A (3:53)

It's funny because it's such an obvious kind of point to think why, why raise your kids in such a way that they're resilient and they're able to do difficult things, but when you apply it to yourself, it somehow loses the frame. And why you do things that are hard but you would want your kids to do it, so obviously it benefits you.

B (4:10)

Totally. The best advice in life that I've ever gotten, and maybe this is going to psychoanalyze on myself, is, you know, just treat yourself as you would treat your kids and like, sort of like coach yourself as you would coach your kids. For some of us that are very lucky, I consider myself one of them. To have three young kids, very healthy, very happy. But parenting is very challenging in and of itself, like, but it forces you as an adult to distill things down. You know, I think we sang First Principles maybe is over overplayed, but in very, very simplistic terms that are easy to communicate to a 5 or a 10 year old. Like, what are those principles and what are the things that we're trying to convey? And I think resilience is a core piece of that. Whether that's somebody that's disagreeable on the playground or the fact that you don't want to do your homework. But it's hard that you have to step up and actually do that. And perhaps you'll miss out on play dates and things of that nature. And teaching our kids that only, only through some amount of sacrifice, and in certain cases extreme sacrifice, can you accomplish something truly special in your life. And that's something that I think all of us as adults should consider as well. But I also think that we should have grace with ourselves. And very rarely do I have grace with myself. Probably all adults are the same way, you know. You know, there's been some days where I wake up and I feel so down on myself with how I'm doing that I would never in a million years want my kids to feel that same way. And so why am I sort of like reinforcing that negative behavior on myself, thinking maybe I'm a failure, or I'm not living up to the task, or I had a company that's not doing too well, or I made a wrong business decision. And I dwell on that. Well, what would I teach my kids? How would I teach them to be sort of like professional, you know, business or personal athletes in that. In that same sense where if you have, you miss a shot, you can't be afraid to step up and take the next one. You can't dwell on that. But psychologically, like, it's harder for us to internalize our own advice versus giving it.

A (5:51)

You think of all Behavior change as something happens and there's a behavior in that new environment, is that what you're really trying to do with your brain where it's like your 50th lap and it just seems impossible, you're in the state of impossibility and you push through it so that when you have that pursuit in the Navy seals or later on your business career, you're able to have the same exact environment and take that next action?

B (6:19)

I think so. I mean, in my swimming days, there is numerous days, weeks, months where I thought that I was a total failure and I didn't know how I was going to get through to that next sort of like unlock of performance, but ultimately through, you know, just overcoming adversity and sticking with it and not giving up. It might sound cliche, but some of the best advice in life sort of is pretty simple. I think it's sort of remarkable what happens if you just see it through. Same thing in the SEAL community and going through hell week. It gets pretty bleak when you, when you're running on four days with zero hours of sleep. But, you know, you're sort of like around the corner, or at least you sort of have that faith. I think the same thing is sort of in company building and investing. In many ways, it takes a long time and for many successful companies to reach product, market fit and ultimately to scale their growth. Having that patience to sort of see it through is something that I've learned in my investing career, and I'm glad that I have now more than I did earlier in my career, certainly because there's very few overnight successes in life. What most people don't see is the hard work that's happened under behind the scenes, the failures that have happened. You know, behind the scenes, you sort of see the publicly announced successes. But I think I've been fortunate to sort of see in multiple careers the undercurrents of what it takes to get there. And that's what we look for, you know, at our, at our venture firm here.

A (7:33)

There's something about these realms of excellence. So it might have been impossible for you to do what you did in the swimming arena or as the US Navy seal, if you were there solo. But seeing other people in that cohort, I'll also add investment banking, starting startups, anything that seems impossible. Investment banking, I always think, you know, is such interesting training grounds where you're working 100, 110 hours a week. You just have to respect it, regardless of whether you think they're providing value or not.

B (8:00)

I totally Agree. I have the lucky ability to be an intern on the investment banking desk in D.C. or, excuse me, in New York City. And I was like, there's no way the rumors are true. And they are true, let's put it that way. That's post SEAL teams. And so it's something that I think is a crucible. And I think that, you know, you could argue like, is there a lot of value that's being created at midnight or 2 o' clock in the morning when people haven't gained much sleep? Potentially not. But I think that sort of like test to yourself. And I think that all people, and I think especially young men, benefit from going through this sort of like ascension past something that's really, really difficult. And I think that's why a lot of folks are drawn towards the warrior ethos of the SEAL community. And I think from an, you know, from a professional world, I think why, that's why some people are drawn towards investment banking. They want to test themselves, they want to prove to themselves that they have what it takes. I think there's something to that. Just, you know, internally I have this.

