Samir Vasavada: The Real Story of Vise: The Regrets, Mistakes and Mis-Hires | E1171

Intro (00:00:00)

• Samir Vasavada, at the age of 20, raised $120-130 million in an 18-month period for his company, which was valued at a billion dollars.
• He regrets raising so much money so quickly.
• He sold a small amount of secondary shares but was tempted to sell more.
• He believes people stabbed him in the back.

Starting Vise (00:01:01)

• Samir Vasavada's entrepreneurial journey began at the age of 12 when he met a kid named Runic at a summer program at Northwestern.
• They started building apps for small businesses using the Swift programming language.
• By the age of 14, they had made $30,000 from building apps.
• Samir's co-founder got a research opportunity in AI research, which led them to the idea of using AI to build apps.
• Their first startup failed due to the wrong team and the technical challenge being harder than expected.
• This failure introduced them to the idea of AI and motivated them to build a startup.
• Samir believes that the best entrepreneurs start early and have a passion and motivation that develops early.
• He started making money early by having garage sales.
• Samir was 15 and a half years old when he started Vise.

The First Big Yes (00:03:45)

• The first big yes was from two engineers who agreed to work on the product on Equity nights and weekends.
• This helped build the MVP and get the first product to market.
• The second big yes was from Nat Turner and Zack Weinberg, who invested $100K in the company.
• This investment was crucial in keeping the company going and attracting further funding.
• Keith Rabois from Founders Fund was one of the first investors, partially through a warm introduction from Nat and Zack.
• Keith believes that going to "crappy investors" first is not beneficial as they ask different questions compared to great investors.
• All the investors who invested in Vise were great investors, and none were "crappy investors".
• Great investors asked better questions, understood things faster, and were able to pattern match more effectively from their past successes.

How the Sequoia Deal Went (00:07:16)

• Vise already had funding from Founders Fund and did not initially plan to raise more money.
• Samir Vasavada wanted to participate in Startup Battlefield despite Founders Fund's discouragement.
• Vise attended a happy hour at Sequoia Capital's office for free food.
• A young Sequoia partner approached Vasavada and expressed interest in Vise's business model.
• Vise pitched their idea at TechCrunch Disrupt and caught the attention of the Sequoia partnership.
• Sequoia's prior investment in Future Advisor, a Robo-advisor company, influenced their decision to invest in Vise.
• Sequoia led a seed extension round in October 2019, followed by Series A and B rounds in March and May 2020.
• Vise was the last investment made by Sequoia before the pandemic-induced shutdown.
• Positive early customer feedback and market validation reinforced Sequoia's conviction in Vise's thesis.
• Vise saw the need for significant capital to scale the business.
• Sequoia tripled down on their investment in Vise within a short period.
• The seed extension round occurred in October 2019, followed by Series A and B rounds in March and May 2020.
• Vise was the last investment made by Sequoia before the pandemic-induced shutdown.
• Positive early customer feedback and market validation reinforced Sequoia's conviction in Vise's thesis.
• Vise realized the need for substantial capital to scale the business.

Does Samir Regret Raising Significant Funds Early On? (00:11:15)

• Samir Vasavada, the founder of Vise, achieved remarkable success at a young age, becoming the youngest person to lead a billion-dollar business at just 20 years old.
• Despite his success, Vasavada emphasizes the importance of staying grounded and adhering to core principles, which helped him navigate the challenges of sudden wealth and fame.
• He regrets raising a large amount of money quickly from a single investor, as it led to a lack of diverse perspectives in the boardroom and a loss of financial discipline.
• The company grew too quickly from a small team to over 100 people, which slowed down progress due to HR issues and differing perspectives.
• Vasavada acknowledges that he got caught up in the hype and admits to becoming overconfident during that period.
• He realized the unsustainable nature of the tech industry and predicted a major correction, prompting him to initiate a major reset within Vise before the market downturn.
• Vise recruited many mercenaries, individuals who were primarily motivated by financial gain rather than shared values and mission alignment, which contributed to cultural issues within the company.

