E390: Ron Rofé on AI, Founder Obsession, and Venture Returns

Summary

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Podcast Summary: How I Invest with David Weisburd – E390: Ron Rofé on AI, Founder Obsession, and Venture Returns

Date: June 15, 2026
Guests: Host – David Weisburd; Guest – Ron Rofé (Rainfall Ventures)

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Episode Overview

In this dynamic episode, David Weisburd sits down with Ron Rofé, Managing Partner at Rainfall Ventures, for a candid deep-dive on why he resists the all-in AI investment bandwagon, his philosophy on venture capital returns, and the critical traits he looks for in founders. The conversation explores the pitfalls of consensus investing, the supreme value of founder obsession, building resilient investment strategies across cycles, and how authentic, long-term relationships power both returns and personal growth in venture capital.

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Key Discussion Points & Insights

1. Non-Consensus Investing vs. AI Hype

• AI FOMO in Venture: Most VCs are currently focusing almost exclusively on AI opportunities; Ron intentionally avoids chasing the trend simply for its own sake (00:00–00:08).
• Founder Commitment over Sector:
  • Ron: "A good deal can come out of anywhere and out of any industry. How many investors over the four years when the Airbnb founders were starting didn't even pay attention to them, just some guys trying to rent people's apartments...but he missed the fact that there was an amazing team that was resilient and wasn't giving up…" (04:28).
  • Ron prioritizes deep belief in the founding team and longevity over fleeting industry excitement.

2. Pattern Recognition & The Power of Early Founders

• Value Creation Before the Hype:
  • Host: Cites Nico Bonatsis’ research: 50% of industry value accrues before a vertical even has a name, highlighting the steep advantage of non-consensus investing (06:02–06:30).
  • Ron: Endorses this: “100%.” (06:29).
• Long-Term Returns:
  • Ron emphasizes that the real challenge and alpha play is showing discipline to invest in founders before the pack jumps in, and riding out cycles with them: “I think it's a long game…you want to find the teams that won’t give up. And if they won’t give up, then they'll catch those tailwinds that they need to catch.” (07:01).

3. The Archetype of the ‘Obsessed Founder’

• Case Studies of Founder Passion:
  • Ron describes investing in Robinhood and Webflow — both led by founders who failed multiple times and persisted for years in the same space, eventually catching macro tailwinds and emerging as leaders (07:18–08:14).
  • Ron: “We’re not looking to invest in ideas and we’re not looking to invest in technology. We’re looking to invest in founders that are obsessed and extremely passionate about what they're doing and they won’t give up...” (08:44).

4. Traits Ron Looks for in Founders

• Ron’s Founder Value Framework:
  • Ron: “In my office on our wall, I have our five values that we look for in founders, and it's humility, persistence, resilience, ambition, and vision.” (15:55).
• The Importance of Humility:
  • Ron: “Humility is important for founders because they pick up on insights instead of being stuck on their way. They listen to the users and hear what they want…And I've seen the best founders have those humble traits and end up being much more successful.” (18:12).
  • Alma Case Study: Founder Harry Ritter pivoted from a WeWork-for-therapists concept to a digital telehealth platform by listening to therapist and market feedback, leading to exponential growth (19:16–21:43).

5. Courage & Non-Consensus Founders

• Difference Between Consensus & Non-Consensus Founders:
  • Ron: “I would say courage because when someone is doing something that not everyone else is doing, it shows that they see something that others aren't seeing, but they're not afraid to do things. That's not popular.” (10:23).
• Intrinsic Motivation and Long-Term Obsession:
  • Ron’s investments in founders like the creator of StudyEdge and Curio XR showcased the compounding effect of founder passion carried over decades, even when sectors weren’t “sexy” (11:00–13:17).

6. Building Networks, Relationships & Value

• The Power of Relationship-Driven Investing:
  • Host: Observes that many legendary portfolios (e.g., Marc Andreessen, David Sacks) came from investing in people they already knew prior to their companies (15:04).
• Backing Founders Pre-Idea/Pre-Business:
  • Ron: “If I have the luxury of getting to know them over time and then they fall on something that they're passionate about...then ten times out of ten, I'll invest in them.” (15:55).
• Persistence in Relationship Building:
  • Ron shares stories of sticking with founders (e.g., Robinhood’s Vlad Tenev) over years, including when initially turned down for an allocation, and how this persistence almost always pays dividends for both LP returns and sourcing (28:31–34:32).

7. Case Study: Getting into Robinhood

• The Power of Going the Extra Mile:
  • Ron recounts flying to meet Robinhood’s founders when allocation was closed, then staying in touch for over a year, helping as much as possible — which eventually led to a $3M allocation at Series B and a 35x+ return (28:31–34:32).
  • Ron: “You're the only one that stayed true to what you said and stayed in touch with us…If you want, take anything you want. And I said, okay, great, I'm in for 3 million. And a lot thought that I'm crazy for doing that because I'm an early stage fund and it's at a 300 million valuation.” (31:05).

