How I Invest with David Weisburd - E335: Why the Best Investors Ignore “Capital Preservation”

Episode Date: March 27, 2026

What if your family office could invest like a founder and a VC at the same time? In this episode, I sit down with Shane Neman, founder of a multi-entity family office with $850M AUM, to explore how he approaches venture investing, deep tech, and portfolio construction. Shane shares how his two decades as a SaaS founder shape his edge as an investor, why transparency and founder relationships matter more than fund mandates, and how he balances high-conviction bets with a rational family office lens. He also dives into frontier tech, co-invest structures, and building a diversified yet opportunistic portfolio.

Before you became a family office investor, you spent two decades bootstrapping SaaS companies. What did that teach you about being an investor? What it taught me about being an investor is really kind of putting myself in the shoes of the founders that I'm investing in. I can see clearly the challenges that they have. I can relate to them very well. I can see their blind spots because I have about 20 years of experience doing that.

It's just generally built a instinct inside of me, about what companies do well and which ones don't and which founders do well and which founders don't and whether or not they have the chops. Obviously, when you're investing, you're also competing against very sophisticated venture capitalists. What edge do you have there that VCs don't have? One of the edges, and not for all VCs, right, is that I was a founder for a long time. So one of the things that I just mentioned, what makes me different than like, let's say,

like larger VCs, for example, I'm investing my own capital, right? And I don't have the same kind of incentive structure where I have to deploy capital like VC funds do because that's how they make a living. So it's a totally different mindset. Also, because I was a founder, I think a lot of founders relate to me better. I think the age of the family office investing in venture is come upon us because there's no investment committee to go through like a traditional VC. family offices can be just as smart money and just as nimble and not be as onerous as venture capitalists are. What's also interesting, I think, for the founders who want these types of syndicates is that they are getting access to investors that can really add value. Instead of being like a black box in a VC where VCs obviously have LPs that invest in them, right?

But you never get to see who those LPs are, right? The way I work is really kind of open source. I give the diligence materials in a data room to everybody. They can see all the memos and tap table financials. You name it. They can see it. And I usually do a Zoom with the founder where everybody joins and they can hear the founder speak about the company and also ask questions.

So it's really transparent. And I think that kind of radical transparency is very different than what's been traditionally. EBC. Something more, why is that so different than the traditional venture co-invest process? Most co-invest processes, you have to be in the main fund to do a co-invest, which is a black box, I would say. And then they're only kind of allowing select LPs to go into their best deals. And they write an investment memo and ask you if you want to invest or not.

I don't think that they allow you to really get into the weeds and do your own underwriting. People really want that semblance. It's not even a semblance. It's actual control. They want to be able to create their own portfolio. I think that post-exited founders, ultra-high non-worth individuals, family offices,

they are very sophisticated and they can make their own decisions, right? They're buying secondaries in Anthropic. They're doing secondaries in SpaceX, NERLing, and they want to be the ones that can also underwrite that next unicorn.

They're just as smart as any other VC, just to be honest with you. There's nothing magical or unique about a VC, in my opinion. Interesting. It's a trend not only in family offices, but also in institutional investors. I recently spoke to an Ivy League endowment, and they talk about that. They're really focused on minimizing their unfunded liability, being able to do more direct deals, being able to have access to liquidity, being in their own kind of pools of capital so that they could transact if liquidity needs came to mind.

So it's not just family offices that are. Yeah, institutional investors. Avoiding wind pool funds. Institutional investors are really focused on how do we get more into direct deals? How do we get more into co-invest? And how do we control our destiny? That for me in specific is why I've also, I've thought about it. And a lot of people have asked me to do it.

I haven't really kind of created a fund. First of all, I'm not really interested in that because I think that, although I am invested in some funds, just as a practical matter. I'm invested mostly in, I wouldn't say generalist VC funds, but I'm in very niche emerging managers or really high conviction managers that are doing very specific things

like biotech VC or crypto VC or synthetic biology VC, things that I just really wouldn't, first of all, know how to underwrite because they're just way out of scope for me. But I want to have access, I want to have exposure to those industries. And I'm usually picking one to three, let's say, exceptional managers. And I tend to like

emerging solo managers. They have an edge, usually. And also, I can also see their deals more often, and they're willing to share more often with me. And then I can do those co-invest with them, or maybe even do my own syndication for something that I think is exceptional. Some of these SBVs that you're doing, they get as large as nine figures, 100 million plus. Tell me about how you get to these kind of quantoms on single deals. You got to be really lucky, first and foremost, let's just say, because I think for me it's been a combination of luck, combination of really selecting only the best of the best

that I think are outliers in terms of doing co-invest for them. For me, the way it's really kind of worked is I usually write a siege hack into companies, And then when the time comes and they've kind of hit, let's say, and there's a real name lead or they've kind of hit some sort of technical milestone. My investment, by the way, just to kind of back up so that it's a little bit clearer, my VC investments are bar belt, right? So I am investing in really deep tech frontier tech companies. And I've been doing this for about six or seven years when it wasn't as fashionable as it is now. So that entails a lot of hardware companies fall into that in a theme, let's just say, robotics, quantum, AI, which is too much of a general term, I would say, synthetic biology, those types of things, right?

