This episode features Alex Mittal, an early-stage investor who explains how to spot investments that look bad but are actually great. He says the best opportunities are both 'crazy' and 'boring,' and market consensus is the biggest obstacle. He's bullish on Ethereum but warns that price drops with usage growth are the real signal. Key holdings: Coinbase (invested when Bitcoin was $6, now the top crypto exchange), GitLab (open-source and remote, valued over $1B), Instacart (grocery delivery, succeeded after Webvan failed).
Alex Mittal, co-founder of Funders Club, shared insights from nearly 300 early-stage investments over the past seven years on the Invest Like the Best podcast. Funders Club is a unique venture capital firm built around a network of investors and entrepreneurs, where members submit deals and co-inves
Alex Mittal, co-founder of Funders Club, has invested in nearly 300 early-stage companies over the past seven years. The central theme of this episode: how to systematically identify investment opportunities that "look bad but are actually excellent." Mittal's core thesis: the best early-stage investment opportunities often simultaneously exhibit the traits of "seeming crazy" and "seeming boring," and market consensus is precisely the biggest obstacle to recognizing these opportunities.
Alex Mittal argues that, although Funders Club has a network of over 20,000 accredited investors, investment decisions must be made by a centralized team. "We spent a lot of time studying whether we could use crowdsourcing to pick outliers, and the conclusion is—you can’t rely on consensus."
Most VCs either have scale without trust (e.g., pure platforms) or trust without scale (e.g., traditional partnerships). Funders Club seeks to achieve both.
Alex Mittal emphasizes that this intersection is far smaller than people imagine, and even after a company grows, it remains non-obvious. "When Facebook was valued at $2 billion, most media outlets were still urging it to accept Yahoo's $2 billion acquisition offer."
| Case | What Seemed Terrible at the Time | Actual Outcome |
|---|---|---|
| Coinbase (invested in 2012) | Bitcoin at $6, only association was the Silk Road black market | Became the largest cryptocurrency exchange platform |
| GitLab | Open-source model (code given free to competitors) + fully remote work | Valuation exceeded $1 billion |
| Instacart | Webvan had just failed, burning $1 billion; trying grocery delivery again was "insane" | Became a unicorn |
> "If innovators themselves cannot quantify future value, how can investors possibly do so?" — Alex Mittal
Alex Mittal believes that Ethereum's core value lies in "trustless transactions and computation"—a foundational technology that did not previously exist.
Mittal acknowledges that "this is still a super early stage," but he cites the Financial Times headline "Ethereum Utility in Doubt as Price Plunges" as a counterexample—"Mainstream media cannot decouple price from utility, and that is precisely the signal investors should watch."
Alex Mittal points out that after the e-commerce bubble burst, VCs generally avoided the retail/logistics sector, but Amazon's rise created rigid demand for infrastructure.
| Link | Investment Case | Core Logic |
|---|---|---|
| Cross-border logistics | Flexport | Using software to transform freight forwarding, making "logistics sexy" |
| E-commerce fulfillment | Chippo | Helping e-commerce manage returns and reverse logistics, with double-digit week-over-week growth |
| Autonomous trucks | Embark Trucks | Highway scenarios are far simpler than urban autonomous driving, and truck driving is the largest occupation in the U.S. with extremely high accident rates |
| Industrial inspection | Gecko Robotics | Using robots to replace manual climbing of power plant boilers, where people die every year |
Mittal views Bitcoin's PoW race as a "petri dish for computing demand":
Alex Mittal emphasizes that he first tells entrepreneurs: "The market can make an imperfect team succeed, or it can destroy a perfect team. Choosing the right market is more important than anything else."
| Trait | Representative Figure | Specific Manifestation |
|---|---|---|
| Tenacity | Chris Bennett (Wonderschool) | Transitioned from Instagram e-commerce to "Airbnb-style preschools," enduring years of effort |
| Learning Ability | Brian Armstrong (Coinbase) | Absorbs information like a sponge; questions are not small talk but "data ingestion" |
| Curiosity | Same as above | Described by Yale's David Swensen as "the most underrated investment trait" |
"You can have a perfect team, but if the market doesn't exist, you will still fail. Conversely, a red-hot market can mask a multitude of team flaws."
| Position | Guest Stance | Key Data |
|---|---|---|
| Coinbase | Bullish (early investor) | Invested in 2012, BTC at $6 at the time |
| GitLab | Bullish (the only investment decision reversed) | Changed from "not investing" to "investing," increased holdings in subsequent rounds |
| Instacart | Bullish | Persisted despite Webvan's failure, ultimately succeeded |
| Flexport | Bullish | Using software to transform freight forwarding |
| Embark Trucks | Bullish (one of the first investors) | Focused on highway autonomous driving |
| Chippo | Bullish | Double-digit week-over-week growth |
| Gecko Robotics | Bullish | Replacing manual inspection of power plant boilers |
| OTI Lumionics | Bullish | Quantum computing + materials science |
| Neurable | Bullish | Brain-computer interface, 1-minute training |
| Chainalysis | Bullish (follow-on investor) | Co-invested with Benchmark |
| MakerDAO | Neutral observation | Decentralized stablecoin DAI |
| Golem | Neutral observation | 5x usage growth (price down 90%) |
| Wonderschool | Bullish | Turned from failure to success |
| Slack | Case reference | Pivoted from a gaming company |
1. "The best investment opportunities lie at the intersection of 'seems like a bad idea' and 'is actually a good idea,' and this intersection is far smaller than people imagine." (Alex Mittal) — Even after a company grows, it remains non-obvious; when Facebook had a $2 billion market cap, the media was still urging it to accept an acquisition offer.
2. "Even founders themselves cannot quantify future value — Google once tried to sell for $750,000, and Vitalik sold 25% of his holdings at $10/ETH." (Alex Mittal) — If even innovators cannot do it, investors should remain even more humble.
3. "A price crash accompanied by rising usage is the real signal — Golem saw 5x usage growth while its price fell 90%." (Alex Mittal) — Mainstream media cannot decouple price from utility, and that is precisely the investor's opportunity.
4. "Funders Club made zero new investments during the 2017–2018 blockchain speculation peak — even if you are bullish on the technology, you must pause when prices go crazy." (Alex Mittal) — Investing requires understanding the duality of being "bullish" and "not investing."
5. "The market can make an imperfect team succeed, and it can also destroy a perfect team. Choosing the right market matters more than anything else." (Alex Mittal) — This is a rebuttal to the "founder-first" thesis and the top piece of advice for entrepreneurs.
6. "Computing is shifting back from general-purpose to specialized — Bitcoin's PoW arms race is a petri dish for future computing demand." (Alex Mittal) — The path from CPU → GPU → ASIC is being replayed in the machine learning space.
7. "The best founder traits are not 'perfection,' but 'relentlessness' + 'sponge-like learning ability' + 'genuine curiosity.'" (Alex Mittal) — Brian Armstrong possesses all three, and David Swenson considers curiosity the most underrated investment trait.
8. "The VC industry is overly fixated on the 'perfect founder' profile, but GitLab's case proves — even if you make two seemingly terrible decisions at once, 'open source' and 'remote work,' you can still build a $1 billion company." (Alex Mittal) — This is the only case where Funders Club reversed an investment decision.