Summary List Placement
As the managing partner of early-stage VC firm Initialized Capital, Garry Tan’s early wins have included unicorn startups like Coinbase, Instacart, and Flexport.
“We’ve had a front-row seat for 10 unicorns and we didn’t have to buy in, per se, like at Series B or C at like $100 million or like $1 billion,” Tan tells Insider. “There’s nothing wrong with that — and I appreciate the people who do that — but I believe there’s something powerful in meeting two people with just an idea and a demo,” he added.
In the case of Coinbase, Tan wrote the company’s first seed round check at Y Combinator’s demo day in August 2012. Tan was an early YC partner and designer-in-residence.
Now, if you log onto Clubhouse on any given night, Coinbase CEO Brian Armstrong is just one of the tech luminaries that Tan might be holding a conversation with, as he also has done with Elon Musk and Mark Zuckerberg.
In a recent Clubhouse chat with Tan, Armstong confirmed the amount of that first check was $150,000, meaning Tan’s early stake could be worth hundreds of millions when the stock starts trading in the next couple of weeks.
“He was actually my first CEO coach. After coming out of Y Combinator, I would go meet up with Gary about once a month and just ask him to pass on some knowledge about how to start a company and that helped get Coinbase off the ground,” said Armstrong.
Despite Armstrong’s previous track record as a software engineer at Airbnb, Coinbase was not an instant shoo-in at the famous accelerator. “It’s not like Brian Armstrong was guaranteed an interview,” said Tan. “He actually had his application scrutinized versus like thousands of other applications.”
Insider recently spoke with Tan and asked him how he got started as an investor, YouTube content creator, and now, star Clubhouse moderator.
“I was not born with a silver spoon, but I sort of tested in.”
Tan is not your traditional entrepreneur-turned-VC. He grew up in Fremont, Calif., in what he has described as a low-income immigrant family. His father was a foreman in a machine shop and his mother was a nurse assistant. To help with the family’s finances, Tan started programming at age 14 and landed his first job in San Francisco by cold-calling the Yellow Pages.
“Tech was so welcoming to a teenager who was scrawny and had acne all over my face,” said Tan. His early work as a teenage programmer was enough to get him admitted into Stanford’s prestigious engineering program.
“I was not born with a silver spoon, but I sort of tested in,” said Tan.
The $200 million Peter Thiel mistake
After graduating in 2003, Tan landed a job at Microsoft as a program manager, but he kept in touch with billionaire investor Peter Thiel, a pal he met at Stanford.
“I first met Peter at Stanford by inviting him to come speak at entrepreneurship events for the club I was president of, the Asia Pacific Entrepreneurship Society,” Tan tells Insider.
One day, Thiel arranged for Tan to fly from Seattle to Silicon Valley for an important meeting. “Peter Thiel took me out to dinner to get me to quit my entry-level job at Microsoft,” said Tan. They ate at Frisson, a French restaurant that has since closed, in San Francisco.
At the time, Thiel was recruiting talent for his new startup, Palantir. To sweeten the deal, Thiel wrote a check for $72,000 to match Tan’s salary at Microsoft.
Thiel said, “Cash this check, quit your job. This is a zero-risk opportunity for you,” Tan later described on his YouTube show.
Not convinced, Tan initially declined the job, and still regrets the decision. He now refers to it as his $200 million mistake, or what his share of Palantir would be worth today.
Eventually, Tan did join Palantir as employee No. 10 as an engineer and designer. “The crazy thing for me was not understanding how these teams come together,” said Tan. “How startup teams are financed and how these ideas even come together.”
Twitter acquired Tan’s startup Posterous.com for $20 million in 2012.
As managing partner of early-stage VC firm Initialized Capital and former Y Combinator partner, Tan has spent a lot of time with hundreds of founders. One of his favorite pieces of advice is: Start a company before becoming an investor. He speaks from experience.
After spending two years at Palantir, Tan cofounded Posterous.com, a startup that attaches documents, photos, music, and video and autoposts to social media sites like Facebook and Twitter.
In 2012, Twitter acquired Posterous.com for $20 million an amount which previously hadn’t been disclosed.
Paul Graham was Tan’s mentor at Y Combinator.
In 2010, Paul Graham recruited Tan to become a partner at Y Combinator, where he helped over 700 startups in five years or 10 YC “batches.” YC typically accepts startups in batches twice a year, one from January through March and one from June through August.
Once accepted, startups receive funding, advice, and access to YC’s vast network of startup founders. DoorDash, Airbnb, Instacart, and Stripe are among the famous graduates of the YC accelerator program.
“Working for Paul Graham was super formative for me because you know, he never had a doubt in the ability of technologists to make things for users,” said Tan.
Tan says he could have easily stayed at Microsoft as a program manager and worked his way up as some of his friends have done. “They are really happy and they have a beautiful house and an awesome life,” said Tan. “What it really took was Paul Graham’s essays to say, ‘Hey, there’s nothing wrong with that life. But you were not meant to have a job like that.'”
Tan is now an investor and content creator, quietly emerging as a YouTube star and go-to Clubhouse moderator for important CEO conversations.
Today, Tan is investing in early-stage companies as an investor at Initialized Capital, the VC firm he founded with Reddit cofounder Alexis Ohanian.
He has also amassed a huge following as a content creator. His YouTube channel has over 64,000 subscribers and he is a regular moderator and guest on the nightly Good Time show on Clubhouse where he has led conversations with Telsa’s Elon Musk, Facebook’s Mark Zuckerberg, Coinbase’s Brian Armstrong, and more.
“Garry fundamentally is a creator and maker of things,” said Harj Taggar, Y Combinator Group Partner who worked with Tan at YC. “He has built a following on YouTube all by himself, spending hours shooting video and doing post-production in addition to his job as a VC.”
“For me, the content is fun because I try to gear it to what I wish I had seen in my career,” Tan said. “So just leaving breadcrumbs for the next generation in tech.”