Tom Williams - I Want To Be That First Call In The Darkest Of Days | #173

Episode Summary

Executive Summary: Tom Williams describes his path from a rebellious, entrepreneurial childhood to becoming a thesis-driven angel investor focused on people, pricing discipline, and long-term partnerships. He argues venture is often distorted by 2-and-20 incentives, hype, and weak diligence, and that the best returns come from backing exceptional founders early, staying supportive through turbulence, and concentrating capital into proven winners.

Main Topics: Tom Williams’ origin story and entrepreneurial formation (Priority: 5/5): Williams explains how being labeled a bad student pushed him to build his own path early, starting with programming, selling games, and then working young in California. He frames his personal history as the foundation for his instincts about people and risk. Why he rejects traditional VC incentives (Priority: 5/5): He criticizes the classic fund model, arguing that management fees create misaligned incentives, encourage capital raising over performance, and obscure true accountability to LPs. Angel investing as relationship-based trust and service (Priority: 5/5): Williams says his edge comes from being a high-impact, low-ego supporter who helps founders in hard moments, does reference checks, and builds deep trust rather than acting like a distant capital provider. Themes and strategy in portfolio construction (Priority: 5/5): He emphasizes investing in companies that solve real problems, often around healthcare, financial inclusion, commerce, and attention. He looks for founders who can become great CEOs and for businesses with durable, pragmatic value creation. SPVs, AngelList, and the evolution of access (Priority: 4/5): Williams explains why he uses AngelList and SPVs to let investors choose deal-by-deal, preserve optionality, and inspect his thinking over time while managing a large number of financings. Pricing discipline, follow-ons, and when to sell (Priority: 5/5): He argues that early-stage investors should be patient, double down on high-conviction winners, and avoid selling too early unless the valuation is far beyond what the business can justify. Philanthropy and prison work as personal purpose (Priority: 4/5): Near the end, Williams discusses his nonprofit work in prisons, saying it reinforces his belief in human potential, bias reduction, and the importance of empathy in investing and life.

Key Arguments: Venture capital is structurally distorted because managers get paid for years regardless of performance, which can reward fundraising skill over true investing skill. The best angel investors are not the loudest or most famous; they win by being useful, courageous, and deeply trusted by founders. Great investing depends more on picking people than on picking products; a founder’s ability to evolve into a great CEO is critical. The most attractive opportunities are often the ones that look ugly, boring, or under-loved at the time of investment, because crowding and FOMO raise prices. Long-term winners should receive follow-on capital aggressively; Williams says his biggest mistake was not doubling and tripling down enough in the past. AngelList/SPVs are useful because they let LPs learn deal by deal, review the manager’s logic, and opt in without being locked into a blind pool. Macro matters in venture: he believes technology should be evaluated in the context of broad societal changes, regulation, consumer behavior, and national competitiveness. He sees technology as democratizing when it lowers costs, improves access, and “ladders up” lower-income consumers rather than simply serving elite coastal markets. A good investor should keep founders close, respond in bad times, and act as a trusted ally rather than a demanding capital source. Selling too early can damage the relationship with founders and sacrifice the biggest upside; only extreme valuation excess should force a sale.

Data Points: Angel investing start: 2013 - Williams says he began making angel investments in 2013. Fund start: 2018 - He says he started his fund in 2018. Age of first entrepreneurial work: 12 - He describes becoming an entrepreneur at age 12. Move to California: 1995 - He says he moved from Canada to the Bay Area alone in 1995 as a teenager. Childhood computer specs: 2 MB RAM / 40 MB hard drive - He recalls learning to program on an early Mac with very limited specs. Personal fundraise for company: $7 million - He says he raised $7 million before really launching Better Company. Target scale for consumer app: About 1 million MAUs - He says consumer mobile required roughly a million monthly active users to reach Series B scale. Portfolio size: Almost 100 investments - He says he has made close to 100 investments. Annual deal volume: 44 financings - He says he did 44 financings last year, about half follow-on and half new. Typical minimum check: $5,000 - He says he imposes a strict minimum check size of $5,000 on his syndicate. Grove run-rate at seed: $1.9 million annualized - He says Grove was at a $1.9 million annualized run rate about four and a half years before the interview. Grove A-round run rate: About $10 million - He says Grove had about a $10 million run rate at the A round, roughly 5x growth in 18 months. JumboTail market size: $300 billion - He says roughly $300 billion of food and groceries are sold annually in India. India grocery transaction channel: 95% - He says 95% of Indian grocery transactions go through small mom-and-pop Kirana stores. LP timing for fundraising: Months - He says the average venture fundraising process takes months, though some close in days or weeks. Potential LP capital allocation: 20% to 30% - He says his fund reserves about 20% to 30% for complete blind-pool/new opportunities depending on size. Planned follow-on posture: More capital into existing winners - He says his future strategy is increasingly follow-on heavy, with less new deal activity.

Pivotal Quotes: "If I had me when I needed me most, I'd be a billionaire today." — Tom Williams: He explains why he aims to be a deeply supportive investor for founders in crisis. "I think that management fees in this asset class are the crack cocaine." — Tom Williams: He criticizes the traditional venture model for incentivizing asset gathering over performance. "The best way to make money is not to lose it." — Mentor cited by Tom Williams: He uses this as a principle for deciding whether to hold, sell, or avoid downside.

Implications: The episode argues that venture rewards patience, founder empathy, and pricing discipline more than prestige. For investors, it suggests learning by small allocations, doing hard reference work, and concentrating behind proven teams rather than chasing hype.