How I Invest with David Weisburd - E410: How Relationships Built a $3.6B Venture Firm

Episode Date: July 31, 2026

Consumer startups may grab the headlines, but some of the most valuable companies are built by solving mission-critical problems for businesses. David sits down with Rick Heitzmann, Managing Director at FirstMark Capital, to discuss how he identifies high-growth technology-enabled business services, why sectors like data infrastructure, compliance, marketing technology, and information services continue to generate outsized opportunities, and what separates enduring enterprise businesses from short-lived trends.

Over 20 years as an investor, what's compounded more for you? Capital, relationships, or brand? Clearly relationships. Because the world seems to get smaller every day, especially here in New York City, where you have the ability to start very small. But the same people keep showing up again and again as investors, as entrepreneurs, as operators and as friends. And having those network effects, especially within a given geography, is clearly the best compounder. Maybe give me an example of how relationships have compounded in your career. So especially going back to early in my career being based in New York City, the ability, there was a very small ecosystem and a very small community. When we started first market, it was 2005.

New York City was the seventh biggest venture market, not growing very quickly, was largely seen as fintech, maybe a little bit of ad tech in Madison Avenue, but not necessarily explosive. And what we're able to see is we're able to fit the entire community in our little office. And there weren't many people out there. They were doing it. But those people that were in that little office were still in touch with today. They send us deals. Some of those people have matured.

They become CEOs. Early days of DoubleClick, I think that DoubleClick Alumni Network has produced something like 40 CEOs. If you talk about referencing people from that era, you could always lean on. on that double-click ad network, which then became part of the Google network, which then became part of a broader ecosystem. And as ecosystems build, everyone's always touching on each other. And that network just becomes stronger and stronger. And it's self-reinforcing. At first mark, we have a thing called guilds. And those are all the people around our ecosystem. And we have a one-to-one relationship with them. But as importantly, we build a network effect within that group. There's now over 80,000

people which we're able to touch, but actually, as importantly, they're able to touch other people in those networks for advice, for know-how, or just to build a relationship. Double-click on these guilds. How do they work? Exactly. Even starting out when we were a very small firm, when there used to be Google groups, we were able to build these little groups, and what we saw was, oftentimes you got better advice if we weren't part of the conversation. If you were looking for something, a specific piece of knowledge, if you were a sales leader, if you were a finance leader, you wanted to go to the real experts. Those real experts were happy to pay it forward or pay it backward and be mentors in that network. So as that grew, it grew from maybe a couple hundred

people in our portfolio. We started adding executives from the ecosystem. We started adding people from other companies, and they started adding their friends and their friends. And now we're able to split up those guilds and say if you are ahead of finance at a software company based anywhere in the world, and you have a question about which software should I use for international sales tax? Because I have 1,000 customers in 115 countries, and I have two people on my finance team. How do I do this? You're able to, at first mark, we probably can't have, don't have the best answer for that. But there's hundreds of people out there in that finance guild who could give you great opinions and great answers. So it's a way to kind of, as first mark, to make

our network bionic, but also provide the best answer for the right people at the right time. This using networks to solve key problems in business is so underrated. If you look at how businesses grow, typically they grow to some constraint, a bottleneck. And they might be stuck on this problem for six months. They might be stuck on this problem for six hours. Elon Musk famously meets with every engineer for five minutes. He has a whole day lined up of engineering meetings. And he asks them, what's your biggest ball neck? What's your biggest problem? How do we solve it?

I had Zayd Narachman from CEO of Flex. He talked about the TEAL Fellowship, WhatsApp group. And when everyone has a problem, they posted into the WhatsApp group, and then three to four fellows will answer it. And, of course, they get social proof from helping other members. But it's fascinating how these networks can build and compound in unexpected ways. YC has something very similar, either within your class, or more broadly, and it's everything from rating people to understanding vendors to even talking

about VCs and both firms and people. And that expands the social proof. Basically, it could provide you better answers sooner. And as an investor or even as an entrepreneur, your job is to move as quickly as possible. So you want to eliminate those bottlenecks. And if you could send one email and solve a problem that could take you all day, even if you're using Cloud and Open AI to get the best research, you're just moving on to the next best thing. And that's the key thing of getting things out of people's way so they could just move

quickly. Information Alpha. The more specific, the vertical, the less people know the right answer to questions and the more niche, the more the community matters. The bigger the network, the more you could slice it, right? So you can have finance people that are series B&C companies in New York and maybe there's 22 people in that guild, but that's enough. There's a big enough sample size. If you have a very specific question, you could ask that network and get a pretty good answer very quickly and then move on with your day. So it's just how do we get rid of that friction?

Entrepreneur's greatest resource is their time and how do you therefore really provide leverage as a firm? Perhaps you could connect the dots to me between how relationships compound into success as a venture capital. So there's a handful of things that happen as a venture capitalists. You have to have a thesis. So especially at the earliest stages, the unique thing you have is insight. So you have specific insight.

You then need to test that insight, that investment thesis. Is that investment thesis reasonable, rational, fact-based? And if you have a network of people, you're able to say, hey, is this thing going to work? What do you think of this idea? and as thought leaders within an industry or a particular market segment, is that thesis relevant? Is that thesis valid? And then as you move on, you say, okay, well, I looked at a bunch of companies in the space. I believe that Rick Coe is the best company, and would you buy that product?

