garry tan of initialized capital

Garry Tan of Initialized Capital: $7/hr Web Developer Turned Venture Capitalist

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A designer and engineer turned early-stage investor, Garry Tan’s journey to becoming managing partner of Initialized Capital was one that comprised hard work, learning from his mistakes, and most importantly, a confidence in betting against big tech.

Growing up in the San Francisco Bay Area, Garry was raised in the shadow of Silicon Valley. Armed with only a passion for coding at 14, he cut his teeth as an engineer and was paid $7 an hour, getting his customers through good ol’ cold calling, the yellow pages, and the internet. Eventually, Garry joined Y Combinator (YC), and as it grew from a little-known entrepreneurial programme into one of Silicon Valley’s best-known and regarded networks for early-stage technology startups, his budding career in the industry soon flourished. At the same time, he’d gained invaluable insights that he uses today for Initialized.

Here are some insights Garry has to share.

There’s no hard and fast rule for a Venture Capitalist

There are many people that are great builders, engineers, product designers…and these are the people who are best positioned to become founders. To Garry, a crucial thing for venture capitalists is to find these individuals and guide them the right way.

“The hard part about playing chess is being smart. It’s not how the pieces move. So the really key thing about working with very early stage founders is finding people who are smart. And then, those are the people who can build, and tell them how the pieces move, which is business, management and hiring and all of those things. And then that’s the core of multibillion-dollar companies,” says Garry Tan on the lessons he learnt from his mentor at Y Combinator, Paul Graham.

At the end of the day, there is never just one way to do things. It’s important to attract the right people and work with them in building a company. Finding the right fit might seem clear now, with success stories like Mark Zuckerberg, or even Google founders Larry and Sergey. However, 10 to 15 years ago, they were the exception to the rule. It was more common practise for VCs to come in, boot founders out, and appoint new CEOs.

Take risks, change your perspective, and look at the bigger picture

As a venture capitalist, to Garry, it is important to be a fellow builder in the early stage instead of a boss. It’s because the beginning is the generative process – there’s no market fit, no product, and barely even an idea.

“And that’s sort of the moment when we need to open the aperture to (see) what is out there in the marketplace, like go talk to your users, and pick which users and which problem to solve, and then understand what their needs are.”

When it comes to divergent or convergent thinking – a big-picture versus a laser-focused perspective – during this nascent stage, it is crucial to subscribe to the former: survey the landscape, see the data, pick out the patterns, and follow your instincts. It is only in the post-product market fit stage that convergent thinking comes in – hire an exact team, capture the opportunity and develop the brand.

Even in his personal journey, taking risks didn’t come easy or naturally. When presented with the opportunity to join Palantir, an American software company, he chose to stay on at Microsoft, preferring the stability of a large organisation. However, the moment he saw the software Palantir boasted, it only took him a year before he quit and joined, becoming employee number 10.

It goes to show how bewildering the early stage can be, and the importance of breaking out of the mindset of wanting security over taking risks.

“The only risk in tech is to not take risks. If you really want to accelerate what you are doing, you join the place that is working on problems that you believe in. Early-stage startups are the place to cut your teeth and maximize the difficulty level and maximize agency. After that, there are compounding effects for the rest of your life.”

Trends are what you make of it

One of the reasons Garry said no to his initial offer from Palantir was because he was hyper-focused on big trends. It took him a while to realise that the “big trends” he looked towards were actually backwards-looking perspectives.

To put it this way, by the time trends are reported or even shared with reporters, it has already been months after the discovery. In fact, people who create trends are those that believe in them before anybody else.

“The number one question I get is: What’s hot? I could tell you, but things I’m excited about are things that are actually continuing. I’m not saying to go out and do these things, but these things have an echo. One that will bounce around and scare up new ideas.”

Support the growth of founders into leaders

Great founders don’t always make the best managers. With a good company, historically the strategy is bringing in professional management to grow it to its full potential. However, the founder-friendly approach lies in believing that the best founders can grow and change in the course of running their business.

With support for founders, companies are more likely to succeed. Every founder will face failure now and then. It’s the ones that will get up to dust themselves off, own the mistake, and fix it, that will make it.

To find out if a founder is doing the right thing, Garry believes in taking a pitch as if he were an engineer deciding whether to work there.

“If I’m sitting down with Peter Thiel again, would I, knowing what I know now, go work for them? If I wasn’t working on Initialized, do I believe in it? Is there a meaning? What are they trying to do? And if I believe then, here’s my X-factor – believing in something before anybody else does.”

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