The Exchanges

Q I would love to kick off today, though, with a little bit about you, so tell me, you have this massive presence and following in markets today, but where did it all start for you? And in a very succinct three to four minutes, how did you make your way into the world of startups?

A Yeah, I'll do it even quicker than that, because I talk pretty fast. So, like, Started in 2003 when I started an internet marketing consultancy with my co-founder, who's now my brother-in-law. And I've known him since he was 11 and I was 15. And so my now wife said, hey, he's got one customer paying him 3500 dollars a month for SEO. He's just going into college. You're just getting out of college. Why don't you two partner up? And so we partnered up and we started making a bunch of money doing marketing consulting services for people. And then we basically started building a bunch of different SaaS products and got really lucky with one called Crazy Egg that creates heat maps for where people are clicking on a page. And that we launched in 2005 and then fast forward a couple years and we decided to raise money for another business we were building, like sort of an offshoot of Crazy Egg called Kissmetrics. And we raised a bunch of money for that business early on and we just kept going. And then more recently, I left the company after a CEO took over and then I went in six months And switched him out to another CEO. And then I left and started investing in advising companies. I've done about a 120 investments or advisory roles. And then after that, I decided once I met my current co-founder, her name's Marie, we decided to start building software. And so we, we tried building a …

AI assessment note: “Started in 2003 when I started an internet marketing consultancy with my co-founder”

Q I had on the show and it was from the founder of joy mode, Joe Fernandez. And he said, serial entrepreneurship is overrated. Given that no one knows what they're doing, know what you don't know, would you agree with this serial entrepreneurship is overrated for you kind of having learned and enjoyed successes and bumps in the road on multiple different companies? How do you think about that statement?

A It's been 16 years and probably like 30, 40 different products that I've tried to build and a few things that have worked and some that are still working and others that are early stage and things like that. And like, yeah, I, I tend to agree with the fact that like it's overrated because Every month, every quarter, every year that goes by, things change so much in the markets, in business, uh, the consumer perception changes, the enterprise buyer changes in terms of how they think about things. So things change. And I think like, this reminds me of Jeff Bezos's quote about, you know, focus on the things that don't change. And so what's more important is finding those things in your market, in your, when the opportunities that you're going after that, that are not changing. And I don't think you have any real Big advantage as a serial entrepreneur, except that maybe like you have more connection and you have some form of a track record, whether it's good or bad, negative or positive, depending on people's perspective. But there is not as much of an advantage as I think there might've used to be when it comes to a serial entrepreneurship. So I'm in full hearted agreement with that statement. There are advantages, of course, because you have some level of experience, but you know what? Sometimes that experience can hurt you because if the things that you did before that made you …

AI assessment note: “I'm in full hearted agreement with that statement.”

Q of offshoot questions that I have to ask. One is like, that's a very precise one person per day. Can I ask from doing that for a while, were there any big lessons or takeaways, be it in human relationship building, be it in how you observe yourself, advising people in how you think about your time? What were the lessons from doing that one entrepreneur a day for you?

A So many lessons. I think the number one lesson there was basically nobody knows what they're doing. And that's not just them. That's also me. And I've also met with many investors and many other folks, even folks that worked at companies and nobody really knows what they're doing. And that's why they seek advice. There's also a lot of conflicting advice on the internet. And so half the time I was helping people just deal with the conflicting advice they were getting on the internet or from other folks. I tend to be really good at being really contextual, which is something I learned in that process. And I've been like that for a long time, which is like, ask them questions, learn about what they're going through and Even if they try to ask me questions like, hey, when you were starting Kissmetrics, how did you raise money? Because usually when someone asks me a question like that, they really want to know how they should raise money. They don't want to know how I did it. They want to know how they should do it. And they think by asking me how I did it, they're going to learn how they should do it, which is not the case. What they really need to think through is how should they do it? What I can help them do is learn how they should do it. One key thing though, that after a lot of reflection, a lot of time that I realized is that most people, they just want encouragement. They d…

AI assessment note: “I think the number one lesson there was basically nobody knows what they're doing.”

Q I had on the show and it was from the founder of joy mode, Joe Fernandez. And he said, serial entrepreneurship is overrated. Given that no one knows what they're doing, know what you don't know, would you agree with this serial entrepreneurship is overrated for you kind of having learned and enjoyed successes and bumps in the road on multiple different companies? How do you think about that statement?