8. Non-Transactional Networking & Value Add

• Philosophy on Pay-it-Forward Networking:
  • Ron describes helping people not just for immediate return, but focusing on long-term persistence and repeated value add — which often leads to access and deal flow down the line:
    • Ron: “It's important not to sleep at the wheel, right? This is very much a relationship business. So long as the relationships continue and continue for a long time, then eventually you'll get into the company or work with those founders that you want to work with.” (39:10).
    • Host: “Behaviorally, what are the odds that the person that has done this for the last year is going to continue? Very high, over 80% probably. What are the odds that this person that's promising you to do something, at best 50, probably 25%. It's hyper rational to actually go with somebody that's exhibiting the behavior of value add to give that extra allocation.” (42:00).

9. Philosophical Takeaways & Life Lessons

• Timeless Advice to His Younger Self:
  • Ron: “Nobody knows anything. Do what's good for you with your own conviction and follow your own path.” (43:27).
  • Draws from stories of Netflix co-founder Marc Randolph admitting that even founders can’t predict greatness, implying humility and trust in iteration and conviction is key (43:45).
• Final Thoughts on Ego vs. Humility:
  • Host: Uses the “rose” metaphor: “You want to be like a rose. It lets sunlight in and lets water in, but if somebody tries to go and pluck it, it has thorns.” (22:12)
  • Ron: “You want to find a fair balance and I think that fair balance needs to come with commitment and resilience.” (26:56)

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Notable Quotes & Moments (with Timestamps)

• On Contrarian Investing:

  • Ron: “AI is another technology that is existing now and there'll be more technologies. And I want to find the teams that I know...are going to keep working on the problem...and they'll start using other technology along the way, like AI.” (01:28)

• On Opportunity Cost:

  • Ron: “I think that the opportunity cost for missing out on working with an amazing team is much higher than on investing in what everyone else is investing in right now.” (03:57)

• On The Founder Obsession and Learning:

  • Ron: “When you work with amazing founders, you learn amazing pattern recognition of what works with good founders to make you stronger, to find more investments.” (05:15)

• On Pattern Recognition:

  • Host: “50% of all value in every space was created before that space had a name.” (06:06)
  • Ron: “100%.” (06:29)

• On Humility:

  • Ron: “I think ego is a very good thing if it's used in the right way...But humility is very, very important for founders because they pick up on insights instead of being stuck on their way...” (18:12)

• On Persisting Through Rejection:

  • Ron: “I won't say it's make it or break it. What I will say it's these touch points that show to founders that you care and you're willing to help. And a lot of VCs I think shy away from. If we can't help a lot, we're not going to help at all. And then they don't have good relationships with the founders.” (33:24)

• On Fundamental Unpredictability:

  • Ron: “Nobody knows anything. Do what's good for you with your own conviction and follow your own path.” (43:27)

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Segment Timeline

• 00:00–03:22: Debate on AI consensus investing; Ron’s focus on founder quality and cycle resistance
• 03:22–07:01: Opportunity cost and non-consensus investments; Airbnb, Robinhood, and recognizing overlooked teams
• 07:01–10:57: Early founder obsession; pattern recognition; case studies (Webflow, Alma, Better, etc.)
• 10:57–13:17: The psychology and archetype of non-consensus founders; deep dives into StudyEdge, Curio XR
• 15:04–17:44: Impact of prior relationships and “pre-idea” founder bets; Ron’s framework of five traits
• 18:12–21:43: The importance and paradox of founder humility; Alma’s pivot story as a masterclass in humility-led success
• 22:13–27:48: The “rose” analogy and balancing humility, resilience, and ego
• 28:31–34:32: Detailed Robinhood bet: relationship building, persistence, and game-changing introductions
• 34:37–39:09: Ron’s entry into VC; importance of not being locked into fund theses
• 39:10–42:57: The mechanics and returns of paying it forward and persistence in relationships
• 43:04–44:50: Ron’s personal background; timeless advice; why venture and life reward conviction and growth mindset

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Tone & Takeaways

Ron Rofé’s tone throughout is direct, grounded, and pragmatic. The episode is peppered with war stories and candor about missed deals, founder obsession, the irrelevance of hot trends to long-term venture returns, and the compounding effects of authentic, relationship-driven investing. The major lesson? True edge in VC comes from repeated bets on founders who can’t let go of their obsession, coupled with humility, resilience, and relentless—not transactional—helpfulness.

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Summary by an expert podcast summarizer.

Transcript

[Host]

Ron, nearly 90 plus percentage of venture capitalists today are exclusively investing into AI. You're not? Why not?

