Rapidly test and validate any startup idea with the 2-day Foundation Sprint (from the creators of the Design Sprint) | Jake Knapp & John Zeratsky (Character Capital)

0:00 we would have a conversation with founders. You're saying like gosh, I'm I'm almost embarrassed to ask this question, but who exactly is your target customer? And three co founders have three different answers. After these hundreds of teams that we've worked with, we've seen that there's one failure mode, which is they Don't know what that set of basics are. Then there's this other failure mode where they never test it. Let's talk about the foundation sprint. Walk us through the process. How does it start? What are the steps? The very beginning of your project. We recommend this kind of crazy idea that you clear your calendar so the core team come together for 10 hours, roughly, and go through a sequence of activities. So that we can make all of the key decisions together. I think a lot of people wonder as they're hearing this is why don't I just build something and launch it and learn. One phenomenon we've seen when teams are building things really quickly with AI is that the more AI generated or assisted they are, the more generic they tend to turn out. Put yourself in a situation where you can slow down and do some hard thinking. Some deep thinking about what's actually gonna make your product unique, going fast can actually slow you down in the long run. Today my guests are Jake Knapp and John Zaratsky.

1:04 The framework that Jake and John share in this conversation. Is basically the missing manual for founders and product teams trying to refine and test their startup or product idea. It's called the foundation sprint. And it emerged out of the famous design sprint, which Jake and Jay-Z co-created, and also from working with over three hundred teams building both new product at startups. And also with teams of larger companies like Google, Microsoft, YouTube, Slack, Uber, and many more.

1:28 They published a book with this framework at the beginning of this year called Click, and the excerpt from that book that dives into this framework is one of my most popular posts of all time and is one of the rare non AI posts amongst the top post rankings. In this conversation, make sure to get your pencils out, because we go through exactly how to execute this two day sprint, where at the end of it, You have a very clear hypothesis that your entire team is aligned around that clarifies what you're building, who you're building for, how it differentiates from competitors, and how to quickly test it with real potential customers. The two days that you invest in a sprint might be the highest ROI days in the history of your product, and I highly encourage you to do this if you're in the process of baking an idea. If you enjoy this podcast, don't forget to subscribe and follow it in your favorite podcasting app or YouTube.

2:11 Also, if you become an annual subscriber of my newsletter, you get a year free of a bunch of amazing products. Including bolt, linear, superhuman notion, perplexity, granola, and more, check it out at Lenny's Newsletter.com and click Bundle. With that I bring you Jake Knapp and John Zaratsky. This episode is brought to you by Brex, the financial stack used by one in every three US venture backed startups.

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3:01 You can send and receive money worldwide at lightning speed, you can get 20x the standard FDIC protection through program banks, and you can earn industry leading yield from your first dollar. while still being able to access your funds any time. To learn more, Check out Brex at brex.com slash banking dash solutions. That's BREX dot com slash banking solutions. Many of you are building AI products, which is why I'm very excited to chat with Brandon Fu, founder and CEO of Paragon.

3:32 Hey, Brandon. Hey Lenny, thanks for having me. So integrations have become a big deal for AI products. Why is that? Integrations are mission critical for AI for two reasons. First, AI products need contacts from their customers' business data, such as Google Drive files, Slack messages, or CRM records. Seconds, for AI products to automate work on behalf of users.

3:54 AI agents need to be able to take action across these different third party tools. So where does Paragon fit into all this? Well, these integrations are a pain to build, and that's why Paragon provides an embedded platform that enables engineers to ship these product integrations in just days instead of months. Across every use case from drag data ingestion to agentic actions. And I know from firsthand experience that maintenance is even harder than just building it for the first time.

4:20 Exactly. We believe product teams should focus engineering efforts on competitive advantages, not integrations. That's why companies like U dot com, AI twenty one, and hundreds of others use Paragon to accelerate their integration strategy. If you want to avoid wasting months of engineering on integrations that your customers need, check out Paragon at useparagon.com slash Lenny. Jake and Jay Z, thank you so much for being here and welcome to the podcast.

4:49 Hey Lenny. Thanks for having us. Yeah, thanks so much for having us on again. This is Always a treat. This is gonna be a very tactical. Conversation.

4:57 We're gonna be going through how to actually execute a foundation sprint. And the reason that I'm excited to do this is you guys shared an excerpt from your book where you initially shared this whole concept. It's called click. Uh you shared this in my newsletter and I was just looking at it and That excerpt, that post is amongst the top ten most popular posts of all time in my newsletter. Yeah, which is especially special because it's not an AI oriented. It's one of the few non AI posts that are near the top ten.

5:26 Uh which just tells me how valuable this is to people and consistently it has sat there. It hasn't been usurped, be just continues to climb. So I'm really excited to just have a conversation where we share actually how to do this. Let me just start with the beginning. Just a little backstory on how the foundation sprint came to be.

5:43 I know it emerged out of the now very famous uh design sprint, which you guys also developed. So just give us a very brief overview of just how this came to be this idea of this foundation sprint. Well, maybe I'll start by talking about the design sprint part because it is essential to understanding the foundation sprint. And the design sprint first developed I I had been working at the beginning of my career at Microsoft for a few years, went to Google. This is like two thousand seven, two thousand eight, two thousand nine.

6:11 And was working on the Gmail team, was working on some, you know, projects that were just executing well, delivering shipping. But I had this other project, this side project that had been going on for Three years With a couple of colleagues was going nowhere, and it looked like their office was going to get shut down after the financial crisis. They were in Stockholm.

6:33 I went there for a week. We cleared our calendars for a week. We created a prototype of this thing because we decided, look, we're we're never gonna get anywhere. We've tried making the perfect pitch. We've tried to you know, per make the ideal PRD. We've tried to show the the ideal design and we just we can't perfection is not working. We're not able to align people. We're not able to to get uh sort of executive

6:57 support for this thing. We couldn't convince Larry and Sergey and Eric that they should fund this thing and In that week in Stockholm, we created a prototype instead. We decided, you know what, forget it, we're just gonna build something and put it in people's hands, put it in our fellow Googler's hands. And

7:13 That's prototype was What became Google Meet? It was this video conferencing tool that you could use in the in the web. No big deal. Yeah, it was it was really cool. I mean the the the outcome of that, that's definitely the probably the most productive week I've ever I've ever had. But the uh the thing that struck me.

7:30 At the time and in in hindsight was wow, it was so different to clear the calendar for a week. And have the entire focal point of every person on the team be How do we create a prototype that's so real that that works so well? that people will think it's real, that they'll react like it's real, that they'll want it. And

7:49 We were in survival mode, you know, we were trying to keep that office from getting shut down, but The the notion that maybe you could repeat that and recreate that is what led me to create the design spread. So For a couple of years at Google, I start running these one week programs with teams trying to go f at the beginning of a project from you know, zero to

8:09 prototype at the end that we can that we can sort of evaluate. Test. And then I went to go work at Google Ventures. So separate one of the alphabet companies were investing in startups. I meet John Zaratsky, and we start running these design sprints with Well, Turned out to be over the course of five years, uh, I don't know.

8:29 couple hundred teams. Working in the early days with founders, the early days of their establishing the product for the first time, trying to build it from zero to to one, or Launching a new Marketing campaign, a new ad campaign, some big high-risk endeavor. We'd get to work alongside them for a week. And we ended up refining this process into a recipe. So across

8:51 Five days. It's Map. Sketch. decide, prototype and test. One big focal point for each day. So at the end of the week you've got a tested prototype and you learn like are we on the right track?

9:02 Or or not. And That's the that's the design sprint. That's kind of the the You know the the prologue the the backstory to this thing. And then

9:12 After a few years at Google Ventures, John and I left and eventually together with our co-founder, Eli Beli Goldman, we started our own venture firm, Character Capital. And that's kind of where the story of the foundation sprint. Comes in. Okay. Awesome. Uh Jay Z anything you wanted to add?

9:29 One of our goals, probably our biggest goal for starting our own V C firm was that we wanted to Be able to focus on just the kinds of companies and the stage of company building. That was the most fun to us, but also was where we thought we could have the biggest impact. And so

9:45 You know, for us with our background as That is the early days, the first couple of months or the first year or two years of building A a new business. And G V.

9:56 Yeah, sometimes we did that, but sometimes we were working with With companies that were already well established. And when we'd come into those companies They kind of knew what they were doing, they knew what they stood for, they knew how they were different in the market and how they were p positioned. And so we can help them, you know.

10:11 answer these big questions and solve these problems and test their prototypes with customers, but when we started investing in It truly precedes sometimes inception stage, you know, pre product, pre-revenue, pre everything companies. There was this piece missing at the beginning of that process. So we'd we'd run design sprints and they would be helpful.

10:31 But Oftentimes it felt like there was It was a a foundational element. of that project that we didn't quite have our hands around. And it was things like you know

10:40 What is the problem you're solving and who's the Who's the ideal customer? How are you different than what's in the market today? Who are your actual competitors? And there were these questions that just kept coming up again and again.

10:52 That led us to say, Hey We need to create a new sprint method, something that is really targeted for the very beginning of these big new projects. And and so that was what led us to create the foundation sprint um at character capital in Twenty twenty one, twenty twenty two.

11:08 Okay. Yeah. I I was wondering the timeline on this. What I love about stuff like this, like episodes like this, is you guys have done so much work and done this so many times with so many companies, so many founders. And have learned what works and doesn't work. You said hundreds of founders, hundreds of startups. Yeah. And you've just spent so many hours studying this, refining it, crafting it, and now you're just here to share all the answers. Save us so much time. Just like the ROI on this is incredible for us. So I appreciate you guys doing this. Let's get into it. Let's talk about the foundation sprint.

11:38 Uh walk us through the process. How does it start? What are the steps? So specifically what we talk about with the foundation sprint is it's at the very beginning of your project. We recommend This kind of crazy idea that you clear your scout schedule. You clear your calendar so

11:55 The core team. This is the co founders if it's a startup. If it's a product team inside a large organization, it's the you know, it's the whoever's in charge of product, it's whoever's in charge of engineering, it's whoever's in charge of design, it's whoever's in charge of marketing. It's the core leadership team. They're gonna come together for It's gonna be ten hours roughly, give or take.

12:15 And During those ten hours, we're gonna go through a sequence of activities very highly scripted. Sequence of activities. So that we can make all of the key decisions together and identify The basics of the project, what it's what's going to differentiate us in the marketplace.