A It's been 16 years and probably like 30, 40 different products that I've tried to build and a few things that have worked and some that are still working and others that are early stage and things like that. And like, yeah, I, I tend to agree with the fact that like it's overrated because Every month, every quarter, every year that goes by, things change so much in the markets, in business, uh, the consumer perception changes, the enterprise buyer changes in terms of how they think about things. So things change. And I think like, this reminds me of Jeff Bezos's quote about, you know, focus on the things that don't change. And so what's more important is finding those things in your market, in your, when the opportunities that you're going after that, that are not changing. And I don't think you have any real Big advantage as a serial entrepreneur, except that maybe like you have more connection and you have some form of a track record, whether it's good or bad, negative or positive, depending on people's perspective. But there is not as much of an advantage as I think there might've used to be when it comes to a serial entrepreneurship. So I'm in full hearted agreement with that statement. There are advantages, of course, because you have some level of experience, but you know what? Sometimes that experience can hurt you because if the things that you did before that made you …

AI assessment note: “I tend to agree with the fact that like it's overrated because”

Q No, I absolutely love that question of the best investors is the train leaving the station. I do have to ask it because I'm seeing more and more, honestly, almost with the professionalization and institutionalization of pre-seed investing, almost the eradication of friends and family around. Is that something that you're seeing in the U S and the Valley, or is this maybe a European trend that we're seeing?

A I think this trend is going to permeate everywhere. That's just, what's going to, it's going to boil down to. And some folks in places are probably a little behind just because of the amount of investors in that area, amount of sophistication in the area. But at the end of the day, this is going to spread everywhere. Everything that we see here in the world that we're in, in the Bay area, that's where I am. You're going to see across the world eventually. It's just a matter of time. Also, a lot of the folks that Are here, go and travel to these other places and do their best to find really great deals and really great businesses.

AI assessment note: “I think this trend is going to permeate everywhere.”

Q And then founder or investor you most admire?

A I really, really, really admire the folks who started Buffer, Joel and Leo. And the reason I do is they, they do it their way. They do it their way. They believe in it. They, they, they've really pushed this movement around transparency and openness a lot further. And I'm sure there's, they've impacted many more businesses than the countless businesses. Right. And that, that kind of, regardless of what happens with their business, they've already impacted so many, they've already done such great things for the world around getting people to be a little more open, a little more transparent or a lot more. Right. And, and I think that just leads to more good things. Um, and so I'm super impressed, happy, and honestly, I, I value my relationship with them, just because they, they think differently, but they're, they're, they have conviction about what they believe, and they're just gonna keep going with that, and that, that's impressive. And they also are one of my favorite companies, because They learn really fast, and they try to get better, and it's visible in the way they talk about it, and the way they say, oh, we sucked at that, now we got to get better at it, or we sucked at it, and here's how we got better at it.

AI assessment note: “I really, really, really admire the folks who started Buffer, Joel and Leo.”

Q and often the notion that we should always be raising mentality that is often advised in the Valley. How do you think about that? Always be raising. And when it founders come to you and ask about the fundraising approach and strategy, do you say invest in lines, not dots, or do you say actually go for the compressed fundraising and really insert that investor kind of eagerness to move?

A In a lot of ways, it depends on what you have in your hands with your business. It depends more on that than anything else. If you have a business that is like a train, and it's leaving the station, and with or without the investor, your business will be successful, and that's the way the business is framed, or that's based on the metrics that you have in the business, then it's not about timelines and compression or anything. It's just about finding the best investors for you. That's the situation you want to put your If you're not in that situation, you're essentially using some of these things artificially in order to create that kind of like hype. That's really what it boils down to, which is like, does it feel like this business is going to be successful without me? That's, I think, what is in the back of the heads of the best investors. And if so, I want in on it. And it's not something that you can easily fake. So this is something that has to be real. And it has a lot to do in the seed stage, especially with the founder and the team and what they've got so far. Cause like, you know, now you have these pre-seeds So, you know, they've already got some money usually, or have spent time with their business, and then now they're raising a seed round in the multi-millions of dollars, usually one to five at that round, usually two to three plus. You'd probably have better data…

AI assessment note: “it's not about timelines and compression or anything. It's just about finding the best investors”

Q Now, can you get the ball rolling for us by telling us a little backstory of how you made your entrance into the tech industry and started Crazy Egg and then Kissmetrics?

