The Exchanges

Q Now, I think great entrepreneurs are shaped by their early years, and so I'd just love to go back. When you think about how your parents or how your teachers would have described the ten-year-old Dan, what do you think they would have said?

A They would have been very, um, astute to notice that I was very into computers. So from a very early age, uh, we always had a computer around, and I owe my mom's boss. She was working as a secretary at Stanford, and her boss was Professor Hector Garcia Molina. And he had this amazing generosity where every time he would buy himself a new computer for home, he'd always have my mom buy the same one for herself. And then me, me and my twin brother actually got to play with it a lot. So, uh, we'd always have the latest and greatest thing at home because of his generosity. And that I think propelled me to what I'm doing today because I'm into computers, which is, uh, something I've been doing ever since I was 10 and even maybe younger.

AI assessment note: “They would have been very, um, astute to notice that I was very into computers.”

Q said one of the things that makes you so special is your ability to get very in the weeds, to really be at ground level, and know exactly what is going on in each part of the business. How do you think about the hire great people and let them do their work, and know those two to three things that you should focus on, versus being everywhere for everyone?

A I've really made a lot of mistakes in my past around hiring and abdicating responsibility to them. Um, and I think it was the ramp, uh, founder recently on the show of yours who talked about this. So you can't abdicate your responsibility to the people you hire. You have to be involved enough to really hold them accountable, to understand the details, to probe, to push. Um, and that's something I certainly bailed at in many cases my first time around where I hired people who are really great. I mean, that's partly why I hired them. They did 15 years of the job that I had hired them to do. And so how could I, this like twenty-something founder who's never been the head of Go to market at a huge multi-billion dollar public company. Give them advice or hold them accountable. And so that's something I really struggled with the first time. I just didn't even know that was my job. You know, I just sort of thought, get out of the way, be a, you know, be the kind of founder that, you know, gives them ownership, autonomy. And what I really learned is that at the end of the day, um, you, you as the founder and CEO of the company, you hold it back. Like they're going to be there. They're many of the people, uh, who join your company, even if they're great executives, uh, they're just on for a little bit of the ride. You know, I've had several times at Optimizely where, You know, they'll j…

AI assessment note: “You can't abdicate your responsibility to the people you hire. You have to be involved”

Q Should you always take the highest price, Dan?

A No, absolutely not. In fact, always saying the highest price is almost certainly going to be a mistake. Uh, I know now because I have real data on this. So I actually have a distribution of the valuations we got From the last Series A. Uh, we had offers, actually, we had 22 offers at a billion dollars. Uh, we turned them down and took 350. So we chose, we actually have this, I can share the deck if you want, or the graph if you want, but the, you know, the most common was 200. We had several folks between 304 hundred, and we had a handful of outliers at a billion. We not only chose three 50, but we also invited everyone who offered more than three 50. If it made sense, we invited them to be part of an RUV, a roll-up vehicle, To participate even a little bit in the round. So we got kind of this benefit of great lead investor and this wide net of hundreds of smaller investors who then are sort of evangelists and supporters and, you know, they'll help retweet things when, when we post launches. Um, so we had kind of the best of both worlds.

AI assessment note: “No, absolutely not. In fact, always saying the highest price is almost certainly”

Q Why don't you hire people out of college?

A You know, I, I used to do that. I do think for the most part today, the best team is a small team that is tightly aligned, highly, you know, focused, and typically, you know, if you think about a team as every person is an opportunity cost, and you've got n squared connections between people, If given a spot, you could hire somebody straight out of college for, you know, less money or somebody who is, you know, has five or 10 years of experience. I would rather spend more to hire the more experienced person and keep the team smaller than sort of bloat the team by just filling, you know, butts and seats. With 20 people today, I feel like we're having a greater impact and ship faster than we ever could with a 120 people and software engineers at Optimizely. So that's working and I just don't want to mess it up by hiring a bunch of junior people who kind of, you know, there's this old saying, The best way to slow down a project is to add a person to it. So I don't want to do that. I don't want to hire a bunch of junior people and help train them and have that at the cost of our velocity, which right now is very high.

AI assessment note: “I would rather spend more to hire the more experienced person and keep the team smaller”

Q Do you think there's any big misalignments between venture investors and founders that aren't called out enough?

