Dave McClure and Aman Verjee on Angel Investing at Scale, 500 Startups, and Practical VC

**CJ Gustafson** (0:00)
What do you think about the evolution of the accelerator ecosystem?

**Dave McClure** (0:05)
We were already doing 400 companies a year in 2014 At the time, people just thought it was fucking insane. That was just a scale that nobody had ever done before. PayPal was a great place to sort of formulate your ideas, argue, present your ideas. I worked for David Sacks for a little bit when I was there, and the red pen of David Sacks was a notorious thing inside the product groups, where you would present something to him, he would like mark it up literally with a red pen.

**Aman Verjee** (0:31)
PayPal was founded in 1998, went public in 2002 That IPO was 800 million, if I remember right, I think it traded up to a billion at the end of day one. eBay bought for 1.5 billion. So PayPal is a $50 billion company today.

**CJ Gustafson** (0:44)
You don't want to get into angel investing and make two investments. 30 would be better.

**Dave McClure** (0:48)
You know what the difference between a startup with a bunch of Stanford graduates and then fail after three years, and then this other startup run by a bunch of drug dealers? Nothing. They're both failures.

**CJ Gustafson** (1:00)
Is this thing on?

**Dave McClure** (1:03)
Yesterday's price is not today's price.

**CJ Gustafson** (1:15)
Welcome back to Run the Numbers, the show where I'm on take two because I forgot what the show is called. My name's CJ, I'm a tech CFO, and I interview the best finance leaders in the world as well as the investors who fund them. This is a special one. There are three men in the booth. I interviewed Dave McClure and Aman Verjee. They are both the managing partners and founders of Practical VC, but both of them, before that, were part of the PayPal mafia. Yes, they help scale and sell PayPal to eBay, working for the likes of Peter Thiel, Elon Musk, and David Sacks. From 2008 to 2010, Dave was a VC at Founders Fund with Peter Thiel and Sean Parker. He made seed investments in 42 companies, resulting in five unicorns, four IPOs, and he led the seed round in Credit Karma. The 3 million portfolio that he managed there returned 200 million or 60X in 10 years, arguably the best venture fund of all time. That includes Twilio, Sendgrid, Lyft, Credit Karma, and Life360. He takes us through the history of starting that, and what it's done within the tech ecosystem. Some of the companies it's invested in and how it's changed the game when it comes to the volume of tracks incubators like Y Combinator and others are writing. We also talk about the history of the secondary market and how that is more. So Dave and Aman have shifted from the earlier stage where you're writing kind of small tracks to the later stage, secondary buyout space where they are taking stakes the second time around as well as buying management stakes in VCs that have had funds that have aged a bit. This is a fun one because it's not often you get to talk to someone who has both started something at one end of the barbell and started something at the other solving problems that they were uniquely qualified to fix. So all this and much more, come out next.
Dave and Aman, thank you so much for joining me on the podcast.

**Dave McClure** (3:02)
Thanks for having us.

**Aman Verjee** (3:03)
Thanks for having us.

**CJ Gustafson** (3:04)
So I had Aman on to talk about his book on financial bubbles. And that was awesome because I'm such a history dork and I am terminally online. I'm always reading about tech and such. Dave, I've been following your blog 500 Hats, which has been around for at least I think going on two decades now.

**Dave McClure** (3:21)
I used to do a lot more writing, but I'm glad you read some of my old and busted blog posts.

**CJ Gustafson** (3:27)
Well, maybe just to start there because I now find myself in the business of creating content online. I started off with writing the newsletter Mostly Metrics, and I think you either die as a newsletter or live long enough to become a podcast. Can you just speak to maybe the power of distribution and what having that blog provided for you in your career?

**Dave McClure** (3:45)
Originally, I had a blogger blog, and then I had a Typad blog, and then I went to Medium. I started listening to people like Brad Feld and Fred Wilson. I guess when I first started, it was more writing about nerdy stuff. I had been working at PayPal with Aman 25 years ago. My title was Director of Marketing. I actually changed that to Director of Geek Marketing, but I was doing developer platforms, evangelism, that kind of stuff for PayPal. Basically, telling people how to write 10 lines of HTML to be able to accept credit card payments on their website. So a lot of that outreach in the folks that was originally developers, software developers and eBay merchants and other people who are selling stuff online. I gradually started talking more about tech topics and venture capital topics, which was one of my passions. But I was writing from an engineer, founder, a little bit from a marketing perspective. I guess there was an audience for that set of stuff. I don't know if you're a friend of Techmeme, but I've pretty much been a regular reader of Techmeme since the day it started. Used to hang out at Mike Arrington's office with Gabe Rivera and the people that started a lot of this stuff, so I got to actually talk to them. Long story short, I got on a path of writing on a more regular basis. This was 2004, 5, 6, maybe timeframe, something like that, talking about metrics for pirates. Eventually, that led to getting a job offer by Sean Parker from Founders Fund. That wasn't the only reason, but one of the reasons that I got that job, but also got access to a fair amount of deal flow from people who would read my crazy shit.