Elad Gil: From Selling His First Company To Twitter To Becoming The Biggest Solo Venture Capitalist

Elad Gil has now launched two startups of his own. He sold one to Twitter and has raised almost half a billion dollars for a second. That’s along with investing in some of today’s most successful companies, like Stripe, Airbnb, and Coinbase. His latest startup, Color Genomics, has attracted funding from top-tier investors like T. Rowe Price, Kindred Ventures, Pegasus Tech Ventures, and General Catalyst.

In this episode, you will learn:

• Hiring for your startup
• What Elad is investing in
• Acquisitions and integrations
• The challenges of healthcare startups

SUBSCRIBE ON:

This episode is brought to you by Gelt. As a referral from the DealMaker’s podcast you can skip the waitlist and get priority just mention Dealmakers as your referral on the schedule a call form here.

.Tech Domains is sponsoring this episode. To unlock the special offer for the DealMakers audience, which includes 1-year domain for $10, or a 5-year domain for $50, go to go.tech/dealmakers.

Go to SaneBox to get your $25 credit to help you identify important email and automatically organize the rest to help you stay focused.

For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash. 

Moreover, I also provided a commentary on a pitch deck from an Uber competitor that has raised over $400 million (see it here).

Remember to unlock for free the pitch deck template that is being used by founders around the world to raise millions below.

About Elad Gil:

Elad Gil is an entrepreneur, operating executive, and investor or advisor to private companies such as Airbnb, Coinbase, Checkr, Gusto, Instacart, Opendoor, Pinterest, Square, Stripe, Wish, and others. He is a co-founder and chairman at Color Genomics.

Previously, Elad was the VP of Corporate Strategy at Twitter, where he also ran various products (Geo, Search) and other operational teams (M&A and Corporate Development).

Elad joined Twitter via the acquisition of MixerLabs, a company where he was co-founder and CEO. MixerLabs ran GeoAPI, one of the early developer-centric platform infrastructure products.

Elad spent many years at Google, where he started the mobile team and was involved in all aspects of getting that team up and running. He was involved with three acquisitions (including the Android team) and was the original product manager for Google Mobile Maps and other key mobile products.

Prior to Google, Elad had product management and market-seeding roles at a number of Silicon Valley companies. He also worked at McKinsey & Co.

Elad received his Ph.D. from the Massachusetts Institute of Technology, and has degrees in Mathematics and Biology from the University of California, San Diego.

Connect with Elad Gil:

• Crunchbase
• LinkedIn
• TheOrg
• Twitter

Read the Full Transcription of the Interview:

Alejandro Cremades: All righty hello everyone and welcome to the deal maker show. So today I’m really excited about the founder and also investor that we have joining us. You know he is saying done it multiple times. He’s been involved with incredible rocket ships. You know that have gone from like. Almost like a double-d digit investors to like the double digit like a employees to like 1500 plus like in no time. Ah, he’s invested in multiple companies. Some of the most successful ones like stripe and and and and others that we’re going to be talking about. But I think that again you know we’re gonna be talking about the building the scaling financing exiting and all of those good things that we like to hear so without further ado. Let’s welcome our guests today el at gil welcome to the show so you were an undergrad in mit.

Elad Gil: Ah, thanks so much for thejandra.

Alejandro Cremades: You were there doing math and biology I mean that’s quite the combination. So what got you into both things to begin with.

Elad Gil: Yeah, so I did my undergrad at Ucsd and then my ph d to mit and um for undergrad I double major in math and molecular biology and um, you know I did the math out of a mixture of interests I just thought it was fun. But also I thought it would be really useful. Um, for things like um, computer science and of course I should have just studied computer science instead of math and hindsight and then molecular biology I just was really into biology and thought there’s you know, really interesting things to be done with what was then called genetic engineering is not called synthetic biology and. Thought it could be a good area for impact.

Alejandro Cremades: So why moving to Silicon Valley then you know after after you graduated and did the studies I mean what? what? what got you into Silicon Valley so

Elad Gil: Yeah, when I got when I first did my ph d my thinking was that I would um, go into academia after and I thought that I’d be a researcher and I’d work on different aspects of you know, either human longevityevity or cancer or certain diseases.

Elad Gil: And um I think I came to the false conclusion during my ph d that a single individual really couldn’t impact that much in human health because anytime you’d come up with a discovery people would discover it very rapidly, right? Away. You know you’d always see 1 group publishing on a specific gene the same time that 5 other groups find the exact same thing and so. I didn’t feel to me like if I stayed in the field I would actually be able to push the field forward because everything happened simultaneously with others in hindsight I now think that’s wrong I think there’s all sorts of examples where individuals make a really big difference or impact on a field or start a whole new area like studying a specific organism or starting a new system or whatever it may be. But at the time I just thought you know if I if I work 70 hours a day but then I end up with the same thing. Everybody else does and why work 70 hours a day on this. Maybe I can go find some other place that I think could really help push the world forward.

