Please enjoy this transcript of my interview with Eric Tarczynski, Founder & Managing Partner of Contrary. Transcripts for other episodes can be found here.
Transcript – #159 Eric Tarczynski, Founder & Managing Partner of Contrary: Favorite Books, Lessons Learned as an Investor, Superpowers, and More
Daniel Scrivner (00:00):
Eric, I am so thrilled to have you on 20 Minute Playbook. Thank you so much for joining me and for coming on.
Eric Tarczynski (00:04):
Likewise. Thanks for having me. I'm excited to be here.
Daniel Scrivner (00:06):
Yeah, I'm really excited to have you here. The first question I always love to start with, and this is more the rapid fire interview type we're going to do, is I'd love to start with a recent curiosity or fascination. What I'm curious is, what question or idea have you been pondering? Or what have you been fascinated by recently? What's on your mind?
Eric Tarczynski (00:23):
Aah. Good question. I think the thing that I've been thinking about the most recently is, I mean, I'm constantly thinking about venture and firm building and all those kinds of aspects. I think most recently what's been top of mind for me is kind of like, where do we go from here in the venture world? I think last year was such a crazy year, but it felt like one of those years where everybody kind of knew it, and I think oftentimes you look back even 10, 20 years ago or kind of like the first dot com bust, and most of the money gets made in these weird id of decade-long bull cycles in the last couple of years. You have this kind of tacit acknowledgement from everybody that, "Yes, it's crazy, but we're still going to play the game and until the music stops."
That was really emblematic of last year, and this year obviously there's been a tremendous hollowing out. I think by many stretches actually just kind of reverting to the mean, which I think is good and healthy and all those kinds of things, but I think some good argue that tech has even oversold. A lot of companies down 70, 80, 90% over the past 12 months.
Daniel Scrivner (01:43):
Eric Tarczynski (01:43):
Yeah, and so it's kind of like, "Well, what happens from here?" Whether that's startup valuations, whether that's fundraising for GPs, whether that's kind of like for the market at large, how long does it take for us to recover from what we're experiencing right now? How do you best play that, both as a startup founder, but also as a fund manager? Yeah, so I think that's been on my mind quite a bit, and there's so many different moving factors there. You have the macro, you have how founders are operating and thinking, you have how like LPs are operating and thinking, how GPs are operating and thinking. All of that kind of combines into like the startup and venture machine, so I've been thinking about that a lot lately.
Daniel Scrivner (02:34):
Well, I mean, it's fascinating, and it is, it's been on my mind as well, too, because it does feel like, one, I guess two things maybe to point out. One, a lot of VCs that I talk to obviously agree. I haven't talked to a single person that hasn't seen just a massive swing and felt this massive swing emotionally, mentally, psychologically, all of it. What's interesting is a couple of people have cited that part of what is so exacerbating about this particular one that is that it's really played out in like six months from the end of Q1 until maybe where we are today, and that really startup valuations didn't start tipping over until the end of Q1.
There's just the speed, and then the second piece is there's so many moving factors, to your point, and there's the rise of inflation. There's much higher rates. What does that mean for startups going forward? I'm glad you're thinking about it. If you have any secrets once you start figuring this out, please share them on Twitter. We call all learn from you?
Eric Tarczynski (03:23):
I will. The one thing I will say is I think everybody, maybe not everybody, but there have been a lot of people who... I remember in... I think I tweeted this recently, actually. I remember even in February or March or April and a lot of people out there were like, "This'll blow over by the summer," or like, "By the fall we'll be back to normal," whatever. I mean, number one, obviously that's not happened, but I think number two is this isn't going to change for a while. I think what a while means is I think, frankly, I do not know, but I think very clearly next year is going to be painful as well. There's no world at this point where... We haven't even started to stabilize the macro yet I guess is my point.
You think about inflation or just the broader macro and it feels like things are going to continue getting worse before they get better. Then, you think about where early-stage venture falls into that equation, and I mean, early-stage venture has probably the single biggest lag relative to any kind of private markets or even public for that matter, like half the class out there. It's probably a good six-to-nine-month lag on these things before it hits early-stage venture.
Even if things magically kind of snapped and changed today, you're probably looking at the middle of next year before there's any kind of normalization. It really does seem like it's going to be 2024 at the earliest before I think things kind of start to bottom out and pick up. That's how we're thinking at Contrary is I think we're going to be in for quite a while still, so...