A (8:48)

Whole theory that there's a sixth gear that gets unlocked in people when they're pursuing something bigger than themselves. Some, some mission like you mentioned, Elon going out to Mars. Is this also like a sixth gear, where you now have it for the rest of your life after you've gone through something like the Olympics or the seals, where you could go into that gear whenever you need?

B (9:09)

I think I do. But life becomes more and more complicated. You mentioned, you know, married, have three kids and so your time has spread really, really widely. And I have some founder friends that you know. One in particular that's a close friend of mine. I've known him for a long time. You know, he's been building his business for coming up 15 years. And he's making that conscientious decision that he's going to sort of take a step back. It's a very successful company, nearly a Decacorn. And because he realizes the trade off that it has sort of on the home front. And so he's, he understands that direction. I think it's just really difficult. If you are trying to be great at multiple things, how many can you truly be great at? There's not many people that can be great at, you know, half a dozen things at the same point in time. So for me, I feel like I.

A (9:47)

Have that in me.

B (9:47)

I feel confident I can bring it out from me, but I think that would have sort of the equal and opposite reaction on the home front, with kids that I'm trying to raise to be, you know, to follow in the, in the good lessons that I've set and to avoid the bad ones that I've set as well.

A (10:01)

How do you maintain mental toughness as a vc? It's certainly not the Seals, it's not the Olympics. How do you maintain that edge?

B (10:09)

I think it depends on what type of firm that you're at. For me, I think it's much more translatable to the entrepreneur community, and I think they deserve all the credit. So I never want to, you know, suggest that we're in the same ilk as the founders that we invest in, but we're having to raise money, we're having to sell ourselves. We're an emerging brand. This is not a firm that has been around for decades where they get to plug into the infrastructure that's in place and exclusively focus on deals and don't really need to worry about fundraising. So from that camp, I, I, you know, for any venture investor, I think it's having the resilience to understand that things are rarely as good as you think and rarely as bad as you think, you know, regardless of the situation. And that's some advice that I got from Peter Levine, who's like, really a true statesman in the venture capital industry. When I was wrestling through some of these things that were going on in the portfolio, both very good and some that were very bad. He's like, Larson, I will let you in on a little secret here. Things are never as good as you think, and they're never as bad as you think either. And so I think blazing that, that sort of, like, level azimuth is really, really important for, for any investor, and how that results in, in resilience. I don't think that mental toughness can be built in good times and in easy situations. I think it's sort of an oxymoron in many, many ways. I think you can only build mental toughness and resilience by going through difficult times. So from an investor standpoint, that could be losing deals that you're competing for, never seeing them in the first place, and, you know, having sins of omission where you're, you know, you're missing deals, you're saying no to things that you should have said yes to, sins of commission, investing in deals that you arguably should not have done in the first place. So there's many, many, many ways to make mistakes. And ultimately, if you treat each of those as a Building block on yourself and on your own career. I think you become more resilient as an investor by focusing on those inputs and build that mental toughness and sort of some of those, those calluses in a good way to help you become sharper for the next time around. I think where people oftentimes miss the mark, myself included, is where you get complacent, where you think that the thing that was working, you know, at one point in your career will always work. And I think that's a little bit missing, missing the mark because the markets are dynamic as we see sort of like in the venture landscape. In the past 10 years since I've been doing it, it's changed a lot. There's some household names that are still household names, there's some that aren't anymore and, and then there's new ones that have really broken up onto the scene and the technology landscape has evolved as well. So I think if you're overly wedded to just doing thing one way regardless of what the market's giving you and you don't have that resilience and that creativity like our founders have to sort of maneuver with the market, I think that's where you can get into trouble.

A (12:38)

Let's talk about harpoon your fund. What is your right to win as a VC fund?

B (12:43)

Very concretely, our right to win is the value that we provide. Our portfolio companies post investment, which for us, we're a venture firm that invests in the national interests of the United States and our allies. So critical technologies that we think can reshape not only the economy and businesses, but also geopolitics in modern times. And what's happening right now. We think that the, the, the market is essentially going through a technology cold war akin to the same thing that we had against the Soviet Union decades ago. I think we're going through that with a near peer competitor in many domains with China. The and so I think our strategy is built around that. So our right to win is helping companies, whether it be cybersecurity companies, AI companies, rare earth companies, energy companies, break into the government market. And we've helped our founders close over a billion dollars in total contracts with Uncle Sam since we started about eight years ago. And so when we think about why a founder would pick us versus somebody else out there, it's that level of differentiation that we're proud to have our founders reference us against.

A (13:40)

And do you compete to collaborate with the mega funds and how do they fit into the ecosystem?

