A founder’s guide to crisis management | Uri Levine (Waze co-founder, serial entrepreneur)

0:00 Let's talk about crisis. I think it might be helpful to do a quick taxonomy of the types of crisis founders face. So to abstractively two types of crisis. One is I I would call that the cash crisis. All of a sudden your cash program or plan. is being jeopardized. You know, losing a customer, disappearing investor, in the other one is lose of product market. When product market feed disappeared, you actually need to go back to square one, and you basically say, everything that I know so far is irrelevant anymore. You also talk along these lines of never give up. In a crisis and throughout your journey. Always keep on looking for ways to make it work. Never give up is the most important behavior of successful CEOs of Starbucks. The second one, by the way, is making decisions with conviction.

0:45 If you don't make them with conviction, then the team is not going to follow. If the team is not going to follow, then you're not going to be successful. The core part of your advice on crisis, it's always the founder's fault if things don't work out. At the end of the day, you cannot rely on someone else. You have only one company. you need to make sure that this company is successful. When you assume responsibility, you're basically saying, you know what, I control my own list. Any advice for how to avoid falling into a crisis as a founder? Number one answer is no. Don't worry, you will face crisis. Today my guest is Uri Lavine. Uri is the co-founder of Waze, along with nine other companies.

1:26 He's sold two companies for over a billion dollars. He's been on 20 different startup boards, has been an advisor to over 50 different startups. And even more impressively This is his second time on the podcast. In our first conversation, we walk through the biggest lessons that he's learned over the course of working with all of these different startups that he chronicled in his beloved book. Fall in love with the problem, not the solution.

1:49 In this conversation, we go deep on one very specific topic. prices. As Uri shares in his book. Building a startup is a journey from one crisis to the next. And my goal with this conversation is to give you tools to handle the next crisis and the next crisis and the next crisis that you face as a founder.

2:06 This topic is so important that Uri decided to update and re-release his book with a whole new chapter dedicated to managing crisis. And this new edition is actually gonna launch right around the time this episode launches. If you enjoy this podcast, don't forget to subscribe and follow it in your favorite podcasting app or YouTube. It's the best way to avoid missing future episodes, and it helps the podcast tremendously. With that, I bring you Uri Levine. This episode is brought to you by Work OS. If you're building a SaaS app, at some point your customers will start asking for enterprise features, like SAML authentication and skim provisioning. That's where WorkOS comes in, making it fast and painless to add enterprise features to your app.

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4:55 dot com slash Lenny. That's rippling dot com slash Lenny. Lori, thank you so much for being here and welcome to the podcast. Thank you. Really happy to be here.

5:08 I should have said, Welcome back to the podcast. This is your second time here, which is a pretty rare feat. And the reason that you're back is the first time we chatted in depth about your amazing book. I have it right here. Fall along with the problem, not the solution. And

5:22 You decided to re release the book recently. With a new chapter. About something that every single founder is gonna go through. I actually have this quote I'll read that I think is a good summary of why this is so important. That building a startup is a journey from one crisis to the next. Let me just start with this question of why'd you decide to

5:39 Add this chapter, why is this so important to update your book? You know, end of the day, um, recent years have demonstrated major significant crises uh throughout the world, right? From Covid to um to interest rate, to inflation, to wars to And then I realized that wait a minute, this is something that I haven't spoken about it during my my first uh book and it's time to write the to re Right, uh a new addition to that or

6:07 Or a new chapter that will be added into the new release. And so this is about crisis. And uh and in addition, you know, my publisher told me that oh you should I have a um a paperback it's uh um it's gonna sell more and the more people are going to read it because it's easier to read. So I do have the the new edition already. It's will be published um uh in about a month. Um and uh um And it does include the new chapter.

6:33 And it's a paperback. I love that you're solving the job to be done. Make it easier to read, we'll make your paper back. I also like as you described it, it made me realize so the Like the reason your book is so great is it's basically a step by step guide. of all the things you need to know about building a successful company.

6:48 And what it feels like is just realized I forgot the step that every founder goes through, which is Crisis. Multiple crisis, right. Multiple crisis. We'll get into that. Also, I love that you can actually update a book. That's like you know, usually people are like, Oh, books are done. You move on. I'd love that you have the opportunity actually to update a book. It's uh

7:06 That's inspiring. Mm-hmm. You know, I'm already thinking of the next one. But uh The next book or the next update to the book? The next um Not sure yet. Not sure.

7:18 Yeah. And there is a reason for me to write the book. Right. Um I I wrote the book in order to make a bigger impact. Yeah. I'm an entrepreneur and everyone knows that, right? So I built ways and movies and dozens of other stars, but I'm also a teacher, so I feel equally rewarded when I build something myself or I guide someone to build it. Yeah, and the book is fulfilling my destiny as a teacher, sharing my know how with uh um with entrepreneurs, with business people, with pretty much everyone.

7:47 To help them to become more successful. So so had the realization that what I really want is people to take out of the book is uh is something that will increase their likelihood of being successful. And uh um and the next book is going to be pretty much the same.

8:04 Right, with the same philosophy of oh wait a minute, if I can make a bigger impact. I would like to make a bigger. Mm. It's a beautiful mission. I think we're gonna do that.

8:15 Let's talk about crisis. Maybe to make this very real and visceral for people to get a sense of like, you know, you hear the word Christ and you're like, Oh yeah, sure. Can you maybe share a story of a crisis that you Experience. that might be illustrative of the types of crisis the founders face across the many companies you've started and advised.

8:33 What comes to mind? You know, Covid was an excellent example. Um um and uh one of my starters back then, um called the Water Chap. And actually it was the first um uh AI chat um back in uh in twenty twenty. And uh

8:49 That was meant to help people to make reservations to restaurant. As simple as Oh, I would like to make a r reservations for six people for tomorrow night at the X Y Z restaurant, right? And that chat um was actually very, very successful in Israel. Um and the reason is that we Actually build an engine that had. facing the user with a chat, but also facing the restaurant with a chat. So we did not require any integration. We could go online anywhere. Um

9:22 and and actually cover all the restaurants in no time. And that turned out to be pretty successful and then Covid hit. And guess what? All the restaurants were shut down for hosting guests. And uh um

9:36 And there were no more reservations for restaurants. Now we were really good at that, but um but we did not have enough funding to actually uh pivot into something completely different. Um and the result is that we had to shut it down. And uh and still, you know, people still ask me how what happened to that, right? What happened to that was um Covid.

9:59 I feel like Coven Happen to a lot of people. lot of companies and it it feels like that's kind of a impetus uh to this chapter. I think he even said that that like it created so many crisis across so many companies you were involved with help to realize a lot of companies and founders are just not prepared. Yeah. So so no by and large, I would say, um, end of the day we look at the global crises and we say, Oh, this is going to impact any industry, right? And the um

10:22 But as an entrepreneur. You don't care about the industry, you care about your own startup. That's it, right? And if the rest of the world is suffering from the same problem. doesn't help you not even a single bit, right? So your problem Is your problem. That's it.

10:39 And and then you need to abstract that and basically realize, okay, wait a minute, I will define a crisis as something that you already had. That is significant. disappears. So let's say that you already Have

10:55 You know millions of dollars in revenues, right? And all of a sudden your biggest customer you know, decide not to f not to continue and you lose half of your revenues, right? All of a sudden you basically say, Wait a minute. I have to adapt, right? Something significant happened. And that's something significant is that your revenues disappear.

