The Gigascale Founder
Actionable Insights from Studying SpaceX's First Investor
“Look up Gigafund. They’re the most interesting fund in venture.”
I got this call from a smart friend a few weeks back that sent me down one of the more fascinating rabbit holes I’ve gone down the past year.
The name vaguely rang a bell, but I couldn’t recall from where so I went to the website. The first line had something typical of most VC websites about backing “ambitious” and “transformative” founders. Before my eyes could glaze over, a few lines in the next couple paragraphs caught my attention.
"Before we invest in a company, we ask ourselves: Do we expect this company to be one of the world’s most significant and transformative businesses 20 years from today? Also, will this founder stick with their company for that period of time and ensure that it achieves its full potential?”
“Limiting focus to ‘yesterday’s’ best-performing industries will miss these companies…We seek founders who look past short-term trends, industry structures, and technology opportunities and instead use first principles to solve the world’s biggest problems.”
-Gigafund website
The two cofounders of Gigafund, Luke Nosek and Stephen Oskoui, worked together at Founders Fund. Luke cofounded PayPal (with Peter Thiel and Max Levchin) and Founders Fund (with Thiel and Ken Howery.) He also wrote the first institutional check into SpaceX at Founders Fund.
The first thing I noticed when studying Gigafund was that they’ve deployed serious amounts of capital into Elon-founded private companies (SpaceX, The Boring Company, and Neuralink). More importantly, it’s also clear that their experience with Elon has colored their vision for what great entrepreneurs look like.
Over the past couple weeks, I studied the founders Gigafund has backed by listening to podcasts and reading their interviews, and began to extract a common set of traits that united many of them:
First-principles thinker
Builders at heart
Idea-generative and curious
Chip on their shoulder, previous swings haven’t been home runs
Solving big problems on a multi-decade timescale
Building full-stack solutions, not wedge products
Together, these traits make up what I’m calling the “Gigascale Founder.”
The Gigascale Founder isn’t happy with a $2B IPO and a house in Woodside.
The Gigascale Founder is someone who can change an industry, do things previously considered impossible, and change the very way we live.
The Gigascale Founder is the type of person most of us look at and say, “They’re crazy! They’re wrong. Why would they even attempt that?”
Venture is the business of looking for outliers, yet very often, venture investors coalesce around proxy characteristics like the school/company background of founders, hot trends, public market comps, or a specific thesis around an industry. It’s not that any of these things are wrong per se and you will likely deliver good returns for your LPs if you pick well and have good access to deals. However, they may not be extraordinary returns. Founders often see the future far better than investors.
Let’s go through some of these founder traits in more details with examples from the Gigafund portfolio.1
First-Principles Thinker
Gigascale Founders usually aren’t ‘domain experts’ and rarely have ‘founder-market fit’ for the company they want to build. They often come from a different industry entirely. The most important trait uniting them all is starting with the basics and constructing their solution to the problem from first principles.
Elon Musk studied physics textbooks and bucked experts to start SpaceX. While he didn’t found Tesla, no one believed that a widely available electric vehicle could be affordable and desirable for the masses. Tesla changed that because of Elon’s famous strategy.
Jeff Holden (Atomic Machines) used to be the CPO at Uber and a key part of Bezos’ executive team at Amazon. Now he’s building a completely unrelated company to create atomically precise manufacturing, the type of nanotechnology we dreamed of in the 1960s. He once said, “If you don’t know something, just go read a textbook on it…learn how to learn.”
Bret Kugelmass (Last Energy) had no expertise in climate change after selling his autonomous drones startup. He did nearly a thousand podcasts with scientists and began to understand how much of the problem with nuclear energy was the industry shooting itself in the foot.
Will Young (Sana Benefits) described his ideation of the company as “What’s the health care plan we want to exist from first principles?” He has no previous healthcare background.
Austen Allred (Bloom) looked at skyrocketing student debt combined with universities failing to provide good job placement for those costs and decided to build an incentive-aligned coding bootcamp. Like other Gigafund founders, Allred had not worked in education before.