B (13:45)

It's a great question and it's evolved over time. When we started, we were very much collaborative because nobody really cared about the thesis that we did. So we were sort of like a natural bolt on a strategic investor in many cases where a name brand multi stage firm would be doing this deal and we'd sort of see around the corner to say, hey, there's a large scale geopolitical imperative to this capability that let's help unlock this new line of business for this company. And so when we started, that's how the majority of the deals that we did got consummated. Nowadays we do many of those like that, but probably only about a quarter of the deals that we do, maybe a little bit more are of that same ilk. The majority of the other ones we're looking for are being those like first check, early stage, whether that be a pre seed or a seed stage investment where the founders are not looking for a 10 or 20, a $50 million initial funding tranche. They only need 500k to get up and off the ground. They only need maybe a million and a half, 2 million bucks to get up and off the ground or to hit that next milestone to unlock value for the company, for the market and for their investors. And so that's really what we're increasingly looking for. And I think given what's happening in venture capital these days and the intersection of our strategy with geopolitics, I think that's a nice place for us to fit. But we certainly don't turn our nose up at great opportunities at a series A where a name brand multi stage firm is involved and we can be strategically valuable and we have the conviction to back the company. We'll, we'll play there too as well.

A (15:05)

I'm sure a lot of people would love to get a check from a 16Z or lightspeed as a fund. Tell me about how that came about and tell me about how that relationship has evolved now that you're on your third fund.

B (15:15)

I mean, at the end of the day, this is a situation where I think I was very lucky. You know, I think in my, in my earlier career. Certainly luck is part of all of this and hard work is certainly part of it as well. But I was fortunate to work with some of the best over at Andreessen and then subsequently over at Lightspeed to really be mentored by the best in, in, in the world of venture capital and some of the most relevant funds, if not the most relevant funds that are out there right now on a multi stage basis. And so ultimately I had this Concept of creating effectively a private sector in Q Tel, for lack of a better term, you know, given my time, you know, representing our country in multiple different domains, I looked at very high esteem for what in Q Tel had done in terms of the mission orientation they have. But they are not a for profit enterprise. They're not a people, purely private enterprise where people can invest in that fund. I said, what if we created something that was like an inkyl, very similar mission. We still collaborated with those folks, but we completely privatized that sort of, that sort of like operating procedure and into a traditional fund model. And so went to the folks at Indreen and Lightspeed and you know, brought up that that's what I wanted to start and was very fortunate that they wrote the first checks into, into harpoon for us to get up and off the ground subsequently. That's, that's evolved. We still have some of the GPs there as investors in US who have invested in every single one of our funds. But the first fund is the only one that they actually committed to out of their core vehicles.

A (16:30)

You know, you mentioned this. You've been very lucky to be mentored. I actually think it's a skill to be mentored. And I believe that the best leaders also know how to be led. How do you balance that idea with the idea that some people are just unemployable and sometimes the best leaders are also unemployable?

B (16:48)

That's a tough one. But I totally agree with you. And I think it goes back to the concept of servant leadership that I learned in the military. Really hard to learn that on, you know, in any other situation. But ultimately having this total, it's not just respect, it's like it's really a love for your colleagues and wanting for them to be successful and knowing that you'll be successful if they are. And we had a concept of where leaders eat last. And so literally in the chow hall in the military, the leaders would be the last people to eat. And oftentimes during training that would mean that the leadership of, of the class sometimes wouldn't get any food or maybe we just get the scraps and but you, you sort of like got that respect by letting your people get and take, become taken care of before you are. And so I think that's something that I think every leader embodies. Whether they sort of like every good leader, whether they know it or not, they embody that, that sentiment because ultimately it's the people that are going to make the organization successful. And it's a leader that it's their job to actually sort of create that environment for that success to occur. But, but I think that you're right. Some, some people are unemployable at other organizations. Many of the founders that I, that we invest in, I think are probably not great employees at large scale company companies because they're so, they're so passionate about what they're doing and putting guardrails on sort of their vision is limiting and I think at some point creates a combustion chamber in a bad way at large scale organizations. And so you have to have them sort of like be freed to have this opportunity to make something more from their lives and from their pursuits. And so it's interesting, but they still embody those, those characteristics of taking care of their people, making sure that their employees are well provided for economically in terms of their, their vesting schedules, in terms of like what they're getting paid from a salary standpoint. I think probably most importantly, setting the vision so that everybody knows what they're there for and setting the vision really high so that people can feel like they're actually contributing to something of value beyond themselves. As you mentioned a little bit ago.

