Earlier in the present day, Forbes reported that enterprise capitalist, operator and entrepreneur Keith Rabois is returning to Khosla Ventures (“KV”), the Silicon Valley outfit the place he lower his tooth as a full-time VC earlier than becoming a member of Founders Fund (“FF”) in 2019, teaming up with former Stanford classmate Peter Thiel within the course of.
The transfer got here as a shock to trade watchers – together with this one. I spoke with Rabois in October about working for Founders Fund in Miami, the place he moved through the pandemic and likewise oversees a startup referred to as OpenStore that he co-founded in 2021.
Once we’d talked final, Rabois sounded content material the place he was. At the moment, he stated the choice to change groups was very current, stemming from a dialogue together with his former Khosla Ventures’ colleague Samir Kaul concerning the attainable deserves and pitfalls of beginning his personal fund; Rabois says that chat shortly was dinner with agency founder Vinod Khosla, who individually introduced in the present day that he’s “thrilled” about Rabois’ return.
To study extra, I hopped on a Zoom with Rabois this afternoon; extra from that back-and-forth follows, edited evenly for size and readability.
Congrats on the transfer, although It was by no means crystal clear why you left Khosla Ventures within the first place after spending six years there.
The true purpose is actually easy. I hated coming down from SF to Sand Hill Highway, and KV on the time — this clearly was pre COVID — had a really robust in-person, one-office tradition and it was fairly demanding from the highest down that individuals must be within the workplace at the least three or 4 days. And I simply felt that the way forward for enterprise was extra distributed.
I keep in mind speaking to Sam Altman concerning the professionals and cons of leaving KV for Founders Fund, which was in San Francisco; I used to be like, ‘Am I loopy to issue on this geographic commute stuff?’ And he was like, ‘Look, each single examine on human happiness suggests the only finest predictor is inverse correlation to commute time, and also you’re human, and also you shouldn’t be shy about that.’
I’m tempted to consider you, however I additionally simply heard ‘demanding from the highest down.’ Vinod Khosla is a giant persona. I’m wondering if that performed a task in why you left initially.
For people who find themselves allergic to big-personality, successful-founder varieties. I don’t suppose both KV or FF could be the very best. [Khosla and Thiel are] in some methods very comparable. I gave this presentation really on the [Khosla Ventures] Summit final yr. They invited me to talk, and the presentation was concerning the 5 form of bosses I’ve had in my profession. And it’s like: Vinod, Peter, Reid Hoffman, Max Levchin, and Jack Dorsey. So I’ve made it by way of 23 years, working with strong-willed visionary founder varieties; each companies have that trait.
Concerning your return, was it an element that Founders Fund reduce the dimensions of its latest fund, whereas KV simply closed on $3.1 billion?
Undoubtedly not. If something, I used to be an especially constructive proponent of chopping the Founders Fund [vehicle].
We talked in October about this. You thought it was a sensible adjustment to the market. However then what do you make of KV transferring in the wrong way?
Crafting a fund technique — sizing the fund — is a sophisticated animal in and of itself.There’s a really perfect dimension for various phases of investing to generate significant returns, after which there’s a staff composition. Like, what number of investments are you able to make and the way a lot cash, and that could be a operate of what number of nice traders you have got on the staff. So it’s important to consider all these variables. There’s not a easy method.
My perspective at Founders Fund was that $900 million was the biggest model of a enterprise fund that I assumed made sense for our technique and our staff. You may additionally have observed that FF didn’t alter the dimensions of the expansion fund, whereas the KV {dollars} could look comparable, however they’re allotted otherwise. There’s a $500 million seed fund, then a $1.6 billion enterprise fund, then a $1 billion alternative fund.
How else do the companies differ? You made an attention-grabbing remark to The Info. You stated Founders Fund gives capital and is comfortable to assist when requested, which could be very totally different from a mentorship mannequin, which has been your forte. That doesn’t sound like a ringing endorsement for Founders Fund, or do you suppose it’s only a higher agency for established founders who want much less hand-holding?
I didn’t imply it that approach. There’s an excessive amount of capital, there are too many enterprise companies, it’s hyper aggressive. There’s no strategy to drive vital returns except you have got differentiation, and I feel it’s important to differentiate as an individual. So the way in which I differentiate is I personally aspire to extend the chances of success for any founder and any firm I work with. That’s my purpose once I get up within the morning: how do I make this firm extra profitable? Different individuals have been very profitable in enterprise with a unique mannequin. Founders Fund, for instance, has been extremely profitable through the years with at the least a considerably totally different mannequin. I feel at Founders Fund, every associate has a considerably totally different perspective on how [to help companies win].
Is there a strategy to make the variations between the companies clearer?
I’d say Founders Fund and KV are perhaps nearer on a plotted line than most others, and I feel I made that time in 2019. I feel KV prides itself on its technical acumen. Many signature KV investments are hardcore expertise investing, which is one thing I respect. It’s not my comparative benefit, however I loved six years of studying . . .and I’m excited to study extra. I feel it’s uncommon in enterprise to have a talented institutional fund that’s deeply technical.
You might be staying in Miami. Will you develop KV’s footprint there?
I’m thrilled to be in Miami. I feel the way forward for America goes to be primarily based in Miami. I’m excited that KV’s going to be opening an workplace in Miami and including to the funds that have already got a big presence right here, together with Founders Fund, in order that makes me extraordinarily comfortable.
I might be commuting to the Bay Space on common one week a month. I’ve a big variety of board commitments within the Bay Space so I’ve really been touring to the Bay Space as soon as each six weeks [meaning] I don’t suppose issues might be dramatically totally different. However I’ll attend associate conferences in particular person. Companion conferences at KV are fairly essential to the way in which that agency operates.
[As for recruiting], I don’t know. The very first thing I’m going to do is get fairly immersed with KV.
Vinod lately stated one thing about by no means desirous to retire. However let’s say that modifications 15 years from now. Do you suppose you’d be his chosen successor?
I don’t know. I imply, put it this manner: It’s fairly irrelevant as a result of I’m fairly certain Vinod needs to be doing what he’s doing without end. He loves what he does. He’s extraordinarily devoted to his craft and what he does. He units an important instance for the remainder of the agency by that degree of dedication.
