How Silicon Valley’s Most Prolific Investor Picks Unicorns | Elad Gil Interview

How to be successful in angel investing (0s)

• Elad Gil is a prolific angel investor who has invested in over 40 billion-dollar companies at very early stages, including Airbnb, Airtable, and Rippling. (9s)
• He attributes his success in angel investing to being lucky and starting to invest at a good time when there was still a lot to be done in areas such as SaaS and consumer technology. (1m57s)
• Gil takes a market-first approach, focusing on the market and product-market fit more than the founders, although he acknowledges that founders are incredibly important. (2m6s)
• He believes that great people can be crushed by terrible markets, and mediocre people can do well in good markets. (2m26s)
• Gil also tries to follow the technology and changes happening in technology, which led him to invest in generative AI companies such as Perplexity and Harvey three years ago, before they became a trend. (2m38s)
• He has been early to waves, investing in areas such as longevity and AI before they became popular, and has a track record of identifying important areas before they become mainstream. (31s)
• Gil's approach to angel investing is different from most investors, and he has been successful in identifying and investing in companies that have gone on to become unicorns. (48s)

How to create a bankroll (3m0s)

• Initially, personal wealth from selling a business was invested in private companies, with over 50% of the funds being invested, which led to running out of money quickly (3m10s).
• One of the biggest regrets was missing the opportunity to invest in SpaceX due to not having enough money to meet the minimum check size requirement (3m34s).
• At an early point in Silicon Valley, there was no personal wealth to invest, so the focus was on helping friends and realizing the need to think like a founder and get resourceful to secure investment funds (3m49s).
• To secure more funds, small Special Purpose Vehicles (SPVs) were raised, which eventually morphed into funds, and now a combination of personal investments, fund investments, and larger fund-plus SPVs are used (4m13s).
• The investment portfolio includes leading or co-leading rounds for companies such as Andel, Applied Intuition, and others (4m25s).
• There are a few recently hired people to help with different tasks, but the focus remains on building things, working on projects, and thinking about technology with a "builder-first" approach (4m42s).
• The investment approach is described as the "anti-VC" approach, with a focus on being a builder and working on side projects (4m54s).

Making the great works of history available to anyone anywhere (5m0s)

• A project is underway to translate the thousand most important books that are off copyright into dozens of languages using AI, and then create audio books for people to download the great works of history from anywhere in the world in any language (5m7s).
• The project involves using different AI tools, such as 11, CIA, and Open AI, to translate long-form books with high consistency and quality assurance (5m30s).
• The motivation behind the project is not solely for business purposes, but also because it is considered cool, societally useful, and interesting (5m53s).
• The mindset behind the project is focused on creating something useful and interesting, rather than solely for short-term gains (6m3s).
• This mindset has been consistent throughout, even before achieving financial security, and is driven by a desire to create something societally useful (6m31s).
• The driver behind this mindset is rooted in a background in math and biology, and a PhD in biology, which was pursued because it was considered societally useful, despite not being lucrative (6m38s).
• This approach forces one to go deeper and gain a more nuanced understanding of the subject matter, and to develop real intuition through hands-on experience (7m1s).
• It is not necessary to be a practitioner of everything to understand a subject, but in some cases, it can be helpful to gain a deeper understanding and hone in on what is important (7m12s).

The 1 thing that matters in a business (7m21s)

• Most businesses have one or two fundamental aspects that matter, and everything else is just noise or a checkbox, with the key being to identify and focus on these essential elements (7m21s).
• Identifying the one thing that matters can be challenging, but it's often the key question that drives the business, and it may be hard to come up with this insight, but it's crucial for success (8m14s).
• Different types of businesses may have varying characteristics, and sometimes it's two things or more complex businesses that have multiple key elements, but 90% of the time, it boils down to one area of belief or one thing that needs to happen in the business (8m43s).
• Having a clear understanding of the one thing that matters can simplify the operating philosophy and decision-making process, making it easier to focus on the target audience and cater to their needs (9m56s).
• The complexity of businesses often comes later as they become multi-product and international, but early on, there's usually a key insight that drives the business (10m12s).
• Identifying the one thing that matters can be done by exploring different ways to monetize the business, and having a clear understanding of the target market and audience (9m11s).
• The business monetization Playbook is a resource that can help businesses identify different ways to monetize and find the one thing that matters (9m32s).

