Investing Billions - E275: Does Grit Actually Matter in a GP — or Is It Just a Good Story?

Episode Date: January 5, 2026

Why do the people who build the most meaningful things almost always choose the hardest path and what does that unlock in the long run? In this episode, I talk with Larsen Jensen, Founding General Partner of Harpoon Ventures, about why deliberately choosing difficult problems builds the resilience, clarity, and long-term edge required to create category-defining companies. Larsen shares lessons from his time as an Olympic medalist and Navy SEAL, how those experiences shaped his investing philosophy, and why venture capital is ultimately a power-law game driven by rare outliers. We explore how founders develop mental toughness, how conviction is formed under uncertainty, and why great investors learn to trust teams more than models.

Larson, I've been very excited to chat. Welcome to the Highland Vass podcast. Super excited to be here. Thanks for having me, David. So, Larson, you're the founding GP of Harpoon Ventures, which is in its third Fondwistake by both A16Z and Light Speed. And I want to get into this. But before we get into that,

you won an Olympic medal as a swimmer in both 2004 and 2008. You were also a U.S. Navy SEAL. And when we last chatted, you talked about embracing things that are hard. What is the benefit of embracing things are hard? It's one of the most important things I think I've taken with me through those different career fields and now bring with me into the world of venture capital. As I look at the founders that we've had the opportunity to back, the founders that I admire the most, whether it be Elon Musk and others,

they're taking on these challenges that are somewhat irrational, it seems like, at first glance, like building a whole new OEM company, electrifying the car industry, bringing us to Mars, literally replacing NASA, it seems like in many cases with some of Elon's pursuits. And if I look back at my prior career in swimming, I signed up for the most difficult races that I could, the distance freestyle races. I'm sure other listeners who maybe are breast shruggers or backstrokers would disagree with me. But I think the things that are most difficult in life are the ones where you feel the most fulfillment.

You get to grow as a person. You get to bring the people around you with that growth as well. And I had that opportunity in the SEAL teams. It's notorious for being the hardest military training in the entire world. And so when I look at the people that I admire the most in my life professionally or personally, they sign up for these really difficult things. And that's something that I tried to embody through my career, because I think that's where you get the most personal fulfillment and where you can actually make your dent on this world in the short time that we have. And perhaps I sit somewhere in the middle. I don't try to live an easy life, but I also don't pursue things that are hard necessarily. I see that almost as a side effect to doing the things that I want to do and where I want to get to. Why is pursuing things have intrinsic value in of its solid? pursuing hard things. I think that there's a stealing of your resolve. So even if you're going through hard things where the end state may not be obvious and it may not be clear to you what the

benefit is, I think by training yourself to know that you can overcome life's adversities that come your way is something that has a benefit in and of itself. And I've been fortunate to be coached by people in my swimming career that didn't give me an easy way out who would recommend that I do 10, 1,500 meter repeats in a practice and I would up the ante to do too. Arguably, maybe not the most intelligent thing to do from a recovery standpoint and swimming, but I think from a mentality standpoint so that when the race comes and I have that quit, give up or push on through something that's truly arduous, I will have conditioned myself to know what my limit could be and to push through those things that are difficult. I think we all go through that in our day-to-day life.

but many of us, I think, haven't really tested ourselves to the extent that we should. There's other people I admire from the SEAL community, you know, people out there, like David Gockens, who's now an influencer, who just embraces the suck for embracing the suck's sake, seemingly. And I think that there's something that we can learn from that. I think that if we train ourselves for these things that are really difficult, we can push ourselves a lot further. The second order part of that question is, are we choosing a pursuit that's just hard without

sort of like a higher purpose or a reason to do it? you and I probably all see this with entrepreneurs out there. They're very hard working, but have sort of like a limit to what they're going to achieve because maybe they're in a shrinking market. And so I would suggest in those situations, channeling that mental fortitude towards something where you can see a higher and better payoff, not necessarily just financially, but in terms of impact that you have on an industry is really the nuance. So doing things for hard sake, I think there is merit to it in many ways. But I think from a business standpoint, you don't want to go into a money losing proposition, a time wasting

proposition just because it's a hard thing because you get some pride in that. I think being intelligent about what you're pursuing, but with that same degree of vigor, is really important. And that's where the best I think shine. It's funny because it's such an obvious kind of point to think why raise your kids in such a way that they're resilient and they're able to do difficult things. But when you apply it to yourself, it somehow loses the frame and why you do things that are hard. But you would want your kids to do it. So obviously it benefits you. Totally. The best advice in life that I've ever gotten, and maybe this is going to psychoanalyze on myself is, you know, just treat yourself as you would treat your kids and like sort of like coach yourself

as you would coach your kids. For some of us that are very lucky, I consider myself one of them, to have three young kids, very healthy, very happy. But parenting is very challenging enough itself. Like, but it forces you as an adult to distill things down. You know, I think we're saying first principles maybe is over overplay, but in very, very simplistic terms that are easy to communicate to a five or a 10 year old. Like, what are those principles and what are the things that we're trying to convey. And I think resilience is a core piece of that, whether that's somebody that's disagreeable on the playground or the fact that you don't want to do your homework, but it's hard that you have to step up and actually do that. And perhaps you'll

