Hard truths about building in the AI era | Keith Rabois (Khosla Ventures)

Transcript from https://podmenti.com/t/68fa8b7e788a0e34

Idea of a PM makes no sense in the future. The skill is more like being a CEO now, which is what are we building and why? There's a lot of anxiety in the job market. AI is gonna radically reorient lots of people's careers, maybe including mine. What I've noticed in some of the best organizations is the number one consumer of tokens is the CMO.
They don't need to rely upon deputies and deputies and deputies to get
Actual work product. I want to hit on some contrarian takes that you have your advice, you don't actually want to be talking to customers. I hate talking to customers. I refuse to allow colleagues of mine to talk to customers. You have this idea of criticizing in public versus in private. You're uniquely great at helping companies build world class teams.
If a founder shows the ability early in his or her career to assess talent ruthlessly and accurately, he or she can go very far with no other abilities whatsoever. It feels like it's never been harder to attract the best talent. Really talented people. When things are going
Well, they're not happy. The morale actually does go down when people are skating. The single role for the CEO is offsetting that complacency. The better you're doing, the more the CEO should push.
Today my guest is Keith Roboy.
Keith's resume, both as an operator and investor, is
Absurd.
He was an early investor in Stripe, Palantir, Airbnb.
YouTube DoorDash Ramp and dozens of other companies
He's part of the famous PayPal mafia, where he was executive vice president of business development and policy.
І з особами Чіф Оператин офісер е сквер.
VP of corporate development at LinkedIn. He's also co-founded two companies, and he's currently managing director at Kostla Ventures.
It's safe to say that Keith is in the ninety nine point ninth percentile at identifying talent.
Building teams and operating world class companies.
Before we get into it, don't forget to check out Lenny's productpass.com for an incredible set of deals available exclusively to Lenny's newsletter subscribers. With that, I bring you Keith Raboy.
Keith, thank you so much for being here and welcome to the podcast.
It's a pleasure to be with you.
Okay, so when we were starting this recording, you told me you're doing this from an iPad.
Which I've never had, and you shared a crazy fact that you haven't used a computer in like years. Talk talk about what's going on there. Yeah. So uh when I when I started working at Square, Jack Dorsey was running the company off an iPad.
And so I immediately converted in September two thousand ten and have a look back. I haven't touched the computer.
Since September two thousand ten. Everything I do in my life
Is either done from my phone, my watch, or my iPad.
What's so interesting about this as you're talking is just
There's this trend of engineers starting to code from their phone. Like I had Boris Cherny on and Simon Willison, these two engineers that are like 10X engineers, and they're just like coding from their phone.
talking to AI and I feel like you've you've been preparing for this for a long time.
Yeah, try to be ahead of the curve. Jop's very good at being ahead of the curve. If you just watch what Jap's doing and follow, pretty good shape and technology.
And just understand the benefit is it just avoid distractions.
Yeah, partially distractions, partially just the flexibility.
Like taking an iPad with you anywhere.
It's just super easy, you know. I some of the some laptops have improved since then, but like the screen flexibility, angles, but like just the weight.
Like I carry my iPod with me everywhere.
So there's no reason there there's nothing you can't perform unless maybe if you're doing heavy duty engineering, which obviously has not been my forte in life, although I may have to start, um, there's no reason to use
A more powerful, heavier weight, less flexible machine.
Wow, iPad Maxing, Keith Roboy.
See if you got my Apple. As long as it's an Apple product, it works.
So appropriate.
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As I was preparing for this chad, there's just like so many directions we could have gone with this. You're so smart so many things.
I want to focus on
Something that I think you're uniquely great at, which is helping companies build world class teams.
And I wanna start in particular with
Attracting the best talent.
And what's really interesting these days, from what I can tell, is there's just like a lot of people that are struggling to find a job. It's taking a long longer to find a job. It's just there's all these layoffs.
On the other hand, it feels like it's never been harder to attract the best
Talent?
There are so many
Amazing company's doing amazing things, so much money flying around, these hundred million dollar offers and things.
And so
From the companies that you are closest to that
UC are best at attracting the best talent.
What have they figured out? What are they doing differently? What are some creative things they do?
Well let's start with
First principles. The most important lesson I learned when I was working at Square
From my board was Venezuelan because I was on my board.
And he said the team you build is the company you build.
And that adage is the most important thing when you're creating a startup. People get distracted with the market, with customers.
With the product, with technology.
Ultimately to team.
If you have the right people,
Everything else will be easy and you have the wrong people, everything else is gonna be difficult.
So I actually learned this be the note just still did, but I actually learned this back in my PayPal days. So, you know, in the early two thousands.
Why was PayPal so successful? Why were there such a gener you know sub subsequent generations of successful interesting companies?
uh for you know twenty five years now it's because Peter
T or National
Marshalled.
An incredible density of talent.
So it allowed PayPal to succeed where possibly we wouldn't have.
And
These people went on with interesting ideas, ambition, and talent to build epic companies, you know, in all kinds of verticals. So from day one, although it's been day day one of my technical career.
uh technology career I've always been focused on
H the importance of
Critical density talent.
How do you identify, retain, and promote
People without talent.
Back in the PayPal days when I first started my career in technology, I actually truthfully was not very good at this.
Um
Fortunately, Peter and Max were. So Max basically hired all the technical technology of the organization. Peter pretty much hired everybody else. Uh they used their network primarily, so it was very difficult to get a job at PayPal.
unless you had a first degree or second degree connection uh to the engineering team or to Peter through Stanford.
Which is a different type of recruiting model. It works really well if you have a strong network.
I wouldn't recommend it for everybody, but if you have a network.
That has, you know
Unique.
Tell it.
There's no substitute interviews are not.
A great substitute regardless of how strong we are at the interview.
But when it's starting to make three year old.
I was
mediocre, let's say hiring people, probably fifty fifty, you know, some good people, some mediocre people. That doesn't allow you to scale a team with an unfair advantage.
But what I learned to do is steal people from other people's organizations within PayPal very successfully.
So I got feedback from David Sachs, who was the COO at the time, that I wasn't gonna get promoted again.
Until I sh until I could demonstrate
uh leverage, like leadership leverage, which hit an equation for of one plus one has to equal three or more. So for every incremental person you hire, you have to show that you produce disproportionate returns, nonlinear returns. And because I wasn't hiring that well, I wasn't really
Succeeding?
out that leverage.
So when I went around, took the feedback.
into account and I said, Hm, okay, I I really want to get promoted, what do I do?
So I found people within the organization that I felt had talent that were were not being leveraged.
to their highest potential in ambition, and I recruited them to my team.
And that was very successful.
And then I did get promoted actually fairly quickly because these people actually went up to speed. They were able to run really fast and we produced a lot of really important results for the company.
The lesson though that I took away was well, that's great because what it showed to me is
I actually could identify talent, I just couldn't identify strangers with talent. So people that were in the building that I have lunch with or dinner with or go for a run around the PayPal campus with
I was accurate at diagnosing their abilities.
I just couldn't do it.
you know, in a twenty minute, thirty minute, forty five minute interview.
So the first thing is just double down on people I know.
That doesn't scale perfectly.
But learn to be excellent at
I if I had context.
Assessing people's abilities, superpowers, and you know, weaknesses.
then over the next x years.
try to identify
uh ability, uh a different technique for identifying assessing random people. Because ultimately, if you're gonna build an organization, ultimately if you're gonna be a VC, you can't just invest
In people you already know.
So that took
Some years and requires some training.
Anyway.
I think you can teach some of this.
to a founder.
But one advantage a founder house is gonna thrive is
If a founder shows the ability early in his or her career
To assess talent ruthlessly and accurately.
Here she can go very far with no other abilities whatsoever.
higher such a muscle.
You need to exercise it, you need to try.
Learn.
What worked, what didn't what what could you have known, what what did you miss, why? And you know
riff on that and try to get better at it. There are tactics you can learn. I think the tactics work pretty well within the middle of a bell curve distribution of moving yourself 10, 20 degrees within that bell curve.
I don't think the tactics can really teach you how to identify, call it like top
Ten basis points, top fifty basis points of talent.
There you have to deviate from the norm. And I think that's actually true of most lessons in life. If you're gonna be extraordinary in any skill,
You can't follow a playbook. Otherwise by definition lots of other people would be
Yeah, the top ten basis points.
But but you can get a lot better by learning.