12:31 And what's the best approach or implementation path? All of those together form a hypothesis. And then we recommend so you finish now. That's your foundation sprint. You've got your founding hypothesis. Once you've got that founding hypothesis then you're gonna go and do design sprints. And we recommend you clear the calendar for two to three weeks.

12:48 At least so you Have the chance to be wrong about your hypothesis. And we're gonna run experiments. And again, the design sprint, highly scripted. Calendar clear, you know. Emails off, we're just the Slack is off, we're just focused on

13:02 running through the sequence of decisions, building prototypes, getting them in front of customers. learning about a scorecard that relates back to the founding hypothesis. So at the big picture it's It's gonna be Anywhere from ten hours to, you know, three to four weeks. You're gonna run this.

13:17 detailed script of activities with your team with their calendars clear. And that's crazy. And most people won't do it. But if you do it, Confers upon you a huge advantage. Because Now you're you're you've got information.

13:30 You you know whether or not your product clicks with customers and that's a we've seen that be just such a tremendous signal for is there gonna be product market fit. Okay, that was really helpful. The ten hours is that specifically that's the foundation sprint time box? That's the foundation sprint time box, yeah. And it's it's give or take, right? It might you might go fast and be done in in eight. have a lot of conversations and have a slightly larger team and might take twelve. So we like to spread it out over two days and do two, you know, like four to six hour blocks.

13:57 Okay. And then the three to four weeks, that's including the design sprint. That's the design sprint. Yeah. One week sprint. Okay, this is incredible ROI on ten hours of work. Uh Basically over two days you get uh have a much stronger sense of whether your idea is any good. And you can tell yeah, that is that a simple way to describe it? Like you just supercharge

14:17 uh validating an idea. Exactly. Yeah. It's it's a it's a chance to in the In the ten hours it's a chance to get clarity about the core of your strategy, which Is something that teams will often go months without really nailing down. And the

14:34 the three to four weeks that's a chance to run experiments and get confidence you're you're actually building the right thing. Okay. Let's uh talk about these two days. How does how do you lay it out? How do you approach it? What should someone do if they want to actually try this at home?

14:48 So there are Three phases to the foundation spread. First phase is basics, second phase is differentiation. And the third phase is

14:58 The approach to the project. So again, all three of those are gonna come together to create The founding hypothesis. So The first phase, the basics, as I mentioned, that's Identifying

15:09 Who's your customer? What problem are you solving for the customer? What's the competition for solving that problem? How do they solve it today? And what are the alternatives? How how else do people solve this? What are the workarounds?

15:23 Those are really almost embarrassingly simple things to answer, but when we do this with a team and everybody's answering, you know, sort of proposing their answer to each question, we see everybody's got a different perspective. And then when we walk in, the decision maker on the team says, Okay, it's gonna be this one, it's gonna be this one, it's gonna be this one. Now we have clarity and and confidence that that's the right way to go. So We'll move forward from the basics into differentiation. and identify what are the things that can set us apart from those competitors. And we're gonna use the advantages we have. We're gonna use our our insight, we're gonna use our motivation, we're gonna use our special capabilities.

15:58 These are things again, people And aware of these things, they're in tune to it, but we want to get super, super specific and I'll I'll we'll go into an example in a second and I think that'll make it more clearly what we mean, but going then from differentiation to saying What are all of the different implementation paths we could take here?

16:15 Let's identify what those are, put a little detail behind'em. And then we have a structure. path for people to take so they can weigh that decision, but move through really quickly. Commit to one, have a back up plan in case you end up feeling like you need to pivot once you start sprinting on it. And

16:31 All of that together is gonna form this This kind of Mad Lib's sentence. If we solve this problem for this customer. uh with this approach. We think they're gonna choose it over the competitors because of differentiator one and differentiator two. And it's

16:45 It's almost silly how simple this thing is. But really powerful yeah if for founders to have that that clarity. About okay, here it all is in one sentence. Now let's go let's go test and make sure this is true. Amazing. Let's look at an example. That's a really good idea. I know you brought some some examples. You're gonna do some screen sharing.

17:04 Uh, you're gonna pull it up. If you're watching on YouTube you'll be able to see it. Also if you're watching on Spotify, you can see the video. Uh if you're an Apple, sorry. Well But uh do your best to describe what we're gonna be looking at. Yeah, so we're gonna talk about this company called Batchet first. This is the the first company we'll talk about and

17:22 Watchet is a startup who was in our last group of character labs and we can go into But essentially This is a kind of an accelerator like program that we run a character capital where we invest in a a group of companies at the same time and we run them through that process that

17:41 We were just describing where we start with a foundation sprint. And then it's gonna be a sequence of three design sprints after that. So that they're they're testing and refining that hypothesis and So it's a great time for them. These are founders who have just started their companies. They're kind of, you know, that pre seed Very beginning, zero stage.

17:59 And The The progress you can see in those three and a half, four weeks, it's phenomenal. So Uh let's let's talk about Latchet.

18:09 So watch it. A couple of co-founders, Chris and James, who were they had left Substack. They were engineers leading up the growth team at Substack. And They wanted to build a product. For For artisans. So if you imagine like you're a

18:25 You're a jewelry maker, you're a you know uh You're a painter, you're a woodworker. And you wanna sell your products outside of your immediate you know, community, the physical place where you are, your physical location. Well you can

18:39 Yeah, you can build this. site on Shopify, but you still have to market it if you do that. You got to figure out how to reach those folks. You can put your products on Etsy. But Etsy has become quite commoditized. So you're gonna be up against

18:51 Everybody everywhere, and it's gonna be very hard for you to build an identity there, like to build a a sense of who I am, what I'm all about. And so what Chris and James thought was, you know, maybe we could use some of the the techniques and methods we we used at Substack to help People find other you know, other newsletter writers through their community, through recommendations they make.

19:14 And and help. Help out artisans in that way. Would wouldn't that be cool? So they were kind of at that stage. They had a few different ideas about what form that might take, what that might look like. when they join character labs. And so that's kind of the the backdrop to to this little quick story I'll tell. And there's one really important thing to emphasize about Chris and James. That

19:34 Jake mentioned briefly, but I think is is worth repeating which is that They're engineers. They are builders. Their instinct is to write code, it's to build software.

19:44 And uh they actually told us that They were excited but nervous to come into character labs. Where we would be encouraging them. not to write code right away to take this time to clarify the differentiation, the the structure of what they're building.

20:02 And to validate that with customers before they went all in on building a particular approach. And I think you'll see in this example how Well they were A little hesitant to do that up front. Eventually

20:13 They saw How much uh more valuable it was to work in this way versus just diving right into building something. Uh that's actually really helpful context. And I speaking of the sub stack replic recommendations feature was one of the most game changing features for me with my newsletter. So uh because it

20:30 basically supercharged my growth. So I get why they'd be so excited about bringing this learning to other to other ideas into their own startups. So uh thank you guys for doing that. And yeah, I'm even more excited to see what they're building. Well let's take a look. the this board here that we're looking at, this is like their mirror board. So we've got like a big template. And whether you're watching on YouTube or listening to this episode will We'll talk about at the end how you can get access to this template, which will kind of guide you through the process.

20:57 But What happens in this first step in the foundation sprint in the basics, as you said before, is that We're going through a sequence of questions. Who's the most important customer, for example, is the first question, the very first question that a team needs to answer. And as we do that, just as an important side note, we're using this tactic that we call

21:16 Work alone together. And specifically The node and vote is this method where everyone's in silence. you know, in this case both Chris and James, but if you have a team of seven, it's all seven people Be working in silence, writing down their own answers to this question, who's the most important customer, who are all the different kind of customers we might consider.

21:35 Writing down multiple answers. And then once we've got those answers. The team's gonna vote on those, and then one person who's designated as the decider, usually it's gonna be the CEO of the startup, but It could be Some cases maybe it's the

21:50 you know, chief product officer, whatever, however they decide to do it. But one person's gonna say, okay, this is our decision for now, and now we're gonna move on. And by doing this and using silence and using structure and then having a designated decision making process, we can move through a lot of conversations very quickly. And save some of that energy that it requires to make decisions for the decisions that matter most. In this case, what we're really worried about. on day one of our foundation sprint is differentiation. So we don't want to spend too long on the basics.

22:21 Anyway, we motor through customer problem. The capability, the insight, the motivation that the team has, those are all advantages. And who are the competition and we get this This sort of one page sheet. The basics.

22:34 And it's gonna have the answers to all those questions. Who's our customer? In this case, artisans who want to sell online, but they sort of find tech and marketing to be hard. The problem is sales growth. You know, if we if we jump down to the competition, their number one competitor is Shopify. But Etsy is another way people approach this, as we mentioned. But there's also, you know, in person sales and art fairs. There are other ways that people try to get at this problem. And realistically, if you're

23:01 Delivering a solution. You need to stand out from all of those. And then there's their advantages. We talked about, you know, this this key one. They build sub stacks network growth features. So they know how to do this thing. So now that we've established the basics, we're gonna move on to Differentiation. Before you do that, actually, let me ask a question here. Because I think people seeing this

23:22 could think, Oh, this is like I know all this stuff so obvious. Like it like it's like okay, I get it, I have an idea. I don't need to do this. Where do you find people most are often surprised by something that emerges out of this is like one of these Buckets often wow, we this is often not what you expect it, or is it generally a lot of surprises? What do you what do you experience there? I think the m moment where you

23:44 immediately start to see value is when everyone on the team is writing down their answers to these questions. And then People put their heads up and look at what everyone else has written. And they realize, oh That's not

23:56 what I would have s that's not what I said. Or I didn't think of that one, or g you know, gosh. The actual concrete reality. Of going through with the team and and being very transparent and clear about how we're making decisions too about each of these things.

24:12 When that basic sheet comes together and you see the specifics The specifics are surprising, but it's also familiar. We look at it and say, Yeah. That looks that all looks right. But I'm surprised by the specifics. They're not what I would have written if I had written it down. I might have gotten two of those things, two of the, you know, six items on there.

24:32 And I think that's what's that's what's most surprising. It's and I think it's also kind of a sense of relief. That like, okay. Well that's r very reassuring that we have We have clarity about that and we've made it concrete. These

24:45 Activities. That we do during the basics are impactful for different reasons. I think that Problem can

24:55 When teams sit down and think about it, it is often less clear than they thought that uh what the actual problem is. Like Wait. What problem do our customers really have that we're solving for them? I think

25:07 competition can be sort of an aha moment when uh they start to think beyond just Oh one of the other startups. In this space, like If this is an important problem.

