Continuous Improvement: How to 10x Your LP and VC Processes

With Jason Calacanis,
Founder, LAUNCH
This week on Swimming with Allocators, Earnest and Alexa welcome Jason Calacanis, founder of LAUNCH and host of This Week in Startups and The All-In Podcast. Known for his early angel investments, Jason also is an active LP. He shares his framework for selecting funds, focusing on deal flow, decision-making, and doubling down on successful investments. Jason gives examples of how his role as LP has informed his own fund strategy. He describes how he’s approaching the marketing of his own fund, considering smaller annual funds, to avoid exhaustive roadshows and make capital-raising more fluid. He stresses his commitment to continuous improvement, particularly in operations, aiming to make the LAUNCH fund's process 10% better every quarter to maximize returns. We also hear from industry expert Hugh Barran, a head hunter for venture, who provides advice to those interested in breaking into VC.

Highlights from this week’s conversation include:

  • Jason’s background as an LP (0:27)
  • Learning as an LP (3:00)
  • Deal Flow and Decision Making (4:54)
  • LP Archetype and Relationship Building (9:07)
  • Venture Investment Strategy (10:55)
  • Communication and Strategy (14:48)
  • Different Investor Preferences (16:25)
  • Predatory Behavior in Acquisitions (18:49)
  • Insider Segment: Advice for Entering the Venture Capital Industry (23:53)
  • The Future of Venture Capital (26:40)
  • Jason’s Fund Strategy (30:39)
  • Defining Success and Legacy (32:45)
  • Early Success and Process (35:14)
  • The Future of Startups (40:31)
  • LPs and GPs Relationship (43:10)
  • Jason’s Philosophy on Success (46:44)
  • Jason’s Process and Parting Advice (49:29)


Jason Calacanis is an American Internet entrepreneur, angel investor, and podcaster known for his keen insights into the tech startup ecosystem. With a net worth of approximately $100 million, he invests in over 100 startups annually through Calacanis also educates aspiring founders at Founder University and hosts the popular podcasts “All in Podcast” and “This Week in Startups.” His notable investments include Uber and Robinhood.

Armstrong International is a specialist financial services executive search firm with 30 years’​ experience across Public and Private Markets. Our consultants possess deep subject matter expertise within; Fixed Income, Equities, Private Equity, Private Debt, Digital (Data Science & Technology), Private Wealth, Corporate Finance, Real Estate, Infrastructure, Emerging Markets, Credit, FX, Emerging Markets & Commodities We are trusted by some of the world’s leading financial institutions, who use us for 3 primary reasons: industry expertise, speed of hire, and ease of doing business. We like to innovate and have been at the forefront of some of the most profitable and exciting changes in the industry, including the technology revolution and the ever-expanding world of Private Markets.

Swimming with Allocators is a podcast that dives into the intriguing world of Venture Capital from an LP (Limited Partner) perspective. Hosts Alexa Binns and Earnest Sweat are seasoned professionals who have donned various hats in the VC ecosystem. Each episode, we explore where the future opportunities lie in the VC landscape with insights from top LPs on their investment strategies and industry experts shedding light on emerging trends and technologies. 

The information provided on this podcast does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this podcast are for general informational purposes only.


Alexa Binns 00:12
Today our guest needs little introduction, Jason Calacanis, an investor, entrepreneur and co-host of the All-In Podcast and This Week in Startups. Better podcast, angel investment. Yeah, yeah. Podcast. This is the podcast on podcasts. Yeah. Jason, you’re most known for your angel investments and VC investments. But today we’re having you on specifically as an LP. He’s on LP checks into 25 some funds. Additionally, a media and marketing guru, Jason is going to chat with us today about the approach to his own fundraise and marketing of his VC fund. Thank you for doing this. Jason. My pleasure.

Jason Calacanis 00:54
It’s great to be here.

Alexa Binns 00:55
Starting out with the LP perspective, when your LP hat, could you share this first story of your first LP? Who did you back in? Why?

Jason Calacanis 01:04
Wow. So I have been lucky enough being in Silicon Valley to be offered to be in some of the big brand name funds that are out here. And so some of those funds will have programs for founders or early stage investors, maybe they want to build a relationship with. So I was invited into a bunch of those sort of well known funds, and would put small amounts of money. And typically, when you get invited to them, in these kind of like side cars for founders or influencer ish, you know, early stage angels, it’s a small amount of money, maybe they have 25k 50k 100k available to you to put into them. And then I started looking at, you know, funds, like, you know, by first time funds by friends of mine, etc, and putting small checks into those, again, 2550 100k, I think, exactly 24 or 25. Right now, I think your numbers are correct. And four of them are my funds, watch button, 123, and four. And the other ones, I’m probably eight or nine managers across, you know, you know, two or three funds each now. And so roll from superhuman, you might know, he started his own little fund, I had backed his first company, he has a partner, Todd, who they got together with, they started a fund such as you know, put a small amount, and I’m gonna put 50 or 100k into that fund. And it’s just a way for me to build relationships in the ecosystem and learn about being an LP. So I would be lying if I said, I understood all this, I thought the best way to do it is with real money to learn. And I’ve come up with my own framework for selecting one LP a year, I get invited to maybe 50 funds a year, and I don’t spend too much time on it. But I try to look at, you know, a small subset of criteria. And in a way I’m doing that. And J She got the domain name, I started trading some public equities publicly on This Week in Startups, because I was also faced with, Okay, well, you’ve now been given shares of Robin Hood, desktop metal, Uber, or, you know, square DoorDash, when when I’m LPs and companies, what do I do with those shares? Well, I need to learn when to exit a public company, what percentage to exit when they’re overvalued, when they’re fully valued, if there’s other opportunities for me. And so all of this is kind of heading into now that I’m in my 50s, which is really crazy to say, like running my family office. And so I don’t want to hire somebody to run the family office, I want to understand the entire lifecycle of investments. So I fully understand seed investing and series A investing. I’m learning public market equities by doing it, and have really had a good run. And you know, I have gotten my ass kicked on a couple of bats, we can get into that. And then also learning how to be an LP and funds and, and I don’t have too much going on in real estate other than residences that my family and I can enjoy. Like, we have a ski house and we have a primary residence, get an office space. So you know, we have three properties there. So you know, it’s just when you get to a certain amount of wealth and resources, I think you need to understand each of these and be an LP. And being a GP, you really get to understand the lifecycle they read.

