Hedge Fund, Peter, France discussed on Capital Allocators
I grew up right around here. In San Francisco. Go Bay area right in Silicon Valley and I guess when I was thirteen fourteen fifteen my friend's older brothers raw building companies because it was late nineties so I started at pretty interested and what was your first venture. First thing I started myself was actually pounds here but I was. I was involved with a bunch of things in high school. One of my friend's fathers was senior. Intel off any gossip bunch of really inexpensive chips and we we overclock them and then we got him to to give us the materials to super cool it and play with that. It was really good for playing quake too but you know it wasn't it turns out. No one else really wanted to buy them so it was much more exploring and be part of other people's companies for the first four or five years. I guess pay Pal for Serious Company. I was apart as an intern for a couple of years. What what was your angle. Did you come at it from technology side from the business side the computer scientists originally so I studied computer science when I was Gosh Ten or eleven my friends Tommy to program and we built games. We built programs. Would your math homework for us and that sort of thing and then pay pal. I saw a lot of really smart people going there so I actually got turned down the very first time am I applied there as a programmer. When I was quite young Max luncheon who's now a friend I mean do stuff on the white board and we debated things and they never got an offer from that but then Peter brought me back the next summer and I started started working at paypal and so you went from pay pal originally into Peter's ecosystem yeah exactly so I got to know Peter from entrepreneurship suffered from a paper he'd started called the Stanford Review. Show is editor of and start talking about different things with him and he brought me in along with a couple of other people as a summer intern in the I ended up working for his family the office and I helped him US starting a hedge fund and I helped higher bunch people there so I kind of started working with him on a bunch of things and what was the original idea propounded here well you know they're actually a lot of things being started at the time at Clarion. The Hedge Fund in some of them were quite crazy. There's this thing that was like trying to mental stimulation that was supposed to do things. Thanks good for your brain that ended up being people nightmares other effects to talk about. There was a spam company. There was a restaurant listening millions lars on there's lots of things and of course Peter there was also the time a big investor facebook's. That's another facebook founders really well so just there's all sorts of things going on some of them crazy some of them not as crazy obviously although it was really hard to tell at the time what were the best nice things in it and hired a bunch of my friends at the hedge fund help us with programming and building things and some of them really didn't like finance very much since waste where we're going to work on and we'd had this idea that initially repeaters idea from pay pal like these people were talking to the secret service at the FBI helping us. We try to arrest these bad guys tweet building better technology for them doing something to take. We've learned and apply it to DC. So the idea came from sort of being there inside clarion well. The idea was from pay pal originally where the Chinese and Russian mafia were stealing sealing off our money in there about a competitor's bankrupt to these online money laundering efforts. That's from hacking into the system. Yes Sir so you go to a seven eleven and buy something and the person some behind the counter somehow takes. Snapshot Writes Down Your Credit Card number and because there's now Russians online as of the year two thousand two thousand one ninety nine who are willing going to pay a lot of money for credit card numbers. Maybe five ten bucks you write down a few hundred of these. It's a nice way make money on the size as someone in they take the money run it through pay pal by the time you realize it's fraud fraud the money's already out of the system and then pay packets hit by a charge back so there's all sorts of versions of pay pal losing huge amounts of money to allow competitors and what role did you initially play at here so pound here. I was the founder who created the company and got going there. Lots of things going on around the time it's idea he played with. I took some of the people who had hired tired. Hedge Fund for better or worse. I became a leader the hedge fund the number two guy there was a genius but was also not really a manager so I was kind of helping me lots of things and just kind of fill the avoid as a overconfident twenty one year old running this paper on this thing and run a big drain account there and debating the trading with Peter and then allies guys working for me and a few of them. She didn't really WANNA work finance stuff and I said you know what let's let's prototype. My roommate is down for at the time really really bright guy she along with me we started just running and staying up late at night and sketching applic- different ways that the product could work for the CIA missing Peter to give us a pleasure to fly out and talk to people we knew in DC and he knew in DC a few other adults there were times he this is crazy as even worse than your restaurant and your other ideas. You're doing stop these kids from talking to these people and then to headed to take off from their point in time. Did