Alejandro Cremades: So so then what happened what happened next because obviously you know that the first rodeo in Silicon Valley you know ended up not unfolding in the way that you had to hope for which obviously you know like is like a door one. You know it’s gonna be closing and another one more exciting is gonna be opening. But. How was that for you I’m sure he was not easy at first first.

Elad Gil: Yeah, ah you know initially I think when you come from a new field or you’re switching fields then people kind of look at you weird and I definitely didn’t want to get a job in Biotech for a number of reasons and so I decided to go into technology and I think the math background helped a bit with that. And so I I managed to land ah internship at a tech company and then that translated into a job and I moved out to Silicon Valley right as the technology bubble was collapsing um, sort of with the first internet way Vin says working at a company that was backed by Sequoia and matrix. And when I joined the company was about 120 people like grew to 1 60 and then it shrank to I think 12 or 15 people over 5 rounds of layoffs. So I got laid off in the third round of layoffs and back then everybody was getting laid off it was mass scale shutdowns of companies. Um, there is large scale layoffs I think we’ll see. Not quite the same extent. But I think we’ll see similar things happen next year and and 2025 in tech and um it was a big reset and so all these people who used to be vp product a company suddenly would join companies as you know, an individual product manager you know just to have a job and tons and tons of people left Silicon Valley during that you know few year period um, so initially I just started offering to work for companies for free because nobody was willing to hire me because Ai had limited experience in b there just wasn’t any jobs at all you know and so I ended up working for free for 2 startups and then I ended up working for Plaqueo which was a company where Sean Parker

Alejandro Cremades: So yeah.

Elad Gil: Um, cofounded it before he became the funding president of Facebook and um, then from there I eventually ended up at Google and um, you know Google I helped start the mobile team and I worked on um, Ai for ads targeting in a few other areas.

Alejandro Cremades: And I guess say before we talk about the Google because I’m sure that that was you know quite a remarkable experience. You know, especially going through that team a round of layoffs and and seeing you know like obviously the market you know market cycles and and and you were talking about what we’re going to be encountering in 2025 to what did you learn about market cycles and and how do you see them now first.

Elad Gil: You know it definitely um was very strong grounding from that point on I think in 3 ways number 1 is I was always grateful to have a job and so I think if you don’t um, if you’re in an environment where you don’t have um. Employment for a period of time you realize how precious a job can be you know and I had no money and I was just straight out of school and so you know it was kind of tough for a while and I think that was a really good experience and it really drove home. You know, gratefulness or gratitude for employment which I think a lot of people lack today. Um, you know Second you just realize that. There’s gravity and there’s reality behind companies and eventually companies or products have to turn into businesses and those businesses eventually have to become self-sustaining and I think that’s a lesson that used to be learned every generation technology used to have these 8 to 12 year cycles and then we ended up with a 20 year boom period from roughly you know 2000 to 2003 until now and I think because of that a lot of people in tech completely forgot that eventually you have to have a business that makes money and eventually you have to have profit margins and you know eventually all these things have to kind of work. Um, so that that really got driven home viscerally.

Alejandro Cremades: Now you were saying that you were doing some consulting projects for companies even working for free for some of them but eventually you landed in Google at a really amazing time. We’re talking about 2004 and during that time you had the opportunity of leading you know and starting.

Elad Gil: For me as well.

Alejandro Cremades: The mobile team and then also transitioning into Google x so I guess what were some of the major learnings from this period.

Elad Gil: Yeah, so I never worked at Google x um, you know I worked on um mobile which you mentioned and then I worked on ads related products including some ads targeting rollouts. Um, and that was a lot of sort of ml-centric product stuff or Ai centric product stuff. Um. You know on the mobile side. It was very much sort of a scrappy new effort where um, there wasn’t there was I think at the time half an engineer who’s sort of maintaining this really old crappy sort of um wml index or you know wap index back in the day so they had specially formatted pages for mobile. Um. And this is before smartphones and everything else and I think the big insight. Um because you know I was asked 1 year to put together the mobile strategy for Google and what should Google do in mobile and um Larry page at the time was very interested in things like um mvnos mobile virtual network operators where you know rent network capacity and then you turn it into a potential carrier and. Really felt that all the people who were building those mbnnos didn’t really have any sort of control. Um in terms of the ability to actually control what was running on the the handsetss or on the network you still ended up dealing with the same handset manufacturers and so you were still pretty locked down. Versus having like an open software ecosystem there and so one of the things I suggested was well should we go and do and ah go into a handset because that gives you way more control over the experience and then at the same time Andy Rubin was starting Android after starting danger.