Earnest Sweat 04:27
Jason, how has your criteria changed over time, as you’ve learned more about being an LP in different funds? Yeah.

Jason Calacanis 04:35
So I think at the core, your deal flow is supercritical. Your decision making is super critical, and your ability to double down on winning investments super critical. So those are the three Ds. There is also being able to fight to get an allocation into a company right competing. I have been very lucky in my career because of the podcasts. If I have too much deal flow, then you know, and that’s like a different type of struggle, we have too much deal flow, because then you’re missing things. And in my email box are countless emails from the last 1012 years of people who pitched me and then reply when they go public. And so you never got back to me. But we went public. And I’m like, Well done, played the long game. And so you know, but new funds, like my friend, Sophia Amorosa, have her trust fund and small LPS in there. Put 25-50k . Maybe it’s only a $5 million fund. And so, you know, she has distribution already, because she has a best selling book girl boss, she did these girl boss rallies, she’s got a following on social media. So deal flow, you know, is already done for her. So then my question to her with her fund trust fund is, okay, tell me about your decision making process. Tell me about your doubling down process. And so those are the three things that I think really matter if your deal flow is basically the denominator and on top of which you have, you know, the companies you actually invest in, if you know, we have I think we’re trending, right around 20,000 applications for funding a year from our fund, we’ve actually stopped asking for applications because we were actually having a hard time getting back to founders, which I, you know, take seriously, and we need more people, we have 21 people at launch. And you can just go to To apply for funding, we try to take all those seriously. You know, sometimes people send us pizzerias, or movies or albums, we can very quickly let them know, Hey, we don’t invest in that space. And we can point them to resources. But you know, you do want to be thoughtful. And so we have a decision making criteria, we came up with 13 reasons to invest in companies 25 red flags. So I’ve built this internally. But by being an LP and other people’s funds, I can say, hey, tell me about your deal flow. Tell me about your decision making and tell me about your doubling down strategy. And then I’m learning from them. Because deal flow, we’ve got decision making, we’ve got done and I just finished in our firm, our philosophy around doubling down. And so then that gives me the ability to hear if people have other ideas, how are they doing the doubling down strategy? What did they keep in reserves? How do they pick which companies in their portfolio to give additional funding to? And how do they say no to people? And so it’s almost like when you’re an LP, it’s a bit of a hack, I get to have people explain to me how they’re solving a problem that I’m also facing right? Now, we don’t have also the issue of competition, when you’re a seed stage investor, there’s typically 2030 names and each round, and there might be two rounds before the Series A, you put that together with overlap, there might be 30 slots on the bus, so to speak, it’s like literally a bus pulls up, and you can get it in the seed round. Now, when you get to the Series A, it’s a two seater score event, you know, the Corvette pulls up, the founder is in the driver’s seat, and then one VC gets in and does the series A and they zip off and they go fast. But it’s generally a bus, right? You know, everybody who gets on the bus pays for their ticket, the tickets 25 to 250k. When you get in that Corvette or the Ferrari, and there’s one seat available, that’s a five $10 million series A ticket size, and that person wants to take the whole round. And so you don’t want to have to worry about competition in these early stage funds, you do have to worry about it in the series A when it gets really chippy. And one person leads and they block everybody, they may even ask all this series, seed investors in the pre seed investors to waive their pro rata so they can get more of the company. And so you know, they’ll ask for rights to be taken away from hard earned rights by those seed stage investors, where they’ll say we’ll just pull the term sheet. Yeah, so you know, those are the four criteria, deal flow decision making, doubling down and competing for deals. So 3d is interesting. You

Earnest Sweat 08:47
Now, you’re kind of described, kind of, like your archetype as an LP is one in which you get to do the learning and actively learn and kind of code. Yeah, collaboration is still the best idea. Are there other aspects of your archetype? Do you feel like you will win? Nick helps the funds that you do. Are you more passive?