11:15 Or maybe your funding disappeared. Or maybe um so so in general The first type of crisis will be around um cash. All of a sudden your cash Is not the same as you expected. Something h happened.

11:33 Maybe funding, maybe revenues, maybe projection, maybe l you last of big customers. A c a cash crisis. And then you need to adapt. The second one, which is even more significant, is that you lost product market fee. And that might happen, right? It might happen because of regulations, because of uh

11:55 competition because of um Um you know, something dramatic happened that there is no more value into your product. And we are going back to basic, right? Product market feed is very simple. That means that you create value. To your customers.

12:11 This is what it is, right? And and you never heard of a company that did not figure out product market feed. They simply died. That's it. And uh and by the way, product market feed in general have only one metric. Only

12:25 One. Making. Retention. Look, it's really simple. If you create value, they will come back. That's it. If they are not coming back, that means that you are not creating value.

12:38 And so in your startup journey, this is going to be the first phase and it's going to require a lot of iterations and the um And and you know, it's it's a journey of failures, right? So we're gonna try something and it doesn't work, we can try something else and we keep on trying until we find one thing that does work. But once you figure that out, you're ready to move to the next part of your journey. But what if it's all disappeared? What if all of a sudden someone changed their regulation?

13:05 Someone you rely on a very unique data. that you were able to build and all of a sudden someone create a way to um to access this data for everyone. What if there is a competitor that makes you irrelevant? You know, I'm using the iPhone. Obviously a lot of people are using iPhone and I'm using that for a long while. iPhone is um

13:29 Born in two thousand and seven. Like before that we used to have different phones with keypads and uh And uh when iPhone was introduced, Microsoft basically said this will never work, right? They were in a position of a market leader, they own mobile Windows mobile operating system that was running on pretty much all the phones in the war, right? So all the smartphones in the world, from Nokia to Motorola to Samsung to pretty much everything.

13:57 And they look at it and say, This will never work, right? they haven't realized how impactful it is, right? So this is a competition coming out to the market with something that is completely different. and not only disrupt the market, but actually create crisis for pretty much everyone else. And uh and the result is that uh um you know, today Microsoft is not a player in in the mobile operating system. Menokia disappeared uh or pretty much disappeared and uh And Motorola disappeared and pretty much everyone that was really significant in this industry

14:31 they were not adapted fast enough to the to the um to the change. And the change was that their product market feet disappeared. Now it's not that their product all of a sudden become irrelevant. People simply wanted something else. So so when product market feed disappeared, you actually need to go back to square one. And the faster that you realize and you basically say

14:57 Everything that I know so far, everything that I knew so far. It's irrelevant anymore. Can I restart? Can I go back to square one and restart? Because if he cannot You will die.

15:13 You're following your own solution. And you believe that this solution is going to be marketed better than what the market wants. What the market wants is different. It can be also a matter of uh um of um regulation change, right. One of my startups had called FIBO.

15:34 died because of change in regulation. So FIBA was doing uh tax returns. Right. Uh something that everyone hates, but we have to do that and um And the and when we started we basically say, Wait a minute, um When I speak with people and ask them how is tax returns being done in your country?

15:54 what I heard was pretty consistent, right? It's either complex Or expensive. Or both. That's it, right? And I said, Wait a minute, what if I can simplify that? What if we can make it really, really simple?

16:07 And we define simplification by filing in less than five minutes. Whatever you do, if you can do that in less than five minutes, it's simple enough. And we ended up with building a platform in Israel that people were able to file in less than three minutes. Yeah and and that was actually pretty amazing. Now the result was that in about uh um

16:28 Now in Israel filing is not mandatory, so we actually enable people that were not filing up until now to file because it's simple. And we increase the size of the market by twenty five percent over one year. Of people filing taxes. Yep.

16:45 Right. So you go into the platform. You realise that wait a minute, I actually entitled to get a return, so let me find it. If I'm not entitled to get a return, then I'm not going to file because it's not mandatory. And the result is that we increase the load of the t taxation system, right.

17:04 Then all of a sudden the Israeli tax authority didn't like us anymore and they basically shut us down. So changing the regulation and we lost product market feed overnight. They basically say, Oh, we gonna shut you down and that's tomorrow. And and that's it, right. No, we we did not have enough uh um

17:25 You know runway to actually because'cause could Company was uh um About break even, right? So so we did not have enough funding to go and try to find something else. And we tried to fight the regulator, but fighting regulator is um yeah requires a long period of time and a lot of funding and we did not have that.

17:48 So regulation might be um a reason why you lose product market feet, right? And uh and uh if you you need to go back to square one. And what we decided is that okay, we um What I decided on a personal level is that I'm not going to deal with the regulation anymore. I don't want to rely on a regulator, um to um to allow me or not allow me to do what I want to do.

18:16 By the way, with ways, you know, in the early days. We thought that the business model is going to be selling data to to authorities, right, to municipalities, to maybe uh public transportation systems and so forth. And we basically say, Wait a minute, we have the best traffic information in the world. Um, I can go to a municipality and tell them How long does it take to make a left turn in each and every traffic light in the CD?

18:43 Every day of the week, every every hour of the day, right? And therefore they can recalibrate the traffic control system and enable better utilization of the of the entire road system. And it turns out that this is really, really, really slow. business. business uh development process, right? They they didn't really care.

19:05 That was frustrating, right? Even if you offer that for free, they still don't care. Yeah, and the result is that we changed the business model and we ended up with advertisement. But the reality is that I don't like to work with regulators that Okay, there's so much here uh I wanna dig into

19:23 One is this example uh this story about losing product market fit. It reminds me of I had Drew Houston on the podcast, found our Dropbox, and he described A moment where uh when Apple launched uh Apple photos

19:35 Or iCloud. I think it was iCloud. He's like It's as if there's like this mushroom cloud exploding far in the distance that you don't hear. For a long time. And

19:44 We didn't necessarily see exactly how much this would have imp This will have impact at our business. And I think that's what can happens a lot of cases. You see something happen and You're like, No, we're gonna this is no problem, we're gonna We're gonna win anyway.

19:58 Like Blackberry, I think they're the same thing with iPhone. You know, we had the same thing with ways, right? Because um When we started the ham, Waze was free. And it was the only one that was offering turn by turn navigation. Um free.

20:13 Right. And and the reason is that we created our own maps. Um And uh um and And then one day in two thousand and ten Google announced their free turn by turn navigation. Turns out that they were working for the last two years in building the maps of the US. And they enable that on Google Maps, right? Turn by turn navigation with you know audio guidance to turn right, turn left, and so forth.

20:37 And the um And and two companies were actually shocked right now. The entire industry, but two companies were impacted. The first one is actually Tom Tom. Something was the provider of the maps. for Google to do

20:53 navigation. And they basically say, No, we have our own maps we are going to terminate the contract. And Tom Ton say, Wait a minute, you're paying us eighteen million dollars a year and we have five years contract. And Google say, Yeah, we will all keep on paying you that amount of money that we are committed, but we are not going to use your project anymore. And that one was waste, right? Because uh basically everyone in the industry told us that we are doomed, right? Our own investors told us that look, if they can sell the company for twenty or thirty million dollars today, do it. Because you are not going to be successful.

21:26 No, obviously we um turned a corner and turned out to be very successful and the um And to that level that eventually Google acquires, right? And and the reason is that the use case was different.