Techniques.
One thing I think you can learn to do
Is is be excellent at references.
It doesn't work for hiring people right out of college or something,'cause
The reference context is gonna be a little off.
But I think without getting better at interviewing and assessing
If you just learn to straff the right information from ruthless referencing.
So for example, Ruth's referencing to me means uh Tony at DorDAS does twenty references on every single senior hire.
Twenty.
Yeah.
I bet you he's pretty good.
And then she's been pretty accurate too.
Ah, so I think you can learn that. That's like a tr uh a skill that's teachable.
That
being absolutely
you know, incredibly dedicated to your craft, you can just get better at. Back in the day, there's an investor at Graylock who's on my board at LinkedIn DVC.
Very successful investor.
Notable for both LinkedIn and Facebook investments.
He used to teach at Greylock, you couldn't stop reference.
being a founder until you hit a negative reference.
So you know you'd exhausted the reference.
When you finally hit a narrative reference.
And so I think there are tactics there in um muscle building. How do you get the right information from the right people? How do you frame the questions, et cetera.
that will lead you in the right direction. Now you have to be careful, like let's say
I'll give you an example where this can go wrong.
Uh I'm been a long time investor from the seed ground of company called Fair.
Founded by
Uh
Two of my colleagues at Square.
Uh Max Rage and Jeff Calvin uh worked for me um at Square. And then the two other co founders also worked at Square.
When people were reference checking Macs.
Often most VCs asked the wrong question, which was Mac was Max a good employee?
The answer to that is very mixed.
And so some venture capitalists, including some very good ones, were nervous about investing fair.
If they frame the question slightly differently, which is
Is Max capable of being a world class entrepreneur? The answer was yes.
So you again, it's like a tactic, you have to understand like what exactly am I trying to extract.
Same person
Wrong question.
Wrong result. And many people passed.
Unfair.
And they regret it. And these are actually
quite talented investors, they just didn't frame the question correctly when they were calling someone like Jack Dorsey up for the reference.
Any other questions you find really helpful in
Extracting the right information.
When when I interview candidates for senior people in leadership positions
I always ask them, you know, look at whatever company they're at and say if you were CEO, what would you have done differently?
And you get a feel for the strategic mindset.
of you know can they drive
Value creation. Because almost by definition they've come from a company that's had some
traction success.
So can they end it? So for in your case, I would have asked you, you know, if you were CO of Airbnb, what would you have done differently?
And you learn a lot from that question.
On reference specifically
I think the uh a general arc that's pretty good is asking the person what would lead to this person being s most successful.

And
If something were not to work out, what would be the primary root cause that you can identify if something going wrong? I think
Generally probing on those two arcs leads to a lot of insight.
And that first question is for the candidate or the or is that in the reference. For the candidate, that's for the candidate specifically. Got it. Um, because it's not like I don't want them to criticize Airbnb. I don't know.
I don't think that's that productive.
But
You can tell how much of the current business model have they absorbed.
How much do they understand trade-offs? And then they can they create an unfair advantage, you know, can they they have insights into afterburners. And then I have a follow up question, which is
Usually gold, which is let's say I ask you this question about Airbnb and you give me this great answer. I'm like, Well, why didn't you why weren't you able to persu and persuade Brian to do it?
So you made this interesting point that there's like
Tactics that can help you get better at
Finding an i identifying talent.
A lot of this is just the feedback loop of doing it a bunch, sounds like.
I find the feedback loop is so like
It's hard to actually like
Like most people interview hire.
And then don't really learn much from how an ends I'm going.
Like there's this gut thing that happens, but they're not like really thinking about it. Do you have any advice for just how to
Make the most out of the lesson of
See how something went. So I've read some research on the topic and
If you ask yourself
Thirty days after any higher, would you make the same decision?
that thirty day loop is pretty pretty useful and it

It's as accurate as measuring it a year or two years out.
So you got a pretty tight feedback loop and you can ask the entire hiring team?
Uh, so I think that is that's just a technique that every company should use.
I wanna talk about this framework that you have.
uh barrels and ammunition because this
Is really
Mind expanding and helping people understand who to even hire.
So look, most companies raise money. They have some traction. They raise you know just see Brown, they get launched, they get some traction, then they raise a lot of money.
Whether it's a series A or B.
And then they hire a lot of people infallibly, or at least historically.
And then the CEO.
almost without exception gets frustrated because they've hired a lot of people, the burn rate has increased a lot, and they don't feel like that's more get more is getting accomplished per unit of time, per day, per week, per month, per quarter.
And they get frustrated. And so then they
sit around at a dinner with other CEOs or people like me or one on one conversation with me and are incredibly unhappy and disappointed that I'm spending all this money on other people, but we're getting lost on or the same done. I don't know why, why, why, why
After years of sitting through these conversations at dinner with other CEOs or COOs
I realize that the fundamental driver of this is that
The number of people that can
independently drive an initiative from beginning from inception to success.
is very limited with any within any company. And if you hire more people
without expanding the number of what I call barrels that can drive from exception to success.
All you're doing is stacking people behind the same initiatives.
And so you're wasting time, energy, and increasing your collaboration tax, your coordination tax.
And so that's what causes the drag.
So for example
At PayPal, we had about two hundred fifty four people in Mountain View when we were required.
Of those people depending on how strict you really want to be. It is considered one of the best talent rich networks of all time in technology.
There's between twelve to seventeen barrels in the organization.
That's like an infinite number. I once asked uh Jack Altman on a podcast
A lot of so it's pretty damn big company. How many barrels of company? The answer was two.
That's a more common answer.
For a very good company.
So you have between two and let's say fifteen barrels that a company
That defines unique number of things you can do in parallel versus sequentially. And just hiring more people is not going to change that. And if anything, it's just going to cause a collaboration or coordination tax, and you're going to have a track provision, you're going to do less.
Sure.
The key is to me is if you want to do more or need to do more, your market requires you to do more, your business model requires you to do more, VCs require you to do more.
You need to have more barrels.
Now the question is how and when and you know this uh there's a lot of
Details there, but fundamentally the ratio of barrels to ammunition is what
Dictates.
the number of important initiatives that can be pursued simultaneously.
And you're not saying you don't want ammunition, like it's valuable. You need ammunition in addition to Yeah, you definitely need ammunition and depends on what kind of project there are
types of projects where an individual
Barrel, maybe I'll just succeed with very limited or no
Yeah.
Sometimes it may be a designer, an engineering team, a PM, a data analysis, blah, blah, blah. True depends on what the project is, what the problem you're trying to solve is, what's the proper amount of ammunition, but once you think about the ratios of ammunition.
to the problem
You can be much more constructive and deliberate and intentional about the team construction.
Most people hearing this, uh
Assume they are barrels.
What helps you understand if someone's truly a barrel?
Can they take an idea?
And make it happen. Basically we're going up that there's a hill over there.
Yeah, still.
Get us over that hill.
In one way or the other.
They will motivate
people if they need to, they will accumulate resources if they need to
They will measure what they need to and they're gonna get your company across that hill.
That's a barrel.
Anything less than that is not a barrel.
And so this is skills like internal Polit org stuff.
resource like strat like what yeah it's kinda the collection of all the things together. Collection of all those things is there's basically there's an outcome.
CEO wants CEO founder wants an outcome.
and come hell or high water, this person is gonna deliver that outcome.
Yeah, the outcome can be
You know, fairly narrow.
And not that difficult in the beginning, and then you expand the scope.
You know, the complexity, the difficulty.
That you
Basically in trust.
to your barrels.
And and sometimes they have no line of sight of how to solve it when you start. Sometimes you have a preliminary idea. So it ranges.
But ultimately it's that skill of
I'm gonna take this off your plate.
You can fire it for that, and this is gonna happen.
And if it's not gonna happen.
I would come back to you proactively.
With the issues I'm confronting
what I've already tried the diagnosis of the root causes and ask for your help.
with sufficient time for you to intervene and try to brainstorm with me to get us to the right answer.
Agency is the word that comes to mind when you talk about this role.
Yeah, I think agency is accurate. The problem I have with terms like agency
is it's like a little bit like strategy because in one ear a lot of people and out the other and they don't really process the meeting.
Yeah.
Where are some examples of barrels that make this real to people can understand what you're talking about?
You know, I talked to my
Y C lecture in two thousand fourteen about how to o how to operate
They can be as simple as
The now somewhat famous in technology smoothie test.