Jason Calacanis 09:07
Yeah. I mean, that’s a great question. By the way, there are different LP types, some of them are in it for the action, and they want to know every investment and they want to sweat, you know, each hand. So you know, if somebody backs you in a poker tournament, they call that staking. Now I will stake somebody in a poker tournament, and like, I’ve been lucky enough to stake my friend, Phil Hellmuth. And what he’ll do is he’ll have the people who he’d let stake him in a little group chat, and he’ll just tell you a couple of the hands or he’ll point you to a website where somebody broke a couple of the hands. So you get this like really cool sweat, which is like why people might bet on football, right? They make the game more exciting, even if the game is, you know, a blowout, you might still be betting on individual players’ performance or the over under your all kinds of action. So when it comes to venture firms, I’m not in it for the action. I’m in it for the relationship. I want to build a relationship with that person want to talk to them about the industry writ large, and LoRa Usually, if I double my money, then I’m like, Okay, I put in 25k or 50k, back 10 years later, that’s what would have happened in the stock market, that’s totally fine. It’s like a little, I call them wealth bombs. You bury some kimchi in a clay pot, you know, you bury some cabbage with some hot sauce in a clay pot, you come back, it’s kimchi, and it’s delicious. And you just pound it. And sometimes you go back, and it’s a really big pot of kimchi, and it went 20x Ray, and you got this, like a giant bowl of it. So it’s considerably these little wealth bombs, and I don’t sweat it too much. If I were to lose half my money, you know, 100k LP commit, and I lost 50. And then the next fund I’ve had, like two funds that have been 10x and 20x, like that 20x makes up for I’m already at breakeven, first of all my funds. So you know, if you have access to these funds, and you have a tenure arc, you can kind of like, maybe not worry too much, especially if you’re doing it overtime, and I’ve been doing it overtime, and maybe one a year. So I do get a little bit and then I have some people re-up. So you get a little time, you know, balancing over it, what’s the word for it? Anyway, you’re investing over time. So you would maybe lose money on, you know, or have less returns during peak ZURB era 2020 2021 Those people might have deployed capital at the peak of the market. Now people are deploying at the bottom 2010 1112 They were deploying at the bottom of the market. So you do want to have that time dispersion of the bets as well. Yeah, so to answer your question, I don’t try to sweat it. And I just love the idea that I can talk to them, or they can send me a deal flow and say, Hey, this is our best performing combination. Although that really hasn’t happened. So that part of my thesis that the GPS will proactively send me to a great company, actually hasn’t happened. So I have a system for doing that with my GP, my LPs, I create a Google Sheet, anybody who has over a $1 million ticket size in the fund, I give access to that Google Sheet. And then we update the Google Sheet every month. And it just says we invested in this company this month, convertible notes safe. This valuation, this amount of money, went through founder University, the launch accelerator, or it was a direct investment. And then they can click on the link. And then I’m adding a one simple sentence description from us. And then I’m adding another column which will be have they raised follow on funding since we did our investment, because that is a criteria that you get judged on as a fund manager is, especially seed stage one, the way to determine early on how they’re doing is just to say, Okay, you did 100 investments and fund one. How many of them got to series? A? How many got to Series B? How many got to Series C? How many made it public? So there are people who look at that criteria, and I’ve gotten hyper focused on that. And I have new systems in place to increase that because it is a statistic. And it’s a statistic for a reason. It’s an early warning for a reason. If the company doesn’t get future funding from a notable person. How’s it going IPO? In 100% of cases if somebody IPO they probably had a notable series A or Series B. So the whole concept of being a great capital allocator is constantly learning, constantly examining your decision making, constantly increasing your understanding of the game on the field. And if you look at basketball, you look at poker and other games. You know, Steph Curry comes into the league, and the league changes right. Steph Curry has this incredible game at Madison Square Garden where he hits like 11 or 12 three pointers and people are like wait a second. That’s 50% more points than he should have gotten when Patrick Ewing. Did you know a lot of shots he got 24 points. But he had 12 shots and he got 36 points. How’s that possible? You get 1515 you get rewarded 50% More by shooting five feet behind Patrick Ewing’s you know mid range floater or jumper you know we would do that little risk flick. Patreon was a basketball player for the Knicks. Putting that aside since you guys are gone. Number one, Shaquille O’Neal came into the league and you had this dominant center. It was the era of centers so you had Kim Olajuwon, Shaquille O’Neal, Patrick Ewing, you know, Tim Duncan, you just had a different era, right? And the same thing happened in poker. People used to play by reading people, people used to play Super aggressive, they used to play GTO game theory optimally. There’s all types of things that change in the system. So I like to stay on top of that. And I like to really study it to be better at what I do every day.

Alexa Binns 14:29
I love the example you gave of how to have co investments actually, how to actually invite your GPS in a more fluid way into the deals that you’ve got inside information. Are there any other examples from your experience as an LP that have informed your strategy?

Jason Calacanis 14:47
Yeah, I mean, the communication level is a really interesting one. I don’t need to get a quarterly update on every investment and the markup and the DPI and The TVP I on all this stuff, because at the end of the day, I care about cash in cash out. And I understand the power law. But there are other LPs who are like them, especially when you’re doing a 506 C like I do, we have to kind of a lot of people who are investing with us as their first time venture. And I’m trying to democratize venture capital a bit. I think that’s one of my core theories that maybe people don’t agree with. But as an emerging fund manager, man, when I said we were doing a 506, C, and I mentioned it on all in, this week, in startups, we got 110 100 and $20 million in interest, you can only capture 10 million of that from accredited investors. So that’s kind of a bummer. If it wasn’t, I would have raised my fund in literally a week. I do think that will be the future, there are people trying to change the laws to increase the number of accredited investors or have a path for people to become a sophisticated investor through taking a test. But you know, here in the United States, the SEC has got to approve all that. And so it’s going to be a slog. But you know, I do think about, well, maybe we need to have two groups, two mailing lists. This one is for people who want a quarterly and this one is for people who want a yearly audit. In venture, I get a yearly audit, from these top venture firms. That’s it. It’s like a very sort of mellow, buttoned up yearly cadence. But you know, I have people who, you know, they’re only putting in 50k. And they’re like, how are we doing? Like, it’s kind of like the chef, you ordered, like a $50 steak. And the chef is like, yeah, I put the butter in the pan. I’m like, Okay, how’s the steak taste? I’m like, we’re gonna find out. Then I’m like, see, the butter is turning brown. Now we’re gonna put the stake in it. But this day, it was added to taste. I said, wait for it. But a little salt on it, you know, then I flip it over, and then I put it on the rack. And I said, he’s got to sit for 10 minutes, you know? And they’re like, Okay, but how does it taste? And I’m like, well find out in 10 minutes. And then in 30 minutes, we cut the steak and you take a bite, and we figure out how we’re doing here with the steak. So you know, I’m okay with that. I just think different people want a different cadence. If I were to send quarterly updates to some folks, they’d be like, Thanks, but I’m not going to read it. I’m not into it. So, you know, I like the idea of, you know, if anybody asks a question, I just send them a link to that Google Sheet. And say, click on the links. And if you think it’s an interesting company, you can contact them and say, I’m an LP and Jake house fund. And he shares his investments with us. And I saw you’re doing something interesting in AI. And in Hollywood, I work at Disney, I was wondering if you would be open to taking a meeting. And I just tell them, like, just represent us well as an LP. Like, don’t, don’t call them and say like, Hey, do you need a real estate broker? Like, it would be lame, but you know, don’t email every single one of them and be like, I’m point 1% of LAUNCH Fund for, I’d like to have a meeting like, you don’t want to waste the founders time. So generally, I try to trust that people understand how to be good people in the world as LPs and trust them. I get disappointed one in 100 times, like I’ve had one and 100 of people in our Syndicate, we have a syndicate the, we were the first syndicate on AngelList, we did the largest deal ever return deal on AngelList My first deal. And, you know, it’s amazing to me that somebody will like you didn’t send an update and the company went out of business. And we told you 90% go out of business don’t play in this part of the market. If you can’t deal with nine out of 10 of your investments going to zero, you should be investing in companies that are 20 years old. Let’s just put your money into an index fund. If you want to not have to deal with zeros, like an index fund doesn’t go to zero. I don’t know that QQ Q or, you know, any of these Vanguard funds are going to zero anytime. So be there get your 456 7% a year, or bonds or maybe or a REIT, I don’t know what the devices are that don’t go to zero because they have some core value. But in order to have a 200x 500x 1,000x power law potential, you have to deal with a lot of zeros. And, you know, just grow up and deal with that. It’s really hard for some groups of people to lose poorly. And I don’t have a problem losing. The only thing is when people try to subvert the sale like we’ve had that happen a bunch with Aqua hires, so what we’ll see an aqua hire, this happened I think with Zuckerberg a lot Chris Sacca called Zuckerberg on and he would buy companies put all the value into the stock equity plans for the two founders, and then screw the investors. And Chris, aka call them out on it publicly, you will find that I call them out publicly on that. And obviously he’s like, I bought Instagram and WhatsApp for large numbers. So I think he changed that immature behavior to predatory behavior, but I still see predatory behavior like that occur to this day, where we’ll have an aqua hire situation and you’re like, okay, the investors are getting their money back or they’re getting half their money back or their money. Any back plus some interest. And then there’s billions of dollars occurring in other payments. And wait a second, what’s going on here?