miss out on play dates and things of that nature and teaching our kids that only through some amount of sacrifice. And in certain cases, extreme sacrifice, can you accomplish something truly special in your life? And that's something that I think all of us as adults should consider as well. but I also think that we should have grace with ourselves. And very rarely do I have grace with myself, probably all adults are the same way. You know, there's been some days where I wake up and I feel so down on myself with how I'm doing

that I would never in a million years want my kids to feel that same way. And so why am I sort of like reinforcing that negative behavior on myself thinking maybe I'm a failure or I'm not living up to the task or I had a company that's not doing too well or I made a wrong business decision and I dwell on that. Well, what would I teach my kids? How would I teach them to be sort of like

professional, you know, business or personal athletes in that same sense. Where if you miss a shot, you can't be afraid to step up and take the next one. You can't dwell on that. But psychologically, like, it's harder for us to internalize our own advice versus giving it. You think of all behavior change as something happens and there's a behavior in that new environment. Is that what you're really trying to do with your brain where it's like your 50th lap and it's, just seems impossible. You're in the state of impossibility and you push through it so that when you have that pursuit in the Navy Seals or later on your business career, you're able to have the same

exact environment and take that next action? I think so. I mean, in my swimming days, there is numerous days, weeks, months where I thought that I was a total failure. And I didn't know how I was going to get through to that next sort of like unlock a performance. But ultimately through, you know, just overcoming adversity and sticking with it and not giving up, it might sound cliche, but some of the best advice in life sort of is pretty simple, I think. It's sort of remarkable what happens if you just see it through. Same thing in the SEAL community and going through Hell Week. It gets pretty bleak when you're running on four days with zero hours of sleep, but you know you're sort of like around the corner, or at least you sort of have that faith. I think the same thing is sort of

in company building and investing in many ways. It takes a long time and for many successful companies to reach product market fit and ultimately to scale their growth. Having that patience to sort of see it through is something that I've learned in my investing career. And I'm glad that I have now more than I did earlier in my career, certainly, because there's very few overnight successes in life. What most people don't see is the hard work that's happened behind the scenes, the failures that happened behind the scenes. You sort of see the publicly announced successes. But I think I've been fortunate to sort of see in multiple careers the undercurrents of what it takes to get there. and that's what we look for, you know, at our venture firm here.

There's something about these realms of excellence. So it might have been impossible for you to do what you did in the swimming arena or as the U.S. Navy SEAL if you were there solo. But seeing other people in that cohort, I'll also add invest in banking, starting startups, anything that seems impossible. Invest in banking, I always think, you know, is such interesting training grounds where you're working 100, 100, 10 hours a week. You just have to respect it regardless of whether you think they're providing value or not. I totally agree. I had the lucky ability to be an intern on the investment banking desk in New York City. And I was like, there's no way the rumors are true. And they are true. Let's put it that way. That's post seal teams. And so it's something that I think is a crucible. And I think that you can argue, like, is there a lot of value that's being created at midnight or two o'clock in the morning when people haven't made much sleep? Potentially not. But I think that sort of like test to yourself. And I think that all people and I think especially young men benefit from going through this sort of like ascension past something. thing that's really, really difficult. And I think that's why a lot of folks are drawn towards the warrior ethos or the seal community. And I think from a professional world, I think that's why some

people are drawn towards investment banking. They want to test themselves. They want to prove to themselves that they have what it takes. I think there's something to that just, you know, internally. I have this whole theory that there's a sixth gear that gets unlocked in people when they're pursuing something bigger than themselves, some mission, like you mentioned, Elon, go out of Mars. Is this also like a sixth gear where you now have it for the rest of your life after you've gone through something like the Olympics or the seals where you could go into that gear whenever you need? I think I do, but light becomes more and more complicated.

You mentioned, you know, married, have three kids. And so your time has spread really, really widely. And I have some founder friends that, you know, one in particular, that's a close friend of mine. I've known him for a long time. You know, he's been building his business for coming up 15 years and he's making that conscientious decision that he's going to sort of take a step back. It's a very successful company, nearly a decacorn, because he realizes the tradeoff that it has sort of on the home front.

And so he understands that direction. I think it's just really difficult if you are trying to be great at multiple things, how many can you truly be great at? There's not many people that can be great at, you know, half a dozen things at the same point in time. So for me, I feel like I have that in me. I feel confident I can bring it out from me. But I think that would have sort of the equal and opposite reaction on the home front with kids that I'm trying to raise to be, you know, to follow in the good, lessons that I've set and to avoid the bad ones that I've said as well. How do you maintain mental toughness as a VC? It's certainly not the SEALs. It's not the Olympics. How do you maintain that

edge? I think it depends on what type of firm that you're at. For me, I think it's much more translatable to the entrepreneur community. And I think they deserve all the credit. So I never want to suggest that we're in the same ilk as the founders that we invest in. But we're having to raise money. We're having to sell ourselves. We're an emerging brand. This is not a firm that has around for decades where they get to plug into the infrastructure that's in place and exclusively focus on deals and don't really need to worry about fundraising. So from that camp, for any venture investor, I think it's having the resilience to understand that things are rarely as good as you think and rarely as bad as you think, you know, regardless of the