Which is
You know, I we used to have engineers work
Pretty hard at square pretty late.
And
I always wanted them to have like food.
So they wouldn't be fabulous, they wouldn't be distracting. And I didn't really want them to eat like junk food,'cause I I actually think junk food's bad for you, bad for your brain, et cetera.
Should
settled on delivering and really wanted to provide like a nine PM like cold smoothies.
And we had a at that time a pretty substantial team at Square, office team, EAs, you know, this was not a lean mean organization.
And so I tried through the office team.
Yeah.
And nothing.
We never got
Uh uh healthy, delicious, and cold smoothies delivered at nine PM.
Just kept that one.
It's getting frustrated.'Cause if you if the end if the smoothies aren't cold, then no one's gonna eat them.
They don't all arrive at nine and no one can really bake on you know the refresher refreshments.
Everything went wrong. And then I had this intern named Taylor Francis.
Uh and I was explaining just my frustration.
I mean, it's like his second day it weren't.
And he's like I'll solve it.
And I was like
Okay, kid. Good luck with that. Like I was like
Sure.
Keep trying trying.
Anyway.
Day goes by.
Nine authorized.
And lo behold.
Smoothies show up.
At nine PM.
Deliver it on the standing desk table where the engineers would congregate.
I sample them, they're cold, they taste great.
And I'm like, Oh my God.
I found a barrel.
And I later gave him
Almost everything to do.
I wanna go back to actually the first question. We did
You shared some amazing in advice for how to uh
Identify
Great talent.
But I'm still curious when you find that barrel, for example, when like
Everyone's throwing money at'em. There's all these amazing teams to join.
What are some things that companies do to attract and convince them to join their team?
There's standard stuff that's still true.
Uh mission. Selling the vision to mission.
is indispensable. Most people have proven Talent anyway.
Yeah, these in the current world are gonna
attract offers from multiple uh you know opportunities. And so you've got to convince them that your opportunity is very special.
I think one way to do that that's a little bit more nuanced is convince them that their particular skill
overlaps with the critical blockers to the current company, meaning they're betting on themselves. So for example,
If they're superb at let's say marketing.
If the biggest blocker
of the company in the company's current success is not technology
Not the product, but
We believe it's marketing.
It's really easy to go to a world class marketing person and say
Not only is this great company building something really cool and interesting that you'll be proud of
But your particular ability
is very unique and differentiated and you can solve this. This is actually how I wound up at Square.
Back in two thousand ten.
Um I was actually I just been aqua hired into Google.
And um was planning on being a V C actually next after I was kinda like vesting whenever
Google's gonna compensate us.
And then um the investors in Square
call me up and they said hey
We've been looking for almost a year now
For someone who knows something about financial services yet is still entrepreneurial.
And they're they're
They're like, hey, there's only three of these at the time to like there's only really two or three of you.
Um in the world. You know, so would you be interested? I said, Well, maybe. But that was the argument to me that made me
Leave Google early, like after two weeks and infuriate everybody.
And
bypass you know venture for another three years, which had been my plan, was because they made the argument that hey, I was one of the three people in the world that could actually do this job.
So th there's like a
I don't know if it's ego, but it's also just like impact. Yep. Well exactly. Impact. Like you have you have child. You want to use them and you want to
feel that you're challenged every day and that what you're doing really, really matters. So that I think that can be extremely helpful. Yeah, my
more important arc in this is I think you have to
build a company on un undiscovered talent. Like I don't think you really want to compete.
for the people that everybody else wants. Right. And you know, I learned this at PayPal. Peter taught me this literally the first day, the first week of a job at PayPal that the way to build a company we were jogging around the Stanford campus is you've got to find these undiscovered talent. That's the only way to scale organization against these large incomeists with infinite money, et cetera.
And you know, I've been on our crusade for twenty five years. For those who are interested, you can link to it. I gave a speech
Yeah, Ramp, you know, how to hire the talks in detail. I also recommend Eric, CEO of Ramp Speech, which is
fairly similar of both videos are online.
I that's such interesting advice and it makes so much sense. You're not gonna be able to afford
the people that have done the thing at uh top companies and also they're just probably not
the people to join early. Well, they're also not maybe the people you want, so there's adverse election, but you know, it's like a salary cap.
Most sports these days have salary caps.
And when you're startup
not only do you have a salary cap, you probably have one tenth the salary cap of the people you're competing with. So you've got to figure out how to leverage
you know, less assets to more success.
What's just one tip when you're looking at when you're looking for undiscovered talent, that's a sign of okay, this person is really special. I know you have a lot to talk about here, but just like what's one tip?
I think it's basically isolating why
Other people aren't going to process them correctly. Like most of the creating at large organizations becomes sort of a homogenous function.
And so if you understand why this person is gonna get thrown into this
block box kind of thing and not get processed accurately. It's pretty easy.
So I always think about, you know, let's say this person was interviewing at Meta or Google or Block these days or Coinbase.
What are they gonna miss?
And the why.
And then that leads to
Oh.
Perfect.
So sometimes it's just lack of information. Like one of the reasons why
You know, sometimes it's controversial to say this, but one of the reasons why the net impact of by higher undiscovered talent is you wind up skewing younger
It's not because you need young people, it's that younger people have by definition less data.
It's like a cr you know, we use credit score and FICA scores.
It's the same thing for employment. By the time you're over thirty some odd things, there's so many data points about you that this block box machine is usually gonna process you like many other people.
If there's no data points, it's very hard for a black box machine that does homogenous
Evaluation to evaluate you. So there is alpha, so to speak, by definition, for people who have like no data points.
It's interesting how this has the same skill as being an investor.
Picking startups to invest in. Yeah.
Absolutely.
Okay. I wanna talk about something else. I asked a few people that know you well that work with you at various companies.
What to talk to you about and one person
Said.
That
when I ask him what to talk about, he said my immediate reaction is that he has a a bar raiser.
No matter what kind of numbers we put up, he pushes us to do more. In fact
Often it seems like the better we do, the harder he pushes.
Uh, does that resonate?
Yeah, I think that's true. I mean I think look ultimately
Um, I'll I'll y I'll I'll channel someone else's feedback, but it's it's in the same thing.
So uh
A friend of mine is a CEO once asked Mike Moritz like what's the most common denominator of the best CEOs ever?
And he said it's the relentless application of force, quote.
I think that's the job of the CEO.
People eventually get comfortable, complacent. The more success you have,
the more complacent the organization tends to get, and the single role for the CEO is offsetting that complacency.
Show
To the point, the more success you have.
The better you're doing, the more complacency naturally kicks in.
And unless you've a neck uh erected a network effect, you do not want to get completed. And even then you debate whether you should. But like fundamentally, most businesses are not network effect businesses. They are not gonna run on, you know, on their own for a long time.
So I think that's one insight is the better you're doing, the more the CEO should push.
Secondly, um it's a little bit like sports when you're growing up.
People
When they're winning.
take advantage of feedback better than when they're losing usually.
Like so, for example, um you know, now what I do is mostly mostly a D C, mostly a board member, mostly like a considerably R HF founder.
And when the company's struggling
maybe what's less intuitive, and you may have picked up on this in your research and, you know, interviews of people who know me.
When it comes to struggling, I'm actually usually a very non critical and more like a coach and supporter.
Because the company the founder knows they're struggling.
Being critical doesn't really help them solve the problems. That's when being supportive can actually
Somewhat counterintuitively more important.
But when the company's thriving
It's really important to be critical.
in isolating things that will eventually
Be problems.
while everybody in the company is really happy and and
borderline complacent. So you you kinda wanna be the opposite as a default.
And that's is like a sim a a really good sports coach, when you're winning is when to polish everything and really master the details.
When you're losing, you definitely also have to be exciting people and embracing the future and selling the future.
So is the advice say someone is listening, a founder or product leader.
The advice here is just keep
Pushing harder, set the bar higher.
As things e even if you're doing great.
Yeah, if you're doing great. Well, also you have to remember, like I I I remember giving a speech once it squares like
You get to a certain threshold, create inflection.
Momentum gets you short.
You know, valuation and all the all these like attributes.
But it's kind of like winning a Super Bowl.
You get
The last year was great.
Porter's wonderful. It's like winning the Super Bowl. You gotta come back next year and start your record zero.
Zero again.
