The Crazy Story of Google’s 7 Angel investors

Andy Bechtolsheim (0s)

• The story of Google's early investors is a fascinating one, with seven strangers making the greatest investment of all time, and it highlights the world of Angel Investing and how luck can be created through various means (0s).
• The building at 165 University Avenue in Palo Alto is known as the "lucky office" or "karma building," where several successful companies, including Google, PayPal, and Logitech, were started (1m0s).
• This office has a legendary status, but it has had a cold streak recently, with some believing that rooms can lose their magic after being "mined" by successful artists or companies (1m50s).
• HubSpot has put together a list of 200 AI business ideas, including an AI dressing room that can show customers how clothes or makeup would look on them, and AI tools for real estate brokers to make listings more attractive (2m6s).
• The story of Google's early investors is about to be shared, including how they created their own luck and invested in the company (2m42s).
• Sergey Brin, one of Google's founders, is shown in a picture with Andy Bechtolsheim, who is not a well-known figure, but is actually one of the founders of Sun Microsystems (2m48s).
• Sun Microsystems was one of the first big companies in Silicon Valley, making workstations, computers, and microchips, and was founded by Andy Bechtolsheim and others (3m18s).
• The founders of Sun Microsystems, including Venod Kosla, Bill Joy, Andy, and Scott McNealy, were approached by Larry and Sergey, two Stanford students and the founders of Google, with an idea for a new kind of search engine. (3m30s)
• The founders of Sun Microsystems were known for creating their own operating system and doing many innovative things, with Venod Kosla being the first Indian guy mentioned. (3m34s)
• Andy received an email from Larry and Sergey, pitching their idea for a search engine that used a new method called PageRank, which ranked websites based on the number and importance of other websites linking to them. (4m8s)
• Larry and Sergey demonstrated their search engine to Andy, showing him how it produced better results than traditional search engines, and discussed their plans to raise money to turn their idea into a company. (5m41s)
• Andy was impressed with their idea and decided to invest $100,000 in Google, writing a check to "Google Inc" despite the company not being incorporated yet, and without discussing valuation or share price. (6m9s)
• Andy's investment was based on his belief that their idea was the best he had ever seen, and he encouraged them to take the money and start building their company. (6m26s)
• Google's valuation today is in the trillions of dollars, and an early investor, Andy, owns 2% of the company, which he didn't realize at the time due to the company's undecided valuation (6m45s).
• Andy was excited about Google and recognized its potential as the greatest idea he had ever seen, having the prepared mind that luck favors (7m0s).
• Andy's investment in Google can be compared to a hypothetical scenario where Elon Musk invests in a company he believes has the best product, drawing a parallel between Andy's influence at the time and Elon's current influence (7m11s).
• Andy was enthusiastic about Google and shared his excitement with the next person in the story (7m22s).

David Cheriton (7m26s)

• David Cheriton is another early investor in Google, often referred to as the "billionaire Professor" due to his professorship at Stanford and his immense wealth (7m26s).
• Cheriton is also known for being extremely frugal, often riding his bike and living in the same old house he had before becoming rich, which has earned him a spot on the list of the top 10 cheapest billionaires (8m2s).
• Despite his wealth, Cheriton gives away tens of millions of dollars to universities, schools, education, and philanthropy, and is admired for his humble lifestyle (8m33s).
• Cheriton invested in several successful companies, including Arista Networks, which he co-founded, and VMware, which was sold to Cisco for $700 million (7m37s).
• He invested $150,000 in Google in the same round as Andy Bechtolsheim, and his investment eventually earned him over a billion dollars (9m31s).
• At the time of his investment in Google, Cheriton was not yet a billionaire but was already successful, having started a company called Granite Systems and later co-founding Arista Networks (9m40s).
• Cheriton's net worth is now estimated to be over $10 billion, making him one of the top 100 richest people (9m54s).

