the future, right? The people who get to build the future. And today, it's sort of pretty inaccessible. You have to be accredited. You kind of may have to live in the Bay Area or like kind of know people. And the beauty of a platform like WeFund or Republic or any of these other ones, Indiegogo, etc.
way more companies, thousands of companies that get to list and they're all audited, they're all kind of vetted by the platforms themselves and you get to put in, you get to kind of build, put in the wraps I guess, right? Where you get to invest a hundred bucks I think was the minimum for the gumroad raise and it's certainly like hard to say the quality of these companies like, you know, of course like there is, there are so issues with it because it can take some time, it's expensive.
There are kind of capital markets that exist for early stage, so you know, you kind of do have to be... You should ask yourself the question, which is like, you know, why is this startup selling their stock, right, to me? Or wanting to, right? Like, just generally, I think that's an important question to ask. Just like, you know, anytime you buy a used car, like, why are you selling the used car? You know? You know, maybe you had a new baby, you need an upgrade, or maybe your car sucks, right? Like, it's important to kind of...
figure that out. And generally, there should be like legitimate reasons for that. Like Garmrit, it was like we want to grow the team and I want to bring my community on board in this journey and we're not really on the venture-backed path anymore. And you can read this blog post about that, right? So yeah, I mean, I think it's amazing. I think every investor should be spending time on these platforms and putting in a hundred bucks at a time into, you know, ideally dozens of opportunities.
things that they are genuinely interested in. I almost think of it like a newsletter subscription with some asymmetric upside, right? Which is like if you could follow the newsletter, sort of like, you know, if you could read like Buffett's sort of annual letters and Bezos' annual letters, like who would you read annual letters from and then invest in those people again, effectively they will send you an email every year or every quarter and you will learn, you know? Like I'm forced to learn about...
sahil (19:11.918)
I don't know, organ genesis, right? Like the ability, the science of producing organs from scratch, because I want to invest in this thing. And I'm, and the only way I get, you know, I, or I did invest in this thing because I was interested in it. And now I have to like learn all this crap because there are all these words in the fricking updates that I don't understand. And that makes me smarter because then I spent like three hours on YouTube, like learning about this scientific breakthrough that, or this regulation change that happened in like May, 2021.
in which you can now do more research on fetuses past week or day 20 or something like that. But I would have never learned that without someone telling me who works in the industry. And so I think, yeah, I think just curiosity, I think, is like the name of the game here. You just have to be curious about things because that's the only way you're going to find all these weird, unique opportunities. And 99 out of 100 times you're going to spend like three hours on YouTube and like...
It's not gonna really materially improve your life, but every once in a while you'll find some, like this vineyard that happened to Reg A Plus, their company 20, 30 years ago. And that might be very meaningful for me in the future. And so I think, yeah, just doubling down on your interest, double clicking on the things that you care about and investing in those sorts of things on these platforms. Like for example, if you're really into health or like, I don't know, like paleo or something like that, there's tons of those kinds of DDC companies on these platforms.
You should go buy their products and be like, what is the best one? And then become, you know, if you spend a hundred bucks on the product, you might want to invest a hundred bucks in the company. Um, right. And so that's, that's generally like a pretty, I think, a simple approach, um, to do, and I think that is also the appeal that I see of crowdfunding generally is that who knows the product, uh, and the value of a product better than anybody except the customers. Right. And so.
if you are a customer of a product, you 100% I think should basically invest in everything that you pay for. Because you've already said that you're willing to invest without any return, right? Like you're a believer so much in the product that you're giving them money. Like you're not eluded financing, right? So why not put some skin in the game? And if you'd done that for like any of the products that you use every day, like Google, Amazon, Apple, like there's a reason that those companies are valuable because everyone uses them, you know?
sahil (21:29.366)
But 10 years ago, you might have been one of the first 100 million users of Amazon Prime, right? And now there are a billion of them or whatever. And so often that's the other thing I often have to remind people is, like, you might think you're late, but just remember that you may not be, right? There's five billion people, roughly, that use the internet on a weekly or so basis. There are not five billion people on YouTube. There are probably one billion or so people on YouTube. So even YouTube has a three or four X multiple and traffic to go. And that's before the...