And then I'm barbelling it with things that I think that cannot be crushed or killed or vaporized by those frontier technologies that I just mentioned, right? And so what would constitute that? It's a very hard thing to define, but I can give you concrete examples of that, right? So we just invested in a company called NARA Organics, which is a baby formula, right? So the idea being that regardless of how much AI or robots or whatever there are, you're going to feed your baby formula. And as a practical matter, I know way too much about baby formula. It's a beautiful business. And I could spend a lot of time telling you about that.

But that's, I'm trying to give an idea, or we did AG1, for example, athletic green. which a lot of people probably who listen to podcasts know who are early investors in that company. We did a company called Flex Storage, which is a competitor to pods where they bring storage units to you, right? And they're tech enabled and there's a lot of reasons why it's better than pods,

but the idea being that you're going to always need to store your stuff, right? So that's the other end of the barbell, and maybe those will not have the same kind of, let's say, trillion dollar outcomes that a deep tech company can have, but they're still really good investments. So I think the flexibility of that is unique as well. Expert calls have always been one of the most powerful ways to build conviction,

but today investors are asked to cover more companies, move faster, and do it with leaner teams. With Alpha Sense AI-led expert calls, their TGIS call service team sources experts based on your research criteria and lets the AI interviewer get to work. The magic is in the AI interviewer, purpose-built and knowledgeable-based information to conduct high-quality context-stretched conversations on your behalf, acting as a trusted extension of your team.

Then they take it one step further. Your call transcripts flow natively into your Alpha-Sense experience and become querable, searchable, and comparable, so your primary insights plug directly into earnings prep, digital work streams, and pitchbooks with zero tool switching. And with Alpha-Sense expert call services, the AI-led expert calls are just one option because we know the importance of a hybrid expert research approach. AI for coverage and efficiency. Humans for complexity and conviction. It's the institutional edge that scales research without scaling headcount. For hedge funds, that means validating thesis assumptions across dozens of experts before earnings instead of a handful.

For private equity, it means faster pre-IOI scans and deeper commercial diligence. For investment banks and asset managers, it means pulling real operator perspectives straight into models and sector positioning without disconnected tools or manual handoffs. All of it lives inside the Alpha Sense platform. trusted by 75% of the world's top hedge funds alongside filings, broker research, news, and more than 240,000 expert call transcripts, turning raw conversations into comparable, auditable insight. Take advantage of Alpha Sense AI-led expert calls now.

The first to see wins. The rest follow. Learn more at Alpha-sense.com slash how I invest. I think the closest thing to that is Founders Fund. They like to go super early or super late. Once it's consensus, they basically, you can think of it as, and smart beta. Just to kind of retrace back to your original question, how did some of these get very

large? We did, I'll give you an example. One of the larger ones that we did is figure, right, which is a humanoid robotics company. The CEO is Brett Adcock. It's gotten a lot of attention lately because it's freaking awesome. Just to be honest with you, if you've seen the videos, it's an autonomous humanoid. It sells itself. Yeah, it sells itself.

But, you know, when we first did that Zoom with Brett, right? I'll never forget it because it was really polarizing because I brought in a bunch of investors with me as well. And by the way, I've been convinced by my investors sometimes never to not go forward and a deal isn't good. So that actually works in my favor. Sometimes I have the blind spot, right? And I'm kind of using this hive brain to tell me where I'm going wrong, right? Which is unique, I think. It's kind of the original angel groups.

So these angel groups were, I was part of one in Silicon Valley, probably around 2010 or so. And you actually get a lot of value through crowd wisdom. And sometimes there's just so many different lenses to look at it. And sometimes you end up in the same situation, but you have higher conviction. Sometimes you change your mind. Sometimes you are no and now you're a yes. It's all over the place. But just hearing different perspectives is so valuable.

It's something that venture firms have as their strength. Maybe their weaknesses, they have too much money. But their strength is they have this different ways of looking at the same. Having too much money as adverse incentive, by the way, because you'll ignore some of the signals just to kind of deploy funds. You know, after all, they're human, right? So, like, that's the way it works. It was really polarizing. It was Brett just had a hand, just like this robotic hand.