25:17 Your customers probably already solving it somehow. It may be a workaround, it may be an alternative, it may not be a direct competitor. But if it's worth solving, they probably have some way of dealing with it today. And what is that? And when you zoom out and you look at that set of competitors. It can be a little scary, but it it is also uh an important moment for teens. And then I think that advantage um isn't necessarily immediately

25:41 beneficial, but it becomes really valuable when the teams are looking at differentiation. Because You know, startups can't compete with big companies on scale or on you know having it built in distribution advantages or having partnerships in place. So they really have to dig deep and figure out what can we do that nobody else is capable of doing.

26:03 And so by taking time to sit down and do this almost unnatural act of like Wait, why are we special? And and you know certain When we're able to encourage teams to really Think about that.

26:14 Um, it sets them up really nicely for the next step, which is differentiation. Ideally based on those advantages. What I'm hearing is a lot of the value here is also just Uh the Everyone has with the answers in their head in some way.

26:26 But just seeing what everyone else is thinking and then aligning on one Is is a lot of this value. Yeah, it's like thinking deeply and quietly about it yourself. And then seeing what everybody else comes up with when they are able to also think

26:41 Deeply and quietly about it. Um And then You know, ideally if they're working you know, with us in character labs having somebody who's a bit external to push them and say

26:51 Like Try harder, like dig deeper. Like what really makes you special here? How are you really gonna be Open AI. How are you really gonna be Google at this? This whole idea of noting and voting and working in silence, such a recurring theme on this podcast of not doing brainstorms in large groups. A lot of people like it feels like that's just dead in every way. I just had this naming expert on the podcast who

27:12 Names. Name some of the biggest companies in the world, Pentium Powerbook. Sonos for sale. And that's their approach is they they used to do brainstorms and he's like, That doesn't work. And now they just have small teams sitting quietly in a room working together on

27:24 on ideas and then thinking on their own. So that's such an interesting trend. Yeah. And I feel like IDO just like created this whole we need to brainstorm post its and then everyone's like, that's not actually working. Let's stop doing that. Um the other thing that I For founders, there's not like a manual

27:43 for starting a company. You always have it feels like this dark art of like, I guess I got to find product market fit in this idea. Feels like this is almost a manual. of the everything you need to do to just get the basics of is this even worth doing? Yeah. And and that's why we created it because we were we're we still are investing in founders who

28:03 Are you know, they're they're incredibly talented and they're smart and they have a background that is gonna give them an advantage and building some particular product. But you're right, there's there's no manual and we were just kind of solving our own problem and

28:15 Yeah. Yeah. We believe in this so much and We see the RY as being so great. That

28:21 This is the first thing we do when we make an investment. You know, we invest in a company. And then we run a foundation sprint with them right away. We run more foundation sprints. with startups than we do design sprints at this point. Um and you know, I don't think we can ever encapsulate every single thing that you need to know or that you need to do.

28:38 To start a company, but This is our This is our best Take Uh

28:43 Like What you should do in the early days. to set yourself up for success and maximize the chances that you're gonna reach product market fed. Amazing. Okay. Let's keep going. So we've done the basics. What comes next? Yeah, so we've done the basics and another important thing that we've accomplished. while going through the sequence of activities and the basics.

29:02 Is to boot up the right context into everyone's head so that we're ready for the main event of this first day. Which is differentiation. And I still have very firmly in my mind Like I grew up with a Mac plus computer and you'd put in, you know, the disk and the drive and you'd have to

29:20 You'd have to boot up the the app that you wanted to run. That that's kind of the way our brains work. Like we have limited working memory and we've gotta have the right stuff in there when we're when we're gonna make a big decision, when we're gonna think hard about a certain problem or question. It's important to have the right context fresh at hand.

29:39 So the basics is really the context for thinking about differentiation. And differentiation is the heart of what we're doing in the foundation sprint. Because Yeah.

29:49 It's it it goes without saying, perhaps, but we like to say it. When you are making a new product People Want to ignore it. People want to not pay attention to it. And if they do have to pay attention to it, if it gets in their face, they they want to not try it.

30:04 Because we just are all bombarded by so many things, and that's never been more true than it is now. And we so we have defenses up to save to save calories in our brain. We just we don't want to engage. It's crucial then that a product has a clear promise that it makes And that that promise is is

30:24 radically differentiated from the alternatives. And that that promise is strong enough that you'll try it. And then that the product delivers on that promise. And so what when we talk about differentiation, we're saying look he We want you to be really clear.

30:38 On your promise, not the promise you're making to investors about this technology and what's special about the technology. Or what's special about the market opportunity. but with the customer at the center. We've started the basics by talking about the customer and the problem they have and the the way they see the world. And we want to talk about what you're gonna offer to the customer. and how it's going to separate from the alternatives.

30:59 And so in the end of this next phase of the foundation sprint, we're gonna have a A two by two diagram that's gonna look like a business school one oh one diagram. In fact we often refer back to this. Steve Jobs uh iPhone introduction slide where he talks about the

31:14 the iPhone and he makes a joke about it. This is a business school one oh one diagram. But It's really helpful to start developing your product with this clarity about this is the promise we'll make to customers at the end. And we're going to deliver on that promise. Because we can test and prove that. And design sprints. So anyway. We start off, we talk about differentiators and we talk about classic differentiators.

31:36 Fast to slow, smart to not so smart to borrow from the iPhone slide. Easy to use to hard to use, and so on. And we just start off and have the team, okay, let's just let's just score those up against the competition. Put a sticky note on those continuums showing where you think the product could be. And usually you'll do this and maybe you'll start to see

31:55 Well, there are a couple places where we can stand out on these classics, that's great. These classics are Easily understandable by Any you know, any customer, we're all sort of familiar with these kinds of things. So okay, that's great. Then we get into writing custom differentiators. So we're gonna write a bunch of, you know, good things on one end. crummy opposite on the other end.

32:15 And then we're gonna score those. And so for the latchet story, we'll pick up with with Chris and James here. Yeah, they've written. Well We we could be uh really s we could really differentiate on networked versus siloed. Our approach is networked if you're using Shopify, you're your siloed, right? Or

32:32 Or we you know, maybe maybe we can differentiate on painless business growth versus labor intensive business growth. So that might be the specific way we describe the promise of our product. So after evaluating a bunch of these, writing a bunch of these, voting on them quietly, you know, and then the decider's gonna say, All right, I wanna choose a couple of these and we're gonna try them out. The teams are gonna If you're running a foundation sprint, you're gonna try out a few differentiators, you're gonna score against your competitors, you're gonna create a scale, and you're gonna say, Okay, let's be honest. Let's be tough.

33:03 Where do we really think we could stack up against the competitors on this differentiator we've chosen? In great detail plotting each each company or product one at a time. Okay, so you know, you do that for one differentiator, you do it for another, you do it until you feel like we've got two that are really strong. And then you make that business school one on one diagram. And so, you know, here's here's this one for outside of Lyric, they changed their name to Latchett, so I'm uh

33:28 Well edit that real time. So yeah. So latch it's, you know, up here in the top right corner, and we say, Okay, look, this is a good differentiation chart because you've got this quadrant here. This quadrant here. This quadrant here, right? You've got the So you're in the top right and you've got to be in the top right. You always have to be in the top right.

33:50 And if you see those other three quadrants The the top left The bottom left, the bottom right. Those form an L shape. And we call that Loserville. So we want to

34:01 We wanna have like a way of looking at the world. That puts all of the competitors into Loserville. And then we want to say like okay. If you can deliver on that. And if that promise is compelling to customers. So both those things have to be true.

34:14 Can you deliver on it? And Do customers care? And believe that that that matters to them. If both of those things are true, you have a really compelling promise. You have the possibility of a very successful product.

34:27 So now we've identified that and that's that becomes a core of our hypothesis. Can we is that differentiation true? So That's the differentiation step. Uh before you move on to the next step, is that where you're going next?

34:41 Just so I could take a Yeah, yeah. Okay, follow a couple of threads This is so awesome. There's so many There's just so much value here. Um also just the slide at the end here, if folks are watching YouTube, this is like your deck slide, right, where you show Yeah. Your your competitors and you're you're better than them all. Yeah. And actually I want to jump on that for a second because We've all seen two by two diagram, right? There's a ton of these. They're they're all over the place. And

35:06 If you're anything like me, I just Ignored these. I just thought these were pretty much BS up until Like, well, whenever we started putting these foundations friends, three or four years ago. And I think the reason why usually these these two by two diagrams feel like this is just consultant baloney. This is just like who you are now it's It's because

35:27 You you know, maybe one person makes this chart and they do it Quickly,'cause they need it to slide for the slide deck. And the audience considering, maybe it's investors, and so you know, often these describe technology or they describe the market opportunity. They don't talk about the customers perspective. And the other thing is that they're they're not proven. There's no evidence behind the fact that these are these true. So if they are, if they did happen to be about customer perspective, it's unlikely that the whole team would have weighed in on on what those differentiators are.

35:58 And it's very unlikely that we would have tested and proven that that That that matters and that we can deliver on it. And so If you do all of those things And you do it at the beginning of the project. We think this has the potential. Well we've seen it. It's

36:12 It becomes this Well, this guiding light. Here's the North Star. We need to deliver on this. This is what we have to create. And that helps you make decisions. All the way through your product development cycle. Just like point people to

36:25 uh justification for why differentiation is so important. There's a couple episodes that I did that uh I'll point to in the show notes. Um that just give you more context of why you need to differentiate. So I spoke of uh David Plastic, who is this naming expert that we just had on the podcast. He His whole thing is when he's coming up with a name for like Sonos or Verse or Windsurf, it's

36:47 Differ it has to differentiate. Yeah, and he talks about this in depth. So I'm we'll point to that episode. you're and this is just like if you're not convinced, why are we spending so much time on differentiation? Uh also April Dunford, who's like the I don't know the the the god of of of positioning. She has differentiation is such a core part of her approach to positioning.

