The Exchanges

Q about kind of bringing superhuman powers to founders. I'd love to talk about kind of bringing superpowers to the companies themselves through the form of network effect. I have to ask this. I got referred this by all three of the kind introducers to this interview. So I'd love to hear, apart from the obvious social networks and marketplace mechanism models, how are network effects important today, do you think?

A Yeah, so our fund is called NFX, and that stands for network effects. We, we think it's incredibly important. We, we did a large study of companies that were, have been formed since 1994, 337 companies worth over a billion. And if you look at the market caps, the combined market Becaps of all these companies and identify, you know, which of them had network effects at their core. It's well over 60% of the value that's been created in tech since the internet arrived has come from companies with network effects at their core. And so we think when we have been looking at business plans over the last 10 years, we've seen that less than 20% of them even consider how they would get a network effect into the business, yet 60% of value is being created. So there's a mismatch there. There's an opportunity there, I think, to focus on bringing network Effects into the business because they are so powerful. It turns out that so far, at least, we've identified 13 different types of network effects. There isn't just one. And, you know, as you pointed out and as we've discussed, it's not just for networks and marketplaces. It's not just Facebook and eBay that have these network Craigslist that have these network effects. It's data network effects. It's physical network and protocol network effects. There's, there's so many different types and And we've developed playbooks for each of them. An…

AI assessment note: “identified 13 different types of network effects. There isn't just one.”

Q How important do you think being first to market is? You mentioned, obviously, the importance of speed. Is that aligned to timing to market?

A Uh, I don't think being first to market is actually that important in most cases. I mean, if you look at the great successes of the last 20 years, there were a couple of companies who were first to market, which were eBay and Amazon, but that was 2020 plus years ago. You know, then you look at your next great success, Google, they were the eighth to market. You look at Facebook, they were the 156th to market with the same five features. They just happened to have real names. Um, and, and, and a fantastic team, but those companies, once they got going in a space that had already been established, they were faster and they were higher quality and they hired better. And that formula of speed, quality, and then hiring in a superior way, that's what makes your giant sort of outcomes in these tech spaces. And I, and first mover isn't typically correlated with that. You look at prosper two years before lending club, Lending Club ended up sort of taking that market, and now Prosper's copied Lending Club, and now they're doing better as well. So it's helpful to be first to market, but often there's a lot of learnings that the first to market experiences that the second or third take advantage of.

AI assessment note: “I don't think being first to market is actually that important in most cases.”

Q And we spoke about Rick, Chris, and Eric there, and I know from speaking to them that you pay a lot of attention to language and psychology. So why is this important for founders? Let's start with that.

A I've had several experiences where I've Watched language makes such an impact on the trajectory of a company. Just switching a word or two. An example would be, I mean, certainly in naming, you watch a company like Yahoo, uh, you know, 20 years ago, they had such an incredible name that was different from every other company's name, and so the press wanted to talk about them all the time. The consumers wanted to talk about them, and that word of mouth spread Yahoo. Despite them not having the right approach or the best technology or the best team, they ended up being very large in part because of Of that language that they chose to use in their name, or, you know, we had an experience years ago where, you know, we were storing photos on a website, and we said, store your photos here, and it didn't really grow very much, so we just switched it to say, share your photos, and that switch of Change the product flow and change the product features so that within six months we registered forty seven million people. And so there was literally that change of one word on the homepage that allowed the whole thing to happen. So we've, we've, and I could give you hundreds of other examples of this. So we've seen how language impacts dramatically the outcomes and the way that the companies move through the markets, through the customers and through the employees of the company so that they …

AI assessment note: “I've Watched language makes such an impact on the trajectory of a company.”

Q How important do you think being first to market is? You mentioned, obviously, the importance of speed. Is that aligned to timing to market?