21:41 Ways was focusing on The Daily Commuters. So we wanted people to use our plug yeah, our application twice a day when you go to the office and when you come back home. And Google Maps is something that you're being used uh not that frequent, right? You're in general I would say if I ask a hundred people how often they use uh Ways they will tell me every day.

22:04 If I ask them how often they use Google Maps, they will tell me when I need it. So a different use case in obviously different product that is built for the specificity specificity of the of the use case, right? So so way is way simpler and the map looks uh You know, al almost abstractive. They are not, but they look like abstractive.

22:25 Um and uh in way less detail. Yeah, and the result is that the ability to create something that is simpler and people are using everything. But uh when they when Google announced turn by terror navigation All the investors in the war turn out turn turn back turn our back on us. And that was two thousand and ten. We were looking for New funding.

22:49 We actually um I remember that night, right? Because we were um Just about to go and meet with uh um All partners meeting at uh Kosla Ventures, right? And and we had multiple meetings beforehand and that was like kind of uh Okay, this is the final seal.

23:07 And the evening before we had dinner with the partners that was promoting us at Kostla Ventures and he told us, Look, I have A lot of relationship in the industry And I spoke with my friends at Google and they told me that they are at least two years away from Building their own maps. And uh and the next morning they simply announced that uh

23:27 This is a turn by turn navigation. Going to that meeting? was waste of time already. Um, and we had very, very hard time to raise capital because of that. But eventually we were lucky in the sense that the um

23:42 Once Google announced their turn by turn navigation. Turns out that the rest of the industry were Took by surprise, right? And Microsoft decided that wait a minute, we Don't have our own map, so let's invest in ways.

23:55 So we ended up getting investment from someone that we dn did not expect. Okay, so first of all, you've shared all these types of crisis. I think it might be helpful to do a quick taxonomy of the types of crisis founders face. You shared. uh regulation changes

24:10 Competitors coming at you. investors not wanting to invest. So so two two two types of abstractly two types of crisis. One is that the I I would call that the cash crisis, right? So all of a sudden your your Cash program or plan. Is being jeopardized, right.

24:29 For You know, losing a customer, um the disappearing investor, um Um not meeting your expectation, dramatic price change in the market and so forth.

24:43 in the other one is um is lose of product market feet. So all of a sudden whatever you have is irrelevant anyway. You actually need to go back to square one. For the first type of crisis, if this is a cash crisis.

24:58 Then what you really need to ask yourself in any any kind of crisis is the first of first of all is what is actually being impacted? Is that my run rate? Is that my product? Is that my revenue stream? Is that my you know, if if I'm still relevant? With WaterChat we were irrelevant, right.

25:22 That's it. And uh um and so the first thing that you need to do is what is really being impacted. And then the second thing Is how long? is going to last. Is that a temporary thing? Is that forever? Is that the new fut the new future?

25:40 Um And and then you ask yourself, okay, so How much run rate do I have? and you reply accordingly. And I'll give you some examples and and this is really important. Um

25:56 Because um Let's say that you're a company that you have five million dollars of of revenues a year. say four hundred thousand per month. And your burn rate, your net burn rate is uh um is is

26:13 Two hundred thousand, right. So you you actually at the end of the year, you know, in order to run for a year, you need about two and a half million dollars to run. If you lose half of the revenues. And you only had Two and a half million in the bank.

26:29 You now have six months to run. So obviously you need to readapt. Now one of the things that you might say to yourself, I'm gonna remain on the same course. and are gonna deal with the crisis in five months from now. Or you can basically say No, I'm gonna change my expense.

26:49 to adjust uh um to the current um um to the current uh revenue stream that I have and still have twelve month of front rate. Whatever you are going to decide. You're going to decide you need to decide today. Right now.

27:05 And the reason is very simple, right? If you want reduce the burn the expenses in order to extend the run rate. If you wait two more months Then it's going to become nearly impossible to do. If you wait six more months, then obviously this is impossible to do. So the more the longer that you wait.

27:24 you actually lose options. The only ability to choose is today. This is one of the most challenging part of of a crisis, right? You actually need to make a decision Rapidly. Like today.

27:40 There are few reasons to that one. Number one is that uh if you don't, then you might lose options. Number two. And this is about community communicating within the organization that decision. Look, if there is a crisis everyone knows. Everyone knows and you don't do anything about it, this is not a good practice.

28:01 Now you might want to decide, no, we're gonna keep on running full steam ahead. Until we um We hit the wall. Because By that we increase the likelihood that we will have enough velocity to bypass them.

28:16 But you need to communicate that with your team. Because the one that is really suffered It's not just you, it's the entire team. They know that there is a crisis and they want to know. That someone that holds the steering wheel.

28:32 is making the decisions. And if you don't. Then guess what? You're then a sinking ship. And what's gonna happen is that the top performing people they would leave.

28:46 Let me do a quick summary of what you've shared. To give people a landscape and then let's keep going down this route. So There's basically two types of crisis. And these are Yeah, there's like

28:56 Small crisis, I imagine someone's pissed off at something. These are how you describe major crisis, like existential crisis for your startup, right? Is that the way to think about it? Right, because if uh if you know, if an A player leaves, um Yeah. It I hate it, but it's not a crisis.

29:10 Yeah. Okay, cool. So there's kinda Uh two. uh cash crisis, which is either a bunch of revenue disappears

29:17 Or investors bail or don't want to Keep supporting you. Those are kind of the two major buckets. And then there's product market fit crisis. Could be a competitor launches, could be the market changes, things like that.

29:28 And within the cash crisis. So say you realize We are not we don't have as much cash as we planned. Worth. Need. The three steps you just described.

29:38 What is really being impacted? Just be really real with what Is the impact. To our business with this change. How long do we think this cash crisis will last?

29:47 And how long do we have? before we run out of cash, essentially. Yeah. And and then you need to um decide. And then you need to decide on on your action, right? And your your new plan, right? And maybe it's a new strategy if uh

30:02 if all of a sudden I would say if this is about product market feed disappear, then this is a new strategy. And maybe it's about the um deciding on on extending the run rate or Keep on trying or whatever. And and this is something that is really interesting. And we go back to Covet and when I look at the Yeah, two of my startups that uh

30:22 that we're in the travel space, right? One of them is uh We ski And it's um essentially, you know, the booking dot com of Steve Accations. And uh um and guess what? Covid started and there was no more ski trips to Europe, right? Europe was shut down completely. And all the ski areas were shut down. And and you know that I'm a habit skier, right? For me that was a disaster on a personal level, right?

30:47 Um and and eventually, by the way, um what happened is that uh And I was back in Tel Aviv and I was unable to travel to Europe and it was only in um that uh somewhere in in twenty twenty two, um, that I was able to travel to the US with uh after vaccination and so forth. And in March two thousand uh uh twenty twenty two I actually um

31:13 moved myself to Utah, to Salt Lake City and I basically say, No, I'm gonna ski every day that I'm not busy. And uh and I skipped until the end of the season. So so what happened is that, you know, Covid started and we realized that we have major problems. Yeah, the problem was actually um the first the the first thing that you face is cancellation. All of a sudden out of um, you know, um

31:36 Very few cancellations per day, you ended up with hundreds of cancellations per day because uh This is it, right? And uh um and after you dealt with that, then the next question that we ask ourselves, okay, so So how bad is it? How long it's going to to last? Now that was supposed to be the first year that we were profitable, right? So we did not have a lot of cash in the bank because we

32:01 expect it to become profitable this year. And we basically told ourselves, Okay, this season is over. Next season is not going to happen. We don't know, but we need to plan for something that is going to last longer than that. And then we basically say okay, um

32:18 How can we How can we deal with it? No. Because of whiskey had a lot of strategic investors from the travel industry, right. In the travel industry? They didn't really care about whiskey, they care about their own problems, right?

