Why Does Founders Fund Not Start Companies?

Scott Nolan says Founders Fund does not programmatically start companies, and the firm does not want to either. Everyone there is selected for wanting to be an investor, not hoping they can someday be an entrepreneur. The mindset that follows is do not start companies, and do not do it programmatically. An airplane covered in war wounds is the picture, and it raises the question of all the companies that never got started out of Founders Fund.

Being an investor is a great job and a great career, so the bar for him to go start something stays extremely high. The work has to be extremely important. He has to believe no one else is doing it, which is why a long search for someone already doing the work comes first. If someone were already doing it, a new company would not be worth starting. The hardest test is whether his own skill set actually makes success more likely. Extremely important work, no one else doing it, and a real skill match form such a small overlap that the activation energy is very high, and the idea has to be extremely compelling. Most of the risk left is then on execution. What clears the bar are forgotten opportunities overlooked for a long time, often because they were extremely hard and the market opportunity had not lined up, yet they sit at the center of an industry taking off.

He took the jump with extreme conviction.