A Uh, I don't think being first to market is actually that important in most cases. I mean, if you look at the great successes of the last 20 years, there were a couple of companies who were first to market, which were eBay and Amazon, but that was 2020 plus years ago. You know, then you look at your next great success, Google, they were the eighth to market. You look at Facebook, they were the 156th to market with the same five features. They just happened to have real names. Um, and, and, and a fantastic team, but those companies, once they got going in a space that had already been established, they were faster and they were higher quality and they hired better. And that formula of speed, quality, and then hiring in a superior way, that's what makes your giant sort of outcomes in these tech spaces. And I, and first mover isn't typically correlated with that. You look at prosper two years before lending club, Lending Club ended up sort of taking that market, and now Prosper's copied Lending Club, and now they're doing better as well. So it's helpful to be first to market, but often there's a lot of learnings that the first to market experiences that the second or third take advantage of.

AI assessment note: “I don't think being first to market is actually that important in most cases.”

Q And we spoke about Rick, Chris, and Eric there, and I know from speaking to them that you pay a lot of attention to language and psychology. So why is this important for founders? Let's start with that.

A I've had several experiences where I've Watched language makes such an impact on the trajectory of a company. Just switching a word or two. An example would be, I mean, certainly in naming, you watch a company like Yahoo, uh, you know, 20 years ago, they had such an incredible name that was different from every other company's name, and so the press wanted to talk about them all the time. The consumers wanted to talk about them, and that word of mouth spread Yahoo. Despite them not having the right approach or the best technology or the best team, they ended up being very large in part because of Of that language that they chose to use in their name, or, you know, we had an experience years ago where, you know, we were storing photos on a website, and we said, store your photos here, and it didn't really grow very much, so we just switched it to say, share your photos, and that switch of Change the product flow and change the product features so that within six months we registered forty seven million people. And so there was literally that change of one word on the homepage that allowed the whole thing to happen. So we've, we've, and I could give you hundreds of other examples of this. So we've seen how language impacts dramatically the outcomes and the way that the companies move through the markets, through the customers and through the employees of the company so that they …

AI assessment note: “I've had several experiences where I've Watched language makes such an impact”

Q I want to start though today with the, with the extensive operational career that you, you just suggested there, because as a full-time entrepreneur with Four acquisitions. Clearly, you have a superpower with regards to that, so I'd love to dig into that, because you've said to me before that speed is the number one superpower, so talk to me. What do you mean by this?

A Well, it turns out that most of what happens is good luck, but you need to have a lot of at-bats to have good luck, and so the reason that we have had four venture-backed companies that have all succeeded is because we have learned how to move so quickly that we try many times until we hit success, and what I tell people is that Failure is temporary. Success is forever. And once you hit a success, it's then a building block to then build more of your company on top of. And so you have to have many of that go very fast and your mentality has to be set up to allow you to, to move on from your failures and to stay interested, stay motivated, even though you're failing every day, because eventually when you hit that success, it's forever and it's a building block and you can build a bigger company from that. And so that's, that's why we haven't really failed yet. And we haven't ever lost anyone, any money, When we've been entrepreneurs and, uh, and building companies. And so that, that mentality we've brought to everything we've done and it's proven to work quite effectively.

AI assessment note: “we have learned how to move so quickly that we try many times”

Q In terms of different perspectives, when I was speaking to Rick before the show, he said that James is a master of storytelling. Talk to me about why this is crucial for founders, how they can use it advantageously for the positioning of their startup and really construct that narrative. So what's your thoughts on storytelling from a superhuman founder perspective?

A Yeah, you know, I feel like the CEO and the founders are, that's their main job, is to tell stories. And you come up with a great story, you tell it to yourself. So that you get up in the morning and you get motivated and excited to do all the work that needs to be done to bring this thing to being. And then you take that same story or slightly modified and you tell it to your employees every day and you repeat yourself over and over again. I know a lot of the CEOs that I work with and invest in are so smart that they get bored with telling the story over and over again because they, they want to feed their brains. And what they have to learn to do is to tell that story again and again to their employees so that everyone understands Feels that rhythm and gets motivated by the same things and is together. And then that story ripples out into the investors and telling the investors the story so that they want to be participating. And then it goes to the journalist. So you actually spend so much of your day as a founder telling that story. And if you get it right, magic happens. And if you get it wrong, it's just, you know, daily grind.

