Delian Asparouhov (Founders Fund)
Dropping out of MIT to pursue a startup, transitioning to venture, evaluating young talent, working at startup out of school, the future of Silicon Valley, space, and more 🚀
|Michael Spiro||Aug 17, 2020|
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Interview Guest: Delian Asparouhov (@zebulgar)
Role: Principal at Founders Fund
Previous: Prior to joining Founders Fund, Delian was both an Investor and Chief of Staff (to Keith Rabois) at Khosla Ventures. Before that, he was VP of Growth at Teespring and Founder & CEO of Nightingale, an enterprise healthcare startup that he founded while at MIT (he dropped out of MIT to participate in the Thiel Fellowship).
Quick Note: This interview was recorded via a phone call between Delian and Michael (that’s me) in early August.
Michael’s favorite quotes from the interview:
(I had a lot of favorite quotes from this conversation. Sorry in advance if this is a long list, but, to be honest, it could have been way, way longer. These quotes are also bolded in the actual interview.)
On his startup, Nightingale: “I ran that for about three and a half or four years, got the Thiel Fellowship, went through Y Combinator, raised a seed round, scaled the team, and got to a decent-sized revenue, but couldn't raise a Series A. And so, I ended up deciding to soft shut down the company.”
On his investing focus: “I do some things that are more standard VC investments (financial services and marketplaces), but I tend to have a preference for things that are a little bit more technical. I basically don't invest in anything that is exclusively software. I like doing things that are involved in the world of atoms.”
On founder-company / market fit: “…making sure that the founder feels like a ‘superhero’ of the story.”
On the importance of apprenticeship in tech: “One thing that I didn't appreciate is that almost every role in technology is much more accelerated via some level of apprenticeship.”
On the space industry: “my long term goal is accelerating the commercialization of the space industry.”
On making a generalist a specialized expert: “One thing that I always like to say is, if you take a really smart generalist, you can almost always make them a decent expert in a field over the course of 90 to 120 days.”
On the future of humanity & game theory: “If you look at the future of humanity through a game theory lens, the only way that you continue to make it non-zero-sum is by making it a multi-planetary society and starting to accumulate resources from not just the earth.”
On finding a job that you intrinsically enjoy: “The people who are best at their jobs don't think about their job as a “job,” it's just what they want to do when they wake up.”
Michael: To start, it'd be great to get a super brief background on how you got into the world of venture and, in particular, came to be at Founders Fund.
Delian: I originally got into the whole world of tech during my freshman year of college. I ended up deciding to start a startup because MIT has an entrepreneurship student group that I was a part of.
That summer, I then decided to be an intern at Square, when they were about 120 people or so, relatively early on in comparison to where they are now. I learned a ton about tech and got super hooked and basically said, I need to be out here as soon as possible. I ended up dropping out the following year and founding my company, Nightingale — an enterprise healthcare company. I ran that for about three and a half or four years, got the Thiel Fellowship, went through Y Combinator, raised a seed round, scaled the team, and got to a decent-sized revenue, but couldn't raise a Series A. And so, I ended up deciding to soft shut down the company.
I was then VP of Growth at Teespring for about a year. I was then considering starting a company again, when I decided to take a little bit of a left turn and join Khosla Ventures about three and a half years ago. That’s where I first started my investing career. About a year and a half ago, I joined Founders Fund.
I’ve been investing for roughly three and a half years now, primarily focused on seed and Series A, and definitely with a sort of technical bend. I do some things that are more standard VC investments (financial services and marketplaces), but I tend to have a preference for things that are a little bit more technical. I basically don't invest in anything that is exclusively software. I like doing things that are involved in the world of atoms.
Michael: That’s all really exciting and a lot to dive in on. One question that pops into mind is that selling into enterprises and really nailing go-to-market is really hard, for anyone. You were obviously a 19-year-old enterprise healthcare entrepreneur. I'm curious, what are some of the main learnings and key takeaways that you had from starting a company, dropping out of school, and participating in the Thiel Fellowship?
Delian: I'd say retrospectively, especially now being an investor on the other side of the table, that 19-year-old MIT founders are not particularly good at enterprise healthcare sales. I learned how tough it is to do and how bad I was at it. The biggest mistake I made with our company was that when we had scaled up to a decent amount of revenue within what I call our SMB clinics, think three to four therapists and maybe 50 or 60 patients, rather than sort of focusing and doubling down on that particular market segment, we tried way too quickly and way too early in the company's lifecycle to move upmarket to clinics that had thousands of patients and hundreds of clinicians.
