May 4, 2025 • 47 mins
Joel Palathinkal chats with Rex Salisbury of Cambrian VC, about evolving venture capital strategies, focusing on fintech community building and Cambrian VC. They discuss family reactions to career shifts, fintech trends, portfolio successes, and assessing risk at the pre-seed stage. The episode highlights the role of community in VC, access in venture capital, and how multi-stage firms affect seed valuations. Co-founder matching, content creation, and platform optimization are explored. The guest shares insights on starting a venture fund, networking, and career growth. The episode wraps up with closing remarks and a summit announcement.
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Episode Transcript
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(00:00):
A pre sold day pretty much.
(00:02):
Yeah.
And this is, you know, Tiger famously did this.
SoftBank has done this in various ways.
Actually, the kind of original thing people sayto criticize a 16 z is that we did this like in
the early days in the twenty teens with ourearly funds because we were willing to pay up
for really great companies worked out reallywell, Coinbase, Airbnb, some other folks.
So there are other strategies that make I thinkA's very very risky for LPs to deploy capital
(00:27):
in, even in some of the best managers becausethe rules of engagement will change.
Welcome to The Investor, a podcast where I,Joel Palafinkel, your host, dives deep into the
minds of the world's most influentialinstitutional investors.
In each episode, we sit down with an investorto hear about their journeys and how global
(00:51):
markets are driving capital allocation.
So join us on this journey as we explore theseinsights.
Hold on.
We will find out, I guess, soon.
I mean, so this goes on all channels.
But, you know, anyways, to kick this off,excited to have you Rex, founder and GP at
(01:13):
Cambrian VC, ex partner at a sixteen z focusedon fintech.
So Rex, thanks for jumping on the show andexcited to go deep on everything that you're
doing and what we've done in the past.
Thanks for having me, Joel.
So let's just jump into it.
Tell me a little more about kind of where yougrew up, what your early education was, and
(01:36):
just navigate us through your career andprofessional path.
And then I'll probably stop you in between todig a little deeper as we go.
Sure.
So to start in MediEarace, the most importantdecision I ever made was to move to the Bay
Area and start working in what I think is theworld's best tech ecosystem because the
networks here are so good.
But it took me a while to figure that out.
(01:56):
So long time ago, actually grew up on a farm inMaryland.
I'm one of five and so grew up hoeing corn andselling pumpkins and like doing all that,
showing animals at four H that kind of thing.
I ended up doing undergrad at Davidson, endedup doing investment banking.
If you think about how networks drive yourcareer, a lot of times you'll see that certain
universities, college networks have certainconnectivity to different employer sectors.
(02:21):
So for Davidson, it's like you've got bio kidsgoing into being doctors, you've got economics
kids going into investment banking.
And that's what I did.
Bank of America down the street, largestemployer of Davidson alums.
I ended up there, learned a lot, totally hatedit.
So I did real estate investment banking,syndicated finance.
I know a lot of people who started outinvestment banking, especially investment
(02:42):
banking during and post the great recession wasjust not a particularly interesting place to
be.
And while I was doing that work, was observingthe work that was starting to happen in FinTech
on the other coast.
I was like, look, this is way more interesting.
So I taught myself to code, drove cost countryand then helped start.
(03:02):
And I was just not an employee, but a founder,helped start a direct consumer mortgage company
under one of the co founders of SoFi.
Really interesting learning experience.
That company failed, but I was now in SanFrancisco in the kind of right moment and the
right place for building a network within theburgeoning FinTech ecosystem.
(03:24):
So in the early twenty teens started buildingcommunity for folks who were building
interesting things in FinTech.
So we would do monthly events in Downtown SanFrancisco, we'd have really interesting
speakers come in and talk about what they werebuilding.
So we had folks from like Plaid and Deal andother companies come in very early at the pre
seeder seat before anyone knew who they were.
And those are the people who've gone on totransform what we think of as being possible
(03:47):
within Fintech.
And so that community that I started was calledCambrian.
Today, I'm running my own fund called Cambrian.
So Cambrian started as these kind of monthlyevents downtown San Francisco, grew to the
point where I was running monthly events in SanFrancisco and New York doing bioinal summits,
quarterly job fairs, bioinal co foundermatching.
I still do the co founder matching component.
And what happened from there is as I built thisreally large following set of network
(04:09):
relationships, as well as insights in theecosystem.
Got pulled into investing and advising.
And in 2019, I quit my day job to go full timeand actually build a fund.
And that's when ASICs and C reached out andthey're like, hey, you understand capital
markets and finance having worked as aninvestment banker.
You understand how to build marshaled networkswithin the fintech ecosystem and you understand
(04:30):
technology because you've worked as a softwareengineer.
So why don't you come and help us build ourfintech practice?
So in 2019, I was first partner hiredexternally.
We grew that team quite a bit.
After two and half years, it was either stayfor a long time and go and do my own thing.
And I think you can see where and why I decidedto do my own thing.
And I'll tell you, I think most partners whoare at large funds, if they could go launch
their own thing and felt like they haddifferentiated brand network voice access, they
(04:54):
would do it.
And it's the best job in the world.
I love it.
Stressful when you get started, takes time.
It's also really long time commitment, right?
Fund one is gonna be north of twelve years andyou're really you're committing to your LPs not
to do it just for one fund, but do it for threefunds.
You're talking about like a fifteen, twentyyear commitment from day zero.
And now that I'm two years plus into it, I'm Ican tell you I'd be very happy doing this job,
(05:16):
for a very long time.
So I'm an older brother.
Tell me a little bit about what your brother'sand your parents reaction was to your career
shift.
I mean, do all your brothers still work on thefarm or they do they all become these
investment bankers and venture capitalists?
Tell me about that dynamic because that's quitea change and that might kind of have different
(05:36):
reactions for different family dynamics.
Yeah, so my parents, great parents, verysupportive and they just want all of us kids go
and do things we're interested in and findcompelling.
Actually a lot of my family has ended up intech.
If you think about the employment rate postgrace recession and certain parts and sectors
(05:58):
of the economy is pretty high.
If you look at tech in San Francisco, was verylow.
We're talking like 2.9% when it was like 10% ina lot of other places.
Wow.
So several of my other siblings started inother places.
Mhmm.
But one of them is now designing the nextgeneration e bike for Lime.
Another one is GM and head of go to market at afintech company actually which he moved out
(06:20):
here to the Bay Area after removing landlinesaround the world.
Another one started out as a private banker inSwitzerland before helping being early at a
health tech startup in the Boston ecosystem.
He went into Harvard undergrads, had a strongnetwork there.
And so actually, four of us are working in andaround the tech ecosystem.
And the last one is actually the youngest ofthe five is my sister Caroline and she is
(06:45):
working to manage Ag land.
So she went to Cornell, studied agriculture andher very first job was managing a 35,000 acre
farm in Louisiana.
Thirty five thousand acres for context.
San Francisco is about seven miles by sevenmiles.
That's about 49 square miles.
Roughly equivalent to 35,000 acres.
So we're talking a really big piece of land.
Now what she does is she works for one of thelargest private landowners in the country
(07:09):
managing an institutional grade real estatefarmland portfolio.
And so we basically have four folks in tech,we've got one doing ag.
Ag, by the way, is a very interesting andgrowing asset class.
If you think about venture, it's kind of acottage industry that hasn't really formalized
or hasn't really started to institutionalize orscale until the last ten years or so.
(07:30):
Ag is in a similar place where it's a veryfragmented market, a lot of family farms,
you've got like two publicly traded REITs doingag and then some private funds, but not a lot
else.
It really is an asset class that shouldinstitutionalize as well.
So that's a whole another kennel worms.
Yeah, that's amazing.
Yeah, I mean, congrats to you and your familyand it's just great to see, number one, having
(07:54):
a great family dynamic and then just seeing allof you guys do great things.
I love your focus on FinTech because I thinkthat's just a constantly changing ecosystem and
technology layer.
So can you unpack the fintech ecosystem as yousee it and kind of what you're excited about?
I mean, people are talking about embeddedfinance for a while in the past.
(08:17):
One thing that I want the audience to know toois you create some great content.
I reached out to you because I really enjoyedthat interview that you did with Plaid.
And I remember one of my past roles in product,we were exploring Plaid as an integration.
So I remember when they were like just gettingstarted and we talked to some of the early
founders kind of integrating them in for likecategorization.
(08:39):
So just, you know, can you unpack just theindustry and kinda, you know, how it breaks
down in your eyes and and how we should startlooking at it?
Yeah.
So let's start really high level and then we'llkinda do bottoms up.
There might be a loaded question.
Yeah, if you look very high level financialservices about 7% of GDP and if you look at the
institutions that are doing most of therevenue, a lot of them like insurers, lot of
(09:02):
them were founded in the 1800s, banks in theearly 1900s.
So we've seen very little change in a hugeenduring part of the economy.
And now it is time for things to startchanging.
And if you look at how much FinTech haspenetrated financial services to date, it's
actually very, very small.
We've got a bunch of companies worth $10.20,dollars 50,000,000,000.
(09:24):
Stripe's worth like $5,060,000,000,000.
You've got deal, which is someone I backed ata16z worth about 10,000,000,000.
You've got ramp, you've got Rippling, you've abunch of other ones.
We've got a bunch of really successfulcompanies, one of the most successful
categories in venture.
Still, if you look at FinTech penetration ofglobal financial services revenue, it's
something on the order of magnitude of like 2%.
So what that means is you've still got 98% ofthe opportunity remaining.
(09:49):
And in the ten years since FinTech got started,we actually now have a lot more founders
actually understand both finance and technologyand they have better infrastructure to build on
top of.
And you have some underpinning demographicshifts around people just not tolerating
terrible products and financial servicesanymore.
And so what that's a long way of saying thatthe market is as big as it was ten or fifteen
(10:12):
years ago when fintech first started.
The founders are better, the infrastructure isbetter and the timing is better.
So there's no reason we shouldn't see morecompanies built or reach scale more quickly who
are starting to get more share from incumbents.
And so that's very exciting at just a highlevel.
If you drill down a little bit or think aboutsome trends, one thing you wanna see is you
(10:34):
wanna see product innovation, but you also wantto see business model innovation.
And one thing I'm seeing a lot of now arepeople building new bundles that are incredibly
hard for banks to compete with because they'rebundling things in a way that commoditize their
complement, which means a bank can't offer itbecause the thing being commoditized might be
the core driver of their business model.
(10:54):
A very simple example of this would be all ofthese companies that now have high yield
accounts.
If you think about a bank, their core advantageis cost of capital and everything else is tied
around that bundle, right?
They have a bunch of different products, butthe core advantage you'll hear people say is,
like my cost of capital beats your productevery day.
Well, guess what's happening?
Now lots of people have high yield accountsthat are integrated into a broader product
(11:18):
suite and bank deposit betas, their cost ofcapital are going up.
We've actually seen a trillion dollars ofoutflows of deposits in the last twelve months.