32:33 If you're a hotel chain then guess what, you have no travellers. If you're an airline, guess what, you have no flyers. So anyone in the traveling industry has suffered from the same problem. And the last thing on earth that they care about is a startup that they invested at. And we realized that okay, wait a minute, what We don't have enough cash to survive for two seasons without revenues.

32:57 We need to raise additional capital. No, no one. No new investor is going to speak with us, right? Because uh There's no ski, so what are you talking about, right? Um and uh and we approach the existing investor, and by the way, I'm one of them, right? And uh and we basically say, Okay

33:18 You know what, we need your help. And everyone told us so we We are busy. Right, we have our problems to deal with, we already have our own problems. I don't see how is that going to become a good investment and uh that's okay.

33:32 Then we basically decided that okay, wait a minute, we're gonna do a pay to play, right? A pay to play is actually sort of uh forcing new investors at the expense of the existing one. Right. So so for example

33:47 doing a major down round. you sort of pay the play, right? Because if you're not participate your your uh your position in the company is going to be diluted severely. And this is what we decided to do. And uh and that was way more complex. I described that in the book. Way more complex than that, because we also had

34:07 you know, safe instruments that we need to convert before we can actually do something like that. And that was really complex, but we ended up doing that. And uh um and today the company is actually very successful. Um after Covid we um we use the time uh of Covid to actually um improved the product and uh um and as soon as COVID was uh was over, then we started to grow rapidly and the companies is profitable, is is growing rapidly, is actually providing very, very good service to its customers.

34:40 I'm And so to a certain extent I would say we ended up uh um Um getting out of this crisis successfully. But if you are in the middle of it.

34:52 And you ask yourself, so what are the chances that we will end up seeing being successful? It looks way smaller. Way smaller. Um So what happened here is that you realize that okay, this is this is not forever, right? So ski is going to come back.

35:09 But we don't know how long. And um and therefore we assume that it's going to be for two seasons until it's a this coming back until twenty twenty two. And for that he we need to adapt, right? And so we resize the company to be very, very lean and small. And we raise just enough capital to survive those two years.

35:30 And uh um and it ended up to be uh working Very well, right. But uh huh. But in that sense now, if you would ask me how much luck was in there. Luck is always good.

35:41 Yeah. I think that I heard the um You know, maybe um maybe the most significant real estate developers in New York is uh is Silverstein, right? And he built the the World Trade Center and pretty much everything on the Hudson And uh um and he was asked uh um how he became such a successful developer. And he said, You know, tell you the truth, this is eighty five percent luck. And fifteen percent still then know how and so forth.

36:09 And then he was asked W if he can change my thing, what exactly is it going to be? And I said You know what, I'm gonna replace the fifteen percent skills. with additional fifteen percent luck. So lucky's good. Um

36:22 For me lack, you know, I will define lack as opportunity meets readiness. Readiness is up to you. Opportunity not always. Beautifully said. I I also agree with luck being so core to most people's success, most companies success. Uh but you probably don't give I feel like you're not giving people enough credit for the work the hard work that's also involved in, you know.

36:43 the the skills and timing and stuff. On the readiness. That's the readiness teacher. Of being ready to uh take advantage of opportunity. That makes sense. Okay. There's a bunch of stuff I wanna dig into here. So So one is and this is something uh it's kind of a tangent, but I think it's a core part of your your advice on crisis. Which is that

37:05 It's always the founder's fault. If things don't work out. Even if there's completely out of air control, even if the whole world is Changing.

37:14 It's still your responsibility and your fault. If things don't work out. I wouldn't say fault, I would say responsibility. Responsibility. Um You know it it

37:25 Okay. It might not end up beautiful. In some cases you will die. But at the end of the day, you cannot rely. on someone else. The fact that this is um uh you know, um the interest rate is going up and the result is that it's ve becoming very, very hard to raise the net capital. The fact that this is industry wide

37:47 So what? You have only one company. You need to make sure that this company is successful. And uh um and later on, you know, if you fail then you can rely to then basically say, This is my excuse. It was uh Not just me, right.

38:02 Not just me is not going to help you to become successful. Just me. is going to help you to become successful. When you assume responsibility then you are able to you basically basically saying, you know what, I control my own destiny.

38:17 I'm gonna make the decisions. And uh um and I control my own best. When this happens, you increase the likelihood of being successful. regardless what happened to the rest of the market, then you don't really care, right? You also talk along these lines of the of this in your chapter the section of Never Give Up.

38:35 In a crisis and throughout your journey. This is by far the most important behavior of a startup CO. You just talk about that.'Cause a lot of times it's like Maybe just stop. Maybe just give up. You shared one example where it's like, I don't want to deal with regulation other companies. I'm just gonna stop. Any advice there just like okay, maybe it does make sense just to stop and try to give the investors money back.

38:54 Versus yeah, it's just part of your job not to give up. Uh you know, I heard of cases that you basically say um our underlining assumptions didn't work out and uh And our thesis is wrong and therefore we would like to return the investors their their money. But uh Entrepreneurs never give up.

39:13 Ninda. And this is the the most successful behavior of of uh of startup CL, right? Never give up. Always keep on looking for ways to make it work, right? And the um And so it is going to be a journey of failures, right? And in particular during crisis. But you still need to

39:32 Keep on trying to make it work. Even though it is way harder. So never give up is um is the most important behavior of successful COs of startup. The second one, by the way, is making decisions with conviction. This is true for all CEOs of all companies, not just the um Startups.

39:50 Now, startups, those decisions are probably more frequent and there are a lot of them and uh but you're in crisis. All COs in the war need to make hard decisions. And you need to make them with conviction, because if you don't make them with conviction, then what will happen is that the team is not going to follow. the team is not going to w to follow, then you're not going to be successful. Um

40:14 But they never give up. You know, you ask entrepreneurs. what will happen if the and they will basically tell you, No, we keep on fighting. One of my other startups in the travel industry called Oversea, um back then they called Fairfly. In the um

40:33 And you know, the CO told me that the um Yeah. A cat might have nine souls, right? We are a cat in that sense, we have nine souls, and the way the reason that I know that is that we already died nine times. Or almost die at night times, right? And so um the reality is that you don't keep up.

40:54 You keep on As long as and and for a second I would say look there are only two reasons that you would like to give her. one is that your mission is wrong, right? So so the problem disappears. And uh um if the problem disappears your mission is no longer relevant or non no longer valid and you m white m might want to consider to give up. The other one is that if the team is not right then you are unable to change it.

41:24 So you brought the um toxed the investors into uh the board and they um Um and they start to control the company and obviously in many cases they create more damage than help. And you're unable to change that anymore. Then this is a good reason to keep up. Other than that, never give up.

41:45 Crisis, not crises, hard cheap. No money to pay him, no you know, anything that might happen. Anything that you might want to think that might happen. Will happen. I'm excited to chat with Christina Gilbert, the founder of One Schema, one of our longtime podcast sponsors.

42:05 Hi Christina. Yes, thank you for having me on, Lenny. What is the latest with one schema? I know you now work with some of my favorite companies like Ramp, Vanta, Scale, and Watershed. I heard that you just launched a new product to help product teams import CSVs from especially tricky systems like ERPs. Yes, so we just launched one scheme of file feeds, which allows you to build an integration with any system in 15 minutes as long as you can export a CSV to an SFTP builder. We see our customers all the time getting stuck with hacks and workarounds, and the product teams that we work with don't have to turn down prospects because their systems are too hard to integrate with.