[Ron]

I would say that an amazing team and business can come out of anywhere, out of any industry or out of any channel. And I have invested historically in AI companies, but it's not my focus. And the truth is I have no focus but to find amazing teams to invest in. And the problem I had over the years after being in different cycles is that when there's consensus investing and everyone is focused on the same thing and a lot of VCs are throwing money there, it clouds the market. And it's hard for me to understand if the team I'm looking at is truly solving a problem they care about or they're just excited about an industry where there's a lot of money being thrown there and I don't know if they're truly committed to it long term. So that's the reason I try not to focus on what everyone else is doing. Having said that, I have a handful of AI companies that I've invested in that were a little bit before all the excitement and hype and it's teams I've gotten to know over a long period of time. So I have a company called Convey Ex Nvidia Founder Immigrant that I really, really trust. And I know that he's doing it for the right reasons and won't give up. And no matter how challenging it will be or when the VC market dries up for AI, he'll still be working on the problem he's solving. We have Harmonic that Vlad Tennant from Robinhood and Tudor started. I invested in IT two and a half years ago. I know Vlad from our investment in Robinhood for many, many years and I think it's extremely exciting. So it's not that I say no to AI, it's just I want to make sure that the team I invest in is the team that I know is committed to something. And I think AI is another technology that is existing now and there'll be more technologies. And I want to find the teams that I know that are going to keep working on the problem in the customer segment and industry that they're excited about and they'll start using other technology along the way, like AI.

[Host]

Right now you referenced other market cycles and how you've seen consensus investing go wrong. Maybe double click on that and give me a couple examples.

[Ron]

I can say that I like to focus on the positive and what went right for us. And I can say that, for example, with Robinhood, we were early Investors there is that when we met Vlad and Baiju, no one was looking really at fintech at the time. Everyone at the time was looking at the on demand economy, the sharing economy. SaaS was a big field at the time. And sure, there are amazing companies that came out of there, but I saw an amazing team and I didn't want to miss out the opportunity on working with the team that knew the space really well at the time. They were working on high frequency trading platforms for institutions, financial institutions, and I saw this amazing team, they knew the problem really well, and I didn't want to miss out on the opportunity to invest in them. So I invested in it. But if I would have just focused on the on demand sharing economy SaaS, maybe I would have made some good bets. And I did make some good bets in that space. But I didn't want to miss out on working with a team like that

[Host]

just to steal man. The argument of investing almost exclusively into AI today, the argument for investing almost exclusively into AI is that the outcomes are just so big that every dollar, every incremental dollar, the opportunity cost is too high to invest into other spaces. In other words, the smart VCs, they're not saying that there's no interesting consumer companies, or maybe space companies or American dynamism companies. They're just saying that the opportunity cost and the cost of capital for not investing into AI is just too great of a risk.

[Ron]

I think that the opportunity cost for missing out on working with an amazing team is much higher than on investing in what everyone else is investing in right now. And I think Robinhood is a good example of that because again, at the time, no one was looking at fintech and I saw this brilliant team, I backed them and they became a category leader. So a good deal can come out of anywhere and out of any industry. How many investors over the four years when the Airbnb founders were starting didn't even pay attention to them, Just some guys trying to rent people's apartments. I know an angel investor that was at the same YC batch with them and was sleeping on their couch and he thought they were dumb. He's like, what are these guys doing making cereal and serving it to people at their apartments? But he missed the fact that there was an amazing team that was resilient and wasn't giving up and continuing to work on a problem that they were getting more and more familiar with and then eventually became an extremely successful company and a category leader. So I think the opportunity cost of missing out on a team that has high resilience, knows a problem really well, and won't give up. And the fact that they won't give up makes them more and more educated and smarter about what they're trying to crack. Is the highest opportunity cost because you'll miss out on working with an amazing team that can become extremely successful. And then the additional opportunity cost with that is that when you work with amazing founders, you learn amazing pattern recognition of what works with good founders to make you stronger, to find more investments. And if those founders see that you're value add and friendly and super supportive, they'll introduce you to more founders along the way. I think that it's an important thing. My approach in investing is not to invest in the thesis or the hot industry that's now it's my job as an investor is to find pattern recognition with amazing founders. And if I don't find that, then the opportunity cost is extremely high.

[Host]

One of the top early stage investors, arguably of all time, Nico Bonatsis, he was at general catalyst for 15 years, made the Midas list. He's found the exact same thing, which is he did a study with his partner, Michael Verdict. They now spun out and run this fund called Verdict Capital. And they figured out that 50%, 5 0% of all value and every space was created before that space had a name.

[Ron]

100%.

[Host]

I agree. And kind of take a step back and you look at that 50%. Okay, well, I'll focus on the other 50%. The problem is that that 50% comes in the first 18 months. The other 50% comes over the next two decades. So you have this rapid growth in returns and even more rapid growth in multiple, followed by what you could call the erosion of alpha. So maybe some nice returns for a couple of years, then some less nice, and then at some point you're just at beta.