the other people who don't even have the internet yet will get onboarded. You know, so it's still like, I think, very early. And I find that many people are like, oh, is it too late? Am I, you know, like, you know, did I miss it? And I'm like, if you believe like the world ends tomorrow, then yeah, I guess you've missed it. But like, if you believe like I do, that humanity is probably gonna be around for a few hundred more years at least, then of course not. Because like, if you just draw the line out, you know, at some point we will have a lot of crazy stuff and like, we will have self-driving cars and we will have AI and we will have...
remote work by default and all of these sorts of things. And that society, I think, will be pretty darn awesome, much more awesome than it is today. And so therefore, like, of course you're early, right? Like, I don't see how you're not early. You know, I believe, for example, that humanity will at some point have 100 billion humans. Like, there will be 100 billion humans alive at the same time. That seems kind of obvious to me. Either that or we blow ourselves up and there's zero. Like, either it's zero or 100 billion. Like, that's kind of what I see.
Okay, well how many people are here on earth today like 8 billion? Okay. Well 100 divide by 8 Okay, so my investment thesis is that there will be roughly like 12 X the number of humans 12.5 X the number of humans, you know, okay. Well, then every asset will effectively talk 12.5 X because Demand, you know supply grow by some amount but demand will grow by much more and so and this is the history of the world I mean, this is the history of American land, you know, like this is the history of the US dollar this is the history of Bitcoin like
so far to date seems to kind of play out pretty consistently. Of course there's bumps along the road but I think if you kind of just zoom out a little bit the picture looks pretty rosy I think to me.
slava (23:36.873)
Let's go around the horn on the other asset classes. So real estate, do you invest into that or what's your point of view?
sahil (23:44.087)
I personally do invest in real estate, but I just do it kind of similarly like as an interest like I Will buy a house for myself and use it almost as a customer in a sense So I think of it like that, but I have not invested in anything any residence that I don't live in myself. For example
slava (24:02.101)
about regular art, not NFTs.
sahil (24:05.118)
I do own regular art, fine art, oil paintings in my house. And so I definitely strongly believe in that. And when I saw NFTs sort of starting to happen and sort of at least like go viral in January, 2021, it made total sense to me. So I was like, yeah, I literally own art. And honestly, I don't want to. Like I would love to have the fine art scarcity aspect of the art without the dirt and oil on canvas part.
Right. And so, yeah, I find art definitely like I have certain artists that I think will be incredibly famous and successful in like 50 years. And like, I would love to own tons of their art, you know, in the next coming years before that happens and then help them.
slava (24:43.973)
Any particular artist you'd want to mention?
sahil (24:46.206)
Yeah, totally. I mean, they're relatively unknown, but there's a Chinese artist named Rowe Li, R-U-O-L-I, who I think is one of the best artists alive today. I think there's an amazing artist, landscape artist, named Josh Clair, C-L-A-R-E, who I think is absolutely phenomenal. And these, you know, their paintings are already worth thousands of dollars, like generally an oil painting that will go on your walls, probably in the low thousands of dollars. But...
And honestly, it's crazy. If you go to the... I went to the Western show in LA, there's some museum, and the most expensive painting there, and this is like a C2, like a SITU, one of the very famous painter. And it was like 65 grand, it was the most expensive painting there. And I'm like, wait, you can buy... This is like, you go to the Seattle Art Museum, and his painting's art, he has a painting there. He's a very legitimate painter, and you can get in.
