The Exchanges

Q Next five years, for you and for Gigster, what does the road ahead look like?

A So for me, for me, it's to work on Gigster. For Gigster, it's, I think we're going to go through a few transformations. Most immediately in the next year and a half, we want to hire about a hundred people, so we'll be, we'll be around 200 people as a company. We're hiring a number of executives to form kind of the leadership foundation. We're building a lot of technology, so The Gigster platform that powers how we actually deliver software, that's, which is our core IP. That's what we'll be working on the next kind of year and a half. I think past that, so maybe looking at the next, the three years after that, we're aiming to reach profitability as a company, aiming to go much, much deeper into enterprise. You see, uh, you know, the Accentures and Deloitte's of the world picking up 50 to a hundred million dollar development contracts. Well, largest one we've worked on so far is about two million dollars. So getting into eight and nine figure deals, uh, Being viewed as more of a trusted partner, someone who's a little more, more mature and established. That's where we'd like to get. We'd like to start picking up much more interesting projects.

AI assessment note: “Most immediately in the next year and a half, we want to hire about a hundred people”

Q How do you assess the transience of markets then and market creation? If you take Gigster, for example, the rise of AI and societal shifts within kind of approaches to and willingness to engage in freelance economy fundamentally changes Not only the TAM, but just the intricacies of the market, and therefore the potential of the company, does it not?

A I think it could change the perception of the company, but it doesn't change the market. So the freelance economy, the sort of artificial intelligence tools that we use, that's not the market that we're in. That's, that's more so how we're implemented under the hood. The market for us is software development. On the demand side, at least, it's, I'm a customer. I need to hire software developers. How do I do that? There's a five to one ratio of job openings for engineers to engineers that actually exist. So there's a massive disparity in demand. So if we can make engineers more efficient, if we can make more engineers, we can make them more accessible. That's valuable for our customers.

AI assessment note: “it could change the perception of the company, but it doesn't change the market.”

Q You said about the series A to B milestone, and then the scaling. I'm intrigued, as I always am, with the VCs and the fundraising aspect, because you tweeted, if you dislike VCs, odds are you've never worked with a good one. What makes a great VC to you then?

A Well, we've actually been, and I don't mean to, to, We've been, we've been really happy with our investors. I think the stereotype on investors is that sometimes they just put money into a company and they're either unhelpful or worse. They can meddle with the way a founder wants to run the business. We've seen with our investors, particularly with Andreessen Horowitz, that it's the opposite. Now their model is a little different. I think they have a 150 operating partners at the firm. So on top of the investment partners who they're helpful here and there, you have these operating partners that will come in and say, oh, you're trying to hire a A, you know, head of sales engineering. Well, that's, that's a role you've never hired for. Here's, here's 20 candidates. Here's how we'd recommend you interview them. Or, okay, you're, you're trying to hire a PR firm. Here are the five agencies our companies have worked with, and here are two that are excited to talk to you. No matter what it is that we need help with, we found that Andreessen's able to help, and I think there's other firms that have these type of facilities as well. As part of the thesis at Andreessen, and what I think the mindset other firms have is they like to go after these highly technical founders, highly product-oriented Founders. When you do that, though, you run into people like me who, uh, haven't, for exampl…

AI assessment note: “when the firm is able to come in and provide support structure there”

Q But talk to me, because you've said the Series A is a hiring decision. Now, is that aligned to the hiring benefits you just suggested there with Andreessen, or is there a different meaning to this?

A There's a different meaning to that. I was talking to Sequoia partner, Mike Vernal, about how Sequoia thinks about Series A's, and I think this, this would apply to Andreessen as well. He said that Sequoia sees a Series A As a hiring decision in the sense that the firm is hiring the founders in a way they're hiring the founding team. So they're asking you a lot of questions that aren't about your traction or your product necessarily. They're trying to figure out is, is this the, is this the kind of founder that we want in the Sequoia family? Is this somebody we're willing to support no matter what happens? You see, you know, with the recent news about benchmark and Uber, when investors don't support their founders, there's a very large backlash that you see in Silicon Valley. That's the kind of thing that's expected from investors. So When you choose to work with a company that's that early stage, you choose to work with a founding team as an investor, you have to be ready to back them no matter what. You have to back them through future, future rounds. You have to, uh, stand behind the founder. You become a reference for the founder. So Sequoia and I think other firms, they look at the series A from the perspective of, Hey, is this somebody we want to point at all of our internal resources? Is this somebody who we're, we're okay emailing with texting with, uh, no matter what t…

AI assessment note: “There's a different meaning to that. I was talking to Sequoia partner, Mike Vernal”

Q You said about the series A to B milestone, and then the scaling. I'm intrigued, as I always am, with the VCs and the fundraising aspect, because you tweeted, if you dislike VCs, odds are you've never worked with a good one. What makes a great VC to you then?