situation. And that's some advice that I got for Peter Levine, who's like really a true statesman in the venture capital industry when I was wrestling through some of these things that were going on in the portfolio, both very good and some that were very good. And some that were very very bad. He's like, Lars, I don't let you in on a little secret here. Things are never as good as you think, and they're never as bad as you think either. And so I think blazing that, that sort of like level asthma is really important for any investor. And how that results in resilience, I don't think that mental toughness can be built in good times and in easy situations. I think it's sort of an oxymoron in many, many ways. I think you can only build

mental toughness and resilience by going through difficult times. So from an investor standpoint, that could be losing deals that you're competing for, never see. seeing them in the first place and, you know, having sins of omission where you're, you know, you're missing deals, you're saying no to things that you should have said yes to, sins of co-mission, investing in deals that you arguably should not have done in the first place. So there's many, many, many ways to make mistakes. And ultimately, if you treat each of those as a building block on yourself and on your own career, I think you become more resilient as an investor by focusing on those inputs and build that mental toughness and sort of some of

those calluses in a good way to help you become sharper for the next. next time around. I think where people oftentimes miss the mark, myself included, is where you get complacent, where you think that the thing that was working, you know, at one point in your career will always work. And I think that's a little bit missing the mark because the markets are dynamic. As we see sort of like in the venture landscape in the past 10 years since I've been doing it, it's changed a lot. There's some household names that are still household names. There's some that aren't anymore. And there's new ones that have really broken up onto the scene. And the technology landscape is evolved as well. So I think if you're overly wedded to just doing

thing one way, regardless of what the market's giving you, and you don't have that resilience and that creativity like our founders have to sort of maneuver with the market, I think that's where you can get into trouble. Let's talk about Harpoon, your fund. What is your right to win as a VC fund? Very concretely, our right to win is the value that we provide our portfolio companies post investment, which for us, we're a venture firm that invests in the national interest of the United States and our allies. So critical technologies that we think can reshape not only the economy in businesses, but also geopolitics. In modern times and what's happening right now, we think that the market is essentially going

through a technology Cold War, akin to the same thing that we had against the Soviet Union decades ago. I think we're going through that with a near-peer competitor in many domains with China. And so I think our strategy is built around that. So our right to win is helping companies will be cybersecurity companies, AI companies, rare earth companies, energy companies, break into the government market. And we've helped our founders close over a billion dollars in total contracts with Uncle Sam since we started about eight years ago. And so when we think about why a founder would pick us versus somebody else out there, it's that level of differentiation that we're proud to have our founders reference us against.

And do you compete to collaborate with the megafuns and how do they fit into the ecosystem? It's a great question. And it's evolved over time. When we started, we were very much collaborative because nobody really cared about the thesis that we did. So we were sort of like a natural bolt-on, a strategic investor in many cases where a name brand multi-stage firm would be doing this deal. And we'd sort of see around the corner to say, hey, there's a large scale, you know, geopolitical imperative to this capability. Let's help unlock this new line of business for this company. And so when we started, that's how the majority of the deals that we did got consummated.

Nowadays, we do many of those like that, but probably only about a quarter of the deals that we do, maybe a little bit more of that same ilk. The majority of the other ones we're looking for are being those like first check, early stage, whether that be a pre-seed or a seat stage investment, where the founders are not looking for a 10 or 20, a 50 million dollar initial funding tranche. They only need 500K to get up and off the ground. They only need maybe a million and a half, two million bucks to get up and off the ground or to hit that next milestone to unlock value for the company for the market and for their investors. And so that's really what we're increasingly looking for. And I think given what's happening in venture capital these days and the intersection of our strategy with geopolitical, politics, I think that's a nice place for us to fit. But we certainly don't turn our nose up at

great opportunities at a Series A where a name brand, multi-stage firm is involved. And we can be strategically valuable and we have the conviction to back the company. We'll play there too as well. I'm sure a lot of people would love to get a check from A16 and Z or Lightspeed as a fund. Tell me about how that came about and tell me about how that relationship has evolved now that you're on your third fund. I mean, at the end of the day, this is a situation where I think I was very lucky. You know, I think in my earlier career, certainly luck is part of all of this and hard work is certainly part of it as well, but I was fortunate to work with some of the best over at Andresen and then subsequently over at light speed to really be mentored by the best in the world of venture capital and some of the most relevant funds, if not the most relevant funds that are out there right now on a multi-stage basis. And so ultimately I have this concept of creating effectively a private sector, Incutel, for a lack of better term.

You know, given my time, you know, representing our country in multiple different domains, I looked at very high esteem for what Incutel had done in terms of the mission orientation they have. but they are not a for-profit enterprise. They're not a purely private enterprise where people can invest in that fund. I said, what if we created something that was like in Incutel, a very similar mission. We still collaborated with those folks,

but we completely privatized that sort of operating procedure into a traditional fund model. And so went to the folks at Indrisen and Lightspeed and brought up that that's what I wanted to start and was very fortunate that they wrote the first checks into Harpoon for us to get up and off the ground. Subsequently, that's evolved. We still have some of the GPs there.

as investors and us who have invested in every single one of our funds, but the first fund is the only one that they actually committed to out of their core vehicles. You know, you mentioned this. You've been very lucky to be mentored. I actually think it's a skill to be mentored. And I believe that the best leaders also know how to be led. How do you balance that idea with the idea that some people are just unemployable and sometimes the best thing is also unemployable?