You can't remember that. Actually adventurers like that. You know
I'm only as good as my last investment. I've had like thirteen years or whatever of pretty damn good investments, but like
Truth I have to wake up every day.
And find some undiscovered founder.
That's gonna change the world.
And if I don't do that, it doesn't matter what I've done the last thirteen years.
But a company's kinda like that if the company can skate on autopilot for a while, then sure you really can't ever skate.
I definitely saw this with Brian Chesky.
It just felt like
Things were going great. Yeah, we just shipped amazing product and growth is up and he's just just always like
pedal to the metal, no matter what. Just like come on, when are we gonna take a little break? And it's interesting because when we did have little breaks here and there.
Morales actually went down.
Because people are like, What am I working on? I don't know, it's not that exciting. Brian and I are usually in sync a lot. Um there's a really good interview where I interviewed him also at the same conference of how to hire
Uh when he talks mostly about founder mode, but I it generally subscribe to
Virtually all of Brian's views.
He even taught me some of these things himself.
Uh but the the the more important point I think you identified, which is very subtle.
is really challenging people.
Or like
Superb athletes.
And when things are going well and people are really kind of coasting.
They're not happy.

They have an internal claw tempo.
They just want to create things and create value and drive.
Drive.
You know, the the morale actually does go down for the best people in the world when people are skating.
Okay, so actually along those lines.
There's a lot of anxiety in the market, in the job market, about
The future of careers, or am I gonna have a job? Am I gonna
Like where things going, and it just feels like people are working
very, very hard. There's just putting a lot of hours, especially the most AI pill people. It just feels like they're working harder than ever.
I don't know if you saw this thing Tyler Cohen put out of just like
Work harder. Now is the time to work harder because AI is
Eating away at your value.
You know, yeah, probably talk to a lot of people looking for career advice of just like this feels scary and
Uh, I feel like I'm
Working too hard, what should I do?
I don't know, do you have any just like advice for folks?
Well it's just like AI AI is gonna radically reorient
Yeah, lots of people's careers, maybe including mine.
So I think that's actually true, and I think the way to thrive
in a rapidly emerging technology world is to be intellectually cursed.
So, for example, you know, I'm a business person historically.
I mean, I did actually could when I was really young, but like
Basically professionally just a business person.
What I've noticed in some of the best organizations is the number one consumer of tokens.
is the CMO.
Yeah. Curious.
And so they're like, Wow.
There's all these cool things I can do now with my hands.
either I had to rely on other teams or never got access the way I wanted and blah blah blah or line.
And they just do it.
This is actually true at open door.
It's true, and another great company that I'm on the board of that's in incredible.
And I so I think you can be intellectually curious and future proof yourself.
Um more than just
Yes, you can work harder and I uh um
Big subscriber to like no days off and working all the time and all that stuff. But fundamentally, the intellectuosity is I want to learn new things.
And that is how you embrace the future.
So yeah and you said CMO is who's used to the CMO. Both of these two companies.
Both massive you know, awesome companies with lots of engineers.
And I think that's
That's very encouraging.
Um, you know, for for the executive particularly, like
This m this is definitely like the best exact feed in the company.
And what are they building? Is it like landing pages and t pay tests?
S well sometimes it's like more like we would have thought of analytics.
Mm. Sometimes it's actually campaigns.
Like actual
campaigns. It's just like they don't need to rely upon
deputies and deputies and deputies to get actual work product.
Um, and so they're just like
Shipping things and like or shipping
Yeah, drops of things or giving the CEO insights into things themselves.
I wanna get your take on the future of specifically the
Product triad.
Uh you work with a lot of
Product people, engineers, designers.
Uh, everyone's always wondering what the hell's gonna happen in my career.
Thoughts on just the future of those three specific roles.
Well, I saw this podcast or listen to this podcast that Peter Fenn did in
He convinced me that the idea of a PM makes no sense.
Basically in the future.
If you think about decomposing the logic is what does PM usually do? They take these
Inputs from customers, they create this sequential roadmap that's well organized over the next year, blah, blah, blah, blah.
That world
Is like ridiculous. Like right now
the capabilities of foundation models or
companies like Lovable and you know things like that.
are just so improving such a rapid rate.
That it makes no sense to have a year long room back.
They they just like incoherent there are things that were impossible.
To do in November.
They're actually pretty easy to do right now in March.
And so I think you need to build an organization that's incredibly adapt at yeah, people say nimble and all that stuff, but
Incredibly adept at changing the roadmap.
Almost on the fly.
And I think intermediaries like c conventional PMs
Don't make a lot of sense versus
being prepared intellectually
embracing and exploiting noticing. So someone needs to notice that oh wow, we can actually do this, but then exploiting it
This week.
is the future of a very h uh a high growth stellar startup.
We'll notice that something's now possible this week.
and create new features and new value for customers next week.
That's such an interesting
Area of discussion. A lot of people say anything as RPM, so I wanna try to defend that role just to see if we see if I can convince you otherwise.
Uh, and by the way, I will say Mark Andreessen had this really good visual of just what's happening here is like every fun all those three functions, it's like the standoff where they're all like I'm gonna take you.
The future is my role.
The features design that's
Engineering is the future.
So the way I see it is
As AI.
makes it easier to build and kind of eats the middle of the software development process.
Just anyone can build he tell the AI, here's what I want.
Um the hard part
the the gap, at least for now, is figuring out what to build and then aligning everyone around what to build. I agree with that. I actually think like whether you talk about someone who used to be a PM or someone who used to be a designer or called an engineer,
The skill is more like being a CEO now.
Which is what are we building and why?
Exactly. And to be a successful engineer.
That trait's critical to be a successful designer because the tools and the
The ability
To actually create the thing, an object?
is gonna be easier and easier.
But the art is knowing what to build, you know.
Another competitor of mine, Alfred uh Lynn, it's coy likes to talk about
Being a chef.
When you're a chef at like a
A prime restaurant.
You're not actually cooking the dish.
You're sampling, you know, your colleagues and you know editing their work a little bit.
But fundamentally it's half a commercial role.
being a being a chef in a famous restaurant
is what's our value proposition, how do we differentiate ourselves, how do we brand ourselves? What's our segment, what's our pricing, you know, et cetera. What's our location even? That's what makes you know a famous chef. It's not
They're literally cooking the dish all the time.
Okay. I one hundred percent agree. Interestingly enough, PMs are called mini COs often.
And I think the important thing is it's not like what do you call this person? I think the question is
what skill will be most like where human brain still gonna be necessary.

It's basically a business option.
Right. Like what will help this company grow and succeed and exactly. I understand the company's business equation. Where we're trying to go and what the inputs and connection outputs are.
And I can
On my own.
create things that move the needle or potentially move the needle.
It's very exciting because
you know, you can actually drive impact like much more easily now.
As an individual.
My conclusion based on what you've just shared is
Of the three roles.
Which role is best at that and in
Historically
It'd be PMs.
Obviously I think the important thing here is it's like the best, you know, it's like great DMs or great engineers, designers.
We'll do well.
But I think interestingly what you're describing to me is what it sounds like what a great PM would be really good at, basically. If they were if they were exceptional, I think that's right. But I think the best a lot of the best engineers I've worked with have commercial instincts like Max Lemchain.
Has this on steroids, Jeremy Stoppelman, you've
worked with me very closely at PayPal before he started Yelp and got promoted to be engineering director and vice president of PayPal had commercial instincts, you know, back when he was an individual contributor.
So I think there are
great engineers who are technically proficient that have always understood the business building.
Yeah. I think that's like the ultimate unicorn is an engineer that is also very business minded. It's gonna put a premium I think this will at the age of AI will put an incredible premium on that because they're not gonna need a large team. You're not gonna be marshaling the forces.
Like we know, another example is a good friend of mine is director of engineering at Ranth.
He ships as much code personally. So he
He has a team of about twenty people.
He personally ships as much code.
As he used to as an individual contributor while he's managing a team of twenty.
Because the tools are so great and he's become a leading pioneer in the usage of AI. And he's basically using AI as a as a second team. He's basically like, Okay, you're the team manager, you do this, you do this, you do this, this together, check this out, blah blah blah. And I think that is definitely the future.
I a hundred percent agree.
Engineers that are very good at that are just extra valuable.
Uh, what's your take on design in the future of design, the value of design?
Well, you know, it's interesting. I design a code emerging.