A Well, for the most part at every stage up until the very end, they're pretty well aligned. Um, you know, you get into these situations near selling the company where maybe the Motivations and incentives are slightly out of alignment. You know, like it's, it's, I think a lot of founders actually have a very binary view on outcomes. They think either it's going to go to zero or it's going to be a multi-billion dollar public company, where actually I think more likely than not, they're discounting kind of the middle of the road outcome where maybe it's, you know, two X what you've raised, you know, or three X, or maybe it's slightly more and things like liquidation preference are really important. And, you know, so I think those are the kinds of things where you do need to model out and think through what are the different Middle of the road outcomes and how you might be misaligned there. So make sure you're not, for example, raising too much money and then getting to an outcome where, you know, investors have a very, very different financial, you know, they're basically like, for example, I'll just make it very plain. If you sell your company for as much as you raise or slightly more, the difference between as much and slightly more is incredibly meaningful to your employees, makes no difference to the investors. They basically get one X back. So in those situations, you really g…

AI assessment note: “situations near selling the company where maybe the Motivations and incentives are slightly out of alignment.”

Q Okay. It's really challenging in one pivotal moment when secondaries become available now more so than ever for early team members. And obviously it's important that people get the right to do it in a lot of cases. Any lessons on how to do that the right way, how to not lose motivation incentive when suddenly people have got five million dollars from their early stock?

A I have a pretty non-conformist view on secondary, and I think this is going to get me some trouble because most of my investors feel the exact opposite, which is, I think that you should let early employees who have vested their stock sell their stock at any point. You shouldn't feel like the vested stock is yours. If they've vested that stock, and if they're working at your company, that should be almost as close to compensation, you know, as, you know, psychologically as, as cash is. If there is a willing buyer, obviously, You, you know, you want to make sure you don't cause a distraction and your employees are going out and trying to find buyers. But for us, for example, in our series A, we're way oversubscribed. We actually have, we raised our series A over a year ago and we haven't even started spending it. So we had far more investors who wanted to invest than we had, um, you know, capital to sell them. And so I gave our employees a chance to sell up to 25% of the invested stock. No judgment. No, you know, like it wasn't frowned upon. And in my theory, and we'll, we'll see if this proves out true or not. My theory is that is more retentive, not less retentive. To give people the opportunity to view their stock as more liquid, I think, you know, it's kind of most what most investors will tell you. Most investors say, you know, give them golden handcuffs, force them to stic…

AI assessment note: “My theory is that is more retentive, not less retentive.”

Q mentioned NEA and their kind of, uh, continuous financing pathway that they can do. Often founders are told, ah, signaling is really dangerous with these large firms. Because if they don't do the next round and they can, as a serial founder, are you like, for fuck's sake, the signaling argument's not true? Are you like, hmm, it's worth thinking about? How do you, how do you think about that?

A Yeah, I mean, I do think it is, it is a factor for sure, and you have to, again, it goes to empathizing with your investors. You have to think through the world from their point of view, and especially somebody who's, you know, if somebody says, I want to invest in Limitless, and they're saying to their partners, look, and I think we should invest in this incredibly high valuation relative to revenue, You know, you need to understand that they need to be armed with the right evidence, motivation, desires to do that, and if one of the, you know, headwinds is, oh, by the way, hold on, looks like Andreessen Horowitz, they invested, they did the seed round, like, why isn't Andreessen leading this round? Like, you need to have a good answer to that question, and that's something that I do think most founders don't recognize. It comes back to empathy. You have to understand, for this person, it's likely, almost certainly, you'll get one person at a firm, you know, if you got a good company, you're doing something well, it's almost impossible not to get at least one person at a venture firm to love what you do. Your job often is to get that person armed with the data information and support to convince their partners that it's investment worth making.

AI assessment note: “I do think it is, it is a factor for sure”

Q to make it happen, like, you can always make a round happen if you want to. How do you think about actually a really challenging thing when you've got one term sheet, and then you're kind of waiting for others, but they're pressuring you to get an answer, but you do want to wait and see what the others say. How do you manage this timing process on term sheets?

A So this is actually something you can think about and be proactive about upfront. So I'll give you an example. Last year, when we did this fundraise, I, um, we did this kind of in public. We put the deck out, and then for any of the people we felt were good finalists, we gave them a calendar link for the first meetings, and those meetings are all one week, so no more than one week, and that's another benefit of doing this in public is you can do it all in parallel. If you're just taking investor meetings willy-nilly as they come, you get into the exact problem you're describing, which is, You might get a term sheet from one investor, but you haven't even started the meetings with another that you actually want to work with. So I do think, thinking about how we structure and sort of calendar out the raise ahead of time. For me, it was all first meetings are one week, and then everyone asks, oh, how's the round going? Oh, this, and I just tell them, like, this week from this date to this is first meetings. I'm having, you know, final partnerships meetings. I have three final partnerships meetings next Monday, and then two more the following Monday, and then they have transparency. The thing is, they also don't want to miss out, so it's actually a mutual benefit They, the investors who haven't given you a term sheet, they want to make sure they're not too late to the game, and the…

AI assessment note: “thinking about how we structure and sort of calendar out the raise ahead of time”

Q Should founders always be raising? Mark Souster says about lines, not dots, and building that relationship over time. But then it does take time away from running the core business. Lines, not dots, or?

