Jason Calacanis: Intelligent Risk [The Knowledge Project Ep. #81]

Angel investor Jason Calacanis talks high stakes poker, how to make intelligent investing decisions, how systems enable or forbid, and demystifies the culture of Silicon Valley.

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Today on The Knowledge Project, I’m talking with Jason Calacanis (@Jason), tech entrepreneur, angel investor, and host of the popular podcast This Week in Startups.

Jason has invested in some of the fastest growing companies that came out of Silicon Valley including Uber, Wealthfront, Calm, and many more.

In today’s discussion, Jason covers what it’s like to play high stakes poker, and how knowing your risk and knowing your odds transfers to angel investing. He discusses the traits that he looks for in founders prior to making an investment, and why the people you’re investing in are every bit as important as the product.

Jason gives great advice about how to build up a skill set that’s unique to you in order to achieve the outcome you desire. He also pulls back the curtain on the start-up world, how it has changed, and what it might look like down the road.

Here are a few highlights from our conversation:

I have to read people, I have to take risks, I’ve got to take intelligent risks, and I only make money if I’m taking risks on a very consistent basis, right?

Poker is all about having an edge. And then you’re at that table, you’re looking at the other players saying, “Which two players are better than me, which three players am I better than, and which three players are as good as me.”

Angel investing is about playing a game where the implied odds are beyond what exists in the normal world. So then you have to re-configure your brain and your brain chemistry because you can withstand 50 losses, a hundred losses, and make up for it with the 101st that pays off 200 to one.

There’s a correlation behind your effort, skill set, and your outcomes. And so if you put in more effort and you gain more skills, you will have a better outcome. That’s it. So if you love what you’re doing, work hard.

I always thought, I’m a kid from Brooklyn. I had it hard, I know what it’s about. I had to grind my way here. And there’s people who had to grind a lot further than I do to get here. And so I had to kind of rethink my own version of this and, I matured on the issue I would think, I evolved on the issue.

I think a lot of my success is the network I had built, the location I was in, and the timing starting at the bottom. It’ll be very interesting to see what the cohort of investments I did in the last five years when I was a better investor I think, with better knowledge, compared to the first five years when I was a neophyte, but the timing was better because the market was on the floor.

I think what you have to do is look into the eyes of the founder and determine if they are going to give up or not. And look at the product and talk to the customers and say, “Hey, do these customers actually love and use this product?” And that takes work and that takes skill.

I really think the democratization of capital — the ability for my parents, or my mom who probably had insights as a nurse practitioner on what companies to invest in but would never have been allowed to, she could have actually placed bets. The pace of innovation, the democratization of private company investing I think, is the trend of the second half of my lifetime.

Ultimately you’re betting on the person’s ability to not quit. That is the number one killer of startups, is people quitting. If you are betting on somebody to take on a major, majorly difficult task, the number one killer is that they give up.

Listen and Learn

Transcript

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