He Went 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.

On the Dealmakers Show, Gil talks about going from academia to entrepreneurship, the big tech reset, how to handle it as a founder, the difference between how first and second-time founders think, M&A integrations, and who to hire as you scale your startup.

Plus, the broken US healthcare system that prevents innovation and value for patients, regulation, and what matters most to startup investors.

Listen to the full podcast episode and review the transcript here.

From Academia To Entrepreneurship

Elad Gil pursued his interest in math and biology through a dual degree and a Ph.D. at MIT.

Originally he thought he would go on to become a researcher and work on cancer, diseases, or other subjects around human longevity. Along the way, he got frustrated or disillusioned about being able to have a big impact on the world, and how to push it forward.

While just working 70 hours a week for someone else didn’t seem like a much better way to achieve his aspirations, he did land a job with a tech company that took him out to Silicon Valley. Followed by time working at Google, on their early mobile efforts, and when they acquired Android. He says it was a revolution not too unlike today’s shift to AI.

He had always thought of starting a company, yet he didn’t feel he was ready. Going to work seemed to offer the chance to expand his network, and meet others who could eventually work with him, or for him, to build something.

However, today, some of his top advice is not to wait. To just jump in and do it. To start building something right out of school, or even maybe drop out to start up something. That can give you a five or 10-year head start.

Do not believe the myth or doubt yourself, thinking you need to learn a bunch of things before you start. He says that you’ll learn way more in the first six months of working on your own company, than in 10 years ‘preparing’ to launch your own startup.

Gil says that the same also applies to investing. Don’t wait until you are older. Just get doing what you really want to do.

The Big Tech Reset & How To Handle It

When Elad first went to work in tech in Silicon Valley, the company he landed at had been funded by Sequoia and Matrix. Yet, that didn’t stop them from feeling the hit of the first internet implosion. They grew to 160 people, then shrank to just around 12, over five rounds of layoffs.

Not unlike what we’ve seen recently, there were massive layoffs everywhere. So, he ended up volunteering to work at two startups for free. There were just no paying jobs available. One of those included a venture Sean Parker had founded before he joined Facebook. Gil says that it certainly gave him a big appreciation for employment.

He believes that we are now at the beginning of a big new reset in tech. One which has been caused by oversupply of capital, and is just beginning.

Too much cheap and easy capital, he says, has caused businesses to forget that they actually need to make money. They need to turn a profit and become self-sustaining. You won’t always just be able to fix it by hiring more people and raising more money to cover up what isn’t working.

Gil told the Dealmakers Show audience that he thinks the past year and a half has just been a warm-up for the real correction in tech and the economy. Public markets have only floated down to historical norms, but haven’t fully adjusted.

Raising Funding Likely To Get Tougher

Over the next 12 to 36 months, he says that as companies find they can’t raise any more money from capital markets, we’ll see the real impact. Including as much as 30% of unicorn-status companies going under.

As a current founder, he says this leaves four options to consider. If you have a solid and profitable business that is really working, and which is sustainable for the next phase in the cycle, that’s great. If you don’t, then consider what you can change to make it work.

Though the later stage of a company you have, and the more money you’ve raised, the harder that may be.

Another option is to sell your company. He says the time to do that is right now. Next year you’ll be competing with everyone else trying to sell their businesses, and, of course, that will bring down values a lot too. If you have a high burn rate, then you probably won’t be attractive to acquirers either.

The next option is just to return the money you have to investors and shut the company down. He says that is probably even a wise choice for those that think they have many months of runway left in the bank. If it just isn’t working or sustainable, shut it down now. Use this small window of flexibility to go start another company.

Investing In Startups

Elad went on to launch his first tech startup and sold it to Twitter. Then launched a health tech startup, Color, that has reportedly raised close to $500M.

Storytelling is everything which is something that Elad Gil was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.

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

In essence, Color is a complete platform for healthcare delivery from population genomics programs to high-throughput COVID-19 testing. the company provides the technology and infrastructure for large-scale health initiatives.

Along the way, he also began advising other entrepreneurs and startups. Then began investing in them too. Including some of today’s biggest and most famous brand names.

Some of the companies that Elad has invested in at an early stage include Airbnb, Coinbase, Instacart, Stripe, Pinterest, Square, and Gusto, to name a few. At Stripe, for example, he invested in their Seed round back in 2010. Today, Stripe has a valuation of over $50 billion.

While many early-stage startup investors say that they focus on founders when looking at opportunities, Gil says that he looks more closely at the market. He says that great founders have failed because of markets.

Whereas even mediocre founders have built great companies thanks to being in the right market, at the right time. Of course, you also need product market fit, and a Steve Jobs to your Wozniak to evangelize and sell to customers, investors, and potential hires. That person may well not be one of the original founders.

Listen in to the full podcast episode to find out more, including:

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

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