FILE PHOTO: SpaceX founder Elon Musk speaks at a press conference following the first launch of a SpaceX Falcon Heavy rocket at the Kennedy Space Center in Cape Canaveral, Florida, U.S., February 6, 2018. REUTERS/Joe Skipper/File Photo - RC15B6B3A870
Joe Skipper — Reuters
By Polina Marinova
October 18, 2018

This article originally ran in Term Sheet, Fortune’s newsletter about deals and dealmakers. Sign up here.

Founders Fund partner Cyan Banister says capitalism saved her life.

Banister, who has made early bets on companies including Uber, SpaceX, and Postmates, was once a homeless high-school dropout who believed that corporations were pure evil. One paycheck, she said, is what fundamentally uprooted her entire world view.

“Literally it was a paycheck,” she told Term Sheet. “I realized that if I work hard, I get this check, and with this check, I can build my own businesses and lift myself up out of poverty. I began thinking, ‘Clearly, I can make more money than this. I just need to figure out how to play the game.’”

That game was capitalism. As a result, Banister has become a strong proponent of incrementalism, which is the notion of focusing on the next gradual step ahead, as well as individualism, which favors thinking independently and being self-reliant.

It’s difficult to describe Banister as she does not fit perfectly in any box, but here’s how Shrug Capital founder Niv Dror described her to me: “She likes to invest in weird things, sees things super early and just gets it.”

I was originally supposed to speak with Banister for 30 minutes, but our conversation lasted for more than an hour. In this wide-ranging interview, she talks about the value of independent thought, social media as a silencing tool, and why she thinks Elon Musk needs more sleep.

TERM SHEET: At TechCrunch Disrupt, you said you started out as a socialist but capitalism saved your life. That’s a pretty extreme shift, so can you elaborate on how that happened?

BANISTER: Like many people, I am a child of public education, and in school they don’t teach you much about capitalism, so you learn based off of gut instinct. If you’re someone who cares about other people, you think that corporations are evil, people who have lots of money are evil, and wealth distribution should be a thing because it seems like the only fair option.

If I had gone out in the world saying, “I want my fair share,” I probably would’ve had a very miserable time. Instead, I started working and realizing I was working for business owners. It’s easy to say, “They’re business owners, therefore, they’re evil and greedy,” but instead, I started seeing them as heroic. I started to understand that this entrepreneur has put everything aside in their life to start a record store so that I could have a job. And that’s when I started realizing that this capitalism thing wasn’t so bad after all.

That was the wake-up call I had as a kid where the entrepreneur became this heroic figure in my life versus seeing them as the Antichrist. I mean, all of my friends saw every business owner on the planet as someone who was trying to exploit labor.

Was there a pivotal moment that made you start seeing entrepreneurs as heroic rather than evil?

BANISTER: The pivotal moment was a paycheck. Literally, it was a paycheck. I realized that if I work hard, I get this check, and with this check, I can build my own businesses and lift myself up out of poverty. I began thinking, “Clearly, I can make more money than this. I just need to figure out how to play the game.”

It took a long, long time before I was able to not worry about whether I could pay my rent, or afford groceries. Many Americans face that struggle every single day. I do think universal basic income is an interesting concept, but at the same time, it’s always going to be this number that we all argue about, and it may never be enough.

There’s nothing more empowering than seeing the fruits of your labor, looking at them, and saying, “Gosh, I worked really, really hard and now I have money, and with this money, I have freedom.” That was the pivotal moment in my life — just getting paid.

You tweeted a few days ago that “It’s super easy to agree with a vocal group. It’s harder to try to have independent thought and stumble and risk being wrong.” Do you think the tech ecosystem has become less interested in the diversity of thought?

BANISTER: Yes, I do. I absolutely think they talk a good talk about it, but they don’t walk the walk. It used to be that the Apple slogan of “Think different” was something people embraced. Now, it seems like it’s “Think the same or suffer.” It’s gotten a little ridiculous.

People like Kanye West are a really good example of this. Kanye is trying to make some really interesting points — one being that you don’t have to be black and be Democrat. He’s not saying you have to be Republican. You can be independent. You can be libertarian. He’s basically trying to say that you don’t have to listen to everyone else — you can be whatever you want.

