The Crazy Story of Google’s 7 Angel Investors

The Crazy Story of Google’s 7 Angel Investors Siqi Chen: Today I'm going to tell you about seven strangers who made the greatest investment of all time. And I'm just going to put my finger to your lips and just say, let me cook here because I got something for you. I'm just going to, I'm going to take you down a road here. All right. So I've been down this rabbit hole, dude, for the last, I want to call it six hours preparing for this podcast. Because I just got obsessed with the random story and lore of the first people that invested in Google. This is crazy. So this is the story of all the people who invested early at Google. And the lessons from this are not about investing in Google. This was like, you know, 20 years ago. But how crazy the world of angel investing is and how much you can almost create your own luck. And I want to show you how these people created their own luck step by step. So first, let me show you something. And if you're on iTunes, go to YouTube right now. You're going to want to see my little PowerPoint I made for Sam. All right, Sam, check this out. Do you recognize this building? Sam Parr: Just probably something in downtown Palo Alto. Siqi Chen: What you're looking at is 165 University Avenue, also known as the Lucky Office, also known as the Karma Building. You might recognize a little better here when you see one of the companies that was started here. So Google was started here. Before Google was started there, PayPal was started there. Before PayPal was started there, Logitech was started there. After Google was started there, a company called Danger was started there, sold for 500 million to Microsoft by the guy who created Android right after that. This office is legendary. Sam Parr: Who's in there now? Siqi Chen: Well, it's had a little bit of a cold streak recently. And it's kind of like Ed Sheeran says, Ed Sheeran believes that rooms have songs. And he's like, once a studio has been mined by like four or five great artists, it loses its magic. It's there's no more songs left in the room. That's kind of what's happened to this office now. Alright, I want to take you through the first few people that invested in Google and how it happened. Do you recognize this guy here? Do you recognize either of these two guys? Sam Parr: The guy on the left is Sergei. He's one of the founders. Is that Sergei or the other guy, Larry? Siqi Chen: Yeah, that's Sergei. Sam Parr: Sergei. And the guy on the right, is that Eric Schmidt? Siqi Chen: It's not Eric Schmidt. It is a guy named Andy Bechtolsheim. Does that name sound familiar? Sam Parr: No. Siqi Chen: Maybe if you just look at these murdered out. Sam Parr: Corvettes. Siqi Chen: These murdered out red Corvettes from the early 90s here. This might ring a bell or two. What you're looking at are some of the OGs of Silicon Valley. These are the founders of Sun Microsystems. Do you know what Sun Microsystems did? Sam Parr: It was one of the first big companies. Was it making microchips? Siqi Chen: Workstations. Computers, basically. And they made their own chips also. They ended up making chips. They ended up making their own operating system. They ended up doing a lot of things. These guys were like the OGs of the OG. That first guy, the Indian guy, that's Vinod Khosla. So that's Vinod Khosla. There's Bill Joy. There's Andy. And then there's Scott McNeely. All right. So these are the four founders of Sun. Sam Parr: Dude, by the way, for the record, they look dope. Siqi Chen: They look dope as hell. Sam Parr: The Corvette, the Flex, that doesn't exist anymore. And I think it's fantastic. I think this is great. Siqi Chen: First of all, they're all on cell phones. Guess what? Cell phones hadn't been invented yet. So I don't even know what they're holding. There's like a corded phone that's running into their car with a little, you know, like the spiral cord. Anyways, these guys are awesome. So Andy wakes up one morning and he's got an email in his inbox. And it's from two Stanford students, Larry and Sergey, the founders of Google. And they're pitching him on an idea for a new kind of search engine. The way that search engines worked at the time was there were these Ask Jeeves, there was Alta Vista, there was Yahoo and all of these companies back in the early 90s, they were search engines that had some combination of manual curation. So they had like editors picking what goes up front for people. How do you find what you find? Or you would search and it would just try to match the words that you're typing to the website. And these two PhD students said, hey, we have a new way of doing this. It's called PageRank. And what PageRank does is it basically says there's a genius insight. The genius insight was of Google was that instead of just showing you what our editors say is the right answer when you search for murdered out red Corvette, instead of just giving you a word batch for it, we're going to show you a link to the website that other people are linking to. Social proof, right? So if other websites are linking to your website, that means your website's probably pretty good. And the more important those websites are, so like let's say the Wall Street Journal links to you, that matters more than if Shaan's website links to you. And they had this insight that they could create better search results this way. They said, we'd like to show you. And so he says, I'll see you tomorrow morning, 8 a.m. He sees them. They pull up in a parking lot. He's in his, the story says Porsche, so maybe one of these is a Porsche. Sam Parr: One of those is a Porsche. Siqi Chen: Okay, great. So as you can tell, I'm a car guy. One of those is a Porsche. That's Andy's car. Larry and Turkey show up. They have a little laptop and they are trying to show him a demo of Google. And they show him, they say, search for something. He searches for something. And the results come up and it's magic. The results are way better than you would get out of a traditional search engine. And they start telling them their thesis and what they're going to do and how they're having, they're thinking about raising money to go actually turn this into a company. And he says, guys, there's a lot of things we could talk about right now, but I think it's easier if I just give you money. And he goes back to his Porsche and he comes back with a checkbook. He writes them a check for $100,000 and he writes it out to Google Inc. And they're like, Google, they're like, hey, we haven't even incorporated the company yet. And he goes, doesn't matter. And they go, but what about valuation? He goes, guys, this is the best idea I've ever seen. Take the money, start building. And he leaves, he gets back in his Porsche, he drives away, and he doesn't even know how much of the company he's just bought because he didn't even agree on a valuation, a number of share price, none of that. He invests the money, he walks away, he invests at a $10 million valuation. Google today is like, multiple trillion dollars, right? Sam Parr: So he owns 2%. Siqi Chen: He owns 2% of this company. He doesn't even realize this at the time because they haven't decided on a valuation. And he's so excited about this company. And if you remember the four levels of luck, he's basically has that luck favors the prepared mind. He knew when he saw this company that this was, he goes, this is the greatest idea I've ever seen. And this is the guy who created Sun. At the time, he's like the man, right? This is like if Elon saw something and invested in a company, he's like, no, this is the best product I've ever seen. And this is the guy that made Tesla and SpaceX and building rockets. He's like, no, no, no, this is the shit. So Andy does that. He's so excited. He goes and he tells the next guy in our story. And this is the next guy. Do you know who David Cheriton is? Sam Parr: He's another OG like Cisco or something like that or one of these like big things that I don't even know what they do, but they have a huge building. Siqi Chen: Arista Networks, yeah. He also invested in, I think, VMware that sold to Cisco for $700 million. So I took this screenshot off of Google. It says The Quiet Billionaire. Oh, I forgot to say Andy's nickname is The Golden Boy. Well, David Cheriton's nickname was he was The Billionaire Professor. This guy's a professor at Stanford, but he's super wealthy, like a multi-billionaire. He's also on many lists as the cheapest billionaire, as the top 10 cheapest or most frugal billionaires you'll ever meet. A little quote from him on it. They were like, dude, you're a billionaire. Why don't you like you ride your bike everywhere? You don't even have like a fancy car. You still live in this old house that you lived in before you got rich. What's the deal? And he goes, honestly, I kind of hate the idea of living like a billionaire. He goes, I'm actually pretty offended by that sort of thing. You know, the type of people that live in houses with 13 bathrooms and so on. Something's wrong with those people. And this is David Cheriton. He gives away tons of money. So he's giving away, you know, tens of millions of dollars to universities, to schools, to education, to philanthropy. But he himself just