And all he had was like 10 engineers that he had recruited from Apple, Tesla, Boston Dynamics. He had put 20 million bucks of his own money in, which really kind of stood out in alignment. with investors. He had obviously the pedigree from Archer and Vetteri, before that being the post-exited founder. But after that, that Zoom, I got two different types of text. Either people were like, this guy's freaking bananas.

I'm out, right? Or this guy's the next Elon. I mean, he's a visionary. He is this. And that actually gave me signal, right? That gave me real signal being, Because by the way, those two types of texts were being sent to me by very smart people that I really, really, really respect. It wasn't just random people, right?

And so I knew there was asymmetry in that. I didn't know he was going to win 100%. And it's still yet to be seen if he's going to win, right? Even though they just raised at a, you know, $40 billion or something dollar, you know, $40 billion valuation. And they have Microsoft and Nvidia and all these other guys backing them. But those are the unique situations that you can get into where you get valuable insight by doing it just the way that I do it, let's say. Was this a $2 billion round? No, it was the A round.

It was a $300 million round. So I think we did close to $5 million in the A round. So it's essentially $300 million on a prototype, which this was a while. back was unusual. Correct. People thought it was insane. And by the way, a lot of people right now think for agenic AI companies that are like SSI that is raising for like a 30 billion with no revenue, right? That seems insane to people. And it very well could be. Or if they're right, it might just be really cheap. I don't know. It's only time to tell. You can tell. But that's how these things get really big because all of a sudden, you know, at the $40 billion valuation,

the mark is like whatever, 65 times. Just 65 times and you see how those numbers work. We did a much larger raise in the B round because Microsoft and OpenAI and V-DiA. and all these other major investors came in. And, you know, people are mostly followers and leaders at that point. And we were able to raise, I think, close to like 40 million in that round.

in order for you to get these allocations in later rounds, is it prerequisite that you come in early? Or could you have gotten in at the Series B, CERC? It's much easier, let's just say, right? Because I already have the relationship and that kind of thing. I have come in into later rounds on certain companies. We just did, for example, Parodromics, which is a bring computer interface company like NeurLink based out of Austin.

And, you know, they've been around for 10 years, but they don't get the spotlight because Elon, they're not Elon, right? But they got FDA approval and that kind of, and Matt Engel is an extraordinary founder. They're based in Austin. That's a later stage one that we came in alongside Piff and Neum, which is, you know, the Saudi Fund. One of the reasons I wanted to have you on the podcast is you kind of have two sides to you. You have the crazy deep tech investor who goes very bullish on certain opportunities, but you also have the family office lens

where you're building a portfolio strategy and you do have a rational side to you not just investing into crazy startups that could go 100 X or zero. Because I do think family offices, depending on the dynamics, many of them are actually over-diversified. You call it de-worsified.

And there's these principal agent problems where the principal's job is not to lose money and they're not really trying to increase the family office. you're obviously in growth mode. Tell me how you build your portfolio construction when you're looking to grow, not just preserve your capital. I actually don't believe in preserving your capital, just to be honest, because I think it's like this false sense of security. I mean, just look at how much the dollar fell this year. Look at inflation. I live in Miami. You couldn't give away the houses like six years ago that are now selling for tens of millions or hundreds of millions of

So this idea that like, oh, let's just say I'm just making up a number, right? I'm worth $50 million. I'm good. Let me just make this like last. Is this, it's a fallacy, right? If you're not growing at least at the pace of inflation, you're really deteriorating, right? And so I'm very cognizant of that. Maybe it's because I'm younger.

I'm 48, right? So I still have some juice left in me. and I want to do things. And I was a founder. So I still have that bug in me too, right? But I listen to a lot of smart investors. And I don't see them trying to preserve capital. I see them trying to grow the pie.

And really, if you even look at these institutional investors, they have much bigger allocations to things that have more alpha, like venture, right, or crypto or these types of things. And obviously, I'm not reckless, right? Like I haven't, I put away enough that if something bad happens, I can fall back on it. But with the rest of the stuff, I'm trying to get thoughtful alpha, right? And so I do do real estate, for example. I've invested in a lot of real estate.

I have a lot of real estate exposure. We've done, we have shopping centers, industrial. I've done a hotel, which was the bane of my existence, to be honest with you. We did the Boka Hotel. I could tell you the Mariette and Boka, which I bought like two weeks before COVID. And, you know, I learned how to run a hotel. Let's just put it that way, right? Which I never thought I would do.