Alexa Binns 20:08
Like signing bonuses? Yeah, yeah. And

Jason Calacanis 20:11
so we’ve gotten better at that, that tweaks me a little bit only because it’s not going to affect me as a GP, because these, by definition, are not big deals. So we only make money on powerwall deals. But I just don’t like my LPS getting screwed. That really tweaks me a little bit. Especially when people do it knowingly, sometimes it’s not even the founders doing. It’s the acquirer and the wires, like screw the investors, we only care about the people we have to deal with going forward, which is the employees. So we just let’s put 95% of the value in the employee packages, and fuck these investors. And that really, is not cool. But I have a technique. I just call the CEO of the company and say, hey, this doesn’t feel fair. And I have a bad feeling about your company. And so if you do unfair things, when people say your company to me, I’m going to say, I think that this is unfair, we had a bad experience with that firm. If you’re okay with that, then be predatory. But I will not have a problem when your name comes up. I’m not gonna like to tweet like this person is terrible. But there’s somebody who asked me about Acme Corporation. I will say, Yeah, we had a terrible experience with Acme Corporation, they tried to screw us. And if they want to double click on it, I’ll explain exactly what happened. And 100% of the time, people are like, Yeah, we don’t want you to have that experience. Let’s be fair to your LPs. And I just want fairness. But, you know, in our industry, you could be a bad actor, over and over and over again, and still find people to back you. So it is the nature of the business. And Hollywood has a similar kind of vibe, where people can be bad actors, but if they make money or they have a good deal, you know, who’s the guy Mel Gibson who, like, had all these, like bad things occur where he, you know, said horrible things. And then people were like, Wait, how much money? Did they pass on the price? Oh, those make a lot of money? Yeah, sure. Well, let’s go, you know, or, or, you know, Adam Newman from WeWork. It’s like, Oh, what happened? You screwed up masa, you took 2 billion out of the business, everybody else, the employees got nothing. You got a $2 billion payout, you screwed all your employees, they got zero for working for you all these years. And then Andreessen Horowitz was like, Yeah, but you’re crazy. Here’s another 500 million, right? It doesn’t matter, like, so you could have like the SEC could find you. I mean, this is the nature of venture capital, people who are investors, if they think there’s a return to be made, they will literally push their grandmother down a flight of stairs. And, you know, send her to the emergency room to get an allocation. It’s really weird because I tried to be principled about these things. And I would never throw my grandmother identified by men, so about half the people I met would literally throw their grandma down a flight of stairs to get to a deal.

Alexa Binns 22:55
One of my favorite early morning radio pranks was that the radio station would have people call their grandma. And all they could say is grandma hang up? And if she did, they got like a car. Oh,

Jason Calacanis 23:09
Well, Grandma started hanging out. They’ll just stay with you. But

Alexa Binns 23:12
if you call your grandma and you say grandma, hang up on what’s

Jason Calacanis 23:18
gonna happen? Where are you? Bringing your cousin, the police officer, in bagels? We’re gonna make sure you’re okay. What did you need? I’m calling an ambulance. You know, they know how to grab the phone. Nicely. Oh, that’s their best feature.

Earnest Sweat 23:33
Now we’re gonna take a quick break to speak with our sponsor. On

Alexa Binns 23:37
The show today has industry expert and sponsor Hugh Baron, who runs the venture capital practice at a global executive search firm. Armstrong International. Thank you for partnering on the show. Any advice for folks looking to work in venture?

