How Silicon Valley’s Most Prolific Investor Picks Unicorns | Elad Gil Interview

All right, today we were sitting down with one of the smartest people that's ever been on this podcast. His name is Elad Gil and he is a prolific angel investor. He's a guy who has invested in something like 40 plus billion-dollar companies all at very early stages like Airbnb, Airtable, Anduril, Retool, Rippling, companies that we've all heard of now in the tech space. He was an entrepreneur, he got acquired by Twitter. He was one of the first 100 employees at Twitter. He was early at Google and he's been very early to waves. He was doing longevity before longevity was cool. He was doing AI investing before ChatGPT came out. So, we love talking to people who are like this that are both very brilliant, very accomplished and seem to be skating where the puck is going. They sort of know what's coming around the corner and they've proven that in their career. So, we talked to him about how he's been such a good investor, what he's looked for and his approach and how it's pretty different than most investors. We talked about his ideas, so things he wants to see built and projects he's working on right now and then a little bit of life advice at the end where he left us with a kind of an amazing tidbit or a nugget about what's made him such an interesting person. So, enjoy this episode with Elad Gil.

The intro for you is basically you're a super angel investor. You've invested in a bunch of companies. I think you have something like 40 plus unicorns in the portfolio and impressively at least 20 or 30 of them were very early stage, so seed stage, series A, pre-seed, some somewhere there. That's wild. As somebody who's invested in I don't know, 100 companies myself, I look at what you've done there and that is prolific. And so, first question is like, you know, there's a block of wood and I don't really know how to hack how to chop into this. So, I'm just going to swing one blunt swing here. How the heck are you doing this? Why? How have you had this success in angel investing?

Were you just doing your own money at first or did you have a fund from the get-go?

That mean running out? Like how? I guess you initially had wealth from selling your business, I guess. And then like you just put all of it into private companies. How much

And so what did I guess you know, I had that point early in Silicon Valley where I initially had no money. So, I was like I was helping friends. I was like, 'Man, I can't believe people aren't investing in this.' But, I myself didn't even look at myself like an investor because I just didn't have a bankroll. Then, I realized, 'Wait, that's stupid. I got to think like a founder here and get resourceful and figure out how to get money to invest in these companies. So, where did you go once you deployed your own capital? Where did you go to get the money right away?

How many other partners are there at your shop, basically? Are you the guy?

Are you doing that because you're like, 'This could be a business,' or are you doing that because you're thinking to yourself, just this is an interesting project and in doing this I will discover interesting things?

But were you always that way? Because like I just recently I guess I could say I'm financially secure and it took a few years before I just recently started feeling like I want to do blank because it's cool. I don't really care necessarily if it's good for the world, but it seems like you have a little bit of that mindset of like this is good for the world. Are you wealthy and successful because you always had that attitude, or do you have that attitude now because you have security? Do you know what I mean?

What's an example of like I'm not sure which industry you care about most, but what's an example of one of these things where people care about five things, but you're like, 'No, this is the only thing that matters.'

That sounds great. When you tell that story, I'm like, 'Yeah, I'm on board with that.' But I own a business now, and it's really hard to come up with that insight.

It's also like it's also hard now, but easy later, right? If it's hard to figure out what the one thing is, okay, you take some upfront difficulty to sort of make a bet or to figure that out, but then from there on out, your operating philosophy can be a lot simpler because you're now Stripe, you know who you're focused on, you know who you're catering to, and you don't have to have these like the decision tree becomes very, very simple later if you did the hard thing up front.

You said you invest in markets, and Anduril, when it was first started, most people still don't have any idea about that industry. When you're trying to like master a topic like that, what is your process?

The push back on that I'd be like, yeah, but there's like I'm ignorant to the industry, which is why it's easy for me to push back. I would say, yeah, but there's like 10 other companies in that space, you know, they got it covered. Like how do you learn enough to know that there's like an interesting opportunity?

I want to break down on that. What's your resource for the second one?

How early did you invest in Anduril? I think you were the first like the very first round. It was just the founders, yeah. And so, did you hear Palmer talking about this, then you go research the market, or had you just independently been curious about this market and then