That's a tough one. But I totally agree with you. And I think it goes back to the concept of servant leadership that I learned in the military, really hard to learn that on, you know, in any other situation. But ultimately having this total, it's not just respect. It's like it's really a love for your colleagues and wanting for them to be successful and knowing that you'll be successful if they are. And we had a concept of where leaders eat last.

And so literally in the chow hall in the military, the leaders would be the last people to eat. And oftentimes during training, that would mean that the leadership of the class sometimes wouldn't get any food or maybe we would just get the scraps. But you sort of got that respect by letting your people get and become taken care of before you are. And so I think that's something that I think every leader embodies, whether they sort of like every good leader, whether they know it or not, they embody that, that sentiment because ultimately it's the people that are going to make the organization successful. And it's a leader that it's their job to actually sort of create that environment for that success to occur. But I think that you're right. Some people are unemployable in other organizations. Many of the founders that we invest in, I think, are probably not great employees at large-scale companies because they're so passionate about what they're doing and putting guardrails on sort of their vision is limiting.

And I think at some point creates a combustion chamber in a bad way at large-scale organizations. And so you have to have then sort of like be freed to have this opportunity to make something more from their life. lives and from their pursuits. And so it's interesting, but they still embody those characteristics of taking care of their people, making sure that their employees are well provided for economically in terms of their vesting schedules, in terms of like what they're getting paid from a salary standpoint. And I think probably most importantly, setting the vision so that everybody knows what they're there for and setting the vision really high so that people can feel like they're actually contributing to something of value beyond themselves, as you mentioned a little bit ago.

Keith Roboy has this concept of barrels and bullets, which is barrels are these many CEOs that basically define problems, solve them. And they could be at any part of the organization. Bullets are people that are really good that you tell them to do something. They go and do it, but they don't basically iterate on themselves. They're not entrepreneurial. And my belief is actually that you could train people. Certainly there's people that have a proclivity to be self-sustaining. There's people that have, you know, no ingenuity or just like to follow orders. But there's people in the in the middle. And I think you could actually empower them to do that. I do that for the producer of the podcast, Walrose. It's both a joke and also true. I have for her. I'm the face on-air talent. She makes sure the podcast runs. She makes sure that everything's going. And it's both because I want her to come to me when she needs something from me. And also I want to make sure there's no barriers in her way. And that's kind of how I look at how you could empower employees or anyone and lower in the organization to start thinking like a barrel. I love that anecdote, and I think that's dead on.

I think the worst leaders that I've ever worked for or ever have seen are the ones who don't take any critical input whatsoever. And I think we can debate. The best leaders sort of like set the example of where we're going. It's very, very wide in terms of where that is. But I don't think that they say, this is exactly how we're going to do it, get out of the way. I think that's sort of a recipe for disaster because it's very, rare, if not impossible for a singular person to have every single aspect of a company's success

sort of like in their head in terms of exactly what's going to happen. They solicit the input from the experts in every single line of their business. And I think the best leaders on the battlefield aren't necessarily the experts at any dimension of what they're doing. They solicit the input and actually synthesize the information to make the best decision possible. And so I think that's extremely difficult to do because a lot of the leaders, as I mentioned, may not want the input from other superiors. They may not want to be told from a top-down standpoint, but having the humility to be told from a bottoms up standpoint, I think makes all the difference in the world. Whether you're getting feedback from your superior or from who you're

commanding, the consistent thing there is that you're focused on the mission. It's not actually the process. It's exactly the mission more important than your own ego. And is it more important for you to go with what you want to do or to win the battle? Totally. And that is one of the hardest things that I've had to overcome. And I know many people have a hard time overcoming. Everybody's in love with their own idea. I don't care who you are. Everyone thinks their own ideas are the best ideas. But if you just take a second to recognize that and realize you're going into a conversation, I don't care if it's with a superior or subordinate. Just recognizing sort of like that framework that I'm going to think I have the best ideas and putting that aside so that you can hear other people's ideas in a more level-headed clear way. I think you'd be surprised with what you can accomplish. I've been working on this concept that some people have high beta ideas and some people have low beta ideas. In other words, some people have a very high hit rate on their ideas and some people have a crazy low hit rate. Maybe it's 30 or 40%, but have these 10, 100x ideas that move the field.

You specifically invest in some of the most innovative companies in defense and it's not just a SaaS startup. up. Do you see that to be the case? Let's be honest. Subscriptions out of fast, streaming services, apps, memberships you forgot you even signed up for, and canceling them is usually a pain. That's where Experian subscription cancellation comes in. Experian can take the pain out of canceling subscriptions by handling it for you. You just keep the ones you want and put money back in your pocket. Over 200 subscriptions are cancelable. You can also save money by letting Experian negotiate the rates on your bills. They'll keep an eye out for new deals and saving opportunities and negotiate directly with your provider on your behalf. And the best part, you keep 100% of your savings.