A Yeah, actually in 2003, so this is about 12 years ago now, almost, uh, my co-founder and I started a consulting company doing internet marketing. Within the first two years, we actually started making a whole bunch of money helping other people, uh, grow their traffic, increase conversions. That was about the time when we launched, uh, Crazy Egg. This was in 2005, and we had built like 12, 15 other products before, and this one, I like to say we just got lucky with it because Uh, you know, we had built a bunch of stuff, and we started learning stuff, but it was all different products, and then we got to this one, and people really loved it, uh, and then we continued, and then fast forward to about 2008, and we decided to raise some money for a new company called Kissmetrics. Both are in the analytics space, but, um, I, I have both running at the same time, and fast forward to today, I'm back working on Crazy Egg. I'm not day to day at Kissmetrics, And then I'm all, I also started a new company called quick sprout. So I, I'm, I'm generally, uh, what you would call a serial entrepreneur. And throughout that whole time, since about, I would say, 2007, I've been investing, uh, and advising companies as well. Uh, my take is that, uh, I always want to be operating, uh, my businesses as well as helping other people out too. So I don't, I don't know if I, I would officially call myself…

AI assessment note: “started a consulting company doing internet marketing... launched, uh, Crazy Egg”

Q And then you said there about what crazy egg you didn't raise money for external funding for, and you did for Kissmetrics. Why was that?

A We, my co-founder and I, we, we value learning above anything else. And so we didn't know what it was like to raise money. And we want it, we value that. Like we wanted to learn. So we, we decided that the way we were going to learn is by actually raising money and, and figuring it out. Cause we had, we already knew how to build businesses, consulting business, software business, and get it to some level of revenue. And what we didn't really understand is how does, how does raising money impact that? And like, you know, there, there's like, it's funny. Like there's a lot of content out there from people that talk about one side of it or another, because that's all they experienced. I've experienced both. People are just very biased here. You know, it's like, the money is an instrument for growth, and once, and that's what venture capital is, but there's also self-funding and, you know, making money yourself, so we wanted to learn, and now we have an understanding of both, and I think that makes us better founders, better entrepreneurs, better helpers.

AI assessment note: “we value learning above anything else. And so we didn't know what it was like to raise money”

Q Is there a time when you think founders really should raise money? Is it, you know, should they have their core audience, their core users, or what stage do you think is the most effective for fundraising?

A Honestly, the truth I have on that, like, just by doing both and helping a lot of people with fundraising, like, if you don't have to raise money, don't raise money. But, the caveat is, you have to know, the simpler, simpler, more basic ways, like, once you know how to, once you're at a point, my ideal scenario is, you get to product market fit, You start experimenting with channels and things like that so that you're basically ready to scale, and then you wanna make a, make an argument, so to speak, that without money, we won't grow as fast as we can. The answer there, the right point is when you can say, I'm gonna take your money, and I know with, without a doubt, right, without, or within a reasonable doubt, depending on how you wanna look at it, that I can take your money and grow this business from a revenue standpoint so that we all get to increase the valuation of this company over time. Because at the end of the day, when you take money, It's meant to help you increase the valuation of the company, the revenue, the profits faster.

AI assessment note: “my ideal scenario is, you get to product market fit”

Q Listen, I totally agree. I wish I had your mindset. I sadly feel the regrets daily, but clearly I need to learn from you in many ways, not just that. I do want to finish the hidden on the final one, which is what are the next five years hold for you and for FYI? What's the roadmap ahead?

A Right now we're focused on basically we've built a great single player product where people can find their documents in three clicks or less. The thing that we've been aggressively working on internally and determined about is building a product that teams love. And so we're building things for teams. That's really what we're doing at FYI. And we're right now thinking through how do we learn the most we can about teams and how do we build the right features considering we're not a document tool. We're also not just a search product. We're more of a product that helps you discover and find, find and discover the documents you need, the information you need, the knowledge you need to do your job. And so I believe that there's a focusing on Jeff Bezos. One last time, the things that aren't going to change is that people are In organizations are always going to need to find information to do their jobs, and so we're focused on that opportunity, and that's going to take another three, five, 10 years, and I feel like I can do it for a very long time and keep working on this massive problem that we found, because we found this problem by doing a ton of research, and the problem is simple. People have a problem finding documents across all the different products they use.

AI assessment note: “The thing that we've been aggressively working on internally... is building a product that teams love”

Q Personal one here. Do you find one more challenging than another to get to grips with?

A Yeah, I think that that's a really good question, and the one I probably have the hardest time with is coordinating, because that involves a lot of time thinking about the people, and also thinking about the business, and figuring out what we should be doing next, taking a lot of inputs from different places. So I think coordinating is the challenge And the one I spend, not necessarily more time on, but the one where, like, I, I like being more thoughtful about that one than some of the other ones, and I think I have to be, because it involves things like changing things around in the company, who are we going to hire next, and things like that, because coordinating is really about coordination, and it's an important piece of a business, because that's how people work together.