A (18:43)

Keith Raboy has this concept of barrels and bullets, which is barrels are these mini CEOs that basically define problems, solve them, and they could be at any part of the organization. Bullets are people that are really good that you tell them to do something, they go and do it. But they don't basically iterate on themselves. They're not entrepreneurial. And my belief is actually that you could train people. Certainly there's people that have a proclivity to be self sustaining. There's people that have, you know, no ingenuity or just like to follow orders. But there's people in the, in the middle. And I think you could actually empower them to do that. I do that. For the producer of the podcast, Walrose Always, it's both a joke and also true. I, for her, I'm the face on air talent. She makes sure the podcast runs, she makes sure that everything's going. And it's both because I want her to come to me when she needs something from me. And also I want to make sure there's no barriers in her way. And that's kind of how I look at how you could empower employees or anyone lower in the organization to start thinking like a barrel.

B (19:47)

I love that anecdote and I think that's dead on. I think the worst leaders that I've ever worked for or ever have seen are the ones who don't take any critical input whatsoever. And I think we can debate the best leaders, sort of like set the example of where we're going. It's very, very wide in terms of where that is. But I don't think that they say this is exactly how we're going to do it, get out of the way. I think that's sort of a recipe for disaster because it's very rare, if not impossible for a singular person to have every single aspect of a company's success sort of like in their head in terms of exactly what's going to happen. They solicit the input from the experts in every single line of their business. And I think the best leaders on the battlefield aren't necessarily the experts at any dimension of what they're doing. They solicit the input and actually synthesize the information to make the best decision possible. And so I think that's extremely difficult to do because a lot of the leaders, as I mentioned, may not want the input from other superiors. They may not want to be told from a top down standpoint. But being no, but having the humility to be told from a bottoms up standpoint I think makes all the, all the difference in the world whether you're.

A (20:52)

Getting feedback from your superior or from who you're commanding. The consistent thing there is that you're focused on the mission. It's not actually the process, it's do you exactly the mission more important than your own ego and is it more important for you to go with what you want to do or to win the battle totally.

B (21:10)

And that is one of the hardest things that I've had to overcome. And I know many people have a hard time overcoming. Everybody's in love with their own idea. I don't care who you are, everyone thinks their own ideas are the best ideas. But if you take, just take a second to recognize that and realize you're going into a conversation, I don't care if it's with a superior or subordinate, just recognizing sort of like that framework that I'm going to think I have the best ideas and putting that aside so that you can hear other people's ideas in a more, you know, level headed, clear way, I think you'd be surprised with what you can accomplish.

A (21:43)

I've been working on this concept that some people have high beta ideas and some people have low beta ideas. In other words, some people have a very high hit rate on their ideas and some people have a crazy low hit rate. Maybe it's 30 or 40% but have these 100x ideas that move move the field. You specifically invest in some of the most innovative companies in defense and it's not just a SaaS startup. Do you see that to be the case?

C (22:09)

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A (23:01)

Is there this trade off between hit rate and how good an idea could be?

B (23:07)

I think that the less aspirational ideas have a very high hit rate but they're not going to clear the bases. And so I think that's one of the challenges for us as investors is to understand I think almost every idea that we're pitched is a good idea. Yeah, that's a pretty good idea. But almost is unsatisfying because the magnitude of some of these ideas just we don't see as being, you know, category changing or you know, changing to the geopolitical, you know, you know, apparatus in terms of ensuring that our country and our allies at the forefront. And so we almost definitionally need to look for things that appear to be bad ideas. You have first glance and realize that we need to control our own bias in those first meetings and say this just sounds like such a terrible idea, this sounds like a bad idea, but if it ends up actually working, it does change everything. And so we're almost looking for in the pitches with founders that we meet, we're looking for things that, you know, it's too polite to say, oh, they appear non consensus or non obvious or just we're looking for things that just seem like they're bad ideas because, you know, all the good ideas are going to be, you know, maybe okay outcomes. But I think that's one of the unique advantages of being a venture investor is we're beholden to the power law. Truly the Only thing that matters is how big do the winners get. It does not matter how many losses you had if you have big enough winners. And that's a really difficult thing to come to gra. To, to to grips with. It's a difficult thing to come to grips with just for like an what if you made every personal decision that way? Like I'm gonna, I'm gonna do all these personal things and you know, maybe one, you know, non financially related. It's sort of at odds with sort of normal life. It's at odds with every other investing discipline that I know of. So I almost don't categorize venture capital investing, you know, in entre tech enabled entrepreneurship as almost being an investing discipline.

A (25:07)

It's very different, it's completely idiosyncratic from any other asset class. Which is why some of the people that lose the most money in venture and do it the worst are the people that are very good at private equity are very good because they're a little smart enough to know different things like sizing and diversification, but they actually miss the idiosyncratic aspects of the asset class. Another way to kind of put numbers behind this intuition is if you have even a 40% chance to get a 3 to 4x that might be a 1.2x to a 1.6x. Yep. But if you have a 10% to get a hundred x, that's a 10x expected value. So that's an order a 7x difference.