Paul Dabrowski (Synthego) was not a biologist. He worked at SpaceX and founded an iPhone case company, but his key insight was “Why can’t we build biotech like software with faster iteration speed and development?” Biology experts would laugh at him with his non-expert background, yet Synthego is helping power breakthroughs in curing human disease.
Alexis Rivas (Cover) is one of the exceptions who proves the rule, having actually worked in architecture previous to starting his company. However, he also had a similar first-principles approach after being shocked by how terrible and overly expensive the current home-building experience is. He asked himself, “Why aren’t homes built in factories like automobiles?”
Gigascale Founders are high-conviction and go deeply through the idea maze to understand what experts think and say, but they do not take it as gospel. They build their own solutions through first-principles thinking and their own unique insights.
Builders at Heart
Almost every single founder of a Gigafund company has founded multiple companies. They are tinkerers who didn’t necessarily start off with “doing their life’s work” or “making an impact.” They just saw a problem and started a company to try and solve it.
This obsession with ‘impact’ is paralyzing for some young entrepreneurs. They won’t start a company unless it has a huge societal mission like solving climate change or cleaning up the oceans. Huge societal missions are great, but it’s interesting to note how many founders started off with something much narrower in scope or unrelated to what later be called their “magnum opus.”
Elon (Zip2, X.com/PayPal)
Holden (Pelago)
Jude Gomila (started Heyzap before Golden)
Kugelmass (Airphrame)
Ben Doherty (Favor before Sunroom)
David Mittelman (Arpeggi before Othram)
Dabrowski (Caseless)
Neal Harmon (small marketing and publishing companies before Angel Studios)
Idea-Generative
Gigascale Founders are super-curious and generate new ideas constantly. It’s similar to music where some of the greatest composers of all-time like Bach and Mozart were also the most prolific. Gigascale Founders are always thinking of products and companies they want to see built in the world. Gomila has a full list of startups he wants to see, Elon has built seven completely different companies and can immediately jump to Twitter and think about ways of improving the product, and Dabrowski can sound like a little kid on a podcast when talking about nuclear fusion and brain-computer interfaces. They are hedgehogs when it comes to their baby, but curious foxes always learning about the rest of the technology world.
‘Serial entrepreneur’ is a trite phrase that sometimes scares VCs, but because of their first-principles thinking and curiosity, Gigascale Founders can think about product solutions to problems across many domains.
Chip on their Shoulder
One interesting note about all the previous companies that Gigascale Founders have started is that none was a typical venture-scale success. Sometimes there’s a successful exit or acquisition (Zip2, PayPal, Heyzap, Favor, etc.), but it’s never large enough that the founder can be fully satisfied.
That brings me to the third trait which is having a chip on their shoulder and willingness to do whatever it takes to succeed. As Josh Wolfe says, “Chips on shoulders put chips in pockets.” Even with some degree of success, Gigascale Founders still feel like they have something to prove. They choose to sign themselves up for the grind of starting a new company and usually one that’s an order of magnitude more difficult than their previous one.
“Normal” people don’t do this. Most would go party on yachts or find a nice house to comfortably retire. There’s nothing wrong with that, but a Gigascale Founder is not satisfied with comfort. They are builders at heart: founding is just in their blood, they can’t help it.
Big Vision for Big Problems
When you hear a Gigascale Founder talk about the scale of what they’re trying to accomplish, it’s breathtaking and can feel borderline impossible.
Solve climate change (Elon, Kugelmass)
Take on deeply entrenched incumbents like Anthem, United, etc. to build the first vertically-integrated modern healthcare solution (Young)
Reimagine the entire home-building process and make beautiful homes available to everyone (Rivas)
Take on Netflix and Disney to build a new media and entertainment company (Harmon)
Cure human disease (Dabrowski)
Reimagine the modern university (Allred)
Index human knowledge (Gomila)
Build atomically precise manufacturing and machines that can make everything (Holden)
Make humanity a spacefaring civilization (Elon)
These are not easy things to accomplish. In fact, all of these companies tend to fundraise at a slower pace than the “hot” startups in the Valley. This means that there’s a small subset of investors who have the stomach and capital to back them, but for those willing to stick it out and brave the uncertainty, outlier results may await on the other end.