AI assessment note: “I feel like the CEO and the founders are, that's their main job, is to tell stories.”

Q How do you think about goal setting and kind of setting a goal that's immensely ambitious, but also achievable with those kind of growth mindset in mind?

A Yeah. So we do a lot of benchmarking. One of the designs of NFX Guild is to bring lots of companies together that are working on network effect businesses so that they can share their KPIs their and key performance indicators with each other with the goal of creating Benchmarks. Because when one company is growing their email marketing at 200% a month, and the other guy was happy at 40% a month, they suddenly realized that's where I could put the benchmark. And then the whole team understands they could put the benchmark higher. So by cross populating information between companies so that it's real, it's not just James telling you, you should have a higher benchmark. It's you seeing others have achieved that higher benchmark and they are just like you. That really helps to let people calibrate the goals they want to hit faster and at a higher level. And, and you're right, it's, it's, it's hard. You don't want to demoralize yourself and others by setting too high a goal, but until you understand how high you can fly, you might just miss it. It might be right next to you, and you might just miss it.

AI assessment note: “helps to let people calibrate the goals they want to hit faster and at a higher level”

Q Can I ask, you spoke there about kind of the speed involved. How do you balance between vision and stubbornness and the ability to kind of move on when it's maybe too early and when it's the right time to push on? How do you kind of navigate that balance?

A Yeah, that's, it's a really great question because it comes up for us and for all the companies who work with a lot. And for me, it comes down to, do you have a list of Of experiments you still want to do and you're excited about. So you've had a vision, you've had an interest in a particular market space, and you've gotten fired up about it, you've started a company, you've tried a bunch of experiments, they haven't worked. Do you still have a bunch of things you see that you could try that you're excited about? If you don't, if you've run out of that list, then it's time to back up and cast your vision more broadly to maybe do a larger pivot or, or shut down and start something new.

AI assessment note: “it comes down to, do you have a list of Of experiments”

Q Is there ever too much data? When thinking about that, just in terms of the sheer kind of data overload there, is there ever a concern that actually hold back, don't want to lose him in the scientific approach?

A Absolutely, yeah. There's a point at which you need to not go there. You know, for the first meeting, you want to go a certain level deep, and then on the sixth meeting, when they're really digging into all the data, that's when you, that's when you've Really bring all the data to the table. And then again, you have to back out after that sixth meeting so that you can then close the deal. So absolutely, you're absolutely right. There's a limit to how far you want to go, but by bringing data into each of your senses in the right balance, you can show that you understand the tactics and the path to actually get and the proof points to actually get to the bigger vision you've painted.

AI assessment note: “Absolutely, yeah. There's a point at which you need to not go there.”

Q In terms of those kind of growth mechanisms, a lot of founders continuously debate and ask me on the continuous kind of question of paid versus free in terms of growth mechanism. I'm super interested to hear your thoughts on this debate, Between paid versus free and their subsequent effectiveness, what have you found with regards to the two?