42:41 We allow our customers to offer thousands of integrations without involving their engineering team at all. I can tell you that if my team had to build integrations like this, how nice would it be to be able to take this off my roadmap. and instead use something like one schema, and not just to build it, but also to maintain it forever. Absolutely, Lenny. We've heard so many horror stories of multi-day outages from even just a handful of bad records. We are laser focused on integration reliability to help teams end all of those distractions that come up with integrations. We have a built in validation layer that stops any bad data from entering your system, and one schema will notify your team immediately of any data that looks incorrect.

43:16 I know that importing incorrect data can cause all kinds of pain for your customers and quickly their trust. Christina, thank you for joining us. And if you want to learn more, head on over to oneschema.co. That's one schema.co. This idea of never give up its Very similar to Dalton Caldwell was on the podcast. He's a partner at Y C in his whole Uh he has a

43:37 Famous talk, I guess, O Y C and this was the title of this podcast episode was Just don't die. That's the main advice to a startup. Just don't die. Never give up. Uh you might have a

43:46 By the way, you might die. You'll never give up. Then we be reborn. And to be clear, the way a startup dies is they run out of money. Is that the simplest way to think about that? Yeah, it's the only way that they die. Okay.

44:00 By the way, all the companies in the board, right, they are unable to pay their bills and therefore they die. Yeah. And Many of the tactics you share is just ways to not run out of money.

44:11 Oftentimes it involves down rounds Uh creating strange cap structures just to keep it alive, losing, you know, equity percentage just to keep it going. That's part of the job basically, and that's what you have to deal with. Y you know, in many cases we had to engage the employees, right? No, we don't have cash. So what we did is that we

44:30 diluted all shareholders in order to give employees way more equity, right? So five times more equity than they had before. And we told them we need you to to trust us and uh and believe in the in the cause and believe in our ability to recover. And if we don't then um then everyone loses. And but if we do Then everyone wins big time. And so this will be a way to to actually re engage employees if you are unable to pay them the regular pay.

45:01 And then that was the case in in most of the startups that uh Almost ran out of cash. Um occasionally you can do um You know, if you if you will tell me that the um You're gonna run out of cash next month.

45:17 And therefore you need to shut down I would like to imagine that you have at least six more months of run rate. You don't know that, but this is through leadership. Right. So you You basically tell your people to stay with me.

45:33 You know, you believed in the cause, you believed in the my leadership. I still believe in the cause and I still believe in you. And maybe we gonna have some hard time. Maybe we're gonna have some uh So month that the unable to pay you. But eventually we will get out of that.

45:51 And in many cases most people will stay. Now leadership you don't you don't build leadership. During crisis. You might But in particular you build leadership through um

46:05 You know, um transparency through um recognitions of uh of your team through actually putting your team as the top priority. At the end of the day, you're going to be successful if your team delivers.

46:20 And uh in order for the team to deliver then um then they need you to trust them to deliver. This is really powerful advice and I'm gonna spend a little more time here. Which is keeping people on board and engaged and motivated through a crisis. So this uh kind of almost script you just shared is really great.

46:38 Is there anything else that you found useful or any advice you could share for Helping a founder. Keep the team on board, keep people excited. Driven. There's um You know, these words you shared I think is is a really good example. Is there anything else?

46:53 So so during crisis people will appreciate more than anything else transparency. And if you if you hide information from them, then they would leave. They they don't trust you anymore. Um but if there is a crisis and and look if there is a crisis then everyone knows that there is a crisis, right? It's not surprising for anyone. And this is where they expect your leadership the most.

47:17 This is where they expect you to be there for them. And tell them that this is what we're gonna do. And if A B C happens then we will be successful and if it's not then we will die. And uh I want you to um believe that we can deliver A B and C and I want you to stay here for for that part of the journey. And uh um and this is really, really dramatic. This is uh perhaps the most important part.

47:45 Oh, during crisis. The team is the one that is going to take you out of the crisis. And you need them more than more than ever. And guess what? They need you.

47:59 When you talk about being transparent and open about everything. Like how What's an example of just like how far you recommend people go?'Cause You know, you could just be like, Here's uh all of our data and metrics and numbers, here's what our investors are emailing me. Like how How real do you recommend people get? I know it's hard to just summarise in a couple sentences, but

48:18 What's a good way to illustrate that? So number one, don't sugarcoat. Right. So you basically you you don't need to share all the feedback from all the investors. You can tell them, Look, I met dozens of investors in the last couple of weeks and they're all saying no. Or

48:34 You know, we had a sign term sheet and the the investor disappeared, right? Okay. That's fine. It is what it is. Look the fact that it's ugly, if you don't tell that it's ugly, it's still ugly. And so you I would sh I would share, um

48:52 The the essence Yeah, and if we have metrics, then what I would like to do is believe that everyone is aware of the metrics, of the key metrics of the company. This is something that in general I would say, Oh, they're they're in the lobby of the office. We should have the key metrics displayed for everyone to understand this is what we stand for. This is how well we are executing anyhow, right?

49:17 And so when they will see the numbers drop, they know that the numbers drop, right. Um and this is something that I will in general I would say look key metrics. They should be shared anyhow. And so in particular during a crisis we should Keep on sharing them, right?

49:34 Definitely not hiding information. So if you have um a major customer leave or investor disappear, right? Or um Or we are unable to sign a termsheet, right? And and uh so this is the highlight, this is This is the major issue.

49:52 in the uh the details themselves. It's less critic. Now if people ask, then answer. If someone asked, okay, so how many investors have you met that say no? Then um start counting uh

50:07 Thirty seven. Right, be specific, right? That's a great answer. I wanna come back to something you said that I think is so important, but so

50:16 Hard We just act fast. If I was a founder. Something changes in the market. It's uh

50:24 Easy to say, okay, you need a cut burn, you need to go raise money down rounds. It's so hard to do. To lay people off to do all these h challenging things for your company. Can you again just uh help people understand why it's so important to act fast.

50:38 You talked about optionality goes away just like what actually happens there if you don't. So so I'll give you an example, right? So let's say that you have um Um you're almost run out of cash, right? Then you have um Um You believe that you're gonna raise capital in the next two months.

50:57 And uh um and if it's not, then you run out of cash, right? So so One of the things that you might want to do is extend the run rate. Yeah. One other thing that you won't might.

51:13 might want to do is actually tell the people that we will be running out of cash in two months. And uh um and number one, I want you to um help me even if we run out of cash because there are good chances that we eventually will Yeah, you have to raise capital and uh um and recover that. And number two, um, in order to um And you know, in in order to to get your support and believe in the company, I am going to offer you more equity.

51:44 So the more equity is a something that I will do twice, right? Once Today. Once you realised it. Th this is going to be challenging. And then again if we need to ask people to reduce their salary or or do something dramatic around that.

52:00 Um And the first one is actually preventive. Um uh preventive action. Right. So so you uh share the know how you share you share the the the the you know, the challenges that we are going to face.

52:15 And you demonstrate generosity not out of You have to, but you demonstrate that. And then you in you Essentially dramatically increase their loyalty and their commitment.

52:29 And when you will need them. They will be there. So so this is one example. The other example is about calculating uh end of cash, right? And and this is really, really important, right? So so let's say that you have run rate of of X month, right.