rides around like a doofus with a bike helmet out on his old bike. And he just that's how he lives his life. And he's great. Sam Parr: So can we just say really quick that the professor billionaire type, I think of all the billionaires, they might be one of the best. Siqi Chen: Maybe your favorite. Sam Parr: I think so. Siqi Chen: I thought criminal billionaire like Silk Road type shit. Those are cool. Sam Parr: Those are cool, but they're not aspirational. Like I want to be friends with them, but like the aspirational one is the professor billionaire. You know, the guy who started Renaissance, the big hedge fund professor billionaire. Ed Thorpe was a professor billionaire. Those are the best billionaires. Siqi Chen: But what about, I thought you loved like the, just the ruthless tycoons. Sam Parr: I like reading about them. They're fun to read about. They've got great stories. But if you could be anyone, The Professor Billionaire is great. Siqi Chen: So Andy tells David Cheriton, he goes, hey, you got to talk to these guys at Stanford. He meets the guys. He also writes a check in the same round. Again, $100,000, $150,000. So he puts it in. Okay, so now... Sam Parr: And was he a billionaire when he made that deal or was he just successful? Siqi Chen: Not a billionaire, but successful. He had started a company called Granite System. And eventually he does create Arista Networks, which is a multi-billion dollar company. But at the time was like, you know, let's call it, probably had tens of millions of dollars. Sam Parr: And he is really rich now. I just Googled him. Holy crap. Siqi Chen: Yeah, like 10 billion plus, right? Sam Parr: 20 billion, like really rich, like top 100 rich. Siqi Chen: Yeah, him and Andy, both of them. They both are now. So this guy ended up making over a billion dollars just off his Google shares. Okay, so he meets David. Now, who's the next person that finds out about this little company called Google that's started by these two students on campus? Well, David goes to a holiday party. And at the holiday party, he meets another person. Do you know who this guy is? Sam Parr: Yeah, Ron Conway. Siqi Chen: Ron Conway. This is going to be a little bit of a long session because Ron Conway is a goddamn legend. And I kind of knew Ron Conway was the man. I've actually met Ron Conway before and he just has this presence. He's got a bit of an aura about him. Sam Parr: But is he like a forgetful professor type? Because like where he's like always taking notes and he's like always moving and doing stuff and he forgets stuff. Siqi Chen: He is always taking notes. So like this picture, he's got this yellow legal pad. When I met him, he also had the yellow legal pad and he was furiously writing notes. And we were just at like a lunch. We were at like a lunch with the mayor and he was just writing like copious amounts of notes and he was just like always on the move. He was moving. And if somebody asked him a question, he would just, somebody came to introduce themselves. He's like, how can I help you do what you're doing? And he was just like, get to the ask. Like, what's your ask? If I could do it, I'm going to do it. And then he would jot down a note on his yellow legal pad. Cool. I'll make that introduction. And like literally like seven minutes later, the introduction was made. This guy moves at a different speed. Sam Parr: You know, like in the mafia, when the godfather has a wedding, his daughter's wedding, everyone in town can come and ask him one favor. He's like that every day. Siqi Chen: Exactly. You said, is he also like the forgivable professor? I think he's more like He's more like Santa Claus. He's Saint Nick. He's like Saint Nick after with like a triple expresso. And so he's just moving. Okay, so Ron Conway goes to this holiday party and the way he tells the story is he goes, I get to this party and I'm in a tuxedo and I goddamn, I hate being in a tuxedo. I'm so uncomfortable. And I just see, I see David there. He's also in a tuxedo. And I go up to him and I go, David, let's talk about something else because I'm so uncomfortable in this tuxedo right now. And David had invested in his fund. And he goes, David, the deal is you invest in this fund. Cool, I'll invest your money, but you got to be telling me what you're seeing. And like, you got to be my eyes and ears on the ground. He goes, David, what are you seeing at Stanford? What's exciting right now? He goes, I just invested in these two PhD students that are doing the search engine thing and he had invested in Ask Jeeves. So he knew, okay, search engines, big deal. If somebody says there's a new search engine that's better than Ask Jeeves, I'm interested. I want to check it out. So he asked David, can you arrange for a meeting? And he tries to get this meeting and he kind of fails. They're busy. They're like, look, we're not taking angel investors. We want VCs. But they go, but maybe you can actually help us get a VC. Sam Parr: Was Ron a legend then or a legend in the making? Siqi Chen: Legend in the making. Got it. Do you want the quick backstory on Ron? That's pretty insane. Sam Parr: Yeah. Siqi Chen: All right. So he, Ron Conway, starts off as an entrepreneur. He starts this company called Altos Computing. So he's also making computers like Sun. And he ends up taking it public and then they get their ass kicked. The personal computer comes out, the PC, and the PC starts kicking their ass. They end up selling the company, but they do well. And his early investor was Sequoia. So he goes to Don Valentine, who's like the guy who created Sequoia. The OG of OG investors. And Don's like, all right, Ron, what do you want to do next? What's the next company you're going to start? He goes, honestly, I never want to manage 1,000 people again. That was a nightmare. I don't know what I want to do, but that's not it. And he goes, That's a bummer. My hope was you're ready to start a new company and I was ready to write the check. But if not, maybe you'd be a good investor. How about I recruit you to Sequoia? Why don't you come follow me around for a couple of weeks? See if you like this investing thing. So he follows Don around. And he's like, hey, this is, he goes, hey, I think you'd be pretty great at this, but you know what you should do? You should do this thing called angel investing. It's a new thing. And angel investing at the time was actually a term from Hollywood. It was about investing in movies. Sam Parr: I think they called it super angel or something. Wasn't it like even like a different term? Siqi Chen: He became a super angel, but like it started with just angel investing. He goes, you know what? You don't even have to start your own VC fund. You could just invest your own money, just small checks, 10, 20K checks. And then, hey, when you see something cool, you bring it to me at Sequoia, right? And so he tells me to go do this and Ron decides, all right, I'm going to start angel investing. And basically, he starts angel investing his own money. Very quickly, he decides, he's like, I've made one great decision in my life. And it's in 1994. He's like, all right. I could just be an investor. He's like, but if I'm competing against guys like Don, I have no advantage, right? They've been doing this. They're just more skilled, more experienced than me. They have a better brand than me and they just know that game inside and out. He goes, but what can I do to differentiate? He goes, well, What if I actually just start investing? What if I pick a niche? And he goes, and so Don's like, okay, is your niche going to be like hardware, computers, just like you just did with your company? He goes, no, all I know is I hate hardware. So what's the opposite of hardware? Software. What's this new thing, the internet? And at this time, by the way, the browser hadn't even been invented. Like Marc Andreessen is still a student at University of Illinois. He hadn't even graduated yet. But he's like, I think there's this thing, software, we needed it for our hardware. And there's this new thing called the internet. Fuck it. I'm all in on the internet. And he just decides, he's like, look, it's a thing that's at zero. So he goes, the beautiful thing is there are no experts. So I can't be behind because this thing just started. So I'm going to go in this thing at zero. I'm going to get to watch it grow. And by the time, you know, this thing's four years, five years in, I'll be the expert. And he goes, that's the greatest decision I ever made in my life. And he goes, by the way, it's now 2025. I'm still All in on the internet. He's like, this thing, I thought this thing was small then because I still think it's early days. And so he goes on the internet. Around 1999, he's been angel investing. He raises a fund. He raises a fund for $25 million from other people to be the Silicon Valley angel investing fund, SV Angel, if you've heard of it. Actually, at the time, it was called something else, Angel Investments or something like that. But he decides, I'm going to invest in Silicon Valley companies. He raises $25 million. The dot-com boom hits. It's getting hot. He raises the next year another $175 million, and his approach is just spray and pray. He's investing in anything and