And it became the worst investment because of COVID, the best investment because everybody came. Everybody came to South Florida and we had these crazy ADRs. You picked the one location in the U.S. that actually was growing during COVID. Yes. And then like about a year and a half. ago, then it started going severely downhill because people stopped coming, right, as much. And then everybody got priced out of Boka. So even just getting labor, got quadruple the price. And then insurance prices went four or five times. So it became a bad business again, right? Time will

tell you whether something's good or bad. And I got out of that unscathed. I actually broke even. Finally, we sold that just about six months ago. But, you know, I, I asked. I'm trying to find alpha in real estate too, hence, you know, trying to do the real, doing, you know, giving my, giving a shot to doing a hotel, which I never had done before. Now we're trying to do things where we can actually own the business on top of it or partner with someone where we do the improvements and, and then, you know, there's a, there's a real operating business and we can get part of the profits,

not just rent, right? So I'm a partner in this, in this racket club called the racket. lounge in South, South Hampton and New York. And it has pickle, paddle, tennis, and paddles grown. A lot of people are very, very into that sport right now. And, you know, it's a members-only club. We own the real estate. And then we brought in a partner to operate the club. I'm trying to do more unique things than just buying, let's say, a five-cap multifamily, right, that I could, you know, increase friends. Support for today's episode comes from Square. The all-in-one way for business owners to take payments, book appointments, manage staff, and keep everything running in one place.

Whether you're selling lattes, cutting hair, running boutique, or managing a service business, Square helps you run your business without running yourself into the ground. I was actually thinking about this the other day when I stopped by a local cafe here. They use Square and everything just works. Check out is fast, receipts are instant, and sometimes I even get loyalty rewards automatically. There's something about businesses that use Square. They just feel more put together. The experience is smoother for them and it's smooth.

for me as a customer. Square makes it easy to sell wherever your customers are in store, online, on your phone, or even at pop-ups, and everything stays synced in real-time. You could track sales, manage inventory, book appointments, and see reports instantly, whether you're in your shop or on the go. And when you make a sale, you don't have to wait to get paid. Square gives you fast access to your earnings through Square checking. They also have built-in tools like loyalty and marketing, so their best customers keep coming back. And right now, you can get up to $200 off Square hardware when you sign up at square.com slash go slash how I invest.

That's SQUA-R-E.com slash go slash how I invest. With Square, you get all the tools to run your business with none of the contracts or complexity. Run your business smarter with Square. Get started today. If you've been considering futures trading, now might be the time to take a closer look.

The futures markets has seen increased activity recently in plus 500 futures offers a straightforward entry point. The platform provides access to major instruments, including the S&P 500, NASDAQ, Bitcoin, natural gas, and other key markets across equity indices, energy, metals, Forex, and crypto. Their interface is designed for accessibility. You can monitor and execute trades from your phone with $100 minimum deposit. Once your account is open, potential trades can be executed in two clicks.

For those who prefer to practice first, Plus 500 offers an unlimited demo account with full charting and analytical tools. No risk involved while you familiarize yourself. with the platform. The company has been operating in a trading space for over 20 years. Download the plus 500 app. Trading in futures involves the risk of loss is not suitable for everyone. Not all applicants will qualify. If you've been considering futures trading, now might be the time to take a closer look. The futures markets has seen increased activity recently and plus 500 futures offers a straightforward entry point. The platform provides access to major instruments including the SP500, NASDAQ, Bitcoin, natural gas, and other key markets across equity.

energy, metals, 4x, and crypto. Their interface is designed for accessibility. You can monitor and execute trades from your phone with $100 minimum deposit. Once your account is open, potential trades can be executed in two clicks. For those who prefer to practice first,

Plus 500 offers an unlimited demo account with full charting and analytical tools. No risk involved while you familiarize yourself with the platform. The company has been operating in a trading space for over 20 years. Download the Plus 500 app. Trading in futures involves the risk of loss is not suitable for everyone. Not all applicants

will qualify. I'd Roger Vincent, who spent a lot of time at the Cornell Endowment, and one of the things that he talked about is one of the mistakes that investors make is they double diversify. So they diversify within the fund. Sometimes they'll diversify, they'll triple diversify. Then they'll diversify within the fund, so let's call it venture. So you diversify within the fund and you invests diversify within the venture asset class. And then everything has to be diversified. And that's where you actually get a poor performance versus if you look at venture as playing a role, which is outperformance and the spikiness. And you build around that, you realize you're not going to have 80% of your money in this really spiky asset class.