We were nowhere near ready to sell to those and our product was not well suited for that either. We ended up sort of floundering a bit where we started trying to move our product upmarket and our sales upmarket. We ended up churning out our core SMB base, while also not successfully closing the higher end of the market. One of the lessons learned, and it applies to sort of how I think about investing now is, one of the primary filters that I have when thinking about an investment is making sure that the founder feels like a “superhero” of the story.
Zuckerberg is a great superhero for Facebook. Elon is a great superhero for SpaceX. But, if they swapped places, I don't think they'd be doing particularly well. I was not the right superhero for an enterprise healthcare company.
Michael: All just a great learning experience, I'm sure, across the board and helps you a ton now on the investor side of things. In terms of shutting down that business, what exactly was that process like and the decision making there? I would imagine that's super difficult.
Delian: It wasn't like there was a single day or sudden moment. It was a steady grind / giving up process. We had basically been flatlined in revenue for six or seven months and at some point got some advice from some friends and mentors who were like, look: If you're banging your head against the wall and not able to solve it, at some point, banging your head against the wall over and over again isn't necessarily going to lead to solving it, and so you should maybe consider starting to work on a new problem.
I then started to think about how to do this and trying to help the rest of the team figure out what they would be doing next. I even offered for one of the other team members to actually step in as CEO if he wanted.
The weird thing was that because there was still a relatively active customer base, the business kept running even after we were “gone.” I think we kept the servers up for another year and a half or so, still making revenue for roughly that time. I kept fielding customer support tickets, even as I moved on to my next thing. When I was at Teespring, I remember having to set aside one day a week on the weekends where I'd basically go through and answer all of the customer support requests.
Michael: Super interesting. I'm kind of taking this next question from your conversation with Erik Torenberg on Venture Stories a few months ago, but how exactly do you evaluate young talent? I know you've spoken about this before in terms of trying to analyze an individual's potential curve versus where they are today. But, I'm curious, do you have any specific models that you use to evaluate talent and, in particular, young talent?
Delian: I have definitely been heavily biased on this by both Peter and Keith, who've been mentors of mine. I'd say, the biggest thing that you look for is some sort of anomalous spark. It doesn't necessarily have to be in a work-related context, and there's a reason that a lot of the companies that I work with are always thrilled to hire D1 athletes. Getting to that level of athletic ability requires extreme levels of discipline and that almost always ends up translating into a work context.
It's looking for some sort of anomalous spark of a thing that they've done that is hard / difficult, but have gotten to the top level of performance. And again, it can be physical, mental, creative, etc. There are a variety of different ways it expresses itself, but especially with young talent, it's unlikely you're going to be able to just evaluate someone entirely based on their resume, since there's not nearly enough data there. And so, you're sort of grasping into the rest of their life outside of just work to understand what their potential anomalous spark looks like.
Michael: That's all really good insight. Something I sometimes struggle with is having folks take me seriously, given that I am 20 and am a still student. I’m sure you faced this when you dropped out to pursue Nightingale. Having that perspective in terms of looking at where someone can be versus just what's on their resume today definitely goes a long way. This next question is kind of a two-part question. First, how influential has working with Peter and Keith been? And, second, how important is mentorship and just working with really smart folks early in one's career?
Delian: One thing that I didn't appreciate is that almost every role in technology is much more accelerated via some level of apprenticeship. A lot of the best founders tend to have been early employees at a really high growth company. That’s one of the reasons why you basically have these mafias that spawn up. With the PayPal Mafia, a lot of it was that those people, Keith as an example, who was previously a lawyer, basically got apprenticed into the world of technology and taught a ton and thrown into the fire.
That made Keith a phenomenal executive and then a founder of Opendoor. Early on, I'm not sure that I appreciated that aspect as much. I didn't do a great job of finding mentors that I could check in with on a regular basis. Even the best really raw first-time founders do a really good job of basically establishing a network of mentors across a variety of different aspects of their business: whether it's a legal counsel that they trust on those types of issues, a go-to-market friend and mentor, or a fundraising expert they can go to. As a CEO, finding people that have domain expertise across a variety of different things and checking in with them on a regular basis and taking action on the advice they give is super important.
As someone who now sometimes mentors people, the most promising thing that ends up making me willing to engage with somebody is when I give them a piece of advice and they actually go through and follow through on that advice.