Daniel Scrivner (05:12):
Yeah, yeah. You don't know how long, but definitely more likely years than months I think at this point especially in time. I want to move on and we're going to do a much longer form interview all around Contrary, which I'm thrilled to do. I think what you're building is a fascinatingly different type of venture firm, but one of the big ideas is that you're focused on identifying and investing in the world's top talent. One of the questions that I wanted to ask is, what has been so talent-focused taught you about what the world's most talented people share in terms of traits, in terms of approach? What have you learned about the commonalities of talent?
Eric Tarczynski (05:46):
Yeah, for sure, so several things, but I think number one is that often starts very early in someone's journey. I think one of the core insights that we've been able to extract now doing this for the past three, four, five years is that for us, we're looking for people who are likely future founders. There's kind of this tech startup lens that we're viewing things through, but nonetheless, exceptional people are exhibiting unique traits very early in their journeys. The way we think about it actually is we have entire kind of conviction in this idea of by the time somebody finds themselves in college, they've very likely already done something exceptional in their lives if they're the kind of person that we want to back or that we want to have as a part of our fellowship program or that we want to get to know, whatever it might be.
Quite often it's not that they started a company. In fact, it's typically not the case, but maybe they were a world class pianist or athlete or whatever it might be, there's some demonstrable level of grit that they've exhibited and they have a very kind of clear and lucid articulation of what they want to do moving forward as well. I think that for us above anything else, that is probably the single most powerful trait and characteristic that we've learned about folks is it starts early. Sure, I imagine there are a number of late bloomers or whatever so to speak that maybe we miss on or whatever, but I think by and large it is a trait that kind of starts early. I think that's number one.
Then, I think number two is, again, these people know what they want to do. They have a very clear sense of kind of like the mark that they're going to imprint on the world. If you go and talk with the right people, they're the kind of person that Contrary is looking to get in front of. They'll say some version of, "Yeah, I'm working at Startup X right now because I want to understand these three things. I want to understand what it takes to fundraise, I want to understand what it takes to be a great manager, and I want to learn under the auspices of somebody maybe who's already been there and done that, serial founders, sold a company before.
"More than anything, I want to learn what it takes to grow a hypergrowth startup on somebody else's dime and then reputation. I want to to that for one or two or three years. After that, I think those are the three most important pieces of the puzzle that I think I want to understand before kind of going and starting my own company. Yeah, in a year or two I'm going to quite and start my own company and then staff." They say it very matter-of-factly like there's no doubt. This is what will happen.
Daniel Scrivner (08:36):
It's not iffy.
Eric Tarczynski (08:36):
Daniel Scrivner (08:36):
Eric Tarczynski (08:39):
... and I think that's rare when you kind of even talk... You're talking to people who are 40, 50, 60 years old and they don't have that level of conviction, I think, in what they're unequivocally doing to do. I think those are the two most important kind of like traits that we've been able to kind of suss out. Obviously, there are many more. We could talk about somebody's technical ability or things like that, but I think more than anything else is it starts early and these are people who have conviction, not only in themselves, but I think in kind of what they want to do.
Daniel Scrivner (09:08):
Yeah, that's fascinating. I would not have picked those two, although I think conviction's synonymous with self-confidence, so sure, maybe that one is there. I want to ask a very different question, which is, if people following could shadow you for a day from the moment you wake up until you go to bed, as creepy as that might be, what do you think they would be most surprised by? I think what we're trying to get at there is, what's unique about the way you approach work, the way you approach life, the way you go about your day? Any of those.
Eric Tarczynski (09:32):
Am I allowed to say two things?
Daniel Scrivner (09:35):
Yeah, of course. Always.
Eric Tarczynski (09:37):
I think number one would be how much sleep I get.
Daniel Scrivner (09:41):
It's a good start.
Eric Tarczynski (09:42):
Yeah, yeah, yeah. I actually... I think for me at least, this has been the single most important factor that's prevented burnout over the past now five-plus years of building Contrary. I think to be very clear, I still work a ton. I work six and a half out seven days a week, oftentimes 12-plus-hour days, but I do little else other than work, sleep, and spend any free remaining time that I can with close family and friends. That is my life. What I've found, though, over the years, I mean, even in the very early days of Contrary when I was working even more than I am today, I could work 12, 13, 14, 15 hours a day, but if I were able to get eight, sometimes nine hours of sleep a night, I would wake up the next morning and just be ready to get after it.
There would be no missing a beat, no burnout, no exhaustion, no dread going into a new day. It was always just kind of excitement, energy, enthusiasm, and I was able to really attack the day rather than feel this sense of like, again, kind of like dread going into it. For me, four or five years in, I love Contrary just as much as ever, and I largely attribute that to the fact that I've never felt that way. I've never felt that sense of burnout or dread or exhaustion, and I owe it largely to sleep. Maybe partially it's my own demeanor, but I think sleep is the really, really big kind of piece of the puzzle. I think that's number one.