$65,000. I mean, that's crazy to me. And at some point, you know, I assume that stuff will be a lot worth a lot more. I mean, that's less than a mutant ape, you know, like, and so, yeah, I really believe in supporting artists and like this sort of patronage model. And I wish there was actually more of that. Like, I think, sort of the, you know, yeah, anyway, I'm a big believer. I think...
slava (26:05.674)
You mentioned the Mutant Ape, which is a great transition. What's your perspective on Web3 tokens, NFTs?
sahil (26:12.766)
Yeah, I mean, I'm a big fan. I think for me, the interest starts with the technology, which kind of goes back to the Bitcoin white paper, which I think is incredibly important, computer science discovery. And so I believe I'm super bullish on the technology and the use of the technology to revolutionize the world. And so I'm sort of a... Yeah, I think that there's much more to go in terms of...
And I think that started with Bitcoin went to Ethereum. There's all these other things happening now. And so I'm I really yeah I strongly believe in it. I will basically never sell any crypto ever. I only buy And that sort of I want that to be true basically forever and Yeah, I sort of think of it like I only there money for me only goes one way which is from fiat to crypto It never goes the other way around. I'm never gonna sell crypto to get into fiat. Like I would never do that
And yeah, so I'm a yeah.
slava (27:07.401)
You just double click on that just so the listeners understand why not go back from crypto if you are
sahil (27:12.682)
Yeah, I mean, look, ultimately I get my salary is in US dollars and, you know, the company, my equity in Gumroad is kind of, you know, denominated in US dollars. And so I find that, like, basically I will never be overexposed to crypto. I will always be perpetually underexposed to crypto, especially if crypto continues to grow. And so I find that, like, I should effectively. Yeah, like if I if I'm selling crypto, that basically means that what I'm saying is I believe that like the sort of future of fiat and US dollars has, you know.
is sort of more optimistic outlook on fiat than crypto, which I basically will never believe. I just cannot believe that. That would be the same as me saying something like, I believe like gas cars have a more interesting outlook than electric cars. Like, no, sorry, they just won't. And yeah, so that's kind of like my fundamental belief is that there's more value to be created here. Probably 10X, 100X, the amount of value. It's still very, very early. It's going to need like...
endorsement by federal governments, the SEC, etc. to really execute, I think, on the promise of crypto. But I think it's here to stay. Like, I don't foresee that, like, any, you know, 2022 or anything being, like, 2017, personally. Like, I just think, yeah.
slava (28:25.237)
We're here in Q1 2022 and there's some choppiness in the market as we're chatting both in the public markets, the private markets, the crypto markets. What's your point of view on the market? And you say you're seemingly quite long on crypto. Like are you a buyer today? What's your thoughts?
sahil (28:40.946)
Yeah, I did. Literally, I am a buyer today. Yeah, I'm buying every single day. Bitcoin, Ethereum. Yeah, and I'll continue to buy both of those sort of, yeah.
slava (28:45.085)
What are you buying?
slava (28:53.829)
Any other layer ones or any other apps?
sahil (28:56.738)
I'm currently just Bitcoin and Ethereum and I'm starting my own like web3 project to kind of learn and build more stuff. And so that will kind of be a sort of a time investment for me and I'll have its own token associated with it. So there may be some sort of value accretion there. But yeah, my sort of focus for 2022 and this is anytime the markets are up or down. I always think the answer is long term thinking and building learning and building.
Those are constants, like in up markets, down markets, like always trying to learn as much as possible and always trying to build. And so I'm spending, you know, a good chunk of 2022, probably building in Web3. And I honestly, I'm like kind of excited to be honest, because it, you know, I don't mind that you kind of shake the sort of thing and a bunch of people fall off, you know, like those people probably weren't hanging, you know, weren't that essential to the movement anyway. And so I'm okay with that sort of the reallocation of,
of attention and resources every once in a while. I think it's sort of healthy. But yeah, I'm super excited. I'm very excited. I mean, I think, like for example, like I moved to the Bay Area in 2010 and many people were not investing that actively. Like I mentioned, I went to YC Demo Day. Like why was I able to do that? It's because there was room for a random person like me in this, you know? Like there were like a hundred people there investing, you know? I like imagine this is like the year that like Instagram, Slack, Snapchat, Pinterest, and you're telling me that like there was a hundred people investing in startups effectively.
