Keith Rabois is going to be a full-time investor after more than a decade in operating roles. And fittingly, he’ll be doing that as a partner at Khosla Ventures — a high-powered firm as feisty, contrarian, and entrepreneur-focused as he is.
Rather than being put off, Silicon Valley had jumped at the chance to hire him after he left his COO role at Square over an employee’s sexual harassment claim in January. Sources say that while he was weighing offers from Khosla and a new executive role at Airbnb in recent days, he also fielded serious inquiries from a large handful of other venture firms and tech companies.
Firm founder Vinod Khosla has had one of the better views of the situation.
He sits on Square’s board and so is privy to the details of the claim. When I asked him for comment on the matter during a phone interview yesterday, he only pointed me to the supportive statements from the company, and Rabois’ own post on the matter – but the hiring reads like a big “he’s not guilty” sign.
Rabois and Khosla have been working together as investor and startup executive since 2007, and through other difficult situations — a theme Khosla hits on in a separate post for us today. In it, he explains how his firm is focused on hands-on “venture assistance” to entrepreneurs they invest in, helping them through the inevitable highs and lows of building big-league tech companies.
Khosla put money into app developer Slide in 2006, shortly before Rabois joined it from LinkedIn. The company ultimately sold to Google in 2010 for $228 million, after a long journey building a variety of social apps designed around self-expression. At times it had major hits like a slide-show widget on MySpace and the famous sheep-throwing app SuperPoke! on Facebook, but it never found a truly big business in that fast and loose industry.
Rabois’ move to Square after the sale marked a return to his roots in the payments business. He’d been an early leader at PayPal during its ride to public offering and eventual sale to eBay. A formative member of the PayPal Mafia, he’s been actively investing for years (we currently count around 40 investments in CrunchBase). He’s currently on the board of money-transfer service Xoom since 2003, which ten years later has just had a successful IPO this month, and reviews site Yelp since 2005, which went public a year ago.
“Most other VCs are constrained, and make more measured bets, like selling companies if they can get three times their money back,” Khosla told me. “We’re known for making crazy bold bets, we’re a bit of an outlier in that.” Although Khosla Ventures invests in the payments and consumer internet businesses that Rabois has focused on during most of his operations career, it has also put large chunks of its funds into cleantech, agriculture and other unusual and risky areas.
At this point, the style and work approach are where the greatest similarities are. “He prefers brutal honesty to hypocritical politeness,” Khosla explains (see: Rabois’ Twitter feed). “I talked to half a dozen entrepreneurs personally who had worked with him, who swore they’d never use anybody else as an investor if Keith was an option. Strong entrepreneurs prefer his direct style. I offend some people as well. Really good guys value it. Not so good ones don’t.”
Rabois’ road to becoming a VC has never been a sure thing. When asked on Quora whether he would consider it, back in 2010 around the time of the Slide acquisition, he responded by talking about the joys of startup life — building something that impacts the world, the constant creative struggle — but admitted that VC investing intrigued him. I’ll leave you with his full post:
Unlike many entrepreneurs (including some friends of mine), I am not reflexively anti-VC, nor do I believe that VCs spend all of their free time plotting to deprive entrepreneurs of their control or just rewards. My perspective is probably influenced by the fact that I have had the fortune of working closely with several excellent VCs over the last decade as well as by the fact that some of the most talented people I have worked with earlier in my career have migrated already into venture capital. Indeed, there are some VCs who I would pay to add to my team as entrepreneur.
- Nevertheless, working as a venture capitalist does not normally provide the same gratification as building something that affects how people live their lives and becomes a quasi-permanent part of the world. It is simply not your baby, which is one of the best, if not the best, rewards of being an entrepreneur. For that reason, in many ways, I still consider the day we announced the sale of PayPal to eBay as the worst day of life.
- I would also miss the excitement and challenge of start-ups: “An abundance of obstacles to be surmounted, of anxieties to be repressed, of misfortunes to be repaired, and of expedients to be devised.”
- Moreover, many of the stereotypes about VCs are accurate. I concur, for example, with Ben Horowitz’s recent controversial blog post: http://bhorowitz.com/2010/04/13/….
Yet, I concede investing does intrigue me. I enjoy the opportunity to work with early-stage entrepreneurs, many trying to build teams, products and cultures for the first time. Brainstorming, debating or problem-solving with brilliant entrepreneurs across many companies and several industries is something I would devote time and energy to even if I were not compensated for it. (I would also play shortstop for the Yankees without a contract, although that might be a mess for all involved.) I develop many of my best insights as result of these constant dialogues with talented people every day whether at Slide, at a professional event, while endeavoring to recruit a candidate or when someone pitches me for money.The prime of your career in the consumer Internet world also occurs much earlier than in almost any other field. Mark Zuckerberg was mostly right in his famous comments: http://venturebeat.com/2007/03/2…. In fact, I argue frequently that being an entrepreneur is akin to competing in professional sports, which means that I need to play like Brett Favre to stay above the par, which is not an easy task to do indefinitely.As a result, at some point, I would not be shocked to invest money professionally. But I hope that I will still remember how to think different.