Keith Rabois dishes on his shocking return to Khosla Ventures, after leaving the agency in 2019 for Founders Fund

Earlier right this moment, Forbes reported that enterprise capitalist, operator and entrepreneur Keith Rabois is returning to Khosla Ventures (“KV”), the Silicon Valley outfit the place he reduce his tooth as a full-time VC earlier than becoming a member of Founders Fund (“FF”) in 2019, teaming up with former Stanford classmate Peter Thiel within the course of.

The transfer got here as a shock to trade watchers – together with this one. I spoke with Rabois in October about working for Founders Fund in Miami, the place he moved in the course of the pandemic and likewise oversees a startup known as OpenStore that he co-founded in 2021.

After we’d talked final, Rabois sounded content material the place he was. Right now, he mentioned the choice to modify groups was very latest, stemming from a dialogue together with his former Khosla Ventures’ colleague Samir Kaul in regards to the attainable deserves and pitfalls of beginning his personal fund; Rabois says that chat shortly become dinner with agency founder Vinod Khosla, who individually introduced right this moment that he’s “thrilled” about Rabois’ return.

To be taught extra, I hopped on a Zoom with Rabois this afternoon; extra from that back-and-forth follows, edited calmly for size and readability.

Congrats on the transfer, although It was by no means crystal clear why you left Khosla Ventures within the first place after spending six years there.

The true purpose is de facto easy. I hated coming down from SF to Sand Hill Highway, and KV on the time — this clearly was pre COVID — had a really robust in-person, one-office tradition and it was fairly demanding from the highest down that individuals must be within the workplace at the least three or 4 days. And I simply felt that the way forward for enterprise was extra distributed.

I keep in mind speaking to Sam Altman in regards to the professionals and cons of leaving KV for Founders Fund, which was in San Francisco; I used to be like, ‘Am I crazy to factor in this geographic commute stuff?’ And he was like, ‘Look, every single study on human happiness suggests the single best predictor is inverse correlation to commute time, and you’re human, and also you shouldn’t be shy about that.’

I’m tempted to consider you, however I additionally simply heard ‘demanding from the top down.’ Vinod Khosla is an enormous persona. I ponder if that performed a job in why you left initially.

For people who find themselves allergic to big-personality, successful-founder sorts. I don’t assume both KV or FF could be one of the best. [Khosla and Thiel are] in some methods very related. I gave this presentation truly on the [Khosla Ventures] Summit final 12 months. They invited me to talk, and the presentation was in regards to the 5 form of bosses I’ve had in my profession. And it’s like: Vinod, Peter, Reid Hoffman, Max Levchin, and Jack Dorsey. So I’ve made it via 23 years, working with strong-willed visionary founder sorts; each corporations have that trait.

Relating to your return, was it an element that Founders Fund reduce the dimensions of its latest fund, whereas KV simply closed on $3.1 billion?

Positively not. If something, I used to be an especially constructive proponent of chopping the Founders Fund [vehicle].

We talked in October about this. You thought it was a sensible adjustment to the market.  However then what do you make of KV shifting in the other way?

Crafting a fund technique — sizing the fund — is a sophisticated animal in and of itself.There’s a perfect dimension for various phases of investing to generate significant returns, after which there’s a group composition. Like, what number of investments are you able to make and the way a lot cash, and that may be a perform of what number of nice traders you’ve on the group. So it’s a must to take into consideration all these variables. There’s not a easy formulation.

My perspective at Founders Fund was that $900 million was the biggest model of a enterprise fund that I assumed made sense for our technique and our group. You might also have observed that FF didn’t alter the dimensions of the expansion fund, whereas the KV {dollars} could look comparable, however they’re allotted in a different way. There’s a $500 million seed fund, then a $1.6 billion enterprise fund, then a $1 billion alternative fund.

How else do the corporations differ? You made an attention-grabbing comment to The Data. You mentioned Founders Fund offers capital and is joyful to assist when requested, which could be very totally different from a mentorship mannequin, which has been your forte. That doesn’t sound like a ringing endorsement for Founders Fund, or do you assume it’s only a higher agency for established founders who want much less hand-holding?

I didn’t imply it that means. There’s an excessive amount of capital, there are too many enterprise corporations, it’s hyper aggressive. There’s no method to drive important returns except you’ve differentiation, and I feel it’s a must to differentiate as an individual. So the way in which I differentiate is I personally aspire to extend the chances of success for any founder and any firm I work with. That’s my objective after I get up within the morning: how do I make this firm extra profitable? Different folks have been very profitable in enterprise with a distinct mannequin. Founders Fund, for instance, has been extremely profitable through the years with at the least a considerably totally different mannequin. I feel at Founders Fund, every accomplice has a considerably totally different perspective on how [to help companies win].

Is there a method to make the variations between the corporations clearer?

I’d say Founders Fund and KV are possibly nearer on a plotted line than most others, and I feel I made that time in 2019. I feel KV prides itself on its technical acumen. Many signature KV investments are hardcore expertise investing, which is one thing I recognize. It’s not my comparative benefit, however I loved six years of studying . . .and I’m excited to be taught extra. I feel it’s uncommon in enterprise to have a talented institutional fund that’s deeply technical.

You might be staying in Miami. Will you develop KV’s footprint there? 

I’m thrilled to be in Miami. I feel the way forward for America goes to be based mostly in Miami. I’m excited that KV’s going to be opening an workplace in Miami and including to the funds that have already got a big presence right here, together with Founders Fund, in order that makes me extraordinarily joyful. 

I will likely be commuting  to the Bay Space on common one week a month. I’ve a big variety of board commitments within the Bay Space so I’ve truly been touring to the Bay Space as soon as each six weeks [meaning] I don’t assume issues will likely be dramatically totally different. However I’ll attend accomplice conferences in individual. Associate conferences at KV are fairly important to the way in which that agency operates.

[As for recruiting], I don’t know. The very first thing I’m going to do is get fairly immersed with KV.

Vinod just lately mentioned one thing about by no means desirous to retire. However let’s say that adjustments 15 years from now. Do you assume you’d be his chosen successor?

I do not know. I imply, put it this fashion: It’s fairly irrelevant as a result of I’m fairly certain Vinod needs to be doing what he’s doing without end. He loves what he does. He’s extraordinarily devoted to his craft and what he does. He units a terrific instance for the remainder of the agency by that stage of dedication.