everything that he sees. And so he's made like 250 investments by the time the dot-com bubble bursts. And when it bursts, he's like, oh shit. And they go to him. He's only working with like four or five guys. And they're like, hey, what's our strategy? Like the market's crashing. He goes, our strategy is we don't invest anymore. Like our strategy is I think it's over. I don't know. I don't know what to do. Like there's just no, there's nothing to invest in now. And so he's like, but my hope is that one of these deals that we did early on is a winner. And basically what he says is that when that dot-com bubble burst, 80% of our companies just went to zero. But luckily, he had Google. And he had invested in Google along the way, and Google carried him. Okay, so how did he end up investing in Google? Because remember, they didn't want an angel investor. They wanted an institution. Well, the thing about Ron Conway is that Ron Conway is known for being just extremely generous. So even if he's not going to invest in the deal, he's just like, I'm going to help the founder. And his philosophy was, and a lot of people say this, but he actually did it. His philosophy was, all I do is I am in service of the founder. I'm just going to help as many founders as I can and money will be the byproduct. Like money has to come if I help enough great founders. Money has to show up. And Paul Graham basically calls us the Ronco principle. And he goes, Paul Graham describes as he goes, he goes, I noticed when Ron Conway goes, I've never heard one instance of Ron Conway behaving badly to any founder. And that's incredible because this guy's invested in like thousands of companies. He goes, in fact, I went looking for examples. Has anyone had an experience where Ron Conway treated you poorly or didn't act in your best interest? He goes, and instead, I just got this outpouring of people being like, no, you know what? He had nothing to gain from a situation and he just went above and beyond. And he goes, so Paul Graham hears this and says, you know what? Actually, maybe there's something to this. Actually, I've heard about a couple other investors that are like this. And he goes, maybe this is not just like a funky coincidence. Maybe there's a bit of a strategy, which is So much of angel investing is getting invited into deals. And if your reputation is just one where you just always act benevolently, then it's actually not just like an act of generosity or charity. You're actually building a reputation that's going to get you into the next deal, the next deal, the next deal. And that's exactly what happened here. And so Ron Conway, who, by the way, just side note, go to SV Angels website. If you were trying to research this company, what would you pay attention to? Sam Parr: Which companies they invested in. Siqi Chen: And what do you see there? Sam Parr: Pinterest, Coinbase, Facebook, OpenAI, Snapchat, Twitter, Rippling, Reddit, Okta, Anthropic, Square. Siqi Chen: Every hit company is on this list. Every hit Silicon Valley company is on this list. Sam Parr: Airbnb, Brex, Checker, everything ever. Like literally every company. Siqi Chen: Paul Graham did a talk where he interviewed Ron Conway and he goes, all right, if you need to remember one thing from this, I'm going to say a bunch of words, but just remember this one sentence. Ron Conway is the man. He goes, I was going to do an intro talking about the hit companies you've invested in, and then I realized it's actually shorter to write down a list of the hit Silicon Valley companies that you missed. And he had three. It was like he missed Salesforce. He missed Kickstarter. And he missed one more. I forgot which one it is. And he's like, it's insane, the number of hits that you've invested in. And he goes, and the funny thing is that Ron doesn't even spend like, I don't know if you know about his like investing style, but it's exactly the same as YC, which I find fascinating, which is why he just like $100,000 into every single thing. He meets you and in 10 minutes he makes a decision. And he, Ron says it's usually three to five minutes and then he'll just decide on the spot in three to five minutes. YC has a 10 minute interview and then they make their entire decision off 10 minutes. So the two best pickers, the two best angel investors in the history of Silicon Valley, both make all of their decisions in under 10 minutes. Isn't that insane? Sam Parr: And so how much does he invest? Siqi Chen: Initially, it was investing like, you know, $25K, then it became $100K, then it became $250K. Sam Parr: I'm not sure if that strategy would work now because I think that then in the 2000s and 90s and things like that, if you had the gumption to be one of the people who threw your hat in the ring and got a meeting and did this, I think that because the barrier to entry was high, because there was a higher ratio of freaks doing this shit, now it's because it's cool that there's a lot more noise. So I don't know if that would work now. Siqi Chen: Let's look at their list here. Anthropic, that's recent. OpenAI, that's recent. Hugging Face, that's recent. These are the big, if I said what are the best companies in the last four years to be invested in, OpenAI, Anthropic, Hugging Face, these would be in that list. He's in Udiswap, which was the big one in the crypto phase five years ago or whatever. I think this still works, but the trick to making it work is not just that they make snap decisions. His decision, his process was basically, they're like, what's your thesis? He goes, I had no thesis. He goes, I went into angel investing when there wasn't even really a word. He goes, there was no thesis that you could have at the time. I just, all right, the internet's cool. And then he's like, I, he goes, I realized one mistake pretty quickly. Which was that the more I tried to judge a, you meet a founder and they have an idea, they have a personality and then there's a market. And basically, if you try to blend those together, you try to make a decision off the mix of the idea, the founder and the market, you lose. If you love the founder, but you hate the idea, you also lose. He goes, Airbnb, I didn't love the idea. But I love the founders. Sam Parr: So what does he pick? One of those three or just the person? Siqi Chen: He's just like, I just picked the founder. He goes, and what I do is I was like, I'm just gonna invest in the founder. It's the founder's job to figure out the idea. And they'll change, they often they change the idea. And he goes, and by the way, I'm not just investing in this founder for this company. I'm investing in this founder for life, because he goes, I realized that the best founders start multiple companies. So for example, he put one of his first employees at when he started doing this was his son Topher. And his son's 13 years old. And his son makes his first investment at 13 at a little company called Napster. And he's like, I heard about Napster, but I don't know about this shit. Topher, go use this thing and tell me if it's amazing. Topher comes back the next day. He's like, Dad, this is the craziest thing I've ever seen. I can get any song. I could download anything. This is changing the game. I'm downloading bits of the song from other people around the world. It's like this is mind blowing, this decentralized thing. And he's like, cool, all right, let's go invest in this thing. He goes and he meets the founders. He had already met the founders. That was his diligence. And he invests in Shaan Parker and Shaan Fanning. And he's like, cool, anything you guys do from here on out, I'm in. And so Napster didn't work out, but Shaan Fanning's fourth or fifth company ended up being a hit. Napster didn't work out, but Shaan Parker's next company was Facebook. And he's like, I totally didn't get Facebook. I didn't know how social networks would make any money. It seemed like college kids, you know, posting pictures of their drunk, you know, escapades, like didn't seem like something that was going to be money, but Shaan Parker's in. And I just, I've decided Shaan Parker's a founder that I want it back. And so I invest in Facebook too. All right, let's take a quick break because I got to tell you about a friend of the pod who's got their own podcast. Speaker 2: If you know Steph Smith, she is a legend. She's been on MFM many times and she's got her own podcast called the A16C Podcast. Siqi Chen: And it's all about technology. If you think about it, technology has evolved like crazy. I mean, I grew up in the 90s. I had CDs. Phones had cords. Speaker 2: You couldn't use the Internet if your mom was on the phone. And now there's like 3D printers and there's rockets that could go up into space, AI. There's so much crazy stuff going on. Siqi Chen: And you got to have a place that helps you stay ahead of the curve. And that's what the A6Z podcast is trying to do. It's a podcast from the VC firm Andreessen Horowitz, and it's trying to give you an inside look at the trends that are shaping our future. They've had guests like Mark Cuban and Neil Stephenson on, and they talk about topics like deepfakes or the science behind GLP-1s or autonomous drones. Speaker 2: No small boy stuff at all. Steph is the host. She's