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As a listener, you can trial Catalyst by Tegas for free by visiting tegas.co slash Patrick. Before we transition to the episode, I want to highlight the Founders Podcast, which is part of our Colossus Network. David Senra, who hosts Founders, has devoted his life to learning from history's greatest entrepreneurs and every week he distills the lessons of a different founder. If you want an entry point, I highly recommend starting with episode 136 on Estee Lauder or episode 288 on Ralph Lauren. I hosted David on Invest Like the Best last summer and it's hard not to walk away insanely energized after listening to any episode with him.

You can find a link to founders and those episodes in the show notes of this conversation. You can also search all past transcripts on our website, joincolossus.com. Hello and welcome everyone. I'm Patrick O'Shaughnessy and this is Invest Like The Best. This show is an open-ended exploration of markets, ideas, stories, and strategies that will help you better invest both your time and your money.

Invest Like The Best is part of the Colossus family of podcasts, and you can access all our podcasts, including edited transcripts, show notes, and other resources to keep learning at joincolossus.com.

Patrick O'Shaughnessy is the CEO and founding partner of Positive Sum and the CEO of O'Shaughnessy Asset Management. All opinions expressed by Patrick and podcast guests are solely their own opinions and do not reflect the opinion of Positive Sum or O'Shaughnessy Asset Management. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. Clients of positive sum or O'Shaughnessy asset management may maintain positions in the securities discussed in this podcast.

My guest today is Josh Kushner, founder and managing partner of venture firm Thrive Capital. Josh started Thrive in 2010 and launched its first institutional fund in 2011. That first institutional fund was $40 million and in it Thrive led Warby Parker Series A, invested in Instagram and incubated the business, which Josh co-founded called Oscar. Thrive has gone from strength to strength since and now manages $15 billion with a small team of 9 investors. Their portfolio is stage agnostic and their track record includes many of the best known businesses from the past decade, including Spotify, Unity, Stripe, and Twitch among many more.

Josh rarely speaks in public about the firm and their philosophy, so it was a blast to do this with him. Please enjoy my conversation with Josh Kushner. I have a strange opening question for you, which is about, it's a very meta question about the nature of this interview in the first place. I've talked to you about it a bunch. And I think you literally at 1 point wrote a note to yourself about why you might do this.

And when, and if we publish this, I think it will represent probably 80% of the total minutes of you being recorded in a conversation. And I'm just curious about that. Everything else we'll talk about, I think is somewhat downstream of some very deliberate choices you've made, your style, your personal style. I've really enjoyed getting to understand. And so I'm just curious in that note, what were you saying to yourself?

Well, I think as a firm, we've always taken a very different approach with regards to how we present ourselves to the world, and I think that has come from a couple of different frameworks. The first is, and most important, our belief that the founders are heroes and the idea of taking credit for their success is not something that we've ever wanted to do. I think Personally, the construct of seeking validation from others is not something that we've ever believed would lead to us getting to the right conclusions on things that we do. We've always been different in that we don't apply to the Midas list or things like that, just because even internally forget about how we would want to be perceived externally. Every single win that we have is the entire firm's win.

And every single loss that we have is the entire firm's loss. I know you've had Shane Battier on the show before, and we all quote the no stat all-star often. Such an incredible piece. Yeah. There's a great story that we remind the entire organization about often, which is I led investment in Slack.

I sourced the deal. I underwrote the deal. I joined the board. I was the person who ultimately decided when we should exit the company. But as we were talking about it as a team, I was extremely nervous about the price that we were about to pay.

And my partner, Kareem, who was not involved in the underwriting process, who had never met Stuart, who did not join the board, was the 1 who actually convinced me that we should do the deal. So who gets credit? Is it me? Is it him? No, it's the team.

I think if you have that mindset, the idea of being out there in the ways in which others are in our industry is something that we've always gravitated away from why do this? I think in many respects. There are negative aspects of the fact that we're not out there and that some people don't really know what we do. Some people think that we just incubate companies. Some people think that we just make early stage investments.

Some people think that we only make later stage investments. So a mentor of mine said to me recently, if you don't tell your story, someone else will tell it for you. I feel grateful to have the opportunity to do it with you, but having the ability to articulate to the world what we do and how we do it and why we do it is something that I'm excited to do.

1 of the things that comes up, if you ask around about you and Thrive is, if I say like, what questions should I ask Josh? Several people will say, talk about the taste on the consumer side that developed early, because for the most part, Thrive invested in the consumer space, which on average didn't do that great, but leading companies did very, very well, and Thrive was often invested in those things. How do you think about the development of taste?

Taste is something that you should always question at the same time. Understanding quality and understanding taste and having a deep appreciation for that is something that is fundamentally important, but that doesn't mean that you're always going to get it right. Good design does have some basic principles. It's the people who can, I would say, understand how that design applies to lots of different industries and sectors and have the capacity to kind of think outside of the box that are ultimately able to thread those common principles through lots of different things? The people that I respect the most that have the most extraordinary taste, whether it be Bob Iger's ability to understand the difference between what movie is gonna work and what movie is not gonna work and appreciating creatives or You and I've talked a lot about Rick Rubin why he's able to understand why 1 musician is better than another is something that is Not teachable, but I think always questioning yourself is something that we constantly do.

You and I think are both in love, you turned me on to it, this chapter in his book called Rules. Can you tell me why you love that chapter so much?

What it says and why you love it so much? I highly recommend people go listen to it. Rick Rubin has this incredible line in his book, which is pay attention to what you notice, but when no 1 else sees. Rules are limitations. Rules artists learn are assumptions.

They're not absolutes. And I actually think there's this orientation that rules are things that we learn as adults. And in reality, when you're younger, you're completely unconstrained with regards to the ways in which you see the world. And I actually think naivety is such a powerful thing. A lot of people in our industry talk about pattern recognition as a positive attribute.

We actually talk about pattern recognition as a negative attribute. It actually prevents you from seeing the world differently. It prevents you from seeing what the world can be. And I actually think rules are things that can be deeply constraining. And actually I think in many respects, the ways in which we think about the firm have always pushed the boundaries in terms of what conventional wisdom is for the industry.

There have been so many times that we've been told this is not what a venture capital firm is meant to do. Smile every time. Yeah, our orientation is, well, if we actually think in first principles around what we're trying to create, we're always gonna ask why. Why is that the answer? Why can't we do this?

And I actually think as a result of our orientations around constantly questioning the norms, we've created something that I think has, in many respects, pushed the boundaries of what we can do, and our ambition is to continue to think outside the box in the ways in which we can continue to build a firm.

First time we met, you told me this amazing line. I think 1 of your parents told you about tall buildings. Can you share that line?

Yeah, the line is, lightning strikes the tallest building. And I've always tried to live my life with having my actions speak louder than my words and keep to myself. In addition to that, I just think it's a lot more fun to listen than it is to talk. When I was in Omaha for the Berkshire Hathaway, this meeting, I had the opportunity to spend time with Charlie Munger and he had this great line to me, which really has stuck with me and resonated with me, which was what's the point in telling everyone all that you know? It's a lot more fun to learn about things that you don't know.

So that's the framework that I have, a lot more listening than talking.

I promise This is my last preliminary philosophy question, but I think you tweet about once a year or so, so consistent with what you've said so far, the most recent precious use of 1 of your annual slots was to share a story from CS Lewis called inner ring, which I'm familiar with and love, and I think it's just a fantastic little, I don't know what to call it, essay story or something. Why share that? What does that mean to you? What's the gist of that and why has impacted the way you think about the world?

Yeah. So the inner ring is an essay written by CS Lewis. The summarized version is there are rings of people. And when you're on the outside of these rings, you'd want to be on the inside. It's this desire to feel included.

It's this desire to be a part of something. And those that actually chase these rings, they do whatever they can to get inside. And once they're inside, they realize that it's not all that they thought it was meant to be. So then they start chasing for the next ring, and the next ring, and the next ring. And the essay concludes that effectively, the goal of life should be to not try to chase anything, but rather focus on your craft, focus on the people that you love the most.

And unbeknownst to you, you will appear as if you're safe and sound within a ring to the outside world, but you will have absolutely no idea. And I think, for me, I have that framed in my office. Actually, I try to live my life every day by focusing on the things that I'm passionate about, my family, people that I love, my closest friends, and just trying to get better at the things that I do every day and try to not get distracted about the outside world.

What have you learned about the different sources of drive and motivation, especially in the context of founders, you called them heroes earlier of the stories of their businesses and you wanting to not get in the way of that story and really be supporting quietly, which is a very nice notion. Motivation seems like a critical thing, like psychology and motivation to understand when partnering with these people, especially if it's a very early young business. And you just talked about inner rings as maybe a pernicious form of motivation of trying to get something, but it being the wrong direction to be pointing. What have you learned about good, bad, healthy, unhealthy motivators and what drive people to do exceptional things?

Yeah. 1 of the values of thrive is to focus on the inputs, not the outputs. I think if you're chasing success, then you're unlikely to realize it. And if you are focused on a problem that needs to be solved, you will likely achieve success. So I think the people that we view as the most driven are the ones that are entirely focused on improving themselves constantly.

It's this level of self-motivation and self-awareness that is entirely a competition between them and themselves. And I think that is the thing that I've seen from the best founders that I've ever worked with. Those that are motivated by how the world will ultimately perceive them will likely make bad decisions. Those that are motivated by a mission or a cause or the ambition to solve a problem are the ones that will ultimately achieve it. In many respects, having the firm based in New York City has been very much driven by the idea of us, I would say, being out of an echo chamber or an ecosystem so that we can actually have true independent thought.