AI assessment note: “the one I probably have the hardest time with is coordinating”

Q So penultimate one here, what was the biggest miss as an angel investment, and was there a takeaway from it?

A Yeah, I don't think about my missus, Harry. And I don't have any, I think it's a, as an angel investor, a lot of things are a crapshoot. I've definitely met with many different founders and could have invested in the companies. I definitely have an Uber story where I could have invested at one point because Ryan Graves and I, we were having tea at Samovar right before I think he joined the company when right he was going to, and he was telling me about it. I'm not sure if I could have invested. I didn't really think about it at that time. I wasn't really investing a lot. I was a little bit, and I'm sure I could have invested if I wanted to. So yeah, there's, there's opportunities that are out there. I don't regret it. I didn't learn anything from it. As an angel investor, especially early stage, who knows is kind of the biggest thing I can say. So anyone trying to say they know, I don't know. You didn't know that you got lucky. I don't want to say that, but maybe you did, but you don't know. You don't know what's going to turn into like, you know, a fifty billion dollar business. Like, come on, those things are rare. So, you know, you just do the best you can and you make the investments that you want to and that you feel are right and people you like at those early stages. And later on, you make it based on data. So I think there's a There's a spectrum of like early, early on,…

AI assessment note: “I definitely have an Uber story... I didn't learn anything from it.”

Q Is there a time when you think founders really should raise money? Is it, you know, should they have their core audience, their core users, or what stage do you think is the most effective for fundraising?

A Honestly, the truth I have on that, like, just by doing both and helping a lot of people with fundraising, like, if you don't have to raise money, don't raise money. But, the caveat is, you have to know, the simpler, simpler, more basic ways, like, once you know how to, once you're at a point, my ideal scenario is, you get to product market fit, You start experimenting with channels and things like that so that you're basically ready to scale, and then you wanna make a, make an argument, so to speak, that without money, we won't grow as fast as we can. The answer there, the right point is when you can say, I'm gonna take your money, and I know with, without a doubt, right, without, or within a reasonable doubt, depending on how you wanna look at it, that I can take your money and grow this business from a revenue standpoint so that we all get to increase the valuation of this company over time. Because at the end of the day, when you take money, It's meant to help you increase the valuation of the company, the revenue, the profits faster.

AI assessment note: “my ideal scenario is, you get to product market fit”

Q So when you ask that question, do you want to see a kind of fiery response? Is that it? The grit?

A No, no, no, no, no, absolutely not. Maybe, maybe, but like, what I really want to see is, I just want to see what they say about it. I want to understand, have they ever had hardship in their life, and have they gone through it? Have they understood what that feels like? Have they understood how to get through it? And that can help you tell whether someone's going to get, Someone's going to be able to deal with all this uncertainty and all this hard shit they're going to have to go through that they've never seen before, especially first time founders. You haven't seen this. I mean, I, I mean, we, we've heard all the stories, but like, you know, there's companies that were like really big and large right now that couldn't raise money, but those founders were persistent and a sign of persistence or a sign of that they can be persistent is that they've had hardships in their life and have got, and have gotten through it. And I don't mean to say if you haven't had hardships, you know, you're not fit for it. I'm just saying that, like, you know, it's going to be hard, and signs that you can deal with it are, you know, around the fact that you've had that hardship.

AI assessment note: “No, no, no, no, no, absolutely not. Maybe, maybe, but like, what I really want”

Q and often the notion that we should always be raising mentality that is often advised in the Valley. How do you think about that? Always be raising. And when it founders come to you and ask about the fundraising approach and strategy, do you say invest in lines, not dots, or do you say actually go for the compressed fundraising and really insert that investor kind of eagerness to move?

A In a lot of ways, it depends on what you have in your hands with your business. It depends more on that than anything else. If you have a business that is like a train, and it's leaving the station, and with or without the investor, your business will be successful, and that's the way the business is framed, or that's based on the metrics that you have in the business, then it's not about timelines and compression or anything. It's just about finding the best investors for you. That's the situation you want to put your If you're not in that situation, you're essentially using some of these things artificially in order to create that kind of like hype. That's really what it boils down to, which is like, does it feel like this business is going to be successful without me? That's, I think, what is in the back of the heads of the best investors. And if so, I want in on it. And it's not something that you can easily fake. So this is something that has to be real. And it has a lot to do in the seed stage, especially with the founder and the team and what they've got so far. Cause like, you know, now you have these pre-seeds So, you know, they've already got some money usually, or have spent time with their business, and then now they're raising a seed round in the multi-millions of dollars, usually one to five at that round, usually two to three plus. You'd probably have better data…

AI assessment note: “In a lot of ways, it depends on what you have in your hands with your business.”