awesome. Siqi Chen: I think you'll enjoy the podcast, so check it out. It is the A16Z Podcast, and I like this tagline. They say, it's like eavesdropping on the future. Speaker 2: That's pretty cool. Siqi Chen: That's a good tagline. Speaker 2: So check it out. Siqi Chen: The A16Z Podcast, wherever you get your podcasts. Sam Parr: Alright, so bringing it back to Google. Siqi Chen: Alright, so bringing it back to Google. He goes to the Google guys. They're like, hey, we want a VC. They're like, alright, we will let you in if you can go get a Sequoia. Because Paul Graham asked him, he goes, you know, when you invest in Google, did you know, like, this is a huge company? There's going to be, like, an all-time company? He goes, you know, you could never think of a company as, like, a trillion-dollar company. He goes, but I did think it was going to be really, really big. And I went all in trying to get this investment. And he goes, why'd you go all in? And he goes, well, because they had three things. He goes, first, super smart geeks. That's criteria one. Two, really determined. Three, do they do something that surprises me? For example, They're really smart geeks, but they're also really charismatic. He goes, but that wasn't the case for them. It wasn't the case for Zuck that they were really charismatic. He goes, with Zuck, it was that early on he was talking to me about getting 300 million users. And he's like, no service had 300 million users. So the fact that Zuck had figured out, yeah, we're going to connect everybody. And he's like, oh shit, okay. Just the fact that this guy is saying things like that, he has a level of ambition that's not really, You know, common, and guess what? I wasn't surprised when he turned down a billion dollars from Yahoo because all he wanted to do was rifle focus on a product that would actually reach everybody. So with Google, he goes, they were super strategic. He goes, they told me, they go, you can be in if you can get Sequoia. He goes, okay, that's great. Sequoia's great, but why Sequoia? They go, not just Sequoia. We need Mike Moritz. He goes, okay, Mike's great, but why Mike? And they go, because Mike is on the board of Yahoo. And what we're gonna do is we're gonna build the best search engine And right now Yahoo has a deal with AltaVista. AltaVista powers all of their search. So we want to cut two mega deals. We want to be the default search engine on Yahoo and once we convince Mike Morris that this is awesome, he's on the board of Yahoo, he'll get us the meeting. And then we want to do the same thing with AOL. Sam Parr: Do they have like a product at this point? Siqi Chen: They had a product, they had users. And he talks about that. He's like, you know, basically he's like, I saw the searches, the results were better. And they had early users that were like, the people who used it, used it all the time. So it wasn't like they had a ton of users, but it's the same thing as Facebook. The people who used it, used it like crazy. And so they go, we want Sequoia and we want Kleiner Perkins. He goes, well, you know, you can have either or. They don't usually like to do deals together. He goes, We want Sequoia and we want Kleiner Perkins because Kleiner Perkins, John Doerr is on the board of AOL or has a relationship with AOL. We need that deal too. Sam Parr: So they were cocky and smart and strategic. Siqi Chen: Yeah, they knew what they needed and they were like, we're going to, it's like an algorithm. It's like, that's the output we need. So then we need to find the path through that. Sam Parr: Well, I've read stories of them, the Sergey and Larry retelling the story and they were like, we were full of ourselves. We thought we were the best and we were pretty good and we acted like it. Siqi Chen: Well, there's stories of both, right? At one point, before this, they tried to sell the tech for a million dollars. And this is when they were like, oh, it's just an algorithm. And then they had sort of gotten bigger and bigger. So anyways, so he goes, I basically, so from the time that that guy David Cheriton tells about this company at this holiday party, he goes, I called them for five months straight. Every month I called them. And finally I got my audition. And at that audition they go, you're in if you can get Sequoia. So he starts working the phones. He gets them a meeting. Sequoia's in and Kleiner Perkins is in. Oh, actually, there's one little thing before that. He goes, hey guys, I'll lead this myself, $10 million. And they go, no, we don't want you. And he goes, okay, fine. I'll go get you Sequoia. So he goes and he gets them Sequoia and Klein Perkins, but they're negotiating. They both want to do the deal. They both want to do the deal at unprecedented numbers. They're trying to do it at like a $75 million valuation, which at the time was like bananas to do a $75 million valuation. But they believed that search was already like a big deal and they thought this was the new search thing. But they can't agree who's going to get the deal. They don't want to share it. And Larry and Sergey get fresh after a month of back and forth. Larry and Sergey are like, dude, forget this. We don't want to be fundraising anymore. Ron, you said that you would do this thing 10 million yourself. Sam Parr: Was that bullshit or is that real? Siqi Chen: They go, you said you could make that happen. Could you actually make that happen? He goes, I can make it happen. This is Friday. He goes, I'll have it by Monday if you want it. And they go, all right, that's what we want. He goes, but honestly guys, do you want that or do you want them to share the deal? They go, our first choice, we want them to share the deal, but if they can't get their shit together, we'll do it with you. And again, Ron Conway badly wants this deal, but he does what Paul Graham calls the most generous act in the history of Silicon Valley. He calls Sequoia, he calls Kleine Perkins, he goes, guys, they're not bluffing. If you don't have this thing done by Monday, they're doing a deal with me to do all 10 million, but they want this with you guys. That's what they truly want. You guys got to figure this shit out. By Saturday morning, they've agreed we're going to do this and they carve out Ron a little allocation because he put that deal together. He gets the 250K. So that's how Ron Conway gets in on this deal. One last little Ron Conway thing because it's just you said something about like mafia. And here's Ben Horowitz from Andreessen Horowitz. He wrote a whole blog post called Ron. And in the blog post about Ron, he says, Ron is not an investor. Ron runs a network. And in Ron's network, everybody who's a node knows you are important and there's a certain code of behavior that you have to have. He goes, to get into the network, you must have a relationship with Ron. Note, I say relationship. That means not just I've met or I know. More on this later. He goes, two, you must answer when called. Ron makes sure that his network matters because he demands extreme reliability. If he calls you to participate, you must participate when called upon. And he goes, three, that keeps you in what I call good standing with Ron, which is you must remain in good standing with Ron to remain in the network. If you do not act when called upon or you do not act well in terms of you have some kind of bad behavior with founders, Ron will light you up and take your ass out of the network. And he goes, no matter what deal you're in, it is more costly to be out of Ron's network than it is to, you know, try to get one up. And because of that, he is ensured that Silicon Valley works. Sam Parr: So people like this guy that much, huh? Siqi Chen: All right, listen to this story. So Alfred Lin, who ends up, have you ever heard that name, Alfred Lin before? Sam Parr: Zappos? Siqi Chen: Yeah, he ends up being like the number two guy at Zappos, I think. Before that, he had started this company. He's like, and he tells the story. He's like, yo, so we had this company. Honestly, it was on the brink of failure. It looked like the company was going to fail. Me and my co-founder were talking. We're like, all right, have we tried everything? They're like, well, there's one investor we haven't talked to because we don't really know him super well, but Ron did invest in our company early on. They're like, we had this deal with this big company, this Fortune 50 company. It fell apart. If we lost this deal, the company's dead. He goes, I didn't know Ron at the time, and his investment was really small, which is why we hadn't reached out to him yet. We first went to our big investors, but we struck out. So he goes, we had nothing to lose at this point. So at 11 p.m., I wrote Ron an email that said, hey, you don't really know me, but I'm an executive at a company you're an investor in, and we need a meeting in person with the CEO of this Fortune 50 company. We need the meeting this week, and if you can't make it happen, hey, that's totally okay, I understand, but we may be going down, and I'm sorry. He goes, two minutes later, this is 11 p.m., two minutes later, Ron writes back, in a way that I now have learned is Ron style. It's immediate email, short, and it's all caps. I'm on it, all