B (25:46)

Totally. And that's so hard to put a weight against because you're at the end of the day sort of cherry picking variables. And it's never perfect but it's a good framework to make these decisions under. And that's how we to try to do it as well. It's like does this have a 10% likelihood of making it a 5%, you know, chance of making it to the the promised land in terms of where we want to go with this company and if it does, we shouldn't be afraid to pull the trigger and do the deal. But that's just not the way it works in private equity or real estate or any traditional conventional asset class that's out there. Venture capital really isn't an asset class, it's an access class. That's something I learned from Ravi at Lightspeed. Like it's very, very different. You need to be in the right companies and if you're not, nothing else matters.

A (26:28)

Yeah. All the research whether Professor Steve Copland, Professor Gregory Brown, they seem to believe that venture is idiosyncratic in that the founders actually choose the investors and every other askfast known known to the world. It's actually, it's idiosyncratic totally.

B (26:40)

It's the opposite way around. When I have LP conversations like how did you pick this company? It's like, dude, this company picked me. Like I was just like, we sold ourselves. It's an interesting way to put it and you know, distilling things down into like very simple, you know, ways, a framework. I think a lot of VCs have a lot of ego. Maybe I do too, who knows. But like, I think that like at the end of the day some people like hire us limited partners hire us to then turn around and convince a certain subnet of subset of companies to take money from us. And I think nobody really describes venture that way, but I think that we truly are hired by our limited partners who have picked us to intelligently go and sell their money through us into the right companies versus the opposite way around. And I think that even the top venture firms. Mark, Mark has been there on the record saying this many times. Like one of the first questions they ask is like, you know, why us? Like why are we so special? And if you know, Mark and others at these esteemed like world class venture firms ask that question, shouldn't we be asking that question of ourselves? And we do every single time.

A (27:34)

I don't know who, who wrote this tweet. I would, or else I, I would give him or her credit. But my favorite tweet is venture is 99% saying no and 1% begging. I think that sums up the life of venture capitalists.

B (27:49)

I think that that's a good one. I should copy that and prolifera. They proliferate that across my team because I think that's right. Like, you know, we, you know, as much as everybody out there wants to think that they don't beg for things that are above that. I think for the special ones, everybody sort of does. They're all competitive unless you get lucky and you sort of get the drop on something before it has the chance to get competitive. And you're have a good and you have a strong enough sales process effectively to sell your capital before it has a chance to get to somebody else. I think that could be the exception.

A (28:19)

So you mentioned Mark at Andreessen Horowitz. You also were mentored by John Vranos at Lightspeed and he taught you how to go, how startups go about getting product market fit. What's the best practice when it comes for a startup to go and get product market fit.

B (28:33)

Some context behind the question. John Vrionis was a pupil of Andy Ratcliffe from, from Benchmark. Really Andy was one of John's mentors. I was fortunate to take the same, you know, class at Stanford taught by Andy that John did, you know, 10 years prior to the product market fit class. And so a lot of my thoughts on sort of like founders finding product market fit is, you know, informed by Andy and by virtue of that, informed by John. And it's something that's really, really critical to I think, what the best venture capitalists in the world do. The best venture capitalists, I think aren't looking for unproven value risk. They're, they're, they're, they're taking it with that value in terms of what the technology could provide to the ecosystem. As for like the base case for the company and taking that sort of like second order question, which is scaling risk in the early stages, that's the earliest innings of scaling or finding product market fit. So pre, like true breakout scaling, but actually finding your first customers that are referenceable against each other in that core customer segment. And so ultimately what I've learned from John and you know, through Andy and others is that, you know, having a 10x innovation is one of the prerequisites for finding product market fit because nobody changes what they're doing in their pattern of life. Nobody switches who they're buying from unless you have a 10x better solution on a price performance, you know, paradigm. And so that needs to be the starting ground. Is this 10x better than what the incumbents or what the existing industry status quo provides? And then secondarily the, the key question, you know, to building out product market fit is who to who, like, who is uniquely desperate for this? If you have a TEDx solution, but nobody's truly desperate, you're never going to actually hit product market fit. You got to get that cross reference ability of customers and a single customer cohort to all reference each other and actually start buying, you know, buying based on that voice, you know, that, that, that reference ability of your platform and a narrow niche before you even hit the next niche. And so I think when we think about investing in companies, it depends on the stage. Certainly at series A is when you'd expect to have product market fit, but you want to have some early glimmers of being able to do some diligence and understand how big is this pain that these customers are up against and if they had anything at all out there to solve that Pain, not just a vitamin to make it slightly better, but a true unlock underwritten by technology. Can we confidently say that they would actually buy that if it existed at the precede or seed stages? And so that's really a hard question to diagnose at those stages, but that's why we do a ton of offsheet references. You know, we do a lot of customer calls to understand the pain because if the pain isn't there and it's not super acute and the customers don't realize they have a pain, they're not going to pay to solve it. And ultimately I think that's where most companies fail is a lack of product market fit. They don't fail because they can't build the technology typically they don't fail because of any other numerable reasons. They just haven't found the right dogs to eat the dog food. And you know, that's, that's been our experience at least in our, at our franchise.