And it's not c it's not clear to me
who triumphs of like is it code becomes design
And
Design.
Just translate automatically into code.
Um I made some investments that
bad on both in some ways. But I I think they're merging in a way where they're not separate.
Yeah, fiefdoms anymore.
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What I'm seeing is something really interesting happening with design.
On the one hand, I just did some analysis on the job market for design and it's
Basically
plateaued in terms of the number of open design roles over the past three years.
Just hasn't gone anywhere. It's a flat.
We had uh the head of Claude d design Jenny Wen on the podcast and she had this
a kind of insight that the design process there's no time for the design, the traditional design process.
There's like
Engineers are shipping seventeen things a day.
There's no time to sit there and help mock and prototype and all these things.
Well let me give you a couple of concrete examples. So at Shopify, the way they develop they've developed they've been doing this for over two years now. So
This may seem normal, but
They have not let PMs uh
provide like PowerPoint or keynote presentations on product for like two years.
Every presentation on product has to be a workable
Demo.
And they just expect the PMs to create the products.
And the the the does the execs just refuse to look at static, you know, we're gonna have this feature.
No, I want everything working. This is for two years.
So I think that you know, again, like everything's just merging together.
That's so interesting. You would think though
Because there are so many products launching every single day, like there're just endless things to pay attention to.
You think design would be a differentiator more and more.
I do agree with that. I I do agree with that, actually. I think the alpha is in design just like in marketing. It's not the tools, it's not the channels, not the networks.
It's the storytelling. It's how do you cut through the clutter in the snapiest, most compelling possible way. There's an it's kind of an NP problem. There's so many different words you can use to express the same concept.
But
The person who can say this is the way to frame it, you know, the proverbial thousand songs in your mocket is worth like all the tools in the world.
Yeah. So that's the other part of my insight recently is just as AI makes it easier to build, it's kind of expanding from the middle out.
And what remains is
Figuring out what to build and making it iterating on the idea.
And then it's at the other end of the spectrum, which is distribution.
getting anyone to pay any attention to what the heck you've done'cause again, there's so much happening every single day.
Yeah, cutting through the clutter. I mean, that's always been critical. I mean, one of the time when people are pitching me as an investor is one of the things I'm dialing into, you know, immediately is
How the how the hell is this gonna cut through the clutter? It's one of the reasons why I don't like to take like customer feedback into account because by definition, when you put something in front of a customer, that's not a proxy for the real world. In the real world, you have to cut through the clutter while they're going to their berry's boot camp, while they're doing their job, while they're raising their kids, you know, et cetera, et cetera.
A while they're walking, while they're on the subway, like that like you know, an isolated fake experiment doesn't give you actionable insights and often is directionally wrong.
Interestingly on that line, uh, there's a few companies that are launching
Simile is one that is simulating
Humans
I don't know if you heard about this company. They basically are building AI models of
Actual people.
So that you can simulate your marketing launch and your product experience with
People before you launch.
I don't know that I've seen that specific company. I have um seen one or two uh sort of pitches
My my
general question as a refrain on those type of companies is what are they trading on?
Because like again.
If they're not training on the right data.
It's dangerous to say you're simulating humans.
Yeah.
Yeah, that is the question. Oh man. What a weird world.
Along these lines actually you have this uh
I don't know if you call it a hot take that AI content is gonna surpass human content and that's just the future.
Oh, inevitable. That's inevitable. Mm-hmm.
Someone was I was talking to someone and then she was saying in like the Chinese TikTok
uh app. It's just like all AI videos now and it's like very good. She like actually enjoys watching these videos.
I think these stories.
I think there'd be like a binary sort, maybe?
I can see products and content thriving.
that is clearly still human generated and that there's some
Desire for authenticity.
Just like for example.
You know, this piece of art is a war hall.
Anybody could create this now.
High fidelity.
But there's still an appreciation for this was created by Andy Orwell. I think there's gonna be a curated experience.
Uh with a premium of provenance, you know, that you know is human created.
And then there's just gonna be a uh sort of a rank filtering.
Uh what's the best content?
Whether it's AI generated or not. It's a little bit like the Ben Thompson Striche thing of curation.
you know, versus algorithm.
There's gonna be two poles in the curation, maybe for human created stuff, and then there's gonna be the algorithm, which is just what's the best.
I uh one hundred percent believe that. That makes so much sense.
I was just thinking the other day, it's so interesting that AI is
Getting very good at
Video.
Like videos are actually fun to watch that are AI generated. And then like images are getting really good.
But
Writing is still really bad, that is AI generated in and it's ironic that it's called a large language model. It's all con text, text, text trained, and it's just like that's the thing it's least good at, which is really weird.
Well, I think part of it's the economic decision of token rationing by
Um the
Oh Mm. Like they
They basically
Or
When you prompt, they're kind of trying to make their economics work within a bell curve distribution.
And so for example, it uses uh prompt and LM to write something that's very short.
The quality is significantly better than if it's a page, paragraph.
I mean page to chapter to book. I think it's token ratioing ratioing versus versus actual quality.
You would think though you know, like I don't know if it was Hemingway of just like if I had more time I would have made it shorter.
Like it's more worth it.
Uh I I think the rating
I right now what works best is short.
Many short
Examples and then.
Picking, editing.
Reprompting.
Yeah.
I it's a little bit like when I used to be a litigator twenty five plus years ago.
The hardest part of writing a brief
Or all the art.
And then all the magic was the first paragraph.
If I could write that first paragraph
Really well.
The chance I would win the case and convince the judge would go through the roof.
So what I would actually do is I might have three weeks to write a brief.
I might spend the first
Oui.
Or more.
Walking around the office.
Thinking through
How am I gonna nail the first three sentences?
Once I figured out how I wanted to frame those first two sentences, I could write thirty pages in like two days.
But getting that right.
Could take a week or two.
Sometimes it would occur to me in the shower or literally the you know, shower or in the middle of a run.
It's like, oh my God, here's how I distill it.
Then I could just sit down and power through the rest of the breed. And I think
It's a little bit like that. The powering through the rest of the brief works, well, you still need the first three sentences.
Is there a story from that time in your life that would be interesting to share? I didn't even know about that. So yeah, not everybody knows. You know, I spent the first
four and a half years of my professional career as a law clerk and the litigator.
Um which occasionally comes in handy, truthfully, like sometimes
Trading off business risk against legal risk is a valuable
Thing to do.
Um sometimes
It's not accidental that may be my best investments.
um or in financial services in heavy re heavily regulated areas.
because I think I can sort of do the legal risk assessment in my own brain. This was definitely true back in the day when I invest in YouTube.
Um
But um I think most things that lawyers learn are very uh
Inconsistent with being entrepreneur.
So when you're graded as a lawyer
You learn every exam in law school virtually is uh issue spotting. So you get
credit for identify there's like fact patterns like
Identify all the issues and then resolve them.
So you learn to identify everything that can go wrong.
Moderately useful, but very not useful as an entrepreneur. I mean, sure, you can identify all the reasons a company could fail.
Not that difficult to do. The art.
Solving those. Uh so you know, not the best training. And then you also measure your productivity by hours worked.
You know, literally you build power. It took me two years.
Maybe a year and a half after converting to technology to stop
Tracking all my time. I used to literally write down in my notebook, uh, half hour of this meeting, 20 minutes on this, you know, blah, blah, blah. I just couldn't get out of my brain.
That is so funny. It and David Sachs was a lawyer too. It's like interesting. That's true. Peter Peter
Peter was smart enough to quit after
Uh five months and four days, I think. David never practiced to maybe even smarter.
Uh both of us.

Okay, I'm gonna hit on some uh hot takes, contrarian takes that you have. You have a number of these. I heard you share on a podcast recently, they asked you, um, why don't you have as many contrarian takes these days? And you're like, Well, they've just all built all been proven right.
And that's the problem is you know, if you have good ideas, eventually you want them
To be adopted. It's a little bit like a uh you know, when you're an investor, you want to be contrarian, so Airbnb.
You start with a contrarian take
But eventually if the company's gonna succeed, it has to become consensus. Like everybody in the world has to use it and believe in it and trust it. So you want that inflection, like you don't want to just have trans and then nobody believe it.
So you do need a refresh rate. Um and then the question is how do you have a
you know, how do you find new ideas, but you want to actually exhaust them.
Okay, so one that I think people still disag would disagree with.
