The Exchanges

Q I'm, I'm really intrigued there briefly. Sorry, this isn't in the schedule, but I'm too intrigued. And it's, what was the thought process behind the sale to Zynga? Were you tempted to do it on your own with such a big addressable market?

A Um, well, so we had been running the company for six years at that point, and we were totally legal. We were, but the internet poker industry was not legal in the United States. But what we were doing was just collecting data and reselling that data. Um, and we had, Basically penetrated the market all the way. I mean, in any one-thirty-day period, 56% of poker players would visit our website. Like, that's how big we had gotten. Um, and the, the only way for us to expand the business from then on was to start doing things like taking bets. And to do that, we would have to violate U.S. laws or leave the country, and, and that wasn't really an option for us. So we met Zynga, and they had this problem that we were so good at. We were really excited because we didn't see any other way for us to To keep expanding the business, and we just wanted a new challenge, and the fit was just really natural, and frankly, there was no exits available to us, because we were these Boy Scouts in this sort of sea of, you know, online gambling, didn't really have any obvious exit opportunities.

AI assessment note: “the only way for us to expand the business from then on was to start”

Q Now I'm, I'm, I'm really pleased. What brilliant timing with Dollar Shave Club's recent acquisition. Uh, I think it's a good time to, to chat briefly, uh, before we dive onto the main aspect of leadership. On the misunderstanding that you've said people have with the subscription commerce space, um, so you've said this before, so why do you think people have this misunderstanding, and what is it?

A Well, I, I don't think it's misunderstanding as much as I think they see sort of half the picture, right? So I think there's two major forces that are driving subscription. Um, one is the e-commerce fundamentals. So this is marketplaces like Amazon, um, and just increased competition on the internet in general are, are driving margins lower for e-commerce merchants. They're making it harder to differentiate or build a real brand because, I mean, I don't even know who I buy my things from anymore. I just buy them on Amazon, but that's some merchant somewhere on the, on the earth that's actually the one that's making that sale. Um, they're increasing the cost of making a mistake with your inventory because if you order too much of something and you have to offload them at a loss, and then your margins were already thin in the first place, that hurts that much more. These and many, many more forces are driving sellers to experiment, um, with the subscription model, right? And I, I think that's the piece that most people get, especially investors really get that sort of commerce side. Um, but there's this other side that I don't think anybody really is paying attention to. So this is, um, what's happening with groups largely on social media. So if you think about things like Facebook groups, Instagram, hashtag groups, and Twitter, there are these groups of people who are connected …

AI assessment note: “I don't think it's misunderstanding as much as I think they see sort of half the picture”

Q And I'm intrigued, though, talking about kind of stopping being relevant, and when, when growth and personal development doesn't pay off and doesn't go to plan, how much of a role does transparency play for you as the leader? You've said before that most people never receive true, direct feedback. So how do you look to differentiate yourself and be the honest and transparent leader?

A Well, so I think about it as two separate things, actually. Transparent and candor, which are different. So transparency, that is, it's incredibly important to a startup. It's the only way to develop people and get them aligned, right? So if you I think most founders, or many founders, especially first-time founders, frequently try to hide problems the company is going through, you know. Some customer is going to pull out, a deal isn't going to close, cash flow issue, whatever it is, they try to hide that, whereas, because they're afraid of losing people or killing morale, but we take the opposite approach. We share everything with the team, because the right people are motivated by the challenge and take the struggles of their own, and then when we ultimately win, which we always do, they gain that much more pride of authorship. Whereas the wrong people, they weren't going to stick around anyway. So that's how I think about transparency. And it's incredibly important. It's one of our core, um, core values, but on, on the, on the direct feedback performance side, that's candor. Um, and I'm actually, I got that from Jack's book, which you should read if you haven't, but it's, it's one of the most important things is to be able to cultivate talent. And I think that most leaders when they're giving feedback to a team member are couching their words with so much qualification that …

AI assessment note: “I think about it as two separate things, actually. Transparent and candor, which are different.”

Q Yeah, love that too. And then talk to me, unfair elements when trying to start a company. What, what's, what's the hard challenge?

A Everything, Harry? Um, no, I, I think the hardest thing is being judged, um, When trying to navigate an extremely uncertain decision process. So everybody has an opinion, but you're the only one who actually knows how much, you know, money and each decision will leave you within the bank and that the various relative trade-offs that are involved. Um, and you're, you're making these decisions with partial information and, and frequently you're being evaluated in retrospect, which when much more information is known to have an enormous amount of empathy for founders, um, because there really are no rules and there's no signposts that tell you what to do. It's uncertainty the whole way. And that's a hard place to live in.

AI assessment note: “I think the hardest thing is being judged, um, When trying to navigate an extremely uncertain decision process.”