A (31:28)

And I agree with this customer pain point, the vitamin versus painkiller analogy, but you, you're betting more on the team than the product or the market. The team versus those two things more important to you.

B (31:40)

Conventionally in venture we have the three legged stool of what we're looking for as early, early stage investors. Are we, you know, world class team best in the industry of what they do. The Michael Phelps is that I used to compete against. Are they like the Phelps of their arena? I know what it's like going up against the Phelps and you don't want to do it. If you, if you can, you can avoid it. And so can we find those people, you know, secondarily like is the market so desperate for a solution that they say they're building? And thirdly, like is there a true technology unlock that's possible now that previously wasn't possible? That's sort of like the inflection point that we're looking for. But ultimately I think it does come down to the team because the best founders in the world are six months, maybe 12 months in front of the best investors in the world in my opinion. I think they are the ones who are leading the market. Venture investors are the ones who are following the market fast followers and the best investors are very fast followers to what the entrepreneurs are saying and doing. And so I think it does come down to the team because if you have the right team, that is the Phelps or equivalent of their domain, they have such a deep degree of understanding with the early customer and such a deep degree of, of understanding of the technology ends up being sort of a package deal. So I tend to think of it as like, you can sort of like kill three birds with one stone if you have the right team. It's not that we don't look into those other things and pressure test it and try to understand it, but ultimately the best teams come with those other two aspects of early stage decision making, early stage start decision making sort of like embedded in the DNA of who they are. And that's why I think the team is the most important. And I think beyond that, like when things don't go according to plan, when the technology inevitably breaks and it's not working as well as we thought, like, are they able to actually solve those problems very quickly? Are their innovation cycles very, very fast? Are they able to adjust, not the technology, but adjust like their target early adopter customer cohort intelligently if they think their product's best situated at scale for the enterprise? Maybe they don't start at scale with the enterprise. Maybe they have to knock down some SMB or, or other startups, things like that, that are more desperate right now to sort of like get that customer reference ability built up to the point where a large scale Amazon, Microsoft, Apple, so on and so forth will take them seriously enough to have that conversation. Not everybody can go straight to the top. The way that I look at it.

A (34:00)

Is product and market is the thing, but the team is upstream of that and the team is the one making the product and picking the market. And then also the team is, even if it's a little bit behind a team that has a better product or a better market, today, the team compounds at a rate that's higher than actually the product and the market compounds. So it's not that the product and the market aren't a thing, that is the thing, it's just that the team is upstream of that.

B (34:27)

I totally agree with that comment. And I think one of the hardest things to realize is that market effectively always wins. You can have the best team in the world, but if you're operating in a crummy market where nobody's buying, in other words, by market I mean sort of like the willingness to pay. People buying, people conducting commerce. If nobody's buying, you're sort of dead to rights. And I think we're seeing that right now with the AI wave that's going on. People are buying in droves. Like the market is here definitively like the fastest scaling companies in history from a revenue standpoint are happening right now. The company at a huge magnitude, billions of dollars in sales in a very short period of time in the context of OpenAI anthropic and others are sort of like, you know, not too far behind. So market sort of wins. And so if you're a brilliant founder right now and you're sort of not operating in a space where there's a lot of, you know, money flowing from a revenue standpoint, you have to sort of ask the question why? And maybe there's a logical reason why why that's the case. But I think having this sort of like that nuanced understanding is what we look for with the founders that we're backing and like why they're sort of like picking the markets. They are.

A (35:30)

Sometimes founders can be so mentally tough that they end up iterating on the small market instead of actually pivoting into it. Sometimes they're too hard on themselves or they're too hard work.