37:06 And so There's just like so much evidence to tell you that you differentiation is a really important step. And element of successful companies. I've noticed about these topics the these the basics we talked about already, differentiation. This notion of

37:21 You need a foundation for your project. It's a bit more under the radar for people. I think it's a bit harder for people to immediately see like, Oh, we need this. We see the people who react the strongest to this and have the strongest, like immediate affinity to this idea actually being you know, startup founders, people who are really sophisticated like in this challenge. product managers who are at, you know

37:42 We're uh uh Invited in to speak it. Open AI and anthropic about this. And we see the product people there being like, oh my God, this is this is really powerful. This is the kind of stuff we need. I think for a lot of folks though it can sound like

37:55 This is just elementary, you know, and differentiation. Of course we need to differentiate. The problem is that all this stuff gets backgrounded. It's it's something we've we've thought about a bit. We assume we're on the same page. We assume we're gonna deliver something. But then kind of business as usual happens. We build a product, we get kind of more interested in the technology and delivering that. And we end up

38:16 trying to sell it to customers at the end. We end up putting a coat of paint on it with a marketing page or sales deck. We haven't actually built from the beginning the thing that we know is gonna matter to people. One of the most useful steps here that uh I haven't seen before is just a starting place for how to even start thinking about differentiation. Like everyone's always probably thinking price and speed maybe.

38:39 You guys have a really cool just l starting list that you showed here. Anything more you can add here for helping people start to think about ways to differentiate beyond the obvious price and speed and I don't know, a couple more. So I'm just gonna jump into another start up here just so we can see what this

38:54 Sheet looks like with scores on it. So this is a startup called Mellow. Anyway The standard classic differentiators where we start They are Fast to slow.

39:06 Smart to not so smart. Easy to use to hard to use. Free too expensive. Focused to one size fits all. Simple to complicated.

39:17 And integrated to siloed. And so w You know, there you could probably argue there's these others that should be included or some of those should be taken off. But what we like about this is that it's a small set. They're easy to understand. We know customers can understand these.

39:33 And they create a great starting place for your team to think about differentiation because You can quickly look at this list and start scoring where you think your product could be on these scales. And you know that if you can Use one of these, people will understand it, but it also starts to make the team comfortable with this notion of differentiation. And again, we want it. Make differentiation something that all of the co founders or all of the core team can participate in.

40:01 It's not just the job of the person writing the pitch deck. It's not just the job of the marketer or the salesperson, but we're getting everybody's perspective in on it. And this is a great warm up activity before we start to write our own custom differentiators. Awesome. And then again, this is just inspiration for coming up with more ways to differentiate.

40:22 Something that There's a common Uh question I think for founders is price as a differentiator. Is there any insight you guys have there? Like how often do you land on price being a good differentiator with the startups you work with. I think price is rarely the

40:36 The most important differentiator. Part of what's interesting about going through these classic differentiators, these standard ones first. And then jumping into the custom ones. Is that The classic ones are

40:47 Sort of universal. But It is gonna be hard to beat the competition on very many of these, like It's gonna be hard to build a product that's faster.

40:56 Then what Google can build or what OpenAI can build. It's gonna be harder to be cheaper. than those competitors because they just have so many more resources. They can have lost leader products that are that are underpriced. Where I think pricing has become

41:11 A really clear advantage for some companies. Is Those that are leveraging AI to solve problems that were previously unsolvable with software. So

41:22 Yeah, we have a company That we invested in called Bindwell. And uh they use AI to design precision pesticides. And uh we ran a foundation sprint with them right after

41:35 Investing. And You know, five years ago, you couldn't design pesticides with AI, right? It wasn't it wasn't possible, right? If if you even if you had that idea, you wouldn't have been able to build it. And now you can. And so for them one of the big advantages is like, yeah, these pesticides

41:50 They can be they can be a lot cheaper because it doesn't require this like massive team of, you know, R D chemists to Tinker and experiment with things in the lab to try to create new pesticides, we can design them with AI. So

42:03 It is it is more often true. In AI Companies like that. But it's very difficult to to compete on price in general.

42:12 And we think we find that it is not as It's not as durable of an advantage as some of these other things. That is such a good point. Uh,'cause historically price has been uh don't don't Compete on price. It's hard to do long term. It's kinda race to the bottom.

42:27 Especially if there's incumbents, they can price a lot lower. But with AI that is a really often and strong comp Uh differentiator. Like now do this thing. Like like cursory basically is competing on. Yeah. You know, you're saving engineering time and the area.

42:41 That's worth so much money to you. Yeah, but at the same time, like the output of the AI is probably not gonna be quite as good as a human process. So it can be a little bit cheaper. Yeah, for now. But it has to be a lot cheaper. It has to be, you know, I've heard people offer 10x cheaper than the legacy sort of um manual approach to solving that problem. As a rule of thumb. That's awesome. Okay. Uh I'll just quickly reference there's an episode that will come out before this with Modavan about pricing strategy and There's a lot of discussion actually on this. Oh, great.

43:11 Design your price. uh with customers as you're starting a company. Also Uh the episode with uh the founder of superhuman Rahul. He actually spent there's a lot of cool context on how he differentiated superhuman and it was actually very much on speed and Is speed actually, yeah, speed was where we landed.

43:27 And to your point, it was both it was the Venn diagram of what you said. Can we do this and do people value it? And that's where his research pointed to is people really value this and they were able to achieve it. One of the things that's really interesting about this Example here that we're looking at Mellow.

43:41 Is that You can see that They were not. the best on all these scales. You know, it's it in if Teams are going through and they're being really realistic about how they stack up against the competition.

43:53 It's normal and natural to find that you're not gonna be the best on all these differentiators. And that is really helpful for creating clarity in your positioning and in your marketing. Because you're not gonna show a feature checklist chart that you know

44:07 says you're better at everything than every competitor, but if you can drive home one or two things that your customers really care about and that you can be radically better at. Um It's gonna improve your chances of of winning and finding product market fit. And and we find that going through this process where you're not just thinking about One differentiator at a time, or you're not trying to win on all of them, but you're looking across the scale of options and you're being just really honest about where you stack up.

44:34 can both point you in the right direction in terms of what you will win on, but also can give you the comfort to say, hey, it's okay if we're not better than every single company on every single one of these things. That's great context. That's gonna make people feel a lot better, I think. Today's episode is brought to you by Coda. I personally use Coda every single day. To manage my podcast and also to manage my community.

44:56 That's where I put the questions that I plan to ask every guest that's coming on the podcast. Sorry about my community resources. That's how I manage my workflows. Here's how Koda can help you. Imagine starting a project at work.

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45:23 With coda's collaborative all in one work space, you get the flexibility of docs. The structure of spreadsheets. The power of applications. And the intelligence of AI. All in one easy to organize tab.

45:35 Like I mentioned earlier. I use Coda every single day. And more than fifty thousand teams trust Koda to keep them more aligned and focused. If you're a startup team looking to increase alignment and agility Coda can help you move from planning

45:47 To execution in record time. To try it for yourself, go to coda dot io slash Lenny today and get six months free of the team plan for startups. That's C O D A dot IO slash Lenny. to get started for free and get six months of the team plan. Coda.io slash Lenny. Anything else on differentiation before we move on to the third step of designing your approach? I think it's worth taking a look at what it looks like when you have a bunch of sort of these custom crafted differentiators, what that might look like, because in the case of Mel O, we've got

46:21 I don't know, there must be twenty five here. And you know, so they've written Purposeful, magical, clear, personal, provides direction, flexible, human, creative, beautiful, all kind and on and on. What they're trying to get at and what we want every team to s sort of think about here is

46:39 What is a new version of reality, a new lens that you can offer to your customers on the world? Because a lot of times you're building a new product, you actually have to change the way people think about what's possible and what matters to them. Those classics Are often already well trodden ground where other people have differentiated. They've already thought about it. But

47:00 These These new particular things that you know are are possible. with your technology that you know is possible with the customer problem, the things that you believe might matter. It's really interesting to you. Try some very fine tuned list of

47:14 slight sometimes just a slight variation. We we slightly change this wording or the way we describe what's great about what we do. And that is the thing we think is really gonna stand out. And again, you can see even on this list. that they've custom written When we see where they score it. They're not all the way to the good end of the scale on all of them. You know, when they get honest and look through, they're like, Well, actually, uh, you know, maybe we can't deliver on this. But this one we really can. And this one we also suspect will matter to customers.

47:43 Where did Mello land on the differentiaters they picked and where did Latchet land. Yeah, let's take a look. For Melo, they tried out a bunch before they decided here. So they actually scored with the competitors On these scales. And just for context, Mello is a tool that allows you to run Very simple

48:04 Very targeted, very useful. AI agents. for common everyday tasks like summarizing your email. Or um

48:13 uh cleaning up your calendar or drafting responses to messages. And one of their insights was that There's been so many AI products that have overpromed about being able to replace all humans and do anything and you know Um ten X year productivity.

48:29 But so few of them have actually delivered on those promises. And so they have this insight that if they can be really focused and really human and really high quality. And they can deliver on that promise of You know, making your life better by offloading

48:45 Yeah. tedious tasks that that's gonna really click with with customers. That's a great context. Thank you for adding that. So Mello lands on mobile first and works out of the box if there are two differentiators. And they're trying to differentiate from No, gum loop and

49:01 Open AI is sort of generalized tool, right? And watch it. They're gonna differentiate on We're pulling it up. If folks aren't watching, he's pulling up the mirror board. Uh to show us where they landed. Watch it. They're gonna differentiate on helps you grow and cooperative. So when they compare against Etsy, when they compare against Shopify or

49:23 Setting up your table at an art fair. they're gonna differentiate on helps you grow in cooperative. And they think none of the competitors does both of those things well. That is cool. Thank you for sharing that. And to your point, the This is where they think it will work and then the next step is actually test this in the market, which is Where we go from here.

49:41 Uh so let's move on to the next step and which is the final step of the foundation sprint. Yeah. So closing off differentiation. uh is a short step that's uh is just to create some project principles that'll help you make decisions in line with that differentiation. And you know, you're just talking about superhuman and differentiating on speed. And when John and I worked at Google back in the two thousands, There was this list called Ten Things We Found to Be True. And one of the things on that list was fast is better than slow.

50:12 And what was interesting is this is a mantra that you would actually hear people using in meetings to help dictate decisions. You know, well We're considering This approach to this view or this approach, this approach renders you know

50:28 twelve milliseconds faster. That's probably gonna be the one we're gonna take if there's gonna be a really compelling reason for us to not go with just the one that renders faster. or the one that gets the user to their benefit with one less click. And This notion that you can have a a decision making guide

50:46 We think it we've seen it be so useful For uh for us in those contexts. We think, hey, this is an easy moment. You've got your differentiators kind of loaded up in your mind. Let's take a second here and just think what's a principle? How can we turn that into a principle? So Uh if we take a look at

51:03 Uh watch it. You know, they've got help sellers help each other. So if they're trying to make a decision between two approaches. Well, which one of these helps sellers help each other? Or do the thing that makes sellers more money. If we're choosing between two things, let's do the one that helps make them more money. And so we we then have we've kind of moved on. We've got a mini manifesto, we call it, which is that differentiation chart and these principles. And the notion is. This page, the the basics page was just kind of the core

51:32 simple stuff you need to know about this project. The mini manifesto in one page is your decision making guide. This is so cool. And uh this looks like it would take a lot of work, but again, this is just uh a day or two. Of sitting around.