Enterprise sales, if you're a C-So, I have Rick Security. Would you buy that product if this product did exactly what we talked about two weeks ago that you said was a big pain point of view. So not only are you using networks to source your thesis, you're using networks to validate your thesis, you're then using networks to figure out, hey, does this particular company make sense? And then beyond that,

as you're validating that company, you're introducing the CISO into the company, obviously getting customers for that company, building trust, building a rapport with that entrepreneur and that senior management team, as we all know customers are the lifeblood to any startup. And then as you go through, that team is also able to reference you. So you have your network of people you've worked with before, people you engaged with before,

and people who can serve as your references, because so most deals are all very competitive. It's a competitive world out there. It's more and more capital, more and more people are doing this. So rarely is there a one-shot-type deal. So you're getting referenced by the entrepreneur. You're winning that deal. and then as you fortunately win that deal, how do you help that company?

How do you say, hey, I know these things, I've seen these things. It seems like given these customers, people in the ecosystem I'm talking to, this is the way the ball is bouncing. This is what people are looking for. It seems like I talked to this other company that might be a big software company.

They might be a good partner for you. They might be a good channel for you. This company is looking for something exactly what you're doing, and maybe it's worth having a conversation. Then as that company matures and moves on, obviously you want a network of people you've invested with before. And you think about downstream capital, people you've invested with before, hopefully people you've made money with before are more open to say, oh, you know, Rick introduced me to this company before. We made money together. Here's this new company. So part of what you're doing as a venture

capitalist is sharing your network with that portfolio company. And hopefully they're able to leverage your credibility as a young company, maybe with not a brand of themselves, to leverage your credibility for hiring, for customers, for financing, and for their presence and their own brand outside, out there in the world. And eventually, their brand then overtakes yours, and they're able to achieve that escape velocity. But being able to identify your network, share that with people on a very generous basis, and letting them leverage it is a not. another way to help those companies achieve escape velocity. So another way, you're not just leveraging relationships to get deal flow. You're leveraging it to vet the deals. You're leveraging it to decide to invest.

To win the deals. And then leveraging it most importantly to help those companies. After you've invested, now help them with customers and also future finances. And also looking around the corner, right? I mean, I think that oftentimes I think the best things about startups are keeping their head down. They're not looking in their peripheral vision as much, especially in the earliest stages. And your job is to be out there in the ecosystem, providing them that peripheral vision of what might be coming strategically, how the winds might be shifting. There might be a new better way for customer acquisition that's been fruitful.

All of those things you're able to do by being able to have a big active network of people that you like and trust. I like Charlie Munger's concept of inversion. which is basically finding failure mode. Obviously, your career has compounded at Airbnb, Shopify, Pinterest, draft gangs. But most careers don't compound. What are those failure modes? Why do relationships not compound for people? You have to give before you get.

And that's often hard, especially when you're starting out. So you have to give before you get early on, even if you don't have that much to give. I have a son who's 22. He's in college. And obviously, everybody in college, when you go down and have dinner with their roommates, they think you've figured something out and there's some magic secret password that will enable them to be successful in their careers. There's really no silver bullet. There's really nothing that's that clear. And I said, hey, there's two things I say, hey, you got to give before you get.

You have to assume that you're going to be generous and you're going to come from a position of abundance to be able to have that come back to you. And the second thing, which is somewhat counterintuitive to the first is, how do you figure out what could be helpful to the person you're working with? And as you, even as a young company, as a young person, how can you add value to someone you're meeting? And it could be simple as making them laugh. It could be simple as remembering that they're from Norway and they had a great soccer win. It could be as simple as remembering they had a child. It could be as simple as remember where that kid went to school. It doesn't need to be, if you're talking to Jamie Diamond, some incredible banking insight. You're probably not going to out banking inside him.

but you might be able to provide an insight or a joke to make them smile and add a little value to their life. Even further than giving before you get, in some ways you want to give in order to give more and more while you also get in relationship to that. Because the relationships are so long arc, right? Like you don't know. You have to continue, and this is hard for some people. At times it was hard for me that sometimes you give, then you have to give more, and then you have to give more, and you're unsure when you're going to get.

But I think that's the secret, because people always remember when you did something great for them. They had no way to repay you, but then you did something great for them again. Would have been some of your lessons from giving as a strategy? The key one is being really authentic in giving. Even if you're just giving advice.

I used to want to make people feel good and not correct them and not be too prescriptive, just so everyone would feel good after the meeting or the call. As I've grown, hopefully, you know, you could do this in both a kind and direct way of being able to give feedback of, hey, I suggested you to do this. What you reflected back to me wasn't exactly what I said. So the advice is to do that. Or you came back to me and said, oh, you wanted to build a relationship with someone

or you needed an introduction to someone. Going into that, here's what maybe you should have done. I think folks are too concerned to be too prescriptive where I think the authenticity and the prescriptiveness really does help the person receiving that advice and gift. The famous concept, Dunbar's number, the amount of relationships you can have 150 relationships. So you really have to know who to build relationships to

and who to give to. How have you adjusted your model on who it makes sense to invest in to? I don't necessarily believe in that. I think it's how much you invest in your network could grow that or shrink it. And I think you're able to maintain a lot of relationships, especially this is such a coincidental business that we're in that there's people I know in the Bay Area that might not have seen in years that I could text and they feel comfortable texting. And we could pick up where we left off three and a half years ago.

So I think you're able to maintain those relationships, especially as everyone knows, the types of business you're in. Earlier in my career, I got this hack from somebody. I wish I could remember who because they deserve a lot of credit. But you should write down your 30 best relationships in your notebook or in your notes on your iPad. And then reflect on that every week and make sure you touch every one of those people once a month. Your VIP list. your VIP lists or just people that are important to you. It doesn't have to be because they're going to source you deals.