[Ron]

I think it's a long game, 100% and it's knowing how to get in early with amazing founders and then see that they are committed long term. And again, it's starting with how we started the conversation, is that you want to find the teams that won't give up. And if they won't give up, then they'll catch those tailwinds that they need to catch. So for example, we're investors in a company called webflow and it's done extremely well for us. Along the way. I sold positions of it and it more than returned my first fund. And I remember meeting the founder and he started the company seven years before he. He failed three times. And on the fourth time, that was when I invested. And he saw something over the years that others didn't see and he just kept going with it. The no code movement and people wanting to build and not rely on engineers. And so he kept going and kept going. And then finally when we invested, he started seeing tailwinds along the way that made him successful. So I couldn't agree more with you.

[Host]

I think that's one of the most underrated founder archetypes and a founder that's obsessed with the same space.

[Ron]

Right.

[Host]

I invested in better when Joey Levy, and he's been in the gaming space for his whole career, which at this point is a decade or so. Scott Painter, who famously has raised over $10 billion in venture capital, has been the car space and just the earned secrets and the information and the network and the profound insights from the customer that you get by going after the same space over and over, even if the previous companies completely fail is such an underrated thing.

[Ron]

I couldn't agree more. That's exactly what I'm saying. We're not looking to invest in ideas and we're not looking to invest in technology. We're looking to invest in founders that are obsessed and extremely passionate about what they're doing and they won't give up and will they be right all the time? No, that's not the reality of things. But they will keep trying and learning and trying and learning and keep progressing and not have the best idea off the bat. We don't look for an amazing solution. We don't look for an amazing idea. We look at founders that care enough about a problem that will keep reinventing good ideas to crack the problem they care about. And I have it. Our most successful founders have been working on companies for years and years and years and are still obsessed with it. I had Vlad Tenev from Robinhood over at my house for Shabbat dinner six months ago and I just noticed him speaking with some of the other guests and I realized, like, why he's such an amazing founder. And because the answer is he's already working on Robinhood for 12 years and he was still showing to guests a new product feature that he's working on for Robinhood that he's excited about. Like he started the company yesterday. And that to me is the founders you want to invest in, the ones that are going to be passionate about it for over a decade.

[Host]

You said something earlier which was very subtle but powerful, which is one of the benefits that you get from investing into spaces that are non consensus is they Have a very specific type of founder. Double click on that. What's the difference between a founder in a non consensus space and a consensus one?

[Ron]

I would say courage because when someone is doing something that not everyone else is doing, it shows that they see something that others aren't seeing, but they're not afraid to do things. That's not popular. And I think that that's a huge trait to have as founders that are disruptive or starting a new trend.

[Host]

What's upstream of that is that just intrinsic love for the space? Is that a passion to solve the issue? Is it some intellectual fascination? Why do they behave differently?

[Ron]

It's their actually care about the problem. So I'll give you an example. One of my first investments is a company called StudyEdge and it's kind of how I realized I was supposed to be investing and in venture capital because it's a very relationship business. But he was friends of my older sister when we were growing up. I met him when I was 10 years old and he was getting kicked out of schools because he was so smart and he would just get so bored in class and he would just distract the teacher and then eventually wanted to go to. He got like 1600 SATs. He got like a 4.0 GPA. And then eventually like none of the Ivy League schools accepted him because he had such bad behavior. So I ended up going to University of Florida and again he was so bored there. So he was just like, okay, these classes are so easy, I'm just going to teach other students. And he started tutoring students and making money. And then he was tutoring groups and then he was tutoring auditoriums. And when I started, I always stayed in touch with him because I'm like, wow, this guy is so impressive and he's so smart and he's like has his own business. And then when I started my VC fund, when I started Rainfall, he was the first call I made. I called him, I said, hey, I started a VC fund and I know you have this tutoring business. If you ever do something more scalable with it, please let me know. It's like funny enough, I am actually figuring out a way to make it more social and start an edtech business. And I was like, wow, can I invest? And that was my first investment. Ended up doing really well. It was like a 14x investment. And why do I bring that up? Because today we're also invested in his second company, Curio xr. He had a successful exit and now he's doing VR headsets across the education sector in high schools and certainly non consensus. Definitely non consensus. He's doing VR headsets to teach kids in high school medical across the country education in an actual digital way. Right. And he's a founder that's already 20 plus years in education and I know he's obsessed with it and he knows it inside and out and he knows what the customers want, he knows what the districts want, he knows what the schools want. Is it sexy? No. Is it AI? No. But it's a founder that's amazing and passionate and knows the space inside and out. And that's what we want.

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[Host]

I think this relates to why some of the top investments of all time were top VCs today. Their angel portfolio, Marc Andreessen's angel portfolio, David Sacks's angel portfolio. Just crazy returns. And the reason for that is they knew the founders before they were pitching. So if you think about passion or all these things that are normative in the space found, founders, whether they're truly passionate about a space or not passionate at all, and just purely mercenaries, they've learned the language to communicate passion up to a point that if you're intellectually honest, it's very difficult to differentiate. So when you find a founder, you actually were willing to invest in this founder pre business. If you think about what does it mean to truly back a founder, they don't even have a company, they may not even have a concept, at least that you're aware of, and you're going to back that founder because of their passion.

