- The course is organized with a lecture followed by a Q&A session
- Questions can be asked through Twitter using the hashtag #ycsis
- Accredited investors will be invited to YC's winter 2018 demo days
- Feedback is requested from participants to improve the course
- The goal is to create better and smarter investors
- The course will cover the fundamentals of startup investing
- There will be experienced investors speaking throughout the course
- The course will also discuss the future of startup investing
- Sam Altman will be the first speaker, discussing why, how, and what to do to invest in startups

- The speaker asked successful investors why they invest in startups and compared their motivations with those of less successful investors.
- Investing in startups is energizing because it involves working with people full of new ideas and unlimited energy.
- Helping to shape the future and having the leverage to work on multiple things are important motivations for investors.
- The potential for high returns, even if most investments fail, is addictive and satisfying.
- Being around talented people and experiencing endless optimism about the future is gratifying.
- Investing in startups is humbling and teaches investors to be comfortable with being wrong.
- The power law, where a single successful investment can outweigh all others, is a key concept in angel investing.
- Instead of focusing on failure rates, investors should consider the potential magnitude of their biggest success.
- The best investments are often the ones that seem like a bad idea at first.
- The best way to find promising startups is through word-of-mouth referrals from other founders.
- Being open and accessible to potential investments, even from unknown sources, can lead to valuable opportunities.
- Founders now have more power and choice in selecting investors, and a good reputation is crucial for long-term success.

- Reputation is crucial in the startup investing world, and founders rely on reference checks from other funded founders to make decisions on which investors to work with.
- Being helpful, responsive, and available to founders before closing a deal can also contribute to a positive reputation.
- The best investments are often the ones that feel expensive or where the investor understands something that no one else does.
- When investing, consider companies that have the potential to become a $10 billion company, regardless of stage, sector, or business model.
- Starting a hard company may be easier than starting an easy one, as hard companies attract more attention and support.
- Picking founders is more important than picking ideas, and traits like obsession, focus, frugality, and love are key indicators of success.
- Intelligence, communication skills, execution speed, and the rate of improvement of the founder are also important factors to consider when investing.

- It is valuable to find people who are on a trajectory to develop into exceptional leaders like Brian Chesky.
- Starting a startup for the wrong motivations, such as getting rich quickly, is not sustainable.
- Mission-driven founders with a deep sense of purpose are more likely to succeed.
- The size of the market in 10 years is more important than the current size of the market.
- Identifying rapidly growing markets and investing there is more beneficial than chasing what has worked in the past.
- Differentiating between real trends and fake trends is crucial, and it depends on whether people are actively using the platform.
- Good ideas that look like bad ideas are more promising than bad ideas that look like good ideas.
- Avoid investing in companies that have many competitors or founders who try too hard to convince you of their differentiation.

- The speaker emphasizes the importance of having a great product in successful companies.
- He criticizes the current focus on growth hacking and sales and marketing in Silicon Valley.
- He believes that word-of-mouth recommendations are a strong indicator of a company's potential success.
- The speaker advises against relying on intuition when predicting exponential growth and suggests modeling it instead.
- He highlights the importance of investing in companies that become more powerful, have increasing pricing power, and are harder to compete with as they grow.
- The speaker suggests considering what unique understanding or advantage one has before making an investment decision.
- Early-stage investors can add value to founders by helping with hiring, future fundraising, and providing tactical advice.
- Flaws in a founder can be acceptable if they are improving quickly and are changeable.
- The speaker recommends judging a founder's integrity based on the decisions they have made in building the business.
- It is generally advised to exercise pro rata rights in up rounds led by reputable venture capitalists.
- The speaker believes that security tokens and ICOs may change financings, but not in the way most people think.

- The speaker believes that securities laws are necessary for crowdfunding and that many initial coin offerings (ICOs) are scams or incompetent.
- The speaker gives examples of successful companies like Reddit and Dropbox that were initially dismissed as bad ideas.
- Evaluating the potential of a market can be challenging, but looking at shifts in consumer behavior can help.
- The speaker prefers founding teams with at least one technical founder and at least two cofounders.
- Self-awareness, willingness to take feedback, and a drive to improve are important qualities in a founder.
- The speaker only funds founders that they want to spend a lot of time helping.
- Investing in startups requires patience and passion.
- The speaker is experienced in angel investing and is highly regarded in the field.