A Yeah, where we start out is that we don't like paid at all. That's where we start. We've, we've, we felt that way for 15 years, and that has proven to be a good mentality to approach it with, and as a result, we were forced to figure out ways of growing in, in free viral ways, and that paid huge dividends for us in many companies. I think, you know, we've been involved in, you know, over 13 companies that we got to over ten million users, and That mentality helped us get there. What has happened over the last 15 years, however, is the number of viral channels and the tools available to people to grow free, to grow virally, has diminished. There's fewer ways to instrument the growth. What we've moved into is back toward more of a word of mouth society, where your product has to be so good that people just want to talk about it because it's so extraordinary. That's a great mentality to have when building a product, but it's also very unpredictable. And when you take venture capital, when you hire people, when you're searching to build a billion dollar company, you can't depend on luck. We've seen a diminution of the ability to grow virally over the last 15 years, and we've got this chart which shows that at the same time, Facebook and others have done a really good job of harnessing their formerly viral channels and turning them into paid channels slowly over time, every day, eve…

AI assessment note: “much of the growth, at least digitally, is going to be coming from paid”

Q Can I ask, is language enough? I interview a lot of people about culture and a lot say you need to codify it with kind of a coherent language. Is that really enough?

A It's never enough. I mean, there's all these businesses are multifaceted, unique pieces of art, essentially. So you have to have all the different pieces fit together. But what we've seen is typically in our world, you know, we're builders, we're makers, all many of us are engineers, and we just like to go and build stuff. What happens is we see a problem, we imagine a solution, we build the solution, and then we slap marketing language on it. And we believe that that process is backwards. We believe that often you need to identify a problem Figure out the language that addresses that problem, and then from that language, build a product that fulfills on the language. And so we're not saying that it's sufficient, but it's certainly an important factor that people underemphasize, and it can become a superpower for founders if they really start to hone in on how much it impacts them. And the companies we work with very much come in skeptical about this, and then when we, when we've spent time after a few weeks, they will come back to us and say, oh my god, I see it now. I see how powerful that is.

AI assessment note: “It's never enough. I mean, there's all these businesses are multifaceted”

Q How does, how does the psychology play into it on the kind of less obvious part?

A Well, there's, there's a lot of psychology to all these products. So for instance, you know, if you're doing enterprise sales and you think, well, this, this product will actually solve the problem. It might, but if it doesn't solve the psychological needs of the buyer or the psychological needs of the buyer's customer within the enterprise, then you're not going to actually get the sell through. And so you have to think about what their motivations are and how they perceive themselves in the world in order to language it properly, sell it properly, price it properly. And people often think, well, no, if I provide utility, that's enough. And what we've seen repeatedly, particularly in enterprise and in media and in viral products, this is not enough that you really have to understand and empathize with your customer. And sometimes you have to understand the psychology of the VCs. You have to understand the psychology of the journalists who are writing and what is feeding them.

AI assessment note: “if it doesn't solve the psychological needs of the buyer”

Q How does, how does the psychology play into it on the kind of less obvious part?

A Well, there's, there's a lot of psychology to all these products. So for instance, you know, if you're doing enterprise sales and you think, well, this, this product will actually solve the problem. It might, but if it doesn't solve the psychological needs of the buyer or the psychological needs of the buyer's customer within the enterprise, then you're not going to actually get the sell through. And so you have to think about what their motivations are and how they perceive themselves in the world in order to language it properly, sell it properly, price it properly. And people often think, well, no, if I provide utility, that's enough. And what we've seen repeatedly, particularly in enterprise and in media and in viral products, this is not enough that you really have to understand and empathize with your customer. And sometimes you have to understand the psychology of the VCs. You have to understand the psychology of the journalists who are writing and what is feeding them.

AI assessment note: “if it doesn't solve the psychological needs of the buyer... you're not going to”

Q Is there ever too much data? When thinking about that, just in terms of the sheer kind of data overload there, is there ever a concern that actually hold back, don't want to lose him in the scientific approach?

A Absolutely, yeah. There's a point at which you need to not go there. You know, for the first meeting, you want to go a certain level deep, and then on the sixth meeting, when they're really digging into all the data, that's when you, that's when you've Really bring all the data to the table. And then again, you have to back out after that sixth meeting so that you can then close the deal. So absolutely, you're absolutely right. There's a limit to how far you want to go, but by bringing data into each of your senses in the right balance, you can show that you understand the tactics and the path to actually get and the proof points to actually get to the bigger vision you've painted.

