Behind the Grind: Danielle Strachman

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Today we’ve got a special Q&A with Danielle Strachman, Founder and General Partner at 1517, a venture capital fund that supports teams with grant, pre-seed, and seed funding for technology startups.

I also think they have one of the most unique websites for a venture capital firm that I’ve ever seen. It’s great.

Prior to 1517, Danielle worked at the Thiel Foundation, where she was a founding team member and program director of the Thiel Fellowship, which gives $100,000 to young people who want to build new things instead of sitting in a classroom.

Danielle was generous enough to answer a few of my questions and I’m so excited to share her responses with you today!

Let’s dive in.

In the past two years, we’ve published dozens of deep dives on world-class founders, sharing how they built their companies. These typically take 20-30 hours to research and write. The most recent ones are below:

What inspired you to co-found 1517 and focus on supporting young entrepreneurs? How has its mission evolved since you started?

Homeschoolers! I was a tutor before I became a principal or worked with the Thiel Foundation on the Fellowship. One of my life's big inflection points was dropping out of the academic path I was on, starting a tutoring business and moving to San Diego. Back then, as now, San Diego is filled with freedom loving people who walk off the beaten path. By happenstance one of my earliest tutoring clients in San Diego were homeschoolers. Working with this family was eye opening. I think we've internalized the idea that learning should be an act of drudgery so when we see bright-eyed and bushy-tailed children with an endless appetite for learning say, "Danielle is here!! Let's do math!" It really stands out! (And this quality of eagerness is something that I look for in the founders I work with today.)

At first I thought that maybe it was just that family, but I kept seeing that same hunger and passion the more I interacted with the San Diego homeschooling community. These young people thrived outside of the four corners of school. I think John Taylor Gatto was onto something when he said, "children learn what they live."

In the early days of the Fellowship, I actively tried to incorporate this homeschooling spirit into how the Fellowship was run. I worked with Michael and other members of the team to create an environment where young people were treated with respect and dignity, their ideas were treated seriously, and they were given the resources they need to move forward. And the key here is resources to move forward instead of the fellowship being a prize for what they had already done. We saw immense potential in the people we were interviewing for the program and we wanted to see what they could do with more resources. 

In the past decade, with 1517, I think we've gotten much more militant, if anything. We've not only kept this homeschooling streak alive, but we've actively worked to expand it to help more young people from different walks of life at different stages of their journey. We want to see a world where young people aren't sectioned off into boxes and made to jump through hoops before they can contribute and live within the wider world. And we've been working on making that happen.

How did the Thiel Fellowship shape your approach to working with young entrepreneurs?

Different people mature at different rates in different ways! Sounds obvious but it's true! Some of the young people we worked with, like Austin Russell, knew exactly what their life's work was going to be and they went after it with single minded intensity. Others needed to experiment and grow before they found their groove. And that's OK. There's no one path for all. And sometimes the best founders need the space to figure it out.

It's not about the next quarter. It's about the next decade. Startup life is a rollercoaster with its ups and downs. Nothing is going to be rosy forever. Nothing is going to suck forever. In the long run, what matters to us and our founders is that we care for the whole person. We give people the space that they need and tell them that we're open to discussing "whatever you want to talk about" no matter what — and we have, from the professional to the personal, seen it all. 

Most importantly we want to help people to normalize their experiences. It’s easy to see the world as happening to you personally, but we live in very complex systems which is more a factor of being in that system than anything being a one off or personally taken. 

What are the unique challenges and opportunities in investing in college-age or younger entrepreneurs?

The challenges are surprisingly fewer than most people think! And the opportunity is deeper than most believe. 

There is something deeply powerful, nearing on the spiritual, about unleashing a young person who has a radically new idea about how to do things. Someone who has been dismissed for their ideas. And give them the belief capital and resources they need to make their vision a reality. I think people underestimate how far they're willing to go for their dream. It's truly awe-inspiring to watch a teenager who is obsessed with their dream make it into a reality. It renews my faith in human beings because children and young people, I believe, are the purest form of endless potential. 

One way of looking at it is that ambitious young people are like cheetahs who've been trapped in a cage their entire life. All they want to do is get out and run. And I think it is an incredible privilege and opportunity that we're able to support their break for freedom.

What makes a founder stand out to you?

After 15 years of working with incredible makers and founders, I helped my co-founder, Michael (in addition to being a great cofounder and investor, Michael is a great writer) distill the characteristics we tend to look for. There are eight of them and they are (briefly) — edge control; crawl-walk-run; hyperfluency; emotional depth & resilience; sustaining motivation; the alpha-gamma tensive brilliance; egoless ambition; and Friday-night-Dyson-sphere. 

