Yes, you may have seen him on Shark Tank. He is an UBER-successful angel investor and venture capitalist. Famous for his wearing vintage cowboy shirts and being on the ground floor of Twitter, Uber, Instagram, Facebook. Listened to a 90 min interview of him by Tim Ferriss. Such good stuff. Podcast and transcript of the talk here. Some quotes from the interview.

My comments in red.

Don’t worry about B-teamers stealing your ideas.

I don’t feel like I’m really giving any secret away by telling you what the approach is. You still have to go execute on it, right? I don’t really have any fear in kind of disclosing my secrets to B-teamers, because they’re not gonna end up competing with me . . .

Chris Sacca

Ideas are cheap. It’s all about execution and follow-through. Toyota showed General Motors all of its lean/kanban systems in the 1980s with the NUMMI plant (now Telsa’s plant), but GM could not replicate it. Still need leadership, rigor, persistence, and supporting culture.

Investing: What and Why

After 120+ deals (still holds 70+, sold off 50+) here , he’s developed a point of view on what makes good investments. He mentioned several venture capitalists who blog about their experiences (Brad Feldman blog, Josh Kopelman blog, Y Combinator resources), and some investment tenents:

– Get involved in deals where [you] can personally impact the outcome. [Think about what value you can add]

– Start with something that’s already great, that you can make more awesome. [Don’t invest in something crappy and try to make it good]

– Give yourself a chance to get rich. [Don’t cash out too early]

– Be proud of every deal. [Lots of uncool ways too make money]

– Invest in things that are already live, in production. [No hypotheticals, no ideas]

 

Chris Sacca

Investing: Who

In 2001 Good to Great, Jim Collin’s argued the importance of “Getting the Right People on the Bus”. Clearly this matters with early-stage investing when it’s all about the people. People matter. Leadership matter. How Chris Sacca described his “sniff test” for successful founders.

[Visionary] The thing they have is inevitability of success. There are no conditional statements coming out of their mouths.

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[Listeners] They are incredible listeners. Voracious readers. This guy is just constantly learning, studying, studying. And so, when he speaks, it matters. But, he’s listening more than he speaks.

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[Learning machines] These guys are learning, they’re modeling. They’re constantly researching, they’re gathering data Chris Sacca

FOMO? What are the deals that got away?

Being great at your work doesn’t mean you are perfect. Plenty of amazing VC opportunities which Sacca missed. Missed 1) Dropbox 2) AirBnB 3) GoPro 4) Snapchat and many others. C’est la vie, and doesn’t that describe the what a risk-taker (read: capitalist), asset-allocation specialist do?

2 and 20

This is a short-hand way to describe how many VC, hedge funds, and private equity often get paid. Namely, 2% management fee on assets (called “the carry”) + 20% of the upside if they sell for a profit. This makes it seem like a garden party, but VC is tough.; more than 50% of VC return less than the principal to limited partners. As Sacca mentions, “it’s a rigged game” to the benefit of the VC – they participate in the upside without putting their own money at risk for the downside. Sign me up for that.

PE . . VC. . . early-stage VC

[Private Equity] There are products, or multiple products, there’s financials, there’s supply chain. And so, you’re going in, and saying, I can do a better job of this than you can. And so, there’s an arm’s length, and there’s some tension, obviously, with management, usually. Sometimes, you’re co-opting members of that management team to go get it done.

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[Venture Capital] But, the venture world is different, in that it’s much earlier, and it’s much more aware of the venture capitalist as a collaborator in determining the product and the strategy, and the vector the business is gonna take.

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[Early stage VC] . . .your job is to actually sit in the room, and actually work at the beck and call of the CEO, to get stuff done, to help build this company. Lend advice about product strategy, about going to market, about the design of the front page, how to staff up, and bring in the next couple members of the team, how to go about raising money, how to deal with your first PR cycles. Chris Sacca

Be a human

The last 1/3 of the podcast talks a lot about values, perseverance, relationships, and focus. For example, Sacca’s parents designed “sweet and sour” summers where the first half was sweet (fascinating, creative, comfortable work) and the second half was sour (hard, manual labor with no entitlement). Sacca argues that we all don’t have enough empathy. And without empathy, you can’t really be an inventor.

Yeah, well, I particularly look for that in hiring, So, I want people who’ve lived, studied, traveled extensively abroad. I want people who’ve been exposed to poor people. And, by the way, the live, study, travel, work extensively abroad is because you can get away with a very comfortable life in the United States as an English speaker, particularly as a white person. You never really have to ask for anybody’s help, you’re not being harassed by the police, It’s pretty easy pickings.

 

Chris Sacca

Georgetown Law without going to class?

Sacca went to Georgetown Law School and never went to a class (what?) and aced classes (what?). Yes, he clearly has intellectual horsepower, but there’s more to it. 1) The key is to not sign the seating chart on day 1, so the teacher doesn’t know you are not there. 2) He got great class notes. . . .

So, that was the path, but yeah, I kicked ass in law school without going to any [classes]. I will say this, you might have heard the legend, but the one thing you do need are some notes from some of the classes, to understand which cases the professor brought up, and what they think is important. And so, I threw a keg party every semester, where the only thing you had to bring to get into the party were your notes. So, classmates would bring their notes to the party, throw them in a bin, and then I would go Xerox them all. And, build kind of a composite, and use that to study for the exams.

Chris Sacca

From -$4 million (debt) to $1.2 billion

Apparently, Sacca made a bunch of money, then lost it. He was $4M in debt after the internet bubble. He got back to break-even ($0) in 2005: “[If you are in debt] you never felt richer than when your net worth is $0”

Play offense

If strategy is about being different – Sacca is definitely different. He moved to Lake Tahoe – away from the San Francisco VC community, when he realized that he was saying “yes” too much.

And yet, what I realized was that, being in the city, I was just playing defense the whole time. I was taking these coffee meetings, listening to these poor pitches. . .

 

So instead of “networking” with random people reaching out to him – he instead – decided to play offense. Develop deeper relationships with fewer people. This is the gold standard. . .

But, the bit just flipped for me, and I was just like, ______, I’m not gonna play this traditionally anymore. . . And so, Crystal and I moved up to Tahoe, and we quite literally built a list of people we wanted to know better. And, we just started inviting them to come up and stay with us in Tahoe. . . I also started writing lists of the companies I wanted to get to know better, and I just went in deep with them, and asked them to come up to Tahoe.

Chris Sacca

As you can tell, I am a bit of a fan. Recommend both podcasts (Tim Ferris #79) here and (Tim Ferriss #132) here. My next step will be to read some of his blog posts (18,000 words) here,

At 42 years old, he’s now semi-retired from investing. He is living in Montana, raising his 3 kids. Joie de vivre.

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