- Announcement about overflowing toilets and alternative restroom options
- Introduction of speakers Carolyn Levy and Christina Thu, experts in startup investment
- Mention of Carolyn's invention of the safe and Kirstie's role as CFO of YC
- Reference to pithy quotes from the speakers about investor assistance

- The course is organized with a lecture followed by a Q&A session
- Accredited investors will be invited to YC's winter 2018 demo days
- Feedback is requested from participants to improve the course
- The goal is to create better and smarter investors
- The course will cover the fundamentals of startup investing
- There will be experienced investors speaking throughout the course
- The course will also discuss the future of startup investing
- Sam Altman will be the first speaker, discussing why, how, and what to do to invest in startups
- The speaker asked successful investors why they invest in startups and compared their motivations with those of less successful investors
- Investing in startups is energizing because it involves working with people full of new ideas and unlimited energy
- Helping to shape the future and having the leverage to work on multiple things are important motivations for investors
- The potential for high returns, even if most investments fail, is addictive and satisfying
- Being around talented people and experiencing endless optimism about the future is gratifying
- Investing in startups is humbling and teaches investors to be comfortable with being wrong
- The power law, where a single successful investment can outweigh all others, is a key concept in angel investing
- Instead of focusing on failure rates, investors should consider the potential magnitude of their biggest success
- The best investments are often the ones that seem like a bad idea at first
- The best way to find promising startups is through word-of-mouth referrals from other founders
- Being open and accessible to potential investments, even from unknown sources, can lead to valuable opportunities
- Founders now have more power and choice in selecting investors, and a good reputation is crucial for long-term success
- Reputation is crucial in the startup investing world, and founders rely on reference checks from other funded founders to make decisions on which investors to work with
- Being helpful, responsive, and available to founders before closing a deal can also contribute to a positive reputation
- The best investments are often the ones that feel expensive or where the investor understands something that no one else does
- When investing, consider companies that have the potential to become a $10 billion company, regardless of stage, sector, or business model
- Starting a hard company may be easier than starting an easy one, as hard companies attract more attention and support
- Picking founders is more important than picking ideas, and traits like obsession, focus, frugality, and love are key indicators of success
- Intelligence, communication skills, execution speed, and the rate of improvement of the founder are also important factors to consider when investing
- It is valuable to find people who are on a trajectory to develop into exceptional leaders like Brian Chesky
- Starting a startup for the wrong motivations, such as getting rich quickly, is not sustainable
- Mission-driven founders with a deep sense of purpose are more likely to succeed
- The size of the market in 10 years is more important than the current size of the market
- Identifying rapidly growing markets and investing there is more beneficial than chasing what has worked in the past
- Differentiating between real trends and fake trends is crucial, and it depends on whether people are actively using the platform
- Good ideas that look like bad ideas are more promising than bad ideas that look like good ideas
- Avoid investing in companies that have many competitors or founders who try too hard to convince you of their differentiation
- The speaker emphasizes the importance of having a great product in successful companies
- He criticizes the current focus on growth hacking and sales and marketing in Silicon Valley
- He believes that word-of-mouth recommendations are a strong indicator of a company's potential success
- The speaker advises against relying on intuition when predicting exponential growth and suggests modeling it instead
- He highlights the importance of investing in companies that become more powerful, have increasing pricing power, and are harder to compete with as they grow
- The speaker suggests considering what unique understanding or advantage one has before making an investment decision
- Early-stage investors can add value to founders by helping with hiring, future fundraising, and providing tactical advice
- Flaws in a founder can be acceptable if they are improving quickly and are changeable
- The speaker recommends judging a founder's integrity based on the decisions they have made in building the business
- It is generally advised to exercise pro rata rights in up rounds led by reputable venture capitalists
- The speaker believes that security tokens and ICOs may change financings, but not in the way most people think
- The speaker believes that securities laws are necessary for crowdfunding and that many initial coin offerings (ICOs) are scams or incompetent
- The speaker gives examples of successful companies like Reddit and Dropbox that were initially dismissed as bad ideas
- Evaluating the potential of a market can be challenging, but looking at shifts in consumer behavior can help
- The speaker prefers founding teams with at least one technical founder and at least two cofounders
- Self-awareness, willingness to take feedback, and a drive to improve are important qualities in a founder
- The speaker only funds founders that they want to spend a lot of time helping
- Investing in startups requires patience and passion
- The speaker is experienced in angel investing and is highly regarded in the field
- Announcement about overflowing toilets and alternative restroom options
- Introduction of speakers Carolyn Levy and Christina Thu, experts in startup investment
- Mention of Carolyn's invention of the safe and Kirstie's role as CFO of YC
- Reference to pithy quotes from the speakers about investor assistance