It's mind boggling. And it's the same thing. There are Pinterest and Slack and Snapchat being built today, right? Because back then it was 2010, and Stripe was started in 2008, 2009, Pinterest started in 2008. Many of these things were not, they raised money in 2010, but they were started a couple years earlier. So I think it's a phenomenal time to basically just stop getting distracted. One downside of markets that are going up only is because everyone just starts focusing on how awesome it is and how smart they are, instead of actually building stuff, which is ultimately the most important thing is actually,
If you want this thing to work as an asset, there's one really simple way to do that, which is you show the world that there's true value here. It's like, hey, we solved this problem better, faster, cheaper than we were able to solve it before without this technology. And if you're able to show the world that you can do that, whether that's DeFi, whether that's NFTs, then I think you'll get back there. Ultimately, asset prices are not dictated by the value of the technology always. It's like, well, there's a trillion dollars of money that...
sahil (31:22.534)
has to move this way and that way. And the sort of macro decisions that have to be made in order to manage risk are very, very different than I think the decisions that an individual investor should be making. And so I think when markets go up 10%, 20% down, whatever, I think it's easy to say, oh, I know why. But truthfully, very few people really truly know why. I would argue basically nobody does. And so ultimately, all you can do is build a strategy that works.
You know, like I don't know what the price of anything is, to be honest. I don't look at it basically ever. Every once in a while someone texts me and be like, hey, how's the market? And obviously I see like what's happening on Twitter. So I can get a sense, but I can't tell you what the price of anything is right now.
slava (32:07.01)
Speaking of prices really fast, do you think that the choppiness in the market is going to have an impact on early stage investing prices?
sahil (32:14.498)
That's a great question. I don't think it should, but I think it will. And the reason I don't think it should is because if you're investing in a company at a pre-seed, it's not going to go public. It's not going to really get a sort of priced by the market for 5, 10 years. And so I think it's kind of weird that people are so reactive, either upwards or downwards. It's kind of shocking to me sometimes. But I do think that the fact that we
they'll probably go down because I think people are very mimetic. People will kind of copy each other. And there's frankly not that many leaders at pre-seed seed. It's mostly a bunch of followers. And so I think those people and their behavior will effectively dictate the rest of the behavior. So if Sequoia pulls back or Andreessen, for example, pulls back. And that I think is the big risk here, right? It's like we have basically turned Silicon Valley into this kind of winner-take-all thing in which there's sort of the Andreessen and its entire globals of the world who are deploying like a good chunk of the total amount of capital.
Which effectively means that if they say, hey, we're pulling back or we're doing something different and those people are effectively raising money from a lot of the sort of public market people, then yeah, I think that will probably trigger some sort of downstream effects. But look, 2018, 2019 versus 2020, 2021, some people, when you look at what VCs are saying on Twitter, you think valuations went from 1 million to 50 million or something. No. They went from like...
five to ten million to like ten to twenty five million, right? Like it doubled. Yeah, I'm not saying that that's not nothing. Doubling is still a lot. But it's, you know, if it goes down by 20, 30, 40 percent, it's not that, you know, like I think like on a macro view, it's not that different. Like I raised, you know, a round for Gumroad in 2011 at a five million post, and people are, you know, that round today would be at a ten million post, and it's been ten years. So I don't think a doubling in ten years is that crazy.
Maybe it would be 20 million at the sort of peak and peak, you know, the peak of peak, but even that is kind of a doubling of a doubling, which is still not that crazy to me. And maybe we go back down to like 15 or 10 or something like that. But I think the thing that won't change, in my view, is that everyone now knows that like if you can build a valuable tech company, you there is a path to a hundred billion dollar valuation or more that exists. It's a non zero path. And that is it's sort of a Pandora's box thing. Like you've we've now seen that happen.