51:47 working through this framework. Yeah. You'll get to this in, you know, four Okay, by the end of the first day you'll have a mini manifesto. That describes how you win, essentially, as a as a company and a startup. Yeah. Or how you believe it's gonna work. And of course we're gonna test it. Yeah. Now the next phase of the foundation sprint is locking in on the approach we're gonna start with.

52:07 So we'll continue the story of Watchet here to It's easier to use an example than to describe this in the abstract. So coming into character labs, Watchet had sort of four approaches in mind, but they weren't sure which one to take. So they might

52:22 build an app, that's one approach they could take. They might build a sort of a newsletter platform. That's something obviously they knew how to do. They might build a Shopify plugin. That's a simple way to kind of piggyback on something people are already doing there, right? Their number one competitor is Shopify. Or they might have to build the full stack, and I think a big question for them was Which of these and how much do we have to build before there's enough value for customers that they're actually gonna adopt it and we're actually gonna get some traction and

52:50 Get this thing going. And it's important to call out here that all four of these approaches solve the same problem for the same customer. And they are all likely to differentiate from the competition in the same ways. based on the unique advantages that the founders, Chris and James bring to this company. So these are not like

53:10 Wildly different. Product ideas or company ideas. These are just different approaches. You have the same destination in mind, but you say, Hey, which path could we take? It's like pulling up directions on Google Maps. This one's a little faster. This one uses less fuel. This one avoids tolls. Uh, what's the right approach for us to take? And I love that the what you the work you did on that first day eliminates a lot of ideas you probably had. that you would have probably spent time building and then realizing, okay, this doesn't make any sense. It's just like what everyone else has.

53:38 Totally, totally, yeah. And We usually see teams starting projects in one of two states, and one state is the state that Latchet finds themselves in, where Gosh, there's a few different ways we could do this.

53:52 How do we decide? We can discuss and discuss and discuss, but You know, that could go on forever. So that's state one. We've we know there are some options. And state two is we're

54:03 pretty locked in on one approach already. We we think we've got this figured out. In either of those cases, we think it's worth taking again, like about, you know, four hours ish to You really

54:16 Careful to lay out the options. If you think there's only one option to sort of force yourself to think, well, what if this doesn't work? What's another alternative? Or is there another alternative that we have previously considered and dismissed that we should maybe reconsider just to make sure. And end with a situation where you've made a decision clearly about, okay, we've considered alternatives. This is our first choice, and you've also identified. This is our backup plan. So that

54:42 Failure doesn't seem quite so scary when we start to run experiments and we're really able to to pivot fast if Should that happen. So what we're gonna do on the second day of the foundation sprint or this sort of third phase. Which is the approach Is to identify those

55:01 different paths so for Watch it here. They've got A, B, C, and D options. We're gonna color code those. And then we're gonna plot them on these charts. So we've got These different lenses. We call this activity magic lenses. And the notion is If we had a discussion about it and we could

55:18 As investors, if we could imagine like waving a magic wand and putting the perfect team of advisors in place to counsel the founders on this decision. We would love for them to have a customer expert, somebody who's just, you know, brilliant vision for the product and the customer experience. And they're you know hammering their fist on the table saying the customer, the customer, the customer, make the decision that's best for the customer.

55:42 And so We'll plot those options on these axes of easy to use. versus hard to use and perfect solution to the customer problem versus you know, this is just an okay solution to the customer problem. And then similarly we want some an advisor who's gonna pound their fist on the table for

55:59 Building something cheap and fast, getting it out into the market, being pragmatic, get it out there as fast as possible. That's the pragmatic lens. We want somebody who's gonna advocate for growth. What's the way to reach the most customers? Get it in people's hands as fast as possible. Easy to adopt. We want somebody who's gonna advocate for for money for the financial health of the business. So What's gonna create long term value for the customers? Where's where's there the biggest audience of these folks?

56:25 We want to look at differentiation, which we spent, you know, the first half of the foundation spread establishing. Well, we want to consider these approaches. Through that lens as well. And so what the teams will do is to plot these options. On these lenses. They'll you almost always create some lenses of their own, some custom lenses that matter to them. You know, they might have one about their conviction.

56:46 Um I think there's an uh there's sort of a humorous one for Mello where it's like Which You know, founders like F yeah, that's exactly what I wanted what I want to build. And

56:57 on the other end of the spectrum's like, you know, nah, just kinda the the the sort of heat of excitement that you feel. That might be a really important decision. That feels really important. Like that feels like that should be when you're calling these the magic lenses. Yeah. Yeah. Yeah. It probably should be. It probably should be. How excited are you to build this? It feels like a really important piece. Yeah, we saw that one in this is the our cohort of labs that's going on right now, and I'll bring that one That one up for um For context. If we add it, we can call it the Lenny Lens. The Lenny Lens. Yeah. Oh that's a good idea. Yeah. So Yeah, so here it is.

57:29 And um You can see that Marie is more likely to swear than than Ben, apparently, but uh That it's it's crucial, right? And many founders they'll have different one of the challenges is that for each founder, I think, each set of founders, there's maybe a different way that they phrase what that means, what conviction means to them. And sometimes and maybe it's As simple as this. It's just I just feel it. I just know.

57:52 And sometimes it's a little bit more like well, I you know, it's It's uh it's conviction, but it's also What's the data that we have behind it? And and that's what forms my my intuition about it. Awesome. I love that lens. I love that your asterisk out. So it's not a little bit work. Slightly. Yeah, if you zoom in, it's it's actually Uh not censored.

58:16 So the Cool thing about this Lynn's thing is at the end, you've done all that, you've plotted it all out. And if you're having a conversation like that, you just have to sort of maintain in memory. What did that person say? What did that other person say? What's that conversation I had, you know, a week ago, whatever. Here it's all laid out.

58:34 And sometimes you zoom out and it's honestly as simple as like, Oh, hey, look. Yeah. The blue one is in the top right quadrant of almost every single lens, like what what is that one? What's going on? That might just be An easy decision.

58:49 Sometimes you zoom out and you say, Oh, clearly like nothing wins in every lens. And that's actually really reassuring. Cause then you know there is no perfect decision. There's nothing that checks all the boxes. And That's gonna help us decide because Now we decide Which is the most important lens.

59:07 Which is the most important viewpoint to take. And you can you can actually move forward in either d either way, either s situation you get in. Where there's sort of consistency across all the lenses. Or There's not

59:20 You either pick a lens or you just pick the the consensus winner. I love that this step Answer's a question that's been in the back of my mind. That I think a lot of people wonder as they're Hearing this is just why don't I just build something and launch it and learn and like what am I

59:34 Spending all his time sitting in a room. And this is and this to me is a big part of the answer is Just like spending an hour or two thinking through here's the ideas we have. How did they compare on the How do they look on these magical lenses, which makes so much sense. Like

59:50 How do they just filter on what customers will love most, will help us grow the fastest, will driving the most money, things like that. Like It's such a simple, quick exercise that will save you So much time building and launching And having to spend time learning. Like that is weeks, days, months of work versus a couple of hours could save you so much of that time.

1:00:10 And it's also the case that you Start building something. It's exciting. You can move fast. It's easy to s easier and easier to see progress now with AI tools. And that act of building and starting to create something has a momentum of its own that can be hard to stop. And if you're headed in the wrong direction

1:00:32 You can spend a lot of time building and making progress, but it's just it if it's not progress in the right direction. It's it's actually hurting you. And that's why we We want people to pause and and take this. It's really But as you said earlier, the ROI is high.

1:00:49 But it feels very unnatural. to pause when you're so excited at the beginning and ready to go to pause and say, okay, let's make sure We're taking the right path. But you know, you just imagine you're You know, you're Gandalf, you're Frodo, you're starting off, you trying to get to Mordor, it's a long trip. You don't wanna take the wrong path. You wanna take the you know, think before you start marching through, you know, the the swamps or whatever.

1:01:13 One phenomenon we've seen when teams are building things really quickly with AI. is that the more AI generated or assisted they are The more generic they tend to turn out. Which makes sense if you think about how LLMs were developed. You know, they're all basically pre-trained on the same data.

1:01:30 And so in this excitement and this rush to say, Wow, look at how fast we can build it. You actually end up with something that is less differentiated. than what already exists in the world. And then you know, let's say you launch it and that

1:01:42 you know, takes longer than building sort of a clickable prototype, but you launch it. Because you're moving so fast. And then you get data from the people who manage to find that thing. About what they did with it. But you don't get any data.

1:01:55 about what they didn't do with it, and you certainly don't get any data about the people who never found it, who never, you know, tried it, maybe they landed on your website and they're like, Blah. Another like Another generic AI generated thing. I got it's that's not worth my time.

1:02:10 And so Uh we think it's really helpful to Basically put yourself in a situation where you can slow down a little bit and do some like Some

1:02:19 Some hard thinking, some deep thinking about what's actually gonna make your product unique. And then you can switch into this mode of like, okay, great, now let's go as fast as possible and get that out. Into customers' hands. But um If you don't take this step first.

1:02:34 It's actually kind of counterintuitive that going fast can actually slow you down in the long run. Yeah, to build on that, I had this guest recently, Bob Baxley Yeah, we know Bob. Okay. So he has this really

1:02:46 Interesting insight. He calls uh he calls it I think he calls it the primal mark. Essentially his feedback is Wait as long as possible to y start any sort of sketch.

1:02:57 Or prototype because as soon as you start drawing what you're building It now everything you do will be a response to that. Mm. And so the more time you can spend before starting to concept out the solution, the more likely you are to land on something that works. Yeah.

1:03:12 That is super interesting and uh You know it's It is counterintuitive. Yeah, and I find myself challenged to think about it. in the context of the sprints that we run with founders, but I think one way to interpret that

1:03:26 In in the work that we do is that We used to just run design sprints with with every team. Like that was our hammer and and you know, everything looked like a nail. And part of what we found so valuable about doing the foundation sprint is that it

1:03:39 It keeps you away from ideation for just a little bit longer and it Yeah. Forces you to think about You know

1:03:48 why you're unique and and the market that you're going into. Before you get to that. Moment of Creating something that looks realistic and then maybe being a little bit locked into to that approach.