But you take venture for what it is, which is sometimes it'll outperform, oftentimes it underperforms, and it rarely loses money as an asset class. But I think that's something that you uniquely do in your portfolio. You don't optimize every asset class as if it's your entire portfolio. No, I don't. I think what I think is reasonable is probably unreasonable to most if you're trying to preserve capital, I would say. If you're not, I think it looks very reasonable, right? This is what you have to do?

I mean, like, what else can you do, right? I mean, obviously, I have the largest allocation personally to equities, to public equities. And recently, I think public equities have actually been acting like venture and giving venture-like returns, especially for, during this AI boom and if you were in the right sectors and that kind of thing. Going back to your, the spikiness thing, right, that you just spoke about, I think that's really interesting because you really have to be built for VC or crypto or these types of things because it's very hard psychologically to consecutively lose. Because, you know, sometimes the spikiness is like you lose 12 times and then you hit.

Right. And you know, by that 10th time, you're like, man, I really suck at this. Why am I doing this? Right. Like, it's very hard to keep going because psychologically it could ruin you, right? Especially if you suffer big losses, you know, because because they were all consecutive. In another way, the J curve is learned helplessness. It's like, no, no, no, no, for seven years. And although people know to expect it, just feeling it is just very different when you're just constantly being reimb. force and then suddenly you have something that returns 5x your portfolio in year 10. You're like, what just happened? I technically got a 4x in my entire portfolio, but that felt I don't want to do that again. So if you think about it, that's what happens to founders. Like so that kind of founder mentality is like you're just told no so many times. And then when you get a yes and you get a win, it feels like, I don't know, you just won the lottery, right?

So it's almost like one and the same, I would say. You got into crypto in 2012. very early. And you bet big. What early signs did you see in crypto that made you really double down in it in 2012? I had a development team in Kiev. We had about 50 developers there.

And at that time, it was a smart thing to do because actually Kiev has amazing talent. Ukraine has an amazing technical talent. They actually are very close in culture to Americans, especially the young people. And so it was a really good cultural fit. So we had developers here and developers there, and they needed to play nice with each other and understand each other. And I would go and visit for a month.

And also, I spent a couple of months there setting up the office and hiring people. It was a group of developers there that just kind of installed a minor on my Mac and taught me about it. And these guys were young and smart and PhD students. I just got curious because they were curious. I didn't go that deep initially, just to be honest. I mean, I guess you could, for very little money, you could buy a lot of Bitcoin, right, at that time. And in fact, I have a funny story. I learned about Ripple, XRP really.

And back then, I think it was 2013 or 14 or it was around that time. It was 2013. Ripple had their own wallet. That was the only way you could actually own Ripple, at least that I knew of, right? Maybe there were other ways. And the way that you would actually buy Ripple or get onboarded was you had to go through some crazy exchange that, I mean, I don't know, I have a degree in computer science and I couldn't figure it out. But you literally went to a Wells Fargo bank, right?

You filled out the deposit slip and you put your wallet address or your wallet ID on the deposit slip and you would deposit cash. And then like, I don't know, miraculously a couple days later, ripple would show up in your wallet, right? Like if you can imagine that, that's pretty crazy. And at that time, it was like, I don't know, fractions of a cent. And I bought maybe a couple thousand dollars worth, maybe $5,000 worth, I think. and then I forgot about it. And that $5,000 would probably worth, I don't know.

I can't, I don't even want to calculate it because I lost it. Because that's the, that's the moral of the story. Ripple discontinues their wallet. I get an email. It goes to my spam. I lose the key. I can't, I can't recover it anymore.

And like, I feel, I don't know, maybe one day it'll come back to me, but probably not. I have like one of these. these war stories. Today, I'm not doing, first of all, it's dangerous to do crypto. I think just like won a lot of like crypto in a wallet or something like that. I just buy the ETF. And I tend to buy mostly buy the Bitcoin ETF and I just buy for my kids whenever I get a chance. I had this argument the other day about that, which is there's this Bitcoin purist

argument, which is if you own Bitcoin in a TF, it's kind of like owning gold in ETF. It's It's only when the government seizes Bitcoin at some point, then owning the ETF isn't going to help you. It's not truly decentralized. But my counterargument to that is if you actually run the math, so let's say for now 20, 30 years from now, the government quote unquote, seizes Bitcoin, which I think probably less than 10% chance. At that point, first of all, it's very unlikely that the government will actually seize Bitcoin. They'll probably force sell. So you'll wake up in the morning and all your ETF will be sold and now you'll have cash. It's very unlikely that they're just going to literally take your Bitcoin ETF.