So we're seeing product innovation coupled witha shift in business models and that creates a
lot of opportunity especially when you gotbetter founders with better infrastructure.
So that's just top down like why I thinkfinancial services and fintech, there's still
(11:39):
lots of room to run.
If you look past that and you start to do somebottoms up stuff, so I run my own fund.
I focus on pre seed and seed investing.
90% of I do is US b to b fintech.
I will do international.
I will do consumer.
It just so happens that 90% of the mostinteresting opportunities I tend to find and
tend to find that I am uniquely evaluate oruniquely situated to evaluate are USB to B
(12:02):
fintech companies.
And when I look at my portfolio, some of whomare now just hitting two years old, they're
doing very well scaling very quickly even in acapital environment that's not as rich as it
used to be, which is fine because they'rebuilding real products with real value in a
capital efficient way.
So we just had one company announce theirSeries A.
Anza is building a closed loop wallet fordevelopers.
(12:26):
You can think about what they do is offeringlike a Starbucks wallet as a service.
They'll do it both for consumer applications.
So like a coffee chain that wants to have astored value for loyalty and rewards, but
they'll also do b to b kind of closed looppayment systems or wallets if you want to do
loyalty and rewards for like wholesale tocoffee shops or some other thing.
(12:46):
Anyways, they've reached a series A in lessthan two years from founding.
If you look at recent Carta data, the number ofcompanies that go from C to A in two years is
less than 12%.
Companies that go from all the way to A fromincorporation in less than two years is well
inside of that.
So if you find really good founders very early,you can see them build and scale interest in
(13:08):
enterprises very quickly and that's superexciting.
And one of the things they're doing is, youknow, they're helping small merchants take on
the card networks because when you have thesereloadable reusable wallets, you can drive
loyalty and rewards, but you also are fundingthem via ACH, which means you're pulling some
of the money out of potential card rails, whichhave really high fees, especially for low value
(13:31):
items.
And that's a great team that's ex, it's SofiaGoldberg, JT Chu and they are ex Adyen and
Affirm going and talking about, you know, youhave really great operators, who have great
pedigree, who have unique insights in themarket, who therefore are able to build and
scale very quickly.
I'm giving lots of other great founders in theportfolio, just giving them a call out because
they announced their series a just it was a dayor two ago.
(13:52):
That's amazing.
So you you mentioned some of the DNA that youlook for, right, great operators coming from
great pedigrees.
What else is kind of that magical thing thatyou're looking for?
Because especially pre seed, you know, it's itis a little more risky, because you're kinda
looking at can you still hear me?
Yeah.
There we go.
Can still hear you.
Yeah.
Yeah.
So, you know, what are some of the other thingsthat you're looking for, especially with
(14:14):
precede, right?
Because you're underwriting the risk of some ofthe uncertainty, not seeing the traction yet.
So you're really, really high convictionlooking at the founders.
So what has been kind of some of the frameworksthat you look at beyond the pedigree, beyond
kind of like, hey, they work the bricklaying orthey work
And I'm gonna push back on that.
I don't think pre seed is risky.
I think it used to be risky.
(14:34):
I don't think it's risky anymore.
I've looked at thousands of deals and afterdoing that now, I actually think that if you
have the right network, the right ability toidentify founders, and you've been looking at
the ecosystem for a long time, you realize thatgreat so why why did it used to be risky?
It used to be risky because the firstgeneration of fintech founders, they didn't
(14:56):
necessarily know how to build something infinancial services because they had never done
it before.
So you mentioned I have a podcast.
I've interviewed folks like Ken Lin from CreditKarma, John Stein from Betterment.
And when they first got started, they're like,who should my co founder be?
And they're like, they have no idea.
They're like, how do I, in the case ofBetterment, how do I actually launch a
(15:16):
brokerage?
It's like, there's no infrastructure toactually build and launch a brokerage on top of
an API.
And actually then turns out that Apex comesalong, but that's like literally at the same
time.
So question of like, how do you build the team?
How do you build the infrastructure?
What should the business model be?
How do you scale the team?
Who do you raise capital from?
Two of the big multi stage FinTech firms at thetime, QED and Ribbit are one of them like
(15:40):
doesn't exist and the other is basically afamily office.
So you have existential risk on like everyaspect of the business.
That's why it used to be very risky because yougive this person money and you have no idea if
they could build it, hire a team or raise afollow on capital.
Sure.
Fast forward ten or fifteen years, all thosethings are completely different.
You can find really great founders with uniqueinsight in the market.
(16:02):
And you know, if you know how to evaluatefounder quality, you know they'll be able to
build and launch the product.
And if you sit around and wait for that tohappen, you're going to end up paying a much,
much higher price for something you could havehad a high degree of confidence about much
earlier.
So I think it used to make sense to sit aroundand wait for like the A and the B.
(16:22):
But in those intervening ten or fifteen years,those rounds have become much, much more
competitive, much, much higher price.
And the likelihood if you identify goodfounders to be able to hit those milestones has
gone way up.
And so that's why I focus on the pre seed andseed.
And when my companies graduate to seed, it'salso risky.
Like sure, you might be able to tell that's agreat company, but what's risky is you might
(16:45):
not be able to win the deal.
So the last company of mine that graduated frompre seed to seed they got seven term sheets
before they stopped running their process.
So that's risky too.
You might not be able to invest in the companyyou want to invest in.
Yeah, which could be a bigger risk at times.
If you think about venture, it's source, pick,win and then also support.
Sourcing, very important.
(17:07):
But for companies, especially as they get preseed, it can be a little bit hard to see
because they might not even be incorporated.
It's literally just like someone counters Gmailand maybe their LinkedIn says they're in
stealth and that's about it.
If you get to the seed, usually the previousround has been announced.
There are other investors who have kind ofsocialized the ecosystem, what they're
building, where the company is.
(17:29):
So starting at the C, but certainly by theSeries A, it becomes very competitive and very
expensive because the amount of capital in theventure ecosystem.
In 2012, about $20,000,000,000 was deployed inthe venture.
In 2020, which admittedly was close to the peakof the market, but we're still getting close to
back to where that was, 200,000,000,000 wasdeployed in venture in The US.
(17:49):
So we're talking about 10x growth in the amountof capital.
What that means is it's 10 times morecompetitive at the series a than it used to be
when you have founders who are better equippedthan ever to hit those milestones.
And so I I really push back on the narrativethat precede and seed and risky.
I think what's risky is waiting around to payup at a later round and then still losing the
(18:11):
deal.
I see that happen all the time with themajority of my companies when they go out for
the next round.
Now sometimes it takes a while to actuallybuild and so this is one the things I'm trying
to educate the market on a little bit isunderstanding that actually if you have great
managers, great investors, they can identifygreat talent very early.
(18:33):
That's less risky than trying to give it tomulti stage funds where they pay up, they lose
allocation, they have high reserve ratios wherethey're buying even more.
They're allocating even more money later on.
So I don't think this is novel if you like lookat the data and you look at funds that
outperform, there is so much research thatshows that smaller pre seed and seed funds
(18:54):
outperform, way outperform a lot of the largemanagers.
Oh, part
of that is just a math thing, but I think partof that is also a cyclical thing in that we've
demystified the kind of formation stage andwhat that looks like.
Before and YC is one of the groups who gets alot of credit for this, as well as lots of
(19:14):
other folks who just written content on what ittakes to start a company.
It used to be this like dark art of like how doyou go from zero to one?
And now it's not quite a dark art in partbecause there are more repeat founders in the
ecosystem than there ever were before.
And so just the mechanics of what you need todo and how to do it, you don't get stuck on
that.
Maybe you get stuck on the fundamental problemof how do you find product market fit, but
(19:35):
you're not getting stuck on like, how do Iincorporate?
How do I set up payroll?
Do I need to hire an accountant?
How do I put together a pitch deck?
How do I run a recruiting process?
How do I do like those things aren't these likeexistential issues.
Who do I raise from?
Do I know any investors?
Instead, the question is like, how do I findproduct market fit?
And even there, a lot of times the foundershave pretty unique insight into what they're
(19:57):
building.
Well, would say too, I was gonna add, I thinkthe fact that you built this community and this
close knit network, I think that definitelygives you an edge.
Mean, the typical VC may not have thosenetworks and ecosystems to kind open up that
talent and access network.
So kudos to you
on venture.
(20:18):
It's about access, right?
And I think the most access constrained part isstill at the pre seed and seed.
Like I said, as soon as you get to the seriesA, there's enough data that people can come in
and start using the leveraging that data to tryalternative strategy.
So when I was at A16C, one thing we werereally, really good at because we have a really
good brand, we're very founder centric, we havea massive platform team, is we would win deals.
(20:42):
If we went in and we bid on a down the middleseries a, doesn't matter who else is in the
round, we will win the deal.
But the problem is people realize this.
So what did they start doing?
They started preempting As before the companywas running a process.
Did we lose those deals?
No, like we didn't want to do those deals.
(21:02):
But then what we started finding was all thegood deals were getting done before they even
got to like what used to be an a.
And so the rules of engagement
It's a pre sold a pretty much.
Yeah.
And this is, you know, Tiger famously did this.
SoftBank has done this in various ways.
Actually, the kind of original thing people sayto criticize a 16 c is that we did this like in
(21:23):
the early days in the twenty teens with ourearly funds because we were willing to pay up
for really great companies worked out reallywell, Coinbase, Airbnb, some other folks.
So there are other strategies that make I thinkA's very, very risky for LPs to deploy capital
in even in some of the best managers becausethe rules of engagement will change.
(21:44):
I've seen this happen so many times.
It's not happening as much right now or in thelast eighteen months of markets have corrected,
but as markets come back, it will starthappening again.
And I'm already seeing it start to happen now.
And you can see this in the data.
If you look at series A valuations, this isfrom Carta, they use their own proprietary data
(22:04):
to look at where median pre money of series A'sare.
It's getting close to, I think it like peakedat 47,000,000 in Q4 of twenty twenty one, Q4 of
'20 '20 '3, it's like 43 or 45.
So it's it's within spitting distance of alltime highs.
So we have this narrative that venture isfalling apart, that fintech is falling apart.
(22:26):
Yeah.
And if you look at the series a market, fewerdeals are getting done and the time between
deals has increased.
But the price of those deals is actually prettyclose to all time highs, which is not something
think enough people are talking about.
Yeah.
I want make sure I understand this.
So can you distill kind of the average forvaluation for pre seed to seed to series A for
(22:48):
fintech in ecosystem So
the best way to look at it and I would justrefer to the Carta data for this.
Yeah, absolutely.
I would say and for seed and it always dependson how you define it.
For series a right now, median post money,people should go to Peter Walker on, LinkedIn.
He runs the data and insights team.
(23:09):
If you subscribe to his newsletter, go to theirlike state of venture reports, they'll do it
either on a usually on a every half basis, butthey'll do some dives on a quarterly basis.
You'll see the median free money for series ais around, like, 44, 40 5 right now.
That's the median number, not an averagenumber.