Q doesn't inherently disincentivize usage? How do you think about that? Because really the majority do be it feature upsell where you don't want to limit features and limit product functionality, but then you don't also want to do it on a contacts Basis on a usage basis and prevent them using more of it. How do you think about this usage versus value based pricing and the thinking around that?

A Yeah, I don't want to make this the theme, but I've said this once. I'm going to say it again. I think Jeff Bezos really is a master of this by saying, focus on things that don't change. So what's not going to change? The customer is going to want a lower and lower price. Like he's right. That's Amazon. That's the consumer. Even the business customer doesn't want to feel in the same way. The business customer doesn't want to feel like as they grow, They have this thing where they just have to keep paying you more and more money and not necessarily get more value from your business. So it's really about your value metric. And in this case, this value metric had just worn out and it was really causing fatigue in the market. So one real thing that you have to think about, about your pricing is you go back to the customer and figure out what their frustrations are. And then you solve for them. I'm sure it wasn't easy to give all the contacts away like that and not charged by contact. And I'm sure drift had to really think about how are they going to make money? Do they have enough ways to do make money? If they don't charge per contact and make money, meaning charge more money over time to customers as they added more value. So that's this value metric of per contact pricing basically took its toll on the market. And eventually somebody was going to come in and change that. And it …

AI assessment note: “So it's really about your value metric. And in this case, this value metric”

Q Speaking of coordination, one of my biggest challenges is time coordination. Now, for you, I'd love to hear, how do you think about what to spend time on versus what not to? How do you kind of measure the ROI of your time and prioritize?

A I don't measure the ROI of my time in the same way other folks might. I really focus on whether I have energy for something. And so if I have energy for it, I'll do it. And that's a really important piece for me, which is like, I spend so much less energy worrying about time and so much more of my time worrying about, do I have the energy for that? And when do I have the energy for that? So ROI is a really funny thing in a business because you can be doing things that seem like they have no ROI, but all of a sudden some benefit will come out of it that you didn't realize. And so there is a big portion of my life, especially at the co-founder level that I'm at where I think Big, big part of what works and what doesn't for me. So like, do I have energy for this meeting and really thinking through the energy, not necessarily the logic. And it has a lot to do with, am I drawn to it? Should I be doing it? Not just like, am I going to see a benefit from it? Cause like I said, I see benefit from so many things as Steve jobs would say, you can only connect the dots looking backward. So it's the fact that I had energy for these things and I did them that led me to somewhere else or some insight or some value that I couldn't have ever imagined because of what I was doing. So in a way, it's like, how do you go with the flow and truly, truly do the things that you feel are right that are u…

AI assessment note: “I really focus on whether I have energy for something.”

Q Speaking of coordination, one of my biggest challenges is time coordination. Now, for you, I'd love to hear, how do you think about what to spend time on versus what not to? How do you kind of measure the ROI of your time and prioritize?

A I don't measure the ROI of my time in the same way other folks might. I really focus on whether I have energy for something. And so if I have energy for it, I'll do it. And that's a really important piece for me, which is like, I spend so much less energy worrying about time and so much more of my time worrying about, do I have the energy for that? And when do I have the energy for that? So ROI is a really funny thing in a business because you can be doing things that seem like they have no ROI, but all of a sudden some benefit will come out of it that you didn't realize. And so there is a big portion of my life, especially at the co-founder level that I'm at where I think Big, big part of what works and what doesn't for me. So like, do I have energy for this meeting and really thinking through the energy, not necessarily the logic. And it has a lot to do with, am I drawn to it? Should I be doing it? Not just like, am I going to see a benefit from it? Cause like I said, I see benefit from so many things as Steve jobs would say, you can only connect the dots looking backward. So it's the fact that I had energy for these things and I did them that led me to somewhere else or some insight or some value that I couldn't have ever imagined because of what I was doing. So in a way, it's like, how do you go with the flow and truly, truly do the things that you feel are right that are u…

AI assessment note: “I really focus on whether I have energy for something. And so if I have energy for it”

Q of spending time with those startups, um, we've got a question from Eric Torrenberg at Product Hunt. So he says, why are you so generous with your time, and what's the kind of guiding philosophy behind this? You know, everyone says how amazing you are at, uh, allocating your time well, and doing interviews, and giving your time to startups. So why is that, and what's the philosophy behind it?