There's no real precedent for that. On top of that, to me, the benefit of holding an ETF outside of safety and all these things is that now I can use it and I can borrow against and I can leverage. So whatever 10, 20% gain or whatever 10 to 20% loss I would hypothetically have in year 30, discounted back today if I'm getting an extra 5, 10% return on that Bitcoin, Not that I'm saying you should lever Bitcoin, things like that, but you could put it into real estate or other safe assets. I feel like that's a much better trade than actually keeping it in cold storage and waiting for this nuclear option. I understand both sides of the argument.

You know, I've heard Michael Saylor speak. And, you know, he has got a really good argument about why you want it in a wallet. My parents, you know, my parents came during the Iranian Revolution to the United States. I viscerally know what it's like to leave with nothing, you know, and have to escape. There's definitely that kind of value in having it in a wallet. But as a practical matter, and from a family office standpoint, I agree with you. I know that Coinbase has solutions for this where you can borrow against your Bitcoin now. But as a practical matter, like, even for estate planning, it's almost impossible to estate plan for a wallet.

I don't even really think they have a good solution for it. So, like, you know, you want some sort of custodian. I tend to agree with you. I think it's much safer and a bunch of better outcome to just buy the ETF. Today, you're up to a dozen entities with 850 million AUM of deals you've invested and you brought in other investors into. What breaks at that scale? What's proven hard?

You have to grow your team. And basically, I've come to the point where either I want to continue to, what started as a, let's just say a side thing, right? Do I really want to kind of grow this into a full-fledged business, you know, asset management business? I'm leaning towards doing that because I'm having a lot of fun doing it. It lets me vicariously live through founders and back the types of companies that I really am interested in, whether they are deep tech or not, right?

But I really like keeping this format because I like to have it in a way where, the investors that are coming in with me are really my partners in making the decision. I'm not making the decision for them. They're making it on their own, right? They're deciding whether or not this company is worth backing or this founder is worth backing because they're informed and they're empowered. As long as I can do it that way and we can continue to have hits, I'll keep doing it. And I'll continue to do the other things where I'm writing seed checks by myself because

they may be just too crazy to show to other people or too boring or what. whatever it may be. Have you evolved that strategy where you really want to go to at least Series A, but really series B and beyond for co-invest? Are you putting other people into seed checks? It's very hard to do seed checks, really like early, early seed checks, except for like, let's say now with these AI companies, because they're not really usually raising a lot of money, right?

So as a practical matter, the economics of creating a co-investment vehicle. I mean, I know that there are these angelist guys, that do it, right, they may raise a couple hundred thousand dollars here and there. But at my level, unless we're doing a significant amount into a company, it just really doesn't, it's not worth the effort, let's just say. And it's also like, it's not economically good either because of the expenses that are for the vehicle, for maintaining the vehicle, too, to each way at your return. It may likely happen more because now you're seeing seed in A rounds that are in hundreds of millions of dollars

and maybe even billions of dollars in valuations where they can actually raise large amounts of capital. But someone's raising a million-dollar seed round, you know, it just doesn't make, it's not, you know, it's much more, it's just much more simpler to just write a check to them. We're not taking the whole thing, right? There's going to be a bunch of other maybe $50,000, $100,000 check people that are going into that seat or angel round as well. But you find writing that C check as a way to put your foot in the door, build the relationship, and then you have that optionality as a company. And I consider that C check gone. I consider it zero.

I literally found myself as a CET invest. I just found today that I get surprised now when I get seed investments back. I've internalized that it's lost money. I just put it out there. And then it's like, okay, the money's gone. And I realized because I'm like, oh, like, oh, that's crazy. I do have these investments. Like, they're not actually zeros.

I have to remind myself. Yeah, some of them do materialize. Some of them don't. Some of them lead to other opportunities. For me, in particular, the two keys to this is having extraordinary deal flow, right? And being able to obviously identify that deal flow. Which one of those are the outliers? That's hard.

And then also having a network that trusts you, right? Those are the two things that you need. And part of that, part of that seed investment is, ensuring that I'm going to get the best deal flow because founders remember you when you help them in the beginning, right? And maybe it's not even not founder. It could be they're in an SF or they're in wherever they are and they're talking to another founder that they think is amazing and they're like, you really need to talk to Shane because he's a good guy or something like that. You just never know the serendipity of it, basically. Speaking of the founder relationships,

what percentage of the time are you relying on pro rata rights? versus the relationship of the founder? Usually the pro rata is not enough. It's really the relationship. It's like we've shown that we can add value. I've shown that I can support that founder the way that they want to be supported. And that I'm also not the type that overwhelms the founder, right?

