PayPal co-founder: Talent, not technology, key to VC investing


Highlights

Nosek helped start PayPal nearly two decades ago with entrepreneurs Elon Musk, Peter Thiel and others.

Successful investing in startups ‘is about the person, not so much about the technology,’ Nosek said.

The most critical ingredient for a successful startup is a talented entrepreneur at the helm, venture capitalist and PayPal co-founder Luke Nosek told Austin technology professionals Wednesday.

“It’s the mistake of putting the technology first instead of the person that has led me to my worst (investment) mistakes,” said Nosek, who helped start PayPal nearly two decades ago with entrepreneurs Elon Musk, Peter Thiel and others and now serves on the board of SpaceX — Musk’s spacecraft manufacturing company.

Nosek, speaking during the Data Center Austin Conference at Austin City Limits Live at the Moody Theater, declined to discuss any of his specific investments that went sour. But he did cite several entrepreneurs that he said possess unique characteristics that have fueled their success.

His list included Musk and Facebook founder Mark Zuckerberg, as well as Satoshi Nakamoto, the anonymous creator of the bitcoin cryptocurrency whom some tech-sector observers believe could be more than a single person.

Nosek credited the shadowy Nakamoto mainly for an “ability to keep his mouth shut,” whereas most people desire credit for accomplishments and the limelight.

The anonymity “allowed bitcoin to spread under the wire while its regulatory clarity was very, very murky,” Nosek said. “It allowed it to grow very, very big. I think if he had done it any way that was more centralized, I don’t think it could have worked as well.”

Musk’s talents include the ability “to think independently from first engineering principles,” Nosek said, as well as the perseverance “to take a lot of no’s and a lot of derision” while building SpaceX amid the staid, government-centric aerospace industry.

Nosek, as a co-founder and partner at Silicon Valley venture firm Founders Fund, led investments in SpaceX. He recently left Founders Fund to start a new investment company called Gigafund that reportedly will help SpaceX raise capital, although he didn’t discuss the move Wednesday.

“Now, (Musk) has a company that is flying reusable rockets” after years of work, Nosek said. “But we just got that breakthrough” in March, when a SpaceX rocket was successfully relaunched after it had been used on a previous spaceflight and then landed vertically.

“That was once of the most special days of the year” because it has been a central goal of the company, Nosek said.

As for Zuckerberg, Nosek said his talent involves product innovation and the ability to zero in on what consumers most want.

He noted that the technology to operate social networks previously existed, but Facebook caught on while competing efforts fell by the wayside.

“The basic ideas were all there” before Facebook, Nosek said. But Zuckerberg “figured out the design (and) he figured out the product, and then we had social networking” take off.

Successful investing in startups “is about the person, not so much about the technology,” he said.



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