Interview
Chris Paik: How I Raised $400M; Substack's Broken Business Model; Music on TikTok vs IG | E1011
- Chris anticipates Thrive Capital remains Josh Kushner's life's work while he establishes Pace as his primary career path, with a long-term plan to transition Pace into a larger partnership structure of five or six equal general partners within 30 years, deliberately avoiding the "co-founder" title to preserve agency.
- Pace Fund One employs a three-and-a-half-year deployment period to mitigate timing risks, targeting a portfolio of high teens to low 20s companies with an aim to hold 20% ownership, expecting that success in 70% of these cases constitutes a hit; bandwidth constraints are projected to alleviate as companies mature or exit.
- Investment strategy focuses on companies requiring existential capital support, such as those needing a J-curve without initial revenue, while excluding businesses with no market risk or those that can exist without venture capital, including many direct-to-consumer brands.
- Chris expects market timing to be a critical input, asserting that founders cannot create market waves but must surf them, with being one step ahead being the optimal position, and views great founders in bad markets as structurally unlikely to succeed.
- The firm's investment thesis relies on identifying companies where "virtuousness" is inversely related to enterprise value, utilizing a framework of the seven deadly sins to categorize human motivators and analyzing platforms like Twitch and TikTok through this lens of creator enfranchisement.
- Chris plans to alleviate future bandwidth issues by adding more equal general partners if the portfolio expands by 20 companies, while maintaining a personal discipline to conduct all diligence without associates or analysts to preserve conviction.
- Current venture capital ecosystem inefficiencies include "heat loss" from incentivized entrepreneurship, structural misalignments in management fees due to closed-end fund mechanics, and regulatory issues regarding carried interest taxation.
- Regulatory changes taxing carried interest as ordinary income are predicted to cool the industry's overheated attraction and diffuse talent, while large multi-billion dollar funds raised recently are expected to "get lost to the sands of time" over a decade-plus period.
- Structural misalignments exist in GP commitment requirements, acquisition management incentives, and round construction, where investors often bring in partners to whom they owe favors rather than those optimal for the company.
- LPs for Fund One were primarily drawn from longitudinal relationships, with first-time meetings deemed unlikely to yield commitments, and Substack is noted as potentially facing future margin compression as top creators negotiate lower economics.