I'm not constantly asking them for board materials or this or the other thing. It's actually irrelevant in the end of it. Like I could have all the financials, and all the updates I want. It'll make no difference in the outcome. It really won't. In the institutional investing space,

governance is the key source of alpha, having good governance and see startups. You can have great governance. No product market fit. It matters absolutely zero. What does a liquidation preference mean when the thing goes to zero? Nothing.

It means nothing. You've had a story career. You're only in your 40s, but you've had two large exits. who are early in so many great companies, perplexity, figure, and many others. If you can go back and give younger Shane one piece of timeless advice,

what would that be? The biggest piece of advice is, you know, you can't like really conflate the magnitude of a potential outcome with the probability that you'll actually capture it. And what do I mean by that? I mean, look, that ripple story that I told you

is a great example, right? Like, I wasn't able to capture that. right it's literally I wasn't and I'm still not able to capture it right and so I think one of the things that have kind of been downside protecting me is I do see a lot of outliers right that I don't do because I just don't see the exit or how it can be monetized and I don't think a lot of people really contemplate that right I was in a co-investment with my friend at Red Sea Venture, Scott Burnbound convoy, which was kind of like Uber, Uber freight. It was one of the first ones.

And I went into him, I went in it with him as seed. And, you know, it got like a five or three billion or five, I don't remember exactly. A couple of years later, I got a three or five billion dollar valuation. And we could have sold into that and we didn't. Right. And then COVID literally decimated the company and it went to zero. And so I think there, there, there, is this thought of, you know, you hold, you hold, you hold, or hot all or whatever it is.

But there definitely have to be times when you take the win. And it's very hard in a venture mindset to also temper that, right? Because you're going for the moon, right? And not just for yourself, getting returns for yourself, but also getting returns for the investors. No one's going to hate you for making the profits. I'll take the other side of that. So I've evolved my thinking. I've had many different things.

I sold draft kings. I returned roughly 90 million to investors and draft kings. In many ways, the top of the market post-COVID. Complete luck. Obviously, the company was good. The investment thesis was good. But the exit was luck. I've had Robin Hood that I got in with Sequoia because it was during COVID.

And then I sold it at the wrong time, basically. And then, well, the quote-to-quote wrong time because I had another 10x. I had Palantir that did the same thing. I did really good. But I missed another 10-X. And I just did the math. And if I had just held everything, I would be doing much better. So if I basically just turned it into kind of my public SMP 500,

I was having dinner with Anthony Pompliano, Pop, on this very topic. And he's like, I never sell. And I'm like, wow, that's like really interesting. I never thought about that strategy, which is basically just building this public portfolio. In venture, he never sells. He never sells or in public. He was talking about Bitcoin and a couple, like, if you really believe in the asset, he never thinks about sell.

Like, it just never, never enters his, his mindset. And I was thinking about, I'm like, okay, that's really, It's much more directionally smart than what I do, but two caveats. One is if the founder's no longer leading the company, I think that's where a lot of the alpha comes from as these founder-driven companies that are still public, they still have that 10x. I think Amazon has gone up 1,000 X in public and same with Google. So that's one caveat.

The second caveat is what you reference, which is if it's somebody else's money, you have to have to have some win. There's career risk, there's reputation risks. I have to have DPI. It doesn't necessarily make it the right strategy. it makes it the right, I guess, like, asset management strategy. It's the right thing to do because not everybody is going to, you know.

And not everybody has the same bullishness. Right. And also, especially if you're doing it my way where it's not an actively managed fund, right? It's a bunch of co-invest. Not everybody goes into every, every deal, right? So you can't aggregate them.

So when you do get a win, you, and by the way, you don't have to take the entire thing, right? Like you can liquidate part of it. It's a fine line. And by the way, you're very right about that.

Maybe the strategy is never to sell. And just at the end of the day, those really, really outlier ones like Amazon and Google that even 10,000 X after they went public, they totally make up for all the ones that didn't do so well. Obviously, full disclosure, this is what I do in my own shares. It's not what I do with the LP shares.

Obviously, like we're talking about, if you take that thought experiment and play it out, if you have 500 of these companies, first of all, they're going to come to a mean. And the question is, what are you going to do with the money? If you're going to sell it, pay 35% taxes, and then buy the S&P 500, why do that versus having a founder-led S&P 500? I know it's not the most sophisticated, but as a rule of thumb, I found it to be a useful

razor. Well, I think equities then did something similar to this. I saw them try and figure this out with secondaries. It was an interesting deal where they were going to founders. And I think they do it with like forward contracts, right? So like it's not actual thing, but they, they tried to make kind of like an index of, of startups, which is pretty smart, I think. It's yet to be seen if it outperforms the SMP, but I think they did something. And then for a taxable investor, even just that drag, like, are you going to really outperform by 35%?