That's way more impressive than meeting Palmer. Like, the fact that you came to that similar you guys were sniffing around the same stuff independently. That's pretty impressive. Well, yeah, but I'm also you know, the best people I get with they tend to have the same laid-back approach as you, which is just like, 'I don't know, I just kind of do the work. I think I was fortunate, blah blah blah.' Then you start to peel back layers, and you're like, 'Oh, so this thing you called luck was actually you I read that Maven story, too. I didn't think to myself, 'Wow, what a wonderful opportunity.' I just moved on with my life, right? So, you know, I don't know if you've read the four levels of luck thing, but I think number two or three is luck favors the prepared mind, meaning because you know what you're looking for, you can actually spot luck when it presents itself. Whereas, the average person might see that same thing and not understand what they're looking at. And so, when you saw that Maven story, you saw the opportunity that, 'Wow, if the big technology players are running away from defense, this huge category, that means there's an opportunity for a new technology company in defense.' And so, what yeah you know, what I find fascinating is peeling that back and actually understanding like, 'Wow, that was incredibly intentional.' And I get what you're saying that not every one of those rabbit holes you go down leads to an Anduril seed round, but the fact that it ever did is remarkable cuz that's like a career making, you know, single investment even, let alone the other 40 that you did like that. I also want to go back to like you said something about you know, market first and there's that great quote like when a great entrepreneur meets a bad market, only one of them keeps the reputation the bad market. And so how what's another example from your portfolio that you can think of that drives home this kind of like market first where the market first approach led you to do something that worked out.

I think it was on the information or something like that they talked about how you had just raised like a billion dollars and that you famously didn't have any employees. And Sam Altman has this or I don't know who said it. I thought it was Sam Altman where he said something like a one or two person billion dollar company is going to be a thing now because of AI. But that's kind of what you've already done.

Do you measure I mean, obviously you measure, but I guess like what is the metric that you keep track of for your own investing? So, like you know, at the top of this we talked about number of unicorns, but you can look at IRR, you can look at your DPI, you can you know, I did a deep dive on YC the other day and there's like some insane number I'm going to butcher it cuz I don't have it right in front of me, but like Sam, I don't know if you know this, but like the first 10 years of YC they basically turned like something like $12 million into like $10 billion of value for them from themselves cuz they were writing super small checks early on and getting basically like 7% but it even diluted down like Airbnbs, the Dropboxes, like the even just the top five companies, they let's say they net own like 2% of these when they go public. I mean they basically had a 320X on their money in that first decade. And then a lot of people now think that they're, you know, maybe have they've sort of lost their touch or the batch sizes are too big or the valuation's too high and actually like their hit rate has gone up even as the batch size has gone up. It's pretty wild. Eli, do you have a metric that you look at that you kind of you're proud of or that's the main metric for you how you've done in terms of the actual money in, money out?

I'm not an angel investor, but you're such a hard person to compete against because you're like, you just it's very strange that you're an investor because you don't seem like you're money motivated. You know what I mean? And that's a really challenging person to compete against because that's the type of person who wins in a lot of stuff. It's the one who's not actually caring about the money, but who's caring about missionary versus mercenary type of vibe. Do you know what I mean?

I'll give you an example. One time I was sitting at a friend's wedding dinner and I just happened to get seated at a table where a lot of the other people were his board, which meant a lot of investors. And I sat next to somebody from a well-known firm. And I said, 'Hey, what are you interested in these days?' And he said, 'Crypto.' And I said, 'Oh, great. We can talk about distributed consensus and trustless systems and censorship resilient products and all this stuff.' And I said, 'That's great. Like what are you excited about in crypto?' And he looks me in the eyes and he says, 'You can make a lot of money at it.' I was like, 'Ha!' I thought he was joking, right? I started laughing. I'm like, 'Oh, that's so funny. No, seriously.' He was like, 'No, that's it.' And that's not a really interesting conversation.

Well, one of the things I liked is that on your website you publish some ideas that you're interested in or you're working on right now or you want people to come help you pull off. I'd love if we could rip through a couple of these. Let's start with one that caught my eye. You said, 'I want to do a new chain of K through 12 schools inspired by ancient Greece.' What's that all about?

I remember when I lived in SF from 12 to 20. And I think there was a handful of schools that were started for elementary kids. Was AltSchool one of them? And was there a wonder school? Does that ring a bell?

What's your plan with this school thing? Are you looking for a kind of entrepreneur to spearhead it? What are you looking for? Are you looking for a DRI?

What other ideas, Sean, do you have listed there? There's one cool one. You said you got a PhD in biology and you talked about longevity. You've looked into a lot of longevity. You funded clinical trials and you said something that I was curious about. You said there's some exciting things that are going on in longevity. You mentioned a company called BioAge and how they have a new drug for muscle. Okay, you have my attention. What is the new drug for muscle and generally what's exciting to you about that space?

I like how you're saying we know as if me or Sam know anything. We don't know this. You smart PhD people know this. And can you explain in layman's terms what you just said? You said there's like... Every time he talks, he'll say a sentence and there's like five things that I'm like, 'Wait, what?' Yeah, five tabs need to open in my browser. So, okay, C. elegans they're living two times longer. You said that aging is a something-driven thing. I...

Mechanical damage type of thing.

And why would that be the case? Like, why would we have an off button? Every single...

And when you say the question is why, well what's the answer? Is it that it's not funded enough, it's not safe enough, there's some other commercial disincentive or?