1:03:59 That's such a like I love that that this emerged out of that. Like you guys are s were so design sprint oriented and it's just like cool, let's just make prototype, let's design, let's make it real, let's show people. And that's like I think where a lot of people's minds are at more and more, or and maybe as a result. And then this is almost like a Okay, maybe that wasn't the right approach to start. Maybe it's actually better to think a little bit. Of what we want to design and build before. And so

1:04:24 Just the fact that you guys spent so much of your life and time On that. And then realize this is actually potentially even more important to do. Uh it says a lot. Well and I

1:04:34 Ideas always get distilled down to like one thing that people grab onto and they they focus on. And I think with the design sprint. It got distilled down to Just build a prototype. Like

1:04:47 J just quit messing around and build something. But You know, the reality is when you run a design sprint, it's five days and you don't build the prototype until the fourth day, right? So you do You do a bunch of work to figure out Um yeah, what is

1:05:01 Uh, how does our customer learn about this thing? Um, you know, what are the different ideas that we're bringing to what our solution could look like? Which of those are the most likely to work? And only Then at the end of the week are you building a prototype? But I do think that as the that method has become really widely known, uh, people just think about the Yeah.

1:05:20 Let's build something and then once you multiply that times the the power of AI. It definitely creates this Narrative that the The only way to build something new is to just Create.

1:05:31 the product as quickly as possible. And that that doesn't really m match our experience, you know, that doesn't really that kind of fit the pattern of what we've seen working best. across the few hundred companies that we've worked with.

1:05:44 I think this validates uh in some ways the uh role of a product manager. Where uh PM's job is to help the team figure out what should we be building and are we all aligned on what we're building before we start designing and building? And uh so this is almost like Like this process is almost like the product requirements document of a

1:06:04 Of a company. uh which I think a lot of product people listening to this will feel really good about. Yeah, we see this as a great tool for product people. It's a way to give you a structure for leading your team through those decisions and A way to give the All the folks on the team, including the the person who's the the product leader.

1:06:27 But the person who's the engineering leader, the person who's the the marketing leader, the the exact right opportunity to contribute and participate in forming the strategy. The exact right opportunity as we get into design sprints following the foundation sprint to then make it real and uh, you know. Turn that.

1:06:48 That idea, that hypothesis about what might work into Hopefully evidence that it does work. I feel like it's actually more helpful than to engineers to like nonproduct people because I think a PM, my brain would be like I wanna do this. Uh intuitively. whether they do it right or not. I think it's other functions almost that are like no just jump jump straight to design, straight to prototyping.

1:07:10 Let me ask you, uh, like while we're on this tangent, we're on this wild tangent out of this process, but I wanna Uh. This question has been in my mind. Uh, because I recently had a founder on the podcast, uh uh Mayor, who built this company called Base Forty Four. He built it, it sold in six months for eighty million dollars to weeks. And the journey of that is he just had a problem he wanted to solve for himself for his girlfriend for a scouts program. He built it.

1:07:35 People started using it, you know, you kind of evolved it from there. And obviously he didn't go through a process like this. Thoughts on just like Is it okay to just do that? When sh should someone think about okay, I should actually set aside time. to do a foundation sprint versus like I'm just motivated to solve a problem for my friends. I'm just gonna build it.

1:07:54 Evolve it, iterate with them, kind of go from there. One of the observations From our Hundreds of experiences working alongside founders in the early days of their projects and

1:08:09 Watching them make decisions and watching them try things and succeed or fail. Is that There are so many founders who are incredibly bright, incredibly capable. They have great insights about

1:08:24 the market about an opportunity. And yet Their startup does not work out. And We

1:08:31 There's a a problem with selection bias that we you know, we we hear from the folks who They were brilliant. They were, you know, they they were they checked all those boxes I just described. They saw a great opportunity. They were they were smart, they they executed well, they had courage and conviction and they did it. And it worked out, and it was a tremendous success. And I I think the the danger in thinking like, Well, they didn't follow a process, so I don't need to.

1:08:57 And you know, that may be true. And you know, that's the maybe maybe you don't need it, but What we believe is You have a better this just increases your odds. This is a chance to to get more clear on is this a good opportunity to get more clear on will the thing I build click with customers. And

1:09:15 You know, if you've already figured out that No, this thing's my my product is taken off, my product is working. We've actually had founders and labs who while they started off character labs and they said, you know, I started selling this thing and it's already taking off. I want to stop running experiments. And we're like, Yeah, stop running experiments. You don't need to do this.

1:09:35 If you've got product market fit, if you've got evidence that this thing is clicking and you're you have conviction, run with it. But If you're not there. This is a great path to get you going. And if you're not sure if the thing you're gonna build is gonna turn into that.

1:09:51 you know, eighty million dollars exit in you know, in six months. Yeah. We believe this is a good chance to improve your odds. People hearing this might be feel like I haven't heard of any company. doing this that has become a trillion dollar IPO success.

1:10:07 Uh what What would make me believe that this is a the process I should follow versus just I'm just gonna do what I hear on Y C just build it, launch it, iterate, that kind of thing. What can you share to give people confidence this is um the approach to take? Well the first thing I'd say is Give us some time. We're we're pretty new to this. We started character labs.

1:10:25 About three years ago, we created the foundation sprint. A about three years ago. But More seriously, When we were creating this method

1:10:34 One of the things that we did was look back across All the projects we've been involved in and the ones that were really successful and we look for patterns and while those teams didn't have the foundation sprint. They ended up

1:10:46 having really clear Differentiation in a really clear view of what made them unique. That they were able to build on. And as we ran design sprints with them, we were able to sort of uh test and validate against that differentiation. Um, so we believe that this is sort of a key to success.

1:11:03 even if those teams didn't have access to this exact same methodology. So what I'm hearing is this is essentially like alpha in uh starting a company. This is a new process that companies are just starting to use. You guys are working closely with founders. And it's rooted in the success of many, many, many companies that you guys were involved in early on and continue to be involved in. Yeah, it's based off of this thing we've seen again and again in the most successful projects when we're inside the room.

1:11:33 In the early days, and we're seeing people make decisions, this is what drives those decisions. It's differentiation and So if we look back across, you know, all of the sprints that we've been a part of over the the years. And John and I And if you're not watching on YouTube, by the way, there's a cool visual that uh that Jake is showing. Yeah, this spans across Google, Google Ventures, Character Capital, and if you're watching on YouTube, you'll see all these little white circles and each one sort of represents.

1:12:03 you know, a company that we've seen inside of during these design sprints. And There are a lot of really great success stories in there. You know, we've had the chance to I mentioned the story of Google Meet and being there and f figuring out what is it that's gonna make this thing stand out. That was what made the

1:12:21 project finally start to take off and to this day is still sort of what animates it. being inside of you know the early days of what became Google Photos or Google Trips and and some of the early design sprints and there's a there are a lot of others on here But Honestly, of course, we've also seen inside a lot that that didn't work out. If

1:12:40 We looked inside. Yeah. greatest hits though, the real smash successes. We looked inside all of those, we realized there is a common element. And that common element in all of them.

1:12:52 is differentiation, that there was clarity around This is what we're trying to prove to customers. This is the promise we're making. And so we've we've been on those teams. Or we've worked alongside those founders. who have this clear idea of differentiation. And sometimes they're not right. They run the experiments.

1:13:09 And they change it, but the thing is they're keyed into differentiation as being crucial. They're not just thinking about the product and trying to get the right shape of the product or trying to make it, you know, usable or whatever. They're really keyed in on differentiation and how do we find the right promise and deliver on that promise and express that promise to customers. So To explain a little bit quickly of what I mean by differentiation and how this is manifested in products we've seen.

1:13:34 If you go back to the early days of Gmail in the two thousands, you know, if you had email, you were probably using Hotmail or Yahoo and it worked fine and you didn't have to think about it and this. new product comes along and you're like, God, I'm not gonna wanna switch my email address. What a hassle. Who wants to do that? Yeah, no one. Gmail's promise was Hey, massive storage, great search.

1:13:54 And as we were building the product out and you know, marketing explaining it to people and making decisions inside the project. We had to continue to deliver on great search. Great search, great search. That was that was key to standing out. He fast forward to twenty fourteen and we're working with this tiny company who's now competing with Gmail, who's now like sort of the market leader people are used to using.

1:14:18 And you know, in their teams. And here's this new messaging software called Slack, and they're you know trying to reach new customers and gosh, switching to Slack is an even bigger hassle than switching to your email address because everybody on the team has to switch. Well Slack says hey If you believe that having fun and boosting teamwork is important, it's gonna be clear to you. This is a new way of looking at the world.

1:14:42 And when they were making their decisions in their first big ad campaign, their first big marketing campaign. This was what they were trying to convey to customers. So we kinda kinda see that from the inside. Another one. We didn't see this one from the inside, but in one that we're all sort of familiar with is what happened with with Chat GPT. You know, it goes from this trusted, I don't have to think about it, I'm gonna run a Google search to Oh wow, it's a new way of looking at the world. There's zero clicks just tells you the answer if this thing's great.

1:15:08 This is also something that we've seen in some of the early success stories from our own portfolio. So 2019, this company. Called reclaim. going after calendar management. And you know, most of us manage our own calendars. Most of us don't have administrators helping us out with that. And you know it's free. We're in control. Reclaims.

1:15:28 argument was hey we can automatically we can use AI to help you focus and to automatically prioritize your calendar. And that animated enough people to take the plunge and switch and try it out that they were able to build up an audience of, you know, tens of thousands of users and uh Dropbox acquired them uh last year. A great answer to my question, you guys. Well prepared for for the skeptics.

1:15:51 Uh Part of our motivation, our our selfish mo motivation with Yes. Found sprint is that You know, now that we are

1:15:59 investing our own money into companies and we're working with all these founders. We want them to have that same clarity on differentiation. You know, we saw how important that was to Gmail and to Slack and to all these other companies. And we want to bring that, we want to sort of give them that same advantage and Help them avoid the you know, the pitfalls that all the other unsuccessful teams and companies that we've seen have fallen into. So

1:16:23 That's that's kind of what we're trying to do here is bring the the lessons from these really successful teams. into You know, any team. that reads the book and runs this process. And the special sauce that John and I bring is that we're obsessed with

1:16:37 Yeah. the sequence of decisions that you make and how you work together with your team to make good decisions quickly. And That specificity about the the method is something that we

1:16:50 We do have a lot of evidence behind it working well because of what's happened with the design sprint and with how many successful teams have have run that. At those companies who are, you know. trillion dollar or whatever kind of giant exit team all all kinds of teams run design sprints. This is that same methodology around how we work together at high velocity and high quality. And it's just brought to a a different part of the process.