I've worked much more closely with Keith than I have with Peter. For the first two years of my Chief of Staff position with Keith, I was basically spending eight hours a day with him. Now at Founders Fund, I definitely get some more exposure to Peter, and he's definitely pretty influential on my thinking. I also give Peter credit to accelerating my career through the Thiel Fellowship back in the day. Had I not done the Thiel Fellowship, I think I still would have likely dropped out, though I'm not sure that I would have had the funds to work on a company. I probably would have had to go take a job at Square or something like that.
Michael: I'm sure working closely with Peter and Keith has been incredible. Something I often struggle with, especially as a 20-year-old, is really thinking I have to do everything now, in the immediate future, when, in reality, I think a lot of things are really a long term game. I'm curious how you manage completing tasks in the near term, versus seeing what is really a long term task or goal, and if you have any advice for how young folks can prepare to play a long term game and not force certain things to be done in the immediate future.
Delian: I think it's important to think about the long term on a regular cadence. You don't have to think about it every single day, but once a quarter so, think about what the problem that you're really excited about in the super-super long term is. It took me a while to sort of arrive at this conclusion, but the thing that I get really excited about, and the reason that I am willing to get up and work every single day is, my long term goal is accelerating the commercialization of the space industry.
My investments at Founders Fund feel like I am contributing to that mission. I think it's important to start to understand and realize what the problem or thing that you care the most about is. It takes time to discover. I probably had a vague answer to that when I was 19 or 20. I think I kind of knew I wanted to do something in space, but it's definitely gotten much more crystal over time.
I think it's important to crystallize that because that's the thing that sort of keeps you motivated and focused. On the days wherein the short term it's really painful, you remember that it’s worth it for this long term goal. Then on the flip side, I think that people don’t think enough about the medium term.
In the short term, you need to maintain some level of discipline, which is why I kind of go back to the sports analogy of, you need to put in the work because who you are and who you become is not based off your goals, it's based off your day to day habits.
In the short term, I think it's important to keep some level of discipline and time management and things like that and be willing to make some sacrifices for the medium and long term. I love my job, but there are for sure days that my job is not particularly fun and kind of painful. I still get up and I do it.
I think the medium term is the area that people really miss out on the most. They feel that they have a long term goal and have to get things done in the short term, but then they sort of forget about the medium term, which I actually think is the most important area and the area that you should focus on the most and where the most of your mental effort should go. Ideally, the discipline and the short term stuff really gets easier and easier over time, where you don't need to spend so much effort thinking about it. But the area that you should be spending the most time on is actually the medium term.
Basically, what are your goals over the next one to two years? That's where you can actually start to make the investments and think about, “How should I adjust my short term based on my medium-term goals?”
Most difficult things you want to get done can get done in roughly a year. One thing that I always like to say is, if you take a really smart generalist, you can almost always make them a decent expert in a field over the course of 90 to 120 days. For example, one of my short term goals or medium-term goals was to get smarter about the space industry. That was my goal after my first six months of ventures. I was like, if I'm going to keep doing this, I want to really get involved in the space industry.
And so, I told myself that over the next year, I would meet a ton of commercial space CEOs, start watching industry newsletters much more closely, and do various other things that would help make me an expert in the commercial space industry.
Michael: That's a great analogy and perspective. What makes you so excited about space? Why is that one of your motivators?
Delian: I think that our democratic, liberal, and capitalist society only functions well when it's a non-zero-sum game. If you look at the future of humanity through a game theory lens, the only way that you continue to make it non-zero-sum is by making it a multi-planetary society and starting to accumulate resources from not just the earth.
And so, I think in some ways, space is the only way to keep humanity going. We're sort of built to grow and our entire society is predicated around that. I fear that we will turn into a zero-sum world relatively soon if we don't aggressively commercialize the space industry.
Michael: I love that perspective. I've never really looked at it that way, in terms of tying in game theory. I'm definitely going to look into that later today and try to follow up and read some more on that front. Transitioning over to advice related questions, particularly for our subscribers, the majority of whom are students. For students who may not know exactly what career path they want to go down, why would you recommend working at a startup, versus working in a more traditional corporate role in finance, banking, or a more established tech company?
Delian: I think it's almost exactly what you just said. Most times people don't know the exact career that they want to go down. The most important thing about successful careers is finding the thing that you have a natural inclination towards and are naturally good at and enjoy.