Is that your advice is for um
For unless you're building an enterprise company, you don't actually want to be talking to customers.
Yeah, I hate talking to customers. I refuse to allow colleagues in my and talk to customers.
You know, there's the
The famous, you know, you can talk with the famous stuff and the Steve Jobs, you know, the horses and the own faster horses and all the stuff.
But I think it's more important is it's often directionally wrong.
Customers don't know what
they want and they're very bad because it's a subconscious decision, especially for consumers.
Like what I purchase, what I wear is not a conscious decision. And when you're
Consciously trying to answer a subconscious decision.
You actually give misleading information even when you're trying. Yeah, the proverbial example I like to use, but it it's instructive is ask anybody who drives a super fancy car, like a Porsche or a Lamborini, like why they bought the car.
Ninety nine percent of the time they will tell you every reason except the real reason.
that once you realize that you're like I'm never asking customers anything. Now it's hardcore enterprise, customer development does work.
Because there is a
Okay. Uh there's a decision maker.
And decision maker is mostly making utilitari decisions. And yes, there's political forces within the organization, and they may or you may or may not be able to tap into those, but fundamentally
the extracting that information is valuable, but a consumer S B micro merchant product
Unmitigated disaster.
And so the implication here is you need to rely on your instincts and gut and experience.
Yeah, I mean humans are humans. I have this other line I like which is
Everything important you need to learn about humans was written by Shakespeare.
Just read Shakespeare.
Like that's better than all the customer research.
Um now you are producing a movie.
And ultimately this movie
doesn't just need to be critically acclaimed. You have to sell tickets.
So you're not selling tickets, you have to
Question.
Okay.
Is the trailer wrong?
Is our distribution, you know, where we're trying to meet people to let them know about the movie. Is that wrong?
Fortunately, unlike a movie.
You can go back and say
Have I casted this somewhat incorrectly? Is the script slightly off, you know, et cetera.
But the goal is selling tickets.
And that's what you want us.
optimized for but if you don't sell s tickets successfully, economically, efficiently
You definitely want to go back in a loop and try to reorient things so that
Tickets.
So it's like CAC LTV kind of stuff.
Is what I'm hearing here.
And so your your insight here is just like it's not only like it's like
Uh it's not gonna help you. You're saying more so it's actually harmful.
It's horrible.
And then people will say, Yeah, like the I've said in so many meetings, and this would infuriate me, but where people will be like I talked to eight customers, blah blah blah blah.
And I know that this isn't statistically represented, but then they pontificate for an hour.
And then and then they're like, oh, I know this is not, you know, blah, blah, blah. And but once you hear this stuff, it's like we can't take this out of your brain. And then every other subsequent meeting is like this this stuff is just locked in the customer's brain.
So yes in the enterprise where you have like I I work with a company in AI that has thirty must win accounts.
That's like the goal for the company over the next two years to make sure all thirty and we're doing really well. Get all thirty using our phone.
Great. We actually can talk to all thirty customers and we can actually meet the decision maker all thirty
Customers.
And we can influence the CEO and all thirty customers.
That is a useful exercise.
If you're targeting a billion people on the planet, you are not
Getting representative.
Being a a contributor and take
Many people with not
believe this is good advice. Do you have a story, maybe or an example of just like, wow, this like someone talking to a customer is then going in the wrong direction for a while.
Well, all the time. All the time. They're called failed companies. You know, there's a re there's a reason why I mean there's a Darwinistic efficiency to this too, which is just like
Hey.
There are things you can that like is it feasible to do XY or Z? So for like let's get like DoorDash.
I don't I don't
I don't think customers told us that we want a button on our phone to click
To deliver food.
But you could talk to
restaurants and say, Hey, would you put this pocket
Here.
So that people walking into a store know in the future that they can get delivered.
Okay. Yeah, maybe.
Then could you run an experiment of how many deliveries per hour would you have to do to, you know, break even?
And is there enough density, you know, within this
Like there are ways to
Improve the odds that you can make the business work.
But I don't think launching the company saying, Hey, we found ten people in Palo Alto, you know
Do you want this button on your phone?
So you know, when Tony and Evan walked into my office originally
The epiphany I had was
Well, they had a stat, which is ninety three percent of our restaurants in the United States don't deliver.
I was like, Okay.
Seems like it should be a higher percentage than seven.
Convinced.
Um and then I when they were describing what they wanted to create.
Andrew Mason of Group On Fame.
had famously said these phones, these devices should have two buttons, I'm bored and I'm hungry.
And uh I was like, Oh my God.
You're the I'm a h I'm a hungry button.
And then sort of just clicked in my brain and then was like, Okay, now we need to make it economically possible.
to scalably do this
Good luck, guys. And this advice is not just consumer, you're also talking like
Door Dash.
has like S M Bish Yeah, like Square and things like that. Square is Square is a good example. Like
Anything sub mid market, I think is it it's directionally dangerous.
And the advice here is basically trust your insights. Like you need to have the insight yourself. You can't find it. I think typically the best companies
Yeah. There's foundational insight. And you know, people don't necessarily want to hear that, but like
There's logic you can acid test to pressure test.
The logic.
They don't are
You know.
To some extent, like when Brian first pitched me on Airbnb.
There was some interesting evidence he already had that this was gonna be successful.
The w number one that one stuck with me at the time
was he gave me the exact number of Craigslist listings that said
Mm.
I want to rent
Someone's bedroom.
And it was actually a reasonable number. It was like thirty in the Bay Area.
But given that you had to literally type it in and
You know, sort of have the epiphany yourself. I was like
That's a lot, actually.
That's like a re probably a real market there.
And I was already like as soon as he said that, I was already leaning in. And by the time he finished his three minute monologue, though it was like this is the coolest thing ever. I need to invest.
Yeah, and I think Airbnb is a good example where he's solving his own problem.
saw an opportunity wasn't like talking to people, Hey, would you
Do this sort of thing. And and people would have said n you know, if you sample the wrong people.
Definitely would have got feedback that was like no. Like very very high risk. Like that's a good example where
You had sample ten random people.
Good chance in nine.
Plus percent would say no, I would never do that.
You know what's really interesting? I was just watching Taylor Swift's acceptance speech at this award show, IHeart Media, something or other and
And she gave this really powerful speech that
When she was starting out.
She was just kind of at home.
Uh
Working on songs, learning piano, just in a room on her own.
Uh
And had thousands of hours to just iterate on learn and get better.
Versus
Today if you were to do this, you'd be posting it, sharing it, people giving you feedback constantly.
And her advice is just like
Find ways to just
Not
expose yourself to people for a long time.
So I have a couple of friends who are like in artists in the music industry.
And I think what she's saying is one of the reasons why it's sometimes difficult for artists to have success.
To recreate the success because the first success was not data driven, was not customer feedback driven. It was like I'm creating this.
And it's resonating.
Then because they have an audience.
Someone either they or their manager or whoever the label blah blah blah blah.
Wants them to get feedback.
And it creates derivative, you know, sort of work.
Not strictly legally, but like derivative works.
They're less inspired.
Um, there's a podcast that Jack Alman did with uh my friend Alex from the Changevokers. He actually talks about this at some length that
They created the song that actually
didn't resonate with a core uh the normal audience.
Um
But actually resonated with a different audience.
Um which is interesting. Um so I I think you can get trapped with success.
If you it's a it's a good illustration, actually.
There's also this concept of the ugly baby in Creativity Inc., I don't know if you read that book, Ed Catmall.
About
Every idea big star like every great idea starts as this ugly baby.
Then no one wants to like
Help and pay attention to and just like get this out of here. I mean, that is actually the starting. Like I use this prism as an investor.
Which is
When I make a sheet investment or serious A investment, let's say
I want half of my friends who are VCs to laugh at me.
Like literally off,'cause I I know most of the people I compete with pretty well.
And so I'm running this algorithm through my brain.
Or these people gonna laugh.
If so, like this is a great invest potentially great investment because it's an ugly baby.
And ugly babies were the ones where there's real alpha.
That's so interesting you say that. I did some research recently on
What are signs? We interviewed this me and Terrence Rohan. I don't know if you know him, V C.
Uh, we interviewed early employee people that have joined early generational companies many times.
And like they open Open AI they join Open AI early before anyone knew about it, Palantir really early, Stripe.
And so we asked them what did you look for? And there's
Three patterns and one of them was exactly that. The idea
People laughed at them. They thought it was crazy. This is never gonna work. Alan Tear, for example, open AI, for example.