A I very much believe you should either be in fundraising mode or not. One, the one thing I actually really recommend, so before I did this public fundraise, the way I actually practiced and actually got the story in a pitch right was anytime prior to that some investor would reach out, I would actually send them a Calendly link for my investor week. It was, it was a week somewhere, usually it was like once, I didn't think at the time, I was doing it maybe once a quarter, now I do it once every two quarters, where I just, I do back to back Usually associate meetings where you hone the pitch over and over again, and I just, when they reach out, I say, hey, super interested, but right now I'm not fundraising. If you're interested, book a time. And so you build up sort of these bookings that then the week comes, and then your investor mode, so you can get out of product mode or customer mode. You're not kind of distracted along the way, and you, you can really, really hone a pitch. When you have like, 30 back-to-back associate investor meetings where you're practicing your pitch and tweaking the deck every single meeting, by the end of that, you have this really, really honed product, like a stand-up meeting.

AI assessment note: “I very much believe you should either be in fundraising mode or not.”

Q Do you think we're going to enter a world of pain around like prefs? We've seen a lot of people raise a lot of money and I think investors will get their money back in a lot of cases, not all, but everyone else will suffer in a lot of cases. Do you agree? And any advice?

A I mean, I think it's, it's very possible, especially in a situation where during Zurp, a company raised at X valuation and they have too much pride and, um, fear associated with that valuation. And they're afraid of taking a down round if they need more capital. And so they trick employees by saying, hey, we raised an up round. But behind the scenes, what they really did was they added like a two X liquidation preference, which almost always means no employee is ever going to get any of their stock worth anything. So I do worry about that. But if you're a founder listening to this and you're contemplating an up round with a liquidation preference more than one or a down round, do 100% of the time do the down round. It is much better for you as a founder with common stock. It's much better for your employees. It will hurt in the moment when somebody says, oh my gosh, this company that I thought once was worth a lot of money is now worth less, but that's fine. They'll leave you or hire somebody else. Like you'd much rather be in a company with less, uh, overhang on the valuation on the liquidation preference than one without.

AI assessment note: “if you're a founder listening to this... do 100% of the time do the down round”

Q Honestly, I think it's so important. Um, yes, absolutely. Uh, that's very funny. Um, so yes, good. What was the best venture meeting you've had? Like when you look back and you're like, ah, that one was like my favorite ever across both companies.

A I would say it was probably the first meeting I had with Peter Fenton in It was, it was not only the best, because I think it was mostly the most memorable. Um, the first reason it was memorable is because he came in with this entire contraption around his knee. He could barely walk, and the reason was he had just been helicopter skiing, and he, like, broke his knee or something. He still showed up to the meeting. He then, by the way, he, I think, has a similar kind of, um, dynamic with me, where he has to sort of prove to the world other things. Anyway, he ended up to learn how to fly a helicopter after that, because he wanted to conquer the thing that had broken his knee. Anyway, the reason I remember it, because I remember so vividly The very first question he asked me, which at the moment I had no idea why he's asking or why it matters, and now with hindsight, I totally get it. The very first question he asked me was, Dan, what's going to get you excited to be at this business in five years? And this is 2013 and 20 18, exactly five years later, it was exactly when I started to feel trapped, resentful, disengaged, you know, sort of like going through emotions, and he exactly astutely Figured, asked, and pointed out, and at the time I probably gave him some answer that I felt was true, but if I had really listened to that question, I think I could have done a much better job …

AI assessment note: “I would say it was probably the first meeting I had with Peter Fenton”

Q it creates a tale of two cities, which is the new employees who have unvested and the older who have vested. And suddenly there's like the rich people in the team who've got not rich, but you know, have sold and have more liquid cash and those who are coming in with less liquid cash and it kind of creates this old versus new vibe. Do you worry about that?