Elad Gil: And um, so Google ended up buying Android and then Andy really came in with a very crisp vision for how to build this open source software stack for mobile phones. Um, and so he really was the you know the the pioneer in terms of thinking through. Okay, what? what What really needs to be done in terms of. You know rechanging the landscape and and software landscape and then of course the Iphone came out and nobody at Google as far as I know expected it and um, that’s why if you look at the very first Android device. It has both the keyboard as well as a flip-up to have a touchcreen because the the iphone had a test screen and it was so revolutionary you know so. Obviously a better solution and so that kind of got rushed out. Um, so you know I think that was really exciting in terms of just a whole new industry being generated and existing which is kind of similar to Ai today and then ah you know towards the last year or so that I was there or maybe 2 years or so. Switch teams and I ended up working more on different ads products including both uicentric ones as well as ads targeting related ones. Um.

Alejandro Cremades: So it sounds like you were having you know quite a good time. So what? what pushed you to perhaps starting mixer lapse and and give you a notice. You know what was the what was the triggering.

Elad Gil: Yeah I always wanted to start a company when I was at mit I ran one of the main startup groups there and um, you know if I I think if I had a stronger either.

Elad Gil: Ah, financial footing or something else. It wouldve started a company right away but at the time there also weren’t there was no ic there was no real strong seed ecosystem. You know it’s actually very hard to start a company and there’s very little information available and so the the default path then was you’d go and you’d work somewhere for a couple years and then um. You know you’d start something and so really I went to Google in part because it was an amazing place at an amazing moment in time and in part because I thought I could create the network of people I could start a company with you know, great engineers or product people or designers or you know people could really help um, build something amazing.

Alejandro Cremades: So mixer labs ended up being the bridge into Twitter you know into a tremendous experience that you had at Twitter so how what were you guys doing at mixer labs and then you know how did Twitter come knocking.

Elad Gil: Yeah, with mixer labs. Um, we were building a really early developer product where you could build custom index on your data and then use that to interrogate geolocation or enable Geo features um for different types of um.

Elad Gil: Ah, for different types of applications or websites or different things like that and so we were one of the very early developer-centric tools. You know at the time I think Twi Leo existed and maybe there was a Heroku or something but there wasn’t much and when we got started Aws was pretty young as a service and so in the early era of like developer tools and apis. And um I think we were right in terms of thinking. There’s a big shift towards those types of products and then we were wrong on market size and I think many firsttime founders are like that right? We first time founders often build great products but they don’t think as much about go to market and then the second time you start a company you think you think more about the market and go to market and market structure.

Elad Gil: And so um, you know we ended up ah raising our second round of funding. Our first round was we were backed by Sequoia and Reid Hoffman and aval ravokant and all these great folks and then um, we raised our second round and right after we raised our second round. Um, you know we’d launched our product and um. Twitter had pinged us about a partnership and then it turned into an acquisition conversation. They basically said hey we’re actually more interested in buying you than partnering with you and um, you know on our side we thought well you know number 1 we think the market is probably smaller than we thought it was and so we don’t think this is. A great market but in the hands of Twitter it could be a great market because at the time Twitter had you know tens of thousands of developers or hundreds of thousands of developers on this platform. Um 2 We thought it could be a really great landing place for the team because Twitter at the time was 90 people and we thought you know our. Our team would be about 10% of the company right in terms of number of people and so they could really have great careers. They are getting into early. Um, third we thought um, you know it would be a good financial outcome. We thought. Okay like if we do the math and the dilution and keep going and. Have to change direction or if we think it’s a small market or whatever it is what does that look like um and so we thought it would be good outcome for ourselves and for our investors and for our employees so in the end we we decided to go for the acquisition and you know in hindsight I’m really happy. We did both because I think the various team members ended up having great careers.

Elad Gil: Um, you know the the outcome was strong from an impact perspective in terms of working on things like Twitter which at the time there’s the arab spring happening on it and all specific events and then of course there was the positive financial outcome as well.

Alejandro Cremades: And how was it also on the and I don’t think people talk about this much the emotional roller coaster of all of a sudden you know, handing the keys you know of your car to to someone else. You know something that you’ve worked so hard for I mean I’ve heard that. It’s like sometimes it feels like it’s like a loss that you’re experiencing in the family. You know your first company. You know to certain degrees you you feel like you are the company you have that type of attachment to did you experience any of that stuff or not.