It doesn't have to be because they might introduce you to your next LP. It might be someone you enjoy. It might be someone who was a mentor for you. It might be someone you just want to keep in touch with. They're just important people to you, not necessarily even professionally. And by being able to go and maintain that list, you're constantly checking back on that. So again, I'll use the example of my son. Like I said, keep that list, check back on it every week.

And you'll remember, oh, I touch this person, whatever it is. And it doesn't have to be, you're not necessarily sending them a deal. You're not necessarily doing something that's professionally important to them. You're reaching out and touching them and saying, hey, you're important to me. I know you're from Norway. Congrats on the game. I know you're from Belgium. I was rooting against you as hard as I could.

But congrats and hopefully you'll enjoy the rest of the World Cup. All those things to build those relationships. because people just want to know you care about them and you're thinking about them. One of my hacks to this has been really focusing on the relationships deeply in short increments. I learned this from Marshmallow, the DJ. He's a friend of mine.

I hung out with him probably three times in my life, but he took me to the stage, he took me backstage. That's awesome. This was probably five, six years ago, and we're still friends, and I still remember this, and his manager told me about they have this process where they could, give somebody this memorable experience. And certainly my podcast is not like being in a DJ

booth with Marshmallow, but there is an essence to that where we spend so much time in the preparation and making sure the guest has a great experience, making sure they look really good, making sure it's edited. But then you lock in that relationship. The durability on that relationship could be many years because so few people go out of their way to help people deeply, even in a single time. It's more going deep than going broad. So as you give survey advice, like, hey, you should touch these people once a month. If you touch these people once a month and it's a no-nothing forward of an email, that doesn't really matter.

But that marshmallow experience, he touched you deeply. And that's something you might remember for the rest of your life. And people that give you experiences, you're going to remember for the rest of your life, you're always going to feel differently about. And do you think he did that? Do you think he created that experience innately, that that's just the type of person he is? Or do you think he thought about that deeply? Most investors don't lose because they lack information.

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I tried to help him. I introduced him to McKinsey for branding and all these things. I tried to be helpful just because he was my friend. And I think he reciprocated naturally. That's how friendships work. Media has become this consensus bet. It's almost trite to this point. Another consensus thing that's starting to evolve is in-person events and in-real-life things.

What's your view on in-real-life events? It's the huge megatrend. Obviously, it's the echo of COVID. More people want to do more things in real life than ever before. You're seeing it, whether you're seeing it the World Cup, Clearly you saw it as part of the NBA playoffs here in New York City, people out in the streets. There's nothing like that emotion in real life experience. We were just talking about the Switzerland versus Columbia shootout yesterday and being in a bar and feeling that energy.

It's amazing. We have an investment in a company called Posh, which helps creators create events and organizers pull people together and seeing just tremendous fundamental growth because that's being pulled out of you. even as we talk about friends of ours who run dating apps and they're seeing that real-life experience is incredibly different as what people want compared to just swiping. So the emotion, the humanness of real-life experiences is a huge mega-trend that I think you're going to see. It's going to be across sports. It's going to be across music.

And it's just going to be across people getting together either because with friends, with common interests, or to. to meet people and the serendipity of it all. Do you see AI accelerating that? I see this being the shadow for AI. So obviously there's AI tools that could make it better to match people on a dating site where investors are coming on Overton that uses AI as a better matchmaker. The more time, hopefully, people are spending with AI and if Claude becomes their best friend,

the more they probably need detachment from that and spend time with real people in real life doing real things, hopefully even outside. One of my working theories is human beings obviously evolved in tribes. They're always outside, always with their community. And today we've almost gone to the opposite degree. Since COVID, it's gotten even worse and everybody's on Zoom. And I think there might be a reversion to the mean, maybe not all the way to tribes and living in nature.

But I think AI is going to have these second order effects where now you get to spend time with people that matter. and you actually get to have more meaning in your life than less. I agree. I think hopefully people will want to spend that time. There's a terrible loneliness epidemic. There's a bunch of different underlying megatrends, and we love megatrends and how they affect things.

The amount of people living by themselves is an all-time high. The percentage people living by themselves at all-age groups is at an all-time high. The amount of people report being lonely, the people, even the most engaged social media users, report being the loneliest. So you're seeing that loneliness and you hope that people start getting together in person to be able to build relationships and to overcome the loneliness. You mentioned Megatrends, one of your co-investors in Airbnb, Mike Maples.

When he looks at companies, he first looks at them as movements and then as businesses secondly. Do you agree with that framework? I do at the earliest stages. At the growth stages, obviously, there's a lot more metrics. But can you see a bunch of people loving the product and really being super fans, right? The initial escape velocity of almost any product is through super fans who every person they see, they're telling, if you try to Airbnb, it's amazing. You know, Draft Kings, are you on Draft Kings?