52:49 Six months, right? If you reduce Burn. By fifty percent today. Then you simply increase your run rate to a year.

53:00 If you don't do it today. And you wait three more months. Then you only can do that for the So the first three months you burned the same way that you did up until now, and now we reduce that to half. So you have six more months.

53:16 Right. Total of nine months. If you decided today that you need twelve months. And you don't act. Today.

53:25 You will never have twelve months. Now is that the only the only way to uh to do that? No, it's not the only way, but it's uh one of the ways that by the way m most companies will do. So they will reduce uh burn rate today. in order to extend the run rate. Um

53:47 Is that going to be more helpful? Don't know. Really depending on the case. If you would ask me if you reduce you'd reduce the run reduce the burn rate. Increase the run rate. So now you have twelve month to raise new capital. Is that going to have higher likelihood?

54:05 Of remaining with the current plan and growth. And raise capital within six months. I don't know that. But this is exactly the decision that you need to make. That's a really great way of putting it. Just the math.

54:20 Mm. means the leverage you have now to extend run rate. Runway. Is so much higher the sooner you make the decision. And

54:28 the key just going back to your kind of algorithm of deciding if we need to act In this way. Quickly is First think about. What's being impacted?

54:38 Then how long is this impact gonna last? And then how long do I have? before you run out of money. And those questions is your advice for deciding do we let people go now? Do we raise money now? Um there is always by the way, there is always alternative for uh let people go. Right.

54:56 Mm. Um I in general I would say letting people go is uh um um is probably better than reducing salary for everyone, right? But let's say that you need um Um you know, cost reduction of thirty percent, right?

55:12 One of the options is let the thirty percent of the people go. Another option is actually um Uh reduce salary by thirty percent for everyone. And it's going to have the same impact, right? um not exactly the same impact on on on the balance sheet.

55:29 And on the P L, but not necessarily on the organization. If the organization feels that they are committed to each other. They will prefer the second way. If this is more of individuals, then obviously they will prefer the first way. Is there a different way?

55:48 What about if management gives up on their salary? That might uh make the same impact, right? And definitely the demonstrations of leadership, right. in by the way increasing the commitment of the rest of the organization. So so in that sense I would say there are multiple ways of of reducing the cost.

56:12 But the um In general, this is always about impacting people. Like if you look at the startup and you look at the budget. Seventy percent of the budget is people. Maybe seventy five percent of the budget is people. Everything else is is nickels and dime. If you gonna tell me oh no, we gonna

56:32 you know, we we are going to um stop the supply of coffee to the office and this is how we're going to reduce costs. No, this is how you create dissatisfaction with the team and the and you would reduce costs because some people would leave because of that. Not because of Lack of coffee. But because of the inability that to determine and to make hard decisions.

56:53 Um so end of the day, if you need to reduce cost, that means people. That was really good advice and really good uh set of options to consider. Whistling people off. So most of what we've been talking about Right now has been the cash crisis route.

57:08 We've spent a little time on the product market fit crisis route, but I want to spend a little more time there. So for the cash crisis. Right. You have these kind of three questions and then it's like Cool. This will tell you how quickly to act and how Severely to make cuts.

57:22 In the product market fit route, is it essentially If you've lost product market fit. It's to pivot, is that basically the question? And then it's a question of where to pivot and what to do. So so the first question is am I still relevant, right? And and probably the answer is no.

57:39 And then the next question that you basically say, Okay, um, do I want to pivot, right? And for that I will say If I would start today. This is what I'm gonna do. And if the answer is yes, then do it. Now in many cases you say, Oh, wait a minute, I already have the organization and I already have money in the bank and this is what I'm gonna do instead.

58:05 Um I wouldn't necessarily do that. The um the the way that I would look at it is different, right? So because the the other alternative is basically say, wait a minute. All of my underlining assumptions are gone, right? They are wrong.

58:23 the I Lost Product Market Feed. The value proposition that I had is wrong. And uh or is no longer valid? Oh no longer relevant. And therefore I need to start from scratch.

58:36 Do I really have The assets. to become successful on the new path. And the assets could be, you know, technology that you already developed. Could be the team that you already built.

58:51 could be the know how that you have in that specific market that gives you a significant advantage. And if any of those is really, really significant. then it's possible that you want to pivot. People basically say You know, major fuck up all of our underlining assumptions are gone.

59:13 And uh um And and because everything else, if it's not, then that's part of the journey of failures, right? If you'll tell me, Oh, we try this product or we tried this feature and didn't work, then this journey of failure, right? This is This is going to be your journey. But once you figure out product market feet if it disappears Then pivot is one option, shutting down is another option.

59:36 And for shutting down, there are two things that you need to ask yourself. Do I have the energy to keep on going? Like maybe you basically say, I spent the last seven years trying to do that. And now it's gone. And you know what, I need some time off. Um and the other one is that where really have the assets.

59:57 to become dramatically successful. Pontera is one of my uh startups that I started back in two thousand and twelve. And uh And back then we called that VX. And we were dealing with financial fees in Israel.

1:00:14 And we were actually pretty successful. And then we decided, Okay, wait a minute, Israel is a small market, let's move to the US, and we move to the US and one day the CO came to me and say, Look We need to focus. I cannot do both. So we need to pivot. And we start the Israeli operation.

1:00:32 Completely. in order to focus all of our efforts on the US operation. And then we realized that the nature of the beast is different, and therefore we need to re-look for product market feed. And eventually we found that. With uh um with the regulations of the Obama administration and the um

1:00:53 And that was our product back in two thousand sixteen or seventeen. And then the administration have changed and now it's going to change again. Um and they change the regulation. In overnight we figure out that I and we were actually on a being a successful path. And uh um And we had to reinvent ourselves. No, what we basically said is look, we have um

1:01:20 We have the energy to keep on going. We have something a thesis that we that we believe might be relevant for us. We have the technology that can serve the thesis. And we have enough cash to try it out. And we went back to the board and we offered them two options. Number one.

1:01:39 We give you your money back. And number two, we this is what we're gonna try. And the the the the interesting part is that investors don't want their money back. They did not invest in order to have their money back. They invest in order to make a significant impact. And obviously they don't want to go back to their investors and tell them, guess what?

1:02:00 And so uh we had all the support to keep trying some something else and since two thousand eighteen. We are actually being pretty successful on this path. And uh and all of a sudden um you know, company's twelve years old. Um and uh um And we pivoted twice.

1:02:19 And now we are um, you know, end of the day helping Americans to retire richer. Um the helping of financial advisors to um uh to support you on your four one K plans on retirement saving plans. And the result is pretty significant.

1:02:35 So this company is on a path of being successful and uh but uh we almost died. Twice. In the uh And and look, all the COs in the ward, if you would ask them, have you nearly died already? And they will tell you yes. And then the next question will be How many times? And they will tell you Multiple times.

1:02:59 Um And if they are not, that means that they're simply too early on their journey. That's such an important point. It came up. I just had uh Toby from Shopify in the podcast and he said exactly the same thing. That just like the number of times Shopify almost died, people will have no idea. And it's important to know that's very common.

1:03:16 It's um yeah, and and um I'm a good friend with uh Harley Finkenstein, the president of Shopping. And he told you know, we exchange horror stories about Nearly dying, right. And we're still here. Just never give up. To double down on this pivot point real quick. So the

1:03:35 Things you should list. uh look at to help you decide. If a pivot is a good idea, you sh shared You have some tech. That might be helpful in this.