caps. By the next morning, Ron had done it. We got an eight-figure contract with that company that led to a nine-figure contract, all because of this desperate email, and eventually our company got acquired for $800 million. We were on the brink of death. Ron didn't know us from Sam, and he saved our ass. Sam Parr: Dude, the takeaway from all of this, San Francisco is amazing. Now, it's cool to shit on it because it is very frustrating. I've lived there for 10 years. It's super frustrating. But I've missed out so much not being there and just like what people don't realize is San Francisco is only like what 800,000 people and if I had a guess Ron Conway lives in like Pacific Heights Marina area and just like walking around that area you feel it and you hear these like weird conversations and just being able to email someone and just be like I'll meet you at the coffee shop five blocks away. That's special man. Just these types of interactions are special. Siqi Chen: So check this out. So you said like, I don't know if that approach would work because now there's so many more companies and at the time when there's very few people starting companies, that might work. So they asked him, this was kind of like when he was in his peak investing time. They go, so how do you invest? He goes, I only take meetings that come from my network. So he goes, I will get five pitches a day. So I see 30 a week. 30 deals come to my desk a week. Every single one is from a referral of a founder or investor that I know well that knows me and knows what to refer to me. He goes, I will invest in one out of 30 every single week. He goes, of the five that I get per day, I'll turn down two or three just via email, no phone call. The rest we'll invest in and I'll invest in, I'll make my decision within five minutes of talking to the founder. They go, well, what are you looking for in that founder? He goes, I'm looking for three things. Insane 24-7 desire to work. He goes, I could tell when I'm talking to a founder if they wish they could just spend all of the time working on this. And they view everything else in their life as like a nuisance or an obstacle in the way of doing this. He goes, have they warned their wife or girlfriend? Like, hey, I love you. But I'm all in on this thing and I'm gonna be gone and I'm gonna be doing shit. And like this is, this is it. This is my thing and I'm doing this. He goes, that's the first thing I look for. He goes, if I could feel it, then I know it's gonna be infectious to other people because they're gonna have to recruit badass other people. He goes, lastly, can they communicate why this matters? He goes, you know, Zuck, it's not like he had like this crazy charisma or personality, but when you talk to him, it's the feeling we got when Amjad from Repl.it was on the podcast where it's like this, It's like, oh shit, this is kind of bigger than I realized. And this is like your life's work. This is kind of, this is going to change everything, isn't it? And they sort of distort your reality to believe that this shit is even bigger than you could ever believe. Next week, we're going to hang out with, uh, with Jimmy, Mr. Beast. And I always have this feeling every year we go to do this event with him, we hang out with him. We stay, we literally like stay at his house. And when you're there, It's like what he's doing is the most badass, important, crazy shit that any human being could be doing. And then you leave and you click a video like three weeks later, it's like... These friends are putting their hand on these chocolate bars and whoever takes their hand off the last gets like half a million dollars of chocolate bars. It's like, wait, this is just like, this is kind of a dumb video. But when you're there, it's not a dumb video. It's fucking everything. And he's able to like make you feel that way. So that's kind of what he describes. The last thing he talks about is he goes, rifle focus on the product. He goes, I invested in Square and all Jack Dorsey ever wanted to talk to me about was the product. He goes, I invested in Twitter. Same thing. All they talked to me about was the product. I invested in Facebook. All Zach wanted to talk to me about was the product. He goes, Pinterest. Pinterest, I didn't really get. It's like this pinboard, like scrapbooking. I didn't really understand it because I met the founder, Ben, and he goes, oh, he's talking about this product. He goes, then I met his head of product or he's like kind of one of his core guys. And I met him three times and every time he was wearing the same shirt. And I go, hey, do you wear this shirt like often? He goes, I wear this shirt every day. And you know what the shirt is? It's a shirt with a circle. And just the inside is just this word focus. This guy literally every day wears this shirt that just says focus in the middle of it. This guy was ex-Facebook and then he was at Pinterest. And this guy was just absolutely obsessed with all we need to do is focus on the product. Oh, there's a meeting. Oh, we got invited to speak at this event. Speaker 2: What are you talking about? Siqi Chen: I don't want to go there. He goes, to the point of being rude, these people just want to focus on the shit that they're focused on, on their product. That's it. Sam Parr: So he, he did Google. He brokered that deal. Who are the other people? Next guy. No way. Siqi Chen: Who do you see? Sam Parr: I see Shaquille O'Neill, Shaq. Not a chance. Siqi Chen: So Shaq is sitting at the... Sam Parr: That doesn't even make sense. Was he even famous then? Siqi Chen: Of course, Shaq is famous. This is the 90s. Shaq is an NBA star at this time. Shaq is in a hotel, in a fancy, I don't know, Four Seasons or Ritz-Carlton, sitting in the lobby. And this is Shaq telling the story. He goes, I see four distinguished gentlemen in the lobby. Sam Parr: Is this your Shaq voice? We got a bit lower. Unknown Speaker: Let's see four guys. Siqi Chen: Four distinguished gentlemen. He goes, what he says, he goes, the gentlemen don't know who I am, but their kids do. And their kids are like, oh my God, it's Shaq. And they run up to him. And the cool thing about Shaq, if you've ever seen videos of Shaq, Shaq is like a giant kid. He's super playful. He's super good. He's super good to people that see him. He's not like one of these celebrities that's like sunglasses, hat on, trying to like push people away at all times, getting annoyed when you get in his space. And so Shaq goes, I'm doing my job, babysitting. And so he just starts playing with the kids. He's just babysitting while they're having a meeting. At the end of the meeting, Ron Conway comes up to Shaq and goes, thank you so much for playing with my grandkids. And so they just start chit-chatting. He goes, yeah, we were just talking about this investment that we're doing. You know what? You should invest in this company. It's one of the best companies I've ever seen. It's called Google. Shaq gets a meeting with Larry and Sergey. He goes, yeah, it was an accident. He goes, I'm doing my job. I'm babysitting. And then he goes, I have a meeting with them. Sounded good. I put in some money. I forgot about it. Years later, Google goes public. He doesn't even realize that he's invested in Google. He reads in the newspaper that Shaq is in the S1. Shaq's going to make a killing off of this. I'm Shaq. Speaker 2: What? Siqi Chen: And so he goes and he remembers. And so Shaq turned and he's like, yeah, I wish I invested more. Shaq turned like, you know, a couple hundred grand into, you know, a hundred million plus off of his Google investment. Sam Parr: No way, really? Siqi Chen: Nobody knows how long he held it, but, you know, it's pretty insane. So Shaq is the next one. Do you know who this is? Sam Parr: Yeah, R.I.P. Siqi Chen: R.I.P. This is... I don't actually... How do you say her name? Sam Parr: Do you know how to say it? Speaker 2: Susan... Sam Parr: Susan... Last name is a Polish name. Wojcicki, I forget. Siqi Chen: Wojcicki, I don't know what it is. Sam Parr: Susan W. Siqi Chen: So Susan ends up getting in on the action early with Google, but I don't know if you know the story how. Sam Parr: I know that she had a garage and they wanted to work there. Did she give them a free place to stay and work there and got a little bit more equity? Siqi Chen: Yeah, kind of. Her sister, Anne, was dating Sergey. Anne says, my boyfriend needs an office space. Susan wasn't wealthy at the time. She was a mid-level marketing manager at some company. Her and her husband had just bought this house. They were feeling a bit of the pinch about like kind of the home and they're like, you know what, what if we rented out our garage? So they put up an ad saying we'll rent out our garage. And it's like, oh, actually, my boyfriend needs a space. So the Google guys rent out her garage for $1,700 a month. And they start working out of her garage. And she just sees them working there day and night. And she sees she hears updates just because she's bumping into them. She quits her job. She ends up being employee 16 at Google. And so that's how she became a billionaire was by quitting her job to go work for the company that was working out of her garage at the time. Sam Parr: And she