Get started with Experian app today. Results will vary. Not all bills or subscriptions are eligible. Savings not guaranteed. Paid memberships with a connected payment account required. See Experian.com for details. Is there this tradeoff between hit rate and how good an idea could be? I think that the less aspirational ideas have a very high hit rate. But they're not going to clear the basis. And so I think that's one of the challenges for us as investors is to understand. I think almost every idea that we're pitched is a good idea. Like, yeah, that's a pretty good idea.

But it almost is unsatisfying because the magnitude of the subject of the of these ideas just we don't see as being, you know, category changing or, you know, changing to the geopolitical, you know, apparatus in terms of ensuring that our country and our allies at the forefront. And so we almost definitionally need to look for things that appear to be bad ideas. You have first glance and realize that we need to control our own bias in those first meetings to say, this just sounds like such a terrible idea. This sounds like a bad idea. But if it ends up actually working, it does change everything. And so we're almost looking for in the pitches with founders that we meet. We're looking for things that, you know, it's too,

it's too polite to say, oh, they appear not consensus or non-obvious. We're just looking for things that just seem like they're bad ideas because, you know, all the good ideas are going to be, you know, maybe okay outcomes. But I think that's one of the unique advantages of being a venture investor is we're beholden to the power lot. Truly, the only thing that matters is how big do the winners get. It does not matter how many losses you had if you have big enough winners. And that's a really difficult thing to come to grips with. It's a difficult thing to come to grips with just like, what if you made every personal decision that way? Like, I'm going to do all these personal things and, you know, maybe one, you know, non-financially related. It's sort of at odds with

sort of normal life. It's at odds with every other investing discipline that I know of. So I almost don't categorize venture capital investing in tech-enabled entrepreneurship as almost being an investing discipline. It's very different. It's completely idiosyncratic from any other ask class, which is why some of the people that lose the most money in venture and do it the worst are the people that are very good at private equity or very good because they're far enough to know different things like sizing and diversification, but they actually miss the idiosyncratic aspects of the asset class. Another way to kind of put numbers behind this intuition is if you have even a 40% chance to get a 3 to 4x, that might be a 1.2x to a 1.6x.

If you have a 10% to get 100x, that's a 10x expected value. So that's an order, a 7x difference. Totally. And that's so hard to put a weight against because you're, at the end of the day, sort of the cherry picking variables and it's never perfect, but it's a good framework to make these decisions under. And that's how we to try to do it as well. It's like, does this have a 10% likelihood of making it a 5% chance of making it to the promise land in terms of where we want to go with this company?

And if it does, we shouldn't be afraid to pull the trigger and do the deal. But that's just not the way it works in private equity or real estate or any traditional conventional asset class that's out there. Venture capital really isn't an asset class. It's an access class. That's something I learned from Ravi at light speed. It's very, very different. You need to be in the right companies. And if you're not, nothing else matters.

Yeah, all the research, whether Professor Steve Copland, Professor Gregory Brown, they seem to believe that venture is insincocratic in that the founders actually choose the investors and every other ask class known to the world. It's actually, it's a distinct way around. It's the opposite way around. When I have LP conversations, like, how did you pick this company? It's like, dude, this company picked me. Like, I was just like, we sold ourselves. It's an interesting way to put it and, you know, distilling things down into like very simple, you know, ways or framework. I think a lot of ECs have a lot of ego. Maybe I do too. Who knows? But like, I think that like at the end of the day, some people like hire us. Limited partners hire us to then turn around and convince a certain subset of companies to take money from us. And I think nobody really describes venture that way, but I think that we truly are hired by our limited partners who have picked us to intelligently go and sell their money through us into the right companies versus the opposite way around. And I think that even the top venture firms, Mark has been there on the record saying this many times, like one of the first questions they ask is like, you know, why us? Like, why are we so special? And if, you know, Mark and others at these esteemed, like, world-class venture firms, ask that question. Shouldn't we be

asking that question of ourselves? And we do every single time. I don't know who wrote this tweet. Or else I would give him or her credit. But my favorite tweet is venture is 99% saying no and 1% bagging. I think that sums up the life of venture capitalists. I think that's a good one. I should copy that and proliferate that across my team. So I think that's right. Like, you know, as much as everybody out there. or wants to think that they don't beg for things that they're above that. I think for the special ones, everybody sort of does. They're all competitive unless you get lucky and you sort of get the drop on something

before it has the chance to get competitive and you have a good and you have a strong enough sales process effectively to sell your capital before it has a chance to get to somebody else. I think that could be the exception. So you mentioned Mark at Andrews-Norowitz. You also were mentored by John Vranos at Lightspeed and he taught you how to go, how start startups go about getting product market fit. What's the best practice when it comes for a startup to go and get product market fit? Some context behind the question. John Vrionis was a pupil of Andy Ratcliffe from benchmark. Really, Andy was one of John's mentors. I was fortunate to take the same

class at Stanford taught by Andy that John did, you know, 10 years prior, the product market fit class. And so a lot of my thoughts on sort of like founders finding product market fit is, you know, informed by Andy and by virtue of that informed by John. And it's something that's really, really critical to, I think, what the best venture capitalists in the world do.

