by Daniel Bean

NAVAL RAVIKANT IS A MAN OF MANY TITLES; ENTREPRENEUR, CEO, FOUNDER, BUSINESSMAN, AND visionary, among others. He has revolutionized the tech industry through his company, AngelList, by making a platform by which to e ectively facilitate a lucrative relationship between companies and investors through an enormous online network. He is perhaps best known as the co-founder of as well as an investor in Uber, among other popular startups that have gone on to great things.¶ We had the chance to sit down and meet Mr. Ravikant for an interview at his San Francisco o ce. After being warmly greeted by his sta , he entered the conference room and we had a very insightful interview!

CM: Can you tell us a little bit about your background and what prompted your interest in becoming an entrepreneur?

NR: Yes. I’m an entrepreneur because I love technology, and entrepreneurship these days is the business of technology. I grew up programming and hacking; just in love with computers, and I wanted to be in the business of computers. I got started with Apple at a very early age and came out here where all of the action was. Once you arrive, entrepreneurship is in the air, in the water, and all around you.
I’ve always been ercely independent and I started a bunch of companies and along the way I learned a lot about raising capital, investing, and dealing with ven- ture capitalists. As a result, people started asking me for advice on how to raise mon- ey. I met this guy, Nivi, and he was writing this blog called Venture Hacks and we ended up co-authoring it together. He interviewed me and I gave him feedback on how to raise money and negotiate with investors; we became the 2nd most popular venture-related blog on the web.  e question we kept getting asked was, “How do I negotiate a term sheet, much less obtain one?” By then, I had raised a small fund and was investing, and I realized the whole process was very ine cient. Entrepreneurs didn’t know how to nd inves- called, which eventually merged and became a part of I then raised my fund, and that fund is what I invested out of for about four years. I then became an investor in Uber Twitter, Foursquare, and lots of other cool com- panies.

CM: What was the impetus behind the founding of AngelList?

NR: I negotiated with VC’s for startups and had some bad experiences. I always fundamentally think of myself as a money manager so being a fund manager, I didn’t want that to be my legacy. Creating the platform of AngelList was a natural extension of who I am and I don’t believe that people should get paid for being information middlemen; it seemed like too many of the returns in the venture capital business were concentrated around a few people who had access and everyone else did not.
What we’ve done with AngelList is taken a large number of deals (probably about 10% of Silicon Valley’s active deals) and moved them online and given access to peo- ple who otherwise would not have such access to invest in those companies. Today, most of the wealth is being created in the private markets, not the public markets. Companies go public at the end of their lifecycle, not at the beginning. It used to beors and how to reach them systematically. It was clear that there would be thousands of companies created each year, instead of tens or hundreds, and, as a result, you need a place to organize all of these investors and entrepreneurs, so we started AngelList. We originally began as a mailing list and then it kind of blew up into the huge online network that it is today, with tens of thousands of companies and investors, along with hundreds of millions of dollars moved into thousands of companies.

CM: How did your very first entrepreneurial endeavour come about?

NR: I worked at a large cable modem ISP; I met with some physicists that were coming out of Lawrence Livermore Labs who were developing a new product, so I became their business guy and I helped them develop a business plan. I then got introduced to some venture capitalists and helped them raise money. I subsequently joined their boards; that was my rst entrepreneurial e ort. I did a similar thing for a company that later became Google Earth. After that, I began my own company the case that Microsoft or Google went public earlier and appreciated 10, 20, 50x in value and the average investor could participate in that. Today, because of all of the regulations around it, companies go public at the last second when they’ve already run up and appreciated fully in value; the private investors are realizing all of that.

CM: What do you feel are the essential ingredients for success as an entrepreneur and investor?

NR: ey’re actually very di erent things. As an entrepreneur, you want to have spe- ci c knowledge about something that you know better than almost anybody else in the world. You have to care about it to an irrational degree; otherwise you just won’t stick with it because startups are so hard. You have to have a high appetite for risk and be extremely good at what you do.
On the investor side, it’s almost the opposite; you want to be very dispassionate, you want to be very rational, and you don’t want to be emotional. You have to spread your bets a little bit. ere’s a learning curve, so you have to lose money ve or ten  times before you learn how to start making money, identifying good entrepreneurs, as well as good opportunities. You have to seal lots of deals and have massive access. At the same time, you have to be a positive force because entrepreneurs talk; repu- tation is very important in this business. For angel investors, I’d recommend going slow, gathering the data, learn as you can, and while you’re learning, the only really safe way to invest is through diversi ed funds, rather than trying to pick individual deals.

CM: Could you provide us a snapshot of the challenges and rewards you’ve experienced as an entrepreneur?

NR: Being an entrepreneur is extremely stressful. e way you recognize an investor in his 50’s is he has a full head of hair; the way you recognize an entrepreneur is he’s gone bald [laughs]. As an entrepreneur, you have all of your eggs in one basket and you’re watching that basket. You sort of build this giant pyramid of expectations, hire people, raise money, and you’ve told the world what you’re going to do. If you fail, you fail very publicly.  You must have an internal compass, be very thick-skinned, be more attached to the work than the outcome itself, and not get too bent out of shape if you fail. You also have to do it all while being ethical, moral, and a good person because you’re under massive scrutiny and the work that you do is just an extension of yourwhen they get started and not wait until they go public and all of the value and wealth creation is gone. We have gotten thousands of companies funded; everyone from Uber that got a few investors through us, to umbtack, Pinterest, and Lead- motion. We have a list of two-thousand of them so it feels great. But now moving to online investing, it’s even better because we’re having the money ow online and we’re connecting people who otherwise never would have had access to startups.  Right now, if you want to invest in a startup, other than AngelList, your next option is to move to Silicon Valley or New York and start networking like crazy. e majority of the capital in the world is not invested in tech companies. However, the majority of wealth in the world is being created by tech companies. If you look at the fastest wealth creation in the last half a decade, it’s all tech; they are even displac- ing companies on the Fortune 500 annual listings.