Can I share my Draft Kings pieces? Pinterest very early on, Pinterest grew every day, day over day for almost five years. and with a non-traditional virality of Midwestern women. And there was a virality of sharing everything from architecture to recipes to close. And people want to share, and they want to be part of a movement. Increasingly so, they want to be part of communities. They want to be part of self-reinforcing communities of people who have common interests. And if you could tie into that, very human desire to be part of that community and build the

movement. It's an incredible tailwind to your business. A lot of your biggest wins in your career have been around consumer. Consumers not very hot today. What do you think about the future of consumer investing? We're at incredible inflection point now for consumer investing. I'm very, very happy. A lot of other VCs bailed on consumer over the last five years. We've continued to invest in our areas. Obviously, new technologies have affected that. So a lot of our consumer investments are powered by AI, or using AI as a disruptive technology to existing models, what we're seeing on the consumer side is we're early era of adoption of AI. One of the ways we look at it is 70%

of all AI spend is from the enterprise. But the enterprise is actually only a third of the economy, two-thirds of the economy is consumer. And different from almost all technology adoption in history, it's being enterprise led, not consumer led. And there's a million different underlying things, including the structures of the model, and maybe even the structures of the app stores themselves. But what you're seeing is, I don't think those models,

and the non-obvious thing to mention is, I don't think those models are going to solve all things for all people. So there's going to be consumer applications, which will sit on top of them, and whether it's dating or travel or sports, that you're going to be a part of a community, maybe even around those pieces. And what you're going to see is this next generation of consumer startups happen around using

AI as a basis, providing a better, faster, cheaper experience like most technologies in the past. And I think we're going to enter into this next wave of AI being consumer-driven. Throughout your career, you've had to be contrarian in several of your investments. How do you manage that while also have an institutional LP base? Your LPs want you to be contrarian, but also right. So sometimes there is often a very large time lag between contrarian and right. You hope, and the window is usually a couple years, right?

You want to be contrarian and get early into something that then is able to show some traction so you can get follow in financing, and then it becomes obvious at the growth stages. So you don't want to be too short or too long or you want to be just right in the middle of that contrarian element. A lot of things we talk about are contrarian after the fact. We think about Riot games and League of Legends, which is the biggest game over the last 20 years. It was the first free-to-play game, so we're not going to charge for the game. It's going to be delivered as a service. It's going to be community-driven customer acquisition.

It's going to be competition and not skills-based. All those things that we thought were very contrarian at the time. Shopify, having an ecosystem-driven product. roadmap. Software as a service, very cheap to join. On a lot of these early contrarian bets, we wanted to be contrarian, but also you have to talk to your LPs about, hey, why are you straying from the herd? Why are you being different? And even as we think about it at our firm, we want to be contrarian and we want to have unique insight into why we're contrarian. So there is a structured thought to it. So we believe,

that, hey, we see a mega trend. We have, we call swim lanes. We're very deep fields of knowledge that each of us have within particular sectors. And we say, okay, given this mega trend, we think the ball is going to bounce like this in our swim lane. And therefore, we have a unique insight. So if we were going to explain it to my partner, Adam, who covers fintech for us, and I don't know much about fintech, says, hey, I'm really interested in this company.

And here's what it does. And we believe in these megatrends. And I think this is going to happen in a very logically laid out way. And therefore, this might not necessarily make sense today. But we think this is an interesting contrarian bet because we have a logical framework, which makes our thesis seem to make sense to everybody. If you work with people for a long time, you respect them. You're obviously willing to take the leap of faith with them.

But they've also taught you over time, oh, we both have. in these megatrends. Oh, we both look at a sector or subsector like this. I believe that you really know what the stable coin ecosystem looks like. All these little pieces have a logical framework which might result in a contrarian idea, and that's part of the beauty of the process. Give me a story about when you were contrarian and early on investment and the market did not agree with you. We were looking at Shopify years ago. The existing infrastructure for e-commerce was IBM. And if you wanted to build a website, it cost a couple million dollars and took a couple years.

And he had to call up IBM. They had to build your product catalog. They had to build all your widgets. They had to build everything and deliver that experience. And that was just the way you built commerce websites. But Shopify had three different contrarian ideas that provided compounding benefits over time. First was you could deliver that as a service. You could deliver a website as a service.

It shouldn't take a couple years to get up and running. It'd take a couple hours. They believe that there was going to be an increase. It wasn't going to be Macy's and Bloomingdale's as the only people selling things online. There was going to be a rise of the entrepreneur and entrepreneurs being able to sell things. And that would unlock enormous market. Very contrarian at the time, clearly obvious today. And then their product roadmap, they don't need all their engineers providing all

feature functionality in their ecosystem, they were going to have an ecosystem of apps, which was going to be able to provide all the feature functionality you needed. And there would be a Darwinistic way that if people wanted more functionality, whether that's return software, whether that's email like Clavio, how do you bring those people into your ecosystem and therefore be able to solve your customer's problems? All three were very contrarian at the time where it was, here's my software stack, I'm going to build it myself, I'm going to host it on-premise, Accenture or IBM. is going to build out my whole product catalog,

and you have to be a big company, even to be trusted to get your credit card from customers. All three of those were contrarian. Clearly, I'm using that example because it's clearly those things came to pass that they're incredibly conventional wisdom now. But it's a sense of how do you think about the world differently and then how do you benefit from thinking about that world differently in retrospect.

And you've also were early and contrarian at Airbnb, Pinterest, Draft Kings. Riot games in League of Legends. Biggest wins tend to be the most contrarian ones. And maybe you could give me the framework on how do you know if you're the crazy one or if the market's just wrong?

Well, sometimes you're wrong. Oftentimes you're wrong. Is this just a probabilistic or you're just making sense? Well, hopefully you have a framework of, hey, I believe this is going to happen. I believe in StubHub that instead of going to ticket brokers, the better way to do things. And we've talked a lot about network effects.

