Kareem Zaki - Small Ideas Attract Competition - [Invest Like the Best, EP.392]

Invest Like the Best with Patrick O'Shaughnessy

Colossus

Investing, Business, Technology

4.8 • 2.4K Ratings

🗓️ 8 October 2024

⏱️ 89 minutes

🔗️ Recording | iTunes | RSS

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Summary

My guest today is Kareem Zaki. Kareem is a General Partner at Thrive Capital and has been at the firm for a decade. In an episode last year, Thrive's founder, Josh Kushner, told me he is the best healthcare investor in the world. Kareem has co-founded three healthcare businesses worth over one billion dollars. He also has expertise in financial services, where he's led the firm's investments in companies like Ramp and Robinhood. It's a timely moment to have this discussion, with Thrive announcing a new $5 billion fund in August. We talk about how Thrive identifies category-defining companies, what concentration means to them, and how startups should approach the healthcare industry. Please enjoy this great discussion with Kareem Zaki. For the full show notes, transcript, and links to mentioned content, check out the episode page here. ----- This episode is brought to you by Ramp. Ramp’s mission is to help companies manage their spend in a way that reduces expenses and frees up time for teams to work on more valuable projects. Ramp is the fastest growing FinTech company in history and it’s backed by more of my favorite past guests (at least 16 of them!) than probably any other company I’m aware of. It’s also notable that many best-in-class businesses use Ramp—companies like Airbnb, Anduril, and Shopify, as well as investors like Sequoia Capital and Vista Equity. They use Ramp to manage their spending, automate tedious financial processes, and reinvest saved dollars and hours into growth. At Colossus and Positive Sum, we use Ramp for exactly the same reason. Go to Ramp.com/invest to sign up for free and get a $250 welcome bonus. — This episode is brought to you by Tegus, where we're changing the game in investment research. Step away from outdated, inefficient methods and into the future with our platform, proudly hosting over 100,000 transcripts – with over 25,000 transcripts added just this year alone. Our platform grows eight times faster and adds twice as much monthly content as our competitors, putting us at the forefront of the industry. Plus, with 75% of private market transcripts available exclusively on Tegus, we offer insights you simply can't find elsewhere. See the difference a vast, quality-driven transcript library makes. Unlock your free trial at tegus.com/patrick. ----- Invest Like the Best is a property of Colossus, LLC. For more episodes of Invest Like the Best, visit joincolossus.com/episodes. Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here. Follow us on Twitter: @patrick_oshag | @JoinColossus Editing and post-production work for this episode was provided by The Podcast Consultant (https://thepodcastconsultant.com). Show Notes: (00:00:00) Welcome to Invest Like the Best (00:06:02) Early Days and Consistent Strategy (00:07:10) Personal Journey and Reconnecting with Josh (00:08:36) Investing Philosophy and Strategy (00:11:04) Building a Supportive Structure (00:12:10) Generalist Approach and Market Trends (00:13:45) Life Cycle Investing and Concentration (00:16:16) The Builders Mentality (00:17:52) Raising a Huge Fund and Its Implications (00:20:40) Understanding Category Defining Companies (00:37:48) The Changing Nature of Investment Categories (00:49:03) Evaluating Business Durability and Market Quality (00:51:30) Understanding Healthcare Challenges (00:53:46) Approaching Healthcare Innovation (00:59:18) The Role of Competition in Healthcare (01:04:17) AI's Transformative Potential (01:07:35) Advice for Aspiring Entrepreneurs (01:09:46) Thrive's Investment Philosophy (01:22:55) The Kindest Thing Anyone Has Ever Done For Kareem

Transcript

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0:00.0	Two fun facts about our newest sponsorship partner, Ramp. First, they are the fastest growing
0:05.2	fintech company in history, reaching a level of revenue in five years that I can't quote exactly,
0:09.9	but is eyebrow raising. Second, they are backed by more of my favorite past guests, at least
0:14.9	16 of them when I counted, than probably any other company that I'm aware of, a list that includes
0:19.6	Ravi Gupta, Sequoia,
0:21.0	Josh Kushner, at Thrive, Keith Rabe, at Founders Fund, and Coastal Ventures, Patrick and John Collison,
0:25.5	Michael Ovitz, Brad Gersner, the list goes on and on. These facts demand the question,
0:29.8	why? Having been personally obsessed with the great businesses through history, one clear lesson
0:34.2	is that the best of them are run by disciplined operators. These operators manage
0:38.2	costs with incredible detail and they are constantly thinking about how they can reinvest every
0:42.6	dollar and every hour back into their business. This is RAMP's mission to help companies
0:46.7	manage their spend in a way that reduces expenses and frees up time for teams to work on more
0:51.4	valuable projects. First, on expenses, the average American business has a
0:55.5	profit margin of 7.7%. This means saving 1% on costs is the equivalent of making 13% more revenue.
1:02.8	The average ramp customer is able to save 5% on their expenses each year. Of course, every entrepreneur
1:08.2	is looking for ways to grow revenue by 50%. They should just as seriously seek to save 5% on their expenses.
1:14.2	Second, on time.
1:15.6	Unnecessary complexity is why most finance teams spend 80% of their time doing operational
1:20.4	work and only about 20% of their time on strategic work.
1:24.2	Ramp makes spend management very simple by handling your company's expenses, travel,
1:28.1	bill payments, vendor relationships, and even accounting. It's notable that some of the best in
1:32.8	class businesses today, companies like Airbnb, Anderl and Shopify, and investors like Sequoia Capital
	...

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