Then, number two is probably just the amount of times in a given day that I do the same thing, and what I mean by that is like that I tell the Contrary story. I think when my fiancee kind of jokes that she could repeat the entire Contrary playbook at this point because of how many times she's heard me say different versions of the same thing over the years. There's a lot of repetition in the role because you are selling. You are selling to everyone. You're selling to potential hires, to potential founders, to potential investors in the fund, to journalists, to whomever.
At the end of the day, you're telling the story of your organization. As a CEO, that's your job, and so there's a lot of repetition. I think maybe that doesn't sound glamorous or exciting or interesting, but I think that's what it takes. I mean, go talk to any presidential candidate and, how many times in a given day do they say the same stump speech? It's no different, so yeah.
Daniel Scrivner (12:35):
Yeah, you can't ever get tired of telling that story. I feel like it's a core skill. I want to ask one follow-up question on the sleep piece, which is, I guess, two thoughts. One is I imagine, at least for myself, I find it hard at the end of the day to shut off my mind. Do you find it hard to shut off your mind? Along that with that, is there anything you've done to optimize sleep?
Eric Tarczynski (12:54):
Yeah, it's super challenging to... I'd say once I've stopped work, I don't know, whatever time that might be, eight, nine, 10, I think for me the trick has been to just do something else, whether that's watch an episode of The Office or talk with my fiancee about how her day was, or you kind of do something to just stop. I've tried to be very deliberate about this where I can. It's not always possible. Sometimes there's something that's just kind of wrangling or there's something that's not good that's going on or whatever, and it does become a little bit all-consuming, but I try to pick a moment in the evening depending on energy level, whatever, where I'm just done.
I will no longer for the rest of that evening talk about something work-related, and so I kind of have this like social contract that to the best of my ability I try to enforce this with my fiancee. I think that's worked reasonably well, and so by the time you end up getting to bed one or two, whatever hours later, you can kind of... For me at least, I have the ability to just kind of shut off and move forward and turn the page to the next day. I'm not somebody who often will kind of stew before they go to bed. I think for me, it's just been kind of drawing that line in the sand, but I think it's hard for a lot of people, so yeah.
Daniel Scrivner (14:21):
Yeah, I mean, in many ways it sounds obvious, but it's also it sounds very intuitive, very logical that, of course, you just need to figure out how to draw a line in the sand and be able to do that as intentionally as possible.
Eric Tarczynski (14:31):
Yeah, you have to, and maybe this something that I think that I having discussed this with a lot of friends or whatever, I think this is something that I'm better at than most people is knowing how and when to shut off. That can be at the end of an evening, that can be on a Saturday afternoon, or that can be on vacation. As an example, we went to Iceland this past summer for a few days off, and by and large, I was able to say, "Okay, I'm on vacation. I'm done. I'm shutting my phone off, and for these three or four or five days, I'm going to do to the best of my possible ability not think or look at my phone and move on."
My fiancee could not do that. Like literally we would be at any kind of area where there's a Wi-Fi hotspot or something and just like had to be engaged on the phone, whatever. I think for me, I mean, it's a superpower. Maybe it's whatever. It's I am almost always on, but then just having an ability to know when is enough and turn the page, so yeah.
Daniel Scrivner (15:46):
Yeah. I want to ask a question about values and standards, and you talked about, which makes sense, that you're working 10, 12-hour days say six, six and a half days per week. One of the questions I wanted to ask is, what sorts of values and standards do you bring to your work? What's important to you about how you show up day to day? This could be for your team at Contrary, for the founders you work with, for the investors you work with. What comes to mind?
Eric Tarczynski (16:09):
Yeah, I kind of view this through two lenses. I view this through the lens of, what is the business that we are in? Number two, what do I expect for not only myself, but also the team and the country culture that we want to build? I think if you look at it through that first piece of, what are we in the business of?, at the end of the day, we're in the business of serving founders. What that means is you never stop. I have to be just as available for somebody on a Monday at 1:30 as I do a Saturday at 7:00 AM. You are in the business of serving and helping founders, and that never ends. That is a five-decade-long kind of commitment, and it's something that I think I, and by extension we as a firm, take very, very seriously, because this is how you earn your reputation. You earn your reputation.
I mean, even at Contrary, we try to respond to our founders within 30 minutes, whether it's text, email, Slack, you name it, like 30 minute SLA. It's the difference between that hyperresponsiveness and not which often determines, number one, how founders think about you and your reputation and brand and all of those things, but also who they go to first. Who do they go to first when they have a really important hiring decision or firing decision when they're thinking about their fundraise, when they get their very first term sheet and they want somebody to run it by you? You earn that trust and that ability to be somebody's first call. It doesn't just happen, and it's very easily lost as well conversely. I think that's number one.