A And not as much. I mean, that is a possibility. We don't have that now. We also tend to hire more senior people. Like we don't hire people straight out of college. We hire people with experience. So we're not hiring people who are super early in their sort of wealth accumulation. You know, not everyone has done well, but like, and so in general, I don't, I don't, I don't feel that vibe. And by the way, we also, it's not just that, you know, company primaries, if there are secondary buyers that have been who've come in between rounds, we also give the opportunity to employees to sell then. So If you're able to, which is again, maybe not always true. If you're able to offer liquidity and you have a willing buyer doing that, you know, every six months or something, I think is a healthy thing. It, or it relieves the pressure for some people, especially people living in the Bay area. Now they can go buy that house, uh, put down a down payment, you know, do the things that otherwise would have been limiting them and holding them back. And there's something about that ability to provide that liquidity, you know, that makes, you know, if you're able to be the difference between them being able to buy a house or not, I think that engenders a certain amount of retentive power that is very hard to do any other way, so I think it's worth it.

AI assessment note: “I mean, that is a possibility. We don't have that now.”

Q Do you think there's any big misalignments between venture investors and founders that aren't called out enough?

A Well, for the most part at every stage up until the very end, they're pretty well aligned. Um, you know, you get into these situations near selling the company where maybe the Motivations and incentives are slightly out of alignment. You know, like it's, it's, I think a lot of founders actually have a very binary view on outcomes. They think either it's going to go to zero or it's going to be a multi-billion dollar public company, where actually I think more likely than not, they're discounting kind of the middle of the road outcome where maybe it's, you know, two X what you've raised, you know, or three X, or maybe it's slightly more and things like liquidation preference are really important. And, you know, so I think those are the kinds of things where you do need to model out and think through what are the different Middle of the road outcomes and how you might be misaligned there. So make sure you're not, for example, raising too much money and then getting to an outcome where, you know, investors have a very, very different financial, you know, they're basically like, for example, I'll just make it very plain. If you sell your company for as much as you raise or slightly more, the difference between as much and slightly more is incredibly meaningful to your employees, makes no difference to the investors. They basically get one X back. So in those situations, you really g…

AI assessment note: “situations near selling the company where maybe the Motivations and incentives are slightly out of alignment”

Q mentioned NEA and their kind of, uh, continuous financing pathway that they can do. Often founders are told, ah, signaling is really dangerous with these large firms. Because if they don't do the next round and they can, as a serial founder, are you like, for fuck's sake, the signaling argument's not true? Are you like, hmm, it's worth thinking about? How do you, how do you think about that?

A Yeah, I mean, I do think it is, it is a factor for sure, and you have to, again, it goes to empathizing with your investors. You have to think through the world from their point of view, and especially somebody who's, you know, if somebody says, I want to invest in Limitless, and they're saying to their partners, look, and I think we should invest in this incredibly high valuation relative to revenue, You know, you need to understand that they need to be armed with the right evidence, motivation, desires to do that, and if one of the, you know, headwinds is, oh, by the way, hold on, looks like Andreessen Horowitz, they invested, they did the seed round, like, why isn't Andreessen leading this round? Like, you need to have a good answer to that question, and that's something that I do think most founders don't recognize. It comes back to empathy. You have to understand, for this person, it's likely, almost certainly, you'll get one person at a firm, you know, if you got a good company, you're doing something well, it's almost impossible not to get at least one person at a venture firm to love what you do. Your job often is to get that person armed with the data information and support to convince their partners that it's investment worth making.

AI assessment note: “I do think it is, it is a factor for sure”

Q Final one for you. Now it's 10 years for limitless. So it's 2034. What would be successful for you if you were to paint the limitless picture in 2034?

A It would be millions of users, active users daily. One of our biggest advantages today is that we're weird. People look at our product and why would I capture everything I say and hear? Like, what's the purpose of that? And it would go from being weird to being accepted. It would be, it would be like airplane Wi-Fi. You're like, wow, that's weird. And then it's like, oh, it's not fast enough. It's the, it's the societal change around the conception of what we do, the benefits of capturing what we say, what we hear, what we see. And using it to, to augment human intelligence with artificial intelligence, not replace human intelligence, augment human intelligence. To me, that would be success in 10 years is that our product is taken for granted, and, you know, and people think about how did you, it's people thinking about today and saying, wait a minute, back then, you know, you, you mean in 2023, when you wanted to remember something, you took out a rectangle that you chopped down from a tree called paper, you had a stick With ink at the end of it, and you scribble things down, and that's how you remembered. That was the thing you thought was the best idea to remember, and that people would laugh at that concept. That would be success in 10 years.

AI assessment note: “It would be millions of users, active users daily.”

Q should never give attribution for other people's wisdom when you can take it as your own. I, I agree. I, I always actually ask the one question, which is, are there more experiments that you're excited to run? And if so, what are they? And if not, then it's probably time to pivot. Like when you've run out of experiments, probably time to change. Do you see what I mean?