Hugh Barran 23:53
Yeah, sure. So I would, you know, from, from, from the people I speak to, you know, and what I would, you know, I think if you are currently in banking, currently at a startup, whatever, whatever it might be, I think at the end of the day, you know, venture firms invest in technology, you know, most of that most of that technology is software based. So if you can find, and it’s about being authentic, and I think that’s, that’s when I speak to VCs and hiring for VCs on the investment side is, you know, authenticating curiosity, you know, so what have you, what do you do outside of your day to day that shows that you’re passionate about X, Y, or Zed because that’s venture at the end of the day. It’s a 24/7 all consuming industry and if you don’t love it, there are easier ways to make money. That’s why I say to everybody so you know, if you’re if you’re two years into Goldman, you’re three years in consulting or your whatever startup just I would say pick two areas. It can be food tech, crypto, AI, deep tech, whatever. Find what you’re passionate about, and I think go super deep in those areas. And the first thing I’d say is, it will probably you know, don’t expect it to have next six months, it might take two years, you just got to prove that and do enjoy it at the end of the day because it’s access to harder job is to consuming for you not to be not to you know absolutely love it and want to do it you know outside of outside of your day to day work. So I think you know, if you can authenticate, find what you’re interested in, authenticate that curiosity, write a blog, post, whatever, start a podcast, go on to meet founders in your spare time, find what companies are interested in. If you’ve got the money, try and Angel invest in stuff that you find interesting. I think that’s just you got to show that you’re, you know, you’re kind of in it for the long haul, I think that that will really impress most venture funds.

Alexa Binns 25:41
I will say the best advice I got when breaking into a venture with Rebecca Camden said, you can start doing the job, when you don’t work for a specific fund. Learn how to filter and you can start sending great deals to the people who have been kind enough to take a coffee chat with you. And you can prove you know how to do the job before you’re in it. So I love that advice that maybe the job comes two years later, but you can actually start doing venture, you can start sourcing and filtering for 20 companies at once. 20 funds at once, because they haven’t got dibs on you yet. Yeah, exactly.

Hugh Barran 26:19
And, you know, I do also like the Paul Graham quote, which is like, if you have people go to and say I want to go into VC go to a startup first because in startups because that’s where you might never have to work again. And you have an invaluable experience to help a founder. So I would also echo that echo that as well.

Alexa Binns 26:35
From your perspective, what does venture look like going forward?

Hugh Barran 26:40
Look, I think we’re in an interesting, I think we’re in a, you know, an interesting spot where I think we’re in a recalibration and a restructuring of how ventures been for the last 20 years, which was, you know, bluntly, investing in FinTech, you know, consumer tech, and enterprise and b2b SaaS companies, I was coming at 90% of where venture dollars, when I, you know, I do think, you know, with the use of AI a lot, building those companies, you know, making engineers more efficient is going to come dramatically down. And I, I really hope, you know, venture goes back to solving the really, really hard stuff, you know, nothing against 15 minute delivery, but if there’s more, there’s more venture dollars that goes into whether it’s hardware and climate tech, you know, AI and robotics, you know, some of the areas of defense tech and aerospace, which I think is super, super important. Globally, if we can see more venture dollars, just, you know, risk capital going into solving real problems. I think that’s where the west where Will, that’s where I hope the next 20 years will be, that’s where I think there’s gonna be some really interesting returns. I think software and SaaS has had a great 20 years, but it’s coming to an end. And then the next 20 years is focused on solving real real problems with real capital. And so and I’ll speak to one fan the other day who said, you know, we’d want 80%. Today, the percent of our portfolio is software, 20%, hard tech and b2c, and we’d want that to be 5050. Over the next, over the next five to 10 years.

Alexa Binns 28:20
Yeah, I can see, solving big major problems is also probably quite helpful for recruiting the best talent to this industry, that you have real, you have a real mission in the work that you’re doing. You are such a good partner to have in a venture. Thank you, folks who are interested in working with you. And Armstrong International, feel free to email, he’ll be at Armstrong And now back to our LP interview. You were talking about this new world of democratizing access to LP funds and setting expectations for some of the LPS who have maybe this is the first deal that they’re coming in to launch. It’s their one and only LP deal. Is the role of limited partners going to change that you now have over 99

Jason Calacanis 29:08
Yeah, I mean it there, there are things happening where you’re going to be able to have a larger number than 99 and 10 million. So do you think that’ll happen in our lifetime? I’m not holding my breath. But you know, you could just do it. I’ve considered this instead of trying to raise a $50 million fund and deploy over four years. What if you did a $15 million fund every year, and you just name the vintages by year, you just tell people, first of the year, which is what good rolling funds are attempting to do to a certain extent to make it a little bit more fluid for people. But I have also thought about that I’ll just do this as lunch five for 20 516 is going to be 2026 primarily Right? Or you know, and so I might actually pursue that strategy because it’s really exhausting. I’ve been to the Middle East. Three times in the last year. Amazing. But that’s, you know, whatever it is three weeks, I gotta give up my family in a year, that’s 15% of the year. And so this fundraising effort in a down market has been really hard. In that market it was really easy, you know, even somewhere in the middle, it still takes a lot of work. And so I think being able to raise capital, fluidly without doing road shows and stuff like that is to me for the seed stage, I think, very appealing. So I might not do this approach. Again, I might just make it like, here’s our returns. Here’s the thesis of the current firm, here’s what I’ve learned, just get on a podcast get on a webinar, if you’re interested, you know, put your allocation in here, if you’re not interested in totally understand you can skip a fund, and LAUNCH Fund six, we anticipate starts on January 1 2026, we anticipate this will be the 2025 fund. And I think the smaller funds benefit the GPS as well, because you can get to the hurdle quicker. So you know, my first few funds were 10 and 11 million, you could have one investment return 10 or 20 million, and all of a sudden you’re paying to carry your team. And to yourself, I’m not resource constrained at this point in my career. And money isn’t the primary driver. For me, it’s, I mean, it is a driver, but it’s not like, I’m desperate. Right. And that is a dangerous thing to say, because some people do like the GPS to be desperate, what I’m desperate to do is like have a great legacy. And to build an architecture here that really works. So I have a slightly different motivation package at this age. But I do think it’s important to, you know, at these funds to have a really tight thesis for you know, your portfolio strategy, your bankroll is really critically important to think about and the architecture of how you think you’re going to get returns is super important, and fun size. And follow on strategy are the two and the number of names in it are really the variables you get to tweak. How many beds do we make? Okay, we’ve had 3030 bats or 100 beds. So is it better to have 30 with three times as much money in HR 100, with a third as much? Well, if you were following the power law, you need 30 or 40, to hit an outlier. Therefore 30 is kind of the minimum. And if you’re at the early stage, you have a certain amount of trician. That’s different from Series A when, you know hopefully, they’ve proven more than Series B. So the returns on Series B funds are lower on a percentage basis, but the number of zeros goes from 90 to 50% zeros, right? And so you know, there’s a lot to consider about portfolio construction and that’s my current obsession with portfolio construction.

