Invest Like The Best
Episode 267 Unwrapping the Gift
Invest Like The Best

Episode 267: Unwrapping the Gift

Invest Like The Best

Episode 267

Unwrapping the Gift

Garry Tan is the founder and managing partner of Initialized Capital. We cover what’s missing in the investment world, how to best systematize venture investments, and the most common bad ideas for startups.

This episode is brought to you by:

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[00:02:45] - [First question] - Why he’s interested by software and the global brain

[00:06:23] - How the shift from global to local manifests in his investing and company activities

[00:11:42] - Ways to increase throughput that would benefit everybody in the investing world 

[00:17:13] - What software he would build if there were no limitations and what happens at the systems level of securing deals at Initialize 
[00:23:33] - Why there is no objective application process for early-stage capital and how much human judgment we can remove from approving funding

[00:26:49] - Shared characteristics amongst new inventions he finds favorable 

[00:31:49] - Whether he’s able to evaluate an idea without a prototype

[00:33:33] - Why travel planning software was the worst idea of 2012 and what he sees as the bad idea of today

[00:36:06] - The most common reasons for failure in these types of businesses

[00:39:07] - Is big enabling technology shifts what manifests in successful outcomes?

[00:40:37] - The role of media and how it intersects with investing

[00:44:29] - What he attributes to the success of his firm and thriving in chaos

[00:48:11] - Would he press a button that would have made his childhood easy, and whether he’s met founders who haven’t come across adversity in their lives 

[00:50:00] - His thoughts on the world today via the lens of his portfolio

[00:53:12] - The kindest thing anyone has ever done for him 

Unwrapping the Gift

Introduction

Patrick
My guest today is Garry Tan, founder and managing partner of early stage venture firm, Initialized Capital. Before starting Initialized, Garry was a partner at Y Combinator, employee number 10 at Palantir, and co-founder of YC-backed blog platform, Posterous. Our discussion covers what's missing in the investment world, how to best systematize venture investments, and what he learned from Paul Graham. Please enjoy my conversation with Garry Tan.

Building the Global Brain

Patrick
Garry, could you begin by telling us what you mean by software and the global brain and why this concept is interesting to you right now given what's going on in the world?

Garry
Yeah, it's actually something that I think is driving every organization that's trying to use software in the world. And actually, interestingly, it was brought to my attention by Yuri Milner of Digital Sky. He came to speak at Y Combinator and I remember him distinctly saying, one of the reasons why he invested in Facebook very early or relatively early at the $10 billion mark was that he came to a realization that something like 10% of the world's energy goes to data centers, which is also about the ratio that the brain consumes in a human body. And I don't know if that's true or not, but I thought that was very interesting. And all the world's people and all of the world's resources were coming together being organized around a nervous system that is basically the internet and software. And that was... He came to speak at Y Combinator probably 10 years ago or more, but I think ever since I heard that, I've been seeing that absolutely everywhere. And I think now if you look at every business that we like to fund or every business that's growing very quickly and reforming the way resources are delivered or all transactions are being sold, you can extend it all the way to crypto, what's happening is that it's that story, not just at the global brain level. Like we think about Facebook and social media, and we're not really sure. 10 years ago, we were very optimistic about those changes and today I think we're quite a bit less optimistic about those changes, probably rightly so. We don't know what it's doing to our children. We don't know what it's doing to our society and to political thought and to geopolitics.

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