Ron Conway (10m26s)

• Ron Conway is described as a legend with a unique presence and aura, often taking notes and moving quickly, with a tendency to be forgetful. (10m26s)
• Conway has a distinctive way of working, always on the move, and when meeting people, he quickly gets to the point, asking what they need help with and jotting down notes on his yellow legal pad. (11m1s)
• Conway's approach to helping others is likened to that of a powerful figure, such as a Mafia godfather, who can grant favors to those who ask. (11m22s)
• Conway is also compared to Santa Claus, but with a high level of energy, as if fueled by a triple espresso. (11m37s)
• At a holiday party, Conway met David, who had invested in his fund, and asked him about exciting new developments at Stanford, leading to a discussion about two PhD students working on a search engine. (11m52s)
• Conway expressed interest in the search engine project and asked David to arrange a meeting, but the students were initially hesitant, preferring to work with venture capitalists rather than angel investors. (12m30s)
• Conway's background includes starting a company called Altos Computing, which he took public before selling it, with Sequoia as an early investor. (12m59s)
• After selling his company, Conway spoke with Don Valentine, a well-known investor, about his next steps, and expressed his desire not to manage another company. (13m23s)
• Ron Conway was approached by Don Valentine, who suggested he try Angel Investing, a relatively new concept at the time, which involved investing small amounts of personal money in startups, rather than starting his own venture capital fund (13m52s).
• Ron Conway decided to start Angel Investing with his own money and quickly realized he needed to differentiate himself from more experienced investors like Don Valentine (14m20s).
• To differentiate himself, Ron Conway decided to focus on a specific niche, which he chose to be software and the internet, as he had a strong dislike for hardware and saw potential in the emerging internet space (14m47s).
• At the time, the internet was still in its early stages, and the browser had not yet been invented, but Ron Conway was confident in its potential and decided to invest heavily in it (15m1s).
• Ron Conway's decision to focus on the internet proved to be a successful one, and he was able to establish himself as an expert in the field as it grew and evolved (15m24s).
• In 1999, Ron Conway raised a $25 million fund from other investors to create a Silicon Valley-based Angel Investing fund, which would later become known as SV Angel (15m48s).
• The fund's approach was to invest in a wide range of Silicon Valley companies, and Ron Conway made over 250 investments before the dot-com bubble burst (16m13s).
• Ron Conway is known for being extremely generous, and his philosophy is to be in service of the founder, helping as many as he can, with money being a byproduct of his efforts (17m7s).
• Conway's reputation for acting benevolently has allowed him to build a network and get invited into deals, which is a key part of angel investing (18m24s).
• Conway invested in Google, which carried him through the .com bubble burst, and he had initially invested in the company despite them not wanting an angel investor (16m55s).
• Paul Graham describes Conway as someone who has never behaved badly to any founder, and many people have come forward to share stories of his kindness and generosity (17m38s).
• Conway's investment portfolio includes many successful companies, such as Pinterest, Coinbase, Facebook, Open AI, Snapchat, Twitter, and Reddit, with Paul Graham joking that it's shorter to list the hit companies Conway missed (18m47s).
• Conway's company, SV Angel, has invested in numerous successful companies, and his reputation has allowed him to get into many deals (18m28s).
• Paul Graham has praised Conway, calling him "the man" and highlighting his impressive track record of investments (19m9s).
• Ron Conway, a well-known angel investor, has an investment style similar to Y Combinator (YC), where he makes quick decisions, often in three to five minutes, and invests a standard amount of $100,000 into every startup he meets (19m42s).
• Conway's initial investment amounts have varied over time, starting with $25,000, then increasing to $100,000, and eventually $250,000 (20m12s).
• His strategy focuses on investing in the founder rather than the idea, as he believes it's the founder's job to figure out the idea, and they often change their ideas (21m54s).
• Conway's portfolio includes investments in successful companies such as Open AI, Hugging Face, and UDA Swap (20m41s).
• He has a long-term approach to investing, viewing it as a lifelong investment in the founder, as many successful founders start multiple companies (22m5s).
• Conway's son, Topher, began making investments at the age of 13, including an early investment in Napster, which was a successful startup at the time (22m14s).
• Conway's approach to investing is not just about making quick decisions but also about understanding the importance of the founder's role in a startup's success (21m4s).
• An investor met with the founders of Napster, Shawn Parker and Sean Fanning, and invested in them, showing interest in their future projects, even though Napster didn't work out (22m41s).
• Shawn Parker's next company was Facebook, and the investor also invested in it, despite initial doubts about the potential of social networks to make money (22m59s).
• The investor was drawn to Sean Parker as a founder and decided to invest in his future projects (23m12s).
• The investor was approached by Google founders, who wanted him to invest in their company, but only if he could also bring in Sequoia Capital, specifically Mike Moritz, who was on the board of Yahoo (23m24s).
• Google's founders wanted to build the best search engine and secure deals with Yahoo and AOL, and they believed Mike Moritz's involvement would help them achieve this goal (24m52s).
• The investor was impressed by Google's founders, who were super smart, determined, and had a clear vision for their company, including a product that already had early users who used it frequently (23m45s).
• The investor noted that Google's founders were strategic in their approach, recognizing the importance of securing deals with major players in the industry to drive their growth (24m34s).
• The investor was also impressed by Mark Zuckerberg's ambition and vision for Facebook, including his goal of reaching 300 million users, which was unprecedented at the time (24m8s).