Average tends to skew a little bit higher.
For a seed, I think right now it's in the highteens or so.
(23:32):
For pre seed, it's in the high single digits.
Okay.
And that's and at the pre seed and seed, that'sdown about 60 from peak.
But for series a, like we mentioned, it'sactually only down maybe six or 7% since peak.
So like the
So there's some yields to capture especiallygoing in pre seed, especially if you know what
(23:52):
you're doing.
Yeah, and the reason for that is you can thinkof the venture ecosystem kind of like a
balloon, where the air is the amount of capitaltrying to get squeezed into a certain sector.
And then the size of the balloon at a certainstage like the valuation depends on how much
air, how much capital is trying to get squeezedin that sector.
Yeah.
(24:12):
And what happened is the reason why seed priceswent up is multi stage firms who raise really
big funds like a sixteen's recent set of fundslike 6 or $7,000,000,000.
When they try and move into seed, that's a hugeamount of air capital flowing in and it
inflates valuations.
(24:32):
When the market calms down, they tend to pullout of that and those prices come back down
because then you have pre seed and seedspecialists who have smaller funds who are more
price disciplined who then concentrate onallocating there and the prices kind of relax.
Will happen though is as maybe not you knowA16Z my old firm but as other firms start
losing deals they're going to be tempted, thelarge multi stage funds start coming down to
(24:55):
seed.
And that's why I also do a lot of pre seed andalways will is because that even the seed
market can kind of get crazy when multi stagefirms start to get involved.
But they only do that that's kind of a countercyclical market signal that we're reaching a
peak is when you know Sequoia announces ARC,A16Z announces a seed fund and if you talk to
(25:16):
those platforms now they'll tell you they'relike kind of still doing that because they have
the programs, but that's not really a thingthey want to concentrate on anymore.
Sure.
So going back to access, what advice would yougive in terms of community building?
Like for emerging managers that are trying tobuild their own community, whether it's an
agriculture tech or hydrogen or deep tech.
What are some of the things that has worked foryou to kind of build this engaged community of
(25:40):
investors and co founders and potentialportfolio companies?
I think one is start small, focus on qualityand you'll be an overnight success in five
years.
So like you have to start with really highquality folks, kind of unique insights,
connectivity and do it consistently.
If you do it consistently for a long period oftime, it will grow.
(26:04):
If instead you focus on trying to grow lowquality interactions and low quality content,
it's not gonna really work.
So high quality staff, high quality individualsand then do it consistently.
And tell us a little more about your community.
So I was looking at the website for a fewseconds, but it sounds like it's mostly
founders, VCs in the FinTech space.
(26:25):
Tell me, you said you had some job fairs aswell.
So we'd love to just have the community beaware of all the great things that you're
doing.
Yeah.
So I've got the main things I do now arecontent.
So I have a podcast where I interview topfounders and fintech as well as operators and
investors.
So we have, I mentioned, you know, Ken Lin fromCredit Karma, John Stein from Betterment.
(26:47):
We recently had Eric from Ramp, Ahmad fromMercury, Ty from Unit.
We also the episode published just today iswith Keith from Kosla, formerly Founders Fund
and formerly Opendoor and Square and some otherplaces.
So one is content, have some great interviewswith folks, then also LinkedIn, Twitter, that
kind of stuff.
I now have I used to run these monthly inperson events.
(27:08):
Now I run quarterly in person events where wehave a really great founder talk about kind of
what's next for their company.
So we did an event with Zach Parrott, the CEOand founder of Plaid at their SF headquarters
in Downtown San Francisco back in February.
We'll probably do two or three more of those.
So like I said, we'll do about an episode amonth for the podcast.
(27:29):
We'll do about three or four in person eventswhere we have a great founder speak about what
they're building and do those in San FranciscoA year.
And then I also focus on high quality smallerevents that are for founders in the portfolio,
friends of kind of the closer Cambriancommunity.
I've got 20 plus founders for all LPs in thefund as well.
And I also have a Slack community that has2,000 fintech founders in it.
(27:52):
So if you're listening to this podcast or thestream and you are in San Francisco, you should
look out for some of the events.
I'll post them on Twitter and on LinkedIn.
When they come out, they tend to sell outwithin like an hour or two.
So make sure if you do see something to act onit quickly.
So that's one if you're in San Francisco, staytuned for some of our upcoming events.
Two is you can subscribe to our newsletterwhich is on the website, cambrianhq.com.
(28:16):
That will then share the recordings of thoselive events as well as the regular podcast
episodes.
If you're a founder, have a Slack community,can find a link to it on the website.
Again, we've got about 2,000 FinTech foundersin that Slack community, it's a great place to
go and just ask questions of other founderslike, I'm integrating with Plaid, I found this
issue, what do you have you found this issue?
That's not a question that people necessarilyask today, but that's the kind of question they
(28:39):
would have asked years ago that you might beasking today around various other kinds of
infrastructure providers or things like that.
And then I do run the co founder matching twicea year.
We have our first half of twenty twenty fourone up and running about 300 folks have
participated.
Again, you can find a link to that on thewebsite, cambrianhq.com.
If you're looking for a co founder in fintech,you should go and check that out as well.
(29:02):
Yeah.
I went ahead and posted those links too.
And anything else you want me to share, I'll goahead and share it out.
The co founder matching, so how does that work?
So you got three hunt do you have like fiftyfifty, like founders and and VCs and it's kinda
like speed dating?
No VCs.
It's co founder matching.
It's just founders.
It is people with like,
(29:23):
the pre seed pre seed companies eventuallycoming coming to fruition.
That's right.
And so actually one of our I've On occasion,will also invest in folks who come in through
that, but it's mostly an exercise and helpingmembers of the community just go and do
interesting things.
Often not often, but like a good number ofpeople, seven, eight folks do find.
(29:44):
And it's hard for me to track, I don't actuallytrack it, do find co founders through that each
time.
But if nothing else, they have a lot of highquality interactions with folks.
So it's mutual opt in.
When you participate, you basically will getaccess to a permission list of other folks who
are participating, and then you can reach outvia email or LinkedIn, and then it's up to you
to to connect.
(30:04):
So it's a lightweight, but efficient way ofgetting a sense of who else is out there and
what kind of ideas they're working on.
Yeah, that's helpful.
I wanted to ask you too as a fellow creatorbecause my stuff is pretty lo fi.
I just kind of go live and I haven't had muchtime to do a lot of production and editing.
But I saw a short form piece of content fromTim Ferriss the other day just talking about
(30:28):
how he works with his podcast guests.
You know, a lot of times he makes sure thatthey can, you know, give a final cut before it
goes live.
There's a lot of preparation, you know, thathappens.
Obviously, you hurt yours and I preparation.
The preparation between you and I has just beenpretty pretty off the cuff, and that's just how
I've been doing it.
But what advice would you give for fundmanagers, founders that are looking to build a
(30:52):
media platform, whether it's YouTube, podcasts,what's kind of your process that's kind of
worked for you and worked for your guests?
Yep.
So I think the number one thing to do is toship it.
So you come up with a kind of content you wantto do, a cadence to do it and then ship it and
be okay if it's not good.
I often refer to a piece of content from IraGlass at This American Life and he says, one of
(31:17):
the hardest thing about being a creator is thatif you wanna be a creator, it's probably
because you have some degree of taste and youhave maybe a slightly elevated degree of taste.
And the problem is with the first content youproduce, it's gonna be bad.
Yeah.
And you're gonna be kind of embarrassed aboutAnd you're like not gonna wanna do it and then
you won't do it and then nothing will everhappen.
(31:38):
So you have to first just create content and doit on a regular schedule and you will get
better the more you create.
But two, this is the next thing, after youstart doing it again, you have to constantly be
working on your process Yeah.
To make it better.
So like right now, you're not doing maybe asmuch prep work as you could, you're not doing
as much post content production you could,that's okay.
(32:02):
You've gotten started, you're doing it.
Now keep doing it and keep making each piecesuccessfully better.
And if you do that for five years, you'll be anovernight success.
So I think the problem is most people don'teven get started.
Sure.
And then most people even they get started, theones who tend not to make it better and better
over time, tend to stop before they put in thetime to make it really good anyway.
(32:25):
So you have to keep doing it and you have tokeep making it better.
And so
And then and then I guess Andy Mike is on.
You have to like the content.
Like you have to Yeah.
Want to do it because there's not gonna be anaudience at first.
Not gonna be like anything that's you can pointto like, wow, this like it's really works
great.
And I like amazing things are happening in mylife because of this bad podcast I published.
(32:48):
So like if you're expecting that you're notgonna do it for five years.
Yeah.
I mean, me, it's been an amazing way Yeah.
Yeah.
Mean, for me, this is kind of the fastest wayfor me to learn, because right now just in
thirty minutes, you've unpacked the entireFinTech and some of SF ecosystem in an
accelerated way.
Instead of me reading a bunch of blogs andlistening to other podcasts, if I can get an
(33:11):
expert to come in and distill it like you did,that's definitely helpful.
I've also just heard from other people just theutility of just really great thumbnails.
There's also like SEO that you can do onYouTube.
So any other just kind of best practices forjust optimization on the channels or editing
quality?
(33:31):
And then have you also looked at short form aswell, like taking some of the long form stuff
and putting it on like TikTok and Instagram?
Obviously, you can just get your head toexplode at some point when you just got so many
platforms you're thinking about.
But any any other best practices on on thosefronts in terms of just improving the content
or optimizing it?
Yeah.
So one, the most important thing is still justto ship onto whatever platform you want.
(33:55):
I think YouTube is a great platform to optimizefor because it's just where all the eyeballs
are.
So first, have to pick a platform.
Yeah.
I think the two best platforms are LinkedInbecause everyone's on LinkedIn by default.
Yeah.
Twitter is super good, and I love Twitter forwhat it is, but there are lot of people who
just aren't on Twitter.
Sure.
Especially like newer graduates, etcetera.
(34:16):
So like LinkedIn is by default people'sprofessional identities.
You should think about having content there.
They are starting to do video content, but thatis early in its iteration.
So I'm not saying it's a great place to dovideo content.
If you wanna do podcasts or like audio video,YouTube I think is the best platform for that.
(34:37):
The short form video sites, I do create shortterm video, but I basically take my long form
stuff.
I have a team cut it up, push it out there.
I don't have to spend that much time on it, butit also just doesn't get that much engagement
that I think matters because I think myaudience that I care about engaging with isn't
really going to spend as much time or get asmuch out of these short form video clips on
(35:00):
Instagram and TikTok.
Could be wrong.
Yeah.
But that's been my impression.
The stuff that does really well on the reallyshort form video is like talking about the
biggest brand names and the biggest brand nameindividuals.
So it'd be like Musk and Twitter kills Apple.
And that that can, like, get a lot of viewsYeah.
(35:21):
If you do it right and you could you could havea sensational hook, but then, you know, try and
deliver quality content afterwards.
Yeah.