A Yeah, it's one of these really weird things where, like, I think, again, I just really like businesses, and I like people. And, and I get energy from that. Like, I just learn new things, and it just really, um, it makes, it keeps me going, so to speak. So, for me, it's like, I've learned that it's a positive thing for my life. And, like, what happens is sometimes I think about it, oh, I just had, like, you know, I've had days where I've had, like, 13 minute meetings, 17 meetings, right? And sometimes I'll have one of those days, and the next day, like, even if I have more meetings, this is the worst feeling, I'm like, should I really have that many meetings and all this stuff? And then what'll happen is, within 24 hours, some random thing happens. That wouldn't have happened. That's very good for me, my businesses, my life, whatever. That only happened because I decided to help somebody at some point like three years ago. So this magic just happens if you're just constantly just trying to help people understand them, work with them, whatever it is, and even just try to improve their lives. And so for me, it's like, it's just become this natural thing. But every time I question it, something just happens. And I'm like, oh, the connection is to my randomness. The connection is to my helpfulness, you know? So it's almost like a self-fulfilling prophecy, a habit, whatever you call …

AI assessment note: “I just really like businesses, and I like people. And, and I get energy from that.”

Q of spending time with those startups, um, we've got a question from Eric Torrenberg at Product Hunt. So he says, why are you so generous with your time, and what's the kind of guiding philosophy behind this? You know, everyone says how amazing you are at, uh, allocating your time well, and doing interviews, and giving your time to startups. So why is that, and what's the philosophy behind it?

A Yeah, it's one of these really weird things where, like, I think, again, I just really like businesses, and I like people. And, and I get energy from that. Like, I just learn new things, and it just really, um, it makes, it keeps me going, so to speak. So, for me, it's like, I've learned that it's a positive thing for my life. And, like, what happens is sometimes I think about it, oh, I just had, like, you know, I've had days where I've had, like, 13 minute meetings, 17 meetings, right? And sometimes I'll have one of those days, and the next day, like, even if I have more meetings, this is the worst feeling, I'm like, should I really have that many meetings and all this stuff? And then what'll happen is, within 24 hours, some random thing happens. That wouldn't have happened. That's very good for me, my businesses, my life, whatever. That only happened because I decided to help somebody at some point like three years ago. So this magic just happens if you're just constantly just trying to help people understand them, work with them, whatever it is, and even just try to improve their lives. And so for me, it's like, it's just become this natural thing. But every time I question it, something just happens. And I'm like, oh, the connection is to my randomness. The connection is to my helpfulness, you know? So it's almost like a self-fulfilling prophecy, a habit, whatever you call …

AI assessment note: “I just really like businesses, and I like people. And, and I get energy from that.”

Q doesn't inherently disincentivize usage? How do you think about that? Because really the majority do be it feature upsell where you don't want to limit features and limit product functionality, but then you don't also want to do it on a contacts Basis on a usage basis and prevent them using more of it. How do you think about this usage versus value based pricing and the thinking around that?

A Yeah, I don't want to make this the theme, but I've said this once. I'm going to say it again. I think Jeff Bezos really is a master of this by saying, focus on things that don't change. So what's not going to change? The customer is going to want a lower and lower price. Like he's right. That's Amazon. That's the consumer. Even the business customer doesn't want to feel in the same way. The business customer doesn't want to feel like as they grow, They have this thing where they just have to keep paying you more and more money and not necessarily get more value from your business. So it's really about your value metric. And in this case, this value metric had just worn out and it was really causing fatigue in the market. So one real thing that you have to think about, about your pricing is you go back to the customer and figure out what their frustrations are. And then you solve for them. I'm sure it wasn't easy to give all the contacts away like that and not charged by contact. And I'm sure drift had to really think about how are they going to make money? Do they have enough ways to do make money? If they don't charge per contact and make money, meaning charge more money over time to customers as they added more value. So that's this value metric of per contact pricing basically took its toll on the market. And eventually somebody was going to come in and change that. And it …

AI assessment note: “go back to the customer and figure out what their frustrations are. And then you solve”

Q As I said, adding it to my list, and rarely do I read the book suggested, but that one's one that I think I really must read. Tell me, what's your superpower in company building? What are you one of the best in the world, and do you think?