Network effects is one of my favorite topics. And we think it's the best business model in the world. And so therefore, marketplaces that we've done, and whether that's Upwork or Airbnb or Stubhub is one of our favorite investment themes. And so if this works, is this a better thing to do? So if you're able to buy and sell tickets online with a distributed person-to-person network, will that be a better thing that you're able to get better, faster tickets, delivered to you. At the time, it was delivered via FedEx before, for instance, ticketing.

There was a million different things. Is there going to be fraud? Is there going to be abuse? Are people going to trust those things? But can you get through? Is the idea itself so both different and valuable that you're able to get through all of the potential pitfalls? And what you hope is, this is a power law business that one winner could overshadow a dozen losers or even more at times. So sometimes you're wrong on the customer adoption. Oftentimes you're wrong on timing and being able to say when that market adoption is going to be given the technology. But when you're right, it overcomes a lot of times you've made mistakes in the past.

Have your mistakes come from underestimating the downside or underestimating the upside? Underestimating the upside and largely underestimating people because people can overcome a lot of those risks. You're talking about Brian Cheska at Airbnb, Jeff Flore at Subhub, Mark Merrill, Brandon Beck at Riot Games, and how those people, Jason Robbins, who ran a hell of a roller coaster around getting Draft Kings through all the reasons. That was my first big win in my career. It was great. Kings. Like, he is a great entrepreneur, and he saw a lot of downs before a lot of ups, and he's been fantastic. When after him as an individual, there's a lot of downs, but because he's an exceptional person, he's an exceptional entrepreneur, he persisted through that uncertainty, persisted through a lot of bad news to get to the other side. Backing those special people has been the greatest wins and the greatest satisfaction of my career, and underestimating him has been the downfall. mentioned Mike Maples. He said that 70% of his winners

had pivoted. Joe Lonsdale famously said that his biggest investing mistake was not backing great founders with what he considered bad ideas. Would you back a great founder with what you consider to be a bad idea? Yes.

And have you? Yes. I won't ask for examples, but how do those play out? Oftentimes they fail because the idea is just so bad. One of the things that great founders have

is a doggedness that they have an idea in their head and that idea is going to work. And sometimes they refuse to give up that bone and it fails. But other times they realize, hey, you can give them feedback. I love you. I hate the idea, but I love you so much I'm going to invest. And sometimes, you know. How do founders react to that feedback? They're unsure how to react because, again, that idea is their baby.

Some people are diversified. Do you remember Max Levchen when he was starting his incubator? he thought a firm was the fourth or fifth best idea. And he had other things around fertility that he really thought he was going to dedicate his time to. Kevin Ryan and Alley Corp, he had three or four ideas. MongoDB was just one of them and maybe not the most interesting out of the box

in a world where guilt was the early riser in that. So even the best entrepreneurs, sometimes have a hard time distilling at the earliest stages what the best ideas are. But they're wildly successful because when that avails itself, they're able to execute upon a great idea and make that happen. And so we've seen that. Almost all of our successful companies were very close to failing multiple times. Getting out of money.

Subhomimus ran out of money a couple of times. We started doing television ads that initially were not very successful. Pinterest, we had to do a couple. seed extension rounds because people didn't really get what Pinterest was going to be and it wasn't easy to fill those seed extension rounds at the time

and that had a little bit of a pivot top up was originally liquid seats every company faces a time where they're almost out of money they did something that doesn't work but the best people say I did this I learned from it and now I see it

and our job is to support them through that with not only words, but capital to get from here to there. These near-death experiences that startups have that you've had in your portfolio, are these just part of every startup's journey or there's something about the greatest startups having to go through failure? They're contrarian enough that people sometimes, and obviously a lot of these failure points are in the first couple of years and then they take off and then they're able to say it. They're contrary enough. It might take people a second to get it. And therefore, the initial adoption might not be perfect. Sometimes the initial decisioning might not be perfect during execution that riot had a hard time.

Getting their game store to work globally was a hard problem. And they just couldn't figure out how to get that done. But then they fixed it. And we were off to the races. But people choose hard problems. People are trying to solve things that no one's ever done before. And people are doing things that are contrarian. So all those things add to it.

But it's awesome. It's why we play the game. So also if you zoom out, great ideas oftentimes have this compounding aspect to it, which means they're early on. They start to build that moat early. So they're either really early or too late where they're no longer a good idea. And maybe some of these wins are just early enough to squeeze in, but not yet late enough not to build it enduring business.

They get a good idea that has some traction. Some people believe that there's a little bit of a curse of getting too much traction early because you just feel like, oh, this might be easy. And I think I figured this out. And you might not have fully figured it out before you think you figured it out. And that might limit your TAM. That might limit some ways to be a great business. I don't want to call businesses like that out because a lot of them might

have not had great outcomes. But having a little bit of need to pivot a little bit, keep your feet moving, show that grit might be in the long term in the company's best interest. Seems like every couple of years, Silicon Valley changes its perspective on whether the next Mark Zuckerberg is going to be a 19-year-old college dropout or a 40-year-old third-time founder. What's the sweet spot in terms of a founder's journey?

when you want to invest. That's really hard. There's no cookie cutter thing. Being in New York, I think I'm less tied into the group think. I think that helps. We've generally seen not dissimilar from other people. We like people that have some reps. They've done something.

They've learned what a business is, how a business works. But they're still young enough. They have a lot of energy and they have a lot of runway ahead of them. So they're very high slope. They've had some experience, good and bad. Sacramento at Roe, I think the first two companies, failed before we backed them. But he clearly is a very smart guy, really understands his market, and has an incredible slope. And Roe is going to be an amazing, amazing company.