And the other issue is when he talked about abolishing the 13th Amendment [which abolished slavery and involuntary servitude, except as a punishment for a crime for which someone had been convicted.] He was talking about modern-day slavery, which is people being incarcerated at a rate that is unbelievable and then they’re being used for prison labor. That’s what he was talking about, but people were just like, “Yeah, whatever.”

He also said that slavery was a choice. He did not mean it that way; he meant that there’s a certain mindset you get into where you start to become complacent with the situation. What he doesn’t realize is that it was a very misguided and poor choice of words, but at the same time, these days, we don’t have the freedom to have a poor choice of words. You get crucified. I really miss the time where you could just put something out there and people could say, “You know, that’s a really crappy thing to think, and you’re super wrong about this issue.” That’s what should’ve happened to Kanye, but instead, people are calling him mentally ill.

I hate seeing this because I don’t agree with everything Kanye West says, but I respect the hell out of the fact that he’s trying to say something. That’s what Founders Fund stands for — we have people across the religious spectrum and the political spectrum, but we respect the heck out of each other. What happens is we have discourse with one another that is respectful, and that’s the most important tenet of a productive work environment.

So what do you think happened that has discouraged people from speaking their minds?

BANISTER: I don’t think social media or the tech industry has been good for a respectful discourse, and what happens is that people go underground. This is how we ended up with Donald Trump in the first place. I’m not a Donald Trump supporter, but I can see plain as day why we have him as the president.

I think social media has become a silencing tool. I think that people are really frustrated and quiet, and it’s actually a vocal minority, not a vocal majority that is using these tools to suppress free speech. I don’t mean “free speech” in the sense of “Congress shall make no law abridging the freedom of speech.” I mean that people are suppressing their own speech because of the fear their careers will be ended or someone will take something out of context and be portrayed as a horrible person.

People come up to me all the time saying, “Cyan, you’re so brave. You say things I wish I could say.” And I’m like, “You have no idea how much I’m suppressing. I’m actually holding back. You should see the list of things I don’t say.”

You invested in Uber’s seed round (which had a pre-money valuation of less than $4 million). Some of the companies you’ve invested in are considered moonshots at the time you wrote the check. What gives you the conviction to bet on a company early on that other investors shy away from?

BANISTER: There’s this narrative that people will tell you when they’re trying to raise money. I look at the narrative and I look at the person, and I try to figure out first and foremost — Does the narrative fit the person? You can tell whether it’s a person who has found some sort of market niche that they’re just trying to exploit, and they’re pretending to be passionate. Those are the people I don’t think are going to win. And then there are the people who think about it day and night and look in the mirror and dream about this thing they’re trying to solve.

Then I ask myself: “Do I believe what you’re building is a fundamental shift in human behavior?” Then I have to try to imagine, literally daydream, people walking around collecting Pokemon, for example. It was hard for other people to imagine this, but it was easy for me because I had played the game they made before Pokemon Go. I got to experience the magic of what it’s like for eight people to get together, roam the earth, and play a game on top of the physical world.

The same thing happened with Uber. The narrative that people had against it was, “Nobody will get in a car with a stranger.” I was like, “You know, I get in cars with strangers all the time. I get in cabs. And they come with these taxi ID numbers, but if I ever had a problem with one, I’m not even sure that there’s anything I could do about it. Uber, on the other hand, is a system with accountability and reputation built in. It’s a way better system.”

I also have this mantra of: “If you give people their time back, they will love you forever.” So one of the things I’m looking for are solutions that give people back the most precious thing they have in their lives, which is their time.

Those are the things I look for when people are pitching me, because like you said, otherwise it’s a total moonshot. And I’ve been wrong, but I always go back to figure out where I made my mistake.

Are there any cues you use to evaluate the founder and distinguish between someone who’s a visionary and someone who’s just delusional?

BANISTER: I don’t know that anyone has the ability to completely tell the difference between delusion and vision. It’s a fine line. For me, it’s basically, “Do I believe that they believe in what they’re building, and do they have the right personality traits for it?”

