Notes: A Talk with Valor Equity Partners’ Chief Investment Officer

Antonio Gracias, light of my life

Antonio Gracias is the Managing Partner and Chief Investment Officer of Valor Equity Partners, a private equity firm founded in 2001, and an early investor of companies such as Marathon Pharmaceuticals, Paypal, SpaceX, and Tesla.

On the 23rd of February, Antonio Gracias visited the University of Minnesota to share his experiences and perspective on global leaders with disruptive business models, as part of the Augeo Luminaries Speaker Series. The series aims to showcase prominent global leaders at the forefront of disruptive innovation in a broad range of industry, nonprofit and public sector fields. These are my notes from his talk.

As a venture capitalist, we look for two separate things…

On a macro scale, we look for markets that are growing quickly and are ripe for disruption. How does your company respond to a market characterized as such?

You want someone that’s pro-chaotic, someone that gets better as the environment gets worse.

For example, Elon Musk becomes much more focused the worse the environment for SpaceX and Tesla got. After a failed rocket launch I attended, I remember telling my son that failure was okay because you learned from it. Elon overheard what I said and quickly countered that it’s actually much better to learn from your successes.

On a micro scale, we look for companies that have a business model that works. It’s okay to have a negative cash flow when Valor initially invests, but eventually, the business needs to start making money.

On Tesla and Open Sourcing

Intellectual Property (IP) is valuable, but if you aren’t able to keep up with the IP you’re open sourcing, then someone else deserves to win. If other companies begin using Tesla’s IP to create competition that ultimately accelerates the advent of sustainable transport, then we’re still achieving our goals.

On Success, Failure and People

I define success by the value I am able to add to the world, the people I touch and the lives I’m able to improve. I live a very fortunate life, so I believe that it’s important that I try to give back and care about the people in my community.

My biggest failure has been making mistakes about people, which have been very costly both financially and emotionally.The people decisions you make are the most important and difficult decisions.

It’s important that you have someone who keeps you grounded when you’re at the bottom and at the top. It is equally important that you create a great place where people with talent will want to come back.

Advice for Students

Go do something you think is cool, explore different ideas, and when you find a better idea, pursue it. Learn about your passions by analogy rather than waiting for a eureka moment because caring about something is a decision. It’s good to like what you are doing but don’t expect instantaneous passion.