Elad Gil: You know, um I think that on the 1 hand you always? um I mean I guess the honest answer is not really I think that you know I thought it was a great experience I love the company I love the people I work with.

Alejandro Cremades: Yeah, yeah.

Elad Gil: But they’re all coming with me and initially we’re going to keep working on the same product but expand it now it turned out that um there was 1 or 2 people inside the company that really didn’t want the features that we were building to exist and they continuously blocked us. There was 1 product manager in particular who is working on mobile who is awful. And kept blocking everything we were doing and when I’d go to um the Ceo at the time or the vb product at the time they just didn’t want to act on it. They were kind of non-comfrontational. Um, and so you know a lot of I think the the sadness came later when we couldn’t ship certain things because there was just some.

Alejandro Cremades: If.

Elad Gil: Random pm who didn’t know what he was doing blocking us right? that was more the issue and I think that’s often the issue at bigger companies when they acquire startups one of the key things you have to do is figure out how do I get everybody out of the way. So this acquisition can actually accomplish what it’s set out to accomplish and so later I ended up taking over m and a at Twitter amongst other areas. Um I moved from the product side and the product organ to into a bunch of operational stuff and one of the things that we’d always do is we’d ask. Okay, well how do we make sure that this team will thrive once? they’re bought and do we integrate them fully. Do we let them work standalone like what does it all mean in terms of this acquisition. So that we make sure that there’s a good landing spot for people going forward.

Alejandro Cremades: I mean in your guys’ case I mean tremendous experience too because you were able to to see Twitter going from like literally 90 employees to over 1500 people in 2 years I mean how what what kind of lessons did you learn around scaling a team so fast so that you know perhaps the culture and other. Critical things. Don’t break.

Elad Gil: You know I think that um a lot broke at Twitter and so I think that um you know one of the issues at Twitter was um, you know the company ended up hiring a lot of really good people but maybe um, too many people that were too junior for the roles that they had. And often what happens at the time at least many of them have grown into amazing careers right? but often what happens is that when a company when a company is growing linearly. You can have the team that you hire grow with a company because the rate at which they learn can be slow and because a company isn’t growing that fast. That’s fine if a company is growing exponentially if you’re going from 90 to 500 people to 1500 people over 2 years. You don’t have time to learn you don’t have time to learn management you don’t have time to learn your function. You don’t have time to learn any of this stuff and you need to hire very experienced people who know what they’re doing. And so the 2 places that Twitter didn’t hire well was number 1 certain aspects of leadership where they tended at least early on to under hire and then later um they’re not later but at the same time they tended to select against what I’d call like an alpha engineer like an engineer who’s super self confidentent and know that they can do really strong work. And um, there was ah this sort of cultural trait that was called like I think it was be humble or something like that or we’re looking for humble people but that ended up screening out for self-confident people as well and I think that was a very negative filter for the company. Um, and I don’t think it. It was um, intentional.

Elad Gil: But each person kind of interpreted humble their own way and you absolutely shouldn’t hire Jerks right? They destroy your culture and that’s not what I’m advocating for since you want people who really know their stuff and who are self-confient on it and come in and saying yeah I can do this I can build this and I can accomplish these things and I think they tended to select it against those people particularly in engineering early on.

Alejandro Cremades: That’s incredible now for you, you you you stayed there for a few years for a couple of years actually and then as they say once an entrepreneur always an entrepreneur entrepreneur. So at what point that’s the idea of color you know come knocking and how do you go from incubation to launch and and to bring it to life.

Elad Gil: Yeah, so um, you know when I started color I had 3 other cofounders and um, one of the drivers for the company was my cofounder Altman who’s now the Ceo um, you know he has been public about the fact that he’s a carrier for a mutation in a gene called brca 2 um, which increases the lifetime risk of cancer in both men and women and in women it elevates their risk dramatically, you know, depending on the variant you can have you can have anywhere from you know a 30 to I think it’s like 70% increased risk chance of breast ovarian cancer and so it’s It’s it’s very important to know your status of these genes because you can actually do something about it in the case of breast ovarian cancer certain types of colon cancer, etc. Um, and so the the reason we started. The company was because his family had this gene and he’d had multiple family members pass or get very sick from from breast cancer.

Elad Gil: Um, and so we thought you know there’s this big shift in genomics and big shift in genetic sequencing and nobody’s really applied software effectively to the area. So Can we make this information more broadly available to people and so the company had a very strong social mission. And very strong personal resonance from sort of the earliest days and so I’d I’d say it was learned by that you know.