But it's usually not gonna say something thatmatters a lot to my core audience of like
founders who are building things or at least Ihaven't figured out a way to do it.
So I do do short form video content, I haven'tfound it to be particularly useful and so I'm
more focused on LinkedIn and on YouTube.
(35:43):
YouTube is great because it has a huge audiencethat is has a high skew in terms of number of
types of different personas that are on it.
And the bat catalog of stuff will continue togrow over time.
I have a bunch of videos that have been aroundfor a long time, terrible production quality,
(36:04):
like literally no production quality andthey're still growing linearly, which is great.
But the main thing is ship, improve qualityover time, pick the platforms that align with
your audience and then yes, like thumbnails domatter, titles do matter a lot and so you are
gonna have to play around in terms of gettingthose working and those they do matter a lot
(36:26):
like Yeah.
One of the most important things that, youknow, folks like mister there's mister beast
has, five, six people or something, and theyall, like, work so hard on getting, like, the
perfect thumbnail.
They're, like, AB testing the thumbnails tojust to make sure they work.
Yeah.
So that's super important to him.
And then, you know, I mean, talking aboutquality, you know, I mean, we both know the
same videographer.
So definitely that plaid video that you had, itwas super crisp looking.
(36:48):
So, any advice on how people can work withvideographers and get into that art of just
really good production quality?
Obviously, the lighting is a big thing too.
Any learnings from getting into more highquality content?
Find a good videographer and pay them money.
And have them give you a lot of guidance.
(37:13):
Cool.
Well, what advice would you give in terms of wegot a couple more minutes, I'll just wrap it to
fire a couple more questions.
So what advice would you give to somebody whomaybe was a founder or professional looking to
just start their fund one?
What are some things that you would tell themto start thinking about?
Well, let's back up and how you even get intothe place to be able to start fund one.
(37:35):
So depends on where exactly you are in yourcareer, but I think one you should move to San
Francisco, maybe New York.
If you want to start a fund, there arebasically two places in The US where venture
happens.
San Francisco is where the vast majority of ithappens.
Yeah.
The only reason I say New York is actuallybetween New York and San Francisco.
A lot of the LPs have offices in New York aswell even if most of the venture deals and the
(37:57):
venture funds are based here.
And what you're doing is you have twoaudiences.
You have the founder audience that you'retrying to invest into and you have the LP
audience you're trying to raise money from.
So you really need to be in one of those twoecosystems.
Otherwise, you can spend so much time on yourroad on the road traveling and travel has a
high tax on your productivity.
You're not gonna build these kind of softinformal relationships and networks that really
matter.
So one, move to San Francisco or New York.
(38:20):
If you're already like, I've been doing thisfor ten, fifteen years, I have this like
massive network, Like I don't need to be there.
And you feel like, you know why that's true.
That might be true.
I still think, I think you're right, but you'reright in the medium term, it won't matter for
the next three It will matter over the next tenor fifteen years, because you will need to
continue to build that and your network willnot initially atrophy, but it won't grow as
(38:44):
fast as it would if you're in the coreecosystems for the thing you're doing.
Right?
So one, and I like to hammer this point homebecause a lot of the other ones are kind of
fuzzy things.
They're fuzzy ideas.
Right?
They're like, this, don't do that.
This is a very concrete thing.
You can either say I am doing it or I am notdoing it.
Sure.
Right?
Yeah.
(39:04):
Whereas all the other bits of advice I can giveyou, like maybe they matter more along some
like if you were to stack rank the types ofthings you need to be doing, but it's fuzzy to
measure yourself as to whether or not you'vedone it and done it well.
So that's one is just be the systems where it'shappening.
And then two, and this is where it's a littlebit of a longer story and maybe whoever's
(39:26):
listening, they're in a different part of thisjourney, but I think like let's go all the way
back to undergrad.
So if you're in undergrad and you're gettingyour first job, move to the Bay Area.
2, the next thing you wanna do is join a midsized company with growth.
Right now that's any company that's raised aseries B within the last twelve or eighteen
months.
Why a series B and why the last twelve toeighteen months?
Well, it used to be that two years ago,everyone was raising series Bs, They're very
(39:50):
expensive, and it was very hard to tell arethese companies raising money good companies or
bad companies.
Last twelve to eighteen months, the market hasturned.
Series b's are very few and far between, and sothat means the companies that are raising them
in a down market are default very goodcompanies.
So another way of saying that is a signal tonoise ratio for series Bs for now, higher than
it's ever been, easy to identify mid sizedcompanies with growth.
(40:12):
So that's why you can look for series Bcompanies now in a way that's unique to this
moment in time.
And then two, always what you should be tryingto do as early in your career as possible, but
even later if you haven't done it already, isjoin a mid sized company with growth.
Why does that matter?
And that's true no matter the market cycle,it's just right now we're in a unique point in
the market cycle where I think it's easier thanusual to identify those companies.
(40:36):
Unfortunately, there's a smaller number ofthose companies than there are, but there's
less noise.
So it's kind of a trade off there.
So why join as company with growth?
If you join a mid sized company with growth,maybe they've got thirty, forty, 60 people.
They went in the last year from 2 and a half, 3million to 9,000,000 revenue.
They grew three x year over year.
They just got a brand name, investor to leadtheir series b.
(40:59):
They're now growing the organization, they needto hire more in sales, they need to hire more
in product, they need to hire more inengineering.
The people who are there are going to getpromoted or manage teams or manage when you
come in and you say, hey, I'm gonna do thisthing.
No one's like, no, no, don't do that thing.
Like you're gonna take my thing.
They're like, please God, thank you.
Do this thing for me.
I have too much to do.
(41:19):
And then as the company continues to scale andSeries B companies are supposed to have
repeatability of go to market.
So they should be somewhat de risked at leastfor the next few years in terms of continuing
to grow.
So you should get pulled along in your careerprogression to be able to do very interesting
work at a company that's growing and thereforehaving a career or a job scope that's growing
(41:41):
while you're at that company.
Then what happens is for the next time you goout and look for a job, someone's gonna say,
hey, I wanna hire someone who's like been in acompany that's another mid sized company growth
or that's like later stage and be like, we'regrowing really well.
I want to hire someone who's been in a companythat's done really well and has scaled this
thing.
And you're like, oh, I've done that becauselike I happen to be at this other company.
(42:02):
So you get to have the career story that youhelp scale something and then you get a broader
brand equity of that company.
And then that means you can land in anothergood job at another fast growing company.
And what's hard is if you come to the Bay Area,you work for one pre seed or seed company, it
fails.
And then you go and work for another one and itfails.
And then you're like, I don't know.
Now I do I invest in pre seed and seedcompanies.
(42:22):
I think people should go and work for them.
And I think those can be actually be the mostexciting, interesting, and like validating
career experiences.
But you should do it because you're amissionary and you believe in the founder and
you believe in the company so much that you'rewilling to take that career risk.
And then even if it fails, you'll be like, youknow what?
I had a blast.
We got to build something that was superinteresting.
(42:44):
That was my experience with the failed directconsumer mortgage company, Still worked out
okay.
So I still think you can go earlier, but youhave to have like you have to be committed to
the mission of the company.
Series b, I don't think it's great to be likeentirely mercenary because I think you're just
gonna end up being unhappy.
But if you were to be more mercenary, likethat's the the stage joint.
So, okay.
Now we're starting to talk about how do get aninvestor for a long long answer.
(43:04):
Now now you're at your second, midsize companywith growth.
You've like led two growing organizations.
Some of your friends from the first companyhave left.
They started starting companies.
Some of the folks from your second company arealso leaving starting to start companies.
They want you as an advisor because you've likehelped scale things in the market and the
company they're starting is somewhat related tothe company you guys worked at together.
(43:24):
And then you're also gonna write them an angela check and then you
do that for two or
three years.
And all of a sudden you've written like 10angel checks.
You're like advising a couple of companies andyou're like, oh, maybe I should go and do
venture because like I really like advising.
I really like backing people.
I have this network and then you can startnetworking very hard with the most junior level
(43:46):
folks at venture firms who've been hired in thelast six months and sharing deal flow with
them.
Why do you network with the most junior person?
Because the junior person doesn't have anetwork yet or their network is not like kind
of fully booked out.
If you go to the senior people, they'reoverbooked.
They don't wanna talk to you.
You go to the junior people, they're happy totalk to you.
You do that for another two years, now you havea network of folks at venture firms and you
(44:06):
know who's hiring, which firms are good firmsto work for, which ones you like, which ones
you don't like.
You have a bigger angel portfolio, maybe advisemore companies.
So again, this is kind of like the five yearplan of how to break into venture.
But that's the best plan is move to the BayArea, join one mid sized company with growth,
go to another one, angel advise invest, networkwith investors, and then maybe in five years,
(44:27):
you'll be in a position to join a good venturefirm.
By the way, you only wanna work for goodventure firms because bad venture firms return
less than the money that's invested in them.
So you are way better off to take five years toland a good job than to try and take any job at
any firm early.
And so that's Yeah.
I don't always remember to say that, but that'svery important.
Also, best outcome, you decide you don't wannabe a venture investor because there's a lot
(44:50):
about the job that you might not like.
And if you've learned that you really likebuilding companies, you should do that instead.
And that's probably more fulfilling andinteresting than like going and working at a
venture fund.
So that's the other thing is you will have morecareer optionality in terms of what you could
do if you take this path.
And it's probably the best path to actually endup in venture anyways.
(45:14):
No, that's helpful.
I think just to your point of joining a biggerfirm, you can definitely do a lot of
storytelling in terms of that track record andkind of the capital that you were involved in
deploying.
I think that's definitely good stuff to talkabout.
A lot of times LPs talk about a synthetic trackrecord.
So that track record that you built over timethat you can get some attribution for when
(45:36):
you're building your own firm and and kind offlowing into that.
Yeah.
Actually, your question was how do you start afund?
So Yeah.
There it's if you have like enough pedigree anda big enough track record from your angel
investments Mhmm.
That's might be enough to do a fund one.
It's gonna be pretty hard.
Yeah.
Ideally, you should go and work for a firm andbuild, a real track record, see how Yeah.
A firm actually operates, and then leave thatfirm and start your own.
(46:02):
So I think also the structure you know.
Yeah.
You got It took me ten about ten years to getto where I am.
Right?
Like that's Yeah.
And it was and it was not linear.
It was also not it was not what I set out withit's not like I started Cambrian.
I'm like, here's my secret plan in ten years.
Yeah.
Do this thing.
It's like I did things as interested in them.
They grew, they created some options and then Ichose the options I was most excited about.
(46:24):
And then this was the thing that kind of beingclear to me that I should be doing.
Yeah.
And I was going to say too the the advantage ofkind of working at a bigger firm or at least a
firm that has some processes, some of thatstructure and process you may adopt or just
make an iteration of when you build your ownfirm as well, which if you didn't have that,
you're just doing angel investments, you got tofigure it out on your own or seek mentors.
(46:47):
But hey man, this was amazing.
Rex, thanks so much.