He's still young enough. He's going to be part of that journey for maybe decades. So we think that's kind of a key archetype. But, you know, I would probably say most of our CEOs who have gone to run. gone on to run tens of thousands of person companies, maybe only, I think at one point, majority of those people never had someone to work for them before they started the company, before they ran a 10 or 20,000 person company, had exactly zero direct reports in their careers. How do you explain that?

I think that they were young. They were probably running startups or part of startups. It wasn't important to them. Their job wasn't to ladder up in the. federal government or ladder up at IBM that they were taking a different path. I think part of the reason that they're able to scale to that level also is they're not stuck in conventional wisdom and thinking. And one of our jobs is to provide some insight to those startups, but maybe the more important thing to do is listen because these best people often

have non-traditional ways to do things, to look at things, to build their organizations, to hire people. And there's a lot that we could all learn from that. It's July 2026. Today, the prevailing view is that you want to go younger with AI native founders. Do you agree with that? I do. The AI native folks are very, very good. And they think about the world in a different way. We've also had a lot of success with people taking AI and applying it to a market that they really know and believe in. It's an example of that. Justin McLeod at Overton.

He was the founder and CEO of Hinge, which is probably the most successful dating app of the last 20 years. Even Mayor Muddami here met his wife on Hinge. And every time I mention in a broader group, people raised their hand. They found their spouse on Hinge. But he saw, here's dating, here's what's going on in the world, here's what's not working in the dating world, and here's what we could do differently. And here's how AI enables a different dating experience.

experience. And I have all this knowledge around a particular vertical, around a particular area, everything from user insights to just decades of really thinking about that. And if I can apply this new technology to a market I like, I'm really excited about it. And we think that those folks are going to be amazing. Alex Huffman from musically and TikTok and being able to provide AI to a different social experience. You don't have to be AI native and you don't have to be to be under 25 to be able to build a beautiful company today. Today you're $3.6 billion AUM as our success story. It wasn't always the case.

In 2008, you had to raise your second fund during the global financial crisis. How did you do that? A lot of blood, a lot of sweat, and a lot of tears. How long did it take? It took about 20 months. We got lucky. We tried to raise $200 million for our first fund. After about, I think also 18 to 20 months, we wound up at 100.

96.6 million. We just couldn't get there. But we had some good proof points. That first fund had Pinterest in it. It had Shopify, it had riot, it had tap it had DCG and it had a lot of amazing companies. But no one really cared. The financial crisis, it was early in that traction and those proof points, New York was early in its journey. And so we just had to chunk it out little by little, piece by piece, a lot of trips to meet with people for non-meetings who either didn't have money, weren't that interested, were just trying to fill their calendar, like any other entrepreneur story. There's a lot of selling, a lot of doors slammed in your face, a lot of times where you face existential crises, but we just kept going, and we kept going and we kept going and we kept going. And we

eventually got to our target of 225. During that time, we actually had some wins in some of those early first Mark I companies were starting to show some traction. Get markups and TVPI. We even had some DPI, which we're able to show some success, even as we're coming out of the financial crisis, and we're able to get us there. But yeah, we didn't have much luck on timing and fun one and two. Alex Hermosier's been on a podcast a couple times, says that, You don't work on your business. Your business works on you. How did that experience work on you?

I was an entrepreneur before starting First Mark. In post-September 11th, internet time. So NASDAX down 40%. Everybody hated the internet and everything tied to it. I had to raise money for an internet company or we were going to go out of business. It took us 87 meetings to raise $16.7 million, which was unable to say,

or else we would have been. Out of business, it saved us, was the capital to get to catch flow, break even. And then we were able to compound to there to eventually get the company public and sell for over a billion dollars. Similarly, maybe having that experience. Stealed me to say, it's not over until you're out of cash. It's not over until you're out of ideas. And you just put one foot in front of the other, next fundraising meeting. They were a non-fit.

What did I learn from that? How do I filter out? who might be a fit for us. How do I leverage my network, my friends, my relationships, to be able to figure out who might be a better fit for us and continue to go forward. And again, fun too. You're still effectively an entrepreneur.

You're still trying to sing for your soup. But the prior entrepreneur experience, that operating company taught me that lesson, persisted, blood, sweat, and tears, got to a great outcome. First Mark II, blood sweat and tears. we got to a great outcome and we're fortunate for our LPs who backed us in that. And I think that we'll continue to be the case.

There's going to be tough times. There's always, as much as you say, every, depending on who you're talking to, seven or ten or 15 years, there are these great times where there's great liquidity. It only means that there's also going to be some tough times. And my dad always had what was called the wave theory of life, that you're moving waves. And it's never as great as you think when you're on the crest of the wave, and it's never as bad as when you're in the trough of the wave. And you have to just realize that this is just the way the world works. And you've got to have to continue to work hard and have ideas, be a good person and persist through.

During these waves, what's the best way to approach them? As stoically as possible, despite being. Both up and down. And not personalize it. At times you think, oh, my guy, this guy must have really hated me. I spent all this time with them. He didn't invest in my company or my fund or whatever it is. Don't take it personally.

I have a stoicism to it that you understand what's going on. And even the successes. We're trying to celebrate more successes at Firstmore. We've had a lot of success in the past. I think it's good for you and good for the team to celebrate those successes and not being too stoic about that. But being able to separate what might be a decision, which you might not have any bearing on from what's going forward, and maintaining optimism and maintaining a positive outlook because dwelling doesn't help at all.