Alejandro Cremades: And T and what? what? what ended up being the business model of color. How do you guys say make money there.

Elad Gil: Yeah, color. Um, started off really focused on genomics and genetic testing and sort of um providing broad access to this type of information at a tenth. The price of what the traditional player cost so we literally had a product that was probably better. And 1 ne-tenth the price now healthcare is a very distorted market because um, consumers don’t want to pay for anything in healthcare or very few things and so what that means is that the person who actually decides what you get or what gets paid for is the insurance company.

Elad Gil: And so if something is covered by insurance. People are actually price indifferent as to whether it’s $3000 or it’s $300 they just don’t care and they really don’t want to pay the $300 they’d rather go get that 2 or $3000 test if they don’t have to pay anything out of pocket right? and it’s ah. Distort. It’s distorted from that perspective and then it’s distorted from the perspective of the person who decides what you get to do as your physician and then your insurance company pays for it and then it impacts you and so your physician could decide not to do things that are really useful for you and they could decide to do things that don’t really help you that much. And it’s a very odd chain and so value creation and healthcare is hard because there is an incentive alignment because between end user delivery of something good versus who decides what happens to you which is your doctor and who pays which is the pay. Um, so eventually we morph the company into and I should say. We really otman moreph the company into more of a population healthcare delivery software platform or platform more generally and during covid um, you know col did all sorts of um software for delivery of tests across multiple states. There was big state deals or big. You know institutional deals with universities as well as things like vaccine delivery and other things. So now. It’s really this this population health care delivery company for both public health programs enterprises employers a variety of different different types of groups.

Alejandro Cremades: Now when you’re building a company you know from nothing a startup I mean you obviously have the uncertainty you know of what’s coming. But then you also have the the issues of um, you know building something in Healthcare which is regulation So how do you find that balance and you navigate all these hoops. Okay.

Elad Gil: Yeah, you know you learn a couple things. Um, you know? For example, the regulators at the Fda are very smart right? and they’re really science drivenve and they really focus on the science of things which I think is great. Um now different um subdivisions of the Fda will have different. Um. Ah, viewpoints on the same topic just like at any other organization. There’ll be different groups that will use something slightly differently and so part of navigating a regulator is often knowing which part of the regulator to engage with so that if you work with them. Um. You’re working with a group that’s already positively inclined to your world viewers at least has alignment with how you think about the world and that’s easier than going to the group that thinks the opposite or disagrees a priority. You don’t have a chance to convince necessarily so there’s regulation on that level and then also if you’re working in labs or diagnostics you have. Other levels things known as clea and cap which are a set of approaches that you have to take in order to be in compliance with running ah a lab that can actually do business in different states. There’s New York state related regulations. So there’s multiple regulations at every level in the state of California you can only hire certain types of people to work in the lab which isn’t true in other states. So there’s all sorts of state by state things too. Um, so it gets pretty complicated and um, one of the things you have to do early on is number one you know at least for us the focus was how do we make sure we get proper information to patients and that there’s high fidelity there because we never wanted to make an error um because it was such important information.

Elad Gil: For a person and then secondly how do we make sure that we do that in a regulatory compliant manner I find the calls today for more Ai regulation to be striking because it’s clear that none of these people have ever dealt with a regulatory environment because they’re speaking of it in very naive terms. You know oh. If. There’s regulation of ai then um, we’ll have the smartest people in ai actually setting the rules and you’re like no no, no, no, you’re not going to have anybody in ai setting the rules of people setting. The rules will be legislators and people who may not understand technology as well. You know or um, people will often compare ai regulation to nuclear and once um. The nuclear regulator was established in the 70 s we stopped approving nuclear plant designs right? The regulator blocked progress for 50 years and so why would you want to do that and so the only possible interpretation is some form of like um regulatory capture hey we really want to make sure that we capture. All the value here and the best way to do that is to regulate it because incumbents win or it’s some some form of um concern for the future. But then I’d be more concerned if there was a bad regulator driving what can and cannot be built in Ai than the industry you know and so I just kind of worry that. It’s a very naive viewpoint that a lot of people are expressing right now.

Alejandro Cremades: I Hear you now for color that is a publicly disclosed. How much has the company raised so far.

Elad Gil: I don’t know what the public number is it’s in the hundreds of millions.

Alejandro Cremades: Yeah I think at least what you see out. There is 484,000,000 but they but in any case, 1 thing that I found very interesting in your journey is that on the on the side you know since 2007 you were actually investing in companies. So. What got you into investing in companies in first place.