A Yeah, I think that's totally true. I, and I, I see experiments as kind of, um, there's kind of a, you know, Pareto optimal or eighty-twenty, like you've got all your most juicy, exciting hypotheses. And, you know, if those aren't working, You can always come up with new things to try, but it's almost always going to be, like, if the last five things haven't worked, like, is that new sixth thing going to be the, the key to success? Sometimes, but almost always, if, you know, you're, you're, you're naturally going to try the things you're most optimistic and bullish about. Um, so by, at some point, it's not so much that you don't have the experiments. It's like, you're starting to ask yourself, is this even worth trying? Like, am I even, you know, is there any remote chance that what I'm going to try next is even going to make a difference?

AI assessment note: “Yeah, I think that's totally true.”

Q mentioned kind of mistakes and lessons. When you, I think, like, the best thing in podcasts, honestly, is when someone shares mistakes and attaches lessons to them. When you think about optimizing, you scale it to a hundred and twenty million in ARR. I mean, fuck. What are the biggest fuck ups that you made in your leadership that you have not taken with you to optimize, uh, to limitless?

A The biggest pattern of failures fall into the camp of my gut says we should do A, somebody else thinks we should do B, we end up doing B and it turned out poorly. There's plenty of times where I said we should do A and it turned out poorly. That wasn't anything I remember. The things that I really just stay up at night and, you know, I've been, I'm over it now, but it takes a long time to get over your company. Um, are things where you're in your, in your bones, in your gut, as a founder, you, you, you don't feel is the right move, or the right focus, or the right investment. Uh, but by smart people who you've hired, your board, you know, it's not because you're being bamboozled. It's people that you've decided that are going to help influence the path. You go with their gut, and, or you go with their decision, and it turns out poorly. Um, many, many examples of this, you know, from moving to the enterprise too quickly, to sort of not recognizing the core of what we had, to, to sort of abandoning The, the core problem of solving churn, like, there's all of these things that, like, I, I time and time again felt in my bones we should do something, and I didn't have even the words or even the arguments, sort of, I, you know, I like to think I'm deeply analytical and data-driven, but oftentimes it's just my intuition, and I could, because I couldn't verbalize my intuition, uh, I co…

AI assessment note: “the biggest mistakes I made were not following my gut.”

Q Why don't you hire people out of college?

A You know, I, I used to do that. I do think for the most part today, the best team is a small team that is tightly aligned, highly, you know, focused, and typically, you know, if you think about a team as every person is an opportunity cost, and you've got n squared connections between people, If given a spot, you could hire somebody straight out of college for, you know, less money or somebody who is, you know, has five or 10 years of experience. I would rather spend more to hire the more experienced person and keep the team smaller than sort of bloat the team by just filling, you know, butts and seats. With 20 people today, I feel like we're having a greater impact and ship faster than we ever could with a 120 people and software engineers at Optimizely. So that's working and I just don't want to mess it up by hiring a bunch of junior people who kind of, you know, there's this old saying, The best way to slow down a project is to add a person to it. So I don't want to do that. I don't want to hire a bunch of junior people and help train them and have that at the cost of our velocity, which right now is very high.

AI assessment note: “I would rather spend more to hire the more experienced person and keep the team smaller”

Q to make it happen, like, you can always make a round happen if you want to. How do you think about actually a really challenging thing when you've got one term sheet, and then you're kind of waiting for others, but they're pressuring you to get an answer, but you do want to wait and see what the others say. How do you manage this timing process on term sheets?

A So this is actually something you can think about and be proactive about upfront. So I'll give you an example. Last year, when we did this fundraise, I, um, we did this kind of in public. We put the deck out, and then for any of the people we felt were good finalists, we gave them a calendar link for the first meetings, and those meetings are all one week, so no more than one week, and that's another benefit of doing this in public is you can do it all in parallel. If you're just taking investor meetings willy-nilly as they come, you get into the exact problem you're describing, which is, You might get a term sheet from one investor, but you haven't even started the meetings with another that you actually want to work with. So I do think, thinking about how we structure and sort of calendar out the raise ahead of time. For me, it was all first meetings are one week, and then everyone asks, oh, how's the round going? Oh, this, and I just tell them, like, this week from this date to this is first meetings. I'm having, you know, final partnerships meetings. I have three final partnerships meetings next Monday, and then two more the following Monday, and then they have transparency. The thing is, they also don't want to miss out, so it's actually a mutual benefit They, the investors who haven't given you a term sheet, they want to make sure they're not too late to the game, and the…

AI assessment note: “you just set expectations with everyone that, like, that's your calendar”

Q Should founders always be raising? Mark Souster says about lines, not dots, and building that relationship over time. But then it does take time away from running the core business. Lines, not dots, or?