Yeah, my parents used to laugh at almost all my jobs attack. Um very funny. They thought I was gonna be homeless because most of it did not make sense to them.
I have classic parents, no idea what the hell people do in tech. They did appreciate stripe, though. Uh my mom always appreciated stripe and you know always try to lobby me to invest and I finally listened.
Nice. Good job, Mom.
She earned her keep.
Okay, we just uh shifted perspective because uh Keith's uh iPad was dying a classic that's maybe the downside of the iPad. The di downside of the iPad is I use it too much.
Like
That's product market fit.
Okay, I want to actually follow up on this discussion we're having about just
Uh
Finding great companies.
Uh a lot of people are starting
AI companies now. There's so many launching.
Uh
As an investor, I'm just curious.
What's a sign that this is a worthwhile idea considering
The endless number of startups launching and
Maybe what are some just like flags that like, okay, maybe don't work on that idea.
Well, the existential question that everybody talks about these days is, you know, are the foundation labs just gonna be so proficient.
That there's no oxygen because you if you're building a successful startup, you need to build for like eight to twenty years into the future.
Like whether you just discount a cat flow analysis or some other prism, it doesn't matter. Ultimately you have to build for something that's durable for
Decades.
And the rate of progress at the foundational uh by the foundational labs, and not just one, multiple of them.
really does start
creating questions about the sustainability of even companies that are look like they're thriving in the short term.
So that's one question. The second question I'd ask is very typical. I've always asked this question for like 25 years, which are what are the accumulating advantages of this startup? You do want to believe that.
Over time
you create an unfair advantage. And there are different species of accumulating advantages. You know, the one that people immediately gravitate to, but it's only one illustration of.
A set of options is network effects. But you want something that
over time makes the business better and better and better, arguably easier and easier at some point.
Do you see those sorts of things at the beginning, like when you're seeing an you know seed stage startup? Yeah, it's a great question because I think people can conflate uh two things.
There's a difference between seeing it and understanding the potential.
So what I'm looking for when I need a founder is
Can they articulate where the accumulating advantages
Can be.
In theory, conceptually, they don't have to have demonstrated it. Yes, there's an occasional example, once every five years you might find one where early you can see you can.
actually point your finger on it empirically.
way too strict as a bar for an early stage investor.
But you re I personally want the founder to articulate to me
Where they
Can build accumulating advantages.
And maybe even
sequentially identify when they would start
Either taking advantage of them, leveraging them, or measuring them.
So when you're looking at when you're when you're evaluating startups these days
I know this is like a very hard question to answer, but just what do you
Is there anything in particular you're looking for that you get really excited about? I'm a founder driven investor.
So the only thing I really care about
Is
Does this founder have a non zero chance
of changing an industry of the world.
And if they do for a C or series A investment, I'm in period.
Don't ask any of the qu other questions.
That's all I need to identify.
Not every investor who's been successful has the same algorithm they're running. There are technology driven investors, like I would say Mark Andreessen's probably like someone like that. The node's a mix. He's both founder driven and a technology driven investor.
There are investors who are sort of product slash market driven investors. My colleague David Wyden, I'd say is that
I think Alfred, Lynn, and Sequoia's mostly that. So you can have different
uh sort of approaches, mental models, paradigms.
But for me it's
Is this founder extraordinary? Do I have reason to believe that this founder is the next Brian Chowski?
You mentioned that
You're an investor in all these all these companies you list that are doing incredibly well.
And you work with a lot of you're on the boards of a lot of really successful incredibly
Uh good.
Teams and companies.
Is there just something they are doing the way they operate?
That is different from companies that are not.
As successful.
I think the subtle
signal, let's say very early
Is speed.
And you know, it's one of those things that's easy to say, but let me try to be more concrete.
There's a tempo, an operating tempo that a successful company develops.
that is very that develops very early in a company's trajectory
And it's incredibly impressive. I remember
When Wolof Botet was on my board at Square.
H he led the series
P
So he joined our board.
And
Six months in, two more meetings in, he said to me, he's like
I haven't seen this kind of tempo since our PayPal days.
And he'd been a VC at that point for nine years.
And what I was curious, so I said like you know
What are you noticing? And he's like.
At board meeting acts.
You guys identify an opportunity or problem.
And by the next board meeting you've shipped
Solutions addressed it.
feature just constantly consistently.
And I I think that's right. Like so
The tie between the seed and series A affair was pretty tight.
And I remember at the time my chief of staff was Deli Nasparov.
And Delian said to me after the second Fairboard meeting that he shadowed me at, he said
If there's all if there's one company in Silicon Valley that would cause me to leave being the VC, it'd be fair. And it's like
Interesting.
Why?
Is like
The pace of execution.
And his answer was exactly the same as Rawls. He's like
There is something slightly off about the next morning meet meeting, not only have they identified the root causes, but they've shipped and reacted in and measured.
The the impact of the solution.
And that compounds that speed really does come out. So that's just one.
a trait and but you see it.
It it in like it did lead me to, for example, preempt the series A of ramps. I then
See in like May ish of two thousand nineteen.
and gave a term sheet to preempt the A in September, so pretty quick.
One of the two signals.
was how
Fast ramp was able.
to
beyond the precipice of shipping the cards.
I'd been working in financial services for a long time to that point, you know.
Nineteen years or so.
And there's just a lot of moving pieces to ship a card. You need these program managers, you need the sponsoring bank, and you need this and this and this. Usually takes nine to twelve months, best case nine.
Ramp was on the precipice in like three months and I was like Oh my God, like I've just never seen that velocity. That was one of two, maybe three inputs. And I was like
Yes.
Make sense to double down already, even if we haven't shipped anything yet.
So I think that's one.
Critical density of talent.
You see.
Company is just
Creating an unfair advantage.
The team was X when you invest in the Southern.
Wow.
This DM is getting better, you know, deeper, better, et cetera.
So that that's another signal.
The third thing that I've noticed though
You know, is
I think they have a different hiring philosophy ultimately.
And maybe there's exceptions to this, but
most of the companies that are thriving.
Have basically skipped hiring senior people.
Senior experienced people.
It's mostly internally grouped talent.
And I think that model has worked really well. It's definitely true of ramp.
Definitely true of trade republic.
It it seems to be
mostly common in ingredient.
But
There's probably exceptions.
Wow, that is an incredible answer. And instead of
Traits.
Uh, just to be clear what you're saying on that third piece, so it's
not hire like fan C VPs from other successful companies and instead develop people internally as a trade of internally and almost turned it into a competitive advantage meaning a strategy. Like we're just not even going to interview people.
We're not gonna try. We're just going to promote from within.
And I I think in some roles
You know, it's not like you're higher a G C, you know, typically right out of law school.
But
Although we have done that once and it worked out pretty well, believe it or not. But but uh I wouldn't recommend that. Yeah, you know, I have this blog post, well, Delian wrote this blog post of lessons he learned from Keith, and one talks about hiring senior people and the the rough prism is
Are you hiring for value creation or value preservation? If you're hiring for value preservation, typically some experience is useful.
On the value creation side, it's probably not.
It's interesting how much of this comes back to just your initial point about hiring.
And the team being everything.
Step so number two was talent density, and three is
Uh helping people develop and be
You know, into the role versus finding someone.
And then obviously
Speed.
all trickles down from just who you're hiring. Yeah. I mean I've watched people use like even chief of staff roles.
to grow talent.
Um
One company board meeting I was out this week that's just phenomenal.
Um I'm any metric.
And the last two
His head his CMO who's he's fantastic, is performing
Miraculously.
Um was his last chief of staff and his new head of product probably.
Is his last chief is his
Is his current chief of style.
And just like
created this institution and factory
Where you can absorb ambitious, talented people.
And over
one two years in osmosis train them to be senior successful leaders.
When you talk about speed, I think about ramp, uh
For sure. Uh
When Jeff was on the podcast, their CPO, he just like our title was Velocity, Velocity, Velocity.
And I know they have like days. If you go to days.ramp.com, it's like the number of days since they launched.
And they're just always looking at that number, how long is it? Oh yeah, every board meeting starts with that the first slide day day eleven hundred eighty four.
And they're like what are they worth? Like a hundred billion dollars, not quite but they're probably not quite that much.
But it's a reasonable fraction of that. Okay. That was incredibly valuable.