Then, on the firm set of the equation for us, we talk a lot at Contrary about building a culture of really three characteristics. I think for us it's, are you ambitious? Are you entrepreneurial, but are you kind? I think for us, those are the three traits that we value the most is we want people that are going to work super hard. We want people that are creative and are trying to build kind of one of the best venture firms of our generation, but we also want good people.
We also want to create an environment where nobody's trying to step on somebody's toes and it really feels like a team and like we're building something special together, that being the operative word. There are a lot of ambitious entrepreneurial people out there who are really assholes, and those are people that we don't want at Contrary, so yeah, I think that's really how we think about it.
Daniel Scrivner (18:59):
I love the second part of your answer because especially preparing for this, doing a little bit more research on your team, that does show up and it does some through. I mean, they're all very smart, ambitious, very talented people, but on one there seems to have any ego. I love the second part of your answer because especially preparing for this, doing a little bit more research on your team, that does show up and it does come through. I mean, they're all very smart, ambitious, very talented people, but no one there seems to have any ego in a negative way.
Eric Tarczynski (19:13):
Yeah, we do our best, and we do our best to weed it out early if we can. Yeah.
Daniel Scrivner (19:17):
There we go. I want to ask maybe a similar but different question, and I want to talk about the areas where you feel like you have an edge or superpower. This is particularly about you have a really interesting background, you've done quite a bit of building and investing in some very different roles. What do you think of as your superpowers? How do those show up day to day in your work and life?
Eric Tarczynski (19:37):
Yeah, so I think for me on a personal level, I think part of it's actually what we just talked about, which is I think I'm now five-plus years in and I get even more joy from Contrary than I think we did the day that I started. That kind of leads to this natural extension of that which is Contrary is my life's work, and I think when you know that you're going to be building something for a multi-decade period, you can think on incredibly long time horizons. For me, I'm not trying to flip Contrary. This has been a three, four, five-year endeavor. In fact, I've already been working on it for five years. This is a 10, 15, 20, 30-year endeavor, and so I think we have tremendous conviction in the North Star and what we're building towards and it allows me to think on really, really long-term time horizons and know that the day-to-day competitors, competition, whatever.
It's largely irrelevant and when you think on those kinds of horizons. I think that's number one. I think number two is just this kind of startup ethos I think that we infuse into everything that we do. We run Contrary like a startup. I didn't pay myself a dime for the first five years of Contrary's journey, and even today, I'm the lowest paid person at the firm. I think there are many, many, many, in fact, basically all other VCs or DPs who don't operate their firms that way, and so I think that gives us a tremendous edge on those firms in terms of our ability to kind of scale, build the firm, how we operate, how fast we move products that we launch. It allows us to leave a lot of those folks in our wake, so I think those two things are probably for me the most important pieces of the puzzle, yeah.
Daniel Scrivner (21:48):
I want to switch tacts and talk a little bit about favorite books. I don't know if in the 10, 12 hours that you're working in a given day if that leaves much time for reading. Maybe it's more short form than long form, but when you think about books that have had an outsized impact on you, and this can be related to investing, related to founding and building companies, can be science fiction, what comes to mind? What are some of your favorite books?
Eric Tarczynski (22:12):
Yeah, so I definitely don't have a lot of time to read in the day-to-day, although it's funny, I probably read the most on flights actually because it still feels like this kind of last bastion of... I'm sure until Starlink or somebody makes high quality Wi-Fi in flights, in which case I'll just keep doing work, but I do a lot of my reading on flights when I can. I think for me, probably the most powerful or one of the most powerful books that I've ever read is this book called The Rational Optimist by Matt Ridley. Have you read it?
Daniel Scrivner (22:51):
I have not, but I haven't purchased and it's on my list, so yes, it's good not to get to it.
Eric Tarczynski (22:53):
Yeah, definitely going to read. Yeah, so I think for me it was powerful because we live in a world that is pretty consistently negative from kind of the bottom to the top. If you ask people how do they feel about their daily lives or how do they feel about how the world is progressing, all the way up through our politicians and leaders or the nightly news, it's often quite negative. When you actually take a step back, and this is kind of a core underlying tenet I think of the book, when you actually take a step back and look at the data, I think humanity is on this inexorable path forward of abundance and positivity. There's no doubt across almost any cross-section, whether it's war or energy or you name it, food, it just doesn't matter, we are dramatically better off than we were even 50 years ago.