- The video is about investing using Y Combinators' SAFE.
- The SAFE is designed for early-stage startups that haven't raised a priced round or issued preferred stock.
- The SAFE is a simple agreement for future equity and converts into shares of the company's stock.
- It is not a loan and does not accrue interest.
- The SAFE is a 5-page document with only two key terms: the amount of money invested and the valuation cap.
- There are different versions of the SAFE, including the capped SAFE, discount SAFE, uncapped SAFE, and MFN SAFE.
- The valuation cap is the highest valuation at which the SAFE will convert into shares.
- The cap is not the current valuation of the company, but a way to reward early-stage investors.
- It is important to consider the potential increase in the next price round when investing at the cap.

- The safe investment converts into shares when the company completes a priced round
- The terms of the priced round are negotiated between the company and the lead investor
- Three things happen when the priced round closes: options pool is created/increased, safes convert into shares, and new money is invested
- The number of shares an investor receives is determined by the investment amount divided by the price per share
- The price per share is calculated by dividing the valuation by the shares issued by the company
- The valuation for a safeholder is usually the cap, while for a new investor it's the priced round valuation
- The cap table shows the ownership and proportion of shares for each investor
- Safe investors may have a hard time determining their ownership after the priced round due to dilution from new money coming in

- The speaker discusses different scenarios that can affect the outcome of an investment, such as acquisitions, failures, and no significant events happening.
- In the case of a successful acquisition or IPO, the investor's safe will convert into common stock and they can expect a return higher than their initial investment.
- In an acquihire situation, where the acquiring company only takes the talent, the investor can choose to have their safe paid off.
- If the company fails, the investors will be next in line to be repaid, but usually receive only a fraction of their investment.
- If nothing significant happens, the safe does not address this situation, and it is advised to communicate with the founders to find a solution.
- The process for signing and converting the safe into shares involves a handshake protocol to avoid misunderstandings, using platforms like Clerky to send and sign the safe, and ensuring the details are correct before signing and wiring the money quickly.

- Founders value investors who quickly sign and wire money
- Investors should not discuss investing until they have the money available
- When safes convert in a priced round, investors will receive documents to sign
- It is important to review the conversion calculations and cap tables to ensure accuracy
- Founders may give short notice to sign documents, but investors should not sign until they are satisfied
- Key advice for investors: focus on the upside, be helpful but not overbearing, tolerate failure
- SAFEs can be complex, but key points are to use them to invest, understand rights and ownership, and be patient
- Q&A: Investors should not worry about the vulnerability of the safe, founders control how much money is raised on safes, and it is unlikely for cap valuations to change drastically.

- The video discusses various issues related to safe investments and investor rights.
- It advises founders to treat investors fairly and honor the contractual rights in the safe.
- If a lead investor is not respecting the rights in the safe, the investor should push back and demand that the contract be honored.
- It is suggested that if investing personal money, it is usually best to invest directly or through a trust, while pooling money may require creating an LLC or fund structure.
- The video mentions that the safe document may need to be updated to reflect changes in the investment landscape.
- It is stated that safes can be used worldwide, but investors should research and ensure their validity in different countries.
- The video also discusses the conversion of safes and the trend of safes not converting in the pre-money stage.
- There is a mention of the need to evolve the safe document to address these trends.
- The video emphasizes that founders may also lack understanding of these issues.