sahil (34:39.966)
many times and that I think will it will effectively create a new ceiling on pre-seed valuation. So I think while like the range will stretch I think if you come up with a compelling idea and by the way Stripe when they raised their seed round they raised it in 2008 or 2009. It was a two million seed by Sequoia at a 20 million post and I remember reading that announcement and being like that I've never seen anything like that happen before like that is an insane price 20 million post at a pre-seed seed and you know pre-seed didn't exist back then so just seed.
um, Tornado is an amazing investment. And so I find that like the outliers almost kind of predict the future in that way where like Stripe was maybe kind of canary in a coal mine. And my guess is that was pretty reasonable. Like I think 20-25 million post is probably where seed valuations kind of should be given where we see these companies get built over time. Like my guess is it will stabilize around for like the top companies for the kind of the Y Combinator, Stripe level companies. And you know, anytime in the market the last nine years, I've seen five to seven million
Even when the markets are crazy, they're always found a store raising at five to seven million posts. Like, you know, not everyone is connected. Not everyone is doing Y Combinator. Not everyone is tweeting and raising five million dollars. You know, like that happens. But it's sort of those are the headlines. Right. Those are the things that make the front page. There are many things that, you know, don't.
slava (35:58.121)
So we all want to get into your head and learn as much as you're learning and know what you're knowing. So what are you reading? What are you watching? What are you listening to? What are the tangible pieces that you can tell our listeners to try to follow you with?
sahil (36:10.494)
Yeah, so I read books. That is the biggest thing I think I can do to make me smarter, mostly because these books are written not in 2020, 2021, 2022, and so I find they have probably less bias and they have less... Yeah, so I'm currently reading a book called Escape from Freedom, which is a phenomenal book. I wish I remember who recommended it to me or how I found out about it, but it's been amazing. Basically about the Italian Renaissance and how it created this...
slava (36:23.445)
Can you name a couple that you like?
sahil (36:38.846)
sort of free society more than it ever done. And it created this sort of anxiety among people because all of a sudden when your needs get met, you kind of have this like anxiety that comes from the freedom, the sort of paradox of choice. And it talks a lot about kind of like, what do people want when they have all their basic needs met, right? And one answer is fame. Fame never existed kind of before Da Vinci. And like that kind of was a new thing that people started to seek. So I think that's very fascinating, probably quite relevant to today when more and more people are kind of...
post-economic in a sense. I'm currently reading a book called Spent by this guy Geoffrey Miller. Geoffrey Miller who's a psychologist and he or psychology professor. It's called Spent Sex, Evolution, and Consumer Behavior. The idea is that sort of modern consumerism is sort of a function, a product of Darwinian evolution. And you kind of have a lot of these examples. Like the reason we buy clothes is to status signal so that we can go on a date.
with a mate and have babies or whatever, right? That's kind of the simple version of it. And so that's another book that I'm reading right now. I also just recently read Ray Dalio's new book, which is like much more, like I honestly often don't like books like that because this guy is talking his own book, right? Like this guy is very exposed to the market. And so you gotta be a little careful with everything that, and frankly, these people are, they have too many friends. They have too many friends in power. So like, you know, you always have to be a little careful with I think with what these people are saying. I love books written in like the eighties.
I love books written by dead people, right? Because they're not trying to appease anybody. So I find that those are often the most valuable books. Like The Sovereign Individual is probably kind of like the book that I recommend everybody read right now. And that was written, I think, published in 1988 and talks about e-money, which basically cryptocurrency. A lot of those kinds of books.
slava (38:24.405)
amazing.
slava (38:27.849)
So the folks listening trying to figure out how to diversify their portfolio into all, do you have any suggestions for how you think about it?
sahil (38:35.935)
Oh man, I would follow a bunch of people on Twitter. I would read a lot of books. I would go through my bank account and my credit card statement and literally just go through and be like, what independent brands on Shopify did I support? And start building relationships with people generally. I think Bill Gurley said it really well years ago about Twitter, where he said something like, Twitter is the only place in the world where effectively you can
worth, prove how smart you are by replying, get a follow back and then DM that person and then effectively have a phone call with someone you never would have been able to meet in 20 years. And so I find that that's kind of where I recommend people spend their time is like sign up for these. Where are these smart people spending their time? Generally it's on Twitter or in their email inbox or something like that. And then the other thing I would add is start writing.