ended up being, up until recently when she passed, she was the YouTube CEO. Siqi Chen: Exactly. So she worked on AdWords for a bit. And then when the Google, she was a big advocate for like, hey, we should acquire YouTube. And when they acquired YouTube, they were like, hey, you were a big champion for this deal. She ends up becoming the CEO of YouTube for many years before she passed away. Sam Parr: And I think that sister of hers started 23andMe. Siqi Chen: Correct. Speaker 2: Hey, can I tell you a Steve Jobs story real quick? So Jobs once said that design is not just how something looks, it's how it works. And a great example of that is my new partner, Mercury. Mercury has made a banking product that just works beautifully. I use it for not just one, but all six of my companies right now. It is my default. If I start a company, it's a no-brainer. I go and I open up a Mercury account. The design is great. It's got all the features that you need. And you can just tell it was made by a founder like me, not a banker somewhere who hired a consultant in an agency to try to make some tool. So if you want to be like me and 200,000 other ambitious founders, head over to mercury.com and open up an account in minutes. And here's the fine print. Mercury is a financial technology company, not a bank. Banking services provided by Choice Financial Group and Evolve Bank & Trust members FDIC. All right, back to the episode. Siqi Chen: All right. I don't think you know who this is. Sam Parr: No. Oh, yes, I do. I do. Parr. Siqi Chen: Yes. Oh, wow. That's a deep pull for you to know this. So this is Pedgeman. Now, he did not actually invest in Google, so I'm cheating a little bit, but this is part of what you said. My takeaway is the magic of Silicon Valley. Here's more of the magic of Silicon Valley. Okay. So this guy's story is crazy. Him and this other guy, Last name Amidi. I think it's like Samid Amidi or something like that. Speaker 2: Amini. Siqi Chen: Two Persian guys. So first Persian guy starts a rug shop in Silicon Valley, right in the heart of Palo Alto. He's selling luxury Persian rugs. And right above his, or like right next to his rug shop, there's also some office space. And so he ends up renting an office space to the founders of, I think it's like PayPal or something like that. PayPal's an early, Early founders were there. There was a couple others. And so he ends up, he's like, he's selling rugs to these people. He gets to know these people and then he realizes like, wow, Google, PayPal. Sam Parr: Like that classic gregarious, like immigrant or Persian guy. Like, hey, my friend, come here. Come here. Come here, my friend. Siqi Chen: Exactly. You want some tea? Let's have some tea. Tell me about yourself. Sam Parr: Tell me about yourself. Siqi Chen: He becomes friends. He's right next to them. He's selling them rugs. He's selling them office space. But he's like, dude, These companies made a killing and so they start taking their rug money and they start investing and become angel investors and they don't know anything about technology really, but they're like, let's just invest in the people that come in to buy the rugs if they seem interesting. Speaker 2: And so how does Pedgeman factor into this? Siqi Chen: Pedgeman cold calls this guy and he's like, hey, I'm coming up to Silicon Valley and he's like, can I have a job with you? And the guy's like, well, have you ever sold drugs before? He's like, no. He's like, have you ever sold anything before? He goes, no, but I could learn. And he goes, listen, man, how can I give this job to somebody who's got no experience? He's like, he plays on the Persian side and he says, like, how could you turn me down? You haven't even met me yet. Speaker 2: Just meet me. Siqi Chen: And so he agrees to meet him. He hires him. And so he ends up becoming basically like a rug salesman for this guy. And he, over the next 15 years, his English improves, his confidence improves. He becomes a Beaty's top rug seller. In his best year, he moves $8 million worth of rugs. Sam Parr: That's insane. That's absolutely insane. Out of a storefront. Speaker 2: Out of a storefront, Palo Alto. Sam Parr: So that's like, you know, $600,000 of rugs a month. That's so many dollars worth of rugs. Siqi Chen: It's insane. It's horrific. So, along the way... Sam Parr: What is that? $20,000 a day of rugs? Siqi Chen: Yeah. And this guy's living... He comes to Silicon Valley. He lives in an attic above a yogurt shop. And then becomes a rug salesman. And that guy ends up becoming one of the greatest investors in Silicon Valley. And here's his trick. So he's like, he meets somebody, he starts selling rugs. And one of the guys who walks in is this guy, Andy Rubin. Andy Rubin comes in, he sells him a $5,000 Persian rug. And during the negotiation, he's like so impressed with this guy. He's like, man, you're a great negotiator. What do you do? He's like, oh, I'm a businessman. I got this company. And he's like, tell me about it. He's got this company called Danger. Remember, I told you, one of the companies in the lucky office, a company called Danger. And these guys made, do you remember the T-Mobile sidekick cell phone? Andy Rubin made that. His next thing he made became Android. And so Andy Rubin's prolific. Sam Parr: And then now he's since done DeepMind or some type of AI? Siqi Chen: He went and became like the head of mobile for like the big Chinese manufacturer or whatever. And then I think now he's doing like an AI thing. And so he's talking to this guy and he goes to his boss immediately and he goes, He goes, we got to invest in this guy's company. He goes, cool. What does it do? He goes, couldn't tell you. It's something technology, super complicated. I don't know anything about it. But I'm telling you, we've got to invest in this guy. He goes, are you sure? He goes, listen, if this guy was selling red balloons, I would invest in it. This guy's going to make things happen. And so he goes, okay. They write a $400,000 check into danger. And along the way, he ends up becoming like a partner in their investing. As he makes money from his commissions, he takes every dollar he has, basically $200,000, and he buys into like their partnership to be investing in startups. And they invest in all these different startups. So he meets Joe Lonsdale. After he'd done Palantir, Joe's buying rugs, whatever, he gets introduced to him and he goes, Joe, I would love to show you a rug. He's like, cool, I'll come into the shop. He goes, no, no, no, no, brother, let me bring the rugs to your house. So he brings like a hundred rugs to Joe Lonsdale's house and his trick is he's like, you learn a lot about a person when you go to their house, much more than if you meet them for coffee or they come into your shop. Sam Parr: And at the time, Joe Lonsdale would have been in his mid-twenties, right? Siqi Chen: Yeah, he's very young. And he goes and he meets them and he's in that Persian rug game. He's in that Persian rug game already. And he's like, he's like doing this next company, Adipar, which, by the way, recently sold for a couple billion dollars. And at the time, he's like, love this guy, love Adipar, Joe Lonsdale. We got to invest in this thing. And he ends up investing in Adipar. He ends up investing in Dropbox because one of the co-founders of Dropbox is also Persian. And so he's speaking in Farsi. He's like, chumming them up. And he's like, come on, please let us in. He ends up doing that. He ends up investing in Applovin, which is now $100 billion plus company. Sam Parr: Because I think the founder of Applovin might be a Persian guy, right? Siqi Chen: I think so, too. I think so. Yeah, he's Iranian or somewhere from that area. And so there's like this whole mafia that gets created off of this rug shop. How insane is that? Sam Parr: Dude, do any wasps want to relate with me? Hey, let's talk about baseball and hot dogs and cows. Like, like, where's my wasps at? Siqi Chen: Dude, okay, I'll give you some credit. One of your best investments now is this company you told me about that I totally didn't get because I was like, dude, what are you doing? You're just putting nicotine pouches in your mouth while we're doing the podcast. And you're like, yeah, I always have one in. And I was like, what the hell are you doing? And you invested in this company called Lucy that was making like a nicotine gum or pouch at the time. Sam Parr: At the time, it was a gum. Siqi Chen: And it kind of just wandered around for a little while. It didn't even seem like it was going to take off. But now this shit is taking off, dude. I think Lucy is going to end up being like a 500 million or billion dollar company. You invested early on in that because you were pouch bros with these guys. Sam Parr: Yeah, I did 25 grand into it. And when I did it, I I was just like, oh, you started Soylent and our mutual friend is Josh and Josh says you're cool and nicotine is addicting. Yeah, like I guess. Cool. Sounds good. I'm in. And so I invested $25,000. I think I only had $100,000 saved up. So that was like a big deal for me. So hopefully, and then I like messaged them and I'm like, what's happened to you guys? I haven't heard from you in like six years. What's going on? And then