How to master a new topic like defense tech (10m21s)

• Mastering a new topic like defense tech involves reading available information, analyzing market structure and growth rates, and understanding technology shifts (11m3s).
• To analyze market structure, one can look at the number of players in the market, whether it's consolidating or not, growth rates, margin structure, and the business approach of companies in the industry (11m17s).
• Traditional defense tech companies often use a "Cost Plus" business model, which limits their profit margins, whereas companies like Anduril can achieve higher margins by selling more units at a lower cost (11m37s).
• Anduril's business model is a market cap expansion in the defense world, with higher margins and leverage, requiring a different business approach (11m56s).
• Understanding the business model and market structure of companies in the defense tech industry can help identify interesting opportunities (11m0s).
• Research can involve reading analyst reports, market research, and asking questions about the market and companies involved (11m21s).
• Early investment in companies like Anduril can be beneficial, with the first round of investment being crucial in shaping the company's future (12m11s).

Investing in Anduril in the first round (12m15s)

• The investment in Anduril's first round was a result of recognizing an opportunity in the market after Google shut down Maven, a project that sparked interest in the defense technology space (12m23s).
• The decision to invest in Anduril was made after researching the market and meeting with people who were working on Maven, including a person at Google Cloud who mentioned that not everyone who worked on Maven quit in protest (12m31s).
• The investment in Anduril was also influenced by meeting with Palmer Luckey, who was working on a similar project, and being impressed by his laid-back approach to work (12m52s).
• The concept of "luck favors the prepared" is relevant to the investment in Anduril, as it requires a prepared mind to recognize opportunities when they arise (13m36s).
• The investment in Anduril is an example of a "market-first" approach, where the market opportunity is identified before the specific company or product (14m26s).
• Another example of a "market-first" approach is the investment in crypto companies in 2016-2018, which was driven by a clear shift in adoption and technology (14m49s).
• The investment in AI companies is also an example of a "market-first" approach, where the shifting market and technology trends drove the investment decisions (15m0s).
• In some cases, investments are made without a clear thesis or trend in mind, but rather based on the quality of the founders and the potential of the idea (15m20s).
• The balance between a thesis-driven approach and an open-minded approach is important, as it allows for the recognition of new opportunities and trends (15m34s).

1b dollar 1 person companies (15m47s)

• There is a notion that a one or two-person billion-dollar company will become a thing due to AI, but this concept already existed before, with examples such as Minecraft, which was sold to Microsoft with only a few employees (15m49s).
• Many large hedge funds and later-stage firms have a structure where one or two people make most of the good investments, and this phenomenon is not unique to the tech industry (16m30s).
• There have been multiple businesses that have achieved enormous scale with a small number of employees, and AI will likely have a varying impact on different types of teams (16m49s).
• Certain teams, such as customer success reps, may shrink due to AI, while others may not be as heavily impacted (17m12s).
• The idea of a two-person AI company is not new and has historical precedents, but its future is likely overstated (17m43s).
• When it comes to measuring investing success, metrics such as IRR, DPI, and the number of unicorns can be used, but the most important metric may vary depending on the investor (17m49s).
• Y Combinator (YC) has had significant success in its early years, turning $12 million into $10 billion in value and achieving a 320x return on investment in its first decade, with a high hit rate despite increasing batch sizes (18m10s).

Missionary vs mercenary (18m51s)

• The primary metric for success is not solely financial return, but also making sure that founders find the resource useful and positive, and being involved with the most important technologies and companies in the world to drive societal impact (18m52s).
• Technology is viewed as a lever on the world, and the goal is to make a positive impact, rather than being solely motivated by money (19m30s).
• The distinction between "missionary" and "mercenary" types of people is discussed, with missionaries being driven by a desire to make a positive impact, and mercenaries being driven by financial gain (19m56s).
• Nala's framework suggests that early in one's career, it's natural to be partially mercenary, but later in life, one should become more missionary-like, focusing on doing things for the greater good (20m14s).
• The ideal is to eventually become an "artist," doing things for the love of the craft, rather than solely for financial gain (20m29s).
• Working on the most important problems in the world with the best people can lead to a good financial return, but it shouldn't be the primary motivating goal (20m52s).
• Sometimes, being surrounded by people who are very money-driven can be boring, as conversations can be uninteresting and lacking in depth (21m4s).
• An example is given of a conversation with an investor who was only interested in crypto because of the potential to make a lot of money, which was seen as uninteresting and lacking in substance (21m31s).