And then now you have tax loss harvesting. So not tax advice, but you have firms like AQR Quintino that allows you to put your shares in kind up to 20% of a portfolio into a tax loss harvesting. So now you're harvesting tax losses against these concentrated positions. You might, let's say you have five companies. You could be harvesting huge losses and capital gains. And there's even ones that you could do around income as well. So now you have not only you don't have the tax drag, you also have tax alpha or structural alpha on top of that.

I think there's an argument for that. It's not a very conservative position to have. And it's not necessarily a sexy position or it doesn't make you seem like a genius where oh, if I had sold these nine and bought this one, like, I've never seen, like, so many of these narratives are revisionists in history. I'm often at these dinners with these large investment banks, and they're always saying the same thing. Like, they saw every little thing. It's almost absurd. And people eat it up.

People literally eat it up at the dinner. They're sitting. They're eating up these narratives. And it's just kind of, it's not very intellectually, honest to say, least. The best you can do is just make smart decisions with the information that you have at the time. And I think if you do that consistently, you'll tend to. to win more than lose. And that's just, it really boils down to that, I think.

And part of that intelligent decision making is whether or not to sell, not just whether or not to invest in the first place. It's hard, man. It's hard when you're liquid. I have this whole concept of the virtue of illiquidity. I have made all my money in my career by being locked up. And I'm getting better at holding liquid positions. It's a skill that I'm building.

But it's so damn hard when you have a 10x and it goes down 20%. You're like, I mean, I have an 8x. Do I not lock it in? It's a hard thing to look at it right now with SaaS companies like I for example I bought at last you on an IPO right it's arguably an amazing company I mean it's literally almost back to its IPO price I was up 2,000% at one point during COVID on that on that on that stock I mean they're not the only ones that are getting murdered right I mean today and particularly is a very bad day unfortunately for the markets but I'm not selling it it's just really taking everything out

of me not to do it right so even when you don't sell it still hurts that That's why I think I'm a big fan of illiquidity. Again, some portions of your portfolio in venture. I got into a $4 billion evaluation on Anthropic. And now it's having some issues, but it was just at $350 billion. And I'm sitting here thinking a lot of people are like, oh, I can't wait for it to IPO. I'm like, no, don't IPO. Keep on compounding because I think personally, not financial advice, I think it's going to be a

multi, multi-trillion dollar company, perhaps at a $10 trillion plus company. It's hard to imagine today. But if you just go from first principles on their revenue, growth. So I don't want, I don't want the ability to sell. My mentor, Eric Anderson said that on your worst day as an entrepreneur, if someone brings you a suitcase of $100 million and puts it in front of you and you're having a shitty day, it's not as easy to say no as it is maybe on a regular or a great day. Absolutely. I mean, think about all those people who sold at the last base extender. They probably want to kick themselves right now because now they know it's going to, I mean,

it's pretty, I think it's pretty known now that they're going to go public. $1.7.5 trillion. I mean, if I had to. sold at the $800 million tender, I would be kicking myself right now. I'm also an investment of mine, but more on 90 billion, so a little bit later stage, but still looking at good. I came in at double. I came in at like, I think it was $100,000 or $200 or I don't remember, something like that. But when I did it, by the way, I thought it was overpriced.

Yeah. Me personally, the thing that did it for me is one of my friends was invited to go to SpaceX, here it down in Orlando and he took me with him and um i've only seen magic two places in my life like true magic one was at space x where we kind of got to put our heads in the engine and i touched a starlink which was like i don't know unbelievable we drove um teslas down the down the landing strip where the where the shuttle used to land it was like the most incredible experience i ever had and i came back and i'm like i never wanted to buy spacex and i was like i need to buy spacex no matter what the price. And then figure. Figure is absolutely magical. I don't, like, I don't think that people

really understand what it's like to see a humanoid robot literally walking around autonomously and doing things. Initially, it's kind of like this, it's really visceral because, you know, you're a primate and that reptilian part of your brain all of a sudden, like, ignites and the hair goes on, goes up in the back of your neck and you're like, what kind of animal is this kind of thing? and then after a couple minutes, that dies down. But then it's just off. It's really insane. Well, Shane, this has been an absolute masterclass.

Thanks so much for jumping on the podcast. Thanks so much for having me. I really, this was a lot of fun. Thank you. If you found this conversation valuable, please click follow how I invest so that you don't miss the next episode with the world's top investors.