- The speaker discusses how founders often struggle to understand terms like dilution and converting in the pre-money stage
- They emphasize the importance of utilizing resources and modeling out the pro-forma cap table to avoid confusion
- The speaker explains that stockholders are generally not liable for the actions of the corporation, and investing as an individual is not a problem
- YC mainly invests in Delaware C-Corps and recommends sticking with C-Corps for signing SAFEs
- The speaker mentions that most favored nation (MFN) clauses are not standard in SAFEs, but can be negotiated if both parties agree
- They recommend using tools like AngelCalc to model safe conversions and encourage transparency in startup investing
- The speaker discusses the preference for SAFEs over debt in lifestyle companies to prevent unnecessary company closures
- The video concludes with a preview of upcoming sessions and thanks to the hosts.

The video discusses investing using Y Combinators' SAFE, a simple agreement for future equity. It explains the different versions of the SAFE and how it converts into shares. The speaker emphasizes the importance of considering the potential increase in the next price round when investing. They also discuss the process of converting the SAFE into shares and the potential outcomes for investors. The video advises investors to be patient and understand their rights and ownership. It also addresses common concerns and advises founders to treat investors fairly. The speaker mentions the need to update the SAFE document and research its validity in different countries. They also discuss the trend of safes not converting in the pre-money stage and the need for the document to address these trends. The video concludes by highlighting the importance of utilizing resources and modeling out the pro-forma cap table to avoid confusion.

Startup Investor School is a free, 4-day course designed to educate early stage investors interested in investing in startups. We'll cover the fundamentals of investing, from investing instruments to legal and accounting basics to evaluating startups and managing deal flow. Our hope is that more people, from a wide range of backgrounds will consider investing in startups and that those who do will be better at it.

The course will run from March 5th, 2018 through March 8th, 2018. The course will be offered live online and in-person in Mountain View. All of the course content, including the curriculum, lectures and other resources will be made available to the public once the course ends.

The way the course is organized is there's a lecture and then there's a Q&A afterwards, so please hold your questions until the Q&A session at the end, unless an instructor explicitly says they want questions during their talk.

I will also take questions from the streaming audience.

To ask a question, please use the Twitter hashtag poundycsis, and we'll take as many of those questions as we can time-willing.

So there's a mixture here of, watching the class of accredited and non accredited investors.

For the accredited investors, as most of you know, we are going to be an extent going to be extending an invite to YC's winter 2018 demo days, which are March 19 and 20.

It's a virtual invite, and you can watch it online.

But also, as a cool little kicker, we're going to invite randomly 10 of you to come in person to YC Demo Day, which is kind of a special occasion, and I hope whoever comes enjoys it a lot.

So, this is our first time teaching this class, hopefully not the last.

We do ask you guys to give us feedback for what worked, what didn't work, what was too obvious or too subtle, what was missing.

At the end of the class, there will be a survey.

I'll say this again at the end, but please do give us feedback.

You can also give us feedback real time as you like.

You can email me at jeff, G-E-O-F-F at Y Combinator dot com anytime you like.

I want to start off also by pointing out I won't be up here very much.

It's mostly a bunch of instructors from inside and outside where I see they're all volunteers and they're very busy people and they've been gracious enough to donate their incredible experience and time to us.

I'm very grateful for everyone who agreed to do this.

Before we get started, I wanted to spend a couple of minutes talking about why we're doing this.

How many of you have made angel investments before?

So there's a lot of experience, and we know there's a lot of experience, but we're doing this for mainly 2 reasons.

1 is that angel and seed investors are a critical part of the startup ecosystem.

It's what allows companies to actually take flight and become real big, interesting, scalable companies.

We think that more great angel investors, great seed investors are great for YC companies.

And we hope you will invest in YC companies.

We also think it's good for you, for people who have, all of you who have invested.

You know it's an amazing way to get a window into the future, to be part of this future that founders are really creating, to get a window into what's going to happen.

Venture investing has been around for, depending on how you look, hundreds of years, but really the kind of venture investing that we think of in Silicon Valley for the last 50 years.