you leave Claremont. Just dedicate to pound here. We got a little office away on Sandhill road appears old offices and we started using that and started building it out and Peter helped us bring on one of the guys from pay pal became another Co founder Nathan he just started working on it and I was working on it part time we were testing it out and trying it out but it was about a year and Judas Clara starting to get really exciting and I ended up moving there fulltime to start start hiring at the team ended up high most of the first hundred people on help from the products and built it out and at what point in time did you say okay this things off on a tone and time to step away. It was about five or six years of working on it pretty intensely in hiring team building a culture and what happened was is that we built out the government side in about three or four lawyers into it was unclear how long governments I was GONNA take to ramp up so I signed to build the finance side of the company as well so so pounder ended up building out a commercial division where we started with the finance side and we had a few early customers like bridgewater another issue ended up using a system for over ten years as with their analysts did their work so really built out a commercial side of it as well as that was scaling. I'd I fully vested my shares in the company about four or five years in and I was as another division in the company by realized. Maybe we should do something on my on more of I was really passionate about this for Outta par so I stepped aside lied about five and a Half Years Union started working on adipose instead until we're the antequera idea come out of his partially from stuff pound here with seeing when I was seeing in general is building my own very small family office at at the time and realized that that s face was very broken the technology religion at work for it a talk to my friends who are running large offices they had similar complaints and the big theme we have which in general in world in the last ten years and Silicon Valley is. There's these industries where there's platforms that should be using data run them better and that are not realize if you WANNA fix a lot of different parts of the financial world. You needed a platform what form this is on top of the money. So part of the idea was to be the software for our as for family offices for banks and be able to have lots of ways that you can kinda talk to the money through the platform and when you dive into one of these ideas you mentioned a couple times your friend for your roommate from Stanford a bunch of your friends. How do you start to build one of these off of the idea. Well I think the number one thing is getting the very top talent with the computer scientists you WanNa culture where people are really really obsessed. You want to agree on what the mission is and why missions important and yet have mission in a set of people that attract the other people on the becomes a positive something so this is a very intense few years getting them going and convincing others to help you and making sure his own enough of it and then I'm a product guy so it's catch up the product than you. I have to have the marketing sales analysis and you have to go entering talk to a lot of people get a lot of feedback evolve the product time based on that one of the key things for the early engineers is they have to to be on a mock up quickly. You need to get feedback ain't data rate and at what point in time did you shift from being an operator to venture capitals so the thing is really proud about pounds here and then later at par is we had some of the very top talents panthers rate number one in Silicon Valley for the engineers. We were attracting and what happens. A lot of talent will come a place for three four five years. Some of them will stay the whole time still people who've been there for fifteen years now but a lot of them after a while but go on they'll. WanNa build something around so I had probably about ten or eleven different from France who had worked with in some capacity pounds here or even out of pure parley on building things on their own and I was being small investments in them from my office. I was advising them and I realized so that's something I really enjoy doing even more than enjoyed Brian the company day to day. At what point in time did you say okay. I'm going to start a venture capital firm that created. I guess it was formation. Take the time yeah. Formation Eight was the first real serious firm had a small fund. We called the before and that the fund was just with family in France in my own money and we did a bunch of angel investing and that was actually really good because even though that fund is over ten exited great. I also did a lot of dumb things so I think you learn by doing things right so so you want to make mistakes before you do it with larger amounts of money but but after doing that seeing it working well started have really strong opinions a scientist start a fund two thousand eleven. I guess when we decided to start it close. Our first fund the very end of two thousand twelve and then at some point in time. I guess some of your original partners cited not to continue in you continued on yeah you know I think everyone has different ways of running and managing these things and so one of the things we always talk about with our entrepreneurs defined unfair advantages because he's so hard to start one of my unfair advantages. Starting permission eight was the Meyer early partner is Family Bill Elgin Korea. His father gave us fifty million dollars anchor..