Idea: new schools inspired by Ancient Greece (22m12s)

• A new chain of K-12 schools inspired by ancient Greece is proposed, focusing on basic aspects of learning such as reasoning, logic, mathematics, writing, and physical fitness (22m16s).
• The idea is not to reinvent the school system but to go back to certain basics and establish a framework that can be used broadly across cities or regions (22m38s).
• The ancient Greeks emphasized reasoning, logic, thinking, discourse, debate, mathematics, writing, and physical fitness, which are considered useful aspects of learning (23m2s).
• The proposed school would focus on these aspects and potentially include a strong emphasis on mathematics, similar to the Proof School in San Francisco (24m20s).
• The Proof School has a curriculum that includes machine learning in 10th or 11th grade and emphasizes mathematics for kids who love math (24m25s).
• The plan is to find an entrepreneur to spearhead the project, who can drive the idea day-to-day, and potentially create a chain of schools with consistency and the ability to bring it to different populations (25m7s).
• The goal is to create a societally useful project that can provide access to this sort of schooling to populations that may not have it otherwise (25m31s).

Idea: A drug that makes you live longer (25m49s)

• Elad Gil has a PhD in biology and has looked into longevity, funding clinical trials and investing in companies in the space, including BioAge, which has a new drug for muscle and is in different phases of clinical trials or pre-clinical work (25m50s).
• BioAge is a company that recently went public, and Elad Gil was an early investor and board observer, but due to the quiet period, there isn't much information available about the company (26m10s).
• The CEO of BioAge is a PhD who did her postdoc at Stanford, focusing on the biocomputation of aging (26m25s).
• Aging is an area that has been dramatically underinvested in, partly due to the structure of big Pharma and the highly regulated nature of the industry (26m43s).
• The National Institutes for aging has a relatively small budget compared to other parts of the NIH, with most of the budget going to Alzheimer's research, resulting in sparse fundamental research into aging (27m1s).
• Aging is a developmental program that can be perturbed, and certain evolutionarily conserved pathways can be tweaked to increase lifespan, as seen in organisms like C. elegans that can live two to three times longer when a specific gene is knocked out (27m13s).
• There are different theories of aging, including the accumulation of damage over time and the idea that aging is a regulated developmental program controlled by signals in the body (28m4s).
• The developmental program theory of aging suggests that different organisms have different clocks for aging, with some animals living longer or shorter lives due to their genetically defined lifespan (28m35s).
• There are various theories about aging, but it's unclear which one is correct, and certain drugs have been found to extend lifespan in multiple organisms, such as mice living 10 to 30% longer when given a specific drug called Rapa m, depending on their sex. (29m10s)
• Gene knockouts have also been found to increase lifespan in certain organisms, which could lead to the development of drugs that mimic these effects, but very little research is being done on this topic in humans. (29m30s)
• The lack of research on aging in humans may be due to a lack of funding, safety concerns, or commercial disincentives, and the FDA has only recently developed a definition of what it means to build an aging drug. (30m7s)
• Aging is not typically considered a disease, but rather a natural state, which can make it difficult to develop drugs against it, but companies like Loyal are working on aging in dogs and have defined a series of endpoints for their research. (30m30s)
• Loyal's approach may have an easier regulatory pathway and could also have benefits for society, such as increasing the lifespan of pets, and the company's founder is well-regarded, although the effectiveness of their approach is unclear. (30m54s)
• Bioage is another company working on aging research and has recently gone public, making more information about their work available to the public. (31m18s)
• Some people in Silicon Valley are exploring new technologies and treatments for fun, which may become more mainstream in the next 10-15 years, but it's unclear what will be popular in the future. (31m30s)
• The individual being interviewed has not tried any interesting pharmaceuticals, such as metformin, and prefers not to take anything chronically unless they think it would have a significant benefit. (31m59s)
• The current market lacks a significant impact on longevity, with most advice revolving around exercise, sleep, and a healthy diet, and there isn't anything substantial that maps to a huge impact in this area (32m6s).
• Some people in the aging community take certain subclasses of statins for heart disease and neuro, and a subset takes baby aspirin for heart disease, but it's essential to consult a doctor before considering such measures (32m32s).
• Gene therapy and gene editing technologies like CRISPR are being explored, but there are concerns about their effectiveness and potential issues, such as targeting the right cells and avoiding immune system rejection (33m23s).
• The speaker has been interested in longevity for a long time, having studied it in school, personally identified a gene involved in lifespan, and funded a clinical trial at Stanford, which didn't work, but they are open to trying again (33m53s).
• The speaker is not familiar with Brian Johnson's work on longevity, despite its relevance to their interests, due to being busy with hardcore biofarma and drug development (34m15s).
• The speaker's focus is on developing drugs that can benefit society at large, which is a different area of focus from longevity and gene editing technologies (34m39s).

