Ask Jason + LegalQ Founder Zeb Anderson + OK Boomer with Jules Terpak | E1539 | Summary and Q&A

Transcript

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Summary

In this video, Jason covers a range of topics, including the impact of a recession on investments, the potential for investing in founders who have previously failed, and the traction that companies like Uber and Calm had when they were invested in. He also includes interviews with a founder from the 25th cohort of the launch accelerator and a segment called "Ok Boomer" with a tech and digital culture commentator.

Questions & Answers

Q: Why does a recession slow down investments when they're supposed to be long term? Isn't it better to buy in a low market? Shouldn't VCs be deploying more now?

The slowdown in investments during a recession is due to various factors. One reason is that VCs have to focus on triaging their existing portfolio companies. They need to ensure that their current companies survive and succeed in a downturn. This requires time and attention, diverting resources away from new investments. Additionally, VCs often need to call down money from their limited partners (LPs) to invest in new companies. If the LPs are cautious and advise against deploying capital in a downturn, this can further slow down the investment process. Furthermore, founders may have unrealistic valuations in a low market, making it difficult for VCs to find attractive deals. Ultimately, it takes time for the market to find equilibrium, and VCs need to be patient and strategic in their investment decisions.

Q: What makes investors invest in a founder multiple times, even if their previous startup failed?

Investors may consider investing in a founder multiple times if they have demonstrated certain qualities and learnings from their previous failure. One important factor is the founder's work ethic and passion for their work. If a founder worked hard and built a great product in their previous startup, despite it failing, investors may see potential in their ability to execute. Investors also look for founders who were good stewards of capital and made wise decisions in their previous venture. If a founder managed resources well and learned from their mistakes, investors may be more inclined to invest in them again. Additionally, investors look for founders who have a clear understanding of what went wrong in their previous venture and can articulate the lessons they learned from it. Demonstrating growth, resilience, and a willingness to learn from failure can make investors more likely to invest in a founder multiple times.

Q: What traction did Uber and Calm have when they received investments?

At the time of their investments, Uber and Calm had different levels of traction. Calm had a very simple product in the App Store, generating $10 per sale. They had already sold 1,000 copies of their product. On the other hand, Uber was still in private beta with just two or three cabs on the road and a simple invite-only app. They had no significant revenue yet. However, what made these companies attractive to investors was not just their traction, but the quality of their products, the dynamic founders behind them, and the potential for disruption in their respective industries.

Takeaways

Despite the challenges and uncertainties in the market, investing in founders who have demonstrated hard work, resilience, and a willingness to learn from failure can be a strategic move. In addition, focusing on the team, product, and customers can provide valuable insights when evaluating investment opportunities. By considering these factors, investors can make informed decisions and potentially discover promising startups.