You know, like I think one great way to sort of think through what you believe is to start writing down what you believe and you'll quickly realize like your thoughts have a lot more holes in them than you think. Like plot holes effectively in your brain and yeah, there's two functions. One is you start writing, you get better at writing and thinking and investing therefore. But two, it'll get you in front of the right kinds of people. Right. For example, I tweeted this is like a kind of a
crude example but I tweeted about synthetic wombs last week in a reply to Elon and it went viral because I said it in a very pithy way and Vitalik from Ethereum replied and whatever it kind of became this big thing and honestly so grateful that I tweeted that though I certainly could have worded it better because I got so many DMs from people who have been building in this space where like wow I never knew anyone would ever I've been building this because I'm a med student at Harvard and I don't want to tell anyone that
really taboo topic, which I didn't know, oops. But if you seem to be an investor, I'd love to tell you what I've been working on for the last two years in my home or in my garage or whatever. It turns out, by the way, that anyone can do science. This is like blew my mind having some of these conversations, but you can kind of just do science. No one owns science. You don't have to go to school to do science. Much science is done in garages and houses, which is kind of mind boggling. But, and kind of scary, I get that, but.
sahil (40:57.634)
But yeah, it's true. And so I find that I think the lighthouse moment, right? Like the beacon. Like if you are interested in something, like I guarantee you every single person who works on anything related to synthetic wombs saw that tweet. It was sent to them. And the five to 10% of people who are building stuff need to raise money, et cetera, all DM me. And I have calls with them all, you know, basically. And so effectively I've like been able to, and I didn't have to find out who was, there's not even a, there's no Yahoo director of who's working on synthetic wombs. All you can do is,
is say something and hope that those people find you. And so that's kind of the same thing. If you find out that you have a thesis that's really interesting and compelling, write about it. The best possible, the canonical piece on that thesis. And you may be surprised at what that can do for you, what that can do for your connections, who you meet, the opportunities that you get access to. But it's never gonna happen if you don't put yourself out there. I think many people think that they can just kind of do this silently.
But I don't think it's a coincidence that some of the best investors of all time, Bezos, Buffett, Elon, are very public figures. I think that feedback loop, one, makes them smarter, and two, constantly reminds everybody else that if they are working on something like brain-computer interfaces or self-driving cars or whatever, they need to get in front of Elon instead of random VC over there or something like that. And so I think that it's just sort of...
It's one of those things that I see every single person do it that I'm like, there's, it's not probably not an accident that all of these people write, you know, like I have friends who are like, or actually a better example is I have LPs in my fund who are like, why do you tweet? Which is always, it's like kind of amazing to me. They're like, what, like I'm like, what, what? Like you're asking me and they're like, yeah, Twitter, it's a waste of time. Like, you know, like whatever. I'm like, yeah, I get, I get that critique. I guess you're kind of equating Twitter to like in an Instagram or something. Um,
But like every half the investments I made are people that I met on Twitter. Like half the LP, like it's funny cause some of these LPs like found out about me from Twitter and they were like, why do you tweet? I'm like, well, how do you know me? Uh, uh, so I, yeah, it's, and I'm always like, look, every single founder that is, is a tweeter. Why? Because they need to sell, they need to hire, they need to tell their story, uh, to the markets and they, you know, there's one way to do that.
slava (43:00.309)
and then they're questioning. Yeah, no, it's funny.
sahil (43:20.358)
one, you know, which is Twitter, like Trump, Bernie, AO, like literally everybody, and everybody who, you know, needs to talk to their, I know obviously all these other social channels are great, but the beauty of Twitter is you can just put it in text and then it'll get propagated everywhere for free on your behalf, right? But yeah, I always kind of have to remind people that like publishing thoughts on the internet is very valuable, very, very valuable. And yeah, and I'm, but I'm grateful that people don't because it gives me the space, you know?