And I think these are human emotions that you feel when you're in the middle of something. When I was in college, I had the opportunity to go to a Knicks game with someone who worked in finance in New York City. And he took me courtside. The seats were amazing. I was in heaven.

And he looked over 5 seats to his right and he said, my seats are good, but this guy's seats are better. And that was- Inner rings. That was a really important moment for me because it made me realize that the way to ultimately do my job really well is to create the right boundaries for me to actually be on the outside and have true independent thought. A large portion of our investments are out West there every month. But I think in some respects, the idea of not being there every day has enabled me to focus on just be a lot more clear on my thinking.

Talk about the relationship between starting and investing in companies for Thrive, which as I understand it is deep in the DNA. We were talking at lunch about this idea that excellence is the capacity to take pain and that the experience of pain as an entrepreneur is probably a huge competitive advantage as an investor. And I think you started Oscar health the same year as you started thrive or are very close. So you were dual tracking this investor. Obviously you're an entrepreneur having started thrive too, but dual tracking the investor entrepreneur

styles at the same time and have ever since. What has that interplay meant to you and to the firm? What that experience taught me is that being a founder is incredibly romanticized And the pain that is taken in order to ultimately achieve success is just extraordinary. I feel like the ability to do both is something that I just feel so fortunate to do because I feel like being a founder has enabled me to appreciate all of those that Thrive is fortunate enough to invest in. And the ability to be exposed to so many extraordinary founders by being a part of Thrive has enabled me to be a much better founder myself.

But as a firm, we have definitely created a culture of building. We're building Thrive. Thrive is a product, we just happen to invest in other companies and our ambition is to be the most meaningful partner to our founders and we need to constantly iterate and tinker in terms of ways in which we can do that. But also, every single person on the investment team, in some respects, is building. And I think that gives them a true appreciation of the founder's struggle and the entrepreneur's struggle.

I'd love you to tell the Oscar story specifically, the actual story for how the thing got started. Work our way towards a general set of lessons on how do you identify an interesting problem and how do you help take something from 0 to 1. With all that in mind, tell us about how Oscar itself got started. I broke my ankle playing basketball.

I went to the hospital, went through the traditional experience. I remember getting home and getting my insurance bill and realizing that I had absolutely no idea what it meant. I had just started Thrive, and I didn't know what my benefits were, what doctors or hospitals I had access to, how to pay a claim. I said to myself, how is it that the internet and software and data and design are transforming every single industry around us? There's this relationship that is so fundamentally important to so many people in the country, both from a human perspective, but also from a financial perspective.

And what would be the way in which we can take this relationship and make it simple and transparent and understandable through technology, data, and design. When I had thought about this idea, the Affordable Care Act was just being introduced. And the reason why this was so exciting was because healthcare had traditionally been sold in a B2B capacity. People were not making decisions for themselves. And the Affordable Care Act was taking the largest industry in our country, which represents a little less than 20% of GDP, and transforming it from B2B to B2C.

And when people can actually make decisions for themselves, they usually choose the product that has the perfect combination of cost and quality. And there are so many examples of consumer choice transforming industries. That could be the shift from businesses giving their employees BlackBerrys to employees choosing iPhones for themselves or defined benefit moving to defined contribution through 401k. And I think as a result of this new market being created where there are so many people flooding to the market at the same time, the barriers to entry which had traditionally been so high in a world in which there's probably a trillion dollars of enterprise value were lowered at 1 moment and there was just 1 moment where a new brand could be created to create trust for consumers. Almost at the exact time that I had this poor consumer experience, Mario, who is my co-founder at Fos2, had his first kid and he equally had a terrible experience.

And I remember calling him and saying, Mario, I really think that there needs to be a new type of health insurance company. He agreed, got together.

We both read the Affordable Care Act over a weekend, which is light reading, and we got going. And the experience has been extraordinary. In this story, the why now is unbelievably clear, both in terms of your experience, but even bigger picture in terms of the affordable care act under what conditions does the why now matter to less or more to you in investing and around incubations. Does there always need to be some galvanizing change like that, that enables the new opportunity.

The why now is always fundamentally important because irrespective of people on capital, you always need tailwinds. So I think it's always a fundamental part of our conversation. The why now and Oscar was so extreme, but I also think the interesting part about Oscar was a recognition entering the founding of a company that it would be something that we would do for decades because we knew how fundamentally difficult it would be. And what's the scale of Oscar now? So we're 10 years into the company, Oscar is a million members, 6 and a half billion of revenue.

But the first decade, in our opinion, is only a couple chapters through what the ultimate story is. Oscar has been an incredible journey in terms of, we call it the 10 plagues of Oscar. Affordable Care Act was extremely volatile. I think there were 33 new insurance companies that were created as a part of the Affordable Care Act and only 2 are remaining. There was obviously a new administration that was very opposed to the Affordable Care Act, which led to increased volatility.

There was the global pandemic. When we started Oscar, I think 1 of the core insights that we had as we think about the next decade is if you were to start an e-commerce business today, you can launch on Shopify, you can plug in Stripe, you can plug in any basic data analytics service and you're ready to go. If you were to start a health insurance company 10 years ago or even today, there is very limited technology that you can utilize. So our idea was not only should we build a health insurance company that consumers loved, we also had this vision of what would it look like to actually create the operating system that would enable us to run a health insurance company end to end. And as we actually think about the next decade, we are the only people that have created this end to end system that enables you to operate a health insurance company and have a longitudinal view of a member from end to end.

And as we think about deploying LLMs across this product, we get extremely excited about the transformations that are going to come.

Do the pleasures and the pain of running and helping run a mature platform like Oscar, Are those pleasures and pains very different from the pleasures and pains of the really early stages of businesses?

If there's 1 takeaway from founding businesses over my career, it's just as hard to start a small business as it is to start a large business. And it only gets harder, the larger the business gets, it only gets more complex. I remember it's probably 6 or 7 years ago. We had made an offer to a CTO and I remember having dinner with Carly. And I said to her, if he accepts, everything will be in a good place.

And she said, Josh, we've only been together for a couple of years now, but you've been saying that for a lot of things and you just have to accept the reality that the challenges are only going to increase. That wisdom was so incredible for me. She made me realize if you're building something and the ambition is

extraordinary, The challenges are only going to increase. That wisdom was so incredible for me.

She made me realize if you're building something and the ambition is extraordinary, the challenges are only going to continue to come because the problem that you're trying to solve is only increasing over time. So I think as we invest in any company at the early stages, or even invest in the companies at the later stages, our views are always oriented towards, we should only try to be a part of things that have really grand ambitions. We should only invest in companies whose ambitions are to be standalone public companies, we should only invest in products that have the desire to truly transform an industry or create a new 1. And I actually think going through the founder experience and still going through it today, I spent a decent portion of my weekend working on something for Oscar. You just have to know that the bigger the business gets, the harder it gets, and as a result of that, the ambition for what you're ultimately trying to create should only be extraordinary from the start.

1 of my favorite snippets from all the interviews I've done was Joey Levine at IAC saying he once walked into Diller's office and had this opportunity said, you know, if we really do it right, we'll have a hundred million in revenue in this timeline. And if we really do it right, it'll be a hundred million in profit. And Diller looks at him and goes, why bother? Like, why would we work on something so small? I thought that was such a wonderful story around scope of ambition.

It brings to mind just all the other things you've done on the incubation side, where the lesson is, if you're going to do it, it's hard no matter what. So go for something that can be really, really big. How do you think about identifying good problems through that lens or that frame? You've done it in healthcare several times. You've done it elsewhere.

What does a good problem look like and how do you think about bringing it from 0 to 1? Now that you've done this more than 10 times, I think through Thrive.

Yeah, we've started over a dozen businesses and every single person on the investment team currently has been a part of an incubation at Thrive. So every single person at the firm is building, everyone understands the pain the founders go through, they're experiencing it themselves. I think our view is there are big markets, there are large markets, and there are infinite markets. And I think the only places that you wanna play are in the infinite markets. I think no differently than our investments, every single incubation that we create has a grand ambition, but there's usually a very specific product that we believe should be built from the beginning that ultimately creates a wedge into a much larger opportunity.

We would ultimately be dissatisfied if that larger opportunity is not captured. And ultimately, no matter how thoughtful we are about identifying that opportunity alongside the partners that we're ultimately working with, if the person who is ultimately building that business is not N of

1,

nothing's going to happen. I think the last incubations at the firm have been created by Gaurav, Vince, and Kareem, And they have just an incredible amount of humility and self-awareness around the quality of the person that they ultimately want to work with. I think they're extraordinary top-down thinkers in terms of thinking about what the opportunities are that could lead to outsized outcomes. But at the end of the day, if we're not building alongside extraordinary people, nothing's ultimately going to realize its full potential.

What was the moment that you decided to start Thrive in the first place? Because I think you were 25, you were extremely young, you had basically no work experience at the time. So what were the antecedents to thrive that matter? What were the ingredients to the early recipe of fuel?

So I went to Harvard, graduated in 2008. Mark Zuckerberg had started Facebook a couple of years prior, and I think that was very motivating to a lot of us there. We saw that someone who was a peer could build and build at an extraordinary level. And I think that inspired a lot of us that we could do the same. So I actually started a company when I was in college with my co-founder at Oscar and Mario.