This is why I do this podcast because in fortyfive minutes I feel like I become much smarter.
Thanks for just catching us all up on yourinsights and I will hopefully see you in San
Francisco at our summit next month.
Sounds good.
All right, see you around Thank
you.
Appreciate it, Rex.
Have a good one.
Cheers.
(47:07):
Bye.
A pre sold day pretty much.
(00:02):
Yeah.
And this is, you know, Tiger famously did this.
SoftBank has done this in various ways.
Actually, the kind of original thing people sayto criticize a 16 z is that we did this like in
the early days in the twenty teens with ourearly funds because we were willing to pay up
for really great companies worked out reallywell, Coinbase, Airbnb, some other folks.
So there are other strategies that make I thinkA's very very risky for LPs to deploy capital
(00:27):
in, even in some of the best managers becausethe rules of engagement will change.
Welcome to The Investor, a podcast where I,Joel Palafinkel, your host, dives deep into the
minds of the world's most influentialinstitutional investors.
In each episode, we sit down with an investorto hear about their journeys and how global
(00:51):
markets are driving capital allocation.
So join us on this journey as we explore theseinsights.
Hold on.
We will find out, I guess, soon.
I mean, so this goes on all channels.
But, you know, anyways, to kick this off,excited to have you Rex, founder and GP at
(01:13):
Cambrian VC, ex partner at a sixteen z focusedon fintech.
So Rex, thanks for jumping on the show andexcited to go deep on everything that you're
doing and what we've done in the past.
Thanks for having me, Joel.
So let's just jump into it.
Tell me a little more about kind of where yougrew up, what your early education was, and
(01:36):
just navigate us through your career andprofessional path.
And then I'll probably stop you in between todig a little deeper as we go.
Sure.
So to start in MediEarace, the most importantdecision I ever made was to move to the Bay
Area and start working in what I think is theworld's best tech ecosystem because the
networks here are so good.
But it took me a while to figure that out.
(01:56):
So long time ago, actually grew up on a farm inMaryland.
I'm one of five and so grew up hoeing corn andselling pumpkins and like doing all that,
showing animals at four H that kind of thing.
I ended up doing undergrad at Davidson, endedup doing investment banking.
If you think about how networks drive yourcareer, a lot of times you'll see that certain
universities, college networks have certainconnectivity to different employer sectors.
(02:21):
So for Davidson, it's like you've got bio kidsgoing into being doctors, you've got economics
kids going into investment banking.
And that's what I did.
Bank of America down the street, largestemployer of Davidson alums.
I ended up there, learned a lot, totally hatedit.
So I did real estate investment banking,syndicated finance.
I know a lot of people who started outinvestment banking, especially investment
(02:42):
banking during and post the great recession wasjust not a particularly interesting place to
be.
And while I was doing that work, was observingthe work that was starting to happen in FinTech
on the other coast.
I was like, look, this is way more interesting.
So I taught myself to code, drove cost countryand then helped start.
(03:02):
And I was just not an employee, but a founder,helped start a direct consumer mortgage company
under one of the co founders of SoFi.
Really interesting learning experience.
That company failed, but I was now in SanFrancisco in the kind of right moment and the
right place for building a network within theburgeoning FinTech ecosystem.
(03:24):
So in the early twenty teens started buildingcommunity for folks who were building
interesting things in FinTech.
So we would do monthly events in Downtown SanFrancisco, we'd have really interesting
speakers come in and talk about what they werebuilding.
So we had folks from like Plaid and Deal andother companies come in very early at the pre
seeder seat before anyone knew who they were.
And those are the people who've gone on totransform what we think of as being possible
(03:47):
within Fintech.
And so that community that I started was calledCambrian.
Today, I'm running my own fund called Cambrian.
So Cambrian started as these kind of monthlyevents downtown San Francisco, grew to the
point where I was running monthly events in SanFrancisco and New York doing bioinal summits,
quarterly job fairs, bioinal co foundermatching.
I still do the co founder matching component.
And what happened from there is as I built thisreally large following set of network
(04:09):
relationships, as well as insights in theecosystem.
Got pulled into investing and advising.
And in 2019, I quit my day job to go full timeand actually build a fund.
And that's when ASICs and C reached out andthey're like, hey, you understand capital
markets and finance having worked as aninvestment banker.
You understand how to build marshaled networkswithin the fintech ecosystem and you understand
(04:30):
technology because you've worked as a softwareengineer.
So why don't you come and help us build ourfintech practice?
So in 2019, I was first partner hiredexternally.
We grew that team quite a bit.
After two and half years, it was either stayfor a long time and go and do my own thing.
And I think you can see where and why I decidedto do my own thing.
And I'll tell you, I think most partners whoare at large funds, if they could go launch
their own thing and felt like they haddifferentiated brand network voice access, they
(04:54):
would do it.
And it's the best job in the world.
I love it.
Stressful when you get started, takes time.
It's also really long time commitment, right?
Fund one is gonna be north of twelve years andyou're really you're committing to your LPs not
to do it just for one fund, but do it for threefunds.
You're talking about like a fifteen, twentyyear commitment from day zero.
And now that I'm two years plus into it, I'm Ican tell you I'd be very happy doing this job,
(05:16):
for a very long time.
So I'm an older brother.
Tell me a little bit about what your brother'sand your parents reaction was to your career
shift.
I mean, do all your brothers still work on thefarm or they do they all become these
investment bankers and venture capitalists?
Tell me about that dynamic because that's quitea change and that might kind of have different
(05:36):
reactions for different family dynamics.
Yeah, so my parents, great parents, verysupportive and they just want all of us kids go
and do things we're interested in and findcompelling.
Actually a lot of my family has ended up intech.
If you think about the employment rate postgrace recession and certain parts and sectors
(05:58):
of the economy is pretty high.
If you look at tech in San Francisco, was verylow.
We're talking like 2.9% when it was like 10% ina lot of other places.
Wow.
So several of my other siblings started inother places.
Mhmm.
But one of them is now designing the nextgeneration e bike for Lime.
Another one is GM and head of go to market at afintech company actually which he moved out
(06:20):
here to the Bay Area after removing landlinesaround the world.
Another one started out as a private banker inSwitzerland before helping being early at a
health tech startup in the Boston ecosystem.
He went into Harvard undergrads, had a strongnetwork there.
And so actually, four of us are working in andaround the tech ecosystem.
And the last one is actually the youngest ofthe five is my sister Caroline and she is
(06:45):
working to manage Ag land.
So she went to Cornell, studied agriculture andher very first job was managing a 35,000 acre
farm in Louisiana.
Thirty five thousand acres for context.
San Francisco is about seven miles by sevenmiles.
That's about 49 square miles.
Roughly equivalent to 35,000 acres.
So we're talking a really big piece of land.
Now what she does is she works for one of thelargest private landowners in the country
(07:09):
managing an institutional grade real estatefarmland portfolio.
And so we basically have four folks in tech,we've got one doing ag.
Ag, by the way, is a very interesting andgrowing asset class.
If you think about venture, it's kind of acottage industry that hasn't really formalized
or hasn't really started to institutionalize orscale until the last ten years or so.
(07:30):
Ag is in a similar place where it's a veryfragmented market, a lot of family farms,
you've got like two publicly traded REITs doingag and then some private funds, but not a lot
else.
It really is an asset class that shouldinstitutionalize as well.
So that's a whole another kennel worms.
Yeah, that's amazing.
Yeah, I mean, congrats to you and your familyand it's just great to see, number one, having
(07:54):
a great family dynamic and then just seeing allof you guys do great things.
I love your focus on FinTech because I thinkthat's just a constantly changing ecosystem and
technology layer.
So can you unpack the fintech ecosystem as yousee it and kind of what you're excited about?
I mean, people are talking about embeddedfinance for a while in the past.
(08:17):
One thing that I want the audience to know toois you create some great content.
I reached out to you because I really enjoyedthat interview that you did with Plaid.
And I remember one of my past roles in product,we were exploring Plaid as an integration.
So I remember when they were like just gettingstarted and we talked to some of the early
founders kind of integrating them in for likecategorization.
(08:39):
So just, you know, can you unpack just theindustry and kinda, you know, how it breaks
down in your eyes and and how we should startlooking at it?
Yeah.
So let's start really high level and then we'llkinda do bottoms up.
There might be a loaded question.
Yeah, if you look very high level financialservices about 7% of GDP and if you look at the
institutions that are doing most of therevenue, a lot of them like insurers, lot of
(09:02):
them were founded in the 1800s, banks in theearly 1900s.
So we've seen very little change in a hugeenduring part of the economy.
And now it is time for things to startchanging.
And if you look at how much FinTech haspenetrated financial services to date, it's
actually very, very small.
We've got a bunch of companies worth $10.20,dollars 50,000,000,000.
(09:24):
Stripe's worth like $5,060,000,000,000.
You've got deal, which is someone I backed ata16z worth about 10,000,000,000.
You've got ramp, you've got Rippling, you've abunch of other ones.
We've got a bunch of really successfulcompanies, one of the most successful
categories in venture.
Still, if you look at FinTech penetration ofglobal financial services revenue, it's
something on the order of magnitude of like 2%.
So what that means is you've still got 98% ofthe opportunity remaining.
(09:49):
And in the ten years since FinTech got started,we actually now have a lot more founders
actually understand both finance and technologyand they have better infrastructure to build on
top of.
And you have some underpinning demographicshifts around people just not tolerating
terrible products and financial servicesanymore.
And so what that's a long way of saying thatthe market is as big as it was ten or fifteen
(10:12):
years ago when fintech first started.
The founders are better, the infrastructure isbetter and the timing is better.
So there's no reason we shouldn't see morecompanies built or reach scale more quickly who
are starting to get more share from incumbents.
And so that's very exciting at just a highlevel.
If you drill down a little bit or think aboutsome trends, one thing you wanna see is you
(10:34):
wanna see product innovation, but you also wantto see business model innovation.
And one thing I'm seeing a lot of now arepeople building new bundles that are incredibly
hard for banks to compete with because they'rebundling things in a way that commoditize their
complement, which means a bank can't offer itbecause the thing being commoditized might be
the core driver of their business model.
(10:54):
A very simple example of this would be all ofthese companies that now have high yield
accounts.
If you think about a bank, their core advantageis cost of capital and everything else is tied
around that bundle, right?
They have a bunch of different products, butthe core advantage you'll hear people say is,
like my cost of capital beats your productevery day.
Well, guess what's happening?
Now lots of people have high yield accountsthat are integrated into a broader product
(11:18):
suite and bank deposit betas, their cost ofcapital are going up.
We've actually seen a trillion dollars ofoutflows of deposits in the last twelve months.
So we're seeing product innovation coupled witha shift in business models and that creates a
lot of opportunity especially when you gotbetter founders with better infrastructure.
So that's just top down like why I thinkfinancial services and fintech, there's still
(11:39):
lots of room to run.
If you look past that and you start to do somebottoms up stuff, so I run my own fund.
I focus on pre seed and seed investing.