[Ron]

That's why AI investing today scares me, because I don't have the time to get to know those founders and understand who they really are and why they're doing this and what their care and passion is and how long they'll do it. I have in my office on our wall, I have our five values that we look for in founders, and it's humility, persistence, resilience, ambition, and vision. And I want to see that the founders that I invest in have those character traits. And if I have the luxury of getting to know them over time and then they fall on something that they're passionate about and they know the problem, then 10 times out of 10, I'll invest in them. I would be silly not to. And I've seen that those are the best investments that I've made. So the founder of Alma, for example, Harry Ritter. Alma is a mental health platform. I met him when I was thinking about investing in a certain company. And I was just. Someone overheard and said, you should speak to Harry Ritter. He works at Oscar Health. You should get to know him. So I went to speak to him, I told him about the business, and just long story short, he said it's. He gave me his pros and cons on it. But then I said, listen, you're really impressive. If you ever start a company, please let me know. And then I made sure I was so impressed by him every couple months to catch up, have lunch, coffee, something with him. And then I got to know him over two years. And then I saw what a thoughtful, humble individual he was. And then he said to me, I'm quitting Oscar and starting all my health. And I said to him, okay, I'm in. I gave him his first term sheet and then we ended up investing. Thank God it was a very successful investment. He just merged with Spring Health, which is another leader in the space. And together I think they're going to be the new category.

[Host]

I've seen these five traits on your wall.

[Ron]

Yeah.

[Host]

And one of those traits is hard to define. And we may have a disagreement on humility. What does it mean to look for a humble founder? Because you could argue the exact opposite. You want somebody with a chip on their shoulder, somebody slightly egotistical. What's the right trade off between ego and bullishness and self belief versus humility?

[Ron]

Yeah, I think that all of us have ego, and I think ego is a very good thing if it's used in the right way. Having said that, I think that humility is very, very important for founders because they pick up on insights instead of being stuck on their way or what they originally thought would be the right way. And they listen to the users and hear what they want. They listen to the industry and understand how it's moving and adapt and pivot in that nature. And I've seen the best founders have those humble traits and end up being much more successful. So Alma's a perfect example of it. When Harry originally pitched me on it, he said, this was at the time when wework was extremely successful. He basically said, I want to create a wework for therapists. And the reason is I see that therapists practice to be practitioners, but they don't practice to find office space, market themselves, and run a business.

[Host]

They don't want to do the back office.

[Ron]

Yeah, they don't want to do. So he said, I'll create a white glove solution. I'll market them, and I'll get them customers, and I'll create a beautiful home. So he raised $3 million. He built this midtown location that was absolutely beautiful, and it was going really well. And then after about a year and a half, it was snowing. And one of his therapists said to him, hey, Harry, that video platform you created so we can speak to other therapists, can I use it to see one of my patients? By the way, when we made this investment, therapy was still kind of taboo. It wasn't a mainstream thing. So it was not the consensus investment at the time. And so anyway, this therapist said to Harry, that video platform that we use to speak to other therapists, can I use it to speak to my patient? Today it's snowing. I want to work from home. He's like, yeah, but I thought part of therapy was the patient leaves the door and goes to see his therapist.

[Host]

The human touch.

[Ron]

Yeah, the human touch. And he's like, that's. And the therapist said to him, that's quickly changing. And people don't really want that anymore. So he's like, hmm, okay. And then he asked a few other therapists, and he felt the same. What did he do? He closed the four wall business. And that was a crazy thing to do, but he realized where it was going. He was listening to his customers. Right. Then what happened shortly after that is he got this call from an insurance provider. And he said, we heard about you, and we heard you have a network of therapists. And we have a problem offering our customers reimbursements for therapy because we don't have a trusted network of therapists that we could use. Can we do a partnership where we'll drive you customers and we'll do a rev share deal? And he said, so you'll bring my therapist customers? And they're like, yes. He's like, okay, let's do it. He spoke to his coo. He said, just had this call. Let's speak to all the big insurance providers and see if they're experiencing the same problem. Sure enough, most of them were. And then he realized, that's how I'm going to bring business to my therapist. Then what happened, Covid? The whole world shut down. Everyone needed therapy. And all of a sudden he can offer nationwide therapy across America. And if he would have been married to the beautiful four wall business that he originally thought of and used his ego to be like, I'm the most smartest guy in the room? Then he would have missed out, and probably that business would have shut down. But instead, it became a nationwide business with over almost 30,000 therapists and doing extremely well. That's humility to me, listening.