I think for me, it's an important book because it makes you realize, "Hey, kind of so much of what's being said, talked about, written about, whatever is actually just wrong when you look at the data." It makes me far more positive and optimistic, I think, about humanity and human progress and understanding that we are marching forward I think far faster than it seems like in the day-to-day, so...
Daniel Scrivner (24:33):
I love that. That's a good recommendation for me to read the book and we'll make sure to include that in the show notes for so everyone else can find it as well, too. I want to ask two closing questions and one, maybe this is related to sleep, although I'm hoping thinking maybe you have another one, but the first question I want to ask is about a tiny habit that's had the biggest positive impact in your life. What I'm kind thinking of there is anything from nightly reflection, planning your day each morning, setting an intention before meetings. Just is there any small kind of work hygiene thing that's had a very positive impact?
Eric Tarczynski (25:03):
I'll just again throw you a curve ball. I... It's not a work hygiene so much as it's kind of a maybe life hygiene. I've been really fortunate, I think, to have sort of four very close childhood friends. I mean, we grew up together. I was in kindergarten with one of them, and we're now it's been 25 years that we've already been close friends. There's not a single day that goes by where we don't all talk with one another in some way, shape, or form, and whether that's text or over the weekend we play a couple of quick games of like virtual hearts or we do a couple trips every year. We try to be incredibly intentional about talking literally every single day, and it can be a couple quick texts or whatever it might be, but I think when you're building something and when you're in the thick of it, whether it's a fund or a startup or whatever, having a support network is really important.
For many people, this is friends or significant others or whatever it might be, and I think I'm fortunate to have a family as well that's been super supportive throughout the journey, but I think having my kind of four close friends and having a group of people that you talk to every single day, it's been really powerful because I know that I don't need much else at the end of the day. I already have my close friends. I already have my family. I already have my fiancee. Really, I can dedicate all of my other energy to building Contrary, and that's it. It's as simple as that, and so I think for me, that's been kind of one of life's greatest blessings. I think it's a very powerful hack and I think something that I feel very fortunate to have because as I talk to more people, whatever, I think there are a lot of people that don't have that, so yeah, I've been very fortunate in that regard.
Daniel Scrivner (27:16):
Yeah, I mean, I love that answer and it's also not an answer I've ever heard before, so I think it's somewhat rare in a wonderful way. Okay, last question. If you could go back to the start of your career, maybe for you it's even going back to college and whisper some words of advice, reminder, something, anything that you'd like yourself to remember, maybe to approach life differently or just to have in mind to go through the journey. Is there anything you would tell your younger self, the advice you would give?
Eric Tarczynski (27:41):
Yeah, I think two things. I think number one is brands matter and I think number two is people vouching for you matters. I think those have been perhaps the two biggest lessons of the entrepreneurial journey or certainly the firm-building journey over the past kind of five or so years is I think this is probably a little bit less true in the startup world than it is the financial services business, so whether that's hedge funds, E-funds, center funds, you name it. Those two things, kind of brands and vouching in the venture world are I think when you really boil it down some of the only things that matter because it essentially translates to credibility and when... It's really interesting. I made a conscious choice early in my career to not do that, to not seek out. I've never worked at a brand name place in my entire life and that was intentional.
It was intentional because I was always optimizing for the velocity of learning, and the velocity of learning is the greatest oftentimes at non-brand name places because by definition you're not part of a machine. You're a part of building something, and so you're learning while building, and so that's actually very, very powerful. I would recommend everybody do a bit of that wherever you can, but I think ultimately not having having worked at top venture fund X or going to top school X or not having some very kind of name brand, well-connected person being able to vouch for you in the very early days of building something I think hurt in retrospect.
When I think about the things that I would do differently, I think you always have this kind of youthful naivete when you go into anything, which I think is great actually because I think a lot of things wouldn't happen otherwise, but when you go into it, in retrospect, I could have focused a little bit more on that than I did. Fortunately today, it's kind of no longer an issue, but I think it costs us time in the early days, and so I think that is a piece of advice that I would give myself is, "Eric, don't be so confident in your abilities alone." At the end of the day, humans look for other heuristics and ways of attaching credibility or credence to something, and you need to also play that game in addition to kind of blazing your own path, so...
Daniel Scrivner (30:36):
Yeah, and I love the way you described it as playing that game because it does feel like that a little bit where you're kind of intentionally recognizing, one, that this is valuable, whether you agree with it or not, and two, that it's actually something that you do need to try to be good at or bias for or lean into. Perfect note to end on. Thank you so much for coming on, Eric. I appreciate it.
Eric Tarczynski (30:55):
Great to chat. Thanks, Daniel.
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