And you mentioned you did all these meetings and you would constantly evaluate the meetings and try to get feedback and try to improve. One of the difficult things for GPs to do is to get feedback from LPs. More than any other customer, I find LPs. What's your secret to that? I really push people, whether it's LPs or anybody else.

And we've been in business for over 20 years you have some LPs who are friends. and are long-term relationships and you've had a lot of success together and if you had to do a SWAT analysis on First Mark, what would that look like? And of course, initially they're like,

you guys are awesome. You guys are so good. Great, here's the wire information. You guys are so good looking. You're so funny. Well, even the guys who invest. If you're an LP who's investing, you're still writing a memo to your committee.

You're still talking to your partners about why we're upping or re-upping in First Mark. And there's some things of, hey, here's some weaknesses, here's some threats, here's what we don't like about Rick, or here's what we don't like about the partnership. You try and pull it out. It's awkward and weird at times to be like, what don't you like? Tell me what you don't like about me. And people don't feel as comfortable, especially if they're existing, right? You don't want to say, well, I really like you.

I'm re-opping. I'm putting more money in your fund. But what I really don't like about you is all these other things. It's an unnatural occurrence. but you hope you build a good enough relationship that you do that, and you hope you're honest with yourself that you say, okay, that's good feedback. How do I take that feedback and work on my weaknesses and continue to play to my strengths?

To me, it's also framing questions. How do you frame the question? I use the question, if I put a gun to your head and force you give me one piece of feedback, what would that feedback be? You could say, what do you think other LPs? What do you think their feedback would be to our stat? That's a great question. I've asked that question.

It's kind of these referencing. Or even the Andy Grove thing. I tried to be the Andy Grove. If I fired myself and walked back in through this elevator tomorrow, what would I do differently as the new leader? I would push on them and say, hey, if we switch jobs and you walked into my office through this elevator tomorrow, what would you do differently?

And that is empowering, it's open-minded. You know, let people think about the world differently. Obviously, Andy Grove was a great entrepreneur. So you want to be compared to that. But if you were king of the world, what would you do? If you were whatever it is, what would you do? If you were going to introduce me to your best friend who's an LP and say, hey, I want to introduce you to first mark.

And they said, yeah, but hey, this is all great stuff. But how would you think about some of the risks in the investment? Can you tell me that? You spoke earlier about relationships compounding. skills also compound, specifically fundraising skills. You've been at it now for 20 years just in the venture seat. How have your fundraising skills compounded? You try to be crisp.

You try to be able to answer the question, and you try to be very factual. So I think I've gotten better at those things over time. The other thing is in general, we try to converts and not trying to convert people. early and maybe early in the cycle or, you know, if I'm at a conference and talking to LPs, if someone decides, hey, I think venture's wrong or I think that's, it's the wrong way to go, and I'd rather just own mag sevens all day. Maybe at a conference, if you're sitting there having lunch, you could push them a little bit on, hey, do you know these facts?

Because the only way to change people's mind is provide a new fact set, not argue the existing fact set. You know these facts and let them go. maybe earlier in my career, I would have taken that as a challenge. I can convert this person. They don't know the facts. And if they hear the facts, I tell them the facts, I'd love to get their money and convert them. Usually that doesn't work.

And if it does, it's incredibly hard. Maybe the better thing to do with that lunch would have been to turn from my left to my right and talk to the person on the other side. I just started. I'm a new CIO here. I love venture capital. I'm looking to build my book. Oh, it's great. I tell you about what I think.

the next 10 years of venture capital look like and what we're doing at first mark, which might be interesting to you. So that's much easier. You're beating your head against the wall a lot less and maybe a better way to do it. The people that you have been able to sell the non-converts, the ones that didn't like venture capital. Are they the first ones off the boat as well? They're actually not. We've done right by them by producing returns.

But once, if you convert them, I think they're. converted and they're on the boat with everybody else. We've seen the people off the boat tend to be less of people, but people change in the seat. Hey, there's a CIO who was there, who believed in growth, had a very growth mindset of venture capital and growth and liked illiquids. There might be a new CIO. So name on the cap table, new CIO hates the foundation, has liquidity issue, their liquidity focused. They want to get rid of all the liquids and their background is in real estate debt and they think that's the greatest market in the world. There still is enough involved there that you want to tell them why that

might not be the perfect way to position the entire portfolio, but sometimes you can't convince it change everyone's mind. How many of the times when the individual left their seat and went into a new seat that they reinvest into First Mark? Often. We're small and we don't have a huge database or an IR team that could track those things. But if you build a personal relationship with someone, I think we have one person that's invested with us amazingly in four seats. They've gone from actually different buckets, all institutional, different buckets of a large state pension plan to a corporate pension plan, to a multifamily office, to a single family office. It's invested in our six funds, four of the six funds has signed the documents with a different

title and a different entity underneath them. Now that you're $3.5 billion, how do you manage all the relationships? It's hard. Especially if you might have started off small and you build a relationship with a small LP, you still have that personal relationship. I think you owe it to the people who've been with you for a long time to still maintain that relationship. I have a great LP.

It's been with us since the beginning. Small, but a great Philly sports fan. I'm from Philly. And anytime anything goes right, even the Nova Nix, there's a handful of emails. So you want to be thoughtful about making sure you're kind and thoughtful to the people who got you there. You also have to be kind and thoughtful to the people who are your biggest LPs. I've learned over time that it's worth investing in those LP relationships. It seems obvious.