Okay, one last hot take that uh I know you have that I wanna make sure we share is this idea of criticizing in public versus in private. Talk about that.
Yeah. So this is um a lesson I actually absorb from one of the great founders I work with.
And yeah, yeah.
Like many great founders, they have their own management.
philosophy and one of the
Most important tenants is
criticize people in public.
And
When you decompose the logic of it, it's so
Obviously true.
But almost no one does this and very few people talk about it, even if they do it.
So if you think about it, when you give people feedback negative uh in individually
You're optimizing for the atomic unit, not the system.
The reason why to do it in public is
It's more important for all the colleagues to understand that there's an issue. It's being addressed.
Versus like they they usually have
Suspicions, let's say, or concerns.
And if you've channeled the negative feedback to the individual, they don't know that you're addressing this that you're on top of it, you're aware you're addressing it. Now it's a collaborative.
Um then also it
Let's other people kind of raise their hand and say, You know what? I can kinda help with that, or you know, et cetera. And so it becomes like
a team building exercise in some way versus like, oh you have this deficiency, go fix it yourself. And then the rest of the company
you know, is nervous about why this problem is persisting.
When people hear this they may f it may feel like oh wait, I'm just it's like it feels aggressive to be
Criticize everyone in public comment.
Uh any advice for just like how do you not make it this like
I don't know.
Scary environment, or is that part of it?
Well, I think you want to win.
You know, I mean, there's probably an uh uh in art to this, like I would say, you know, some of the best coaches in sports probably do a bit of both.
Um, like there's things they will say in front of the team and then there's things that probably you know
channel to the individual player. So it's probably a mix.
You know, could be very effective too.
It feels like you're not a uh
Focus on psychological safety as a core table. No.
No, I don't believe in that at all. Like
High performance machines don't have psychological safety. They're about winning.
Like for those who want to, you know, a good book that's off central casting for you is uh read Jordan Rules.
Or watch the last dance if you like, but like fundamentally read Jordan rules. If you wanna be Michael Jordan, you gotta act like Michael Jordan.
Do you feel like that's negatively correlated to this idea of psychological safety with success? For the most part.
Yeah.
Interesting.
I'm gonna take us to failure corner.
Okay. So failure corner.
So that you know, you talk about all these things you've done that are incredibly well, all these companies you invested in all these businesses you've built, PayPal, all these things.
People
don't realize there's also a lot of failures along the way.
Is there a story of a time you failed in your career?
Or investing that uh might
illuminate the down you know, when things don't go crazy. Well, I mentioned I mentioned one, I alluded to one by accident. I talked about being Aqua Hired or whatever into Google and being stuck there. So clearly not successful. Um that was a slide. Uh so you know we did sell for like one hundred eighty seven million, but not
Nowhere near the ambition, you know.
Didn't really see any of our
goals product wise or
Company wise.
Investing teaches you, you know, mostly about failures. You know, if you're
A world world class investor in the early stages.
thirty to forty percent hit rate is great and golden.
By definition.
That's like fifty to sixty.
You know percent, seventy percent failing. There's it's a little bit like those old Nike commercials where there's the Michael Jordan one where it's like
you know, I've missed a hundred and nine game winning shots in my career, or there's the tennis one. I think it's Federer that's like, you know
I
Something like I win sixty percent of my points.

I just mean I'm like the best time player ever, but I lose forty percent.
So there's a lot of that in venture. You definitely have failures all day long.
I think one of the arts is like
Not getting too caught up in failure, actually. I I think over and I actually gave this feedback in a board meeting recently, which is
Someone
Yeah, well mentioned, well meaning, one or two board members are like, Well, let's do retros on our failures.

And the company's doing really well. So I was like, you know what? Honestly, I'm not sure I would do this.
I was like, I don't want to deter people from taking ambitious shots on goal.
And if you overemphasise failures
And you real people think they're gonna get criticized.
This is where psychological safety maybe has some validity, which is
Be ambitious, be bold.
Don't worry about the failing part unless there's things you miss that you know.
could have been factored in, but you want people to take risk and you want people to be excited.
about raising their hands for very difficult problems and challenges because that's how you create value.
And so I was like, no, let's let's really not do these retros.
Let's just focus on winning.
Contrary and take all around.
Keith, is there anything else you wanted to share? Anything else you want to leave listeners with before we get to our very exciting lightning round. I'm excited for your lightning round. This is usually like one of the best parts of your podcast. Okay, first question. What are two or three books that you find yourself recommending most to other people?
So the number one one is called the upside of stress.
Um by Kelly McGougles, Frostwick Stanford.
And basically it argues in a in an incredibly compelling way that if you want to be happy, healthy, or wealthy
You need more stress in your life, not less. So it's magic. The evidence she marshals is
Effectively
Uncritiquable.
At the outcome level, at the biochemical level. It
It is transformative to be able to read this book, so highly recommend it.
Favorite recent movie or TV show you've re uh you've enjoyed?
T V actually just watched Neurobird trial.
Highly recommend uh Nuremberg. Um
There's a lot of lessons there that are
applicable to the modern world. Um so I won't spoil it all, but
Even I'm kind of the student of history of politics.
And watching the movie, I've probably learned
Five or ten things that I never knew before.
So
Highly in
It's extreme. I mean, obviously.
Not an exciting thrilling movie.
But it's a extremely well produced movie and incredibly useful to understand.
you know, some of the travesties of history and
How to prevent them in the future.
Where do you find this? Is that one of the streaming services?
It's either on Netflix or iTunes or both.
Sweet. Okay.
Uh, is there a product that you've recently discovered that you really love?
rarely. Um, you know, I I do find I do find products that I'm addicted to, like, you know, now this appreciate about eight sleep, which is another one of my conventions is you know, you must sleep eight hours a day. You must prioritize sleep, even when you're very busy. Um I am an investor and so I'm somewhat biased in eight sleep, but
It transforms people's lives. So I'm still addicted to that one.
I don't know if there's like a new product that you know I've been fanatically addicted to recently.
It's sleep counts.
Do you have a
Life motto that you find yourself coming back to in work or in life. No days off. House child no days off.
I don't believe in taking days off from work out. I don't believe taking days off from work, period. Um derivation for those who are interested is
when uh Bill Belichick won the Super Bowl for like whatever billionth time with the Patriots. Um back to back Super Bowl wins. I think he started the championship celebration
Parade with this chant of no day's house.
So that's that's kind of a mantra.
And when you say no days off, uh are you saying like work every day, like you know, like work the weekend sort of thing or or what do you think? That too, but like so it's talking about the work outside.
I believe I've missed seven days and seven years of working out.
And it it still kills me, like half of those I still am annoyed that I missed.
Like a story, if they really
really had reoriented my schedule. I should have been able to hit at least four of those. And I measure it and I post it at the end of every year.
Um, last year I missed none, so I was very happy, but I don't believe in excuses, basically. No days off is a proxy for I don't believe in excuses.
Mm.
And do you work out every day, is that the rule? Oh.
I mean literally uh there's only seven days in the last seven years I haven't worked out.
Yeah, I'm not going to be able to do all kinds of illness, sickness, travel, international times of travel, weddings.
Just like no excuses.
Actually every day. All right.
More than once typically more than once a day, but and you've told me uh before we started recording you had a Barry's class this morning, you have another one later today. I do. I uh and and a lift.
Okay, final question.
So you've were famously part of the PayPal Mafia.
I'm curious if there is someone there that's like overperformed.
Someone that you worked with that you never thought would be
That good.
Honestly, no.
A lot of investing in, you know, most of the most of the derivative companies and stuff. And so I think I had a good spidey sense of which people
You know, had I
kind of these founder level ambition.
Um and could potentially build something.
Sorry, I wish I could give you a better answer.
They would have been mad at you anyway, so this is the safer answer. Well it depends. If they've been super successful, they're sure.
Peter T just Yeah. Elon Musk.
Uh
Keith, thank you so much for doing this. I learned so much. Uh that's gonna help a lot of founders, a lot of people building stuff.
Two final questions where can folks find you online if they want to reach out and how can listeners be useful to you?
Yeah, so app com
I treat prolifically. Um
You mentioned my pin tweet. So that's probably the easiest way.
Sweet.
Key, thank you so much for being here.
Pleasure to be with you. Thanks for the invitation.
Uh thanks for accepting it.
Bye, everyone.
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