Investing in startups requires experience, luck, and taking risks, and successful investors prioritize investing in founders with great teams and pursue seemingly impossible ideas to achieve great success.

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  00:00

  Investing in startups is an art that requires experience, and YC partner Paul Buchheit invented Gmail and sold FriendFeed to Facebook.

  • Investing in startups is more of an art than a science, and experience is necessary to become an expert, while the live stream for the event may have some issues, but all slides will be available on the site within 24 hours.
  • Paul Buchheit, a YC partner for seven years, invented Gmail and sold his company FriendFeed to Facebook.
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  02:10

  💰 Successful investor shares experience and patterns of favorable and unfavorable outcomes in investing, emphasizing the importance of luck and taking risks in startups.

  • Paul Bouquet, a successful investor, shares his personal experience and patterns of favorable and unfavorable outcomes in investing to improve his future decisions.
  • Good startup ideas often look bad and unimportant to big companies, as they have the resources and market power to execute them, and the example of Google's original research project at Stanford proves this point.
  • Luck plays a crucial role in the success of a startup, and being a startup employee is similar to being an investor, as demonstrated by the speaker's experience of joining Google due to their product and work with Linux.
  • The speaker learned about startups at Google and later got involved with Y Combinator, despite it being initially seen as a bad idea by many.
  • The speaker found an idea intriguing and interesting, and cold emailed PG to learn more.
  • The speaker invested in Y Combinator's first batch and continued to invest in subsequent batches, with his first angel investment being in a YC company called Wufu which later returned 44x when SurveyMonkey bought them, and the founder of Wufu became a partner at YC.
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  11:48

  Justin.tv pivoted to video game streaming and sold Twitch to Amazon for a billion dollars, while successful Y Combinator alumni started their own companies and emphasized the importance of having a great team and investing in founders who know what they're talking about.

  • Justin.tv started as a live streaming platform with a camera strapped to the founder's head, struggled for a while, pivoted to focus on video game streaming, and eventually sold Twitch to Amazon for a billion dollars.
  • Justin Khan, Michael Seibel, and Kyle vote are successful entrepreneurs who started their own companies after working at Y Combinator, with Justin Khan starting FriendFeed and having multiple startups, Michael Seibel starting Socialcam and becoming CEO of Y Combinator, and Kyle vote starting Crews which was bought by GM for a billion dollars.
  • Find people who are smarter and more insightful than you to join your team, as having a great team is the most important thing, and don't invest in founders who you think you could do a better job than.
  • Investors should use their knowledge to ask intelligent questions to determine if a founder knows what they're talking about, and look for companies like Meraki that have been able to build impressive products without raising any money.
  • Founders often sell their companies too early, but those who are willing to take on seemingly impossible tasks, like Kyle Vogt of Cruise, can lead their companies to success.
  • Blake, the founder of a supersonic travel start-up, taught himself everything about aeronautics and was able to clearly explain the three things he fixed from the Concorde and the viability of his business.
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  24:43

  Invest in non-software companies for giant exits, prioritize your own startup, move fast in decision-making, invest in optimism and the future you want to see.

  • Investing in non-software companies, such as those in the bio industry, can lead to giant exits in the future, and don't dismiss companies just because you don't know anything about their field.
  • Investor missed out on investing in successful startups due to canceling meetings and advises against wasting founders' time.
  • As a startup founder, prioritize your own company over angel investing, even if it means missing out on potentially great opportunities.
  • Move fast and be deliberate in your decision-making when investing in promising companies to avoid adverse selection and missing out on good deals.
  • Investing in startups based on value or avoiding high prices has never worked for the speaker, and emotionally-driven investments out of pity have also never been profitable.
  • Invest in optimism and the future you want to see, not the future you fear, even if it means investing in cynical ideas that could make a lot of money.
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  32:29

  Pursue seemingly impossible ideas to attract top talent and achieve great success in startups.

  • Good numbers alone do not guarantee a good investment, as it is important to consider whether the company is creating value and not just exploiting temporary inefficiencies.
  • Good communication skills, clear understanding, and ability to move fast are essential traits for successful founders.
  • Startups should pursue ideas that seem impossible or stupid, as they often attract top talent and can lead to great success.
  • Attracting the best people and making something people want are the key factors for success in startups, as exemplified by Y Combinator's top startups like Stripe and DoorDash.
  • Determination is the most important trait in a start-up founder, and it can be identified by looking for signs of hedging bets and past mistakes.
  • People with perfect resumes are often scared of failure and take early exits, but for bio companies, the demand is usually obvious and the risk is creating the product.
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  42:31

  A group of four people stuck a camera on Justin's head and streamed it, allowing them to quickly test and iterate their concept.

  • A group of four people had a simple and unpredictable idea to stick a camera on Justin's head and stream it, allowing them to quickly test and iterate their concept.
  • Investors need to know if startup founders move fast and iterate quickly, which can be determined by asking about their accomplishments in the past month, their anticipated future schedule, and pushing them to move even faster after funding.
  • Clear and concise communication is crucial in a ten-minute interview, as failure to explain what a company does results in an easy rejection.
  • Investors should not spend too much time making up complex theories and talking themselves out of good deals, as most investments will not work out.
  • Justin.tv acquired talent from Google in a random manner.
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  48:51

  Don't let past mistakes hold you back from investing, but be cautious of ICOs and too much funding for startups, while investing in hard tech companies requires excitement and trust in the founders' determination.

  • Don't overlearn from past mistakes when investing, as it may cause you to miss out on potential opportunities.
  • Most Initial Coin Offerings (ICOs) are scams or unsuccessful attempts to raise funds, but there is potential for interesting developments in the crypto industry.
  • Too much money can be a liability for startups as it enables the founders to insulate themselves from reality to an unhealthy extent.
  • Investing in hard tech companies can be intimidating, but it's easier to invest in things you're excited about and to accept that you don't know everything, so it's important to invest in people who are better than you.
  • When determining a founder's determination, investors look for those who are willing to charge straight into a brick wall without conditions.
  • Determining someone's determination is difficult, but asking about their past failures and persistence can provide insight into their ability to handle challenges and take risks.
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  55:59

  Learn from past mistakes but also ignore the past to be a successful investor.

  • The speaker avoids relying too much on their past knowledge and experience, particularly in the area of email startups, but has had success with a recent email startup founded by Mathilde.
  • To be a good investor, one should learn from past mistakes while also ignoring the past, which can be contradictory advice.