The best venture capitalists, I think, aren't looking for unproven value risk. They're taking it with that value in terms of what the technology could provide

to the ecosystem as for like the base case for the company and taking that sort of like second order question, which is scaling risk. In the early stages, that's the earliest innings of scaling or finding product market fit.

So pre like true breakout scaling, but actually finding your first customers that are referenceable against each other in that core customer segment. And so ultimately what I've learned from John, and through Andy and others, is that having a 10x innovation is one of the prerequisites

for finding product market fit because nobody changes what they're doing in their pattern of life. Nobody switches who they're buying from unless you have a 10x better solution on a price performance paradigm. And so that needs to be the starting ground. Is this 10x better than what the incumbents

or what the existing industry status quo provides? And then secondarily, the key question, you know, to building out product market fit is who to who? Like, who is uniquely desperate for this? If you have a TEDx solution, but nobody's truly desperate, you're never going to actually hit product market fit. You've got to get that cross-referensibility of customers

and a single customer cohort to all reference each other and actually start buying, you know, buying based on that voice, you know, that that referenceability of your platform in a narrow niche before you even hit the next niche. And so I think when we think about investing in companies, it depends on the stage. Certainly it's series A, is when you'd expect to have product market fit.

But you want to have some early glimmers of being able to do some diligence and understand how big is this pain that these customers are up against. And if they had anything at all out there to solve that pain, not just to divide them and to make it slightly better, but a true unlock underwritten by technology,

can we confidently say that they would actually buy that if it existed at the preseater seed stages? And so that's really a hard question to diagnose at those stages. But that's why we do a ton of off sheet references. You know, we do a lot of customer calls to understand the pain because if the pain isn't there and it's not super acute and the customers don't realize they have a pain, they're not going to pay to solve it. And ultimately, I think that's where most companies fail is a lack of product market fit. They don't fail because they can't build the technology typically. They don't fail because of any other numerable reasons.

They just haven't found the right dogs to eat the dog food. And, you know, that's been our experience, at least. least in our, at our franchise. And I agree with this customer of pain point, the vitamin versus pain killer analogy. But you're betting more on the team than the product or the market. The team versus those two things more important to you. Conventionally in venture, we have the three-legged stool of what we're looking for as early stage investors.

Are we, you know, a world-class team best in the industry of what they do? The Michael Phelpses that I used to compete against. Are they like the Phelps of their arena? I know what it's like going up against the Phelps and you don't want to do it if you if you can avoid it. And so can we find those people? You know, secondarily, like, is the market so desperate for a solution that they say they're building? And thirdly, like, is there a true technology unlock that's possible now that previously wasn't possible? That's sort of like the inflection point that we're looking for. But ultimately, I think it does come down to the

team because the best founders in the world are six months, maybe 12 months in front of the best investors in the world, in my opinion. I think they are the ones who are leading the market, venture investors are the ones who are following the market, fast followers. And the best investors are very fast followers to what the entrepreneurs are saying and doing. And so I think it does come down to the team because if you have the right team that is the Phelps or equivalent of their domain, they have such a deep degree of understanding with their early customer and such a deep degree of understanding of the technology. It ends up being sort of a package deal. So I tend to think of it as like you can sort of like kill three birds with one stone if you have the right team.

It's not that we don't look into those other things and pressure test it and try to understand it. But ultimately the best teams come with those other two aspects of early stage decision making, early stage start decision making sort of like embedded in the DNA of who they are. And that's why I think the team is the most important. And I think beyond that, like when things don't go according to plan, when the technology inevitably breaks and it's not working as well as we we thought, like, Are they able to actually solve those problems very quickly or their innovation cycles very, very fast? Are they able to adjust, not the technology, but adjust like their target, early adopter customer cohort intelligently? If they think their products best situated at scale for the enterprise, maybe they don't start at scale with the enterprise. Maybe they have to knock down some S&B or other startups, things like that that are more desperate right now.

just where like get that customer referenceability built up to the point where a large-scale Amazon, Microsoft, Apple, so on and so forth, will take them seriously enough to have that conversation. Not everybody can go straight to the top. The way that I look at it is product and market is the thing, but the team is upstream of that. And the team is the one making the product and picking the market. And then also the team is, even if it's a little bit behind, a team that has a better product or a better market today, the team, compounds at a rate that's higher than actually the product and the market compounds. So it's not that the product of the market aren't a thing. That is the thing. It's just that the team is upstream of that. I totally agree with that comment. And I think one of the hardest

things to realize is that market effectively always wins. You can have the best team in the world. But if you're operating in a crummy market where nobody's buying, in other words, by market, I mean sort of like the willingness to pay people buying, people conducting commerce. If nobody's buying, you're sort of dead to rights. And I think we're seeing that right now. now with the AI wave that's going on, people are buying in droves. Like the market is here definitively. Like the fastest scaling companies in history from a revenue standpoint are happening right now. The company at a huge, you know, magnitude, billions of dollars in sales in a very short period of time in the context of Open AI Anthropic and others are sort of like, you know,