[Host]

I've been thinking about this paradox for many years, because the opposite is also true. You want somebody that's so dogged that will ignore the wrong type of feedback when everybody is telling them, why are you doing a mattress in your home? And everybody's rejecting. You want somebody that's going to continue pushing through that. And the best analogy that I have for this is a rose. You want to be like a rose. What does that mean? It lets sunlight in and lets water in, but if somebody tries to go and pluck it, it has thorns.

[Ron]

Right? Right.

[Host]

You want to know, and the distinction there is you want to differentiate between good feedback and bad feedback. A lot of times people are not able to differentiate between what is good and what is bad feedback. And also, people don't differentiate between being weak minded and being strong minded. So you want strong minded. You want to be able to persevere when things are Tough. Some would call that ego and other people will just say that's just doggedness and that's persistence.

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[Host]

Also, you want to be like a rose. You want to be taking the necessary sunlight and the water that's needed in order to bloom and prosper.

[Ron]

Right? Right. I think that you want to find a fair balance and I think that fair balance needs to come with commitment and resilience. So not giving up and caring about something long enough. And the best founders will try things and some things will work, some things won't. But they'll live to see another day and keep going. Vlad for Robinhood. He went through Roller coasters. He was speaking in front of the Senate after the Gamestop scandal. He was like one of the most hated figures all of a sudden in the financial industry. Everyone was trying to take him down, but he got through that came out the other end. And now that company continues to skyrocket. But Vlad, what was interesting about him is I always noticed that anyone in the room with him, he would always ask questions, and some of that he would take to heart, and some of it he wouldn't. But he's always asking and curious.

[Host]

That's what Mark Andreessen noticed about Mark Zuckerberg. Early on, when he met him, he thought there was only one of two alternatives. One is just he was completely socially awkward. Or two was that he was completely like a sponge, getting information from anybody and learning massively quickly. And ended up being, as soon as he figured out it was the latter, he joined the board and he started investing into the company. But this ability to be a sponge of information and constantly get information from people and constantly learn from people, it's so, so valuable, right?

[Ron]

I couldn't agree more. 100%.

[Host]

Speaking of Robinhood, you are clearly an early stage investor and you invested in Robinhood at the series B. Tell me that story.

[Ron]

This is a perfect example of how a deal can come out of anywhere. And I actually, at the time, that was a $50 million fund, and people thought I was crazy when I made that investment. But a deal can come out of anywhere. Earlier I said that at the time, on demand in the sharing economy was a big thing. So I was ordering something on Postmates to my house and a bike messenger delivered it. And when he came into my apartment, I chatted with him briefly and I realized he's a really smart kid. And I gave him my card. I said, if you need help with anything, let me know. And he reached out to me, asked me for help with something, and he was a stranger. So I said, listen, I don't know you come to my office, let's get acquainted and I'll see if I can help you. And then I went, I had lunch with him, and I realized he was really, really smart and he was an actor. And I asked him just kind of why he was an actor. He told me story and long story short, I asked him if he reads about tech companies. And he told me a few. And when I went back to my office, I looked at, looked up some of them and they were really impressive. And then I took him out for dinner and then I asked him why he's an actor and whatnot. And he said, this is just. I was a child actor. My mom pretty much raised me that that's I could be a good actor. So I asked him why he was an actor, and he said, I was a child actor since I'm a kid. It's what I know. And I said, would you be interested in working for me as an analyst? And he's like, really? Why? I'm like, I think you're really bright. I think you should let go of the acting career and start looking for investments with me. And he jumped on the opportunity. A month later, he found Robinhood. He was reading different blogs. And then he showed it to me. And I thought it was interesting because it was a team that looked really impressive. And it took me about a month to get to them. And eventually I did. But I got to them when they pre launched and they just finished the Series A conversations. I said to Vlad, I really want to meet you. I'm going to fly over to meet you. I was in New York, he was in Palo Alto. It was before the Zoom days. It was on phone, I really want to meet you. And he's like, you can come and meet me. But he was always very humble and transparent. I can't promise there's going to be room. It's already spoken for. And I still flew. The next day I went, I met him in Baiju. I said, if there's room, great. If not, I want to stay in touch with you guys and maybe invest in the next round. And he's like, look, you were the only one that flew out to meet us. There's no room in the round, but let's stay in touch. So for about a year and a half, I stayed in touch with him here and there. I shot him notes, anything I can be helpful with. I made some intros along the way. And then a year and a half later, he reaches out to me and he said, listen, you're the only one that stayed true to what you said and stayed in touch with us and offered help and made some intros along the way. And the one that flew to meet us, we're doing a series B. There's 1 to $5 million allocation. It's a 300 million valuation. If you want, take anything you want. And I said, okay, great, I'm in for 3 million. And a lot thought that I'm crazy for doing that because I'm an early stage fund and it's at a 300 million valuation. And this was 10 years ago, right back then, 300 million was like 3, 3 billion today. And I looked at it and this is one of the privileges of how I started investing. I looked at it and said, okay, it's not a seed deal. I don't want to be invested only in seed. Why limit myself from working with an amazing team? And I said, Vlad said to me something that really struck. He's like, I want to be bigger than Schwab. At the time, schwab was a $50 billion market cap. I did the math. I said, if he's right, this could 30 to 50x still from here. So why would I not invest in it? And then why would I not want to work with Vlad Tenev and learn how some of the best founders work? And so I ended up doing it and thank God it 35x and returned more than that fund. I just want to premise by saying that generally I look to invest in founders that don't need our help. If I'm investing in a founder that needs our help or needs other VCs help, then I think you're investing in the wrong team. And I'll never take credit for being too much value to a founder. They're the ones eating, breathing and sleeping this business. And at the end of the day they're in the corner alone and trying to make this a success through the hard times and the good times. But I will say that over the years we've provided a lot of resources to founders and introductions that we've built over time. And we offer them if it's biz dev opportunities or potential hires or growth capital introductions. There we have. But I won't say it's make it or break it. What I will say it's these touch points that show to founders that you care and you're willing to help. And a lot of VCs I think shy away from. If we can't help a lot, we're not going to help at all. And then they don't have good relationships with the founders. So I think the little bits of help go a long way because the founder sees this person cares. In the case of Robinhood, though, after we invested, the big value add that we did help with was I have a long standing relationship with DST Global and I told DST, this is an amazing company, you should keep an eye on it. And then when they were raising their Series C, they were doing diligence and Vlad really wanted them to invest and he said to me, I like them, they're not there on the price. And I said, what's the price you want to be at? He said, someone gave us a 1.3 billion valuation. And I said to Raul, I said, raul, you have it at 1.3. And I know you guys really want this, so speak to Vlad. He's like, okay, I didn't realize that was the number. And then eventually they led the Series C and they led the Series D. So DST gave them a few hundred million dollars through our introduction, and then they did extremely well by that. And Vlad to this day remembers that I made that introduction for him.