It was a social gaming company. And that experience exposed me to this idea that something could be built and it could reach tens of millions of people. And that was really intoxicating. I actually suppressed that because a lot of the people that I respected the most at Harvard at the time were actually going to work in finance. So I ended up applying for a bunch of finance jobs.

I got a job at Goldman Sachs, but while I was at Goldman, there were days where I was working 20 hours a day, and then there were days where there was absolutely nothing to do because it felt like the world had stopped during the global financial crisis. And I got introduced to a company called Hot Potato, which ended up selling to Facebook, ironically. And I asked him if I could invest in the business. And he said, of course, but you need to convince my venture capitalist. And I said, that sounds great.

I didn't really appreciate what venture capital was as an industry at the time. So I ended up speaking to this firm and I ended up being general catalyst. And they said, well, while you're at HPS, why don't you come by for a coffee? So I did that. And I thought I was coming for a coffee and they effectively offered me a job.

And I didn't join them, but after school I would go and I'd hang out at their office and learn from them. And in between my first and second year of business school, the 3 of them effectively said, we think you could be really good at this. We want to give you a million dollars to invest on your own. And I feel really grateful to them because in many respects, this is not something that I knew that I could do. I was working at Goldman the year prior buying distress credit.

I just feel so lucky that they did that for me. But that was an extraordinary, extraordinary thing because it enabled me to have the capacity to just meet with founders, both in New York as the ecosystem was taking off, but also on the West Coast around the time that the iPhone was introduced. As a result of that, I was able to invest in some really great companies and that enabled Thrive to get off the ground. Towards the end of my time at school, General Catalyst introduced me to Andy Golden, who is the CIO of Princeton. And similarly, I think Andy saw more in me than I saw in myself.

And he really spent time with me talking to me about what I wanted to do and what I wanted to build. And he had this really powerful line that really resonated with me, which was as firm scale, they start to lose a sense of who they are. They start to focus on AOM. They start to focus on doing things that they weren't necessarily good at in the beginning. That leads to the vicious cycle.

The vicious cycle is you have a lower cost of capital. The lower cost of capital leads to lower human capital, less ambitious people, less ambitious people leads to lower returns, and it just leads to mediocrity. And I came back to him and I said, well, Andy, what if I told you what I dreamed thrive would be in 10 years from now? And I started doing that today. And I pitched him this idea of being this opportunistic vehicle that had the capacity to invest across stage sector and geography.

And keep in mind, this is at a moment in time in which you're either an early stage firm or later stage from your other software firm or consumer firm. You are either a European firm or AUS firm.

Yeah. No generalists.

Yeah. So the idea of actually having a fund that actually could build companies, invest in companies early and invest in companies late was so deeply unconventional. I feel really lucky that he saw it and he understood it. But what it has enabled us to do is do the exact same thing from when we started the fund till today. Our first institutional fund was $40 million.

Our last institutional fund that we raised was about $3 billion. But the strategies have been exactly the same. The only things that have changed are the team, the scale of the brands, the knowledge and insights of the people within the organizations.

I'd love to talk a little bit about a history lesson using the funds themselves as the timeline mileposts, if you will, tell us a little bit about the significance to you and to thrive of funds. 123, and 4. And then I want to pause on 4 and talk. I know that was a really important fund for the firm. So I guess start with 1, 2, and 3.

If you had to sort of top line, what was happening, why it was important and what you learned from the first 3 funds, could you do that for us?

The opportunistic strategy that we've laid out to our limited partners was seen as unconventional. So the sequencing of making sure that every fund had essentially the right ingredients to the cocktail that we ultimately wanted to create, took time. Thrive 2 was our first institutional fund. It was $40 million. But in that fund, We had our first incubation at Oscar.

We led the series A of Warby Parker. And we invested in Instagram. That was fun too. Fun too. Yeah.

At a half billion dollar valuation. Fun 3 had multiple incubations as well. Quite a few early stage investments, but we also invested in Twitch and Spotify at the later stages as well. I think fund 4 was the first time where We not only did everything that we did, but we started to develop our frameworks for concentration. So in that fund, we had about a 15% position in GitHub, about a 10% position in Slack, 10% in Stripe,

10%

in Unity. And then we invested in BenchLink and Lattice at the seeds, but we ultimately built those up into about 10% positions over time. And then we also incubated Cedar and that fund as well. So I think That was the first time that we weren't only doing everything, but we started to develop clarity that it's not only about investing at every stage and in every geography and in every sector, but also being extremely disciplined around almost doing a lot, but not doing a lot and making sure that ultimately the things that we wanted in the portfolio are ones that we were extremely concentrated in, that we wanted to hold for a very long period of time.

How did you know that that was the right move going from funds 2

and 3 into 4. Everything always seems simple in retrospect, but I think our view at that time was there was this mismatch in terms of at the earliest stages and the later stages in that no 1 was creating and no 1 was also investing at later stages. And our ability to actually beat out traditional later stage funds as a result of our product and strategy orientation at the later stages was something that we were taking advantage of that time because the competition was mostly coming from mutual funds blending down towards privates and our ability to kind of approach what we believed to be these category-defining businesses at the later stages and deploy meaningful amounts of capital into them for what we believe to be attractive prices, even though they were seen as later stage at that time was something that we were indexing towards.

You raised this idea of competition, right? The competition wasn't doing X, Y, and Z and it created an opportunity. And I'd love your perspective on industry-wide competition today and kind of your views on the different models for, I guess, building a venture firm or building a private equity firm just in general. Obviously you've gone 1 direction with thrive. Maybe the opposite of the spectrum would be something like artisanal small partnership.

A couple of partners that share economics. There's lots of examples like this where they do it 2 people or 3 people or something like that. That would be 1 model I'd be curious for your thoughts on. And then the other like monoliths that have now built multi-stage firms, built firms that can go anywhere, do anything, have teams in different geographies. How do you think about the different models and the pros and cons from your seat and what you've observed?

We have specific points of views on this, but I think it would be unfair to say that the other views that others have are incorrect. What works well for us might not work well for other people. I think the most important framing that we have internally, as I expressed earlier, is Thrive is a company. We have a product. Our product is our strategy and our investment process, but also our ambition to be the most meaningful partner to our founders and we let our founders determine what meaningful is to them.

The market is constantly changing and the idea that people in our industry can have a perspective, that the market can change, but the ways in which they do their jobs doesn't change, has never necessarily resonated. And I actually think the ways in which we approach Thrive is no different than how a lot of our founders approach their businesses. Our best companies ship weekly or monthly. And our view is we need to be shipping weekly or monthly in terms of the ways in which we are making decisions or serving our founders. But we are a company.

We are building a company. We are founders. We just happen to be founders of an investment firm. And I think a lot of people don't think about investors as founders, they don't think of them as builders. We think of ourselves as builders.

We're just building Thrive. We do have strong opinions on the ways in which we do things, which is we believe in the generalist model. We've always shied away from sector-specific funds. And I think if you have these funds that are so focused on a specific sector, the argument that you can make is that you see everything and that you have the prepared mind to make the right decisions. The counter argument is you feel the pressure to deploy capital into a sector as a result of the fact that you have a sector specific fund.

So we've really believed that the best ideas are the ones that we should invest in. Thrive started by primarily investing in consumer-oriented businesses. Our first funds had, as I mentioned before, Warby and Harry's and Twitch and Instagram and Spotify and many others. If we had stayed focused entirely on being consumer oriented, then I think the returns that we would have created would look very differently. You can apply the frameworks that you have from 1 opportunity or 1 sector to another.

You've asked me a lot about how we actually identify companies. I actually think we in many respects apply a consumer lens to every single deal that we're doing, whether or not it's a payments business or an enterprise software business. At the end of the day, each product has a consumer. It has an enterprise. Understanding kind of the nuance of that product, understanding how special that product is, whether or not it's a feature or something that is truly fundamentally important to someone and why it's important to someone is something that we constantly go back to.

So I think you can apply the frameworks from 1 sector to another, but I think the idea of actually being sector specific is not something that we've ever oriented towards.

I wanna spend a few minutes on talent and people and recruiting them and seeing potential in even very young people, which you just described a few people seeing in you. I don't know if you know this, but the first time I was in your office, I was with David Fialco immediately beforehand. And I mentioned I was going and he got this as Fialco's want to do this, like sparkle in his eye. And I'm curious what you think that was. Why, when you were 25, did a few people who we can now safely call investing legends, both on the endowment side and the GP side, what do you think they saw?

And another way of introducing the question is what you see in others, because you've done the same thing over and over again in turn, paid it forward, I guess. But starting with you, what do you think it was that Andy and David and Joel and all these people saw early on in someone that objectively didn't have an investing track record?

I can't speak for them, but I think there was an extraordinary amount of independent thought that went into the thesis behind Thrive. And I would say a tenacity and a drive to do whatever was possible in order for us to ultimately be the best versions of ourselves. I think there's a level of self motivation, humility, that immigrant-like mentality that goes into the ways in which every single person thinks of the firm that I think resonated with them because they're all thinking very similarly.

Where does the immigrant mentality land for you? I know that's a common theme of people that you've worked with and for you and your family too. Say a little bit more about, people have heard that phrase, they understand the general concept, but what has that felt experience?

So my grandparents were Holocaust survivors. They both lived in what would be modern day Belarus. My grandmother lived in a small town. At 1 point it became a ghetto. She was a part of a small group of people that dug a tunnel that was 90 feet to escape the ghetto, had many members of her family murdered, escaped to join the partisans in the Forest, the Belsky Brigade.