Elad Gil: Yeah, um, so I think I made my first investment around um geez I’m not sure. Actually maybe it was a 7 thought it was closer to 9 but maybe it zero seven um yeah I think you’re right, maybe as zero seven or 8 um, yeah so I mean really, what happened is is a lot of ah. People that I was um, a lot of people would come to me for advice because I was starting a company myself at the time and I just started helping different people with ideas around people who would fund them for like angels or vcs or I’d help them with the early hires or advice on. Go-to market or whatever it was and so. People just started asking me if I wanted to invest as part of their rounds and so it just happened very organically I don’t think it was quite the way it is today where every every founder has like a side fund or an angelless syndicate or you know a rolling fund or something else I think back then there just weren’t that many people angel investing I think part of that was there just wasn’t a lot of money in the ecosystem. And the only money you could ever invest was personal money and so I put something like half of my net worth which wasn’t a lot of money into startups at the time because you couldn’t raise a fund as ah as a founder as an individual back then um and so it’s just a very different ecosystem.

Alejandro Cremades: And you know pretty unbelievable now you know you take a look at some of the companies that that you invested in I mean we’re talking about our advice. You know we’re talking about airbnb coinbase fcma flexport gitlab ghoststo instacart and the list goes on and on and on I guess say. 1 thing that comes to mind is what do you look for in founders I mean you’ve even invested in a company like stripe very early on I mean what do you see? What are some of those straits that you’re like that pattern recognition you know is like is like clicking for you. You’re like this is a company that I want to invest in.

Elad Gil: Yeah, you know I think um, unlike most early stage investors I tend to be more product market centric than founder centric I think founders are incredibly important right? I started 2 companies myself and you know I think founders matter a lot. Um, but I’ve seen really great people get absolutely crushed by bad markets. And I’ve seen pretty mediocre people do extremely well in a very good market and so I think the product market matters most for whether a company will be successful or not that said obviously founders are incredibly important and I think founders are what takes something from that naturally goes from 0 to 1 from 1 to 10 or 1 to 100 or everyone to think about it. Um, and ah. You know, usually I think founders um i’t most view it as like the the Apple framework right? You had Steve Jobs Steve Wozniak and then Tim Cook and you kind of need those archetypes over the course of the company so early on you need somebody who can sell very well and selling may mean um, convincing employees to join you. Could mean getting your first customers. It could mean raising money right? But you’re constantly selling as a founder and then secondly you need somebody who can build and that was Wozniak and um, you need to be able to actually deliver the thing and if you don’t have somebody who can build of course you don’t have anything right? You’re just talking. Um, and that’s kind of almost like the the caricature of the and Nba startup right? 3 and Nba show up with nobody who can build anything and they just talk a lot and have a powerpoint deck but it doesn’t matter versus you know 3 hackers show up and they’ve already built the prototype and you can play with it and you can see how it works um and then later in the life of a company. You need a Tim Cooktype

Elad Gil: You need somebody who can actually scale things and run the ship and do operations and all that stuff and usually that isn’t one of the founders but every once in a while it is but most founders just aren’t that interested in all the intricacies of you know people issues and all the rest of the stuff that tends to come with a company working. Um, so usually I look for those 2 characteristics you know and then there’s other things like are are they learning very rapidly. Um, can they make their own decisions and are they decisive. Do they have an eye for talent are they aggressive or um, you know, really want to win are they competitive maybe is a better way to put it. Um, and I think a lot of those things were kind of forgotten during this last period of like free money or you know, very um, available capital because um, you forget that ultimately business is very competitive and I think the Ceo of ah shopify had this really great blog post about culture where he said. We’re not a family. We’re a team and we focus on performance and I think that was kind of forgotten for a while everybody got into different forms of politics and different forms of you know, um, you know? Ah I don’t know to call it um things almost got too unhurried. There was no urgency. Um, everything was fine. We can just hire more people to fix things like versus. Okay, we’re we’re competing and we need to go fast and we need to be. We need to get things done.

Alejandro Cremades: And how would you say that having that experience as a founder of having built in you know a bunch of companies already. How do you think that has influenced you know your approach to being a startup investor.