A I very much believe you should either be in fundraising mode or not. One, the one thing I actually really recommend, so before I did this public fundraise, the way I actually practiced and actually got the story in a pitch right was anytime prior to that some investor would reach out, I would actually send them a Calendly link for my investor week. It was, it was a week somewhere, usually it was like once, I didn't think at the time, I was doing it maybe once a quarter, now I do it once every two quarters, where I just, I do back to back Usually associate meetings where you hone the pitch over and over again, and I just, when they reach out, I say, hey, super interested, but right now I'm not fundraising. If you're interested, book a time. And so you build up sort of these bookings that then the week comes, and then your investor mode, so you can get out of product mode or customer mode. You're not kind of distracted along the way, and you, you can really, really hone a pitch. When you have like, 30 back-to-back associate investor meetings where you're practicing your pitch and tweaking the deck every single meeting, by the end of that, you have this really, really honed product, like a stand-up meeting.

AI assessment note: “I very much believe you should either be in fundraising mode or not.”

Q You said there about kind of the, the features and I think feature creep is one of the most dangerous things. How do you think about simplicity and product today, the importance of it and how to prevent feature creep?

A This is one of the things that I think the CEO really needs to lead on, because it's very hard for anyone else at the company to say no, especially when it comes to customer says, I have this problem, and you have an engineer who says, I know how to solve it, and then you end up with a product that solves the customer problem. By itself, that's not that bad. You know, that's good that you have engineers who are empathetic and listening to customers, but that times a hundred features, you end up with a bloated product that isn't really focused. And so, I do think as a founder, you're able to Take in and understand and sort of intuit the market, the customers, investors. Ideally, you have a good enough understanding of the technology to understand the effort necessary to build things, not just the effort to build it up front, but the effort to maintain it. So you, you have to know that everything you build, uh, I have this saying, you know, around building features that no good deed goes unpunished. I think I've, I have to, I've never seen a situation where we'll ship a little feature and we're done. It's always like, oh shoot, now there's this edge case we didn't think about it. And then, oh, this other person wants to do this other thing. So you, it's like opening a commitment that you have to keep beating. So, um, again, it goes back to saying no, being decisive, choosing what…

AI assessment note: “it goes back to saying no, being decisive, choosing what you think is the most important.”

Q Do you agree with Marc Andreessen's statement that there's no such thing as a bad idea, only a bad time?

A I think that's largely true. And I find Then when, when I heard that, I think what I think about is, you know, I've had lots of pivots in my startups. Everything I pivoted away from almost always could have worked. You know, it's not so much that it's the unequivocal, at least in my mind, maybe this is my delusional, optimistic founder mind. I never thought to myself, oh my gosh, this would never work. It was always a version of, um, if you draw the analogy, like climbing a mountain, if you're starting a startup at the base of the mountain, and as you climb the mountain, you see other paths to the top that seem a little bit easier and a little bit better, and you've learned a lot along the trip. You're like, oh, I'll just, I'll go down a little bit to go back up that path. It's not to say your current path, you couldn't get to the top of the mountain, you know, eventually you'll get there. It's just going to be much harder. So in that sense, I think it also goes to this idea that, you know, ideas are cheap. It's all about execution. So I, I do think almost any idea can work with enough perseverance. Rarely, very rarely is it just fundamentally broken as an idea. So that's, I guess, yeah, in some ways, I definitely agree.

AI assessment note: “I think that's largely true. And I find Then when, when I heard that”

Q I never like it when a founder's like, ah, next company, I'd do this. I'm like, no, no, no. Like, the great founders of our time have one company. It is their mission. Daniel Eckert, Spotify, you name these great founders that we have, the Collisons at Stripe, This is the unwavering mission of their life. Is that wrong of me to expect it to be the founder's life mission?

A I think when you're in the moment and you are the founder and you are the CEO of the company, that should be your mindset. But, you know, you never know where the company goes. If the company doesn't make it or it doesn't become the next, you know, there's like 10 companies that you described that are going to be huge multi-billion dollar public companies the first time around. Bill Gates, Mark Zuckerberg, you know, so it's, it's more likely than not that the company that they've started will fail. And then the second most likely is it's going to have a medium To okay outcome. And so that, and then they decide after that, so they want to start a new company. That's a huge pool of people who I think, you know, they shouldn't be knocked on for whatever reason, if their company failed, you know, if it failed because of fraud or whatever, then you shouldn't invest in them. But more likely than not, it's some timing to market issues. Uh, you know, there's some factors that can explain the, the failure and, um, and I wouldn't, I wouldn't, you know, not invest in them. There's just only, you know, yeah, if you could invest in Mark Zuckerberg every time you should do it. There's just only so many of those out there, and oftentimes you might not even be able to get into that round, so.

