Key Takeaways
- • Keith Rabois, General Partner at Founders Fund (and previously at Khosla Ventures, per the transcript), argues that "the team you build is the company you build," stating that people matter more than products, markets, or technologies.
- • Rabois says founders can raise their odds of success from roughly 1-in-10 to 30-40% by changing team composition, and Founders Fund positions itself as matchmaking founders with missing co-founders.
- • Rabois reports he made 80 to 85 angel investments between 2003 and 2013, typically $30,000 to $200,000, and since joining Khosla Ventures has rarely invested less than $500,000, typically $1 million to $3 million at seed.
- • Rabois says he has invested in 15 to 20 unicorns overall, and identifies a founder's "spark" as the key early-stage signal, versus fundamentals and metrics at Series B.
- • The session was delivered at SaaStr Annual 2019, moderated by Boost.ai co-founder Lloyed Lobo, and published June 2019 by SaaStr.
Summary
Keith Rabois, a General Partner at Founders Fund, shared his lessons on building teams in a conversation with Lloyed Lobo, co-founder of Boost.ai, at SaaStr Annual 2019. The transcript, published by SaaStr on June 2019, covers Rabois's career at PayPal, LinkedIn, and Square, his role as chief operating officer at Square, and his investment approach. Rabois said the founding principle he adopted from Khosla Ventures founding partner Vinod Khosla, who had served on Square's board, is that "the team you build is the company you build." He argued that while founders often focus on products, markets, and technologies, people are the decisive factor, citing PayPal, where a small group of 20 to 40 people were essential to the company's survival.
Rabois said team composition matters based on the company's goals, noting that a company competing with SpaceX would require a different team than one competing with Facebook. He said changing team composition can raise a startup's odds of success from roughly 1 in 10 to 30 to 40 percent. Founders Fund, he joked, should rebrand as "co-founders' fund," because it often matches early founders with missing skills, such as AI, engineering, hardware, or business co-founders, and requires them to allocate real equity. He described a board member's value as leveraging a network to find executives such as CFOs, VPs of engineering, and VPs of sales, and conducting reference checks.
On investment stage, Rabois said he made 80 to 85 angel investments between 2003 and 2013, typically $30,000 to $200,000. Since joining Khosla Ventures six years earlier, he has rarely invested less than $500,000, typically $1 million to $3 million at the seed stage. He compared team culture to concrete, which is malleable before it sets, and said he prefers to invest before it solidifies, though Khosla also invests in Series A and B rounds. Rabois estimated he has invested in 15 to 20 unicorns as an angel and five to 10 as a general partner. He said early investments are driven by a founder's "spark," while Series B decisions rely on metrics and cohort analysis. He cited a recent autonomous driving startup and a company called Fair, which he said had raised over $100 million, but the transcript does not provide further figures on those companies.
Rabois said team composition matters based on the company's goals, noting that a company competing with SpaceX would require a different team than one competing with Facebook. He said changing team composition can raise a startup's odds of success from roughly 1 in 10 to 30 to 40 percent. Founders Fund, he joked, should rebrand as "co-founders' fund," because it often matches early founders with missing skills, such as AI, engineering, hardware, or business co-founders, and requires them to allocate real equity. He described a board member's value as leveraging a network to find executives such as CFOs, VPs of engineering, and VPs of sales, and conducting reference checks.
On investment stage, Rabois said he made 80 to 85 angel investments between 2003 and 2013, typically $30,000 to $200,000. Since joining Khosla Ventures six years earlier, he has rarely invested less than $500,000, typically $1 million to $3 million at the seed stage. He compared team culture to concrete, which is malleable before it sets, and said he prefers to invest before it solidifies, though Khosla also invests in Series A and B rounds. Rabois estimated he has invested in 15 to 20 unicorns as an angel and five to 10 as a general partner. He said early investments are driven by a founder's "spark," while Series B decisions rely on metrics and cohort analysis. He cited a recent autonomous driving startup and a company called Fair, which he said had raised over $100 million, but the transcript does not provide further figures on those companies.
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