they recently hollered at me and it turns out it's going really well. Siqi Chen: Yeah, it's going amazing now. Shout out to John Coogan and the crew there. Okay, so let me finish out the story here. Did you know that Bezos invested in Google? Sam Parr: I heard that. Did he invest in it because he was getting a lot of traffic from it or why? Siqi Chen: I'm not sure. I tried to find it. I could not find any of this backstory here, but Bezos invested $250K pretty early in Google as well, which is kind of wild. It's the same way that Microsoft also invested in Apple and kind of saved Apple from failure at one point in time. There's these stories of these people that you think are kind of enemies or competitors, but actually, at a key point in time, invested in each other. I just thought that was kind of cool. Alright, I want to share with you, let's see, do I have anything else? Oh, there's one other hilarious story from this whole thing. Ron Conway was like, they go, did you know that Google would make, you know, so much money, would be essentially the most profitable money, best money machine man has ever made. And he goes, no, he goes, I still have Google's first slide deck, 10 pages, 10 slides. And it was all about the product. And he goes, the last slide, which is always like the financials and the projections, it just said, thank you. He's like, dude, where's your financials slide? And they go, we have no idea. And he goes, OK, love it. I'm in. But how crazy is this like wild world of like meeting people at a party or the lobby of a hotel and hearing about this thing and doing this deal? Isn't this crazy? Sam Parr: But that's how it still is, isn't it? It's just that you don't get out. You still live there, but you don't get out. Siqi Chen: During the Tony Robbins episode on our pod, he has this phrase he says, which is, proximity is power. He just talks about literally just being close to the action. It's like this most underrated thing you could do, just being as close as you can to the people you want to be around, to the people you want to be like, because whether it's you hear a thing, you meet a thing, you start to do the same habits and lifestyle of those people, proximity is power. And that's the crazy thing about Silicon Valley is proximity is power principle. Sam Parr: I moved to where I moved because of family reasons, but if I could live anywhere, I think Palo Alto would be the place. I dearly loved San Francisco, but I got pissed off at it because of the crime. But Palo Alto is pretty amazing. Do you ever think that you'd rather be there? I mean, you're an hour north of SF. Do you wish that you were an hour south? Siqi Chen: No. I mean, SF is now where the action is. So the question would be, do I wish I was still in the city? And the answer is, I definitely know I would make more money if I lived in SF. It seems like it's a more expensive place to live, but actually I know I would make way more money because there's just the serendipitous bumping into's of people. Sam Parr: It's just a fucking headache though. It's such a headache. Siqi Chen: But yeah, exactly. Making money is not the only criteria is so like, you know, family wise, it's much better to be in the burbs for me. So lifestyle wise, I'm happy with this choice, but damn, when I hear these stories, it does make me wish I was back in on the action. I went and hung out with my friend Luke in Palo Alto and we went to his house and he was like, you want to take a walk? And I was like, yeah, let's take a walk. And we walked around for probably two, three hours. And in that two, three hours, he was like, that's the garage where Google started. And this is this. And that's Zuck's house, actually. And this is this person's house. And then we bumped into like, Somebody he's like, oh, that's where the founder of Quora is. And then we go to we go to the Starbucks. It's like a little coffee shop there. And like I get recognized by five people that I, you know, I just sit in my house all day. But there's people who listen to the podcast and then they start telling me what they're up to. And they're doing a cool AI company. And then you leave the coffee shop and we just pop into our friends, you know, like VC shop. And we he's having a meeting. He introduced us to those founders. And so I'm like, oh, man, do the amount of serendipity I had is crazy right now was crazy. And you don't you don't really get it until you Until you experience it. And so if there's like one takeaway from anybody who's like, you know, listening to this, I would say my two big takeaways was number one, proximity is power. And like literally just showing up and being there, being in the heart of the action for whatever scene you want to be in, how much that matters. And the second was the Ron Conway principle of How do you just act so benevolently that your reputation is the product you're actually building? You're not building a portfolio. You're building a reputation. The reputation builds the portfolio. And the third one is the midwhip meme strikes again where it's like, so the two best early pickers of startups ever in the history of Silicon Valley both make their decisions based off of just do they feel like these people are fierce founders and they can figure that out in less than 10 minutes. And then here you have people that are doing market analysis and segmentation maps and tons of due diligence and this and that, and they have thesis on all these different markets. And it's like, dude, the best people are literally just amazing judges of people and they're making their decisions in five minutes. And then they spend the rest of their time just helping people. Sam Parr: It's so exciting to hear these stories. How much do you think that each of these investors made? Like, I guess like if you, in what was the first valuation? Siqi Chen: So the first valuation was 10 million. The next round was at 75 pre. So Ron Conway, this is now a decade plus ago, I think 2012, they asked him, they were like, Ron, how much did you, they were like, first, were you scared off by the valuation? I mean, 75 pre today is a high valuation for a series A company. And you know, Google, obviously now it's obvious, but like nothing's obvious at the beginning. Nothing's that obvious. Sam Parr: And he goes, which by the way, that's worth $150 million today. So that's a shitload of money. Like how am I ever going to, so this company has to sell for a billion dollars. Siqi Chen: Right, right. So like, they're like, did this valuation scare you off? He goes, no, I think that's crazy. He goes, companies are binary. He goes, the investing we do, a company is binary. It's either a huge win or it's a zero. I just let the market figure out the valuation and then I invest. Once I've decided to invest, I let the market decide the price. He goes, yeah, we did great. He goes, for every dollar invested, we got $400 out. This was back in 2012. And they go, is that the peak valuation or that's the current valuation? He goes, the peak valuation of Google is far in the future. He knew, right? Because this is 12 years ago and Google has since, you know. You know, I at least tripled in value since then. So it's a pretty wild return. Now, I don't know how much guys like Shaq and others got. So Ron got in at the $75 million round. The guys like Andy or David that I mentioned at the beginning, the professors, they got in in the $10 million round, right, which is just wild. So, you know, $100,000 became over a billion dollars for each of those people. Sam Parr: And the crazy thing about pricing is like So Google was started, I think, 30 years ago, right? 28 years ago. And what are they worth? A trillion or something or two trillion? What's crazy is that the equivalent of that would be investing in a company today and trying to convince yourself that it will be worth $6 trillion. Do you know what I mean? Siqi Chen: It's a $2.3 trillion company today. Sam Parr: In 30 years, double that or triple that. It's incredibly hard for the brain to think, if I invest in this company, maybe one day it could be worth a trillion dollars. That's an inconceivable thing to think about. And so that's why angel investing is the mindfuck, like to think like, like, because you think like, oh, this is worth 100 million now, you got to sell for a billion. And the founders like, no, man, it's like 1 trillion. Like those, the math behind all of this is very, very, very challenging to even like wrap your head around. Siqi Chen: Yeah, totally. And even when it's staring in the face, I think I've told the story before, but I remember sitting in a conference room in Silicon Valley in 20, maybe 14, 15, something like that. There was some point in time where I was telling this guy, I was like, yeah, I came out to Silicon Valley. I applied to two places. The place I'm at now and the other place I applied to was Stripe. There's only two jobs I'd ever applied to in my life. And I didn't get the Stripe job. I got rejected. I blew the interview. And he goes, Oh, actually, I guess I'm investing in Stripe right now. And I go, Stripe now? It's not like an angel investment anymore. He goes, Yeah, he goes, Yeah, it's a $3 billion valuation. And I remember just thinking, like, what