90% of I do is US b to b fintech.
I will do international.
I will do consumer.
It just so happens that 90% of the mostinteresting opportunities I tend to find and
tend to find that I am uniquely evaluate oruniquely situated to evaluate are USB to B
(12:02):
fintech companies.
And when I look at my portfolio, some of whomare now just hitting two years old, they're
doing very well scaling very quickly even in acapital environment that's not as rich as it
used to be, which is fine because they'rebuilding real products with real value in a
capital efficient way.
So we just had one company announce theirSeries A.
Anza is building a closed loop wallet fordevelopers.
(12:26):
You can think about what they do is offeringlike a Starbucks wallet as a service.
They'll do it both for consumer applications.
So like a coffee chain that wants to have astored value for loyalty and rewards, but
they'll also do b to b kind of closed looppayment systems or wallets if you want to do
loyalty and rewards for like wholesale tocoffee shops or some other thing.
(12:46):
Anyways, they've reached a series A in lessthan two years from founding.
If you look at recent Carta data, the number ofcompanies that go from C to A in two years is
less than 12%.
Companies that go from all the way to A fromincorporation in less than two years is well
inside of that.
So if you find really good founders very early,you can see them build and scale interest in
(13:08):
enterprises very quickly and that's superexciting.
And one of the things they're doing is, youknow, they're helping small merchants take on
the card networks because when you have thesereloadable reusable wallets, you can drive
loyalty and rewards, but you also are fundingthem via ACH, which means you're pulling some
of the money out of potential card rails, whichhave really high fees, especially for low value
(13:31):
items.
And that's a great team that's ex, it's SofiaGoldberg, JT Chu and they are ex Adyen and
Affirm going and talking about, you know, youhave really great operators, who have great
pedigree, who have unique insights in themarket, who therefore are able to build and
scale very quickly.
I'm giving lots of other great founders in theportfolio, just giving them a call out because
they announced their series a just it was a dayor two ago.
(13:52):
That's amazing.
So you you mentioned some of the DNA that youlook for, right, great operators coming from
great pedigrees.
What else is kind of that magical thing thatyou're looking for?
Because especially pre seed, you know, it's itis a little more risky, because you're kinda
looking at can you still hear me?
Yeah.
There we go.
Can still hear you.
Yeah.
Yeah.
So, you know, what are some of the other thingsthat you're looking for, especially with
(14:14):
precede, right?
Because you're underwriting the risk of some ofthe uncertainty, not seeing the traction yet.
So you're really, really high convictionlooking at the founders.
So what has been kind of some of the frameworksthat you look at beyond the pedigree, beyond
kind of like, hey, they work the bricklaying orthey work
And I'm gonna push back on that.
I don't think pre seed is risky.
I think it used to be risky.
(14:34):
I don't think it's risky anymore.
I've looked at thousands of deals and afterdoing that now, I actually think that if you
have the right network, the right ability toidentify founders, and you've been looking at
the ecosystem for a long time, you realize thatgreat so why why did it used to be risky?
It used to be risky because the firstgeneration of fintech founders, they didn't
(14:56):
necessarily know how to build something infinancial services because they had never done
it before.
So you mentioned I have a podcast.
I've interviewed folks like Ken Lin from CreditKarma, John Stein from Betterment.
And when they first got started, they're like,who should my co founder be?
And they're like, they have no idea.
They're like, how do I, in the case ofBetterment, how do I actually launch a
(15:16):
brokerage?
It's like, there's no infrastructure toactually build and launch a brokerage on top of
an API.
And actually then turns out that Apex comesalong, but that's like literally at the same
time.
So question of like, how do you build the team?
How do you build the infrastructure?
What should the business model be?
How do you scale the team?
Who do you raise capital from?
Two of the big multi stage FinTech firms at thetime, QED and Ribbit are one of them like
(15:40):
doesn't exist and the other is basically afamily office.
So you have existential risk on like everyaspect of the business.
That's why it used to be very risky because yougive this person money and you have no idea if
they could build it, hire a team or raise afollow on capital.
Sure.
Fast forward ten or fifteen years, all thosethings are completely different.
You can find really great founders with uniqueinsight in the market.
(16:02):
And you know, if you know how to evaluatefounder quality, you know they'll be able to
build and launch the product.
And if you sit around and wait for that tohappen, you're going to end up paying a much,
much higher price for something you could havehad a high degree of confidence about much
earlier.
So I think it used to make sense to sit aroundand wait for like the A and the B.
(16:22):
But in those intervening ten or fifteen years,those rounds have become much, much more
competitive, much, much higher price.
And the likelihood if you identify goodfounders to be able to hit those milestones has
gone way up.
And so that's why I focus on the pre seed andseed.
And when my companies graduate to seed, it'salso risky.
Like sure, you might be able to tell that's agreat company, but what's risky is you might
(16:45):
not be able to win the deal.
So the last company of mine that graduated frompre seed to seed they got seven term sheets
before they stopped running their process.
So that's risky too.
You might not be able to invest in the companyyou want to invest in.
Yeah, which could be a bigger risk at times.
If you think about venture, it's source, pick,win and then also support.
Sourcing, very important.
(17:07):
But for companies, especially as they get preseed, it can be a little bit hard to see
because they might not even be incorporated.
It's literally just like someone counters Gmailand maybe their LinkedIn says they're in
stealth and that's about it.
If you get to the seed, usually the previousround has been announced.
There are other investors who have kind ofsocialized the ecosystem, what they're
building, where the company is.
(17:29):
So starting at the C, but certainly by theSeries A, it becomes very competitive and very
expensive because the amount of capital in theventure ecosystem.
In 2012, about $20,000,000,000 was deployed inthe venture.
In 2020, which admittedly was close to the peakof the market, but we're still getting close to
back to where that was, 200,000,000,000 wasdeployed in venture in The US.
(17:49):
So we're talking about 10x growth in the amountof capital.
What that means is it's 10 times morecompetitive at the series a than it used to be
when you have founders who are better equippedthan ever to hit those milestones.
And so I I really push back on the narrativethat precede and seed and risky.
I think what's risky is waiting around to payup at a later round and then still losing the
(18:11):
deal.
I see that happen all the time with themajority of my companies when they go out for
the next round.
Now sometimes it takes a while to actuallybuild and so this is one the things I'm trying
to educate the market on a little bit isunderstanding that actually if you have great
managers, great investors, they can identifygreat talent very early.
(18:33):
That's less risky than trying to give it tomulti stage funds where they pay up, they lose
allocation, they have high reserve ratios wherethey're buying even more.
They're allocating even more money later on.
So I don't think this is novel if you like lookat the data and you look at funds that
outperform, there is so much research thatshows that smaller pre seed and seed funds
(18:54):
outperform, way outperform a lot of the largemanagers.
Oh, part
of that is just a math thing, but I think partof that is also a cyclical thing in that we've
demystified the kind of formation stage andwhat that looks like.
Before and YC is one of the groups who gets alot of credit for this, as well as lots of
(19:14):
other folks who just written content on what ittakes to start a company.
It used to be this like dark art of like how doyou go from zero to one?
And now it's not quite a dark art in partbecause there are more repeat founders in the
ecosystem than there ever were before.
And so just the mechanics of what you need todo and how to do it, you don't get stuck on
that.
Maybe you get stuck on the fundamental problemof how do you find product market fit, but
(19:35):
you're not getting stuck on like, how do Iincorporate?
How do I set up payroll?
Do I need to hire an accountant?
How do I put together a pitch deck?
How do I run a recruiting process?
How do I do like those things aren't these likeexistential issues.
Who do I raise from?
Do I know any investors?
Instead, the question is like, how do I findproduct market fit?
And even there, a lot of times the foundershave pretty unique insight into what they're
(19:57):
building.
Well, would say too, I was gonna add, I thinkthe fact that you built this community and this
close knit network, I think that definitelygives you an edge.
Mean, the typical VC may not have thosenetworks and ecosystems to kind open up that
talent and access network.
So kudos to you
on venture.
(20:18):
It's about access, right?
And I think the most access constrained part isstill at the pre seed and seed.
Like I said, as soon as you get to the seriesA, there's enough data that people can come in
and start using the leveraging that data to tryalternative strategy.
So when I was at A16C, one thing we werereally, really good at because we have a really
good brand, we're very founder centric, we havea massive platform team, is we would win deals.
(20:42):
If we went in and we bid on a down the middleseries a, doesn't matter who else is in the
round, we will win the deal.
But the problem is people realize this.
So what did they start doing?
They started preempting As before the companywas running a process.
Did we lose those deals?
No, like we didn't want to do those deals.
(21:02):
But then what we started finding was all thegood deals were getting done before they even
got to like what used to be an a.
And so the rules of engagement
It's a pre sold a pretty much.
Yeah.
And this is, you know, Tiger famously did this.
SoftBank has done this in various ways.
Actually, the kind of original thing people sayto criticize a 16 c is that we did this like in
(21:23):
the early days in the twenty teens with ourearly funds because we were willing to pay up
for really great companies worked out reallywell, Coinbase, Airbnb, some other folks.
So there are other strategies that make I thinkA's very, very risky for LPs to deploy capital
in even in some of the best managers becausethe rules of engagement will change.
(21:44):
I've seen this happen so many times.
It's not happening as much right now or in thelast eighteen months of markets have corrected,
but as markets come back, it will starthappening again.
And I'm already seeing it start to happen now.
And you can see this in the data.
If you look at series A valuations, this isfrom Carta, they use their own proprietary data
(22:04):
to look at where median pre money of series A'sare.
It's getting close to, I think it like peakedat 47,000,000 in Q4 of twenty twenty one, Q4 of
'20 '20 '3, it's like 43 or 45.
So it's it's within spitting distance of alltime highs.
So we have this narrative that venture isfalling apart, that fintech is falling apart.
(22:26):
Yeah.
And if you look at the series a market, fewerdeals are getting done and the time between
deals has increased.
But the price of those deals is actually prettyclose to all time highs, which is not something
think enough people are talking about.
Yeah.
I want make sure I understand this.
So can you distill kind of the average forvaluation for pre seed to seed to series A for
(22:48):
fintech in ecosystem So
the best way to look at it and I would justrefer to the Carta data for this.
Yeah, absolutely.
I would say and for seed and it always dependson how you define it.
For series a right now, median post money,people should go to Peter Walker on, LinkedIn.
He runs the data and insights team.
(23:09):
If you subscribe to his newsletter, go to theirlike state of venture reports, they'll do it
either on a usually on a every half basis, butthey'll do some dives on a quarterly basis.
You'll see the median free money for series ais around, like, 44, 40 5 right now.
That's the median number, not an averagenumber.
Average tends to skew a little bit higher.
For a seed, I think right now it's in the highteens or so.
(23:32):
For pre seed, it's in the high single digits.
Okay.
And that's and at the pre seed and seed, that'sdown about 60 from peak.
But for series a, like we mentioned, it'sactually only down maybe six or 7% since peak.