There's a movie called Defiance, which Daniel Craig stars in, which was that group of people, to then wait out to finish the war, to live in a refugee camp in Italy for 3 or 4 years, to come to the States with nothing but her and my grandfather, the shirts on their back to create a life for themselves. So growing up around the dinner table, I was hearing that story and the story about how my grandfather who came here as a laborer on construction sites, how he would sleep in the homes that he was building over save money on gas. And I think the lessons for me were I'm entitled to nothing. America is the greatest country in the world where everything is possible. Perseverance and tenacity and having the capacity as I expressed earlier to just deal with pain is something that leads to greatness.

And I think a lot of people that work at Thrive have very similar mindsets. They feel like they need to do whatever they can to be the best version of themselves.

How do you think about maintaining the power of that story in your own family and in your business? Obviously so many of the hard things that people go through shape them in extreme ways, probably in the ways that you're describing. And then hopefully things get better. And you and I talk about our kids a lot. How do you think about this story and your kids or this story and the next person, the partner that joins you at thrive and harnessing this story for good, I guess is the way to ask the question and maintaining the power that it's had for you personally, which sounds pretty significant.

I think stories are impactful, but actions are a lot more impactful. So As I think about how Carly and I can ultimately pass lessons down to our children 1 day, it's going to be entirely based on our actions and how we act and how we live our lives and the priorities that we have and the values that we have. With regards to work, my partners and I can never ask anyone to do anything that we're not willing to do ourselves. I actually feel like as the firm has gotten larger, in many respects, the tenacity has increased. The desire to be even better has increased.

The focus on winning and the ways in which we want to do it with our values and integrity, I think are things that we're even more focused on. We can talk about talent whenever you want, but there's a line that I use at the firm all the time, which is if you actually have to choose between the most experienced person, the most educated person, or the person who actually wants it the most, you always pick the person who wants it the most. There is no substitute for hard work. There is no substitute for willing to outwork someone else. And that can translate into your personal life just as much as it can translate into your work life.

I think I said this to you during lunch. If you're not embarrassed about who you were 2 years ago, you're not growing. A mentor of mine once said that to me. I feel that way about myself as an individual, not just within the business world. I think it's that chip on your shoulder that you feel like you just have to get better all the time that I think is what we look for in people at the firm.

I would like to linger on talent because I totally agree that the work ethic and wanting it more is the ultimate advantage and persistence trumps maybe everything else. That being said, I'm lucky to know some of your partners current and past and 1 of the things that I think if everyone listening met them would stand out is their intellect. Whether that's Miles, who's now a benchmark or Chris, who's now at pace or Kareem, who's with you now. All these people have a, I think what could be fairly described as a sparkling intellect. Someone said to me about Miles 1 time, what's the deal?

What's his superpower? This is a very good investor that said this to me. It was like, he's just smarter than everyone. So amongst a group of really talented, smart people, how do you test for the wants it more gene, if that's the thing that you choose over everything else, and you're lucky to hunt in a really smart, talented pool of people, how do you test for that, especially if the person's very young, which has been the case in a lot of Thrive's partners. They're mid-20s or late-20s.

They're young people.

I will always take someone's desire to win more so than anything else. But our view is that there's a major difference between being intelligent and being smart. And I think we look for people who are deeply independent in their thought process that have an incredible first principles lens and that are creative enough to imagine things that have never existed before but analytical enough to be able to understand businesses at any stage and in any sector. 1 of the things that we have done, I think, very effectively is we've taken people that have started off their careers at places like a Blackstone or a Bridgewater that were trained with a very financial lens, but just realized that it wasn't the right place for them. And I actually think that has enabled us to truly identify people that are so unique in their thinking.

They don't know what everyone in our industry is talking about. If you were to sit down with anyone who works at any firm and ask them about artificial intelligence right now, they will likely be able to regurgitate whatever it is that they heard on whatever podcast they listened to. If you take someone who's thinking about global macro at Bridgewater or distressed debt investing and give them a day to give you their best points of views on whatever topic is interesting to us at Thrive. And they're able to come with incredible analysis and articulate it in a very intense debate. That is the type of person that we want at the team.

When you think back to the earliest days and the first couple of funds, what were the investments that were the things that started to form the kernels of the story? Obviously there's the Instagram story. We can tell that if it's interesting and people know you for it. So maybe it's worth hearing your version of it. But along with that 1,

what were the other consequential investments that you made early on and what was going on around them? So maybe to take a step back, Our ambition is to really be extremely concentrated in both ideas and people, both at the early stages and the later stages. We purposely have built a small team to actually create constraint around what we can do.

How small is small?

We manage approximately $15 billion and our investment team is 9 people. Our view is the only way to have a team is to have a small team. In addition to that, the only way to have a small team is to have a team of people who respect each other equally. And that doesn't mean that everyone needs to be exceptional at the same things. That means that every single person brings something completely different to the table, irrespective of their age, irrespective of their experience.

Trevor Burrus

I want to understand how that philosophy developed in the early days. So Thrive could have gone a million directions. You are concentrated. Proof's in the pudding there. Was that how you planned it from the start when you were doing your independent thinking exercise that convinced Andy Golden that you're onto something.

Was that part of it or did that develop as a result of early deal-making, early investments, early observations? How did that crystallize?

We're of the belief that artists like to live in artist colonies and that every single person that joins an organization should be the most extraordinary person that we can find, irrespective of the role that they're playing. And I think we also have the belief that 1 extraordinary person could do 10 people's jobs. 1 of the things that we've done very well, I think as a lot of organizations grow and people become more established, they start to hire for leverage. And our mindset has always been everyone that we hire to the organization should be extraordinary, but also every single person that is hired to the investment team has the capacity to be a partner. The mindset is this person, a lot of organizations are a come worker for 2 years, you're in, you're out.

But every single offer that we give to people on the investment team is with the expectation that if they are successful, they will be a partner at the firm. And I think that has forced us to be incredibly disciplined around every single person that we bring onto the team, irrespective if they're 2 years out of school or 10 years out of school. They should raise the bar for us. And I think that's enabled us to do as much as we've done with as few people as we've done. Going back to the only way to have a team is to have a small team, we've taken, I think, a pretty unconventional point of view, which is we don't believe in consensus.

We don't believe in complete autonomy. We believe in the team. I think a lot of firms have a point of view that everyone needs to agree in order for a decision to be made. A lot of firms believe that if you have the right people within the organization, they should have the capacity to just make whatever decision is that they want. I don't convince the team that we should do a deal, we don't do a deal because I believe in the team.

And I think that's a very, very, very powerful thing. The only way to actually do that is if you have a group of people that respects each other, respects each other's points of views, respects each other's perspectives. I'd love to talk about your great analogy for all the kinds

of investing that you do that uses real estate as sort of a proxy. Maybe I'll kick it off with like an idea that someone said to me recently, which is the market may underprice market leading positions in companies. I guess another way of saying that is may underprice quality at a certain stage of development. And I think the analogy you've told me about you explaining this to your mom, like kind of what you did through the lens of real estate, was really, really interesting and informative. Maybe you could share the whole framework.

As we've talked about, we have a core belief that as a firm, we should be concentrated in exceptional companies and exceptional people. And our view is that the best companies compound themselves over a very long period of time. We're hoping to invest in companies that we're partnering with for decades. And I'm not sure if that's a benefit of our ages or the fact that we know that the best investors are the ones that have picked businesses and have held them for a very long period of time. The running joke in my family for some period of time is that my mom thinks I fix computers for a living.

She is still calling me when the TV is broken, But I've always tried my best to kind of explain to her what we do in the context of real estate. At the later stages, I always say to her that we invest in Fifth Avenue. And my view is you always pay a fair price for Fifth Avenue. Markets go up, markets go down, but at the end of the day, if you invest in quality, that quality will ultimately compound on itself. There's a scarcity value to quality.

Those that invest in Fifth Avenue a decade ago are happy that they have it today. The biggest mistakes that we've made as a firm are when we've way overpaid for Fifth Avenue or we've bought Third Avenue thinking that it would become Fifth Avenue. And that's just never the case. Our view is if you are concentrated in the most exceptional businesses and you hold those businesses over very long times, a lot of the value in those sectors that you're investing in will ultimately accrue to the number 1 player. There are a lot of firms that actually have a very different point of view, which is they like to invest in the second or the third player in an industry.

Our view is we want to partner with the most visionary founders that are building the category-defining assets in their sectors and partner with them over very long periods of time because the value will ultimately compound on itself. To continue the real estate analogy, at the earliest stages, I always say to her, for the metropolitan folks listening to this podcast, we're going to Jersey City. 10 years ago, we're going to Astoria, we're going to Williamsburg, we're going to Bed-Stuy. Sometimes we'll get those neighborhoods right way before anyone else. And sometimes we won't, but our ambition is to be in those neighborhoods way before anyone else's moved there and really dream of what they can be way before The rest of the market identifies them.

At what stage of a company's life do you think that it can be on Fifth Avenue? Is it a revenue stage on average? Is it like a fundraising stage? At what point does that quality third versus Fifth Avenue thing start to sort itself out do you think on average?

It has less to do with revenue or valuation. It has more to do with how the end consumer or the end customer feels about the product. And we talked a little bit about our orientation around approaching our investments with a consumer lens. A lot of people at the firm have an incredibly creative side to them. In some respects, there's like an artistic orientation of a lot of people at the firm.