Earnest Sweat 32:45
Jason you kind of hit me and Alexa for her you got jumped on we’re talking about you know, when it is enough enough, like what is motivating you, you know, you’re doing money is in a constraint right now. But you mentioned legacy, when is enough enough on the legacy portion? What’s the ultimate goal? Yeah,

Jason Calacanis 33:02
You know, I’ve had a lot of thoughts about that, because I could retire, you know, because of the Uber bat and a couple of other Robin Hood callers, you know, you have this ability to retire early. And there’s a movement amongst I think your generation. It’s like getting rich, retiring early or something. I forgot what it is, but there’s an acronym for it. And there’s a whole site fire. Yeah, totally. What is the FY in fire? What is it? I’m trying to figure out if somebody looks up the acronym, I know it’s retired early. And then there’s two letters before it. Somebody look it up. But anyway, there’s a group of people who are in financial

Alexa Binns 33:36
independence. Gotta retire early. So it’s a lot of

Earnest Sweat 33:39
you talking you’re talking to, you’re talking to Capricorn elder millennials who don’t like I’m going to work until I die. So okay,

Jason Calacanis 33:45
I don’t know anything about astrology. 16.

Alexa Binns 33:47
But he’s actually in his 40s

Jason Calacanis 33:51
I don’t know anything about astrology. I use astrology. For men. It’s called the Myers Briggs. You may have heard of it. So, yeah, and TJ. So, you know, for me, the way I look at it is I think I’m in the Vinod Khosla sort of mold, which is, you might have to drag me out of the building. And we’re Alan Patricof, who I just saw, and he’s in his 90s. And Alan Patricof, was at the i connections conference down in Miami. And I’m like, Alan, he’s like, I haven’t seen you in 25 years. Like I met him when I was a cub reporter doing Silicon Alley Reporter And I interviewed him. And that was 25 years ago, and at that time, he was but if he’s 95, now 25 years ago, he was 70. And I interviewed him when he was in his 70s, you know, and I’m 53. So I’m 17 years from when I first interviewed him, and he was 20. He’s still going 25 years later, and he’s investing solely in life extension. Pretty good bet. Pretty good thing to bet on when you’re 95 is extending life. There’s a passion for you. So you know, I do think financial rewards, you know, status, a lot of those things I was able to achieve a little bit early. And, you know, certainly people have gotten them much earlier than I have. But it is one of the things as a capital allocator, that winning early and then confers a certain amount of status on you, which then starts to fly well, so there’s been studies about this. If you hit a unicorn early, and I hit three on my first seven investments, you suddenly think you’re good at this. Now that happened, probably because of my network. So maybe there was something to it. But it also made me think I was good at it. Which is the experience a young person might have, let’s say, you’re, you know, Alexa, you were so Alexa. Right? Yeah. I just turned on like 100. I always be more careful saying Alexa, because I think 100 people’s Alexa just went off. Hey, Alexa,

Alexa Binns 35:45
play, you can call me Benzie. That’s, that was the the general general way around

Jason Calacanis 35:52
Alexa plays dire straits. On his way, she uses headphones. But anyway, if you had, you know, started playing basketball, and in your first game the game was on the line, and the ball got tipped to you. And you were behind the three point line. And it was a two point game. And you chucked it, and it switched. The whole crowd goes crazy. It’s your first season as a player. And then it was like, wow, you can hit the three. Now, it could have been just pure luck. You could have had your eyes closed and just chucked it. Somebody said throw it and you threw it because you were afraid. And then they say, You know what, we’ve got a three point coach from two towns over, we’re gonna send you to a three point coach, and because you’re great at three pointers, and then all of a sudden you believe it. And then you manifest it. And then people tell you, you’re great at it. That’s what happened to me in Angel investing. They’re like, whoa, you hit Uber, DataStax, thumbtack and you were the first investor, a second investor, third investor, you’re good at this, you should start a fund. And I was like, Okay, how do you start a fund and they’re like, you just ask your rich friends for money. And I was like, hey, everybody at the poker game, I’m raising a fund and then all of a sudden, I had a $10 million fund. And we were like, Oh, my God, Chico, raise a $10 million fund, and then more positive reinforcement. So I really believe in this power of positivity, early success, and then building on it. And you know, but then you need to if you want to scale it, you have to study systems, and create, you know, this kind of systems and the process. So I believe in the process, and trust the process over my own skill name. Because when I look back on it, I’ve deconstructed it. And it’s like, the process is what got you there. People knew you because you were journalists, people knew you because you threw parties, you hosted dinners. You had a network, you’re 100% extroverted on the Myers Briggs. So you have a lot of friends and a lot of friends talk to you and you like to talk to your friends and your friends tell you about other deals. That’s why you had success. It’s not like, I can look you in the eyes and be like, Oh, you’ve got it, you know, and I’m Yoda. No, yeah, I was just a really great networker. And yeah, it goes back to your original question. You know, your original question is like, how do you make an LP? How do you decide which funds to LP? deal flow was pretty important. I had a deal flow, but I didn’t know it. And so you know, you, I really focus on the process over my goals. I focus on it’s good to set goals, but process you have control over outcome. Sometimes you don’t have control over it because I know people who had unicorns in China in the education space. And then Gigi Ping was like, Yeah, you know, you can’t have these anymore. They’re controlled by the state. All your returns are zero. So they went from having a 10x fund to having a 1x. One. And it was completely out of their control. So process over individual performance.