A I think it's difficult to me to... Think through what I'm the best in the world at, mainly because I just always want to get better. And so if I were to say what I'm best in the world at, I think is something really, either really weird or on the esoteric side. So I'll give you a couple of them that I think about sometimes. One is someone asked me about at a dinner that they were going through. It was a dinner with a bunch of founders and folks and investors, and they wanted you to share your hobby. So the hobby I shared is my hobby is thinking about other people's businesses. And so, you know, I don't know if I'm in the best in the world at that or anything like that, but like, it's something I enjoy doing. So I think you can be the, being the best in the world at something, one way to think about it is what do you enjoy doing? Somehow I enjoy doing that. I like looking at markets. I like looking at companies and thinking about other people's companies. And I do that. I write about it, tweet about it, et cetera. The second thing is I would like to be one of the best in the world at basically improving and growing anything, plant a business myself, you know, self-improvement, I'm really excited about that, and that makes me really motivated to wake up every day, which is like the opportunity to improve.

AI assessment note: “my hobby is thinking about other people's businesses.”

Q And did you find that the VC funding allowed you to grow much quicker? I mean, Mark Suster, who we had on the show recently, said that actually constraint enforces creativity on founders. Do you, did you find that actually having less money made you more resourceful, or did the funding just allow you to grow quicker?

A I think when it's your first time raising money, and you don't understand that simple thing that Mark said, Um, you're not going to create the kind of constraints that are going to allow you to push the limits and have that creativity. So the way I would approach it is if you're conscious of the fact that constraints create creativity, it doesn't matter whether you raise money or not, you're going to already think about it like I'm constrained. So I think it's a mental shift. It's a mindset shift, but the mindset shift isn't a shift of we should be constrained and we're going to, it's going to lead to more creativity. The shift is actually that being stable, except that now I have money. Right. To, to help, help us be more creative, not help us just not make it so that we're just spending money. Right. You're supposed to spend money ahead of revenue when you raise money. But the thing is, I say ahead of revenue, which means that, cause like in a self-funded business, you make money, you spend it. Right. You don't make money. You have nothing to spend. Right. While in a funded business, you have all this cash. So your job is to utilize it effectively to grow faster. Then you could have without it, right? And, and grow faster means a lot of different things at different stages of a company, right? In the later stages, it's very obvious what that means. In the early stages, it's l…

AI assessment note: “So your job is to utilize it effectively to grow faster.”

Q Yeah, and, and in terms of kind of the wider seed funding environment, do you see a massive proliferation of seed funding and later growth stage funding? I mean, we often hear about the barbell effect. Have you seen that particularly for you?

A Yeah, I mean, It's easier than ever to start a company. There's going to be a lot more of them than there are today, and the velocity of these things, you know, they take some dips sometimes, but right now, we're just up and to the right. There's going to be more and more companies in the future. There's going to be more and more competition, and the reason is, you know, it's easier than ever to start a company, and on top of that, Because it's easier than ever and it's cheaper than ever. There's a lot more early stage money. And I don't see that going away because what happens is companies IPO people, people get wealthy and they need to put their money somewhere. And one of the places around here, especially in the Bay area to put your money is in other startups.

AI assessment note: “Because it's easier than ever and it's cheaper than ever. There's a lot more early stage money.”

Q No, I absolutely love that question of the best investors is the train leaving the station. I do have to ask it because I'm seeing more and more, honestly, almost with the professionalization and institutionalization of pre-seed investing, almost the eradication of friends and family around. Is that something that you're seeing in the U S and the Valley, or is this maybe a European trend that we're seeing?

A I think this trend is going to permeate everywhere. That's just, what's going to, it's going to boil down to. And some folks in places are probably a little behind just because of the amount of investors in that area, amount of sophistication in the area. But at the end of the day, this is going to spread everywhere. Everything that we see here in the world that we're in, in the Bay area, that's where I am. You're going to see across the world eventually. It's just a matter of time. Also, a lot of the folks that Are here, go and travel to these other places and do their best to find really great deals and really great businesses.

AI assessment note: “I think this trend is going to permeate everywhere.”

Q board member. If no one knows what they're doing, I guess the question for me is how do I seek the truth efficiently on this topic, but also maybe more generally, how do you advise other people to seek the truth in an efficient way? Is it crowdsource opinion and then aggregate? Is it just do it and learn along the way? If no one knows, what is the solution?