B (35:40)

Totally. We're going through this right now with a founder of ours who has this really difficult conversation about firing his existing customers because he was a non native AI company to start and obviously AI, you know, everything's being rewritten and re architected effectively and you know, his technology has some great bulge bracket, amazing customers under sort of like more of a SaaS operating model that wasn't, you know, AI native and AI first, but we think, and so does the founder, that there's like a logical extension of that capability to be a core piece of, you know, the AI infrastructure that's being recreated or being creative for the first time right now. And you know, I think he's going to fire all his existing customers to pursue that. And so that's, you know, takes a whole, you know, gut check to say the least when you think about that. I mean, potentially alienating, you know, millions of dollars in revenue with very reputable, you know, customers and you know, going through that reset, you know, to pivot into a more attractive market with the team that's been focused on something else and the investor sort of potential backlash. Maybe not everybody agrees with it or is supportive of it because it's different than what they originally backed. And so when you talk about mental toughness and resilience, I'm constantly in awe with the toughness and resilience of the founder community and what they have to go through to build things of worth. They sacrifice a lot and there's a lot of sleepless nights there. And that's something that maybe I'm a little bit crazy, but it's something aspirational and feels super exciting. To be a part of when you have the, when you're around people that are, you know, giving it their all. I don't care if it's on the playing field, the battlefield, or in the world of entrepreneurship. There's something, you know, aspirational about that and it makes it that much easier for, you know, the people that they're surrounded with to get up and echo that behavior.

A (37:19)

And for somebody like this founder or VCs that want to become more mentally tough and don't have the opportunity or don't have the desire to go to Olympics OR Do Navy SEALs, is there a light version of that? How does a venture capitalist or a founder go about becoming more mentally tough?

B (37:36)

I think it starts with how we were taught in the SEAL teams to recognize that the only easy day was yesterday. And what I mean by that is that yesterday is gone and it's done. And so inevitably it's easier than what I'm going to undertake today. And so if you have that mentality that tomorrow is going to bring challenges, but I'm prepared for those challenges, to overcome them, just like I have these historical challenges. I think you're, you know, at a starting point in the right frame of mind. But, but ultimately I can't tell you that there's, you know, running a marathon or, or, you know, doing an, you know, a, a ironman is the thing that's going to get you there. But I, I do think that anytime you can sort of consciously put yourself into a position of discomfort in a low stakes environment, I think it builds resilience for when stakes are higher. There's a reason why in SEAL training, many say that the training is harder than the actual job itself downrange, because you are putting yourself in a low stakes environment to be conditioned for something that's extremely hard and extremely arduous. So that if and when things go really wrong, you know, professionally thereafter, you're prepared and have a level mind and know how to handle it. I don't think in the business world we think that way very often. So I think it does come down to sort of like self education in many ways, because I don't know any companies that sort of intentionally put their employees through a meat grinder to say, hey, we're going to make sure that you're resilient. So I think it comes down to the individual. It's really like build that resiliency into yourself, which I think benefits you regardless of what you're, what you're undertaking is, is just like that understanding that to do anything that's meaningful in life, it's going to be hard. There is no, and I think anybody that's listening here, if you're, if you're thinking back on your own life, your greatest achievements that you've ever done, were they the easiest ones to, to achieve? I think the answer's always no. They're probably the hardest ones. The things that you're most proud of as an individual are the things that you actually saw it through and you, and you still succeeded and you didn't give up and you saw around the corner. That doesn't mean you won every single time. That probably means you lost 10 times out of 11 and that one really paid off. And so I think that that's something that I think every founder knows, certainly the repeat founders do. I think the best venture capitalists know that by virtue of the business model. And you still have to step up to the plate and not be afraid to strike out. You gotta swing for it. And that's where it's, it's really tough sometimes.

A (40:00)

And I'm really trying to put a finger. I'm usually very good at distilling people's strengths and their brilliance, and I'm trying to take, put a finger and understand exactly how you think. So tomorrow, if you were to get, let's say, 150 pay questionnaire that you had to fill out, what would be your first thoughts? Oh, this is hard. This is great. And walk me through your exact thought process is like when you get a difficult task.

B (40:23)

If I had 150, yeah, I would at face value, like, I did not expect this and I'm not excited about it, but you know what, depending on the context, if it's for a large institutional LP or something like that, what a blessing. And how lucky am I that this person in this group that's probably, you know, tens of millions of dollars in potential investor interest sees enough in us that we actually have to go through this process to actually consummate this relationship. And so, and I think that's, that's literally been the case in terms of that long of DDQs, as, you know, in, in the, in the fund management landscape.

A (40:54)

Not a purely hypothetical.

B (40:56)

No, nobody's super excited about that. But ultimately, what, what sort of like a testament that they actually would, you know, look into you so deeply. And so it's a weird thing too, because when the, when we're, when we're so founder oriented, we want to be so respectful of their time, but at the same time we want to Go as deep as possible. And rather than, you know, a founder thinking that that's like a bad thing or annoying, it's like, wow, that, that, that should be sort of like gratifying that, like, somebody is so curious and so interested that they want to go that deep to understand the business and the background and what your vision in such detail. And I think it's the same thing as we think about it with our LPs, is like, you know, the ones that do the most work on us. I'd be lying if I didn't say, like, ah, this is a little bit overkill sometimes. Don't you maybe already, you know some of this stuff. But honestly, how flattering and humbling is that that somebody wants to go that deep on the organization to understand every little tiny nook and cranny of everything that we've ever done. And I think that that makes it actually worth it when you frame it in your mind that way.