And it seems like a miss not to. But at times you're like, okay, I'm not fundraising. I'm going to focus on these other relationships, and when I have to fundraise again, I'll relight up those relationships. I think the important thing, like any other relationship, is maintaining a continuity

and not being transactional in that relationship. So being able to build that relationship off cycle, thinking about that person off cycle. If you're in the city they're in, making time for them, if they're in the city you're in, making sure you can make time for them in a time where you're not asking for capital,

or one time you're not fundraising, so you could build that human connectivity even outside of work. And everyone says relationships are not scalable, but if I put a gun to your head, like we were talking about earlier, and I made you tell me some ways to scale your time and your relationships,

how would you answer that? I think relationships are scalable. You can build a bigger, broader network, and I think it might sound trite, but just being conscious of those and thinking about people and when acting, right? If you're on X or if you're on Instagram

and you see a meme that makes you think of somebody, send it to them. And whether that's, hey, they're a huge Indiana Hoosiers fan or whether you knew they were an early investor in SpaceX. Hey, I just saw this meme. This is a hysterical thing that Elon said about SpaceX. Congratulations on the IPO. You guys must be thrilled.

Love to catch up the next time I'm in D.C. And amazingly, that morning of the SpaceX IPO, I had friends there who were executives, I had friends there, the early investors, I'd friend that they served later investors. The five minutes, as I'm walking at work to sex, congratulations, and not a congrats, exclamation point, send. The most straight thing, hey, congratulations. Justin Wolfson, who runs 137, fantastic guy. One percent position in SpaceX, never sold, $20 billion position report. Early was kind of based his, I knew him when he was at Founders Fund,

fantastic guy based a lot of his fund on that. I saw him at a conference last year and we caught up and obviously he was excited about it. But hey, you know, love talking to you about that at the conference. I know you based your firm on this and it must be amazing for this all to come to fruition today. You know, thinking about you, that's great. And that's really a personal message, and it shows that, you know, you authentically, I was authentically happy for him. I was excited for his success. And I thought about a 20-year relationship at that moment.

And being able to share that was great. He was texting me back from, you know, the floor of NASDAQ. I only realized this a couple of years ago. I wasn't born with this envy gene. I genuinely am happy for people. And I just always assume that everybody was like. Great piece of luck to not have. that. I have the same thing.

Eric Tornberg told me this. He said, your superpower, who started this podcast with me. Yeah. You said your superpower is you're always happy for people, and I didn't realize there was another way. You're so super lucky. That is a superpower. Yeah, I see things on, and

it's awesome. Like they you saw the memes on SpaceX. All these VCs are sitting whipping themselves if they're not in SpaceX. I'm like, now I just spent my entire walk to work. texts to my friends who were early and congratulations. That's awesome for them. It's actually extremely rational

to be happy for others, not just because it's, quote, unquote, the right thing to do or just because you actually even care about that person. It's just what's predictive of your success is the success of your network. So you should be celebrating that. For a very rational perspective, yes, but from a very

human perspective, these are your friends. You're excited for them. They made maybe an irrational bet 10 years ago, It's paying off for them and their family, and they're going to have a great day and they're going to be super happy. They're going to be maybe super hung over the next day, but don't worry about that. That's awesome for them. Be happy for them. I can't imagine another way to be.

You mentioned earlier you're learning to celebrate wins. I see this among some of the most successful people. They're hard on themselves. That's why they've become successful. How have you incorporated that into your life? Arthur Brooks calls people like that strivers. So I'm a striver that, you know, if you went back and said, hey, 20 years ago, if this would have happened, how happy you'd be would you be? Like, I'm 11 out of 10.

But then you might wake up in the morning. So you don't know, no, I want to do this other thing. I'm five out of 10 because I want to achieve. You're moving the goalposts on yourself constantly. And the first thing is understanding that, hey, hey, this is my thing. I'm a striver for all these reasons. And it's worth watching or listening or reading about Arthur Brooks because I'm sure there's a ton of people that are watching. and listening now that have the same good thing. Good thing is it helps you be successful,

bad thing. There's always a shadow to every personality trait. So that's a key thing. So A, you recognize that's your personality type. You understand what the good aspects and bad aspects are and you can take time to reflect and appreciate that what your five years ago, 10 years ago, 20 years ago self might not be as hard. Knowing where you are today might not be as hard on you as you're being on yourself right now. Also paradoxically, for me celebrating, ironically, that part of me, that doesn't celebrate, and accepting that part of me has allowed me to celebrate more. Exactly.

I think that's great. I've seen the same thing. I think that's incredibly insightful that you, just recognizing something unlocked your ability to both do that thing and enjoy that thing more. If you could go back 21 years ago when you were just, starting first mark. And you could just give a younger Rick just one piece of timeless advice.

What would that be? Buy SpaceX. Now, going back, if I had my time machine going back 20 years, I would say, double down on those relationships. We talked a lot about relationships today

and how those relationships are important not only to your success, but your happiness. At times you're like, am I spending too much time on it? No, double down on those relationships. doubles down on the people you think are excellent and double down on the people that treated you well. From a professional perspective, I think the key thing is it's all about people.

So whether that's people that walk in the door every day at First Mark or the best entrepreneurs, a lot of people have said that, you know, you say, hey, this company's great, but the price is too high, but it's not exactly what we do. There's always a reason not to do something, but the best reason to do something is there are exceptional people doing great things. On that note, absolute masterclass, thanks so much for coming here. Thank you.

This was awesome.