Full-Stack Solutions
Gigascale Founders don’t build wedge products. They build full-stack solutions that are often vertically integrated. A variation of these is what Parker Conrad calls the “compound startup.”
Sana is a great example. A typical Silicon Valley approach is to build a superior, tech-enabled layer that sell to incumbents or distributes existing products. The founders of Sana came from Justworks, where they would partner with healthcare insurance providers like United HealthCare to make it easier for SMBs and startups to offer benefits. But in the end, the plan itself is still United Healthcare’s, making it extremely expensive and with poor customer support.
Instead of just being a better software layer (potential $5-10B outcome), Young is going for the whole enchilada and trying to build a new healthcare insurance company from scratch (potential $100-500B outcome.)
As I thought about Gigascale Founders, I realized these traits were also replicated in some of the most interesting founders outside the Gigafund portfolio (eg: the aforementioned Conrad at Rippling, Palmer Luckey at Anduril, and Brian Armstrong at Coinbase.) They are all thinking on multi-decade timescales which is why they eschew the point solutions or wedge products that are so popular in Silicon Valley.
There’s one big elephant in the room. It’s quite often the case that a previous successful exit, even if small on the venture-scale, has enabled a Gigascale Founder to be financially comfortable enough that they can now take that big swing at massive problems. The failure case may not nearly be as bad as it is for other would-be entrepreneurs.
However, one of the interesting takeaways for young founders is that you should not feel embarrassed about a relatively ‘small’ startup idea, no matter how un-impactful or ‘grand’ it may seem to your peers.
Don’t worry about creating your magnum opus when you’re starting out, just build something you care about existing in the world.
It may turn out to be your life’s work anyway, but the bigger thing is to just start the company and build something.2
Gigascale Founders who are now solving some of humanity’s biggest problems often started off with something very small or companies that were nowhere near ‘venture-backable.’ It was just a problem they wanted to solve. If it didn’t end up working out, there was always a new idea thread to pull on. The uniting factor was an obsession with building products to solve problems, not the social status or trappings of being a founder.
Chase your curiosity instead and build a solution from first principles. If you continue to go down the rabbit hole despite your initial lack of knowledge, it may be a signal that this is something you care about enough to start a company to try and solve it.
I believe the best way to learn is Deconstructive Thinking: focus on the most fundamental layer and slowly add layers of complexity on top of that. Josh Waitzkin uses the example of learning to surf: instead of just jumping on the board, first get your body comfortable in water. I used similar principles in spelling (root words), geography (mental map of the world), and poker (hand ranges).
As a seed-stage investor, the quality of the person you’re investing in outstrips the importance of every other aspect of the underwriting decision. Through sheer osmosis and mentorship from my amazing teammates at Susa as well as the hundreds of pitches I’ve sat in over the past year, I’ve slowly begun to develop a sense of what makes a great founder. Studying the Gigafund portfolio over the past few weeks has crystallized this further into a set of core traits that I believe define the “Gigascale Founder.”3
To reiterate them:
First-principles thinker
Builders at heart
Idea-generative and curious
Chip on their shoulder, previous swings haven’t been home runs
Solving big problems on a multi-decade timescale
Building full-stack solutions, not wedge products
These are the types of folks I want to invest in: they’ll change the world and just happen to deliver amazing returns on the way to doing it.
This was a really fun research project into a fund that gets very little publicity despite the quality of the investors and companies in the portfolio. I hope you enjoyed this article as much as I enjoyed writing it.
And if you’re a Gigascale Founder looking for an investment, reach out to me at pratyush@susaventures.com
My suggestion is to try not to focus on the merit of any individual company or founder within the portfolio. If played well, venture is a power law game and that’s true even within a relatively concentrated portfolio like this. An individual failure does not discount or disprove the quality of the strategy.
The subtle nuance is there’s a difference between being an idea-generative founder who has ideas bursting out of them so they have to start a company or someone who wants to be a founder just to be a founder. The Gigascale Founder is the former, not the latter.
While it was not something I thought about consciously at the time, the three founders I’ve sourced for Susa (Jayce Hafner at FarmRaise and two others yet to be announced) fit many of these traits. It’s clear what my ‘taste’ as an investor is.