[Host]

Taking a step back, tell me about the story of how you started investing in 2013.

[Ron]

Well, funny enough, I didn't realize. I think I actually started investing when I was 10 years old. But in 2013, I started my career. I was in the tech unit in the army in isra. And then afterwards I started a game startup with some friends of mine that ended up doing well.

[Host]

Is that 8200?

[Ron]

That was my mom Ram that worked together with 8200. And then I worked on a startup in the game sector that ended up doing well. And then I moved to New York and I was always networking. And I think that's one of the value drivers for founders, like someone that networks and always offers help. Just going back to the question before of value add for VCs, I end any email or anytime I reach out to founders, I'm like, how's everything going? Can I be helpful with anything? Always just networking and making introductions. That's my job as a vc. I was always building relationships with people. That's always been my lifestyle. And from time to time, family offices or investors would ask me for introductions. And then one investor, a family office out of Israel, asked me for two really hot companies to speak to in America that they couldn't get to. One was Kik messenger, that was actually in Canada. The other was Foursquare. Both were really hot consumer companies. And so I've always learned, don't take no for an answer and help people if you can. And so I flipped the world around and got to both of them and made the introductions. And then they said to me, listen, you should do a VC fund. If so, we would invest. And so I asked them why, and they said, you have such a good network. You are a founder yourself. You enjoy meeting people. And it's no rocket science, this business. You just find people that are solving a problem and invest in them. So I said, yeah, okay, let's do it. And that's how it started. And then why did I say I started when I was 10 years old because I remembered the founder of StudyEdge, Ethan Fieldman, and I called him. And that was my first investment. So that's how it started. I never planned to be in vc. I never planned to be in finance. I just enjoy meeting founders. And I jumped on the opportunity and it took me many, many years to understand why I was very lucky. Because most VCs, when they start a VC fund, what do they have to do? They have to fundraise. In order to fundraise, they have to have a thesis and tell investors what they're going to go after. So for example, how many AI funds are there today? And so they have to be right twice. I only had to be right once because I had the luxury of investing in anything and just finding really good teams. I got excited about the other VCs had to be right about their thesis and they had to be right about the team. So my odds of being successful are way higher. So I wasn't planning to be a generous investor. It didn't happen by design. It happened by learning along the way that the underlying success is not investing in trends or hot fields, it's investing in amazing teams.

[Host]

In Matthew call this a constraint problem. You put this constraint on what is hottest in the space, the thematic trend. That's the thing that you could raise capital on. But now you're stuck in that constraint and you can't go outside the box, right?

[Ron]

And then what do you do? You have to reinvent yourself every time you want to find investors to do a new fund. And that how do you do that? I want to get stronger and stronger on pattern recognition of really strong founders. And that comes with finding founders that have resilience, that are committed to a problem, that are humble, have persistent characteristics to them, have a vision and have ambitions.