Is that Kevin Rose's thing? Kevin Rose invested in it? I think he talked to us about it.

Yeah, that's like my favorite longevity company. It's like yeah, forget the humans. Let's save the dogs. I'm all about it. I think it's both going to have an easier regulatory pathway but also good for society. Like sure, my dog living longer. I support nothing more than that. Does that... What have they found? Is that working? I haven't kept up with the actual science of the company.

You know, what was that crazy quote? It was like what Silicon Valley nerdy people are doing for fun, that's like what everyone else is going to do in the next 10 or 15 years or something like that. Do on the weekends. Not because I know it's going to be a lot of veganism, which sounds awful. Well, that's what I was going to ask you, which is like you kind of fit that stereotype, you have a lot of resources and you're in the know with a lot of interesting new things. Are you taking any interesting pharmaceuticals? Are you doing Metformin? What do you think is interesting right now that you think will be a little bit more popular in two, three, four, five years?

But you're not.

When Sam says that quote about you know, what the nerds are doing on the weekends, what they're tinkering with in their spare time is what we'll all be doing 10 years from now.

But are you kidding? I mean, it sounds pretty cool.

You've been interested in longevity earlier than I would say like this current wave of interest. You know, I think not only did you study it in school, I saw on your site you said you personally identified a gene that's involved in lifespan. You funded your own clinical trial at Stanford. It didn't work, but you're like, 'It's okay. I'll try. I'm happy to try again.' I'm curious, what do you think of Bryan Johnson and what he's doing?

I'm surprised. How come you haven't looked into it? That seems like it's right up your alley.

Hm. What I want to know is are there any ideas on there that are just cool, but not necessarily like a world-changing serious thing? Like do you ever... You know, his monuments thing. Can you talk about the monuments thing? I think that's dope.

In America at that period, you know, with Andrew Carnegie. They were built with that idea of let's prove. So like the Eads Bridge in St. Louis, it was the same thing where they would build these amazing bridges and then they would do all these funny things. Like they would get an elephant to walk across it to prove...

You know what I mean? And there's a flex side of it and there's an inspirational side of it. Like where are there large-scale inspiring pieces of beauty and art in society anymore? Like where have they gone? Why aren't we doing those anymore?

That's the last one.

Well, you know what another example that sounds silly is the Blue Angels. And I was having this debate with someone the other day about how much money the American government funds air shows. And I was like, 'That's totally worth it.' Because whenever you go to one of these things, you definitely feel a sense of patriotism and you're like, 'This is awesome. I'm in awe of this.' And same way with going to the moon. You know, in the '60s and '70s, we spent a significant amount of money on this. A lot more than you could argue that we've spent on longevity, which is actually a shame. But there is a history in America of doing things just because, just to flex or just to celebrate. But what was the last thing like that that we did? It's been decades, right?

Yeah, and part of that is going to be regulation and then part of that is this odd postmodern cynical thinking, right? There's a very strong anti-progress movement in the US. You know, basically the idea is you buy land and you construct giant monuments that are inspiring. I don't know. I mean, it's pretty simple-minded, but imagine if you walked out in San Francisco and you looked across to the view with the Golden Gate Bridge and Alcatraz and there was a giant statue. This could have been an ode to the future. Do you know how much these things even cost?

Like okay, let's walk through an example. What's one that you fantasized about? You're like, okay, what if we did this? That would be cool. I would be inspired by that.

I remember that.

Was that up by Stockton?

[Laughter]

And what would it be of? You know, what's our equivalent of the Statue of Liberty or the Eiffel Tower that's just to demonstrate their steel prowess. Like, what do you think would be the modern equivalent that would have some meaning?

I well, yeah, I mean, that's one of my favorite eras to read about. Basically, in the mid '60s, Malcolm X, JFK, RFK, there's a series of assassinations and one can argue that that was like the death of innocence in America. And so it's kind of an interesting period to read about.

No doubt about that.

It just seems like there was a shift. There was some mindset shift. And maybe that is what it was attributed to. I don't know what it's attributed to. Have you ever, I don't know if you guys Sean, you definitely have maybe you have actually. Sean, driving a do, do you guys ever remember seeing all these crosses on the side of the highway in the south? I bet Ari has, but you know, there was this guy who was old and he had saved up roughly three or four million dollars and he spent all of that money building crosses on the side of the highway. Now, regardless if you like Christianity or not, it doesn't matter, but I always thought it was so interesting that this guy dedicated that money to that. If you guys don't remember seeing this, it was like a big deal in the south. You would be driving to the south and every 50 or 100 miles you would just see this huge cross. And that's all you saw. Or you would see these billboards that says 'Jesus saves'. Do you remember those?

We appreciate you.

All right, well take care.

I feel like I could the world. I know I can be what I want to. I put my all in it like the days old. On the road let's travel never looking back.