Wesley Chan on what he looks for as he’s shopping for potential unicorns

Investor Wesley Chan has shown a knack for making very early investments into multi-billion-dollar unicorns, such as Plaid, Gusto, Flexport, and, most recently, Canva.

Chan comes from an unconventional background — he grew up in an immigrant family and had only middling grades in high school. But he landed a job washing test tubes in a lab at Caltech and impressed lab manager Ellen Rothenberg enough to get her help in getting into MIT.

From there, his serendipitous journey continued: He majored in computer science because it seemed like a good career path, but landed in Silicon Valley just after the dot-com bust, when the only company hiring was a search upstart called Google. After nearly a decade there working on vital products such as Google Analytics, Chan was ready to do his own thing, but co-founder Sergey Brin convinced him to join the company’s nascent venture arm, then called Google Ventures (now GV), and from there he’s had a long career in venture, spinning out his own firm, FPV, with partner Pegah Ebrahimi, a few years ago.

The point of all this is there’s an incredible amount of luck and timing involved in any success story, and Chan is the first to admit it, telling the audience at TechCrunch Disrupt 2024, “luck matters a lot, but the best founders who know how to push luck in their favor really have a keen sense of why timing matters.”

He points back to what Brin told him about founding Google, which they started at a particular moment when other search engines were trying to keep users on their sites as long as possible to show them ads. Google’s innovation was delivering results almost immediately, then giving users no particular incentive to stick around, but to send them off on their way. (It’s changed a bit since then.) But Brin said that timing was everything — if they’d started six months earlier or six months later, business conditions would’ve been different and the competition wouldn’t have given them such an easy opening.

So what does Chan look for when he’s trying to pick the next unicorn? He says there are almost no commonalities in the companies he funds except for founders who remind him of Sergey Brin and Larry Page, with a strong conviction that they are solving an urgent and timely problem with truly unique insight. That, and a focus on building a great product first, instead of trying to buy customers or buy growth.

“A lot of challenges for founders in the early stages, they raise money and then they spend it all in 18 months, buying growth, but there’s no reason for people to stay on it, or engage in the product, or tell other people. And then you burn all your money, and you go, oh, I need to raise another round.”

That product focus is also vital if you want to get Chan’s attention. He doesn’t find founders at conferences or events, he says, but only talks to the ones who are introduced to him through word of mouth from other founders in his network.

“There are only two of us at the firm, right? We can’t go take every cold email or every pitch, or every person that shows up at the door. So the best founders come to us through our other founders, right? They build something we either notice or our founders notice. You got to meet this guy. Like, the products, incredible. We’re using it at our board meetings. We’re using at our companies. I have it on my iPhone, right? Or we meet them through our network, where one of our founders really says, ‘I’m putting some money in this guy; he’s amazing.’”