#023 Founders Fund

Founders Fund is likely the most non-consensus VC firm in the industry. Sequoia founder Don Valentine said to target big markets; Peter Thiel said to target small markets. Jeff Jordan says he likes competitive deals as a signal of future success; Brian Singerman says if a deal is competitive, then it’s too late to invest in that industry.  The list goes on and on, but in this essay, I’m going to elaborate on some of the truly unique principles of Founders Fund that, truthfully, I find to be the way venture capital and startup investing should be. Today, we’ll cover: Why to Target Small Markets Why Competition is for Losers Why Invest in Market Creators  Why all Investments need Supreme Conviction Why Founders Fund’s Firm Building Thesis is How Venture Capital Should be  I have several quotes from key partners at the firm that emphasize why Founders Fund is drastically different than any VC firm you’ve studied, but one you probably will learn the most from.  But first, who is Founders Fund? Founders Fund was founded in 2005 by Peter Thiel of PayPal fame, Sean Parker of Napster and Facebook fame (Justin Timberlake), Luke Nosek, and Ken Howery, both also of PayPal fame. Founders Fund essentially pioneered the “VCs as former founders” movement that is so prevalent today. Their guiding principle was to treat founders with the respect they deserve by ensuring them that they were in charge and never felt threatened by the VCs at Founders Fund, backed by a vow never to oust a founder. In 2005, these principles were very contrarian to the industry.  Their remarkable portfolio consists of SpaceX, Palantir, Stripe, Anduril, Facebook, Airbnb, Nubank, Rippling, Affirm, Ramp, Flexport, Spotify, and many more multi-billion-dollar companies.  Therefore, I encourage you to pay attention when reading about their investment theses because, clearly, they’ve had some remarkable success in practice.  More All Things VC: If you want to read along this podcast, you can check out All Things VC on Substack If you want to watch clips of this episode and many others, you can check out All Things VC on YouTube

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