AI assessment note: “There's a point at which you need to not go there.”

Q Speaking about that kind of tipping point and implementing network effects successfully, if so, it leads inevitably to insane growth, almost unparalleled growth. I'm intrigued. What fundamentally do you think is the mindset then for growth?

A So we spend hours and hours with, with our teams working with them on the growth mindset. There's a lot to it, but basically it comes down to the courage to break things, the courage to back up, The courage to never be satisfied with a 30% monthly growth, that there are these growth modalities available to companies that people don't even believe are there. But once you learn to look for them and you have methodologies for finding them, you can really systematically develop approaches which allow you to grow much faster than most people think you can. And that's the mindset you have to have, that you should not be satisfied with a four percent improvement or a 20% improvement. You really need to look for a thousand percent. Improvement. 10,000 percent improvement. And if you can teach all of your employees to have that culture, then even in the later stages of a company, when you have 40, 50, a 102 hundred people, they're still going to be willing to break things and move forward in a way that will take your company to a whole different level. So that, that mindset is hard because there's a lot of fear. Like, hey, we got something good. Why would we shoot for a thousand percent improvement? We've got something good. If we just grew 20%, that would be great. We'd hit our numbers. And my point to them as well. Wanted to raise your site, it's even higher. If I can register forty-s…

AI assessment note: “basically it comes down to the courage to break things, the courage to back up”

Q to this kind of lack of distribution channel availability to the viral growth that you suggested there, the likes of Jeremy Levine at Bessemer and Eric at Kleiner Perkins said that consumer really now is in a fallow period, and essentially posited their, their uncertainty towards it with the incumbency advantages. I'm intrigued. Do you hold such a view towards that, or do you think there are still inherent opportunities?

A No, I, I agree with that. I think that it has been easier to do consumer businesses over the last 20 years than perhaps at any other time in history. I mean, when you look back at the early nineties, if you got a 10 X on a venture investment, you were pretty psyched. Um, and now, you know, we went through 20 years where you could get 50 or a hundred or 400 X on your investments because of the distribution of the internet and mobile. And many of the ideas, many of the main businesses have been discovered. We're, we're, we're moving now into more and more niche areas. So, I mean, you can still build billion dollar companies, but to build a ten billion dollar company is getting more and more difficult, just as it was more difficult to build railroads in the Through their course, and then you need to find new technology bases. So yeah, we, we agree. We think that the business of finding, you know, viral social consumer apps is, um, it's, it's intensified. It's, it's so difficult. It's so difficult now. There's, and, and look, I mean, most people say, well, there's too much competition, and they leave it at that. What I say is the psychological and emotional needs of the consumer are largely being met, and it's more difficult Of those emotional and psychological needs that you could tap into to generate that viral storm, to build a new network, to build a new identity for a consumer…

AI assessment note: “No, I, I agree with that. I think that it has been easier”

Q Can I ask, you spoke there about kind of the speed involved. How do you balance between vision and stubbornness and the ability to kind of move on when it's maybe too early and when it's the right time to push on? How do you kind of navigate that balance?

A Yeah, that's, it's a really great question because it comes up for us and for all the companies who work with a lot. And for me, it comes down to, do you have a list of Of experiments you still want to do and you're excited about. So you've had a vision, you've had an interest in a particular market space, and you've gotten fired up about it, you've started a company, you've tried a bunch of experiments, they haven't worked. Do you still have a bunch of things you see that you could try that you're excited about? If you don't, if you've run out of that list, then it's time to back up and cast your vision more broadly to maybe do a larger pivot or, or shut down and start something new.

AI assessment note: “it comes down to, do you have a list of Of experiments you still want to do”

Q In terms of different perspectives, when I was speaking to Rick before the show, he said that James is a master of storytelling. Talk to me about why this is crucial for founders, how they can use it advantageously for the positioning of their startup and really construct that narrative. So what's your thoughts on storytelling from a superhuman founder perspective?