I think as we think about what is a premier company, a lot of it has to do with the quality of the product in the eyes of those that are actually using that product. That is how we identify what Fifth Avenue is. Consumers or enterprises can change, but I think there's a level of love for products that we've invested in where the switching costs are so high as a result of how the end customer thinks about them.

Can you give an example, not a specific 1, I don't want to name companies, but of the category mistake of thinking Third Avenue is Fifth Avenue. What is it that has snared you in that specific trap, especially at the late stages?

The thing that I love about concentration is you need to be so all-in on the idea that you're willing to kind of bet the farm in some respects, no compromises. I think other mistakes I've made is every time that the firm has ever sized down a position, based on our perception of risk, it's never led to an extraordinary outcome. And we try our best to identify these things. Stripe just raised a large round. We felt fortunate to be a part of it.

We put a billion 7, 5 between us and our partners into the company. I can't think of a better business model and a more extraordinary team for us to have the opportunity to invest in a very deep way.

If you think about the environment that we're facing today and the tension of, I'll call it like a hangover from extreme valuations, especially late in COVID, Apple just announced their new product, which you mentioned you started your career at, had been a mobile, and we know where that led. This explosion of opportunity in companies, and AI has been happening, we've talked a lot about it offline over the last, call it, year now. So you've got these 2 unbelievably exciting, could be new technology platforms, or enabling technologies, that are exploding on the scene at the same time as we're dealing with this tremendous hangover and there seems to be the end of a capital cycle. It feels like a weird time. How do you incorporate your understanding of the time and the prevailing circumstances, like the ones I just described in an investing process.

And I'm asking this cause you've seen a lot of them now. You started in great financial crisis. You've seen a lot of environments since then as an investor, you care, like, does it matter? Does the macro environment matter much to you?

So I think the best way to answer that question would be to talk about my experience at Goldman Sachs. So I started my career in the summer of 2008. I showed up at the office 1 Saturday night just to get ahead of the week. And many of those that I was reporting to were in the office. I asked them what they were working on.

They said that they were underwriting all of Lehman Brothers' real estate assets. I asked if they needed help. I was just a couple weeks into the job, but did my best to support them in whatever way I could. This group that I was a part of ultimately decided that it made sense to pass on buying Lehman's assets. And the next day, Lehman announced that it was going under.

And I had this true appreciation in that moment. I remember getting home Sunday night knowing what was coming on Monday morning and feeling like the world was going to change in a very dramatic way. And it did. And I remember a couple months later, I was in the office the day after Thanksgiving, I was working on something. I think I was the only person there.

And I remember calling my father to see how his day was going. And I said to him, dad, you think the world has changed forever and has lied to me, which stuck with me. And I think really has led to a lot of our thinking around investing is the world doesn't end very often. There are cycles and it's important to understand where you are in the cycle. I think the things to appreciate though, in this moment, you want to run to something whenever and else is running away.

I think we have definitely tried our best to do that in this moment. As the market is facing the volatility that it's facing, we kind of try our best to take a step back and say, do we believe in the fundamentals of the space that we're working in? Do we believe that the long-term trends associated with technology innovation are going to move in a very particular direction? Do we believe in this group of exceptional founders that we've had the opportunity to partner with? Do we believe in their products and their positioning?

If so, lean in when others are leaning away. And it's scary to run into a burning building when everyone else is running away. I think those that I respect the most have benefited tremendously in their careers when they've done the exact same thing.

What was your reaction when you saw Nat Friedman and Daniel Gross's available computer for, I don't know what else to call it, do you know what I'm talking about?

I thought it was brilliant. Daniel's something that I respect a ton. Actually invested in his first company out of YC, and Nat took over GitHub after it was sold to Microsoft. All of these AI companies just need compute.

They said, here you go.

Their orientation is, hey, we can give you money or we can just give you compute. And naturally that's gonna lead to them investing in these companies, but it's just brilliant. Constantly thinking about why are things done a certain way, going back to our conversation around the ways in which the industry has existed. I think there are some beautiful aspects to the ways in which the industry has existed. But My hope is that as a firm, we're constantly questioning those things and pushing the boundaries no differently than our companies with the main goal of being, how do we actually serve our customer?

And our customer is our founders. If we're constantly pushing the boundaries around ways in which we can do that, then I'll be happy that we're questioning the rules.

For someone that's so deliberate about people in their lives, why sell a small stake of Thrive, the business itself,

to the group of people that you sold it to? Walk me through that episode of why you did it and what you get out of it. Sure. So Thrive sold in January a 3% stake to a group of 5 individuals. Bob Iger, who's the CEO of Disney, Mukesh Ambani, who's the founder of Reliance, Xavier Aniel, who's prolific French entrepreneur and investor, Georgia Paula Lemon, who started 3G and has run and operated many extraordinary businesses, and then Henry Kavras, who founded and scaled KKR.

The reason for the transaction was very much us as a group thinking in first principles around the reality that our best companies have cap tables and they have cap tables with extraordinary investors, but also they have boards. As the firm has scaled, the idea of actually having people who have built meaningful businesses and have operated meaningful businesses is something that we were very excited to have as a part of

our organization. So we feel very lucky to have this extraordinary group. How do you think about setting and controlling your own ambition? And thinking all the way back to your first conversation with Andy Golden about the polls that happen on asset management firms as they scale and trying to keep some purity. What you talk about is concentration of people and ideas is that expression of that purity.

Do you have big ambitions? Do you think about, I want Thrive to be X, Y, or Z in 10 years, is that prudent? How do you think about it?

We are very focused on the inputs, not the outputs. Going back to the Andy Golden comment that he made to me, if I said to you right now, Thrive is 15 billion, our ambition is to be $100 billion in 10 years from now.

Bad ambition. It would be the wrong way

to think about things. My view is we need to focus on what has enabled us to get to where we are today, which is how do we have the highest density of human capital in our industry? How do we create an environment where people feel so empowered to do big, bold, ambitious things? How do we be the most meaningful partner to our founders? How do we be great fiduciaries for our limited partners?

How do we create the most exceptional culture of transparency and kindness? And then whatever it ends up being, it will be. Of course, we want to partner with the most extraordinary founders who are making the biggest impact in the world. We want to be there by their sides. We want to build some of these companies ourselves, And we want to do it for a very long time.

But I think thinking about the inputs is the right way to approach the problem. Tactical question, which is, how do you manage the tension between being the CEO of Thrive, the business that you're building, in all those ways you just described, and being a pure play investor? That is, looking at companies and meeting people and thinking about ideas. Those 2 things both take a lot of time. How do you actually do those things you just described of building the pieces of Thrive?

Is it a trusted lieutenant? Is it, I'm just curious in the nuts and bolts of how the thing actually works.

Kareem Nithin, Nori, our chairman, Nabil and I were talking about this last night, which is ultimately as the firm has grown, we've gone from people who are just making music to in some respects being conductors. But our view is the danger that a lot of firms have is that they just focus on conducting and when you're just focused on conducting but you're not making any music, you actually shouldn't know what notes sound good and what notes don't sound good. You shouldn't know who the best violinist is. So as an organization, we've always been very committed irrespective of the fact that we have to manage the firm and its ambitions. We need to spend a disproportionate amount of our time making music.

And that's how we do spend our time. You need to do both. You need a lead, but you also need to be focused on getting better at the craft. If you're not focused on getting better at the craft every day, then you become mediocre.

How do you do that? Is it different learning? Maybe we could take a real example today with AI, just because it's the obvious 1 that everyone's curious about and talking about, is it just constant conversations with the smartest people you can find? Is it sitting and thinking, is it reading? Is it all of the above?

Is it talking to your team? There's only 10 hours in the day or whatever it is that you can work. Like what, how

do you think about allocating them? It's less about the process. It's the intention of the process. So there's obviously different ways in which you can go about learning. But I think the intellectual honesty that goes into the process is something that I have found has benefited us the most to actually develop our own informed points of views and perspectives.

So when we're sitting around the table talking about an opportunity, everyone is approaching that conversation with a level of humility and self-awareness that none of us can predict the future. 1 of the most humbling moments in my career was right after I invested in Instagram, Snap started to grow in a very meaningful way. And Instagram was 1 of these products where I used it, I loved it, I understood it. The natural expectation was that because I understood 1 social product, I should understand the other. And I actually didn't get SNAP.

I didn't appreciate it. And I think as I started my career, there's this expectation that, and while I do believe that instinct is like a very powerful thing and people should trust their instincts, I was at this point of view that like in this industry, you are just meant to trust your instincts. But if our jobs are to break the future, if any of us could, we should be doing things a lot more important in our lives than investing in companies. So I think the mindset that we take is none of us can predict the future. We just need to have an intellectually honest conversation about where we think the world is going, develop our informed points of views.

But that intellectual honesty and that intention around actually learning is what enables us to develop our conclusions.

So having lived through mobile and cloud and so many of these big things that have driven the world. What do you think of these 2 latest things and what they might unlock? And I know you've invested in open AI. So obviously like you're super familiar with what's going on and how exciting it is and also the limitations and all these sorts of things. At this point in time, what is your model for thinking about these things?

I think it's the most exciting paradigm shift that I've had the opportunity to be exposed to in my career because of the potential implications of it. When you start to think way out in terms of what these models can do in terms of transforming processes that exist in our lives or incredible services that exist in our lives or very human, real aspects of the ways in which we live, whether it be health or drug discovery or things of that nature. It's exciting. It's powerful. We've been amazed by all that the company has done in such a short period of time since ChachiPT has launched.