Idea: Large scale monuments to flex (34m56s)

• Large-scale monuments were built in the past to showcase progress and technological advancements, such as the Eiffel Tower, which was constructed in the late 1800s for a world fair in Paris to demonstrate French steel-making prowess (35m16s).
• These monuments also served as inspirational pieces of beauty and art in society, but it seems that such large-scale projects are no longer being undertaken (35m59s).
• Examples of recent large-scale societal beauty projects include the Vegas sphere, which is considered a real example of large-scale societal beauty (36m9s).
• The Blue Angels air shows are also mentioned as an example of a government-funded project that evokes a sense of patriotism and awe (36m14s).
• The United States has a history of undertaking ambitious projects, such as going to the Moon in the 1960s and 1970s, but it has been decades since such a project has been undertaken (36m35s).
• The lack of such projects in recent years is attributed to regulation and a post-modern, cynical thinking that is anti-progress (37m35s).
• There is a desire to see more large-scale, inspiring projects that showcase progress and technological advancements, such as a giant statue in San Francisco that serves as an ode to the future (37m52s).
• Building a monumental structure can be challenging due to regulatory frameworks and expensive land costs, especially in major metropolitan areas like the Bay Area, where even constructing a public toilet can be difficult (38m9s).
• However, other metro areas are more open to such projects, and there are global and US versions of this concept, with the main challenge often being the cost of land rather than construction (39m1s).
• The construction process for a monumental structure is relatively simpler compared to building a large commercial property, as it often involves building a big statue or a hollow shell with a base or foundation (39m12s).
• The idea of building a monumental structure is to create something equivalent to the Statue of Liberty or the Eiffel Tower, which would demonstrate modern steel prowess and have meaning (39m35s).
• The project, called Monumental, aims to solicit ideas from locals on what they find inspiring and what they want to drive their children's optimism forward, serving as an ode to progress and a way to encourage inspiration in young people (39m52s).
• The lack of ongoing societal beauty and great works is partly due to the cynicism that arose in the 1960s and 1970s, which can be seen as a reflection of the death of innocence in America following a series of assassinations, including those of Malcolm X, JFK, and RFK (40m31s).
• The Baby Boomer generation's self-absorption may have contributed to their internalization of historical events, making them perceive the world differently compared to other generations (41m10s).
• A man spent roughly $3 million building crosses on the side of highways in the South, which became a notable phenomenon, with other churches following suit and erecting similar structures (41m16s).
• The idea of dedicating a large sum of money to a cause, despite it seeming illogical, can be intriguing and thought-provoking (42m32s).
• A park in Oslo features a collection of around 200 sculptures created by a single artist over several decades, showcasing the value of craftsmanship and dedication to a project (43m0s).
• The question arises as to why society seems to have stopped producing such inspiring and amazing works, with the possibility that it only takes one person to spark a wave of creativity and innovation (43m31s).
• Elon Musk's endeavors, such as Tesla and SpaceX, serve as a modern example of pouring talent and resources into high-risk, low-probability projects that can have a significant impact on society (43m40s).
• Musk's success has changed the way founders think, inspiring them to pursue ambitious projects, regardless of their field or industry (44m11s).

Gil's Guide to Intensive Travel (44m25s)

• Intensive travel involves immersing oneself in a new place and culture for an extended period, usually a month or more, to learn something new and become part of a community, which can be a transformative experience (44m42s).
• The approach to intensive travel is to spend at least a month in one city, decide to learn something there, and join a community related to that topic, allowing for immersion in the subject and the local people (45m8s).
• Examples of intensive travel experiences include learning yoga in India, drawing in France, or making pastries in a local bakery, which provide opportunities to learn new skills and connect with like-minded people (45m15s).
• Intensive travel is different from traditional tourism, where the goal is to see as many sights as possible in a short amount of time, and instead allows for a deeper connection with the local culture and community (46m4s).
• Engaging in a hobby or activity while traveling, such as playing basketball or practicing Jiu-Jitsu, can provide a sense of native fluency and allow for connections with locals, even without speaking the language (46m40s).
• The Jiu-Jitsu community is a vibrant example of a global community that welcomes newcomers and provides a sense of belonging, with a common interest and shared values (47m16s).
• Plugging into a community like Jiu-Jitsu or yoga can provide a sense of instant adoption and connection with others, even in a foreign environment (47m34s).
• The formation and persistence of communities like Jiu-Jitsu are interesting questions that can provide insights into how people come together and form connections around shared interests (47m55s).
• Elad Gil can be found on Twitter at @eladgil, and he hopes that more people will go out and build interesting things (48m17s).