With Uber, it wasn’t until I met [Uber founder] Travis [Kalanick] that I knew there was something there. I saw Travis as being this aggressive entrepreneur who would go head to head with taxi regulators and fight. It was one of those things where it was like, if you’re going to have someone to get down in the dirt and roll around in the mud, that’s your guy. I was looking for that because I had been thinking a lot about the taxi medallion system and what a racket it was and what it would take to disrupt that entire industry. It takes someone like Travis.

With [vitamin company] Ritual, [founder and CEO] Katerina Schneider is someone who leads a healthy lifestyle and she cares a lot about what she puts in her body. She’s a really great example of authenticity — you believe she wakes up in the morning and thinks about vitamins. It all depends on the industry and it depends on the person.

I also look at whether the company culture reflects the products they’re trying to sell. Uber, for all of its downside and things that happened, did reflect the culture it needed to be in order to succeed. It’s a good thing that [Uber CEO] Dara Khosrowshahi stepped in, but at the time, they absolutely needed someone who had that kind of mentality because there’s no way that Lyft would exist without Travis. The whole ride-sharing industry wouldn’t exist without a bulldog like him.

The first check you ever wrote was to SpaceX. What did you see in that company at the time that gave you the confidence to invest?

BANISTER: That was probably one of the most terrifying checks I’ve ever written in my life. I had never angel invested before. I had done a little stock market investing, and I was just very cautious about my money. The deal was suggested to me by Luke Nosek, who was at Founders Fund at the time. He sat me down and talked to me about [SpaceX CEO] Elon Musk — what he knows about Elon, what the value of the company could be if he succeeds, and what the potential outcome could be from my investment. So I was like OK!

It was definitely one of those YOLO moments. I literally remember rockets blowing up on the launch pad, and I thought, “Oh my gosh, that is my money being blown up right this second.”

Elon Musk has been under fire for his tweets and performance at Tesla. As someone who is familiar with his management style, what is your impression of him as a CEO?

BANISTER: He needs to sleep. It just comes down to that. I think he has taken on more than he can chew, and he needs to offload more of this on other executives. He probably needs a much more robust executive team. He tends to be very hands-on and likes to be in the thick of it. Both companies [Tesla and SpaceX] are tremendously amazing — one is revolutionizing the car industry and the other is revolutionizing the space industry. It’s just super ambitious to try to run both of these companies at the same time, so I just think what you’re seeing is a man who needs to sleep.

People who are overachievers and operate at such a high level sometimes try to figure out magical ways of evading sleep so they can achieve more, but it comes at such a high cost. If you don’t sleep enough, and you’re trying to do too much, your judgement is impaired.

Elon Musk recently reached a settlement with the SEC after allegations that he violated securities fraud over his abandoned attempt to take Tesla private. How do you respond to criticism that he’s being irresponsible as the CEO of a public company?

BANISTER: I think he could be more responsible. I think he knows he could be more responsible. He’s self-aware of what’s going on. I wish people would have a little more heart, but it’s hard because it’s a public company and people are shareholders. At the same time, a little more understanding is required that this isn’t a typical situation of Bill Gates with Microsoft. This is a situation where someone who is super smart and super driven is trying to operate two companies at the same time, and it’s not clear that either one would flourish without him.

I think people should offer to give advice and try to help fix the situation rather than trying to tear him down. When entrepreneurs reach this heroic status, people try to tear them down. You can never be too good. You see it happening with Jeff Bezos too. If you reach this level of success, people will do anything to tear you down if you have any holes in your armor anywhere.

What company or technology are you personally excited about at the moment that you think Term Sheet readers should know about?

BANISTER: I’m most excited about Niantic, [a company building an augmented reality platform]. I think it’ll be one of the most valuable companies in the world. I truly believe that. In order to believe that, you have to also believe that the next wave of computing is augmented reality. I don’t think you need wearables for this to be a very compelling offering. I think every one of us has a cell phone in our pocket, and we can experience a magical world through this lens we all carry around.

To think of Niantic as just a gaming company is a little short-sighted. I think of them as the AR/VR platform of the future. There are so many people who think I’m insane, but I like to believe in the crazy companies that are on the frontier that no one else believes in until the opportunity for a seed investment has passed.


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