A (41:51)

So part of your resilience is actually a optimism that's embedded in the way that you think about things.

B (41:58)

Absolutely. And I built probably from my swimming days too, where how lucky was I that I had the opportunity to swim for some of the best people in the world who pushed me to that level and who I pushed, frankly, as well as the athlete, to, like, stay longer, to do more with a goal of winning an Olympic gold medal? That mentality is not shared by everyone. It is shared by the best that I've ever competed against. And the best that now I, I work with is that they constantly want to take it a level further. And is it harder by taking a level further? Sure. It's not just a marginal, you know, you know, incremental 5% hard. I think that last, like, once you get to like, 80%, that last 20% you want to do, I think is like the 80% of the effort. Like, you know, if. If half of life is just showing up, the second half is way harder. Way, way, way harder. So show up. But ultimately realize that just showing up is the easy part. The hard work starts thereafter.

A (42:57)

What's one piece of advice you wish you knew before starting Harpoon a decade ago?

B (43:03)

I wish I knew what a limited partner was. I had no clue that's how ignorant I was in terms of, like, what they truly were. But I think that that's actually synonymous with some of the best founders that we've ever backed. They're industry outsiders. I'm not trying to compare ourselves to them, but I think I see some parallels from how we started what we're doing, like people that have a non consensus opinion that's very different from the status quo and sort of like enough self confidence and enough of the thesis to go out there and try, but not so much scar tissue that they know the reasons not to. And I think that that's one of the key advantages that we had as a firm. If I would have known all of the challenges that are around every single corner might not have started it, right? But like, I think that ultimately ignorance was bliss in many ways. I go back to a piece of advice I got from Chris Dixon. Early days in our fund. So maybe this is probably it. When we started our fund, we had so many rules, pages of rules of what we would look for valuation at entry, ownership targets, sectors, percentages in each sector, all these rules. And I ran this by Chris and he said, Larson, you know that rules are the enemy of returns. And I'm like, okay, like what's, what's he mean by that? And he attributed to Peter Thiel that that quote, he's like, your fund is either going to be successful or not based on an outlier deal. Like Venture is a game of, of outliers based on an outlier deal where you broke maybe every single rule that you set for yourself on valuation, target ownership, check size, all of this stuff. And that one company is the one that's going to return the fund multiple times over. And it's not going to be based on any of the rules that you set out because you thought you were smart. And so I think that was really eye opening to me, that singular conversation. And fortunately that happened, you know, early in my Venture career wasn't, didn't predate Harpoon, but it was shortly thereafter, a year or two in. And I think the challenge with that and the nuance is like, it could be a very slippery slope. If everything's the exception, then nothing is truly that special. If you justify every single deal, say, oh, this one's the exception, that one's the exception, then nothing's the exception, everything's the exception, which means there's a new rule. And so in short, I think looking for those exceptions, those true outliers that you're not predicting that you'll see, that you're not predicting what they're going to be. And just being so convicted that you need to do this deal is really pretty much the only thing that you should be doing at the end of the day if you're going to play by that framework that Chris laid out, if you're only looking for the exceptions versus things that fit your parameters. I think that's where the venture model truly works.

A (45:39)

That is why venture is an art. I think about this whole concept, this meme that if I knew what I knew now, I wouldn't have started. I thought a lot about that. Why does a so many successful people say that? And I think that's because they've underestimated the challenges and they've underestimated their resilience. I actually think it's a misnomer. I think if you had known the challenges and you had known your resilience, you would have done it. But I think people underestimate the challenges, but they also underestimate their resilience.

B (46:07)

Totally. But you still need that push off the ledge. You know, I saw this fun. You need that ignorance. I saw this flag that was in somebody's startup company. I think it's a really, really smart one. Maybe one of the Gundo companies or something like that, because they have all the cool paraphernalia, said we do this not because it's easy, but because we thought it would be easy. And I think that that is totally the best framework for anybody starting a company. Everybody thinks it's going to be easy at the end of the day, and maybe it feels like it when you get that first round done, or maybe that first product that works, that first customer. But that's when you realize the only easy day was yesterday.

A (46:40)

On that note, Larson, this has been an absolute masterclass. Thanks so much for jumping on the podcast. Look forward to continuing this live.

B (46:47)

Thank you, sir.

A (46:47)

Such a pleasure to be here. Thank you.

C (46:49)

That's it for today's episode of How I Invest. If this conversation gave you new insights or ideas, do me a quick favor. Share with one person in your network who'd find it valuable or leave a.

A (46:58)

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C (47:00)

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