not too far behind. So market sort of wins. And so if you're a brilliant founder right now and you're sort of not operating in a space where there's a lot of, you know, money flowing from a revenue standpoint, you have to sort of ask the question why. And maybe there's a logical reason why that's the case. But I think having this sort of like that nuanced understanding is what we look for with the founders that we're backing and like why they're sort of like picking the markets they are. Sometimes founders can be so mentally tough that they end up iterating on the small market instead of actually pivoting into it. Sometimes they're too hard on themselves. They're too hard work. Totally. We're going through this right now with a founder of ours who has this really difficult

conversation about firing his existing customers because he was a non-native AI company to start. And obviously, AI, everything's being rewritten and re-architected effectively. And his technology has some great bulge bracket, amazing customers under sort of like more of a SaaS operating model that wasn't, you know, AI native and AI first. But we think, and so does the founder that there's like a logical extension of that capability to be a core piece of, you know, the AI infrastructure that's being recreated or being created for the first time right now. And, you know, I think he's going to fire all his existing customers to pursue that. And so that's, you know, takes a whole, you know, gut check to say the least when you think about that.

I mean, potentially alienating, you know, millions of dollars in revenue with very reputable, you know, customers and, you know, going through that reset, you know, to pivot into a more attractive market with the team that's been focused on something else. And the investor sort of potential backlash, maybe not everybody agrees with it or supportive of it because it's different than what they originally back. act. And so when you talk about mental toughness and resilience, I'm constantly in awe with the toughness and resilience of the founder community and what they have to go through to build things of worth. They sacrifice a lot. And there's a lot of sleepless nights there. And that's something that maybe I'm a little bit crazy, but it's something aspirational and feels super exciting to be a part of when you have the, when you're around people that are, you know, giving it their all. I don't care if it's on the playing field, the battlefield, or in the world of

entrepreneurship. There's something, you know, aspirational about that. And it's, makes it that much easier for, you know, the people that they're surrounded with to get up and echo that behavior. And for somebody like this founder or VCs that want to become more mentally tough and don't have the opportunity or don't have the desire to go in Olympics or do Navy SEALs, is there a like version of that? How does a venture capitalist or a founder go about becoming more mentally tough? I think it starts with how we were taught in the SEAL teams to recognize that the only easy

day was yesterday. And, you know, what I mean by that is that, you know, yesterday is gone and it's done. And so inevitably, it's easier than what I'm going to undertake today. And so if you have that mentality that tomorrow is going to bring challenges, but I am prepared for those challenges to overcome them just like I have these historical challenges, I think you're, you know, at a starting point in the right frame of mind. But, but ultimately, I can't tell you that there's, you know, running a marathon or, you know, doing an iron man is the thing that's going to get you there. But I do think that any time you can sort of consciously put yourself into a position of discomfort in a low stakes environment.

I think it builds resilience for when stakes are higher. There's a reason why in seal training, many say that the training is harder than the actual job itself downrange because you are putting yourself in a low stakes environment to be conditioned for something that's extremely hard and extremely arduous so that if and when things go really wrong, you know, professionally thereafter, you're prepared and have a level mind and know how to handle it. I don't think in the business world, we think that way very often. So I think it does come down to sort of like self-education in many ways, because I don't know any companies that sort of intentionally put their employees through a meat grinder to say, hey, we're to make sure

that you're resilient. So I think it comes down to the individual. It's sort of like build that resiliency into yourself, which I think benefits you regardless of what you're undertaking is just like that understanding that to do anything that's meaningful in life, it's going to be hard. There is no, and I think anybody that's listening here, if you're thinking back on your own life, your greatest achievements that you've ever done were they the easiest ones to achieve. I think the answer is always no. They're probably the hardest ones. The things that you're most proud of as an individual are the things that you actually

saw it through and you still succeeded and you didn't give up and you saw around the corner. That doesn't mean you won every single time. that probably means you lost 10 times out of 11 and that one really paid off. And so I think that that's something that I think every founder knows, certainly the repeat founders do. I think the best venture capitalist know that by virtue of the business model and you still have to step up to the plate and not be afraid to strike out. You've got to swing for it. And that's where it's really tough sometimes.

And I'm really trying to put a finger. I'm usually very good at distilling people's strengths and their brilliance. and I'm trying to put a finger and understand exactly how you think. So tomorrow, if you were to get, let's say, a 150 page questionnaire that you had to fill out, what would be your first thoughts? Oh, this is hard. This is great. And walk me through your exact thought process when you get a difficult task.

