He is a designer, engineer and founder turned early stage investor, co founding Initialized Capital with Alexis Ohanian in 2013.

Their firm manages over $500 million and if invested at the earliest stages of companies like a coin bass, FL Export means the cart and Cruz.

Prior to initialize, Gary spent nearly five years as a partner at Y Combinator, advising and funding more than 1000 companies and founders before why See, he was a co founder of a block platform called Pasha Rhys, which was acquired by Twitter in 2012 for $20 million.

He done worked at Palin Tear as a founding member of the engineering team and fun fact he actually designed to Palin tears.

Logo Gary also holds a bachelor in computer systems engineering from Stanford University.

Wow, that is one heck of a resume.

Very impressive, but I got very lucky by getting in.

That's what everyone says.

And here he is, talking to me a youtuber, the camera, the camera, unless you want to a little bit of a problem.

But yeah, so and I also heard that now your portfolio initialized performance Valley that 36 billion?

Yeah, his extract.

And in almost every single case, we were the first or among the first check.

So when the company was worth certainly under $10 million we funded about 200 companies.

So, like coin base, you ever one of the first?

Yeah, that is crazy.

So I have a lot of viewers.

Most of them are from high school Are like college.

Just just a little curiosity.

Did you do well in high school and college high school?

I aimed for exactly perfect a minuses because I figured out that my our college admissions process, the transcript that the district would send out didn't have plus or minus.

And so every moment I spent on getting a plus or not minus meant that it wasn't optimized.

Well, okay, that's a very 80 20 mindset.

You gotta men, max your life.

Not sure that's true.

That's true.

And what did you do it with theater time?

Because I'm pretty sure you had more time because you didn't optimize for a pluses.

Oh, man.

I mean, the reality is I actually grew.

Grew up pretty poor in Fremont.

Yeah, and so were growing up in apartments.

I wanted my parents to buy a house.

I mean, I wanted to grow up in the house and I was 14 and I was obsessed with computers and I knew how to make Web pages.

So I opened up the Internet section of the Yellow Pages and Cold called until someone gave me a job for a seven bucks an hour to make websites for cities.

And that was my first job when I was 14 I ended up taking all those earnings over, you know, every summer and winter break for a few years, and we ended up putting down the down payment for the home that I mean, my brother grew up in, so that's amazing.

And so for me, computers just fundamentally changed my life like I grew up, like sometimes food insecure, like I know what it means to be hungry or show up to school, like wearing the same clothes again.

You know, on DSO computers actually really changed my life in a fundamental way, and I would have worked on computers for free.

But it turns out, especially over the past 20 years, it's basically like winning a lot like winning the lottery was being into computers like now and in the past 20 years.

Yeah, I do feel very fortunate.

I chose computer science for sure.

You know, it's funny because I used to work when I was maybe not 14 cause that was illegal.

But when I was 15 I think I worked at McDonald's.

Yeah, big contrast here.

And my dad thought I would got really soft by just working on computers.

He was like, Maybe you should go work at McDonald's.

That's like, No, Dad, I love computers.

That's really cool.

So back, Thio.

Now what you're doing, you're VC, all right.

Initialized capital.

And, um, can I ask you, what kind of companies do you guys invest in or what do you look for?

Yeah, totally.

Uh, we are super focused on the earliest stage.

And then So you know people with Justin idea.

When we met Brian Armstrong, who created coin base, he just quit his job.

A SZ head of anti fraud for Airbnb an Airbnb had just been minted as a $1,000,000,000 company.

Now it's worth like north of 30 billion, which is crazy.

But for him to quit that job at that moment on work on the super speculative thing called Bitcoin.

That was really noteworthy for us.

What year was that?

I think it was 2013.

Only 13.

That's crazy.

Okay.

And then you you guys were one of the first invest, or you were the first invest.

Yeah.

I mean, we funded them at y Combinator and then initialized I was able to invest again.

So that's one of the funnest thing seeing people who are just have this crazy idea.

I mean, Bitcoin was fringe, you know, I read about it on hacker News and dismissed it like a lot of other people.

Um, but for us, it goes back to the founders.

If they are really smart and really great engineers who can build anything, that's the most important thing.

And this is in contrast to how I think most venture capitalists work.

Um, most people just look at the buzzword.

They look at the resume, they look at the buzz words, and they say check, check, check.

Okay, I'm gonna take that meeting or not on.

And I think that that's why start ups suck so bad.

That's why you read about you open up TechCrunch or you open up Twitter and you read about this startup that raised $10 million.

It's like that doesn't sound very good at all.

And it's because a lot of startup investors don't think from first principles.

They're never built a company before or they never built software before.

Like they don't know how to be an engineer.

They don't know how to be a designer.

They've never built anything.

And so what do you do?

You rely on your power point watching skills.

I guess so, aside from technical skills are you know what they can and cannot do in terms of personality traits?

What do you look for in these founders?

The number one thing I think is actually grit around it.

Aeration.

So I mean, just making something that people actually want on and then putting it out there, even if it sucks.

If if there's one person out there in the world who would be happy that that exists, then you did the right thing, right?

If you are putting out software that you're not embarrassed about, then you waited too long generally on Dhe.

Then once you have that out there like you don't have to blast the world but get like at least one or two people using it and relying on it.