1:17:14 Excellent answer. Uh speaking of the method. We went on the world's most epic tangent. I wanna bring us back. We haven't finished actually going through the process. I think we're towards the tail end of it, so let's just finish that. What else do you do? So you have this this uh Yeah, I guess catch us up. Let's catch up with Watch It. So As a refresher for you who forgot, Watchet are building this tool for artisans. They want to help them.

1:17:39 sell with the community networking features. Like you might find one Substack. And they've Identified their differentiation. They've identified their

1:17:50 approach now using magic lenses and all of this is going to come together to create a founding hypothesis. So If we help Artisans solve online sales growth. with a social sales app. And then they've also got their backup plan, or we could build the full stack solution if if that doesn't work. We believe they're gonna choose it over Shopify and Etsy because our solution is cooperative.

1:18:12 And easy to use. And in this Single sentence we've laid bare Their strategy. And

1:18:18 Now they're gonna try to find out. Does that work? So the output of The sprint is the founding hypothesis. And I love that the term hypothesis is a part of this because it's not Telling you this will work. It's this is the thing you will now test.

1:18:33 Absolutely. And Every project has at its core, every new product has at its core a hypothesis. They have there is a founding hypothesis. It's just usually not explicit. It's usually hidden and different people on the team may have different ideas about what it is, and because it's not explicit.

1:18:52 it's very hard to interrogate it and test it and find out if the The different variables in it, the right variables. I'm curious what's in that photo to the right as you're showing the YouTube. Oh yeah. If uh if you're on YouTube. So that this is just we did the sprint together in person and so on Watch it's board you're and you're gonna see that like Here's where they wrote it out and took a photo of it and dropped it in and then later filled it out on the mural board. Beautiful. And I it has their old name there. That's right. Yeah, yeah. Lyric, which it turns out is uh not

1:19:24 The easiest for SEO. There's a lot of lyrics. I know some lyrics. Uh, and just to understand, is the next step the design sprint? And that's where you actually start testing. Exactly. So if we zoom out now, we see now they're gonna head into a sequence of design sprints running one after another. Each of those design sprints starts with the founding hypothesis. Then the team is gonna say, Okay, what are the biggest risks?

1:19:47 You know, the that hypothesis not being true. What do we need to assess right now? Gonna make a map. of how customers discover the product, what that core experience looks like, and then figure out using that map. Where's the

1:19:59 Where's the key moment for assessing that risk? So for them the biggest risk is do people even will these artisans even want this thing? Are they actually gonna want to have a community sharing sort of Sales platform. And they decide the key moment for us to test that's actually on the landing page. They figure we can prototype landing pages that describe the product. And learn a lot for our first experiment just

1:20:21 Just with landing pages. They're gonna sketch solutions. This will be familiar to anyone who's you know, heard about design spreads, I guess each person sketching their own proposal for how that key moment should work. choose the strongest of those. In this case they choose they're gonna actually prototype three things. So they test three things head to head against each other.

1:20:41 fake brands for each one. So they look like three different products. And then this is a really key part. At the end of the design sprint. We've got a scorecard. This is actually a new innovation. This is not in the sprint. Oh shit. Here we go. Hot off the presses design sprint.

1:20:57 Uh improvement. So this scorecard is gonna break down the founding hypothesis. Hey, as we talk to each customer, was this the right person as the right kind of customer for us? Do they have the problem that we think they have? Was this the right approach for them?

1:21:12 Did they choose it over the competition? They're gonna test these prototypes head to head and also show people like, okay, here's Etsy. Here's Shopify. Now out of all these five options. Think about out loud about you know What do you what how do you compare these? So do do we believe they'd they'd actually choose it?

1:21:29 Did the differentiation actually work? Were those differentiators valuable and and motivating to them? Does it click? So Our new book is called Click and you know the the idea there is You can see

1:21:42 When a product clicks with one person. And that's a that's a helpful signal. Now, granted, these interviews are kind of a simulation. It's not like the real world, but They're a helpful signal that we're on track for product market fit. If we see it, gosh, this product just seems to be clicking with customer after customer. That's a really strong signal, and that's when people start to get the confidence that it's time to build.

1:22:03 That's a really good term, by the way. I feel that's such a good way to describe what it feels like. It doesn't just click with them. Just kinda clicks, yeah. And if you look across Latchett's first scorecard. There's a ton of red. It's it's a lot of things that didn't work. Yeah, yes. The the conclusion at the end in this last column there's a conclusion. Hey, we interviewed

1:22:22 This case they interviewed four customers. Well, it looks like this is the right customer. It looks like they have this problem, but Everything else kinda didn't work about the hypothesis. Approach wasn't working, differentiation wasn't working. There's some many hypotheses kind of about the prototype itself. Just lots of red on here. So they spread again.

1:22:41 Yeah and just zooming out for a second, this is a team who just started working on this new company. And you know Sometimes it can feel slow. We talked about it feeling slow to go through all these steps. But They're only a week in.

1:22:55 And they've already built three prototypes. And they've Tested those three prototypes with four real customers. And they have this super detailed scorecard of Here's what's working, here's not what's not working.

1:23:06 That's after a week. So It's interesting how what can feel slow in the hour to hour actually can s really speed you up. in the the weeks and months uh time scale.

1:23:17 That was such good context,'cause I was feeling that and to your point. Mm most founders do not do this much. Testing, iterating, learning in the first few weeks of their startup. They might spend a few weeks just talking to customers without showing a prototype. And then they might spend a few months building an MDP. And then they might, if you know, maybe they're gonna spend some more time talking to customers while showing them the MDP. Maybe they'll do manual onboarding, something like that. But yeah, that plays out over months and it fits with what founders tell us. You know, it's of course it's a a subjective

1:23:47 measure but Founders who go through this process with us, they say that We're able to accelerate three to four months of work into the three or four weeks uh back to back sprints that we're doing together in character labs. Excellent context. Thanks for throwing that in there. And these conversations with customers are so much more fruitful and pointed when you've got the context of I know exactly what my hypothesis is and you have prototypes to show them.

1:24:11 We have a founder in our group of startups in character labs at the moment. I'm thinking of Maruthi John, who's Uh it comes from doing uh sales at Rippling and had been talking to tons of customers while starting off. And he said, You know, I've had 50 conversations over the past month, but I learned so much more from even the first conversation.

1:24:35 when I had a hypothesis and I had a prototype or a couple prototypes to show them. It's like night and day. That is a great example. This this all makes sense. As you guys describe it, like you're You're actually testing something very concrete that your entire team is aligned.

1:24:51 behind and actual prototypes and you've thought about different directions. So it's you're testing something very specific versus just generally Testing at your general concept. As we go into the second design sprint for Uh latchet.

1:25:08 they're making some edits to their founding hypothesis now. They're you know, revising a few things, making new sketches, new proposals for what this solution might look like. They've learned a lot in that first sprint. A new

1:25:23 Prototype. Uh that's got a prototype that has more detail now. So They are engineers. They're starting to actually write some code and and put some more detail behind the product. It's more robust. And again, they're trying to fix that positioning. Here's their scorecard.

1:25:37 And if you're watching on YouTube, you'll be able to see it, but Again, there's a lot of red here. At first blush, this the scorecard is is bleeding. But there are some promising signs. There's like maybe a few little sun breaks, or some spots where Some of the red has started to flip to yellow. And so if we look at the conclusion on the far right.

1:25:56 They're starting to believe their differentiation is dialed in. And they're starting to believe that this could be the right approach. They may be able to get people to choose it to the competition, even though they haven't done it yet. So those are starting to become yellow lights on the scorecard. And now they'll take what they've learned and Now we're into the third

1:26:16 consecutive week of design sprints. Again, they're gonna sort of review that founding hypothesis. They're gonna sketch, they're recruiting a new slate of customers as they do each week. A new prototype again. m more code in the prototype. It's it's becoming more and more robust, more realistic, as they're also adjusting the the marketing and the positioning at the same time. So all of these things kind of go in concert the product itself.

1:26:40 and the marketing are are sort of one as they're as they're moving along. And this is an extreme example of what everything is green. Everything's green. If you can't see it, every single one is green. Oh my God. And this is this is extreme, but it is a pattern that we see real again and again. This is a real example. Wow. How do I invest to get us in this round? This is great. Yeah, this is pretty great. This is great. So um so we see this again and again, and I you know, I can share a couple of

1:27:09 uh other boards of ones that are in progress. We're also constantly adjusting the templates so you can get to see a little bit more how the how people will edit their um their founding hypothesis from sprint to sprint. So, you know, Melo, who we were talking about. Here's their first prototype. And you know, here's their first scorecard.

1:27:26 Lots of lots of yellow for them. Maybe they're a little bit more likely to use yellow than red. And then Here's the edits to their founding hypothesis after the first sprint. You know, so you can kind of see in red they're changing. slightly changing the definition of their target customer from the first week. Slightly changing the the problem that they're solving. Slightly changing

1:27:46 the approach slightly changing the competition. They've dialed in, they've gotten more crisp on who are we up against. They've gotten a little bit more crisp, just a tiny tweak. On what how do we explain this to people? To get them excited about it. What's the differentiation? They sprint again, they prototype again, and if we just jump down and just looking at hypotheses.

1:28:05 They learn a bunch and now there's another slight tweak to that founding hypothesis. And so Week after week you're learning, but you're also really able to able to track exactly what is it that we learned and how does that affect

1:28:18 our our strategy. Okay. Guys, this was incredible. I think we've We've covered i the entire process. I love that you also covered the design sprint pieces, which Uh

1:28:29 Which isn't part of this book, but is such a core if you clearly these things are very uh connected and meant to work together. So you go from Here's the thing we should be building to how to actually test it. Let me ask you before we wrap up, is there anything else that you think is really important for people to know before they start? Trying this process at home.

1:28:47 And Is there anything you can point them to to actually try this at home? One thing we didn't talk about, you we go we use an example of a company whose Not building an AI first product. uh Watch it's building uh you know this this network community s uh sales platform for for artisans.