Alfred Lin (29m31s)

• Alfred Lin, an executive at Zappos, sent a desperate email to Ron Conway, a small investor in the company, to arrange a meeting with the CEO of a Fortune 50 company, which led to an 8-figure contract and eventually the acquisition of the company for $800 million (30m19s).
• Ron Conway's investment approach involves only taking meetings that come from his network, with around 30 pitches per week, and he invests in about one out of 30 deals (31m51s).
• Conway's decision to invest is typically made within five minutes of talking to the founder, and he looks for three key qualities: an insane 24/7 desire to work, a willingness to prioritize the business over other aspects of life, and a strong passion for the project (32m17s).
• Conway values referrals from founders or investors he knows well, and he turns down around two or three pitches per day via email without a phone call (32m11s).
• The story highlights the importance of networking and being part of a community, such as San Francisco, where interactions and connections can lead to significant opportunities (31m4s).
• When evaluating potential investments, one key factor to consider is whether the founders can make their vision feel infectious and exciting to others, as this can be a sign of a successful and charismatic leader (32m50s).
• Another important factor is the founder's ability to communicate why their product or service matters, as this can help to inspire and motivate others to join their cause (32m56s).
• Successful founders often have a strong sense of focus and are able to make others believe in the importance and potential impact of their work, even if it may seem insignificant or unimpressive at first (33m10s).
• One example of this is Jimmy "MrBeast" who is able to make his videos seem exciting and important when you're with him, but may seem less impressive when viewed from a distance (33m24s).
• A key characteristic of successful founders is their "rifle focus" on the product, meaning they are completely dedicated to making it the best it can be and are not easily distracted by other things (33m59s).
• Examples of founders who have demonstrated this focus include Jack Dorsey of Square and Twitter, Mark Zuckerberg of Facebook, and Ben Silbermann of Pinterest (34m0s).
• One employee at Pinterest was so focused on the product that he wore a shirt with the word "focus" on it every day, demonstrating the company's commitment to prioritizing the product above all else (34m31s).
• This focus on the product is a key factor in the success of many startups, and is something that investors should look for when evaluating potential investments (35m1s).

Shaquille O'Neill (35m7s)

• Shaquille O'Neal, a famous NBA star in the 1990s, was sitting in a hotel lobby, likely a Four Seasons or Ritz Carlton, when he encountered four distinguished gentlemen who didn't recognize him, but their kids did (35m33s).
• The kids ran up to Shaq, and he, being a playful and good-natured person, started playing with them while their parents were having a meeting (35m54s).
• At the end of the meeting, Ron Conway, one of the gentlemen, approached Shaq and thanked him for playing with his grandkids, and they started chatting (36m18s).
• During their conversation, Conway mentioned an investment opportunity in a company called Google, which Shaq eventually invested in after meeting with Larry and Sergey (36m32s).
• Shaq has stated that his investment in Google was an accident, and he forgot about it until he read in the newspaper that he was listed in the S1 filing and was going to make a significant profit (36m50s).
• Shaq's initial investment of a couple hundred thousand dollars turned into over $100 million, although it's unclear how long he held onto his shares (37m8s).