CM: Why should a venture capitalist like Robert Herjavec sign up with Angel- List?

NR: Because of his partner, Barbara Corcoran from Shark Tank. She’s leading a syn- dicate which means that if Mr. Herjavec has great companies that he’s investing in, he can bring his friends or other people on the internet to invest behind him; they can follow the signal of his money and do it in an honest, ethical, and transparent way. Additionally, he can get paid for it. Basically, we create these popup venture funds online. If Barbara wants to invest in a company, she puts in some of herhigh return industry, then this is the way that you should do it. I see people rushing into buying things like art and wine. at’s ne and they appreciate in value, but it’s all specula- tion-based. Your wine collection doesn’t get out of bed at night and work for you, it just ages. Every time you invest in one of these tech companies, or 100 of them, you’ve got entrepreneurs that are killing themselves to make you successful and make you rich. You’ve got armies of servers working at data centers in the  night while you sleep.

CM: Is there a certain designer you like, perhaps a power suit you like to wear to large investor meetings?

NR: I quit my rst job because I wouldn’t wear a tie [laughs]. I spoke in front of the Senate Finance Committee and testi ed and I received special dispensation to not wear a tie. I didn’t wear a tie to my wedding. e only time I’ve worn a tie in the last decade was at the Rose Garden; I was in the second row when President Obama signed the Jobs Act. I like comfortable, non-branded clothing. is is so geeky and so Silicon Valley [laughs], but everything I wear is optimized for weight, comfort, and exibility. For example, today I’m wear DNA. At the end of the day, the company relies upon you as an extension of you, so whatever moral force and whatever commitment that you project will sort of ripple through the entire company.

CM: What qualities do you feel are necessary to succeed as the CEO of a start- up?

NR: A CEO is a little di erent than an entrepreneur. e best companies are owned by founders/CEO’s because no one else cares as much. ere’s a line that’s attributed to Benjamin Franklin, “If you want it done, then go. If not, then send.” It’s a great line because it summarizes the most fundamental problem in microeco- nomics, which is the principal-agent problem. Principals own the business or the capital; the aides do the work for them, and the agents optimize for themselves, not for the owner of the capital or the business.  e larger the business, the more the agents are optimizing for themselves, and by the time you get to a multi-thousand person company, people are doing what’s best for each individual, not the company. What makes startups work is that their small founders care. Ideally, a founder should still be able to be the CEO, but it’s a very di erent job. Being a CEO is a lot more about management, setting goals and priorities, and communicating clearly. It’s a lot more about being patient, e ective delegation, and scaling.

CM: What would you like to say to someone who’s never heard of AngelList?

NR: AngelList is the place you can go to invest in high-quality tech companieswn capital, we then put in more capital for her and other people. She gets paid a percentage of the pro ts that they make; she’d bring them access and judgment, in exchange for getting her cut of the upside.
Uber was on AngelList in August of 2010. We had four investors who founded through us and invested, giving $25,000-$100,000 each. at investment today is worth 4,000 times what they invested. at’s obviously the one huge winner. But there are dozens of smaller winners, there are hundreds of other ones that have potential, and there are a thousand that are going to lose. e only way to learn is to do it, like anything else in life.  It has very nonlinear aspects to it; it’s not a lottery, it’s not rigged against you, and you’re investing in productive assets. But at the same time, it is a very di cult business. You can come, build a great pro le and start doing it. Or, if you’re only interested in returns and watching from afar, we’ll invest it for you and let you track everything.

CM: What’s on the horizon for AngelList in 2015?

NR: Last year, we launched the world’s rst heavily diversi ed, no load, no cost, publicly available venture funds. If you go to you’ll see them; there are six of them and you can invest as little as $50,000 in the fund. We’ll invest in the top 100 deals, then for the next two years on the platform there are no management fees. It’s a carry-only so we collect a percentage of the pro ts that are made o of the investments. If you don’t know how to angel invest or invest in tech, but want a very small percentage of your portfolio in this dynamic high-risk,ing a sweater; its cashmere, which is very unstructured and light. My shirt is unstructured linen silk. My shirt is Barbados, and my pants are Armani. I like going to this place called e Archive in San Francisco.


CM: Where do you go to unwind?

NR: For quick getaways, my wife and I got to Napa a lot. We also enjoy Big Sur, Monterey, and Carmel.

CM: Is there a certain car that you like or have been looking at?

NR: I have had my eye on one of the new Tesla’s, but having Uber and living in the city, I’m not sure what I’d do with it. When we have kids, a seven-seater Tesla might be the way to go. Tesla’s are far and away the most interesting cars on the road today.


CM: What else can you tell us about the future of AngelList in terms of expansion, etc?

NR: We’re really big in Silicon Valley and New York. We also have a fair bit of presence in Europe. We just got clearance to be online in the Western part of Europe, and we’re ramping up in London and Berlin. Our recruiting platform is actually huge in India; ten percent of the users come from India, and I would argue that we’re probably the largest presence of startups in that country.

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