And if you can get one or two people to really love it, then that's the kernel of something that could grow a lot faster.

And so that's one thing that we ask ourselves, a lot of meat a founder.

Have they made something that their customers actually truly love?

Because that's more important than all the Stanford and Harvard's and all the Google and Facebook, you know, resumes in the world like you.

You could take all of those and add them up.

And it wouldn't matter if those people can't sit down in front of a user, figure out what they need and then build the thing and then have someone be really happy that that exists.

So it's simple.

It's actually shockingly simple, so it sounds simple, but I mean obviously fine product product market fit is not always easy.

Oh, yeah, right.

And like that's actually like the biggest thing.

So imagine if I did find a product market fit.

How would I pitch it to you?

How can you extract the most signal out of my pitch Or how should I make my pitch so that you can extract and totally number?

One thing is, uh, and I get cold Probably 20 cold emails every single day, which is crazy.

And these are actually not actionable for me, because in that e mail, I can actually tell What is it?

Who's it for?

What problem doesn't solve Andi?

How do I even know if it's actually solved?

Well, those air sort of the four things, Really, it's not a lot of things, but, you know, if someone was gonna cold email me your cold, pitch me or pitch anything to any investor, that would be how I advise it.

And that's sort of the process that a founder has to take every single day.

Whether it's not just for investors is actually to your customer, too, because the customer sitting there and you know I'm trying to buy Bitcoin.

It's a huge pain in the butt.

I have to go to this other website.

I have to go to Western Union.

I think I went toe Western.

You really and I wired money from Western Union cash to some random address in India, Maybe something like that.

And then it magically appeared in this super sketchy payment system that then showed up on Mount Cox and I could buy my first Bitcoin.

And so that was the state of affairs.

Today, everyone forgets because coin based now exists.

You go to the website you put in your credit card, you put in your bank account information.

It's trusted.

It's encrypted.

It's all in the United States.

It's fully compliant you.

It's, frankly, way better than what was the alternative.

I mean, it sounds simple, and it is very hard to actually a find a problem like that and be solve it in exactly that way.

So now that you have invested in multiple startups, I'm sure some of the startups film not all of them coming.

Probably more than 50% right, not working out.

So why do you think startups fail?

What are the most common issues or problems that make them fail?

Yeah, the number one really early ends up being co founder problems, actually, um, especially when you're only two or three people, you actually kind of need those people on.

And so that's probably the number one thing And that's why when we look for teams that air starting out, we really like teams that have actually worked together before or have known each other for a really long time.

I mean, one litmus test almost for whether or not ah, Cofounder is good is have you ever been camping a storm?

Because that's kind of how it's going to feel like it's gonna be garbage.

You're gonna get punched in the face.

It's gonna be wet.

It's gonna be cold, like someone forgot matches.

There's gonna be, like, 1000 problems, that problem that crop up.

And if you are able to work with someone, you can get through all those problems.

And, uh, you know, the thing is, that's gonna happen.

So what about solo founders?

Have you ever invest in Solo found?

Yeah, absolutely.

Um, the classic advice was trying find co founders, but solo founders can make it work, too.

Either they have to build the whole first version themselves on.

They have to raise money or, you know, there are lots of different paths.

It's usually better to be a solo founder than to have co founders who are bad at accents that makes it bad for each other.

Yeah, bad for each other.

Because, you know, it's almost certain death when you're getting out there.

Maybe you're trying to raise money, and then you lose a co founder.

Yeah, I think I read an initialized capital.

You said something about if if we have you as a an investor, then you're gonna help us prevent the 1000 landlines.

Oh, yeah.

Potential water does 1000 landmines.

I mean, we could probably talk for hours about it, just like we can't even do a few more.

Aside from co founder stuff.

Honestly, a lot of it is shipping.

So a lot of people are so obsessed with getting it perfect that they actually never ship.

And there are lots of examples of companies that have actually raised millions of dollars, hired tens of people, worked on problems for years, and then never shipped.

Sometimes when they finally do ship, it's so late that the opportunity for them was a year and 1/2 ago.

Competitors, you know, came and went startup.

Entire competitors started released and died, and it's just too late.

And, you know, they burned millions of dollars, you know, it's crazy that that happens, but it happens a lot, actually.

So being able to iterated in front of users really important and their startups even today, that have not shipped yet.

And they should.

I see.

I see.

So if I am a startup founder, like, why would I come to you for money rather than people imagine?

Have a rock solid product?

Yeah.

So why would I come to Initialize Capital versus another C firm?

Well, we started companies before, So part of it is so many investors have never started anything, and so they're very lean back.

And, you know, if you've ever done pitches, you can kind of tell what kind of pitch is gonna be immediately because it kind of feels like you're being watched by your teachers from high school or something.

It's, you know, it's lean back.

There's not a lot of, you know, sort of discussion.

There's no back and forth.

It's just impressed me.

And then I'm gonna grade you.

Um, and those aren't the those aren't the investors you want.

And then what's worse is after that, those investors will say, Well, I'm interested.

This is very interesting, but come back to me when you have a lead, which is basically the it's just literally the worst thing that investors do and it's in most of them.

Do it.

It's completely crazy.

What do you mean by lead?