Elad Gil – How to Identify Interesting Markets – [Invest Like the Best, EP.101]

My guest this week has a fascinating background. He has a PhD in biology but has split his time as both an investor and an operator. As an investor, he’s involved in companies like Airbnb, Coinbase, Instacart, Opendoor, Stripe, Square, and Pinterest—not too shabby. As an operator, he helped both Google and Twitter scale their businesses, in the case of Twitter from 100 employees to 1500 over two years. He’s just written a book about these experiences called the High Growth Handbook.

Our talk centered on what makes for a good investment and more specifically how Elad identifies an interesting market. Operators and early-stage investors will find lots of nuggets in this fun conversation. Please enjoy.

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Show Notes

1:31 – (First Question) – Process for evaluating a young business

2:43 – Andy Rachleff Podcast Episode

3:09 – Data factors for evaluating a business

5:08 – Reference checks

6:42 – Advice for companies that are reliant on product cyclicality

7:01 – Where to Go After Product-Market Fit: An Interview with Marc Andreessen

7:31 – High Growth Handbook

9:30 –   Lessons learned from marketing and growing companies

12:09 – How do you hire the best people to improve your distribution

13:16 – How does he think about lifetime customer value vs customer acquisition cost

15:57 – Should companies just focus on the high margin power users

16:35 – Best ways to organize a company hierarchy

19:16 – His interest and background in the area of longevity research

21:52 – Changes he has made in his own life as a result of this longevity research

22:56 – Most effective use of a CEO’s time

24:58 – How he evaluates or identifies interesting markets for potential businesses

28:03 – Any markets that fit his criteria that are underappreciated by investors

30:02 – Worst practices for businesses

32:19 – Kindest thing anyone has done for him

33:20 – What would be the topic of his next book

34:40 – Biggest lessons he’s learned about markets