AI assessment note: “when you're in the moment and you are the founder... that should be your mindset.”

Q salesmanship or sales into inside a partnership, and you have to get other people along with you in a lot of cases. So I totally agree there. How do you advise founders on how much they raise and how they say the price? Like, should they shoot for a smaller amount, let people go over it? There's a kind of cat and mouse game here. How do you advise them?

A Well, first thing I'll advise you is I want to just demystify when I want to share some code that you may not know. When an investor asks, How much are you raising? What they're trying to do often, they may actually want to know the literally the amount. More often than not, they're actually asking, they're actually asking, how much do you think you're worth? And let me, let's start the negotiation on valuation right now, because like you said earlier, often, you know, 10% or 20%, let's say 20% is what they want. If you say, you know, we're worth, ah, yeah, we're raising ten million, they just take ten million divided by .2, and then that's what they think that your valuation, that you think your valuation is. So instead of answering the question how much you're raising, The best answer is, you know, we don't need to raise, so we don't have a budget we're driving. We want to sell no more than this percentage of the company, and we're letting the market decide the valuation. That's how I frame it. It kind of pisses off investors because it doesn't play into their game of, you know, when they, again, it goes back to when they write up their memo for their partners and say, okay, what, what valuation should we go in? You know, it doesn't give them what they need, so they get a little frustrated, but I usually say, and the other thing, by the way, that I think I frustrate so many i…

AI assessment note: “So instead of answering the question how much you're raising, The best answer is”

Q should never give attribution for other people's wisdom when you can take it as your own. I, I agree. I, I always actually ask the one question, which is, are there more experiments that you're excited to run? And if so, what are they? And if not, then it's probably time to pivot. Like when you've run out of experiments, probably time to change. Do you see what I mean?

A Yeah, I think that's totally true. I, and I, I see experiments as kind of, um, there's kind of a, you know, Pareto optimal or eighty-twenty, like you've got all your most juicy, exciting hypotheses. And, you know, if those aren't working, You can always come up with new things to try, but it's almost always going to be, like, if the last five things haven't worked, like, is that new sixth thing going to be the, the key to success? Sometimes, but almost always, if, you know, you're, you're, you're naturally going to try the things you're most optimistic and bullish about. Um, so by, at some point, it's not so much that you don't have the experiments. It's like, you're starting to ask yourself, is this even worth trying? Like, am I even, you know, is there any remote chance that what I'm going to try next is even going to make a difference?

AI assessment note: “Yeah, I think that's totally true. I, and I, I see experiments as”

Q said one of the things that makes you so special is your ability to get very in the weeds, to really be at ground level, and know exactly what is going on in each part of the business. How do you think about the hire great people and let them do their work, and know those two to three things that you should focus on, versus being everywhere for everyone?

A I've really made a lot of mistakes in my past around hiring and abdicating responsibility to them. Um, and I think it was the ramp, uh, founder recently on the show of yours who talked about this. So you can't abdicate your responsibility to the people you hire. You have to be involved enough to really hold them accountable, to understand the details, to probe, to push. Um, and that's something I certainly bailed at in many cases my first time around where I hired people who are really great. I mean, that's partly why I hired them. They did 15 years of the job that I had hired them to do. And so how could I, this like twenty-something founder who's never been the head of Go to market at a huge multi-billion dollar public company. Give them advice or hold them accountable. And so that's something I really struggled with the first time. I just didn't even know that was my job. You know, I just sort of thought, get out of the way, be a, you know, be the kind of founder that, you know, gives them ownership, autonomy. And what I really learned is that at the end of the day, um, you, you as the founder and CEO of the company, you hold it back. Like they're going to be there. They're many of the people, uh, who join your company, even if they're great executives, uh, they're just on for a little bit of the ride. You know, I've had several times at Optimizely where, You know, they'll j…

AI assessment note: “You can't abdicate your responsibility to the people you hire. You have to be involved”

Q easily. Ah, you're a CPO, a head of sales, duh, and actually titles are quite expensive in my experience. Do you agree with me on the challenge of giving away titles too easily? What have been some lessons for you there? And I got a shitload of hate, by the way, this weekend, because I said, can we abolish like founding engineer? You're either a founder or you're an engineer.