This guy named George Doreo made, he was a VC, he was an early VC of this firm called ARDC, and he made what we'd consider a seed investment of $70,000 in 1957 until this new tiny computer company called Digital Equipment Corporation, sometimes called Digital, often called DEC.

And that $70,000 turned into $35 million, which a lot of people found pretty interesting.

That led to, kick-started an incredible flowering of innovation and a lot of wealth creation that has never seen the like in the world.

And we hope that some of you all have that same experience, hopefully investing in YC companies.

And if we're lucky, some of the folks who are going to talk to you will give you some of those examples.

So we also hope that you all are going to be better, smarter investors after this course.

I'm sure that's why some of you are here.

Some of you are here to get some of those insights.

I'm sure also that you will tell us if we achieve that goal.

Lastly, we want to create a permanent repository of this information so anyone can make use of it in future years.

So we hope to make the repository better and better.

And in fact, if there's anything that you all, you can look at this online at investors.startupschool.org.

And if there's anything you think we should add, just mail it to startupschool at ycombinator.com.

And we'll look at it, and if we like it, we'll add it.

We have 4 days, about 10 hours, so we can only cover so much.

This is going to be about the fundamentals of startup investing.

There'll be a few deeper dives, but not that many.

We will start off with fundamental questions of why, how, and which companies.

And that's today, and then we'll talk about the mechanics of startup investing.

Clearly, many of you know these mechanics, but I think we'll cover it, perhaps, in ways you haven't seen before.

Then we're gonna walk through some of the dance that you have to do to make your decisions and to talk with entrepreneurs and founders and figure out which are the companies that are going to be part of your investing future.

We're going to hear from a bunch of extraordinarily experienced and talented, at least by the results investors, during the course.

And then we're going to Complete with a little bit of context and a little bit of a look towards the future of startup investing.

Startup investing has changed radically over the last decade and I think most of us expect a lot more changes in the next decade as well.

In the end, we'll finish up with a conversation about the role that you all can and may want to play as you think about your role as an investor and what that means.

I think it's going to be really useful and I think we have a pretty great lineup of instructors that will be very relevant and useful to everyone.

So with that, I'm going to turn it over to our first speaker, Sam Altman, the president of Y Combinator, who actually had the original idea for this course, so I'm pretty grateful for that.

And He's also the man who has said, you want to sound crazy, but you want to actually be right.

This is, it's cool to see so many people in the room.

So I want to talk about why, how, and what to do to invest in startups.

I'm only going to talk a little bit about why, especially given how many of you already invest in startups.

But I did do something to get ready for this class, which was I asked some of the best investors I know why they invest in startups.

And I, oh, Stephen, I think it's automatically advancing.

So, and then I compared that with reasons I've heard from other people who I don't think are as good.

And I think it is worth thinking about why the people who have sort of done the best in the field, what their motivations are to invest.

This was 1 I heard from a few people, these exact 3 words from a few different people.

The thing that I like the most about investing in startups is that it's energizing.

I feel like I am constantly working with people that are not burned out on the world at all.

And they have the sort of the beauty of inexperience.

People that are doing things for the first time are willing to do things that anyone who has got a few more battle scars won't try.

And that is incredibly energizing to be around.

Help shaping the future was something that the very best investors said again and again.

And as Part of that, the leverage on time, the ability to work on multiple things, came up again and again and again.

Most of the time you lose 1 extra money, but occasionally you do get to make a hundred or a thousand X and that, for the same reason slot machines are so satisfying, is incredibly addictive.

It's also satisfying because every once in a while, a founder of a great company who is now super famous will tell you, hey, that thing you did for me 8 or 10 years ago was this make or break difference to my entire career.

You get to be around some of the most talented people in the world.

There is this sense of just endless optimism around the future that is really important to my own personal happiness to be around.

And I haven't found that in too many other places in the world, besides startup founders.

I write on the back of every stock certificate on a post-it note my confidence interval and what I thought was going to happen with the company.

And that framework, that mental adjustment, you know, you're usually going to be wrong, that has been helpful to me in everything else I've done in life.

And if you treat this as something that you're going to try to get better at, and sort of deliberately practice, you can learn a lot and you can get better at this really quickly.