Mistakes & Lessons on Hiring (00:19:15)

• Vise made several poor senior-level hires who lacked understanding of the financial advisory industry.
• The company prioritized internal matters over customer-centric discussions and product development.
• The hired executives assumed the company had already achieved product-market fit.
• Despite initial optimism, the executives failed to solve the company's problems within 3 to 6 months.
• Vasavada acknowledges his responsibility for hiring the wrong people and takes ownership of the company's issues.
• Founders should be selective about the advice they follow and consider the context of their own situation.
• Startups should maintain a high bar for employee performance and quickly let go of underperformers.
• Vise faced challenges with a poor executive team, toxic culture, remote work issues, and overstaffing in 2021.
• The company hesitated to make tough decisions due to fear of damaging its reputation and affecting fundraising, recruitment, and customer perception.
• Vise made difficult decisions in early 2022, resulting in positive changes such as improved team cohesion and reduced burn rate.
• Samir Vasavada, the CEO, resisted acquisition offers despite considering them, believing in the long-term potential of platforms in asset management.

Advising Founders on Transfer Restrictions & Investor Exits (00:38:29)

• Founders should be cautious when allowing investors to sell their shares.
• It's important to know who is buying the stock to avoid bringing unwanted individuals onto the cap table.
• Transfer restrictions can be used to control who can buy shares from investors.

The Dual Impact of High-Profile Investors on Startups (00:39:07)

• Investors can positively impact a company's trajectory by providing credibility, social capital, and access to talent, customers, press, and funding. However, this can also attract the wrong talent motivated by quick exits rather than the company's mission.
• Founders should be mindful of this and ensure potential employees are joining for the right reasons.
• Selling a small amount of secondary shares can provide founders with a financial cushion and reduce the risk of making personally-motivated decisions, but founders should avoid selling too much secondary as it can lead to complacency and a lack of motivation to make tough decisions.
• There is a "zone of reasonableness" when it comes to financial comfort, where having too little or too much money can be detrimental.
• The speaker is not worried about scaling into the valuation because they have a lot of money in the bank and don't burn very much.
• The speaker believes that it is more important to focus on the preference stack than the valuation, as a high preference stack can still result in value even if the company sells for less than its valuation.

Losing Friends When the Company Cooled (00:45:02)

• Samir learned that it's important to have a core group of close friends who are there regardless of your success or failures.
• Some people come into your life for the wrong reasons and move on when your company is no longer hot.
• Some investors pretended to be friends but turned their backs when incentives changed.
• Samir was hurt by people pretending to care about him and then betraying him.
• He realized that he should focus on shared incentives and the common good of the business rather than trying to please everyone.
• Samir made the mistake of underwriting people's emotions instead of their incentives.
• He tried to make people happy by saying things they wanted to hear, which was the wrong approach.
• The right approach is to focus on shared incentives and the common good of the business.

Samir's Period of Depression (00:47:46)

• Samir Vasavada dropped out of school at 16 and lived in a shared house in San Francisco despite financial struggles and lack of support from his parents.
• Despite the challenges, Samir remained determined to succeed in his business venture, driven by a desire to prove himself to his doubters, including his teachers and parents.
• As his company, Vise, gained success, Samir's motivation shifted from proving others wrong to proving them right, which created an internal conflict.
• Samir eventually reconciled with his parents and no longer holds any resentment towards them for their initial lack of belief in his chosen path.
• Samir criticizes societal pressure on children to conform and achieve success, which he believes contributes to mental health issues among young people.
• Samir Vasavada believes he had a unique perspective and approach to entrepreneurship, seeing the bigger picture and playing a different game than others.
• He expresses empathy for his parents' lack of understanding about startups and Silicon Valley during the 2010s, acknowledging their efforts with the information they had.
• Vasavada reflects on those who gave up on him, particularly those who were initially supportive but abandoned him during challenging times.
• He emphasizes the importance of genuine integrity rather than just knowing about it, recalling advice from Ravi about the difference between knowing something and internalizing it.
• Vasavada acknowledges that he spent too much time trying to teach others lessons they needed to learn for themselves, realizing that he had to learn his own lessons through personal experiences rather than blindly following the advice of successful founders.

Quick-Fire Round (00:55:40)

• Samir Vasavada, the CEO and founder of Vise, emphasizes the importance of deep domain expertise on the board of directors, especially when raising a Series A round.
• Vasavada stresses the significance of self-reliance and perseverance, advising entrepreneurs not to rely excessively on others' advice and to persist until their goals are achieved.
• He acknowledges the challenge of separating personal identity from company identity and suggests that founders should strive to achieve this separation for a healthier mindset.
• Vasavada envisions building Vise as the asset manager of the future, offering deeply personalized portfolios across all asset classes in a user-friendly software experience.
• He believes the industry needs to shift from human portfolio managers and traditional investment products to platform-driven investing, acknowledging that this transformation will take time and require industry-wide collaboration.