Talent Is Overrated in Silicon Valley: Lewis

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July 26 (Bloomberg) -- Founders Fund Principal Geoff Lewis discusses his investment idea with Emily Chang on Bloomberg Television's "Bloomberg West." (Source: Bloomberg)

Interestingly, you have some controversial philosophies.

And the first one i want to start with is that pretty much every investor i speak with says the most important thing in terms of where they put their money is who they are giving it to.

The entrepreneurs.

You don't think that's so important.

Why not?

Well, obviously talent is incredibly important and our founders are heroes but we think that something that is equally as important but very underrated is actually having a pretty solid long-term plan and a pretty solid business strategy for how over time the company is going to defend against competition.

Actually be monopolies.

I would say that relative to business models and business strategy, i think talent is quite overrated today in silicon valley.

You're going to have daggers thrown at you for saying that.

Talent is supposed to be the hoddest commodity here.

It's the currency -- hottest commodity here.

It's the currency.

It certainly makes silicon valley tick and you need incredible people to do incredible companies but one interesting thing to look at is if you look at a place like going where will supposedly, you know, in reality there are tons of very talented people that work there, but if you look at all of the startups started by ex-google employees, the only startup that's become a billion-dollar company was instagram out of all of those startups.

One has to begin asking questions around, do people actually, very talented, wonderful engineers and product managers actually learn the right lessons for starting a company at places like goingle?

So because talent, good talent supposedly is so hard to find, the compensation packages for some of these employees have gone sky-high.

Are people getting paid too much too?

The market determines what people get paid and big proponent of free markets here.

So certainly not going to say people get paid too much.

But i do think that the context shift from going from a half-million dollar package as a midlevel engineer at going toll starting a company and trying to raise financing, i think that's a very difficult context shift for many entrepreneurs to make successfully.

Mr.

are you saying the idea that -- are you saying that the idea the entrepreneur has is more important than who the person?

No.

people have to be talented but have to have a very strong vision and a pretty well thought-out plan early on.

Is it strategy more than the idea?

I think it's strategy more than the idea is what we're looking for, wals as obviously the team and why they're uniquely suited to whether that company.

So what's a strategy that's really excited you lately?

Right, well, typically things that we like are things where there's significant technology risk early on.

Most of these don't like taking technology risks.

So we're fine doing that.

Give me an example.

Something like spacex would be an example.

Tremendous technology risk.

Now the barriers to entry are so significant it's a highly profitable, very successful -- it took 10 years to get there.

What a about a high-speed transport between san francisco and l.a.? that's the type of talent we would invest in no matter what he does.

If we had the opportunity to invest in him i'm sure we would look at doing that.

What about snapchat?

That's probably a good example of a company where there's perhaps not a very strong long-term business strategy.

So, it's the type of thing where it seems to be working.

For us it's not enough if it's working and getting users, we want to know how that company's defensible long-term.

Snapchat, is it overrated too?

We would not have invested in this last round had we looked at it.

The jury is still out.

Hopefully they'll come up with a really defensible business strategy.

Yet, you invested in a company like lift.

What is so big about lift?

I like those guys, i think it's an interesting idea, but is it going to change the world?

We believe that it will.

Pier to pier is a difficult business than black cars and taxis.

We think that with lift it's a more for less story which is very compelling.

It's a better experience than taxis and for many people black cars.

Significantly cheaper and we think peer-to-peer will win transportation in cities and

This text has been automatically generated. It may not be 100% accurate.

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