Alexa Binns 38:40
Yeah. Seems like originally, it was about winning a spot. And now it’s a little bit more about sorting. Since you’ve got such insane deal flow.

Jason Calacanis 38:51
Yeah, that is what I obsess over is how do we not miss? We know there’s 20,000 applications, we know there’s 10 unicorns, it’s going to be you know, you know, if there were 20,000, and there were, let’s say, let’s say there’s 20,000 applications, and 10,000 of them are just not venture scale. So they got 10,000 left. And let’s say one in 100 become unicorns, there’s 100 unicorns in there, or let’s say one in 1000 become in regards to the 10 unicorns in there. So every year we have a chance to find those 10. Unicorns, I think it’s probably something like that one in 1000. So if we can find the one , how do you find the one in the 1000? Is the question you have to ask yourself, and then let’s say you invest in 200 per fund out of those 10,000, you invested in 2% of them? How do you know which ones are out of those? If you do have a unicorn in there, how do you know which one’s the unicorn? And then how to bet more on it right? And how to get more money into it and double down on it. And that’s where doubling down comes in. So you really need to have a really great system. So I believe in systems and I believe in the process. So how can you make your process 10% Better every quarter, which means every seven quarters your process is twice as good, right? So I tried to be 10% better at what we do every three months. We’ll be twice as good every two years. Ish.

Earnest Sweat 40:09
We’d be remiss, Jason not, you know, picking your brain on where the industry is going. You are besties with some of the top fund managers in the world. Yeah. What’s kind of like, really happening that we might not be hearing on the, you know, the headlines. Industry is going, everybody’s

Jason Calacanis 40:32
talking about AI, obviously, because it is a paradigm shift. And it feels like all the paradigm shifts we’ve experienced are leading up into AI. So cloud computing was a prerequisite mobile, a prerequisite for the internet itself, broadband, PC computing, CPUs, GPUs, all of these revolutions and paradigm shifts that occurred feel like they’re culminating in AI. And so that’s obvious to everybody. AI is just kind of like mobile or cloud or broadband internet in that it’s going to help a lot of businesses accelerate, and build really great products for consumers and businesses. What I look at is how businesses are constructed, and who construct those businesses. And what I’m finding is there is a global market for startups that has emerged, there is remote work that has emerged and doing more with less. So I believe there will be 10 person companies, I don’t believe in like the one person $1 billion company, I think that’s like a sensationalistic thing to say, to get headlines. But I do believe in the 10 people making 10 million in revenue each a 10 person company, generating $100 million. I believe that will happen many times in the future. And so I am finding three person teams that have gotten to 3 million in revenue 1 million each. And I’m like, huh, is it too much to think that this could be 10x is like, Nope, they could just raise their prices. 10x. Or they could double their customers and raise the prices 5x double their prices and add five times as many customers, you could just do simple math. And so that’s the trajectory and the trend I am obsessed with. It’s not like robotics versus AI versus crypto nonsense scams. Blockchain versus, you know, broadband versus fiber versus satellite. You know, it’s really about how you construct businesses, which goes back to process. So what’s our process as a fund, and what’s the process that founders are using and the process founders are using is fascinating. Two or three core people who understand customers and product and product design and building a product. And then everything else outsourced HR, legal accounting, everything is abstracted servers, you know, marketing, everything just abstracted, abstracted away through tools and AI, and outsourced companies, and then just this core group of people who obsess over the product. I believe that’s the future.

Alexa Binns 42:59
Any suggestion of questions, LPs, should be asking GPS, who they’re either potentially considering reopening with or new manager.