Susan Wojcicki (37m20s)

• Susan Wojcicki, whose last name is of Polish origin, was an early investor in Google and played a significant role in the company's history (37m20s).
• Wojcicki had a garage that she rented out to Google co-founders Larry and Sergey Brin for $1,700 a month, providing them with a workspace (38m14s).
• At the time, Wojcicki was a mid-level marketing manager and had recently bought a house with her husband, and they were feeling financially strained (37m56s).
• Wojcicki's sister, Anne, was dating Sergey Brin and arranged for the Google co-founders to rent the garage (37m50s).
• Wojcicki was impressed by the Google co-founders' work ethic and eventually quit her job to join Google as employee number 16 (38m24s).
• Wojcicki went on to work on AdWords and was a strong advocate for Google's acquisition of YouTube (38m40s).
• After Google acquired YouTube, Wojcicki became the CEO of YouTube, a position she held for many years (38m49s).
• Wojcicki's sister, Anne Wojcicki, co-founded the genetic testing company 23andMe (38m52s).
• Susan Wojcicki eventually became a billionaire and held the position of YouTube CEO until her passing (38m37s).

Pejman Nozad (39m0s)

• Pedram, a Persian immigrant, started a luxury rug shop in the heart of Palo Alto, Silicon Valley, and rented out office space to early founders of companies like PayPal. (39m33s)
• He became friends with these entrepreneurs, sold them rugs, and eventually invested in their companies, becoming an angel investor despite having no knowledge of technology. (40m5s)
• Pedram's approach to investing was to invest in people who seemed interesting, often those who came into his rug shop. (40m39s)
• Pedman, not an actual investor in Google, cold-called Pedram and asked for a job, eventually becoming a rug salesman for him. (40m45s)
• Over 15 years, Pedman improved his English and confidence, becoming Pedram's top rug seller, with his best year resulting in $8 million worth of rug sales. (41m24s)
• Pedman's success as a rug salesman led him to meet influential people, including Andy Rubin, co-founder of Danger, the company behind the T-Mobile Sidekick cell phone. (42m10s)
• Pedman's trick to becoming a successful investor was to meet people, sell them rugs, and learn about their businesses, often leading to investment opportunities. (42m8s)
• Andy Rubin created Android and later became the head of mobile for a big Chinese manufacturer, and is now working on an AI project (42m35s).
• Andy Rubin invested $400,000 in Google, and later became a partner in an investment firm, investing in startups and making money from commissions (43m14s).
• Andy Rubin met Joe Lonsdale, who was buying rugs, and introduced him to his rug shop, where he would bring rugs to customers' homes to learn more about them (43m39s).
• Joe Lonsdale was in his mid-20s and was already successful in the Persian rug business, and Andy Rubin invested in his company, Adapar, which recently sold for a couple billion dollars (44m12s).
• Andy Rubin also invested in Dropbox because one of its co-founders was Persian, and he was able to communicate with him in Farsi (44m23s).
• He also invested in AppLovin, which is now a hundred billion plus company, possibly because the founder is Iranian (44m32s).
• A network of investors, referred to as a "mafia," was created through connections made at the rug shop (44m43s).
• An investor, who is not named, invested $25,000 in a company called Lucy, which makes nicotine gum or pouches, and expects it to become a 500 million or billion dollar company (45m33s).
• An individual invested $25,000 in Google, which was a significant portion of their savings of $100,000 at the time (45m53s).
• The investment decision was made after a mutual friend, Josh, vouched for the founders, leading the individual to think they were "cool" and decide to invest (45m48s).
• The individual lost contact with the Google founders for about six years after investing, but later found out that the company was doing extremely well (46m6s).
• The individual gives a shoutout to John Doerr and the crew at Google, acknowledging their success (46m11s).

Jeff Bezos (46m17s)