Talking about all of them would turn this email into a book (one that Michael has already written!) so I'm going to just talk about something that emerges in the most incredible founders. Their ability to make the journey in the first place. For some founders, there's this pre-ordained, closely held childhood mission that they're seeking to fulfill. For others, it's more complicated. I think there's a tendency to think that one of these groups is somehow different from the other. But I think that's taking the wrong lesson — just because someone's journey takes place in a different way at a different pace, doesn't mean that they're more (or less) than others. 

What matters - and I think this is the true lesson of the Fellowship - is the ability and courage to make the journey at all. The Fellowship was about making conscious choices about your education, and I think that the most (or, least) surprising lesson of all is that the people who thrive no matter where their path takes them are the people who can make conscious choices about their life. 

Maybe it has to do with the tension in their core that makes them insider-outsiders who can see the paths not taken. Maybe it's the inner conviction that sustains them. But there's something about the most incredible founders that makes them step up to the plate.

One of our young, high school founders recently told me that working on his startup had led him to step up to the plate with his family. He went up to his absentee father and brought him and his mother together for his brother's birthday. That kind of emotional depth, maturity is rare in a 40 year old, let alone in a teenager.

I think that kind of person would stand out anywhere, including an investor meeting. It's rare to find people who can make conscious choices about difficult things and then follow through.

How do you spot founders with “hyper-fluency” regarding their vision and steps to achieve it?

My co-founder, Michael, loves to say that it's as distinctive as the pop of a fastball hitting a catcher’s mitt. I remember when I met Austin during a summit and I went, "Ohhhh so you're really into lasers." He knew everything about lasers and LIDAR backwards, forwards, sideways and inside-out - and he couldn't stop talking about it! His knowledge went way beyond what the average smart person would learn about their market. He knew details that made it very clear that LIDAR and lasers were his obsession.

This kind of obsessive focus is pretty often mixed with an intense curiosity about the world that's so different from the way most people live their daily lives. And it does make a lot of sense. To get into something in obsessive detail, you need to have some type of intense curiosity driving you in the first place. And it doesn't stop in one place.

I have a friend who is obsessed with space and she was telling me about an astronaut who is the type of person who looks at their morning coffee (in space) and wonders if he can model the early solar system with salt, sugar and coffee. He can talk your ear off about fluid dynamics but he has also done emergency dental surgery, repaired snowmobiles, macgyvered stuff in space, invented a 0g coffee cup, published a book about his art and spent his time in space playing with physics. He's NASA's oldest astronaut and he loves his job. It's clear that he was built for his job - to be an astronaut.

That's what we're looking for. We're looking for founders with that kind of tensive brilliance and hyperfluency who're just built for the markets they want to serve.

How do you assess and manage risk when investing in early-stage companies with younger, less experienced teams?

A lot of investors tend to think of themselves as these swash-buckling risk takers, but I think of us differently. For me, it is incredibly humbling to watch from the sidelines as these founders take incredible risks to make the leaps that make our world a better place. And yes, sometimes things don't work out. Sometimes it's market forces. Sometimes it's a large global event like a pandemic. Or, it's the team falling apart. But even in those cases, it is incredibly inspiring to see the blood, sweat and tears they pour into these products and companies. 

When I see 1517's role in this process, I look at us as people who ought to be of service to the one's taking the actual risk. To the people who devote their days and nights making a dent in the universe. I think this perspective is what keeps us grounded and oriented towards what matters - the entrepreneurs themselves.

What frameworks or mental models do you use to make investment decisions?

We search for tells that we've noticed in great founders and learned from Peter Thiel's approach to investing. I've mentioned them in outline above, but they are edge control; crawl-walk-run; hyperfluency; emotional depth & resilience; sustaining motivation; the alpha-gamma tensive brilliance; egoless ambition; and Friday-night-Dyson-sphere. Describing these in detail would take a book (I recommend Michael's!), but as a brief overview, 1517 looks for weirdos with conviction who're on a mission. Sometimes this mission is clear. Other times it's not. But what's common is that there's a reason for our founders to persist and make the kinds of tough emotional decisions that most folks can't.

What makes a founder our special kind of weirdo is a mix of extremely high openness and conscientiousness. If we were crewing a ship during the Age of Discovery, our founders would be the people who dream of exploring the new world and discovering new species but don't mind scrubbing the deck and cleaning up others' mess. Building anything meaningful and new is back-breaking work that requires hard work and the willingness to explore.