So like the
So there's some yields to capture especiallygoing in pre seed, especially if you know what
(23:52):
you're doing.
Yeah, and the reason for that is you can thinkof the venture ecosystem kind of like a
balloon, where the air is the amount of capitaltrying to get squeezed into a certain sector.
And then the size of the balloon at a certainstage like the valuation depends on how much
air, how much capital is trying to get squeezedin that sector.
Yeah.
(24:12):
And what happened is the reason why seed priceswent up is multi stage firms who raise really
big funds like a sixteen's recent set of fundslike 6 or $7,000,000,000.
When they try and move into seed, that's a hugeamount of air capital flowing in and it
inflates valuations.
(24:32):
When the market calms down, they tend to pullout of that and those prices come back down
because then you have pre seed and seedspecialists who have smaller funds who are more
price disciplined who then concentrate onallocating there and the prices kind of relax.
Will happen though is as maybe not you knowA16Z my old firm but as other firms start
losing deals they're going to be tempted, thelarge multi stage funds start coming down to
(24:55):
seed.
And that's why I also do a lot of pre seed andalways will is because that even the seed
market can kind of get crazy when multi stagefirms start to get involved.
But they only do that that's kind of a countercyclical market signal that we're reaching a
peak is when you know Sequoia announces ARC,A16Z announces a seed fund and if you talk to
(25:16):
those platforms now they'll tell you they'relike kind of still doing that because they have
the programs, but that's not really a thingthey want to concentrate on anymore.
Sure.
So going back to access, what advice would yougive in terms of community building?
Like for emerging managers that are trying tobuild their own community, whether it's an
agriculture tech or hydrogen or deep tech.
What are some of the things that has worked foryou to kind of build this engaged community of
(25:40):
investors and co founders and potentialportfolio companies?
I think one is start small, focus on qualityand you'll be an overnight success in five
years.
So like you have to start with really highquality folks, kind of unique insights,
connectivity and do it consistently.
If you do it consistently for a long period oftime, it will grow.
(26:04):
If instead you focus on trying to grow lowquality interactions and low quality content,
it's not gonna really work.
So high quality staff, high quality individualsand then do it consistently.
And tell us a little more about your community.
So I was looking at the website for a fewseconds, but it sounds like it's mostly
founders, VCs in the FinTech space.
(26:25):
Tell me, you said you had some job fairs aswell.
So we'd love to just have the community beaware of all the great things that you're
doing.
Yeah.
So I've got the main things I do now arecontent.
So I have a podcast where I interview topfounders and fintech as well as operators and
investors.
So we have, I mentioned, you know, Ken Lin fromCredit Karma, John Stein from Betterment.
(26:47):
We recently had Eric from Ramp, Ahmad fromMercury, Ty from Unit.
We also the episode published just today iswith Keith from Kosla, formerly Founders Fund
and formerly Opendoor and Square and some otherplaces.
So one is content, have some great interviewswith folks, then also LinkedIn, Twitter, that
kind of stuff.
I now have I used to run these monthly inperson events.
(27:08):
Now I run quarterly in person events where wehave a really great founder talk about kind of
what's next for their company.
So we did an event with Zach Parrott, the CEOand founder of Plaid at their SF headquarters
in Downtown San Francisco back in February.
We'll probably do two or three more of those.
So like I said, we'll do about an episode amonth for the podcast.
(27:29):
We'll do about three or four in person eventswhere we have a great founder speak about what
they're building and do those in San FranciscoA year.
And then I also focus on high quality smallerevents that are for founders in the portfolio,
friends of kind of the closer Cambriancommunity.
I've got 20 plus founders for all LPs in thefund as well.
And I also have a Slack community that has2,000 fintech founders in it.
(27:52):
So if you're listening to this podcast or thestream and you are in San Francisco, you should
look out for some of the events.
I'll post them on Twitter and on LinkedIn.
When they come out, they tend to sell outwithin like an hour or two.
So make sure if you do see something to act onit quickly.
So that's one if you're in San Francisco, staytuned for some of our upcoming events.
Two is you can subscribe to our newsletterwhich is on the website, cambrianhq.com.
(28:16):
That will then share the recordings of thoselive events as well as the regular podcast
episodes.
If you're a founder, have a Slack community,can find a link to it on the website.
Again, we've got about 2,000 FinTech foundersin that Slack community, it's a great place to
go and just ask questions of other founderslike, I'm integrating with Plaid, I found this
issue, what do you have you found this issue?
That's not a question that people necessarilyask today, but that's the kind of question they
(28:39):
would have asked years ago that you might beasking today around various other kinds of
infrastructure providers or things like that.
And then I do run the co founder matching twicea year.
We have our first half of twenty twenty fourone up and running about 300 folks have
participated.
Again, you can find a link to that on thewebsite, cambrianhq.com.
If you're looking for a co founder in fintech,you should go and check that out as well.
(29:02):
Yeah.
I went ahead and posted those links too.
And anything else you want me to share, I'll goahead and share it out.
The co founder matching, so how does that work?
So you got three hunt do you have like fiftyfifty, like founders and and VCs and it's kinda
like speed dating?
No VCs.
It's co founder matching.
It's just founders.
It is people with like,
(29:23):
the pre seed pre seed companies eventuallycoming coming to fruition.
That's right.
And so actually one of our I've On occasion,will also invest in folks who come in through
that, but it's mostly an exercise and helpingmembers of the community just go and do
interesting things.
Often not often, but like a good number ofpeople, seven, eight folks do find.
(29:44):
And it's hard for me to track, I don't actuallytrack it, do find co founders through that each
time.
But if nothing else, they have a lot of highquality interactions with folks.
So it's mutual opt in.
When you participate, you basically will getaccess to a permission list of other folks who
are participating, and then you can reach outvia email or LinkedIn, and then it's up to you
to to connect.
(30:04):
So it's a lightweight, but efficient way ofgetting a sense of who else is out there and
what kind of ideas they're working on.
Yeah, that's helpful.
I wanted to ask you too as a fellow creatorbecause my stuff is pretty lo fi.
I just kind of go live and I haven't had muchtime to do a lot of production and editing.
But I saw a short form piece of content fromTim Ferriss the other day just talking about
(30:28):
how he works with his podcast guests.
You know, a lot of times he makes sure thatthey can, you know, give a final cut before it
goes live.
There's a lot of preparation, you know, thathappens.
Obviously, you hurt yours and I preparation.
The preparation between you and I has just beenpretty pretty off the cuff, and that's just how
I've been doing it.
But what advice would you give for fundmanagers, founders that are looking to build a
(30:52):
media platform, whether it's YouTube, podcasts,what's kind of your process that's kind of
worked for you and worked for your guests?
Yep.
So I think the number one thing to do is toship it.
So you come up with a kind of content you wantto do, a cadence to do it and then ship it and
be okay if it's not good.
I often refer to a piece of content from IraGlass at This American Life and he says, one of
(31:17):
the hardest thing about being a creator is thatif you wanna be a creator, it's probably
because you have some degree of taste and youhave maybe a slightly elevated degree of taste.
And the problem is with the first content youproduce, it's gonna be bad.
Yeah.
And you're gonna be kind of embarrassed aboutAnd you're like not gonna wanna do it and then
you won't do it and then nothing will everhappen.
(31:38):
So you have to first just create content and doit on a regular schedule and you will get
better the more you create.
But two, this is the next thing, after youstart doing it again, you have to constantly be
working on your process Yeah.
To make it better.
So like right now, you're not doing maybe asmuch prep work as you could, you're not doing
as much post content production you could,that's okay.
(32:02):
You've gotten started, you're doing it.
Now keep doing it and keep making each piecesuccessfully better.
And if you do that for five years, you'll be anovernight success.
So I think the problem is most people don'teven get started.
Sure.
And then most people even they get started, theones who tend not to make it better and better
over time, tend to stop before they put in thetime to make it really good anyway.
(32:25):
So you have to keep doing it and you have tokeep making it better.
And so
And then and then I guess Andy Mike is on.
You have to like the content.
Like you have to Yeah.
Want to do it because there's not gonna be anaudience at first.
Not gonna be like anything that's you can pointto like, wow, this like it's really works
great.
And I like amazing things are happening in mylife because of this bad podcast I published.
(32:48):
So like if you're expecting that you're notgonna do it for five years.
Yeah.
I mean, me, it's been an amazing way Yeah.
Yeah.
Mean, for me, this is kind of the fastest wayfor me to learn, because right now just in
thirty minutes, you've unpacked the entireFinTech and some of SF ecosystem in an
accelerated way.
Instead of me reading a bunch of blogs andlistening to other podcasts, if I can get an
(33:11):
expert to come in and distill it like you did,that's definitely helpful.
I've also just heard from other people just theutility of just really great thumbnails.
There's also like SEO that you can do onYouTube.
So any other just kind of best practices forjust optimization on the channels or editing
quality?
(33:31):
And then have you also looked at short form aswell, like taking some of the long form stuff
and putting it on like TikTok and Instagram?
Obviously, you can just get your head toexplode at some point when you just got so many
platforms you're thinking about.
But any any other best practices on on thosefronts in terms of just improving the content
or optimizing it?
Yeah.
So one, the most important thing is still justto ship onto whatever platform you want.
(33:55):
I think YouTube is a great platform to optimizefor because it's just where all the eyeballs
are.
So first, have to pick a platform.
Yeah.
I think the two best platforms are LinkedInbecause everyone's on LinkedIn by default.
Yeah.
Twitter is super good, and I love Twitter forwhat it is, but there are lot of people who
just aren't on Twitter.
Sure.
Especially like newer graduates, etcetera.
(34:16):
So like LinkedIn is by default people'sprofessional identities.
You should think about having content there.
They are starting to do video content, but thatis early in its iteration.
So I'm not saying it's a great place to dovideo content.
If you wanna do podcasts or like audio video,YouTube I think is the best platform for that.
(34:37):
The short form video sites, I do create shortterm video, but I basically take my long form
stuff.
I have a team cut it up, push it out there.
I don't have to spend that much time on it, butit also just doesn't get that much engagement
that I think matters because I think myaudience that I care about engaging with isn't
really going to spend as much time or get asmuch out of these short form video clips on
(35:00):
Instagram and TikTok.
Could be wrong.
Yeah.
But that's been my impression.
The stuff that does really well on the reallyshort form video is like talking about the
biggest brand names and the biggest brand nameindividuals.
So it'd be like Musk and Twitter kills Apple.
And that that can, like, get a lot of viewsYeah.
(35:21):
If you do it right and you could you could havea sensational hook, but then, you know, try and
deliver quality content afterwards.
Yeah.
But it's usually not gonna say something thatmatters a lot to my core audience of like
founders who are building things or at least Ihaven't figured out a way to do it.
So I do do short form video content, I haven'tfound it to be particularly useful and so I'm
more focused on LinkedIn and on YouTube.
(35:43):
YouTube is great because it has a huge audiencethat is has a high skew in terms of number of
types of different personas that are on it.
