The Generalist - AngelList: A Venture Constellation

Hey friends,

Today’s piece is six months in the making. I am so glad to finally share it.

Like so many others, I have been an admirer of Naval Ravikant’s writing and public thinking for some time. I have also been fascinated by what he and his team have built at AngelList for one main reason: twelve years in and it feels like they’re just getting started.

Though AngelList is a household name in tech, its footprint remains small. It employs about 200 people across its Venture and Talent departments and has publicly announced just $26 million in financing. That might give the impression of a relatively small business, albeit one with a big brand.

Such an impression couldn’t be further from the truth. Not only is AngelList a unicorn, it is a creator of unicorns. Companies like CoinList and Republic emerged from Ravikant’s business, raising hundreds of millions in venture capital themselves.

How does AngelList do this? What explains its unusual structure and remarkable results?

In today’s piece, we’ll explore these questions and plenty more. After getting to interview nine senior sources, including Naval Ravikant himself, I feel confident in saying this is the most deeply researched piece The Generalist has ever published. Some of what is written here is being shared for the first time.

To jump straight into AngelList’s unusual structure, strategic moves, and potential future, just click the button below.

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ANGELLIST: A VENTURE CONSTELLATION

Actionable insights

If you only have a couple of minutes to spare, here's what investors, operators, and founders should know about AngelList.

• Defining "AngelList" is tricky. AngelList isn't just one company. Technically, three separate entities leverage the brand: AngelList Venture, AngelList Talent, and AngelList India. That's without mentioning businesses that spun out from the company, including Republic and CoinList. Or, indeed, Product Hunt, which AngelList owned between 2016 and 2020.
• AngelList Venture is an efficient unicorn. AngelList's Venture arm is worth at least $1 billion and potentially considerably more. Thanks to its targeted spending, it has achieved that outcome with relatively little capital.
• Spinning out aligns incentives. Companies like Republic exemplify a crucial component of AngelList's playbook: some innovations are best served by going solo. AngelList founder Naval Ravikant believes it produces more effective teams, largely thanks to better alignment of incentives.
• Hiring founders increases leverage. AngelList hires an unusual number of former entrepreneurs, especially those with an engineering background. The company looks to build around individuals who understand how to leverage their labor and can take a product from zero to one.
• AngelList's most important products are just getting started. Ask Naval Ravikant what products he believes are most important to AngelList's future, and he'll point to Rolling Funds and software suite, Stack. Both have been around for less than two years.

***

At the beginning of our conversation, I asked Naval Ravikant a simple question: What is AngelList?

Implicit in that inquiry were others: Is it a recruiting platform? A capital management service? A fundraising tool? If you were to describe AngelList to someone that had never heard of the company, how would you account for its complexity?

Ravikant responded with classic concision. "We innovate on the infrastructure of innovation," he said.

It is a neat appraisal and an interesting one, not least, linguistically. Usually, companies inhabit the domain of nouns. Uber is a ride-hailing service. Twitter is a social network. Google is a search engine. We can describe these businesses in other terms, and massive marketing campaigns exist to embroider these definitions. But if your aim is clarity, the noun works best; X is.

It is telling that to Ravikant, AngelList is a verb, a collective doing. Over months of researching the company, I have come to feel that this choice reveals something poignant. AngelList is more a methodology than a business – a way of building and experimenting that manifests commercial enterprises. In the course of its life, it has produced dozens of different products. Today, at least six major entities can be considered partial outputs of this approach: AngelList Venture, AngelList Talent, AngelList India, Republic, CoinList, and Product Hunt. At least three of those have almost certainly reached unicorn status.

Ravikant's description implies something else about AngelList: there is no center. To rely on the verb is to elide the vacancy. That is not a criticism but an observation. The reason we can condense a behemoth as multivariate as Google into a three-word description – "a search engine" – is because we intuit a focal point. AngelList doesn't work this way. While we might suggest that the company's Talent and Venture arms seem to shine most brightly, it's not obvious why we would think so.

If we are to push AngelList into the world of nouns – after all, "nouns name the world," the poet Anne Carson wrote – we might think of it as venture capital's constellation. Each star shines alone, but with a squint and a bit of imagination, we can find a shape to them.

Today's piece is an attempt to outline this figure and apprehend what may be one of the world's most intriguing, influential, and impactful businesses. In doing so, we'll delve into the following:

• Starting as a newsletter. AngelList emerged from a newsletter called Venture Hacks. It took three years for the founding team to find a winning formula.
• Evolving into a multi-faceted behemoth. Over its twelve-year history, AngelList has matured into a broad offering spanning private market investing, fund administration, startup tooling, and beyond.
• The benefits of spinning out. If you want to go fast, you must go alone. AngelList seems to believe that adage, given it has spun out several businesses in pursuit of maximum efficiency.
• A culture of leverage. AngelList has created massive value with little funding. In part, that's because the company spends as little as possible on sales and marketing, focusing on more leveraged investments.
• The value of AngelList's ecosystem. Depending on how you parse it, AngelList has co-founded two unicorns and played a vital role in three further businesses worth hundreds of millions of dollars.
• What the future may bring. No one could have predicted the path AngelList has taken to its current state. The future is likely to bring further experimentation. Building products for the crypto ecosystem seems like a good place to start.

IN A MEME
​​For the pictorially inclined, here's the whole piece — all 15,000 words of it — in a single meme.

PUZZLER

​​All guesses are welcome and clues are given to anyone that would like one. Just respond to this email for a hint.

Joseph H swept to the win on our last outing, bringing with him the winds of change. He was joined by fellow codebreakers Lisa O, Tord N, Mark B, Chris R, Steven R, Alex W, Sheridan J, Jonathan W, Gabriela I, Scot D, Tom S, Lyndon B, Nathan M, TW., Scott P, Joe R, Peter F, Dan M, and Matt W in finding the correct response to our prior puzzler:

The answer? The wind. A few other clever responses were given including sound, alcohol, and love. Each works in its own way. Well done to all that tried their hand.

It’s a beautiful, bare day in Dumbo. I think I’ll go for a walk in the mist and then listen to some Alan Watts recordings. I hope wherever you are, you have a chance to do some pondering and playing.

Until next time,

Mario
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PS – As you may have noticed, we were away last week in light of the events unfolding in the Ukraine. Our mind and thoughts remain with the Ukrainian people. If you’d like to join me in donating, I’ve shared a few good causes here.

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