Elad Gil: I think it’s um, done 3 things 1 is um, it’s it’s allowed me to hopefully give better advice than if I hadn’t done all this stuff and I think one of the reasons founders like working with me is I have very tactical advice. You know I’m not I don’t say ape players hire a players and blah blah blah say. Okay, let’s talk about your hiring pipeline and how do you expand it. You know and how do you run a good hiring process. Um, and so I think I tend to have advice. That’s a bit more grounded and like what what you need to do as an operator versus some theoretical thing that you know if you’ve only ever been in finance, you just don’t understand how to run companies. Um, so I think that matters a lot I think sometimes that helps with product assessment because you just have a natural intuition for you know this is a product and enterprise would actually use. You know oh this actually won’t work because there’s too many potential buyers and you know you’ll have 7 people in and every decision. It’s just not going to. You should just choose 1 1 function to sell to or whatever it is and so I think there’s some better intuition for so some things like that the way that um, a friend of mine runs a big venture team and he says and he used to run a giant company. You know with multi $100000000 revenue stream.

Alejandro Cremades: And then I guess Sean the 2

Elad Gil: And he says um, he likes to hire people who’ve stared product Market fit in the face and flinched you know or had to decide whether to flinch or not right? and so he likes to hire people who’ve actually had to deal with does the market. Want this product and how can I tell how can I tell if this is a good product.

Alejandro Cremades: I can I can see that now 1 thing that that you know has come out. Obviously you know there is reports that are talking about you being the biggest solo vc out there a batting average of like 67% of ah. Being able to track or to capture companies that are going to end up pay racing a follow on round so incredible batting average I guess from a strategy perspective when it comes to the investment side of things. How would you say that that has evolved over time from maybe like when you started to know 7 oh eight you know all the way up until now.

Elad Gil: Ah, you know it’s a good question I I have to admit I haven’t thought that deeply about that question you know I think um I’ve I’ve focused on very basic fundamentals of these things which is how can I help people as much as possible when they start a company.

Elad Gil: And how can I be helpful throughout the life of the company actually and that may mean um, you know having ideas for people they can hire for Cfo or you know anduril had me interview their cfo finalists and be part of their hiring scrum for that right? and so there’s ways to actually be very useful if you’ve actually scaled things before um. And then the other piece of it is how can I identify what are really interesting companies in a given moment in time and you know get involved with some of those companies because I’m effectively very technooptimtic and I want to view technology as a force for good and I want to be involved with the most important technologies and companies at a given moment I want to help push the future forward. Um. And so a lot of my focus has been on those 2 things and it’s very much what are the basics of those 2 things versus let me come up with some complicated thought structure and I think it’s back to again that grounding is an operator usually as an operator you eventually realize you need to figure out the basics and then focus on the basics. Versus adding a bunch of unnecessary complexity to everything you know, like often strategies sound great and they just don’t work.

Alejandro Cremades: So as you’re thinking as we’re talking about operations. You know, scale and things like that you actually wrote um a really a really good book. It’s called high growth handbook and you did that in 4018 What can the founders that perhaps you know. That are listening right now to us. What can they learn from reading this book.

Elad Gil: Yeah, the book is really meant to be a set of tactical um chapters around different areas of scaling a company and so that’s everything from how as can you as as the Ceo manage your own emotions and your own time and prioritize what it should be. You should be doing. And through to how do you buy a company for the first time or do m and a or how do you do a reorg. How do you deal with a board member who’s acting badly and so the book is really meant to be almost like a reference guide where you can say okay now I’m dealing with this issue where I have a vp who’s acting badly and you jump to that section and read about it. And then it’s interspersed with interviews um with different leaders from the industry you know folks like ah Patrick Colison from stripe or Reid Hoffman or Sam Oltman um talking about specific aspects of how they’ve run companies or um dealt with specific issues. And so it’s meant to both be my own perspective but also the perspectives of great operators.

Alejandro Cremades: So talking about great operators now and what’s coming you know, especially with this macro you know environment you were talking about What’s what’s going to kick in in 2025 with layoffs and things like that where are things heading you know what they can Perhaps you know the founders that are listening right Now. You know, learn you know from from what you are seeing the insides and and also how can they prepare themselves as best as possible for what’s coming.

Elad Gil: You know I think we’re about to hit a very rough patch and I think the last year and a half was just a warm up and most of the things that happened happen in public markets and so public markets now have basically adapted and they’re they’re roughly at where they have been historically in terms of multiples. And so when people talk about how this is a low period. It’s not a low period. This is a very normal period now in terms of where e valuations are and what hasn’t adjusted yet as private markets because people raise so much money. There is a time delay between when you raise money and when you have to raise again and so I think next year and maybe part of 2025 are going to be the really tough times. Because there’s going to be a lot of layoffs. There’s going to be a lot of shutdowns I think maybe a third of the of the unicorn companies will go under or some large number over the next you know 1 to 3 years and so I just think um, we’ve deferred a lot of pain because there was such available capital and now the capital is going away because. People are not going to if you have a company that’s burned $100000000 that generate $5000000 a revenue. Nobody’s going to give you that next round of funding and so I think um, a lot of companies are about to go under and so as a founder I think you have to make a few decisions number one is do you fundamentally have a good business or not. If not, how do you How do you make it a great business if you can’t make it a great business then you have 4 options right? You can change direction but the later the stage of the company and the more money you’ve raised the more you’ve done the harder that is to do so usually that’s not a good idea. Um, you can sell and if you.

