Keith Rabois explains why Founders Fund doesn’t invest in remote startups

“We have a view at Founders Fund that we will not fund a company that doesn’t work in person... The reason why is because if you’re going to build a company on undiscovered talent… the way you learn a craft is by osmosis. Osmosis and unstructured learning does not work remotely. So you have to hire very experienced people and have a linear roadmap that lets you predict what kind of talent you need. But that’s pretty rare.”

Keith admits that it’s not impossible to do — something like 1 in 10 companies have the resources or reputation to attract already-discovered and experienced talent. But most startups do not, and will have to take chances on undiscovered talent that learns on the job.

Another issue with remote work that Keith points out is that it’s harder to know who to promote and give more responsibility to. He gives the example of working at PayPal and Peter Thiel appointing a 29 year old to the role of CFO before taking the company public:

“There’s no way he would’ve gotten promoted in a remote company. The signals that led to Peter concluding that this would actually work are these little, soft, interactive signals.”

Keith has seen this running OpenStore too:

“My #2 person at OpenStore was hired as the most junior person at the company. He’s been promoted 5 — going on 6 — times. He’s now 29… There’s no chance he could’ve gotten on this promotion ladder without me being able to watch how he interacts with other people and see how other people trust him and go to him to solve problems. His whole career trajectory is completely different because he joined an in-person company.”

Full video: Khosla Ventures “Lessons from Five Bosses | Keith Rabois & Samir Kaul“ (May 2023)