5 Qs WITH A DEALMAKER
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. Read the full Q&A here.
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.
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. You can be whatever you want is basically what he’s saying.
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 used for prison labor. That’s what he was talking, 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.
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 were 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 gives people back the most precious thing they have in their lives, which is our 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.
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.
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