If I had 150, yeah, I would at face value, like I did not expect this and I'm not excited about it. But, you know, depending on the content, if it's for a large institutional LP or something like that, what a blessing and how lucky am I that this? person in this group that's probably, you know, tens of millions of dollars in potential investor interest sees enough in us that we actually have to go through this process to actually consummate this relationship. And so, and I think that's, that's literally been the case in terms of that long of DDQs, as you know, in the in the fund management landscape. Not a purely hypothetical. Nobody's super excited about that, but ultimately what sort of like

a testament that they actually would, you know, look into you so deeply. And so it's a weird thing too, because when we're so founder-oriented, we want to be so respectful of their time. But at the same time, we want to go as deep as possible. And rather than, you know, a founder thinking that that's sort of like a bad thing or annoying, it's like, wow, that should be sort of like gratifying that like somebody is so curious and so interested, they want to go that deep to understand the business and the background and your vision in such detail. And I think it's the same thing as we think about it with our LPs is like, you know, the ones that do the most work on us. I'd be lying if I didn't say like, ah, this is a little

bit overkill sometimes. Don't you maybe already know some of this stuff? But honestly, how flattering and humbling is that that somebody wants to go that deep on the organization to understand every little tiny nook and cranny of everything that we've ever done? And I think that that makes it actually worth it when you frame it in your mind that way. So part of your resilience is actually a optimism that's embedded in the way that you think about things. Absolutely. And I built probably from my swimming days too, where how lucky was I that I had the opportunity to swim for some of the best people in the world who pushed me to that level and who I pushed, frankly, as well as the athlete, to like stay longer to do more with a goal of winning an Olympic gold medal. That mentality is not shared by everyone.

It is shared by the best that I've ever competed against and the best that now I work with is that they constantly want to take it a level further. And is it harder by taking a level further? sure. It's not just a marginal, you know, incremental 5% hard. I think that last, like once you get to like 80%, that last 20% you want to do, I think is like the 80% of the effort. Like, you know, if half of life is just showing up, the second half is way harder, way, way, way harder. So show up, but ultimately realize that just showing up is the easy part. The hard work starts thereafter. What's one piece of advice you wish you knew before starting Harpoon a decade ago?

I wish I knew what a limited partner was. I had no clue. That's how ignorant I was in terms of like what they truly were. But I think that that's actually synonymous with some of the best founders that we've ever backed. They're industry outsiders. I'm not trying to compare ourselves to them, but I think I see some parallels from how we started what we're doing. Like people that have a non-consensus opinion that's very different from the status quo. and sort of like enough self-confidence and enough of the thesis to go out there and try, but not so much scar tissue that they know the reasons not to. And I think that that's one of the key advantages that we had as a firm. If I would have known all of the challenges that are around every single corner,

might not have started it, right? But like, I think that ultimately ignorance was bliss in many ways. I go back to a piece of advice I got from Chris Dixon early days in our fund. So maybe this is probably it. When we started our fund, we had so many rules. pages of rules of what we would look for. Valuation at entry, ownership targets, sectors, percentages in each sector, all these rules. And I ran this by Chris and he said, Larson, you know that rules are the enemy of returns.

And I'm like, okay, like, what's, what's he mean by that? And he attributed to Peter Thiel, that quote. He's like, your fund is either going to be successful or not based on an outlier deal. like venture is a game of outliers based on an outlier deal where you broke maybe every single rule that you set for yourself on valuation, target ownership, check size, all of this stuff. And that one company is the one that's going to return the fund multiple times over. And it's not going to be based on any of the rules that you set out because you thought you were smart. And so I think that was really eye-opening to me, that singular conversation.

And fortunately, that happened early in my venture career, didn't predate Harpoon, but it was shortly there. after a year or two in. And I think the challenge with that and the nuance is like it could be a very slippery slope. If everything's the exception, then nothing is truly that special. If you justify every single deal, like, oh, this one's the exception, that one's the exception, then nothing's the exception, everything's the exception, which means there's a new rule. And so in short, I think looking for those exceptions, those true outliers, that you're not predicting that you'll see, that you're not predicting what they're going to be and just being so

convicted that you need to do this deal is really pretty much the only thing that you should be doing at the end of the day. If you're going to play by that framework that Chris laid out, if you're only looking for the exceptions versus things that fit your parameters, I think that's where the venture model truly works. That is why venture is an art. I think about this whole concept, this meme that if I knew what I knew now, I wouldn't have started. I thought a lot about that. Why does so many successful people say that? And I think that's because they've underestimated the challenges and they've underestimated their resilience. I actually think it's a misnomer.

I think if you had known the challenges and you had known your resilience, you would have done it. But I think people underestimate the challenges, but they also underestimate their resilience. Totally. But you still need that push off the ledge. You know, I saw this flag. You need that ignorance. I saw this flag that was in somebody's startup company. I think it's a really, really smart one, maybe one of the gundo companies or

something like that because they have all the cool paraphernalia said, we do this not because it's easy, but because we thought it would be easy. And I think that that is totally the best framework for anybody starting a company. You know, everybody thinks it's going to be easy at the end of the day. And maybe it feels like it would get that first round on or maybe that first product that works and that first customer. But that's when you realize the only easy day was yesterday.

On that note, Larson, this has been an absolute master class. Thanks so much for jumping on the podcast. I look forward to continuing this live. Thank you, sir. Such a pleasure to be here. Thank you. That's it for today's episode of How I Invest. If this conversation gave you new insights or ideas, do me a quick favor. Share with one person your network who'd find a valuable or leave a short review wherever you listen. This helps more investors discover the show and keeps us bringing you these conversations week after week.