a dummy, like, you know, 3 billion? What do you think this is gonna turn into? Like, three, like, I thought the game of startup was to create a billion dollar company. So hearing that one was already at three. Sam Parr: It's already three X overvalued. Siqi Chen: It's like, oh, what are you hoping? It gets to 10 billion and you triple your money like nuts. And now it's, you know, a hundred billion dollar company. I would have 30 X my money even then. And it was so obvious. Like anybody I knew used Stripe. It was so obvious. Stripe was the best company in Silicon Valley at that time. And I talked myself out of investing in it because I just couldn't fathom the numbers, right? It just didn't make any sense. Sam Parr: It's because you think in absolute numbers. So I remember one time when I first started my company, we were spending $30,000 a month and I met with the CEO of like a billion dollar company and I was like, can you believe this? I hired two people and we went from spending $8,000 a month to $30,000 a month. How insane is that? And he was like, dude, I spend $300 million a year. He was like, you can't think of this as an absolute number compared to your real life. This is just a number on a spreadsheet and it doesn't matter how many zeros are behind it. These zeros going in, you're getting more zeros out. That's all you have to think about. Don't think about this in terms of a real number. And when he told me that, that kind of like shaped how I viewed a lot of things. Siqi Chen: You need to do like the casino thing. You have to take your cash, trade it for these chips that are different colors you're not used to, and then just try to make the chip stack bigger. Versus if you look at a, you know, a hand of blackjack you're playing. Sam Parr: Like a $50,000 hand. Siqi Chen: Dude, that's a month's rent or whatever it is, right? It's like insane. All of a sudden you just start making different decisions. I remember like even, it's not even the absolute number. Sometimes even relative will screw you up because I remember investing in Tesla when Tesla was at a $5 or $6 billion valuation. I invested even before that. I think it got to $6 or $7, something like that. I had made three times my money. I remember looking at the market cap of the biggest car company I could think of at the time. I think it was GM or Ford or one of those companies. It was a $26 billion company. I remember thinking, and I looked up how many cars Tesla was selling and how many cars they sold. Tesla sold nothing compared to them. And I just remember thinking, okay, the ceiling of this is like a $30 billion company. Cool. So if I ride this out, if Tesla became the most valuable car company in the world, it would be a $30 billion company. That would be $30 billion to be like a 5X from here, or I could just take my winnings down and go and enjoy them. I don't remember the exact numbers, but I remember that $26 billion was where the car companies were at. Tesla today is not only is it today like a $1.5 trillion company or whatever it is, now it's a $1.5 trillion company. So I was off by like more than 10x. I was off by like two orders of magnitude basically. On top of that, Tesla is worth more than the next 10 car companies in the world combined. Sam Parr: It's hard to comprehend. Siqi Chen: The whole idea of it will be number one, it breaks my brain. Tesla is literally worth, all of the next six car companies, they're worth, I think it's like, I don't know, 600 billion or something like that. The big six are 477 billion. Tesla is 1.3 trillion, right? So it is just mind-boggling what these things are. Sam Parr: It's hard. It's hard to understand. I mean, didn't I tell you when I was trying to understand what a trillion dollar, a person worth $100 million compared to a person worth $1 trillion, which is what Elon will be in three or four or five years. If you have $100 million, you're like ungodly rich, okay? But the equivalent of those two, the gap, is the same as $100 million and $10,000. Siqi Chen: Right. Sam Parr: Isn't that insane? So like when I think of a hundred million dollar person, I think you're one of the richest people I've ever met. Siqi Chen: Dude, I think there's this great quote about happiness. It's like, I have talked myself out of happiness a thousand times, but I've never once talked myself into it. I've never thought my way into unhappiness a thousand different ways, but I've never thought my way into happiness. I don't know if I buy that quote exactly, but I get the premise of it, which is like, we could very much talk ourselves out of things or into unhappiness. I think investing is very much the same. I've now realized, especially in technology investing, this may not be true for value investing, but for tech investing where the whole game is like, Find the one or two psychos and the one or two like breakout categories that are going to just break the entire game as the power law and these things are going to become worth not a billion dollars, not $10 billion, but like $100 billion or even a trillion dollars each. I think it's back to the, like, make a five to ten minute gut based decision on the, like, quality of the founder or the overall space, like the internet in 94, crypto, you know, in the early 2010s, mobile, now AI, right? It's like just, oh, this is the smartest person I know is doing something in AI. That's enough. I don't need to, like, The more I think, the worse my returns will get is sort of what I've realized when it comes to tech investing because it is all about the breakouts. And the breakouts are not things that you could just linearly We had Shield on the pod the other day and he's like, yeah, I invested in Bitcoin early and Nvidia early. We're like, wow, you're so smart. He's like, yeah, I invested in Bitcoin because I thought it was going to become this other thing and I invested in Nvidia because I thought it was going to win in crypto mining. So he's like, even in the ones he was right, even in the professional investor with amazing returns, who picked the right two things to bet on over the last 15 years, Bitcoin and Nvidia, he got it absolutely right. He did it even for the wrong reason, right? It's like, God damn it. What are you supposed to do in this? Sam Parr: This was a great podcast. That was a great story. It would be fun. I would love to do a series where we get the first employee or the first investor or one of the first in legendary companies to come and talk. So like Google, Facebook, Reddit. Siqi Chen: I think that's the hack because getting the founder obviously is great. It's super hard. And they're also still running the company and have to say certain things. They've been so media trained. Sam Parr: And the statute of limitations can be past it. So if it's 10 years old, it's like, look, no one's going to get mad at you if you say that you guys called the competitors and pretended to be a customer just so you can get fake information. You know what I mean? We're past that. So you could actually reveal a bunch of stuff. Siqi Chen: Paul Graham asked Ron Conway, he goes, you've been doing this now for like, you know, you were a founder and now you've invested in all these legendary founders. What's changed? And he goes, we drank way more back then. He goes, what? That's the thing you're going to say? He goes, yeah. He's like every day around like 4pm, we had this woman, Donna, who would like push a cart around the office with booze and we would all drink. And he's like, we literally work hard, play hard at the same time. Like, let's do this. He's like, there was all kinds of crazy shit going on in our company. And he's like, that's just what we did. He goes, now I go to these companies, they don't do that at all. They're much better about segmenting it. They do play hard, but they like happy hour on Fridays after work, like not like all the time during work, crazy shenanigans going on. Sam Parr: Dude, that was great. Is that it? Siqi Chen: That's it. Sam Parr: That's the part. Hey everyone, a quick break. My favorite podcast guest on My First Million is Dharmesh. Dharmesh founded HubSpot. He's a billionaire. He's one of my favorite entrepreneurs on earth. And on one of our podcasts recently, he said the most valuable skill that anyone could have when it comes to making money in business is copywriting. And when I say copywriting, what I mean is writing words that get people to take action. And I agree, by the way. I learned how to be a copywriter in my 20s. It completely changed my life. I ended up starting and selling a company for tens of millions of dollars and copywriting was the skill that made all of that happen. And the way that I learned how to copyright is by using a technique called copywork, which is basically taking the best sales letters and I would write it word for word and I would make notes as to why each phrase was impactful and effective. And a lot of people have been asking me about copywork, so I decided to make a whole program for it. It's called CopyThat, copythat.com. It's only like 120 bucks and it's a simple, fast, easy way to improve your copywriting. And so if you're interested You need to check it out. It's called Copy That. You can check it out at copythat.com.