And the bat catalog of stuff will continue togrow over time.
I have a bunch of videos that have been aroundfor a long time, terrible production quality,
(36:04):
like literally no production quality andthey're still growing linearly, which is great.
But the main thing is ship, improve qualityover time, pick the platforms that align with
your audience and then yes, like thumbnails domatter, titles do matter a lot and so you are
gonna have to play around in terms of gettingthose working and those they do matter a lot
(36:26):
like Yeah.
One of the most important things that, youknow, folks like mister there's mister beast
has, five, six people or something, and theyall, like, work so hard on getting, like, the
perfect thumbnail.
They're, like, AB testing the thumbnails tojust to make sure they work.
Yeah.
So that's super important to him.
And then, you know, I mean, talking aboutquality, you know, I mean, we both know the
same videographer.
So definitely that plaid video that you had, itwas super crisp looking.
(36:48):
So, any advice on how people can work withvideographers and get into that art of just
really good production quality?
Obviously, the lighting is a big thing too.
Any learnings from getting into more highquality content?
Find a good videographer and pay them money.
And have them give you a lot of guidance.
(37:13):
Cool.
Well, what advice would you give in terms of wegot a couple more minutes, I'll just wrap it to
fire a couple more questions.
So what advice would you give to somebody whomaybe was a founder or professional looking to
just start their fund one?
What are some things that you would tell themto start thinking about?
Well, let's back up and how you even get intothe place to be able to start fund one.
(37:35):
So depends on where exactly you are in yourcareer, but I think one you should move to San
Francisco, maybe New York.
If you want to start a fund, there arebasically two places in The US where venture
happens.
San Francisco is where the vast majority of ithappens.
Yeah.
The only reason I say New York is actuallybetween New York and San Francisco.
A lot of the LPs have offices in New York aswell even if most of the venture deals and the
(37:57):
venture funds are based here.
And what you're doing is you have twoaudiences.
You have the founder audience that you'retrying to invest into and you have the LP
audience you're trying to raise money from.
So you really need to be in one of those twoecosystems.
Otherwise, you can spend so much time on yourroad on the road traveling and travel has a
high tax on your productivity.
You're not gonna build these kind of softinformal relationships and networks that really
matter.
So one, move to San Francisco or New York.
(38:20):
If you're already like, I've been doing thisfor ten, fifteen years, I have this like
massive network, Like I don't need to be there.
And you feel like, you know why that's true.
That might be true.
I still think, I think you're right, but you'reright in the medium term, it won't matter for
the next three It will matter over the next tenor fifteen years, because you will need to
continue to build that and your network willnot initially atrophy, but it won't grow as
(38:44):
fast as it would if you're in the coreecosystems for the thing you're doing.
Right?
So one, and I like to hammer this point homebecause a lot of the other ones are kind of
fuzzy things.
They're fuzzy ideas.
Right?
They're like, this, don't do that.
This is a very concrete thing.
You can either say I am doing it or I am notdoing it.
Sure.
Right?
Yeah.
(39:04):
Whereas all the other bits of advice I can giveyou, like maybe they matter more along some
like if you were to stack rank the types ofthings you need to be doing, but it's fuzzy to
measure yourself as to whether or not you'vedone it and done it well.
So that's one is just be the systems where it'shappening.
And then two, and this is where it's a littlebit of a longer story and maybe whoever's
(39:26):
listening, they're in a different part of thisjourney, but I think like let's go all the way
back to undergrad.
So if you're in undergrad and you're gettingyour first job, move to the Bay Area.
2, the next thing you wanna do is join a midsized company with growth.
Right now that's any company that's raised aseries B within the last twelve or eighteen
months.
Why a series B and why the last twelve toeighteen months?
Well, it used to be that two years ago,everyone was raising series Bs, They're very
(39:50):
expensive, and it was very hard to tell arethese companies raising money good companies or
bad companies.
Last twelve to eighteen months, the market hasturned.
Series b's are very few and far between, and sothat means the companies that are raising them
in a down market are default very goodcompanies.
So another way of saying that is a signal tonoise ratio for series Bs for now, higher than
it's ever been, easy to identify mid sizedcompanies with growth.
(40:12):
So that's why you can look for series Bcompanies now in a way that's unique to this
moment in time.
And then two, always what you should be tryingto do as early in your career as possible, but
even later if you haven't done it already, isjoin a mid sized company with growth.
Why does that matter?
And that's true no matter the market cycle,it's just right now we're in a unique point in
the market cycle where I think it's easier thanusual to identify those companies.
(40:36):
Unfortunately, there's a smaller number ofthose companies than there are, but there's
less noise.
So it's kind of a trade off there.
So why join as company with growth?
If you join a mid sized company with growth,maybe they've got thirty, forty, 60 people.
They went in the last year from 2 and a half, 3million to 9,000,000 revenue.
They grew three x year over year.
They just got a brand name, investor to leadtheir series b.
(40:59):
They're now growing the organization, they needto hire more in sales, they need to hire more
in product, they need to hire more inengineering.
The people who are there are going to getpromoted or manage teams or manage when you
come in and you say, hey, I'm gonna do thisthing.
No one's like, no, no, don't do that thing.
Like you're gonna take my thing.
They're like, please God, thank you.
Do this thing for me.
I have too much to do.
(41:19):
And then as the company continues to scale andSeries B companies are supposed to have
repeatability of go to market.
So they should be somewhat de risked at leastfor the next few years in terms of continuing
to grow.
So you should get pulled along in your careerprogression to be able to do very interesting
work at a company that's growing and thereforehaving a career or a job scope that's growing
(41:41):
while you're at that company.
Then what happens is for the next time you goout and look for a job, someone's gonna say,
hey, I wanna hire someone who's like been in acompany that's another mid sized company growth
or that's like later stage and be like, we'regrowing really well.
I want to hire someone who's been in a companythat's done really well and has scaled this
thing.
And you're like, oh, I've done that becauselike I happen to be at this other company.
(42:02):
So you get to have the career story that youhelp scale something and then you get a broader
brand equity of that company.
And then that means you can land in anothergood job at another fast growing company.
And what's hard is if you come to the Bay Area,you work for one pre seed or seed company, it
fails.
And then you go and work for another one and itfails.
And then you're like, I don't know.
Now I do I invest in pre seed and seedcompanies.
(42:22):
I think people should go and work for them.
And I think those can be actually be the mostexciting, interesting, and like validating
career experiences.
But you should do it because you're amissionary and you believe in the founder and
you believe in the company so much that you'rewilling to take that career risk.
And then even if it fails, you'll be like, youknow what?
I had a blast.
We got to build something that was superinteresting.
(42:44):
That was my experience with the failed directconsumer mortgage company, Still worked out
okay.
So I still think you can go earlier, but youhave to have like you have to be committed to
the mission of the company.
Series b, I don't think it's great to be likeentirely mercenary because I think you're just
gonna end up being unhappy.
But if you were to be more mercenary, likethat's the the stage joint.
So, okay.
Now we're starting to talk about how do get aninvestor for a long long answer.
(43:04):
Now now you're at your second, midsize companywith growth.
You've like led two growing organizations.
Some of your friends from the first companyhave left.
They started starting companies.
Some of the folks from your second company arealso leaving starting to start companies.
They want you as an advisor because you've likehelped scale things in the market and the
company they're starting is somewhat related tothe company you guys worked at together.
(43:24):
And then you're also gonna write them an angela check and then you
do that for two or
three years.
And all of a sudden you've written like 10angel checks.
You're like advising a couple of companies andyou're like, oh, maybe I should go and do
venture because like I really like advising.
I really like backing people.
I have this network and then you can startnetworking very hard with the most junior level
(43:46):
folks at venture firms who've been hired in thelast six months and sharing deal flow with
them.
Why do you network with the most junior person?
Because the junior person doesn't have anetwork yet or their network is not like kind
of fully booked out.
If you go to the senior people, they'reoverbooked.
They don't wanna talk to you.
You go to the junior people, they're happy totalk to you.
You do that for another two years, now you havea network of folks at venture firms and you
(44:06):
know who's hiring, which firms are good firmsto work for, which ones you like, which ones
you don't like.
You have a bigger angel portfolio, maybe advisemore companies.
So again, this is kind of like the five yearplan of how to break into venture.
But that's the best plan is move to the BayArea, join one mid sized company with growth,
go to another one, angel advise invest, networkwith investors, and then maybe in five years,
(44:27):
you'll be in a position to join a good venturefirm.
By the way, you only wanna work for goodventure firms because bad venture firms return
less than the money that's invested in them.
So you are way better off to take five years toland a good job than to try and take any job at
any firm early.
And so that's Yeah.
I don't always remember to say that, but that'svery important.
Also, best outcome, you decide you don't wannabe a venture investor because there's a lot
(44:50):
about the job that you might not like.
And if you've learned that you really likebuilding companies, you should do that instead.
And that's probably more fulfilling andinteresting than like going and working at a
venture fund.
So that's the other thing is you will have morecareer optionality in terms of what you could
do if you take this path.
And it's probably the best path to actually endup in venture anyways.
(45:14):
No, that's helpful.
I think just to your point of joining a biggerfirm, you can definitely do a lot of
storytelling in terms of that track record andkind of the capital that you were involved in
deploying.
I think that's definitely good stuff to talkabout.
A lot of times LPs talk about a synthetic trackrecord.
So that track record that you built over timethat you can get some attribution for when
(45:36):
you're building your own firm and and kind offlowing into that.
Yeah.
Actually, your question was how do you start afund?
So Yeah.
There it's if you have like enough pedigree anda big enough track record from your angel
investments Mhmm.
That's might be enough to do a fund one.
It's gonna be pretty hard.
Yeah.
Ideally, you should go and work for a firm andbuild, a real track record, see how Yeah.
A firm actually operates, and then leave thatfirm and start your own.
(46:02):
So I think also the structure you know.
Yeah.
You got It took me ten about ten years to getto where I am.
Right?
Like that's Yeah.
And it was and it was not linear.
It was also not it was not what I set out withit's not like I started Cambrian.
I'm like, here's my secret plan in ten years.
Yeah.
Do this thing.
It's like I did things as interested in them.
They grew, they created some options and then Ichose the options I was most excited about.
(46:24):
And then this was the thing that kind of beingclear to me that I should be doing.
Yeah.
And I was going to say too the the advantage ofkind of working at a bigger firm or at least a
firm that has some processes, some of thatstructure and process you may adopt or just
make an iteration of when you build your ownfirm as well, which if you didn't have that,
you're just doing angel investments, you got tofigure it out on your own or seek mentors.
(46:47):
But hey man, this was amazing.
Rex, thanks so much.
This is why I do this podcast because in fortyfive minutes I feel like I become much smarter.
Thanks for just catching us all up on yourinsights and I will hopefully see you in San
Francisco at our summit next month.
Sounds good.
All right, see you around Thank
you.
Appreciate it, Rex.
Have a good one.
Cheers.
(47:07):
Bye.
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