Like it's kind of, I get to eat more cake, you know.
slava (43:52.585)
To put you on the spot with one last question, we asked this of all the guests, what would you recommend to be investing in now and tangibly today, Q122, that three years from now you think will see good results against any of these private asset classes, all to asset classes?
sahil (44:11.254)
Yeah, I mean, I think BTC, ETH, like that's like, I'll literally tell you my trade, not financial advice, but what exactly what I did was I put 50% in Bitcoin and 50% into Ethereum. I think those are like asset classes on their own. So you kind of like I'm sort of indexing on the ecosystem. And I believe that they're here to stay. I believe that sort of like Bitcoin is.
sort of revolutionary, like we'll look back on it as just as important as the invention of Fiat, you know, in 1972 or what have you. Like I really believe that. You don't have to, I'm not convincing anybody, but that's what I believe. And so that's kind of my bet today is BTC, ETH, 50-50. Obviously, you can kind of do more than that. But to do anything more than that, you have to buy those two first anyway, right, which I think makes those two even safer for me personally.
And then what I would probably do is I would literally look at the public companies that I have wanted to invest in for a long period of time, but never felt like I could because they've always seemed too expensive. And maybe if they were, you know, if you felt like you almost wanted to and they're now down, maybe you should, you know, like otherwise, you're just kind of being intellectually dishonest with yourself, right? You never actually. What's a good example? I mean, honestly, I would literally just look at Feng and be like, what dropped the most? I believe all Feng companies.
slava (45:21.941)
Do you have an example?
sahil (45:32.414)
especially Facebook, Microsoft, Apple, Google, will be worth literally, I mean, I'm not joking, like tens of trillions of dollars each in 10 years or 50 years. Like those things are here to stay. Amazon is here to stay. Certainly Google is. Apple certainly is. Like those three are products that I use literally every day all the time. And so I would bet on those any day. So if any of, I don't know, I literally don't know because I haven't checked the markets. But if any of those things are down more than...
10, 20, 30%, whatever, whatever is down most. Like I would, that I think is like easy. I cannot imagine that we're like, we've, Elon said this well, I think he's like, you either believe that we're going to go to Mars or you believe that like the moon is the last place the farthest humanity will ever get. And I'm very, I would be very, and so it's similar with all time highs. You either believe that we've seen the most value ever in these companies or that we'll see more. And my guess is we'll probably see more.
And, you know, yeah. If 2021 was the moon, you know, and whatever we're in now is like, you know, the orbit, we're still not at Mars, right? Like we're still, we're still, we still don't have self-driving cars. We still don't have general purpose intelligence. We won't for many decades. But like, there is a future that is better than the present. And that future, you know, money is effectively a measure of wealth, and much more wealth will be created.
slava (46:33.589)
Well said, well said. It's been an incredible conversation.
sahil (47:00.974)
And you know, it's sort of humanity is the greatest Ponzi scheme, right? It relies on more generations. And like as long as you believe that, as long as you believe more people will have more kids, which I believe because I believe strongly in making it easier and cheaper to have kids, that will happen, you know? And honestly, like I'm only interested in betting that way anyway, because I'm not interested in betting the other way, because if I bet the other way, that's kind of assuming that everything goes to crap. And like, that's not why I invest. I don't invest for-
I put money in my bank account for everything to go to crap. But when I'm thinking about investing, then I'm thinking about where can I position myself to be? I don't use leverage, right? So I'm not really margin called or anything. I don't do any of that, but anything that I can afford to lose, I'm putting in where I believe the future is.
slava (47:49.137)
Thank you so much for your time. From 100 billion people that will be here, to books from dead people, synthetic wombs, and betting on BTC and ETH, we've gone through a windy road with you, and thank you so much for your time, Sahil. This has been awesome. We appreciate you here.
sahil (48:08.266)
You're welcome. Thanks so much for having me, for doing this.