1:03:44 New direction. You have a team that's really well suited to this new idea, where you have some knowledge Is there anything else just like what's that list of things you should look at to see? To come up with ideas slash decide this is a good idea for us to pursue.

1:03:57 So so you know, going back to basic, right? Um but now you you're already running, so you probably have already validated the problem or the value proposition. So so you when when When you're But about pivoting, right? So when you start you think that okay, I have this brilliant idea and what I really encourage people is

1:04:17 First of all, go and validate the problem, right? Speak with people, understand their perception of the problem. And only then start to think about the solution. Now this is still not the case in mo in most uh Um most startups. But uh Um and this is falling in love with the problem, not the solution. And and for for a few reasons, right? And maybe number one reason is uh But

1:04:39 Entrepreneurship journey is about Creating that. Simplest way to create value, solar product. That's it. Simplest way. And I like simple. Um

1:04:49 But then in addition, when you focus on the problem, then the problem is going to serve as the North Star of your journey. And when you have a North Star, you're gonna make less deviation from the course and increase the likelihood of being successful. But by and large, your story is going to be way more compelling. If we will be here in two thousand and seven and I will tell you that I'm gonna build an AI crowdsource based navigation system. You're gonna say, Oh yeah, very interesting. But you don't care.

1:05:16 If I will tell you I'm gonna help you to avoid traffic jobs. Then you do care. When your customer here They want you to be successful. And when they want you to be successful, they are going to help you to become successful.

1:05:30 And so this is going back into pivoting the same way, right? First of all, validate what's your value proposition. What's the problem you're going to solve. Now in most cases you already validated that because you you know, in the market for some years and you had dialogues with customers and you already realize that and maybe you already told yourself, you know what?

1:05:52 In my next startup, this is what I'm gonna do. And so in it's possible that you already validated, and if you haven't then this is exactly the time to revalidate the value proposition. So this is the first thing that you need to do. Then the second thing that you want to do is ask yourself, do I really have a significant advantage here?

1:06:13 Do I really have the team, the technology, the know how To make a leapfrog here. and and really lead the market. And then the outer part of it is, okay, do I have the energy and the passion? They go and do it all over again.

1:06:30 Because this is going back to square one, right? Trying to figure out product market fit and then figuring business model and then figuring out growth and so forth. So the entire the entire journey from scratch. And if if you answer yes to all of those, so you have the a very significant value proposition. And you think that you have something that is going to accelerate you dramatically because of the know how, the technology, the team? Then the next thing that you're gonna do

1:07:01 is validated with the team. In your underlining assumptions the team is going to continue? Maybe. Maybe not. This is exactly the time that you would like to validate that.

1:07:14 And the way that you're gonna validate that is you basically say then guess what? We are Fact. Right. Our our underlining assumptions are no longer valid. And this is our new opportunity and we can go this path or we can die. And uh um and let's see what people if they believe in the new path, then this is a good idea.

1:07:36 In many cases, by the way, it's possible that the new path will come from them. They are the one that are closer to the customers, they are the one that are closer to the technology. They are the ones that are probably no better than you. um if this new path is actually valid or not. And if this is the case, then you go and do it.

1:07:55 The last the last one that you want to look even if you don't have the money for it. Let's say that you don't have plenty of cash in the bank. Go back to the investors and go back to raise capital. Because now you actually have a very significant advantage, right? You already have a technology, you already have a team.

1:08:16 You already have the know how? You're already second time entrepreneur because Pivot is like restarting from scratch. Or or you're al already multiple times entrepreneur? So you're way more attractive than Than when you were a few years back.

1:08:33 And so go back to existing investors and new investors and raise more capital for for this new journey. I like this algorithm I was writing it down as you're talking. So basically when you're deciding to pivot Looking for opportunities to pivot. Step one is find a problem, validate there's a problem that exists. Step two is Figure out if you have the tech.

1:08:53 team or know how that gives you an advantage. to win at solving this problem. then ask yourself, do you have the passion and energy to be spending your life and a many number of years attacking this problem? Yeah, then make validate your team wants to also go after this problem. And then

1:09:09 check with your investors and try to get money. Two. Fund. You going after this problem.

1:09:16 Yep. Awesome. And and I like this order, right? Uh some people will tell you, Oh, my order is different and and I'm not saying if this is the right thing or the wrong thing, but I think that uh One of the reasons that I say this is the order is look. When you validate

1:09:33 the problem and the value proposition. Even if you don't have the passion. If it's being validated, your passion will be built up. Because then you feel you know, you speak with uh um With with

1:09:48 You know, we with potential customers and you tell them um This is what uh this is what I'm thinking of doing and this is um how it's going to help you. They will say, Yes, I need that. Can you do it tomorrow, right?

1:10:02 Then all of a sudden you get excited about it. And uh usually when I tell when I speak about consumers then I I tell people look when you go and speak about the problem if the answer that you is going that you are going to get is Oh I know someone that had this problem Don't follow this path. If they will tell you, No, no, no, no, no, this is not the problem.

1:10:24 The problem is and they will give you their version of the problem. This is where you want to follow that. To a certain point if you speak with enough people you would have the sense that you are being sent on a mission. And this is where your passion is going to go through the roof, right?

1:10:41 And so don't start with the passion. Let the passion be built. I totally feel that. I have friends who started this company, zip. Which is a procurement. A really good procurement platform. And I don't know if they're

1:10:53 Growing up wanting to be Building a business that helps procurement. uh experiences be better. But in their And they pivoted six times before the

1:11:01 Take this idea. Uh But they've Through that, I think. found how big of a deal this was and how much

1:11:08 happier people can be in their day to day with a better product and got excited about it. Now that's what they're building. Mm, the best thing happened when you try to validate a problem is that you speak with someone and they will They will tell you in a very strong emotional word. I hate that. I adore. Something like that. Yeah. This is exactly what you're looking for. You're looking for something something that people will engage emotionally.

1:11:32 And with strong emotions. Someone once described it as you want to look for their pupils to dilate when you tell them. When you talk about this problem. Yep. There's a there's a quota wrote down as you were talking earlier that I think is really great. It's kind of a framework for

1:11:45 The way you used it is to help you pick which p direction to go. But I think it's a useful framework in general for companies and founders is Ask yourself if I were to start today. What would I have done and what would I do if I were to start this company again today.

1:11:58 I think it's uh that's such a powerful thing to always think about, even when everything's going great. I agree. It's you know, today is the first day of the rest of your life. And and this is pretty much everything in your life, right? So so so ask yourself, knowing what I know today, would I do something different? Now if the answer is yes.

1:12:18 Then do something different today. Don't wait until next life, right? Or next company, or next relationship, or next something. If you basically know today that you should be doing something different, And change. I think that's extra important because somebody will do that probably and compete with you and put you out of business.

1:12:40 And it's better that you Do that first. But this is f true for everything in your life, right? Look if you if you are working in a place and you're not happy. And you suffer there.

1:12:53 Then then I would say um You know, the guid the guidance that I give to my children is very simple. If you're not happy at your working place, then ask yourself if there's something that I can do to change that. Then try to change that for the next three months. If you're unable to change that, then leave. You don't deserve to be unhappy. And you need to control your own destiny, right?

1:13:21 For me quitting your job. Do you know what it means? You fire your own job boss. That's what it means. You fire your boss by quitting.

1:13:32 That's it. That's empowering. I like that. Okay. Uh just Okay, two more questions.