A The reason nobody knows is they only know what's right for them. So you could talk to 10 board members. You might find a few patterns. Patterns are going to be really basic. Right. One of the patterns you'll find is like, Hey, if you're on a board and you're an investor, you should focus on the business and be able to really have a perspective on the business. It's very clear, not necessarily a perspective on the team or the founders or anything, but it's the business. So the best investors might tell you that, and you might find that pattern, but they won't necessarily say it in those words. But at the end of the day, like you're your own individual, you're not going to sit there and imitate the great folks at some of the other firms and really like go imitate them and do what they do and do it exactly how they do it. It's always nice, though, to, like, be on a board and have someone who's more senior than you that's been on boards before as an investor, and you can just absorb by watching them and learning how they do things, but that is actually more impactful than talking to people and getting advice from them, because the key thing is, like, we're all trying to be unique. We're not actually trying to be like each other, and when we take this approach of looking for advice and trying to talk to so many different people, we're really just trying to calibrate how should we be…

AI assessment note: “you can just absorb by watching them and learning how they do things”

Q And in terms of kind of the mass of startups that exist now, in a blog post you stated that you like to ask founders what's their earliest, most traumatic memory, and I was wondering, kind of, why is that, and what tells do you have to determine the true grit of founders that you do want to back?

A Yeah, I, I'm also, and I, and I do that even with team members, you know, especially early team members at a company, because you need that little, like, I don't want to say chip on your shoulder, cause I don't mean to, I don't mean it like that, but some people it's a chip on their shoulder, which might be bad or great. Um, but it's really this like, this like, um, yeah, I'll be more direct about it. Starting a, starting a company is, is absolutely hard. I mean, there's probably harder things in the world, but like you're creating something from nothing and you have to, you have all these things, you have to employ people, you have to find people, you have to think about relationships. I mean, it's a very stressful job. From the perspective of, like, the human being who is where the buck stops in a business, and it's usually CEO slash founder or founders, and early on it's founders, and over time it just gets harder, it doesn't get easier, so you have to be, you have to be ready for that stress, so that question helps me understand if someone's ready for it, or they're gonna need work. It doesn't mean I think they shouldn't start a company, it just is like, hey, do you know what you're gonna have to deal with? Because it sucks, and like, and I'm not trying to dissuade you, I'm trying to make sure that you're ready for it.

AI assessment note: “that question helps me understand if someone's ready for it, or they're gonna need work”

Q And in terms of kind of the mass of startups that exist now, in a blog post you stated that you like to ask founders what's their earliest, most traumatic memory, and I was wondering, kind of, why is that, and what tells do you have to determine the true grit of founders that you do want to back?

A Yeah, I, I'm also, and I, and I do that even with team members, you know, especially early team members at a company, because you need that little, like, I don't want to say chip on your shoulder, cause I don't mean to, I don't mean it like that, but some people it's a chip on their shoulder, which might be bad or great. Um, but it's really this like, this like, um, yeah, I'll be more direct about it. Starting a, starting a company is, is absolutely hard. I mean, there's probably harder things in the world, but like you're creating something from nothing and you have to, you have all these things, you have to employ people, you have to find people, you have to think about relationships. I mean, it's a very stressful job. From the perspective of, like, the human being who is where the buck stops in a business, and it's usually CEO slash founder or founders, and early on it's founders, and over time it just gets harder, it doesn't get easier, so you have to be, you have to be ready for that stress, so that question helps me understand if someone's ready for it, or they're gonna need work. It doesn't mean I think they shouldn't start a company, it just is like, hey, do you know what you're gonna have to deal with? Because it sucks, and like, and I'm not trying to dissuade you, I'm trying to make sure that you're ready for it.

AI assessment note: “that question helps me understand if someone's ready for it, or they're gonna need work.”

Q And you mentioned that Slack, obviously Slack kind of the poster child of SaaS success. What are your thoughts on it, uh, as, as a company and then its latest valuation and funding? Do you think that is a fair valuation? I mean, there's been a lot of talk around it, but what are your thoughts on it?

A I believe that company, before they even publicly launched it, was very deliberate about understanding what kind of product to build for the market, so I believe that they spent so much time on product market fit, by the time they released it, they were very sure Of the engagement levels and the activity and the satisfaction that companies would get once they got on it. And so we can go talk about valuations and growth rates and all that stuff, but fundamentally they did one thing really well. They got the product right at the exact right time to get that kind of product right. And they put all the work in beforehand to do that. And they, they probably had some luxuries around funding and other things that enabled them to do that. But they also had a pivot from a previous business, right? And this was an internal tool that they pulled out. So I feel like it's very hard to talk about that company without understanding where they came from and why the company is at a spot that it is today, at least with some, some, some amount of truth or fact, right? Because it's, it's, it's one of those where the timing was so good that like, it's a, it's a runaway. So it's hard to explain why it worked. But one thing we know for sure is Stuart, Stuart Butterfield and the team, they've come out and said when we, you know, we were very deliberate about as we had more size of companies and Come i…

AI assessment note: “we can go talk about valuations and growth rates and all that stuff, but fundamentally”