Obviously they've been working on the product for a very long period of time. I think from like an investor's perspective and as we're thinking about building companies in the space as well, I think 1 of the trickiest things is not whether or not value will be created, but where will value ultimately accrue to. And obviously we made an extremely large investment in open AI as a result of the fact that we think a lot of value and a lot of impact as a result of the fact that we think that they have an extraordinary product, but also a very high density of talent building the space will accrue to them. But where it ultimately falls elsewhere is something that we're still spending time on. I think the insights that exist today, and as to whether or not these insights will be relevant in a couple of years from now is 1, this feels like the first paradigm shift that I've been exposed to in my career where the incumbent has the first right of refusal.

As a result of the fact that this is an API based paradigm shift as opposed to an operating system based paradigm shift, the ability for every company to access the same technology at the exact same time puts people in a position in which they can utilize this technology to improve their businesses. So as on-prem moved to cloud or desktop moved to mobile or other things have transformed over time, I think the ability, analog moved to digital, like the ability for Every company to just implement this technology very seamlessly is something that we're seeing at a pretty rapid pace. I think the other thing that we at least have a point of view and perspective on is that this is going to be both top line and bottom line of creative. The ability to transform enterprise or consumer experience and intentionally increase our poo. Or in addition to that automate a lot of processes is likely as well.

I'd love to do the same, just a couple other categories. So just go down to the weeds of what you've learned in a category building and investing in companies. The first of which is crypto. You've really been notable in your absence from that space. We've talked about extensively, like you guys can go anywhere, you can do anything.

You could have done a lot of crypto, you didn't. Why not? What was less exciting about that? What answer would you have given in early 2021 when everyone was investing lots of money in crypto? What was it about that space?

What was your model of

that space at the time? We have a core belief that there's an important place in the world for crypto. I think the technology that has been created and will continue to be created can be extremely meaningful. I think the reasons why we struggled over the last years has been primarily oriented towards the fact that it has felt like there's been solutions in search of problems. And we try our best to be extremely simple in everything that we do.

And we tried really hard to kind of understand the problems that some of these technologies were trying to solve and we couldn't. And our orientation to kind of approaching the sector was more oriented towards, okay, if this is something that is going to take off, let's invest in the picks and troubles associated with the space, but I think you can't invest in something that you don't understand. There's a difference between a great company and a great investment and don't invest in things that you don't understand. If you don't understand it, you can't invest in it. And I think the discipline that we brought to the sector is something that I'm both proud of, but in the spirit of vulnerability, I think we felt deeply insecure as everyone else.

Making money hand over fist.

Was pitching this version of the world. It's funny, as we talked about, I'm not a big Twitter user, but in my 1 tweet of the year, I went back and I said, where did all the .eths go? They're gone. No 1 has NFT profile pics anymore. Did we just erase this from our memories?

I think that's roughly what's happened, yes.

But anyway, I think blockchain as software is something that we believe in, and I think it has an important purpose in the world.

When and if it solves a tangible problem, you understand you'd be interested.

Yes, of course. Like everything else, always open-minded.

What about financial services slash FinTech? How do you think of the world of opportunity in and around that space? Our FinTech investments so far have been on the infrastructure side, as we've talked about, Stripe and Plaid, on the direct consumer side, NewBank in Brazil, Monzo

in the UK, Robinhood, and then on the B2B side, Ramp, and then in some respects, B2B2C, Affirm. I think from our perspectives, we've just always been oriented towards, There's been this incredible consumerization of financial services products and the ability to actually create meaningful relationships with a lot less friction within consumers has created businesses that have grown pretty significantly without any customer acquisition as a result of the products that they've created. And I think as we've seen across our portfolio, there's usually 1 hero product. And that product leads to incredible demand, but utilizing that distribution to ultimately introduce lots of different products over time is something that we've seen create meaningful enterprise value. We are big believers that there will continue to be tremendous innovation in the financial services space.

We're also tremendously impressed by how some of the incumbents have reacted to the innovation that has been brought forth by some of the companies that I've mentioned. But I think there's so much more to ultimately do.

Are there other areas that you think as distinct areas of opportunity like FinTech, healthcare, AI, et cetera?

If I were to frame the way in which we think about investing, we invest in consumer, so e-commerce. And on the direct to consumer side, we've invested in businesses that are very much oriented around the framework of cost, quality and convenience. So how do you actually sell a better product in a more convenient way at a lower cost than the incumbent? So throw Warby, Skims, Harry's, Hymns into that relevant framework. I would say aggregation, commerce, so an Instacart or Fanatics.

And then the third is just traditional marketplaces. On the second category that we've traditionally invested in would be traditional industries that are utilizing software or the distribution of the internet to provide a better consumer experience to the end consumer in a more capital efficient way. So think financial services, healthcare, insurance, real estate. The third is software. We've talked a lot about some of the companies that we've invested in.

And then the fourth would be software enabled hardware. It would be Andro and SpaceX. I think hardware is something that we've traditionally avoided just given the capital requirements associated, but also just the long lead times, but the ability to kind of apply an operating system on top of hardware is something that we've seen with those 2 companies and is something that we've been paying much closer attention to.

What was it like shadowing, I'm thinking of a legendary technologist, and I know early in your career, you shadowed Mark Andreessen for a period of time. I think Michael Ovitz introduced you. What was that, why did you do that, and what was the experience like?

So Michael Ovitz invested in Thrive's first $5 million fund. And...

Talk about someone willing to do the work. Yeah, 100%.

I never really properly spent time in Silicon Valley before. And he suggested while I was there, I spent a couple of days with interest in Horowitz to kind of learn about how they operated the firm and Mark was so generous. He had me sit in on all of his meetings. I was 25 years old at the time. And I was truly blown away by 1, his generosity, his willingness to include me because a friend of his suggested that he did was just extremely kind and generous of him, his curiosity, but also his tenacity.

And actually 1 of the mottos of Thrive, after I came back from that experience was, Mark started Netscape, and he's still doing everything he possibly can to be an extremely value-added partner to his founders. We didn't start Netscape. So we need to go above and beyond. So even a line that we use today at the firm is we did not start Netscape. So let's just remind ourselves that that did not happen.

You and I have talked before about the power of communication, which is funny since you basically never communicate with the outside world. I think it's great. And I'm appreciative you're doing it here. When you think of great communicators, and I know there's lots that might come to mind, but who comes most immediately to mind for you?

The person that I admire the most with regards to communication is Bob Iger, CEO of Disney. I've always looked up to him because he leads with humility and kindness. I think every single time that I've heard him speak or the book that he's written that I've read, there's a level of self-awareness and humility to his story that I've just admired and appreciated.

What have you learned from Stan Druckenmiller?

Stan has been someone I've looked up to. I feel fortunate for how much time he's been willing to give me over the course of my career. But I think what I've learned from him is both to focus on the macro and the micro. I think he just has such an incredible lens into the world and all of the different factors that are impacting the world, but also an appreciation for quality of companies and quality of founders and the ability to do both so well is something that I've learned so much from. And he also just has a way of focusing on simplicity as well that I've admired so much.

I was amazed to see him pop up as an early investor in Palantir. He gave a talk with Alex Karp at Palantir. It's surprising. It's disorienting to see this macro guy that's mostly talking about interest rates all of a sudden, like pop up early and all these company deals to kind of an unbelievable story. What about Henry Kravis?

What does he tell you?

I think I've learned a lot from Henry with regards to what it takes to build a firm, how important people are within an organization. Henry in many respects created private equity as an industry. I think for him to pass down the lessons that he's accumulated over the course of his career have been tremendously beneficial with regards to how we're thinking about building the firm. Every step of the way KKR has innovated in terms of becoming the firm that it is today because they created the industry. They created the LBL.

As we think about rules and doing things that are different, having him as someone that I can constantly go to, to kind of get advice and guidance is something that I feel fortunate to have.

The only rule is there is no rules. I think it's a good thing to remember. Well, there are rules. Ignore them.

In the investing world, there are some rules you absolutely must always follow.

Of course, of course. Last 1 on this type. What about David Geffen?

I love David so much. I look up to him in so many ways. And I think David has always been such a big proponent of helping me from a very young age, not care about what other people think. He's always just been such a great person to kind of get advice from on both life and business-oriented things and has just been such an incredible mirror. He's 1 of the most special people that I've ever met and I owe so much to him.

Did he tell you or show you or a combination to not care what other people think?

He showed me and he told me. He has always constantly expressed to me that you only have 1 life and you need to live your life and you need to be who you are and you shouldn't care about what other people think because at the end of the day, it's only about what you think about yourself. But also, you definitely showed me that that's the case too.

My favorite Joseph Campbell quote is, "'The privilege of a lifetime is being who you are, ' which sounds very simple, but it's actually quite hard to do. Sounds like that's the lesson he's taught you. David's been very generous to me. How has becoming a father changed you?

Fatherhood is amazing because all the cliches of fatherhood are true. Daniel Lack actually had this great line to me before Levi was born which he said, children fill a void that you didn't know you had. What a good line. And it leads to a level of simplification and prioritization in your life that is extremely powerful. And I always knew that I wanted to be a present father and to build a life with Carly, but when it actually happens, it's just so magical.

It puts so much into perspective.

Do you think you're different at work as a result of being a dad? Absolutely. In what ways?