Elad Gil: Think you should sell you should probably start selling now because next year will be much harder to sell because everybody will be selling next year as they run out of money and I think a lot of people think that they’re going to be able to sell and they just aren’t going to be able to because fundamentally um you know say that there’s 7 observability tools. Maybe 1 or 2 of them get boughtp but the other if 5 don’t right. There’s just too many companies doing the same thing but also each large player that can buy. You is either blocked by the Fdc now. Um, or um, the companies that are acquiring things don’t want to take on a lot of burn right? So if you have a highburn team nobody will want to buy you? Um, third you can raise more money.

Elad Gil: But that’s going to become really hard and it’s getting harder and harder all the time and so often I hear founders say well worst case I can do a ah down round and know the worst cases you go under. You should be cutting costs now in anticipation of never raising money again. You should literally think of it as what if I can never raise money again. And then your last option is um to just shut down and return money and I think too few people are doing that I think people should probably consider that if they have $50000000 and it’s still 5 years or 6 years of runway. But the company isn’t really working very well. The best years of their lives are this moment in time.

Elad Gil: In terms of flexibility in terms of ability to start another company in terms of you know, jumping on the Ai train and building a new new Ai startup. Whatever it is they want to do and I think people Misunderstand that because the older you get the more obligations you have you have kids you have family members that start to get sick. You have all sorts of other things to deal with and so the very best. Time in your life to start A company is probably now while you have this other startup and so the best thing you can do for yourself in some cases is either sell or shut down because it frees you up, you know.

Alejandro Cremades: I hear you you know, cost opportunity and I hear you there on being available and kids and all that stuff how it complicates the logistics now the last question that I wanted to ask you here a lot is if I was to put you into a time machine and I bring you back in time maybe to that moment that you were still at Google. You know, thinking about giving your notice and doing something of your own and let’s say you were able to have a sit down with that younger self and being able to give that younger self one piece of advice before launching a company. What would that be and why given what you know now.

Alejandro Cremades: Up Not not sure what happened there but they but anyways please please continue go ahead.

Elad Gil: Hey sorry about it looked like a crash. Yeah, um so I’d probably go back to like undergrad and number one I just say if you know what don’t study all these other things just study cs or maybe do cs and math because I just did the math for fun. You know, um. And then 2 is just start building something straight out of school you know and just go for it. Um, or maybe even drop out I don’t know like I don’t think everybody should drop out I think most people who drop out don’t do well? Um, but I do have a lot of friends where they got an extra you know five to 10 years of trying things. Because they dropped out initially and just went for it and so I think too often I hear people say well I need to do these 7 things. So I can learn how to do a startup and often my advice is well especially if you’re already working at another company. Just go do the startup like what else is there to learn like you’ll learn way more and. Six months of a startup then the next ten years preparing to quote unquote do a startup so I just think it’s one of those things that if you want to go do something you should go do it? Um I think that’s similarly true for investing sometimes you hear people say well I’ll start investing in 20 years or 10 years and I’ll be my retirement job and you’re like well then you don’t really want to do the job right? if. that’s what you love and that’s what you want to do just go do it so I just think it’s one of those things where um, people talk about lifelong learning all the time and I’m much more interested in lifelong doing you know I think the best way to learn something is to do it.

Alejandro Cremades: I love that I love that so allowed for the people that are listening that will love to reach out and say hi. What is the best way for them to do so you say enough you see enough what what is the Twitter handle.

Elad Gil: Probably Linkedin or Twitter Twitter could work at a lot gil.

Alejandro Cremades: Amazing! Well hey, thank you so much for being on the deal maker show. It has been an honor to have you with us today.

Elad Gil: Ah, thanks so much for including me.

* * *
If you like the show, make sure that you hit that subscribe button. If you can leave a review as well, that would be fantastic. And if you got any value either from this episode or from the show itself, share it with a friend. Perhaps they will also appreciate it. Also, remember, if you need any help, whether it is with your fundraising efforts or with selling your business, you can reach me at al*******@pa**************.com

 

Podcast: Play in new window | Download

Subscribe: Apple Podcasts | Spotify | TuneIn | RSS | More