1:13:40 One is I wanna close the loop on the way story. So you talked about how Google launched a competitor basically free turn by turn directions. That was the business you were building and you was Essentially had to change direction. what did you actually do? How did you decide and realize this?

1:13:56 So we didn't change. We we Back in two thousand ten we were simply not good enough. We were still in the product market feed iterations and iterations and iterations. And we were not good enough, and we kept on building and we kept on iterating and iterating and iterating. Um but we almost ran out of cash, right? And and then we had uh um you know this uh

1:14:18 Um lucky day that Microsoft decided to invest and so we have Qualcomm and uh And you know, the funny part is that I had this dialogue with Qualcomm Ventures and they told me Um that they're not sure why is that important for them. And I read someplace that they

1:14:37 did not invest a tweeter at fifty five million dollars and this is exactly what I told. May I remind you that you did not invest in Twitter at fifty five million dollars valuation. This is where Waze is today. Yeah and uh um you know, obviously different story, but that was um

1:14:54 The the Fear of missing out, the FOMO was it. But the result was that the um Um, we had enough cash to keep on trying, um and keep on iterating and iterating and iterating and eventually we ended up to be uh uh very successful. So that was not about uh

1:15:14 uh pivoting or changing directions or doing anything dramatic. We basically say okay Um We will need to reduce costs dramatically. We decided that we are not gonna by the way, what we did is we reduced the salary of the management only. And uh and to a certain extent I would say uh People didn't even know.

1:15:36 um we decided in the management meeting that this is what we're gonna do and if we if uh Push come to shovel, then we will do the next step and the and the next step and the next step. And uh um but we were eventually able to raise capital. So so in that sense, uh um The the nearly die was a matter of uh of state of mind, but uh

1:15:57 But we did not run out of cash. We we raised capital just before that. The story's actually really illustrative of a point I was thinking as you were talking, which is that product market fit crisis often also leads to a cash crisis from investors not wanting to invest. In many cases, yes. In many case.

1:16:15 But but uh um But to a certain extent I would say no product market feed basically means that you go back to square one. Mm. So you know. The other alternative that you have, and by the way, it's also valid.

1:16:29 Is If you are unable to convince your existing investors to re to reinvest in the company in order to build The new part of the journey. The new uh the new journey. Then

1:16:43 You know what? Shut down the company and restart a new company that is doing exactly that. Uh and that's a bigger threat for investors, right? Because they are not part of the new journey. Now they might want to say, Oh, we you know, the company owns the the IP. The know how to

1:17:03 is the people owned by the the people, not the company. How do you avoid the crisis? You know, a lot of this advice is here is you have a crisis, here's how to deal with it. Uh Any advice for how to avoid

1:17:14 falling into a crisis as a founder. Number one answer is no. Don't worry, you will face crisis. Um and if you worry You're still going to face crisis.

1:17:29 Um number two is that look It's way easier to to deal with a crisis if you have plenty of cash in the bank. So if you can raise capital and maintain higher level of cash in the bank. It will help you to go through the next crisis. But it's not going to avoid it.

1:17:51 Um so so always be funded is a good advice. But in general look you do not prepare for the next crisis because you don't know what kind of crisis it's going to be next. And uh and uh you can assume that they will be. The next crisis, right? Trust me, they will be the next crisis. And uh um

1:18:13 And then the most important part is that you analyze that fast. Then you act fast. Um but you cannot prepare for it because you don't know where it's going to come from. Um And and this is really, really important.

1:18:28 The best preparation is that if you have plenty of cash. In general, I would say if you have plenty of cash, then this is going to help you m for many things. When you say plenty of cash, do you have any advice? It's kind of common advice if have eighteen months of runway. Is there anything there you'd recommend? Uh five pounders.

1:18:44 And then this is really depending on um on the COs, right, and their um risk attitude. Um some of my COs prefer to have two to three years of front rate. Basically say this is my comfort zone. I know that I can restart if I need to, I know that I can um suffer major crises, I know that I um

1:19:05 and can go into new direct direction if I want to. I know that I can expand and try something completely different if I want to. This is not necessarily as a result of a crisis, right? So maybe you basically say here's an opportunity And I have the cash to do that. The gener my general rule will be around eighteen months. Are you okay with twelve month? Yeah, if you if you risk take a bigger risk taker, then you can survive with twelve months.

1:19:33 But the challenge is that look, if you have shorter period of time then you don't have enough time to execute. You need to focus on fundraising all the time. And uh um And and you want to fall to focus on creating value and not just uh bringing cash into the company. Yeah.

1:19:54 Obviously the downside of raising more runway is you're giving away more of your company. But it's always this trade off. How much to sell, how much money to get. Being a founder. What a what a what a tough dig. And I'm gonna come back to this quote you had w that I shared at the beginning of the podcast, which is

1:20:10 Building a startup is a journey from one crisis to the next. Yeah, it's you know, it goes back into uh um you know the other three dimensions of uh of a start, right? It's a roller coaster journey with ups and downs and ups and downs, and it's a journey of failures. Because we are trying to build something new that no one did before, so we we tried multiple things. For that Albert Einstein used to say that if you haven't failed That because you haven't tried new things before?

1:20:36 And it's a long journey. It's a very long journey. In particular the longest part is until you figure out product market fit. And now I add the fourth dimension of that, that this is a crisis from one this is a journey from one crisis to the next one. Yeah. And you've done how many companies have you started ten last time I saw? Um yeah, about uh a little bit more than that, yeah. A little bit more than that, okay. Yeah.

1:20:59 It's a um You know, not all of them are going to be successful. But Most of them are. Mm.

1:21:07 In some form. And you just keep doing it. You're a glutton for a crisis, is what I'm hearing here. You know, I I uh I'm not there for the crisis. I'm there for the value creation.

1:21:20 Yeah. Or is there anything else that you wanted to share that you think might be helpful to We wrap up? Um I really like this podcast. I really like

1:21:34 Okay. And uh and hopefully, you know, in in my mind, this is my my mindset of a teacher, my my destiny. It's about value creation. And if this podcast

1:21:49 Or this book. This one. Can help people to become more successful. Then I fulfill my destiny. Ori, I'm so delighted to be helping you fulfill your destiny.

1:22:02 Two final questions. Where can folks find the book? When is it for sale? And then just how can listeners be useful to you? The book is going to be published in about a month from now. Yeah, and it is already available for pre orders on Amazon. But uh later on it will be on bookstores uh throughout the uh US and Canada and so forth. What's the date it'll be published?'Cause we're recording this def uh

1:22:23 Maybe it's coming out around the time we publish this, so what's the data? I think it's February fifteenth. Okay, great. I think this is coming out right around there. So perfect timing. So perfect timing. And uh you can uh follow me on LinkedIn. Or you can go to my website, com.

1:22:40 Um And uh um And I want you to read the book, right? End of the day, you know, you ask me at the beginning, w what do I want to accomplish? Do I want people to um um buy the book or read the book. And and uh I told you, look, everything that I'm trying to do in my life has uh It's about doing good and doing well.

1:23:01 So um buying the book is the doing Well Park Fit. And reading the book, if they're doing good part of it. And I want you to read the book. So good.

1:23:12 Ori, thank you so much for being here. Thank you. Appreciate it. By 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.

1:23:28 Also, please consider giving us a rating or leaving a review, as that really helps other listeners find the podcast. You can find all past episodes or learn more about the show at Lenny's Podcast.com. See you in the next episode.

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