A Yeah, you know, I feel like the CEO and the founders are, that's their main job, is to tell stories. And you come up with a great story, you tell it to yourself. So that you get up in the morning and you get motivated and excited to do all the work that needs to be done to bring this thing to being. And then you take that same story or slightly modified and you tell it to your employees every day and you repeat yourself over and over again. I know a lot of the CEOs that I work with and invest in are so smart that they get bored with telling the story over and over again because they, they want to feed their brains. And what they have to learn to do is to tell that story again and again to their employees so that everyone understands Feels that rhythm and gets motivated by the same things and is together. And then that story ripples out into the investors and telling the investors the story so that they want to be participating. And then it goes to the journalist. So you actually spend so much of your day as a founder telling that story. And if you get it right, magic happens. And if you get it wrong, it's just, you know, daily grind.

AI assessment note: “I feel like the CEO and the founders are, that's their main job”

Q storytelling importance you say there, And then you've also said about the importance of having an obsession with data and speaking with data. Interesting balance in terms of potentially on kind of surface, almost paradoxical, because to me, data could dehumanize stories. But I'd love to hear your thoughts on kind of the obsession with data, how it's so crucial for founders, and does it sometimes dehumanize conversations and stories?

A Yeah, it's a great question. And that's the COO part of you. You have to be obsessed with the data that's coming out of your systems. You have to have your culture speaking with data. And when you tell the story to let's say an investor, and it's a high level story, it's a big picture story, it gets you the meeting. Then you go into the meeting, you tell that same story for the first two or three minutes, they get them fired up again, they're not looking at their cell phone, and then you have to speak with data. Then you have to then weave in the proof points of data and your obsession with data into the whole story. That builds an effective Communication that not only can I see where I'm going, not only have I discovered a exciting and wonderful journey that I want to take my life on, and I want to bring you the investor or the journalist or the employee on, but now I'm going to prove to you that how we're actually going to get this done, right? So then you move into that part of it. What I say to all the founders is when you're pitching the deal, especially for investors, you want to use a number in every sentence you speak. If you say a sentence without using a number, then you have wasted that sentence. When you learn that simple rule, your communication about the opportunity and how you're going to get there becomes a lot more effective when you're telling a story for 10 o…

AI assessment note: “weave in the proof points of data and your obsession with data into the whole story”

Q How do you think about goal setting and kind of setting a goal that's immensely ambitious, but also achievable with those kind of growth mindset in mind?

A Yeah. So we do a lot of benchmarking. One of the designs of NFX Guild is to bring lots of companies together that are working on network effect businesses so that they can share their KPIs their and key performance indicators with each other with the goal of creating Benchmarks. Because when one company is growing their email marketing at 200% a month, and the other guy was happy at 40% a month, they suddenly realized that's where I could put the benchmark. And then the whole team understands they could put the benchmark higher. So by cross populating information between companies so that it's real, it's not just James telling you, you should have a higher benchmark. It's you seeing others have achieved that higher benchmark and they are just like you. That really helps to let people calibrate the goals they want to hit faster and at a higher level. And, and you're right, it's, it's, it's hard. You don't want to demoralize yourself and others by setting too high a goal, but until you understand how high you can fly, you might just miss it. It might be right next to you, and you might just miss it.

AI assessment note: “So we do a lot of benchmarking... to let people calibrate the goals”

Q I want to start though today with the, with the extensive operational career that you, you just suggested there, because as a full-time entrepreneur with Four acquisitions. Clearly, you have a superpower with regards to that, so I'd love to dig into that, because you've said to me before that speed is the number one superpower, so talk to me. What do you mean by this?