1:29:06 It probably be interesting to look at how People use this when they are building a a very technical product, when they're vibe coding prototypes. That's a question we're getting all the time. What's the influence on this of the speed with which you can build something? That's an awesome idea. Let's definitely do that. Yeah. Okay. So let's jump in here and take a look at a company, again, in our current group of labs teams. Axion Orbital, it's called, and the founder, Dinner J is actually running this whole process solo, which is pretty cool too. He's a he's a remarkable guy. We have a couple of solo founders right now and uh who are You know, able to generate, you can see, just to give like a sneak peek, he's generating when we talk about customers all these sticky notes himself and making the decisions himself about

1:29:47 Which is the right one. But to ground us in this story, his founding hypothesis is He wants to help geospatial devs solve these sort of complex workflows with a browser based no code development environment. So we'll um we'll take a look just Uh, really quickly at What his prototypes look like.

1:30:05 And in the first week I can show you this prototype right here. And it's a marketing page. And on this marketing page. There's a link.

1:30:17 to a uh to a video. So if I click find out more. I'm gonna see this video. And this video It's gonna kind of

1:30:26 Hear Din and Jay talking over it. And it's gonna kinda walk through A screen share of a very rudimentary version of what this product might look like. Now, if you're watching on YouTube and you see this prototype, you might think, Boy, that marketing page and the demo itself. Pretty bare bones, not the most polished looking. This is uh

1:30:47 This Doesn't look super compelling. So he was focusing in that first sprint on the messaging, you know, on finding those those people who actually have that role, testing it with them. And he learned a lot. So if we, you know, sort of go back to his His scorecard. We'll see. Okay, that was

1:31:03 Yeah, that was a pretty good one. Actually a lot of green on his first scorecard, but he also felt like what he tested was was pretty incomplete. Now, one thing that's cool here, we saw the big leap with Latchet from one week to another in terms of like their learnings and the scorecards. One of the things that's interesting here is to go from Finny Ja's first prototype here to his second prototype. And it's obvious he's

1:31:24 been able to just build a ton. in uh in the next week. And he's using, you know, AI based tools. He's doing a lot of work. He's also just a terrific engineer. But here we've got like a much more real looking marketing page. very detailed. And an important thing that he's done here with us.

1:31:40 Is He's built out a lot and created a video of something so that the product, while not fully functional. You can see exactly how it works. So if we sort of Play this video.

1:31:51 He's created this demonstration of what it looks like when you type in a query into the engine. And exactly the kinds of results you get. And by doing a combination of vibe coding Real coding. All of which is based off of, you know.

1:32:06 Pencil sketches, we can go back and see the sketches he's doing on paper to define this is what I think needs to be in there to make this compelling to deliver on my differentiation. And then he's using a a product video so that the entire thing doesn't have to work fully free for him. That's what it can look like when a team is building something that's that's you know more AI centric, when it's a more sophisticated tool, when people are going to be curious about the sort of the ins and outs of it. So along those lines, where do you find people are you

1:32:35 leveraging AI most in helping them through these sprints through either the foundation sprint or the design sprint is it mostly just Bibe coding prototypes. That's definitely the

1:32:46 First. And biggest use of AI. in sprint so far is is in you know, making prototypes that look

1:32:53 More realistic, faster. And You know it's kind of like Uh you know, having an entire prototyping team on standby, right? So that you don't have to just

1:33:03 make it yourself and sort of piece things together, but you can have, you know A ton of people ready to jump in. make something look really realistic. But It's also really critical we found that

1:33:14 while you're outsourcing that prototyping work, you don't outsource the thinking. Like you you don't kind of skip over the the part where you think about Well, what is the actual copy? on the website, how do I actually describe what the product is, how it's differentiated. Um and so

1:33:31 it's it's one of the reasons why doing the foundation sprint first and then doing a design sprint can really help you. Yeah. And and Yeah, because it it allows you to spend time Working on that harder part of

1:33:45 what it means to design and and build a product. And then once you have a clear view of that. Then you can use AI tools to go really fast. And you know, in this example that Jake is showing of Axiom orbital, people get really clever about which parts of this need to be real, which parts of this can be vibe-coded, which parts of this can just be a static Figma mock-up. Um and it's all about kind of creating

1:34:05 A simulation uh something that looks realistic that you can put in front of real customers. To help you answer the the key questions. That's a really good point that you're making. And again, it's just a reminder.

1:34:17 You will move faster if you slow down a little bit at the beginning. that because prototyping is so easy now and just things that look it's so easy to make something that looks really nice and kind of it's doing what you want, but Spending a little time making sure you understand what you're testing and what you want. Uh is it becomes more important. We had a couple of teams in this current group of character labs where they jumped to vibe coding prototypes like right away, like at the very beginning.

1:34:41 And Y you know, when you when you generate something using A using an L L I'm using an AI tool, like It looks pretty real. Like it looks you know, it looks believable and I so I think there's a temptation to say like Okay, like this is this is good to go. Like it it looks close enough that I'm just gonna you know, show that to customers.

1:34:58 And then what they found was like Actually the You know. It was so it was super generic. Like it didn't really describe what the product was. It didn't really describe how it was different because You know, it was it was generated by a model that

1:35:11 uh is trained on you know sort of existing products and so In that second sprint, that was when they really took a step back and said, Okay, let's Think through this. And then shift into prototyping mode. So

1:35:23 It's definitely helping people speed up. But we also think there's an important lesson here that while you're outsourcing prototype P prototyping don't outsource the thinking as well. I see pulling something up, Jake. That might be imagine you want to show. Yeah, I think it's kind of interesting to see the sketches that went into Denin Jay's prototype, the axiom orbital prototype that we just looked at, because they they are super detailed, and this is

1:35:46 Doing this level of thought where you're you're pausing, you're being really intentional about What does the customer need to know? What needs to happen for them to find a solution to their problem on y you know, and within the product. That's

1:36:02 a way of doing your prompt engineering, if you end up vibe coding this prototype, but you start off with a very clear plan about this is what the thing needs to look at look like. Rather than going immediately into a conversational mode where you're sort of co designing with the LLM and going back and forth via Chat conversation. This is much likelier to yield. An opinionated

1:36:24 product that Make sense, that's very clearly defined around the the problem that you're trying to solve, the tasks that need to happen to solve that problem. And the right messaging, the right wording, that's really crisply aligned with what you know about your customers, what you know about what they care about. That's such a good point. Again, just the concept of the primal mark is ringing in my head as you talk about this. Just as soon as you make that prototype, everything from that point is a response to that.

1:36:50 first idea versus have I actually thought through what this should be. Guys, we did it. This is uh incredible. I think this is gonna help a lot of people think through and actually save a lot of time. Um Is there anything else that you want to share, leave listeners with, maybe a last nugget or something you want to I don't know, just double down on to leave folks with before we wrap up.

1:37:10 Well one quick thing is that We've We've shared a lot of examples. In this uh in this conversation and we actually have a template.

1:37:19 Uh mirror template. that folks can use if they want to run their own foundation sprint. It's the template that we use, you know, when we're working with founders, taking them through these sprints. We we do our work in Miro, even if we're in person with them, we're usually working in Miro or Maybe working on paper and then capturing it in Miro because it's It's just such a great canvas to work on.

1:37:38 Um and we'll make that template available so anybody who's Who's listening or watching can can grab that and and use it to run their own Foundation sprint. That's amazing. I I you answered the question asked that I forgot to come back to you. Uh can we give people a UL we'll put it in the show notes, but should they is it at your yeah, I guess where can folks find it?

1:37:57 You should find it at character dot Vc and you can uh Go there and we'll have we'll have a page for you too. So easy. Uh that is awesome. I'm s that's so awesome that you guys are doing that. But I think the template is Just like a plug and plate. Let's just do this at home. Obviously, if they want to go deeper, they can work with you guys to have you It's such a win. They take money. You give them money and you help them figure out what the heck to build.

1:38:25 What a deal. And that's also character.bc. They want to explore that. Yep. Amazing. Okay. Uh is there anything else, Jake, that you wanted to share before we Close up. No, just you know, if if you made it this far, uh hopefully your your mind and heart is is open to this idea, but

1:38:42 We know it's a lot to ask to clear the calendar and follow these these steps, but if John and I weren't so convinced that beginnings are essential to getting your best efforts in the hands of people and to achieving the the things you want for your customers. We we wouldn't be doing this. We wouldn't be going to all the trouble. There's simpler things we could we could do after. Um

1:39:07 The kind of cool thing we've found about working in this way. Though we've we've focused a lot on finding product market fit and building your business, getting started, getting momentum, getting alignment, all these things that tactically are important, that business wise are important. But another part of it that's A nice

1:39:25 Side benefit. That actually maybe is the most important thing of all. is how close it brings you to your customers, to the people who you're building for because you're interacting with them, you're focusing on them as you plan and you're interacting with them on a weekly basis when you work in this way. And how close it brings

1:39:43 Teammates together. In a very authentic way. We're working together on the most important things and we don't have to navigate the usual social dynamics of conversations where one person has an idea and they're pitching it. We don't have to navigate the constant context switches of the calendar that dominates our days. We're just working on the most important thing and the structure.

1:40:04 Takes care of a lot of the The difficulty of the The process of what we should do. And we just find people come out of it. With

1:40:14 renewed motivation, renew energy, and renewed enthusiasm around The fact that they get to work on what actually matters to them. Yeah, and it just feels like really fun. Just this part of the process so fun. And then not having to decide how to approach it, having someone just give you here's a framework to follow. It's like a yoga class, right? It's like yoga, but explain to me step by step. Yoga for startups. That'll be the title for this episode.

1:40:39 Guys, this was awesome. Uh I'm gonna skip the lightning round just because we've gone long. Cool. And I guess just where can folks find you online and how can listeners be useful to you? You can find me on LinkedIn. John, I think you find you on LinkedIn too. Yeah. Yeah, yeah. We'd love for people to apply to character labs, or if you know a founder, apply to character labs, apply uh get in touch with us, character.vc. There we go. All right, guys. Thank you so much for being here and for sharing.

1:41:04 Yeah, thanks, funny. Thanks, Lenny. Hi, everyone. Thank you so much for listening. If you found this valuable, you can subscribe to the show on Apple Podcasts, Spotify, or your favorite podcast app. Also, please consider giving us a rating or leaving a review, as that really helps other listeners find the podcast.

1:41:23 You can find all past episodes or learn more about the show. At Lenny's podcast dot com. See you in the next episode.

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