vertical integration

Scott answers a question on verticalization within the grocery delivery market and explains why there’s power in controlling access to the consumer. He also offers advice to a start-up founder on when to add more members to a board of directors, and why business school is still worth it, even if you just want to work for yourself.  Music: https://www.davidcuttermusic.com / @dcuttermusic Learn more about your ad choices. Visit podcastchoices.com/adchoices

Scott answers a question about how SaaS or B2B companies could go vertical — or in other words, control as much of the consumer’s end-to-end experience as possible. Scott also answers questions about his decision to invest in the private markets, deciding whether to pursue a PhD, and how to build a professional network outside of your academic institution.  Have a question for Scott? Email a voice recording to officehours@profgmedia.com Learn more about your ad choices. Visit podcastchoices.com/adchoices

Tesla is today the most valuable automaker in the world by market capitalization beating out industry giants like General Motors, Ford, Volkswagen group, and even Toyota.  It has achieved this impressive feet despite a short operating history, a limited product lineup, and even relatively modest sales figures compared to these much more established entities.  In spite of all of these indicators, investors are willing to pay more than five times as much for the same stake in Tesla as compared to the more traditional automakers.  So what is going on here? What do investors see in Tesla that a rational person may not? What is the companies vision to truly justify being valued this highly? and could this all be a charismatic CEO taking a pool of naive investors for a ride?

My guest this week is Keith Rabois. Keith is currently an investment partner at Khosla Ventures, but has a storied and diverse background as an investor, entrepreneur, and executive. He has worked in senior positions at Paypal, LinkedIn, and Square; has led investments in companies like Stripe, YouTube, Palantir, and AirBnB; and started the company OpenDoor, which aims to transform the process of selling a home through technology. One fun fact about Keith is that he may have the most impressive list of bosses I’ve ever seen, which we discuss during the episode. We cover a lot, but one thing we kept returning to was business strategy. Keith’s frameworks for gaining and building strategic power helped me clarify my thinking on the topic, and his examples of contrarian thinking will hopefully make you question some commonly held beliefs. Please enjoy our conversation.   For more episodes go to InvestorFieldGuide.com/podcast. Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub. Follow Patrick on Twitter at @patrick_oshag   Show Notes 1:35  (First Question) – A look at his investing philosophy 3:16  – Favorite examples of his own investment history             4:40 – 7 Powers: The Foundations of Business Strategy 5:07 – Understanding what is anomalous in a given investment 7:07 – How much a secret needs to be protected within a business 11:51 – Why accumulating advantage with data is of interest to Keith 15:12 – Digital health companies and ideas that he finds compelling 16:17 – Nuance around financial services that investors should be mindful of 17:56 – How do they evaluate managers ability to recruit talent 19:36 – How similar are the roles of entrepreneur, board member, investor, etc that Keith has had in his career 24:02 – Ways that Keith is a contrarian, including his feelings on “lean startup.” 27:04 – Is problem identification a specific skill set 28:29 – Objection with experimentation/iteration 30:02 – Bad ideas in venture 31:36 – What he likes about Apple             31:51 – Creative Selection: Inside Apple's Design Process During the Golden Age of Steve Jobs 32:26 - Interview questions for identifying great talent 35:41 – Elements of good design 37:14 – Impact of platforms on opening new opportunities 38:42 – His take on valuation in the early stage environment 40:33 – Advice he would give people early in their careers 43:58 – Do high growth companies get beat by established larger businesses 45:25 – Popular narratives that he thinks are just wrong 48:22 – His thoughts on how people should learn, balancing experience vs information gathering 50:00 – Other investors that are taking a unique approach to investing 51:57 – Reflecting on the entrepreneur as a client model of private equity 55:04 – Books that he recommends that is least known             55:18 – The Upside of Stress: Why Stress Is Good for You, and How to Get Good at It 56:30 – Kindest thing anyone has done for Keith   Learn More For more episodes go to InvestorFieldGuide.com/podcast.  Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub Follow Patrick on twitter at @patrick_oshag