I think being a parent in some respects helps you truly understand what's important, but being a parent also at the same time is the first time where you both give and feel unconditional love. There's this incredible feeling that you have when you're a parent to your children that you're just so excited to give, you're just so excited to be there for them. And also, I think the most incredible thing about being a father for me has been seeing Carly as a mother. The most beautiful thing about being a parent has been seeing her in that way. And I think in many respects, it's made me fall even more in love with her.

Are there values in the business that a lot of them just come through in all your answers, but I know every year you write a very simple restatement, I guess I would call it, of firm values that you send to the whole firm. Any of those that you think are really important that we haven't touched on as much? 10, 11

years into the firm. I think we've truly developed a deeper understanding of who we are and what we do. And we've spoken about a lot of that at length today in terms of us being deeply concentrated and people and ideas and extremely long-term in our thinking and focusing on exceptional people and exceptional businesses that can compound for a period of time. But I think 1 of the other core insights that I've had is the power of balancing patients and impatience. I'm deeply inspired by all that Berkshire Hathaway has been able to build over the many decades that it's been operating.

And there's this constant articulation of the fact that there's very few decisions that are actually important. But my view is the only way to actually be in a position in which you can make those very few decisions is to be extremely anxious about the fact that you are not seeing everything. So we are incredibly impatient as an organization in terms of trying to understand everything that we possibly can around every theme, every sector, every company we possibly can, but we're extremely patient around what we ultimately decide to do. And balancing those 2 is really difficult. It's an incredible context switch, no differently than me walking out of a board meeting of a company that I started myself towards going into a board meeting of a company that I was just lucky enough to invest in.

But I think the balance between those 2 is the thing that has enabled us to get to where we are today.

How do you balance as the firm has grown, doing an investment like you just did in Stripe, which is an iconic round, maybe 2 billion into a single company, single round, obviously iconic business with the next check, perhaps being a $2 million seed check into a company, which on a $15 billion asset base, it's just hard. The $2 billion checks move the needle, no matter who you are. How do you reconcile those things?

Well, actually, it's pretty easy for us because we're equally as concentrated in people and ideas at the early stages as much as we are at the later stages. And that doesn't necessarily mean magnitude of capital. That means emotional commitment and concentration. We don't do a lot, but when we do it, we are deeply invested and deeply focused on making sure that we're the best possible partners to those that we work with. Our view is a lot of people have, and we understand and respect the strategy.

They've taken a very indexed oriented approach to our industry. We don't believe in optionality. I think optionality around processes and opportunities to invest is a great thing, but I think optionality around deployment of capital is really inappropriate, especially when founders have a portfolio of 1. So when we ultimately decide to invest, we are all in, irrespective of whether or not it's a $5 million investment in a series A or a C deal, or whether or not it's a multi-billion dollar investment in a later stage company. When we do it, we're there, we're fully in.

I asked earlier about how you think about product market fit for an investing firm with a long horizon. And you mentioned also that you think of thrives a business, your customers, the founder, how do you think founders, especially these great ones make decisions on who to partner with everyone's money's green and the industry that you're investing in, even though you were very early to it, is way more institutionalized. So there's just more committed capital flowing around. There's a lot more choices. What, in your experience, really drives the decision-making process for founders, for who to partner with, especially with such a large supply of options now?

I think it's very hard for founders because I think in many respects, everyone says the same things.

And sometimes does the same things.

And sometimes does the same things. I don't think it's possible for any 2 individuals to actually do the same thing. But I think the mentality can be right. In addition to that, I think really important decisions get made very quickly. And I think people ultimately end up in a bad position on both sides when that happens?

It could just be that that's the answer, right? That founders, like any customer, said talk and reputations are built slowly and via word of mouth. But it's hard for me to understand how incredibly quiet Thrive is. If you're a founder, you can't go watch a bunch of stuff, listen to a bunch of stuff, read a bunch of stuff and know who Thrive is. But you go through the list of companies that you've invested in and it's the who's who of this generation's technology businesses, not everyone, but a lot.

And that has to happen somehow. It gets me curious.

We always want to win through substance. And we have found that whenever we're competing in a process, we want to have those that we've worked with in the past speak about who we are and what our values are and what we stand for. I think there are many extraordinary firms in the world that do very different things and have very different mindsets and founders might want 1 versus another. I think it's really extraordinary. 1 I have a ton of admiration for lots of firms I spoke about, Entrys and Horowitz, I have a ton of respect for Sequoia in particular for 2 reasons or 3 reasons.

The first is they've maintained a culture for almost 50 years, which is an aspiration of ours. I think we care so much about our culture, but the fact that they've been able to maintain 1 for such a long period of time is extraordinary. The second thing is they've also been deeply committed to talent, which I think is our ethos as well. And the third thing I think that they have the advantage on right now is founders still want to tell their parents that they took money from Sequoia. So that's the dream.

What a fascinating trio,

which is so interesting to me because they are so big now. And recent has done this so well too, if these are huge, enormous firms, and yet still that is the brand and the reputation. It's remarkable. What's the most unusual interest of yours that you feel pulled back into over and over again? Is there anything unusual that you feel odd in how much you return to it over and over again, relative to your peers, just as a general area of interest.

As an individual, I'm very inspired by the arts. I love photography. I love music. I love interior design. I'm very inspired by visual creations, which I think in many respects are representations of things that people dreamed into the world that others didn't necessarily think could exist.

So I think in many respects, there are tons of parallels with the businesses that we invest in.

You have turned me on with a couple others, Sarah Fedder is the other person that's done this for me, to the work of James Turrell and the idea of installation art, more generally speaking. What is interesting to you about that kind of art?

James Turrell for me is an amazing example of just seeing the world differently than the rest. His ability to kind of manipulate something that we all have in our lives, which is light, and just use it in such a different way than other people do to create a unique and transformational experience is really powerful. So I think for me, there are 2 things that resonate a lot. The first is his ability to kind of see something that should be obvious to other people, but just use it in a very, very, very different way. And I think there's something about just being present in the world.

It's the Rick Rubin thing again. Yeah. Seeing something other people don't notice.

Yeah, I think there's just this dynamic where we're all living our lives, but if you actually pay attention, the most beautiful things can be right in front of you.

Very, very spieler. Yeah. I think

that is something that's really powerful with Terrell. I also think Terrell is also among the artists that I enjoy the most because, whether it be Terrell or Donald Judd or Sol LeWitt, they're visual in terms of the ways in which they created the art, but they don't actually create it themselves. It's more of a scientific problem or a mathematical problem that they're trying to solve. And ultimately someone constructs it for them. I don't know.

I love music, but I don't know how to play an instrument. I love art. I've tried to learn how to paint. I'm not particularly good. I love technology, but I'm a terrible coder.

So Maybe my love for Terrell is more coming from the fact that someone who's visual but has others crave for him just be an inspiration for me.

It raises an interesting question, which is artists literally are manifesting the thing in their brain. And take Slack, a company you obviously know incredibly well, was itself a pivot. The thing that Stuart was imagining was a game, and then it became something very different. How do you think about vision as a key ingredient for founders, given the number of companies that have started as 1 thing and become something very successfully, but very different. Does vision matter?

I think it's the most important aspect of what enables companies to realize their full potential. I think the ability to inspire and motivate is just as important as the ability to operate and hire and build. Every company is centered around a mission and that mission has to have a vision in order to determine the North star. And those that dream have the capacity to motivate their people to ultimately have something that has yet to exist and to be created.

What have you learned about the conversation and negotiation with founders for late stage investments where pencils can be out, math can be done? There's more to tether. I suspect you've gotten very good at having the conversation with a founder so that you end up in a positive someplace where they're happy, you're happy, you're partners. And maybe that there's also been things you've learned not to do. I'm just curious about that muscle and that process.

First and foremost, I remember every single person that has ever passed on Thrive, and I remember every single person that's ever passed an Oscar and how they did it. So before we get to what it's like to actually have a negotiation with the founder, how you handle the conversation when you ultimately do not invest, it's just as important as the conversation that you have when you do invest. Rejection is hard. I've experienced it so many times in my life. And you want that rejection to be an experience that you can learn from.

So the best passes that I've ever received with Thrive have been when people said, Josh, we really think that there's a lot of really positive attributes around what the firm is doing. This is our risk section. Let's talk in a couple of years. And that happened obviously in the early days when most people pass on us. And we took that risk section and we tried our best to learn from it and grow from it.

With Oscar, it was the people who sent us their work and took us through the things that they thought that we needed to do to get better. So we try our best to do that, knowing that obviously given a large portion of our conversation has been focused on concentration, that a large portion of our conversations are us saying no. That being said, when you do a deal, when you're a founder, the best conversations are when they're not zero-sum. You want both sides to win. And obviously the best deals are the ones where both people feel like they're giving a little something.

In the construct of Stripe, the company needs to raise a large amount of capital, but also John and Patrick were so focused on making sure that their employee base felt deeply respected.

What do you make of our industry, the investing industry overall right now in 2023, are there things that surprise you? Are there things that excite you that turn you off? I'm just really curious as someone that's not been in this a while, what the industry itself feels like to you in this environment?