• Jeff Bezos invested $250,000 in Google at an early stage, a fact that is not widely known, and the reason behind this investment is unclear (46m28s).
• Microsoft also invested in Apple at a point in time, saving the company from failure, showing that competitors can invest in each other at key moments (46m34s).
• Rod Conway, an investor, was shown Google's first slide deck, which had 10 pages and 10 slides, but the financial projections slide simply said "Thank you," and Conway decided to invest despite the lack of financial information (47m10s).
• The concept of "proximity is power" is highlighted, where being close to the action and the people you want to be around can lead to opportunities and success (47m45s).
• The idea of living in Silicon Valley, specifically Palo Alto, is discussed as a desirable location for being close to the action and meeting influential people, with the trade-off being a higher cost of living (48m10s).
• The importance of serendipitous meetings and bumping into people in the right location is emphasized, with the example of walking around Palo Alto and seeing the garage where Google started and the houses of influential people (49m16s).
• The concept of proximity's power is highlighted, emphasizing the importance of being present in the heart of the action for whatever scene one wants to be in, as it can lead to serendipitous encounters and valuable connections (49m59s).
• The Ron Conway principle is mentioned, which involves acting benevolently to build a reputation that ultimately leads to a strong portfolio, rather than solely focusing on building a portfolio (50m11s).
• The midwit meme is referenced, suggesting that the best early pickers of startups, such as Ron Conway, make decisions based on their ability to judge people and determine if they are fierce founders, often within a short period of time (50m25s).
• The first valuation of Google was $10 million, and the next round was at $75 million pre-money, with Ron Conway investing at the latter valuation (51m3s).
• Ron Conway was not scared off by the $75 million pre-money valuation, as he believed that companies are binary, either resulting in a huge win or a zero, and he let the market decide the price (51m41s).
• Ron Conway's investment in Google yielded a significant return, with a $400 return for every dollar invested, and he noted that the peak valuation of Google was still in the future at the time of the conversation (51m57s).
• The conversation mentions that Ron Conway's investment was made over a decade ago, specifically in 2012, and that Google has since tripled in value (52m14s).
• Google's early investors, including professors Andy and David, invested $100,000 in the company's $10 million round, which eventually became over a billion dollars for each of them (52m31s).
• The concept of Angel Investing is challenging to comprehend, as it requires thinking about a company's potential worth in the future, which can be difficult to wrap your head around, especially when considering the possibility of a company being worth a trillion dollars (53m16s).
• The math behind Angel Investing is very challenging, and it's hard to think about a company being worth a trillion dollars when it's currently worth $100 million (53m29s).
• The story of Stripe is mentioned, where the company was valued at $3 billion, and the speaker thought it was overvalued, but it eventually became a much larger company, demonstrating the potential for huge returns on investment (54m10s).
• The speaker reflects on a conversation with the CEO of a billion-dollar company, who advised them to think about numbers on a spreadsheet rather than as absolute values, and to focus on the zeros going in and out, rather than the actual numbers (55m11s).
• This conversation shaped the speaker's view on thinking about numbers and investments, and they learned to approach it in a more abstract way, similar to a casino, where you trade cash for chips (55m31s).
• The concept of relative numbers can affect decision-making, as seen in the example of investing in Tesla when it had a valuation of $5 or $6 billion, and the investor made three times their money, but still considered taking their winnings due to the company's market cap being comparable to that of a large car company like GM or Ford (55m55s).
• The investor recalls thinking that if Tesla became the most valuable car company in the world, it would be a $30 billion company, which would be a 5x return, but Tesla is now a $1.3 trillion company, exceeding the investor's expectations by more than 10x (56m37s).
• The investor notes that Tesla is worth more than the next 10 car companies in the world combined, and its valuation is more than the combined valuation of the next six car companies, which is around $477 billion (57m9s).
• The investor uses the example of a person worth $100 million compared to a person worth $1 trillion to illustrate the vast difference in wealth, and how it's hard to understand the scale of such large numbers (57m40s).
• The investor mentions a quote about happiness, stating that people can talk themselves out of happiness, but not into it, and relates this to investing, where people can talk themselves out of investments or into unhappiness (58m6s).
• The investor notes that in technology investing, the goal is to find the one or two breakout companies or categories that will disrupt the entire game, following the power law (58m36s).
• When it comes to tech investing, it's often about making a 5 to 10-minute gut-based decision on the quality of the founder or the overall space, as seen in the rise of the internet in the 1990s, crypto in the early 2010s, mobile, and now AI (58m53s).
• A professional investor with amazing returns, who picked the right things to bet on, such as Bitcoin and Nvidia, may have done so for the wrong reasons, highlighting the unpredictability of tech investing (59m30s).
• The idea of getting the first employee or investor of legendary companies to share their stories could provide valuable insights, as they may be more willing to share information than the founders, who may be media-trained and still running the company (1h0m2s).
• Paul Graham asked Ron Conway, a founder and investor in many legendary companies, what had changed over the years, and Conway replied that they used to drink more and have a more relaxed attitude towards work and play (1h0m42s).
• Conway shared that in his company, they would often drink and socialize during work hours, with a woman named Donna pushing a cart with booze around the office, and that this culture of "work hard, play hard" was common at the time (1h0m56s).
• Conway noted that this culture has changed, and companies now tend to segment their work and playtime, with happy hour on Fridays after work, rather than during work hours (1h1m18s).