In addition, Michael and I took a decision theory course at the very beginning of 1517, ten years ago. The biggest takeaway is almost zen koan in nature. 

You must untether the decision you make at the time with the outcome of that decision. You can make a good decision that has a bad outcome and you can make a bad decision with a good outcome. 

Decision quality is about the inputs, diligence, and thoughtfulness at the time of the decision. The outcome is a combo of will, ambitions, team character, market forces, luck, and other traits that go into the stone soup of having a great success. We are quite clear and humble that we have control only of the former (our decision quality) and not the latter (the long term outcome).

The 1517 Medici Project offers $1,000 grants to help young people kickstart projects. What results have you seen from this and what are some ways those people use the money?

People have made a robotic squirrel and a baby elephant trunk, a monument to oil derricks in Austin, a photobooth and a few of them have built marquee portfolio companies, like Deepgram and Mach Industries. I think that a part of the reason why we've had such great results from the Medici program is because we don't lean very hard on folks to give us results. We check in on them and try to log face time with our grantees, but we are - in general - pretty hands off. We don't ask for receipts or accounting or budgeting or any of that. We actually don't even know how most of them use the money. That's between them and their card processor. Our job is to be their professional fairy godparents. We're there to give them a nudge and see where they go. And we trust them to do their best. 

I know our light touch shocks people, but this is how things used to be. Places like Bell Labs would give people the resources they need and step away to let them do the rest. I think we've forgotten that the vast majority of people are honest and want to do their best. We try to hold on to that at 1517. So no, I can't tell you how they use the money. But I can tell you that Mach’s founder, Ethan, was just in high school when we cut him a $1K grant to start prototyping a new type of rifle. Today, Mach is in a 100K sq foot facility and employs some of the best in the business to keep democracy safe.

How do you foster a sense of community among 1517 Fund founders and stakeholders?

By meeting them in person and spending a lot of unstructured time with people (going for a walk, dinner conversations, playing werewolf, book club, etc!). One of the counter-intuitive things we embraced before others is that when it comes to connection physical > virtual. I think something magical happens when someone who has been ostracized for being different finds a room of people who accept them for who they are and are just as ambitious as they are. I think I will let one of the attendees of our fall camp for teens explain it in their own words,

"I have always been someone who’s hesitant to trust/connect with people because I feel like they don’t actually understand me/I can’t relate to them. But I think that the people I met at 2E [1517's Fall Camp for teens!] are people who do understand me. And you have no idea how special that is to me.

People I feel like I can truly connect with and be myself around. People who I can have good conversations with, people I would choose to be around and would probably travel long distances to see again. That weekend gave me a new hope for people, and that I can find (and have found!) people I can really relate to. It doesn’t matter that they’re in a different country, cuz we’ll figure out a way to meet up again. So thank you for that[.]"

What industries or emerging technologies are you most excited about right now, and why?

Glowing bunnies! One of our 1517 startups, The Los Angeles Project, is looking to make glowing bunnies and unicorns real. And I can't wait! When we started 1517, I didn't imagine we'd be funding a lot of biotech, but the rise of synthetic biology has changed everything and we now have portfolio companies that are trying to cure chronic disease - and it seems like they might succeed too!

Reflecting on your journey, what has been the most unexpected challenge you’ve faced working with young entrepreneurs?

The biggest challenge consistently has been other investors! I've met investors who've tried to take advantage of a promising young person on the come up. I've met others who are happy to sing the praises of a founder to me for over a year, but are unwilling to take out their checkbook and invest. And I've met plenty of others who fall somewhere in between! I think our society would progress faster and we'd get a lot done, if we just gave young people resources and got out of their way. 

We met one of our portfolio company founders, Ethan, when he was in HS and gave him a Medici grant, then wrote an angel check and now he might help shape the future of geopolitics. I'm incredibly proud of how far he has come! I wish others would do the same for more young people! 

If you could fund any moonshot idea today, what would it be, and why?

A friend, and I am so indebted to my super geeky friends (they became Thiel Fellowship mentors, help us with diligence at 1517, and overall educate me on so many things because I am a social learner) introduced me to Project PACER, or as some people affectionately call it - redneck fusion! It's a simple but radical idea. We've already achieved fusion with nuclear weapons. What if we tried to safely harness nuclear explosions? I would take a Dyson Sphere or three also. 

We need more bold, wild, and crazy ideas so that we can build a better world for all mankind. :)

Best,
Justin

Founder of Just Go Grind

P.S. Hiring? Check out the team at Athyna