So a couple of things. 1 is, I don't know if we spoke about this before, but 1 of the core insights when we started Thrive was the perceived risk reward associated with the asset class was very different than the actual risk reward. So in many respects, my view when Thrive got started was venture as a term was mislabeled. And the idea that someone could build and invest early was obvious, but the idea that someone could invest at later stages as a venture firm was seen as deeply unconventional. I think in

2021,

there was an idea that given the amount of value that was created over the last decade, the cost of capital associated with the industry should come down. And Thrive is not perfect in terms of everything that we did. But in many respects, my view was the perceived risk reward was very different than the actual risk reward in the opposite direction. And going back to the frameworks that have driven our success So far, a small amount of companies create the most value and that value compounds over very long periods of time. So the idea that there were so many companies that were raising so much capital over such short periods of time, where the progress associated with the companies and their products and their customer traction were not necessarily correlated with their valuations, but more correlated around the markets that they had the opportunity to ultimately penetrate over time, was very destructive.

Now I've always been of the belief that investors don't really know what investors want. And I know we've spoken a lot about independent thought, but there was a moment where investors were telling companies to grow at all costs. And there are moments now where investors are telling companies to become profitable at all costs. And our view is that each company is an entirely different conversation. And every single individual company has to think about what is the best thing for them.

There are no generalizations in life, in my opinion. I mean, maybe be kind, maybe be good. But I think when it comes to a company, the idea of there being a generalization that applies to our existing portfolio is deeply flawed. So we have always tried our best to say to companies, and I think this is very counter to most folks right now, is let's actually think about your business as a totally independent entity and think about what is best for you in order to achieve profitable growth over a very long period of time. And I think that has been the right approach.

Going back to what I spoke about earlier, we have tried our best as people have been focused on the volatility of the market to say what are the things that we think are most special in the world and lean into them. We believe in the compounding tailwinds of technology and the power of innovation. We also believe that there's a huge difference between being an optimist and being delusional. I think we're very pragmatic and rational about our approach on these things, but we have to pick correctly.

It feels like in a period of time with so much change, just in the same way that you started in a period for the world was hard. The hangover from the financial crisis was serious. I remember it. I started at the same time as you, and it took years to feel our way through that. And what you did at the time was fairly contrarian, and it's exciting to think about that looking forward, certainly for me.

Are there aspects of Thrive's story that we haven't talked about that you feel are most formative or most important for someone from the outside in be trying to understand the business.

I think the thing that I would want people to understand is that Every single person who is at the firm has been deeply impactful to the firm's success. Every single person who comes in the future will be deeply impactful to our success in the future. Thrive is a company and We think about excellence across our entire organization and different people have pushed us in different directions over different periods of time. For example, I started Oscar, but my partner Kareem has started 3 healthcare businesses that are worth a billion dollars plus. In my view, he is the single best healthcare investor in the world.

Taking a kernel of exposure and making us a leading firm in a sector is something that I'm very proud of. Vince has pushed us into software and infrastructure in a very meaningful way alongside Philip and Avery. Gaurav has pushed us into financial services in a very meaningful way. Nabil has built out our portfolio impact team that has enabled us to actually unbundle the investor and be this value added partner. We didn't have a data science team a couple of years ago, and now 10% of our organization is focused on building products for ourselves and our companies.

What's the point of something like that? Is it telemetry?

Well, I think my framework has always been, what is Thrive? Thrive is people, culture, capital, process, and data. The 4 things prior are mostly always gonna be art and some element of science. But if you can actually think about an investment firm as effectively a proprietary data asset, what could you do with that data that would enable you to actually make the process better, make the culture better, enable you to deploy the capital much more efficiently. And we have seen our capacity to make better decisions, have a more, I would say, informed perspective and prepared mind as a result of some of the things that we're seeing, and then also be a much more meaningful partner to our founders as a result.

So that could be information pushed to you on the investing team that you wouldn't have found with your own devices. It could be reporting or telemetry for a founder on their industry. It doesn't matter. It's custom in each situation, but you need a data store to be able to do any of that stuff.

Yes. And we build a lot of products for ourselves to help us have a more informed perspective on everything that we're doing.

If you were giving an interview for a documentary about Kareem and how he's done this multiple times, built businesses that have gone on to be very, very large, how would you describe that? What's he doing? What's going on to make that possible? Not just once, but multiple times with him in particular?

I think there are 2 types of investors that currently exist in the healthcare ecosystem. There are those that understand the healthcare industry, and there are those that understand technology. There are very few people that understand both. And I think that's what makes Karim so special. It's his deep understanding of the industry.

He was pre-med, his father's a doctor. He always thought he wanted to be a doctor until he got to school and he ended up getting a summer internship at Blackstone and got exposed to the world of finance. But I think his love and appreciation for technology and software and his ability to combine those 2 in such an interesting way is what has made him so unique as he's built in that industry. I think very similarly for others at the firm, their ability to understand the real world, but also kind of apply the lessons and insights that we have around the traditional technology industry is what has made us ultimately be successful.

If you were investing, let's say, say like you got to shut down Thrive. And the only thing you're allowed to do is invest in other investment firms. And you listed an amazing list of people that have been a part of the Thrive story in 1 way or another, whether it's KKR, there's lots of very successful blackstone, fascinating investment firms. How do you think you would approach that challenge?

What would you look for? What would you care about? Firms that have independent thought, don't need validation from the outside world, are both pragmatic, but also contrarian, and not distracted.

Say more about distraction. You've so cultivated a lack of distraction that word hasn't come up yet.

People always talk about this concept of the need for a common enemy in order to be successful. And my view has always been, the way to be the best version of yourself is to only compete with yourself. And the way in which you can do that and realize your full potential is if you're entirely focused. And I think there's something to be said for the difference between calming your mind and being distracted. I heard a great line the other day, this woman said to me, she grew up on a farm and she always said to her mother that she was bored and her mother responded to her, well, being bored is the best way to figure out what to do.

So I think there's a difference between calming your mind. I actually think everyone who is a professional in some respects needs to take care of their mind and rest their mind. Tom Brady does physical therapy. After a game, you need to erase the whiteboard. But I think the idea of being distracted by those rings, going back to the inner ring, is the thing that I think needs to be avoided the most.

What does the Sabbath do for you?

Every Friday night, I shut off my phone. Carly, myself, my son Levi are together. We are entirely present. I work a very intensive schedule and my wife does as well. What she does is so inspiring to me, but the ability to almost shut off the world and just be together with each other is something that we look forward to every week.

It's the greatest thing we could ever imagine.

It's so simple. The whole world would be better if

they had some version of it. Creating simplicity is complex.

I think this has been so interesting for me to learn from you how to take a few simple ideas and take them very seriously as it relates to building an investing franchise. And I know that you hate this version where you're the 1 answering the questions, not asking them, but I really appreciate your willingness to do it because so many people listening are aspirational investors or building an investing franchise or building a business. And I think our conversation has been for me and hopefully for everyone else, just a really good reminder that it's simple things that work, but you have to take them very seriously, which you've done with Thrive. And I really appreciate you doing this with me. And I know this will probably be the only 1 of these that you do for maybe another 10 years.

So we'll do another 1 when we're a little bit older and our kids are grown up or something, but I appreciate your time today. I think you know I have a traditional final question that I ask of everybody. What is the kindest thing that anyone's ever done for you? It's actually

a crazy story. When I was in high school, I went to a concert in New York City. So I traveled in from where I grew up in a small town in Livingston, New Jersey. My mom's gonna hate when she hears this story. And I was walking towards Rosenball Room, where the concert was, and I got held up at knife point and the person took my tickets and I was stunned and shocked and about 10 minutes later someone came up to me and said to me, hey, I just saw what happened from a distance.

I have an extra ticket, and here's that ticket. And... It was really, really, really stunning for me just to go through that experience. And about 3 years later, since I'm a little kid, I've always been obsessed with basketball. I've always tried to go to the NBA Draft, All-Star Weekend.

I love watching games. And 1 year, someone took me to the NBA Draft, and I sat in my seat, and I look over to my left and the person who I had never seen since who gave me that ticket was sitting right next to me. Wow. And he was an artist. His name's Adam Port.

And he actually is an artist that has painted pictures of famous NBA players. And he just saw me 1 day getting robbed and decided to do a generous thing. And I ended up sitting next to him. And I was so stunned by actually having the capacity to meet him and be able to actually thank him because that lesson for me at that moment in time was a really powerful thing. You see someone down, like, do whatever you can to support them.

Through different moments in my life, I've been down and those that have bear hugged me at different moments in my life are the ones that I appreciate and love the most. He gave me his business card and it has sat on my desk for the last 10, 11 years of my life.

So it's inner rings and that guy's business card. Yeah. Amazing. To close on a light note, we both love basketball. Yep.

Outside of business investing, something we're both deeply in love with for sure. Why was it good that you could not dunk until after high school?

So I played basketball in high school and I started, I'm 6 3 now, I started my freshman year at 5 3 and I was constantly growing throughout high school. When I went to college, I played a lot of pickup in the gym. And the summer after my freshman year, my... I was playing with a bunch of friends and I dunked on 1 of them. And Patrick loves this story.

My father joked with me in that moment. He goes, I'm so glad You couldn't dunk in high school. And I said, what do you mean? That would have been amazing. I was terrible as a basketball player in high school.

And he goes, well, if you would have dunked, you probably would have been a lot cooler than you were. And if you're a lot cooler than you were, you probably wouldn't have studied as much as you studied. And if you didn't study as much as you studied, you probably wouldn't be where you are today. So I still wish I would have been able to dunk in high school.

As a fellow late bloomer, I love that story. And I think it's the perfect place to close. Josh, thank you so much for doing this. Thank you, Patrick. If you enjoyed this episode, check out joincolossus.com.

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