All right, so now I want to move into the 2 main sections, the how and the what.

The number 1 mistake that I used to make when I started investing was actually not a misunderstanding of the power law.

The number 1 mistake was that I cared too much about what other investors thought.

And the sooner you can free yourself of this, the better.

I think this is a very common mistake that people make when they start investing.

You get very swayed by what previously successful investors think.

The first question that most people ask when I see startups is who else is investing in your round?

People totally outsource, I would say 80% of investors outsource 80% of their decision making to what other people think about an investment opportunity.

And so there's this weird schooling effect where a company gets hot for no discernible reason or it fits a trend or whatever, and then everybody wants to invest in 1 company.

And it's just because a few people decided they liked it.

So the number 1 mistake I made was to be too swayed by what other investors thought good and bad about a company.

After I corrected for that, the second biggest mistake I made was not investing the power, not understanding the power law.

The power law means that your single best investment will be worth more to you in return than all of the rest of your investments put together.

Your second best will be better than 3 through infinity put together.

And this is like a deeply true thing that most investors find.

And this is so counterintuitive that it means almost everyone invests the wrong way.

So the question that you should be thinking about, the question that most people think about when they start angel investing, is can I hit a bunch of singles?

And in most other kinds of investing, that's the right way to do it.

You know, if you're going to invest in stocks or bonds or whatever, that's how you do it.

You just compound singles for a long time.

But angel investing is a business of home runs, and you want to look for things that can be potential home runs.

And we're gonna talk about that again and again through this.

But this is, I think, the most important thing to learn and the thing that most investors get wrong.

So it's all about the magnitude of your biggest success.

Most investors talk about their failure rate.

Still, you know, when we have people that are trying to build angel firms come talk, the question, the first question they ask is, what is your failure rate?

Totally the wrong way to think about angel investing.

You can have 95% of your investments fail if 1 of them returns a billion dollars and you'll be totally happy.

And so this is what you want to think about.

The first question that I try to ask myself when I meet a startup is not why is it going to fail.

The first question is how big could this be if it works?

Can I imagine this founder, this idea, this market supporting a, you know, massive, massive company?

And then I think about all the things that could go wrong.

But I found that if I thought about what could go wrong first, I filtered out the companies that could be giant.

The companies that could be giant are at this intersection of sounds like a bad idea is a good idea.

And because that's a very narrow intersection, And because they sound like a bad idea, the best investments are the ones that are easiest to talk yourself out of if you start off thinking about why they could go wrong.

So then there's a question about how do you find these companies?

How do you find the companies that can be the handful of companies that get started every decade that are responsible for almost all of the returns.

Just to put some numbers on the power law, YC has funded I think around 1600 companies, maybe 1700.

Our top 5 companies represent about 2 thirds of the value that we've created.

And our top 1 company represents about 1 third.

So this is like this very extreme, very counterintuitive thing.

All right, how do you find these companies?

Another thing that I think is surprising is many of these companies that are sort of a generation defining companies are started by people who are out of network, who are not well-known, who are not sort of the people that, you know, can start a company and get a bunch of press right away.

And the best way to do that is from other founders.

This is part of what we try to do at YC, is we try to get our founders to like us so much that they refer all of their friends to us.

Because they say, these, you know, YC creates so much more value than it takes, you gotta go work with them.

And we, this idea of like word of mouth as the way to find companies to invest in has been great.

If you're just starting out, I think what I have seen the most successful angel investors do is just start helping founders for free.

Realizing they may not get to invest in those companies, but that they'll get the referrals down the road.

And so much of this is about people connecting you to other people that you don't know.

We talk about this at YC, this value of an open network.

A lot of angel investors like to brag about how difficult it is to get a meeting with them, how you have to have a connection, Otherwise they'll never take you seriously.

And it's got to be from someone they worked with a bunch, and you've got to be well-known and experienced.

Anyone in the world can go to our website, click Apply.

We try to respond to emails to people that email us.

We take people seriously that have no personal brand, no reputation, no network.

We ask people that are in our network to connect us to the most promising people they know that we don't already know.