[Host]

As I've gotten to know you, I've learned that you're a great network builder. We were introduced by Bill Brown. You mentioned the story about how you helped this Israeli family office get into Kik and Foursquare, talked about Vlad Tenev and connecting him to DST Global. How often does, I guess paying it forward and helping and being value added work out? Because oftentimes I think in finance you'll have one of two philosophies that are rampant. One is this highly transactional short term thinking, which is dominant. And then you have what I would call bumper stickers. People say, well go and help anyone because they'll always come back to you. Almost like something you would see in a bumper Sticker or maybe a children's fairytale book. Where's Ground Truth? What percentage of the time when you help people, does it come back to you and maybe map out how that happens?

[Sponsor/Announcer]

Exactly.

[Ron]

It's important not to sleep at the wheel, right? This is very much a relationship business. So long as the relationships continue and continue for a long time, then eventually you'll get into the company or work with those founders that you want to work with. So it's important to keep being persistent in helping a founder and showing that you bring value add. And if for whatever reason, you miss the A round, okay, then keep helping and invest in the B round. Right? And what does that give you? It gives you, over time, of the founder seeing that you are not giving up and you believe in them and that you're a persistent person and that's the type of people they want in their corner. Right? And on the flip side, I gain insights on who these founders are, are they truly committed? And then eventually I do the math if to invest in the company because of that relationship I built over time. And I've seen that most times I end up investing in those companies so long as I'm persistent about it. But you can't help a handful of times and then just go MIA and expect someone's going to give you a call and say, hey, remember a year ago you helped me with this? Now something's happened, you've got to be persistent about it. The underdog mentality, keep going, keep fighting.

[Host]

Alex Hermelzi would say, do so much that it becomes unreasonable for you to be successful. In other words, create so much value that's unreasonable for someone not to let you in their own. Since we last chatted, you told me the story about how you got into Robinhood Series B after staying in touch with Vlad after series A, helping, making introductions, et cetera. And I thought about it from Vlad side, from the Robin Hood side. Is this rational? Is this reciprocity, which is human nature? You do something for me, I feel compelled to reciprocate. Or is this hyper rational, in other words, with a psychopath, which I'm not saying Vlad is, but just this generic psychopath that's getting a lot of value, is it in his or her interest to let you in the round? And I've actually come to the understanding that it is very rational for that psychopath to let you in the round. And the reason for that is this. Whenever you have a hot company, you get somebody to price the round. So the price is fixed and now you could fill it in with a bunch of investors. Just simplify and say you have two different types of investor. One that says I'm going to do this, I'm going to be value added. I'm going to make all these introductions. Another that says same thing, but has done that for the last 12 months. Behaviorally, what are the odds that the person that has done this for the last year is going to continue? Very high, over 80% probably. What are the odds that this person that's promising you to do something,

[Sponsor/Announcer]

at

[Host]

best 50, probably 25%. It's hyper rational to actually go with the somebody that's exhibiting the behavior of value add to give that extra allocation.

[Ron]

I think it's a good question. I think that at the end of the day, when a really, really good founder that knows what he knows what they're doing and has conviction when they raise a new round, they want to get it done with as quickly as possible.

[Sponsor/Announcer]

Speed, speed.

[Ron]

And to have investors that will be supportive and not get in their way. And if they have those relationships, then they'll jump on that and do it quickly with them. And I think that's what I've seen the strongest traits with founders.

[Host]

That's such a good point. So the friction is lower. So if you, Ron, are already on the cap table, giving you another 5, 10 million is much less friction than somebody that says I'm very interested and then they take you through this two month, 100% great.

[Ron]

Founders aren't focused on fundraising. They're focusing on building businesses and making money. Right?

[Host]

Fundraising is not the thing. No, Ron, a lot of people don't know this about you. You came from very humble roots. You grew up in an immigrant family from Orlando, Florida. You've done these phenomenal things in your life and your career. If you go back growing up as a children of immigrants from humble roots and you could give yourself one piece of timeless advice, what would that be?

[Ron]

Nobody knows anything. Do what's good for you with your own conviction and follow your own path.

[Host]

It's oftentimes the people that work with presidents, that work with billionaires, deca billionaires, they say the same thing, which is it's idiots all the way up.

[Ron]

Something that I heard and to touch on VC and investing. Something that I heard that really hit me is Marc Randolph, the founder of Netflix. He's got a lot of wisdom and he said that he's worked on seven companies over his career. Some worked, some didn't. He never knew if any of the companies were really going to be successful. And he especially didn't know that Netflix would be what it is today. And he said something that you don't hear a lot of very successful people say, talk about humility. He said that if I, the founder of Netflix, didn't know it was going to be successful and certainly didn't know how successful it would be, it means that nobody knows anything. Right? And when I heard that, it gave me such a relief. It meant that just do your thing. Just every day, try, learn, trust yourself. Some things won't work out, some things will, and just keep going and you'll grow and progress and have success.

[Host]

Ron, this has been an absolute masterclass. Thanks so much for jumping on.

[Ron]

Thank you. Really a pleasure.