E278: What Separates the Top 1% of GPs
Timestamps are as accurate as they can be but may be slightly off. We encourage you to listen to the full context.
Podcast Summary
Joshua Browder, founder and CEO of DoNotPay and solo GP at Brouter Capital, shares his counterintuitive approach to building profitable businesses and investing in pre-pre-seed startups. (00:08) DoNotPay operates as an AI consumer champion with over 100 services helping millions fight big companies and government bureaucracy, maintaining profitability with just 14 employees and paying dividends to shareholders. (00:46) As an investor, Browder focuses on being the "first believer" in founders before they look credentialed, emphasizing grit over IQ and momentum over optimization. (03:03) The conversation explores his philosophy that life comes down to one major binary decision per year rather than countless micro-optimizations. (08:09) Key themes covered: • Building profitable, dividend-paying venture-backed companies • Pre-pre-seed investing strategy focused on first-time founders with grit • The power of momentum machines in early-stage startups • Binary decision-making versus optimization mindset
Speakers
Joshua Browder
Joshua Browder is the founder and CEO of DoNotPay, an AI consumer champion company that helps millions of people fight back against big companies and government bureaucracy across over 100 service areas. Starting as a Stanford freshman helping people contest parking tickets, he has built DoNotPay into a profitable, dividend-paying venture-backed company with just 14 employees. Browder is also a Thiel Fellow and operates as a solo GP at Brouter Capital, his fourth fund focused on pre-pre-seed investments, where he serves as the "first believer" in founders before they become credentialed or obvious to the market.
Key Takeaways
Prioritize Profitability Over Endless Growth
Browder challenges Silicon Valley orthodoxy by advocating for companies to exist to make money rather than chase growth at any cost. (02:08) He notes that Facebook was profitable at Series A despite popular narratives about companies needing to lose money for extended periods. DoNotPay's success as a profitable, dividend-paying company with only 14 employees demonstrates that efficiency and profitability can coexist with venture scale. This approach allows companies to maintain control over their destiny and provides sustainable value to shareholders rather than relying on perpetual fundraising cycles.
Focus on Binary Decisions Over Micro-Optimizations
Life's most impactful outcomes stem from major binary choices rather than endless 5% improvements on the margins. (08:09) Browder emphasizes that decisions like investing in Bitcoin in 2015, starting a fund, or backing a particular founder create exponential returns compared to incremental optimizations. His impromptu decision to start his fund during a phone call exemplifies this principle - it was a split-second moment that changed his trajectory. (08:49) The key is recognizing when you're facing a power law decision and having the courage to act decisively rather than over-analyzing.
Grit Trumps IQ in Entrepreneurial Success
While above-average intelligence matters, extraordinary grit and connection to the problem are far more predictive of founder success. (12:28) Browder debunks the myth that Olympic math medalists automatically make great founders, instead looking for people with "chips on their shoulders" who won't give up. He cites Adam Gilt starting Owner.com to save his mother's pandemic-destroyed dog walking business as the type of personal mission that drives lasting commitment. (13:20) Entrepreneurship involves "eating glass" on difficult days, and only founders with deep personal connection to their mission will persist through inevitable challenges.
Create Momentum Rather Than Chase Hype
Startups succeed as "momentum machines" where weekly progress builds credibility and prevents the number one cause of early-stage failure: running out of hope. (17:24) Browder acts as a "one-person accelerator," helping founders move to San Francisco, securing visas, and creating an "escalator of momentum" from naming the company to first customers to hiring. (18:07) This approach of bending the world to create success proves more valuable than predicting outcomes. The momentum compounds like a snowball rolling downhill until the company becomes unstoppable with hundreds of employees.
Look for Top 1% Skills Demonstrated in Teenage Years
The best founder predictor is evidence of extraordinary execution ability during adolescence, which varies by generation. (15:20) Browder's generation proved themselves through jailbreaking iPhones and iOS development, while Adam Gilt's cohort built six-figure monthly revenue through Minecraft servers. (16:11) Current founders might demonstrate ability through Roblox development, sneaker bots, or even SaaS products as teenagers. The key is completing the entire lifecycle from idea to execution to money in the bank, proving they possess the grit, innovation, and skills necessary for entrepreneurial success.
Statistics & Facts
- DoNotPay operates with only 14 employees while serving hundreds of thousands of customers across over 100 consumer service areas, demonstrating extreme operational efficiency. (00:46)
- Browder has interviewed over 1,000 prospective Thiel Fellows across six years of involvement with the program, giving him extensive pattern recognition for identifying high-potential founders. (14:06)
- His fourth fund averages a $5 million entry valuation across investments, with no reserves allocated, allowing maximum focus on pre-pre-seed first believer checks. (26:24)