But this idea that we're available and we're open, I think this was in the 2 or 3 most important secrets of YC.

This was something that we did that was really different.

In fact, people bragged about the opposite and we went totally the other direction and I strongly recommend this.

Be open to that random email that comes in.

Be open to the introduction of someone that, on paper, doesn't seem like, you know, that they're someone you want to meet.

That other time makes it totally worth it.

So, 1 big shift that's happened in the last 10 years, I'd say, or maybe 15 even, is there are now way more people that want to invest in good startups than there are good startups.

And so, founders have really become in the driver's seat.

Founders of good companies have a lot of choice when it comes to investors.

The network has gotten big enough that the asymmetry that used to exist, where investors had a lot of leverage is gone, and I don't think it will come back anytime soon.

It is way more important to your future success as an investor, that founders like you and say, that investor did the right thing by me, than it is that you squeeze out, you know, a few drops of juice from a failing company.

The number of investors that I have seen do incredible long-term damage to their reputation by fighting over the carcass of a company that was never because of the power law going to matter to them anyway, but try to get out, you know, $10,000 or whatever from a dying company.

If you're playing the long game, that's not worth it.

Reputation, especially reputation when a company is going badly, is super, super important.

And I think that is the secret at this point in sort of 2018 Silicon Valley to winning deals.

The thing that we tell founders to do and the thing that founders do anyway when they're trying to choose between a number of investors that all want to invest in their company is they do reference checks on you, just like you do on them.

And more and more, the thing that I have seen founders use as the criteria to make the decision about which investors to work with, is what the other founders that investor is funded have to say.

And so I think this will continue to be important.

There are other things you can do, I think.

Helping before you close the deal is good.

Deciding quickly, being clear about your reasoning, being responsive, being available, all the things you want from a founder, those all help, too.

But this reputation of being good to work with, that goes a long way.

And people remember that for a long time.

The other question I get all the time is how do I get a good bargain?

Like how do I get better terms than everybody else?

We recently had a company, they had let's say 10 investors that were gonna join their seed round.

Every 1 of the 10 had asked for advisor shares.

Every 1 of the 10 had said, well, unlike all those other investors, I really do work super hard.

You know, I'm the only investor in a round that usually gets advisor shares, so you need to give me to participate.

And I think, you know, a lot of people are just looking for a good deal because valuations feel high.

They have felt high to me for 8, 7 years now.

I went back and looked at my best investments.

The very best investments I've made have either been a ridiculous deal because no 1 else wanted to invest, or a deal that felt incredibly expensive.

The more I was willing to sort of overpay in my mind to invest in a company, often the better it did.

And especially when I felt like I was getting screwed.

If it was like a huge up round, 3 months after some other round, it was painful, I did it anyway.

I think because the companies that work sometimes work so fast, and you're anchored to like what a fair deal is, you gotta watch out for this, but my experience investing in startups is my best investments with 1 or 2 exceptions have been the deals that felt the most expensive to me, and the 1 or 2 exceptions were companies where I understood something that no 1 else did, and thus there was no competition whatsoever.

Other than that, the companies where I like tried to value invest have not been as good.

I think value investing is not a winning strategy when it comes to being an angel investor most of the time.

I will try to go kind of fast through this to leave time for questions.

So there's a big question of what to invest in, and here is the framework I use.

I will consider anything that I believe could be a 10 billion dollar company and That is such a tight criteria.

I have no other rules So I am willing to look at any stage.

I'm willing to look at any sector I am willing to look at any business model.

There are other investors who have this like, oh, I only do this 1 thing at this 1 stage, and maybe they make that work.

The great companies, the companies that are in that number 1 spot on the power law are so rare that I suggest you only select for things that can be there and other than that be really open-minded.

Speaking of the really big companies, I think, I don't know if this was always true, I suspect it may have been, but I think today it is easier to start a hard company than an easy company.

And this sounds super counterintuitive, but if you're going to build a really big company, you got to convince people to come work with you, to pay attention to you, to write press articles about you, to care about you, to advise you.

And if you are starting the 22,000th photo sharing application, it's really hard.

If you are starting a nuclear fusion company, a lot of people want to help with that.

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