Episode summary
He Refuses to Back Founders Without This Trait (It’s Not IQ)
How I Invest With David Weisburd
· · 37 min · Hosts: David Weisburd · Guests: David Hornik
Summary
David Hornik argues that venture investing is built less on raw intelligence or aggression than on uncompromising ethics, trust, and long-term reputation. He says he will only back founders who are “unflinchingly ethical,” and distinguishes between hard-driving culture choices, like pushing a team hard, and dishonesty, like selling something you know you cannot deliver. In his view, the best founders are the ones who can be trusted to tell the truth because venture is a business of repeated relationships, not one-off transactions.
He also frames venture capital as a power-law game defined by disappointment: roughly one in ten investments produces the outcome that drives a fund, while the rest may fail, stagnate, or return modestly. Hornik says that reality never becomes emotionally easy, because each failed company represents real people and real loss. But the model works if investors keep backing extraordinary people and survive long enough to catch the outlier.
Across 25 years, Hornik says the biggest compounding assets have been network and reputation. He describes the “transitive property of reputation,” where trusted relationships lead to introductions to other trusted people, and says founders should diligence investors just as rigorously as investors diligence founders. He also argues that EQ matters more than IQ in most cases, and that being helpful in multiplicative ways, through conferences, media, and relationships, creates durable advantage.
Key takeaways
- David Hornik says he will only back founders who are “unflinchingly ethical,” and treats truthfulness as a non-negotiable investment filter.
- Hornik says venture is a power-law business where about one in ten investments drives the fund, so patience and resilience matter more than linear planning.
- Hornik says network and reputation are the biggest compounding assets in his career, especially when trust leads to further trusted introductions.
- Hornik argues that founders should diligence investors as hard as VCs diligence founders, because enduring franchises come from mutual trust.
- Hornik says EQ beats IQ for most outcomes he has seen, because the ability to build trust, persuade people, and manage teams matters deeply.
Notable quotes
“I will only back people who are um unflinchingly ethical”
“venture capital is about disappointment because the reality is that I I've invested in let's call it 50 companies over the last 25 years”
“one in 10 of those companies has done the thing that is that I hoped was true of the other nine in 10”
“Network and reputation, right”
“I would absolutely not agree with that and I would and I do not invest that way”
How the episode opens
You have 25 years of venture experience from August Capital to now lobby capital. You've invested everywhere from seed to preipo. Do you find that the greatest founders are quote unquote good people, aggressive people? Is there a certain archetype that really comes through as correlated with the extreme power law outcomes?
I will only back people who are um unflinchingly ethical. And in fact, part of my process, — How do you define that? — There are definable truths. And if you are willing to, you know, if you are willing to stretch the truth, you are not unflinchingly ethical.
Is pushing somebody toward to work 100 hours a week, is that ethical? Is telling somebody you're going to go and deliver something that you you're not sure that you could deliver. Is that ethical?
Choosing how much and how hard you're going to push is not an ethics question. It's a culture question. And I do think that's an extraordinarily important question.
I backed in a phenomenal entrepreneur uh and in his first startup. One of the you know one of the tenants of his company was work life balance. And then I backed his second company and when he built his second company he said under no circumstance is that going to be my tenant.
how he remained an extraordinarily good human, a very devoted family man. But he realized that an emphasis on work life balance suggested that the startup world was not an unimaginably rigorous thing that one had to engage with, you know, all of one's energy. I don't think he became any less ethical when he said work life balance is not the thing we're focusing on.
Um, selling something you think you can deliver although you're not certain is one question.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- venture capital ethics
- reputation compounding
- power law returns
- founder-investor diligence
- eq vs iq
Companies and tickers mentioned
- Splunk
- Lobby Capital
- August Capital
Watch the episode
Watch “He Refuses to Back Founders Without This Trait (It’s Not IQ)” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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How I Invest With David Weisburd, this episode and its artwork belong to David Weisburd. Octagon is not affiliated with the show; this page is an independent summary.