The people who are best at their jobs don't think about their job as a “job,” it's just what they want to do when they wake up. Typically, it's much more motivating to wake up and do a thing that you're really good at. The reason that I enjoy venture so much is that I don't feel every single day is a workday. I literally, if anything, have to coach myself into not working on Saturday. I think I feel this way because I have a decent natural inclination towards it and seem to be decent at it. So, it’s a lot more fun than doing something that I'm not as good at.
That's basically my answer for why it makes sense to work in a startup, or another broad role, early on in your career. I am actually typically a fan of going and working at one of the top three consulting firms, with the goal of leaving there within two years. Consulting exposes you to a broad set of industries, and I think it is important to get broad exposure early in your career.
Early-stage startups are a way to do that. If for some reason you feel like you don't have the connections or the network to get into early-stage startups, working at BCG for two years and spending those two years learning about a broad range of industries and at the same time, making sure to get to know a lot of startups so that you can figure out where to go to after BCG, is a great way of doing that.
You want to expose yourself to a variety of different types of rolls. It turns out, it's not just finance, banking, and consulting. The real world has thousands of different niches and areas that you can pursue, some of those you might be super interested in and might naturally be good at. You want to expose yourself to as many of those areas as possible early in your career.
Michael: That's a really great perspective. In terms of joining a startup out of school, kind of just to follow up on what you just touched on there, would you recommend joining a seed-stage startup with five or six folks on the team, wearing a ton of hats and learning a lot about a variety of things, or joining a company that has raised a series A or B, that's maybe a little bit less risky but where you will also wear fewer hats and not get the full spectrum of learnings that you would maybe get at an earlier stage company?
Delian: I think people sometimes overrate the stability of a Series A company. Those companies are still pretty damn risky. You're going to get thrown into a lot of different roles. I don't think there is a massive difference between a Series A company and a seed company. If you have the ability to join a Series A company, then do so. But, sometimes the particularly hot, interesting Series A companies are actually just tough to get into.
At some point, they start becoming high signal or their bar is able to be artificially raised. And so, sometimes I think it's a lot easier for people to join a super scrappy seed-stage startup where nobody's really interested in and applying for their jobs. If we lead the Series A of a company, all of a sudden they have thousands of job applications and it’s tough to get a role. Wherever you can get yourself inserted, do so. If that’s a Series A company, great. If it’s a seed-stage company, that’s great too.
Michael: I really like that advice there. In terms of the influence of Silicon Valley on the startup and tech scene, where do you think that's going? I've seen a bunch of people on Twitter say that they're leaving the Bay Area and with work from home being the norm for at least the foreseeable future, I'm curious just to get your perspective here. In five years, will Silicon Valley still be what it is today?
Delian: In the immediate medium term, let's say three to four years, I'm skeptical that there is any sort of major change; the main reason being that for founders that are based in the Bay Area or founders that are flying somewhere to raise money, they're all going to do that in San Francisco. If I move to Denver, no super talented founder from New York is going to fly to Denver, pitch me, and then fly to San Francisco to pitch everybody else.
I still think in-person meetings are extremely important for trust-building, which is necessary for a lot of the larger checks that venture capitalists write. While people are doing Zoom investing right now, I think the moment that in-person is allowed or is more possible, people will immediately revert back to that and prefer that strongly. There is some chance that everything gets super decentralized in the longer term and there starts to be a spawning of other areas where there's enough density of venture capitalists that founders are willing to travel there.
I also think there's a potential version of the world where it's like, look, a lot of the people that are leaving San Francisco and the Bay Area were pretty risk-averse people that likely weren't going to be starting companies otherwise. It's the various Google and Facebook PMs that didn't really want to be in San Francisco and were just here for the jobs. Those people were unlikely to be starting companies anyway.
Because of that, the rent has gotten much cheaper here in San Francisco, which now makes it so that scrappy young entrepreneurs that want to come out of here to build companies can afford to come out of here again. When I was 20, I probably couldn't have afforded to move to San Francisco if the prices were what they were in 2019. When I first moved out here in 2012, I had a $1000/month rent for a bunk bed in a shared room. That just wasn't possible 2019. Now in 2020, you can afford to get a bunk bed in a shared room again.
Michael: Delian, thanks so much. I really enjoyed that!
Delian: Of course! Thanks for having me on. I enjoyed it too.
We hope you enjoyed the interview with Delian. We certainly learned a lot and hope you did too :)
You can find Delian on Twitter @zebulgar.
I’m on Twitter @mspiro3 👋
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