Q You've said before about spending a lot of time investing in people and you mentioned that turning the employee into the best product manager. So I'm intrigued as to how do you know whether to invest the time into people? You've stated before about two fundamental distinctions between foundational and mercenary members of the team. So what are these two distinct distinctions then for you?

A Yeah, actually, uh, DevDut at Charles River Ventures, who's, uh, one of, uh, Annie's partners, um, taught me a lot about this, and it basically, what it is, is you have to understand as your company grows, who are your foundational members, the ones that are really, you're counting on for being there forever, right? They're, they're motivated by the company, they feel deep ownership of what they've helped build in a sense of mission, and then you, you need to understand who's, who's really just a mercenary. I mean, that doesn't necessarily mean they're bad people, but, But they're there for a short period of time, whether it's a career move or, or to make hope in hopes of making money, you can't really count on them to be there in four or five years as you're, as you're growing the business. So, um, and, and once you, as a founder, just knowing that distinction, you can make much better decisions. So with your foundational people, you can invest heavily in them, both from a compensation standpoint, equity is especially, but also just from investing your time and giving them ownership over things that you need to be working well for a very long period of time. And then with the mercenary people, You know what motivates them, and you know how to get the best use of them, and you also know to not put them in charge of something that you're gonna need to be, you know, working still…

AI assessment note: “foundational members, the ones that are really, you're counting on for being there forever”

Q And you said early on in the organization there, and with the early hires, are you a protagonist then of the statement that the early team might not necessarily be the team that takes the company through from, say, a one million dollar business to a twenty million dollar business? Do you think there is that flexibility of the employee, and how can you determine that?

A Yeah, you see this a lot, right? Especially, I think you see it a lot in sales and marketing, but Basically, at the beginning stages of, of a company, what you need most is generally for, for shit to get done, right? You need problems, you need problem solved, you need shit handled. Um, and then as the company grows, you, you, you have customers, you have sort of customer feedback, you need to keep things stable while incorporating their feedback and iterating on the product and evolving your sales methodologies. So, you need things to get done, but it also starts to be, uh, more important that the right things are getting done and all the factors are getting taken into account and, and so on and so forth. And then as the company grows even further, uh, Um, you start having scaling issues, you know, like, uh, how do you actually scale out the, the fact that, that Marty is the only one that knows how to do this thing, and nobody told John how to do it, so he's doing a different thing, right? Like, so you have to have people that are starting to think about process and, and, and just generally making, uh, the operation scale. And frequently, the people that are great at the beginning stages, because they were just hustlers, um, you, you still want them at the later stages, but that skill set is insufficient, right? And especially as the CEO or as the founders, you can only have s…

AI assessment note: “frequently, the people that are great at the beginning stages... that skill set is insufficient”

Q I think it's probably Dunbar theory, isn't it? Kind of a 150 it gets. Do you know their names? It's tough.

A Yeah, some, somewhere in there, but I'll, I'm gonna do it as long as I can. I mean, the, the reason that it's valuable is because, uh, it's so important is because if you have the right team in place, you can weather almost any storm, but if you have, uh, Uh, the wrong team in place, it only takes a small gust to, to blow you over. So Krayjoy is a company that we, we took a long path to get here. We had several pivots before we discovered Krayjoy, and then we've had to adapt to the market as it grows, uh, while building Krayjoy. And if we, if we hadn't put so much effort into building a team of flexible thinkers who were in it for the right reasons, I, we definitely would not have made it here, right? So the first 10 hires you make for your company, their strengths will be what the next 10 hires emulate. And that just keeps on propagating. And similarly, their weakness, their weaknesses will, will then be the same weaknesses that are generally emulated by, or things that are ignored by, by the people that come after them. So, um, it's really important that especially very early in the organization that the founders own Um, own recruiting, and I'm going to do it for as long as I possibly can.

AI assessment note: “Yeah, some, somewhere in there, but I'll, I'm gonna do it as long as I can.”

Q At what point do you think, then, you transition those very generalist jack-of-all-trades early hires into the specialist inside salesman or outbound marketing chap? At what point do you transition them from generalist to specialist in your expertise?

A Yeah, I think it's case by case. So this has gone both well for me and poorly for me. Um, I, I try to have a very, uh, candid and transparent relationship with everybody in my company, and I've spoken to them about what's happening. You know, they're a generalist, And what we really need here is a specialist, and I've offered them the opportunity to specialize. And, and the really smart people actually jump at that, or they find another role for themselves that makes a little bit more sense. Um, and some people, some people can't, it can't make the transition. And some of my more successful cases, I, I took, uh, somebody who was basically a jack of all trades, combination engineer, project manager, customer support specialist, you know, and, and I turned him into a senior product manager, uh, Um, and that, and now he's one of our best product managers, right? So it's a case by case thing and it goes both ways, but having a transparent candidate relationship is probably the most important thing there.

AI assessment note: “I think it's case by case. So this has gone both well for me”