Jason Calacanis 43:09
What have you learned? What mistakes did you make that you fixed? It speaks to the process, right? Like my mistake in the first two funds was we didn’t have reserves to double down. And when we look at that first fund, even though it’s 4.9, or 5x, on paper, we’ve returned over 1% of the fund already. So we’re in that like, Will this be a 7x fund or a 2x fund a 4x? Fine, but you know, getting dpi, we looked at the four unicorns in there, which were calm, Robin Hood, superhuman intensity. And in three of those four, we knew Robin Hood had to check every comment that detract trajectory and superhuman had the trajectory of a breakout unicorn. And density didn’t, because it was a hardware product, and they were figuring it out. And now it’s super clear, like I believe that it’ll be DECA corn actually. But what that means is early on, in three of the four, we knew they were going to be unicorns because they fit a certain criteria and actually density fitted as well, which is they had a lead investor who wanted to lead the next round who wanted the majority of the money in the round, and they wanted to take a board seat. So when you see those characteristics, it’s undeniable that this is a likely winner, or we call it a definitive winner internally, we knew the definitive winners and three out of four cases had we made a second bet on one of those Robin Hood, superhuman or calm if we had made that second bet. That 5x fund on paper, probably a 20x fund 50 Next fund 25x one, let alone if we had doubled down on two or three. So being able in your own portfolio to define likely winners is a definitive winner. What we did in those early funds was the squeaky wheel. The founder who lobbied me the most who begged me who, you know convinced me that I should put that extra 25 or 100k into their business or The ones who got it, and I look back on that I had a big heart, I want to be supportive, that’s a weakness in some ways, for a capital allocator. What you have to do with that reserve capital is have a system for investing it communicate to the founders, hey, we only invest, we are a seed fund, we don’t do your Series A, we don’t do your series B, and we might start selling it seriously just really communicating that to them that they have to go find that money, we’re not a permanent source of capital, there are some permanent sources of capital in the world, we’re not one of them. And most venture funds are not actually but there are a couple who want to believe that they could take you from cradle to grave. We’re not that, nor our 90% of funds, we only do the top 5% of the portfolio. So in that first one, there were 109 names, I think 5% of that would have been five companies, and we would have known three of them. So two of them, we probably would have lost in the best three of them, we would have actually gotten right. And so now with this fourth fund, I’m reserving half the dollars for follow on half the dollar for primary. And that fund is right around 50 million. Now I suspect it will be 75 to 100. But let’s just say it’s 50. That means, you know, maybe 20 million in primary investment 10 million in fees 20 million in second in the follow ons, that 20 million 100k each of 200 companies, let’s say just on average. So if 200 companies to pick from 5% is 1010 into 20 Millions, 2 million each. So that 20 million will go 2 million each into 10. But hopefully it goes 1 million each into seven. And then there’s 13 million left for three and we performed million into each of those. So we really know, you know, like power law getting more money into the top ones. That’s the name of the game. And you know, you get better at it. I didn’t so that’s your Alexa, play dire straits? You that’s the answer to your question is like, ask them like, what did they fuck up? And you know, I’m brutally honest, which probably means like some endowments and buttoned up people from Ivy League schools might find me not their cup of tea. But family offices, sovereigns High Net Worth people, they’re like, fuck yeah, J cow. Yeah, you sucked at that. You realize you sucked at it. Now you have a really cutthroat, hardcore, aggressive way to solve that problem. Yeah, that’s how life works. And I just, you know, I’m gonna be me. I’m gonna, you know, be a bit Charles Barkley or Dennis Rodman around the rim, some elbows might get flown. You know, I might make a mistake once in a while. might be, you know, a little bit like Phil Hellmuth, me the poker brat once in a while and lose my cool. But you know, just so you know, I take the game seriously. Like I hope anybody’s learned anything, if you’re an LP listening to this, or you’re a founder, I’m thoughtful and passionate about it. I really think about how we do a great job for founders and kick ass for them. And that we kick ass for the LPS. And so I’ll just leave it at that.

Earnest Sweat 48:00
Yeah, Jason, that was great. We definitely can tell you trust the process. And I have to hold back all of the basketball analogies and ref tell you when I used to be an A you, oh, I played against Chris Paul and LeBron James.

Jason Calacanis 48:18
If Dwight Howard had half of Kobe or Shaq had half of Kobe’s motivation, those guys would have 10 rings. Each is easy. Shaquille O’Neal suffered from the, you know, the biological physique he got, which didn’t require him to do what Kobe did. Kobe had the average physique, Michael Jordan had an average, perhaps below average physique. They had to, you know, without having it, they had to use resources. And to a certain extent, I feel that way as well. Not that I compared myself to them. But because I didn’t go to an Ivy League school, I didn’t have the Stanford network. I didn’t have the Harvard network. I didn’t have a rich dad, rich mom, to cede my fund, I had to fight for it. And I do think there is something about having to fight for it that makes a great matriarch or patriarch, you know, if you look at the leaders of these funds, the person who had to fight for it to get that spot. I mean, it is the number of people who want to start a venture firm like everybody in business does. Everybody perceives it as like the greatest status and power in our business, and the number that makes it to a second fund. It’s like the new statistics. I talked about it all in and I shared it on liquidity. It’s like 15% of fund managers are making it to their second fund. I’m on my fourth. Not going anywhere folks. Like I feel pretty good about it. Like to get your fun to pat yourself on the back for that. Now, I still have to fight to get to my fifth and sixth, but I do feel like I figured a couple of things out and I hope they’re helpful to the audience. And if anybody’s got questions for me, you can always email me Jason If you want to pitch me on your startup to get into the funnel, you can still DM me Jason DMS open on oppa artforms Anytime you want to be an LP in the fund I wrote my Deal Memo I put it out publicly I said, Here’s my Deal Memo. Tell me what’s wrong about it. And you know what, I got some people who did fix some leaks in my game. So, if you have a process, sharing your process like I’m doing here, the reason why I said yes to you so quickly was I like sharing my process, because people will email me and say, You know what, I invested in a fund, they fucked it up. Here’s where you’re gonna, here’s where you’re gonna make a mistake. And it’s like, okay, well really when you hit the three, you know, your feet planting and your elbow being tucked in like Steph Curry gave me some pointers. I hit that elbow in a bit, and I was like, Okay, sure. Steph Curry telling me to tuck the elbow and I’m talking in. Gotcha. All right. I can’t wait to hear from you.

Earnest Sweat 50:42
Thanks, Jason.

Jason Calacanis 50:43
Appreciate you having me on again in a year.

Alexa Binns 50:46
See you later, Allocator!

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The Hosts

Earnest Sweat

Earnest Sweat is the Founding Partner of Public School Ventures, a dynamic syndicate of over 600 technical operators, go-to-market specialists, and LPs. Previously, Earnest built new venture capital practices at Prologis and GreatPoint Ventures. His focus is on investing in value chaintech, specifically vertical SaaS, applied AI, middleware, and B2B marketplaces, which are poised to revolutionize foundational industries like real estate, insurance and supply chain. Earnest has sourced and led investments in companies such as Flexport, Flexe, KlearNow, and Lula Insurance.

Alexa Binns

Alexa Binns is an angel investor and LP. An experienced investor and operator, she has climbed the ranks from associate to partner at Maven, Halogen, and Spacecadet Ventures and built digital and physical products for Kaiser, Disney, and Target. Alexa has worn every hat in venture from fundraising to sitting on boards. She invests in companies with mass consumer appeal, focusing on the future of shopping, health/wellness, and media/entertainment. Key angel investments include The Flex Co, Sana Health, and Chipper Cash.

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