A Uh, yeah, I mean, I do think titles, um, they're, they're a bit weird because they're both kind of free to give in one sense, that it doesn't cost you more money, but they're expensive in that it creates this sort of, like, mutually assured destruction. You know, as soon as you give out that first VP title, then everyone wants to be a VP, and, uh, you know, that's why I think companies actually go in these ways where early stage everyone's ahead of, you know, you're head of marketing, head of engineering, um, you don't have distinction between VP, SVP, and, Um, I think that's actually the sweet spot. You kind of want to be in a place where it's clear who is ultimately accountable for a particular function. You don't want just everyone to be an IC. So that's why I kind of like this, you know, head of, because it makes it clear, but it also doesn't box you out from one day, you know, hiring an executive from the outside and bringing them in and making them, you know, something that maybe they're more accustomed to. And then the one thing on titles that I do think is important to recognize that at least in some circles, in particular, the Bay Area, Anything with the word found in it, founding, founder, co-founder, has a certain weight that is hard to ignore. Like, you, you, you're kind of So I don't think you should be dismissive of that concept. And to be a founding engineer is s…

AI assessment note: “they're expensive in that it creates this sort of, like, mutually assured destruction.”

Q but I guess at this stage, are you not like, I don't really want to work with someone who's got to go up and sell it to someone else? Like Fenton does not have to sell a deal. I mean, like he will present it in the way that Optimizely is and people will see the brilliance, but he's not like selling in the way that we talk about that.

A Yeah. My, my thing on this has actually changed quite a bit. I think the best investor you can have for your company is somebody who's on the rising arc of their career. You want a Peter Fenton when he's 35, not 45. You want, not, not going to be ageist, but you want somebody before they've had their first IPO, and you want them to be the person who's going to have that. You're betting on them just as much as they're betting on you, because what happens when somebody's had a lot of success, and no knock on the people, I got to work with amazing investors who had a ton of success, like Peter Fenton and Marc Andreessen, like, they've had a lot of success. Like, for you to truly be the difference in their career or not is pretty unlikely, and so you want somebody where they just, in their bones and in their pocketbook, You are the difference between them reaching the pinnacle of their career. Um, and so that's, you know, the same way that you'd rather get, you know, an NBA player, you know, who's in the prime, not somebody who's on their way out of their career. And they're, you know, they've done great things, but I think you, you get the best out of somebody when they are, when they're aligned around trying to build something with you, not because they're just a fancy logo on their, you know, many logos of public companies they've, they've taken.

AI assessment note: “I think the best investor you can have for your company is somebody who's on the rising arc”

Q A very academic way of taking notes here. Uh, my question to you there is so many founders make the mistake of moving to enterprise too quickly, thinking that it's the holy grail. Having had that experience, what are your biggest piece of advice to founders on when to move into enterprise and when to stay at the core?

A I think the most important thing is to understand what's working about your business and what's not. I think we had a core magical thing working at Optimizee from the almost beginning, which was this product led growth motion, which, which by the way, didn't exist that term Was in many ways actually the person who coined that term use Optimize as an example of, uh, of product-led growth before the term existed. And, you know, a good example is, you know, we had on our website when you go to Optimize.com back in 2013, you could put in the website, uh, the URL for any website. Doesn't have to be your own. You could put it into our homepage. You don't have to sign up, and you could instantly start making changes to the website and seeing what our visual editor looks like. Obviously those changes don't go live until you put the JavaScript snippet on your page, but that alone, that was such a magical part of our product that led to not just small businesses, But Starbucks, you know, Starbucks.com, a guy there who's in charge of optimization and conversion for Starbucks.com, had that experience, and he saw forgiveness, not permission to put, you know, to run our product. For 79 dollars a month, he put our A-B testing product on his homepage. And so, Starbucks, that's an enterprise company, but we missed, you know, we had sort of this confusion around, there's the, there's the, you kn…

AI assessment note: “most important thing is to understand what's working about your business and what's not”

Q Before we move on to kind of lessons from optimizing, which you kind of touched on, I do just have to ask. So if you're an investor today, would you have more of a leaning towards backing serial entrepreneurs over first time founders as a?

A Yes, I would. Yeah. Oh, absolutely. Yeah. Yeah. Yeah. Because the other part about the nice thing about second time founders is by the time they decide to be a second time founder, like you kind of already de-risked one of the main things, which is perseverance. Like, you know, I would much rather, rather, you know, invest in somebody who's like a hundred percent going to stick with it and try to make it work. And maybe 80% is smart than the other way around, uh, because, you know, there's a, there's a lot of, you know, people who are smart but end up giving up because it gets hard, and it always gets hard. So when they're second-hand found, they're willing to sort of put themselves through the punishment again, that alone is kind of a strong signal to me, um, and you've learned a lot. You know, I personally, I've learned a lot. I'm much better because of the first company I had.

AI assessment note: “Yes, I would. Yeah. Oh, absolutely.”