A Well, it turns out that most of what happens is good luck, but you need to have a lot of at-bats to have good luck, and so the reason that we have had four venture-backed companies that have all succeeded is because we have learned how to move so quickly that we try many times until we hit success, and what I tell people is that Failure is temporary. Success is forever. And once you hit a success, it's then a building block to then build more of your company on top of. And so you have to have many of that go very fast and your mentality has to be set up to allow you to, to move on from your failures and to stay interested, stay motivated, even though you're failing every day, because eventually when you hit that success, it's forever and it's a building block and you can build a bigger company from that. And so that's, that's why we haven't really failed yet. And we haven't ever lost anyone, any money, When we've been entrepreneurs and, uh, and building companies. And so that, that mentality we've brought to everything we've done and it's proven to work quite effectively.

AI assessment note: “we have learned how to move so quickly that we try many times”

Q Talk to me in terms of like breaking down the network effects. Is there an inflection point where kind of escape velocity is reached, whereby there's kind of the significant barrier to entry because the network effect has been so successfully implemented?

A Network effects are about defensibility. And this is something that is kind of invisible to most people. My partners and I really try to emphasize this to people that your network effect is not a viral effect. Okay. A viral effect is about getting new users to you. And that's a whole different growth tactic. And there's playbooks for that. And, you know, we can do that all day. You know, Stan and I have been doing that for 20 years or 15 years together. Pete Flint, my partner, he grew Trulia to a, you know, three and a half billion dollar acquisition with zero marketing spend. So there's lots of Viral techniques and viral effects. That's not what we're talking about. We're talking about network effects, and the network effects means that every new user makes that product more useful for all the other users. What that does is it makes it difficult for your users to leave because they're getting so much value, and it makes it difficult for your competitors to provide a better product, and therefore it's defensibility. And so what you're looking for is getting as quickly as you can to a tipping point where you're No one in the market can build as valuable a product as you because you have a certain number of users. That's essentially how it works.

AI assessment note: “getting as quickly as you can to a tipping point where you're No one in the market”

Q Talk to me in terms of like breaking down the network effects. Is there an inflection point where kind of escape velocity is reached, whereby there's kind of the significant barrier to entry because the network effect has been so successfully implemented?

A Network effects are about defensibility. And this is something that is kind of invisible to most people. My partners and I really try to emphasize this to people that your network effect is not a viral effect. Okay. A viral effect is about getting new users to you. And that's a whole different growth tactic. And there's playbooks for that. And, you know, we can do that all day. You know, Stan and I have been doing that for 20 years or 15 years together. Pete Flint, my partner, he grew Trulia to a, you know, three and a half billion dollar acquisition with zero marketing spend. So there's lots of Viral techniques and viral effects. That's not what we're talking about. We're talking about network effects, and the network effects means that every new user makes that product more useful for all the other users. What that does is it makes it difficult for your users to leave because they're getting so much value, and it makes it difficult for your competitors to provide a better product, and therefore it's defensibility. And so what you're looking for is getting as quickly as you can to a tipping point where you're No one in the market can build as valuable a product as you because you have a certain number of users. That's essentially how it works.

AI assessment note: “what you're looking for is getting as quickly as you can to a tipping point”

Q The ideal education system. What is it to you from Eric Torrenberg?

A Yeah, my wife and I started a homeschool for our four boys called Buckminster Learning Lab, which was super fun. We now have them in other schools, but yeah, I'm a big iconoclast when it comes to education, and It has to do with practical learning, and I just don't think we're teaching the right things. We need to be teaching kids to ask the right questions. We need to be teaching kids to predict the future, not study history. We need to teach people to communicate and to lead, not to play soccer. People think they're learning soccer. They're actually learning to lead, but no one's pointing out the lessons, and so I believe in the pointing out way of education, that so many things are there to be learned, but they're buried under an archaic system that isn't serving our kids. Or there are adults. I mean, we all need ongoing, uh, continuing education, particularly around the social, emotional, and the communication.

AI assessment note: “It has to do with practical learning, and I just don't think we're teaching”