A Well, we've actually been, and I don't mean to, to, We've been, we've been really happy with our investors. I think the stereotype on investors is that sometimes they just put money into a company and they're either unhelpful or worse. They can meddle with the way a founder wants to run the business. We've seen with our investors, particularly with Andreessen Horowitz, that it's the opposite. Now their model is a little different. I think they have a 150 operating partners at the firm. So on top of the investment partners who they're helpful here and there, you have these operating partners that will come in and say, oh, you're trying to hire a A, you know, head of sales engineering. Well, that's, that's a role you've never hired for. Here's, here's 20 candidates. Here's how we'd recommend you interview them. Or, okay, you're, you're trying to hire a PR firm. Here are the five agencies our companies have worked with, and here are two that are excited to talk to you. No matter what it is that we need help with, we found that Andreessen's able to help, and I think there's other firms that have these type of facilities as well. As part of the thesis at Andreessen, and what I think the mindset other firms have is they like to go after these highly technical founders, highly product-oriented Founders. When you do that, though, you run into people like me who, uh, haven't, for exampl…

AI assessment note: “when the firm is able to come in and provide support structure there”

Q I guess I was asking them, how do you analyze market creation?

A There are certain elemental markets that have, have been around for, for centuries or even, even millennia. And as a founder, those are the market That's what I like to go after. You know, I think it depends on how you define a market to you. You look at Uber. Is that a new market? Well, we'll know it's personal transportation, which, you know, used to be served by taxis in other parts of the world. I'm sure for thousands of years, there've been people that will carry you around on a cart, at least since the wheel was invented. So, you know, I think Uber is just the most recent, most modern evolution of, of a product that can address that market when it comes to software development. You know, Gigster is just providing a different way to hire software developers. I think there are some markets that are created, but those, those markets are pretty risky to get into as an investor. The ideas that I find the most compelling are what I would call A plus B ideas. Proven market A with deep existing demand plus novel technology or concept B. So Uber would be taxis meets mobile phones. Airbnb would be vacation rentals meets an online marketplace. Ideas like that tend to be the most valuable.

AI assessment note: “Proven market A with deep existing demand plus novel technology or concept B.”

Q But talk to me, because you've said the Series A is a hiring decision. Now, is that aligned to the hiring benefits you just suggested there with Andreessen, or is there a different meaning to this?

A There's a different meaning to that. I was talking to Sequoia partner, Mike Vernal, about how Sequoia thinks about Series A's, and I think this, this would apply to Andreessen as well. He said that Sequoia sees a Series A As a hiring decision in the sense that the firm is hiring the founders in a way they're hiring the founding team. So they're asking you a lot of questions that aren't about your traction or your product necessarily. They're trying to figure out is, is this the, is this the kind of founder that we want in the Sequoia family? Is this somebody we're willing to support no matter what happens? You see, you know, with the recent news about benchmark and Uber, when investors don't support their founders, there's a very large backlash that you see in Silicon Valley. That's the kind of thing that's expected from investors. So When you choose to work with a company that's that early stage, you choose to work with a founding team as an investor, you have to be ready to back them no matter what. You have to back them through future, future rounds. You have to, uh, stand behind the founder. You become a reference for the founder. So Sequoia and I think other firms, they look at the series A from the perspective of, Hey, is this somebody we want to point at all of our internal resources? Is this somebody who we're, we're okay emailing with texting with, uh, no matter what t…

AI assessment note: “There's a different meaning to that. I was talking to Sequoia partner”

Q Do you think more founders and CEOs should be actively investing in startups?

A I think so. I think it's been very, it's been very valuable to me to get exposure outside of my company to other founders, how they're running their companies, the challenges that they're running into. I think, I think I'm now in about 70 companies as an angel investor, so I regularly get investor updates from companies that I'm in, able to regularly mentor other founders. They say one of the best ways to learn is to teach, so I found that When I help out other founders, I'm able, I'm able to learn a lot about how to be a better founder myself, and I, I love learning from founders as well, and there's always something to learn from the people I've invested in, so it tends to be a great way to just look more broadly at how to, how to be a good founder than, than just in the echo chamber of my own company.

AI assessment note: “I think so. I think it's been very, it's been very valuable to me”

Q You spoke about value within companies there, and one unique aspect of your Corporations that I'd love to hone in on is your ability to both angel invest and to be CEO at Gigster. You've tweeted before, works smarter and harder. I agree with you there, but a question from Andy Rankin. How do you have time, and how do you prioritize what's important with such kind of dual hats?

A Good question. Part of it is I, I angel invest far less now than I used to. There are a few different ways to invest. My, my focus these days is more reactive than proactive. If there's a Founder who I know who's starting a business. If there's a great idea that I happen to see, I'll reach out to the founders. If I'm at a demo day, like a Y Combinator demo day, and I see a great idea, I'll, I'll write a check. I I'm not proactively going after founders anymore. I'm not taking pitches in industries. I don't understand. I tend to cluster around certain themes. I've already done a great deal of research on. So if I see a great founder, who's going after that theme, I don't have to diligence the market anymore. I don't have to diligence the company as much. I really just diligence that founder.

AI assessment note: “Part of it is I, I angel invest far less now than I used to.”

Q I have indeed. I've had him, and I'm going to ask you a question that he posited. He said that, uh, the amount of investors investing in deep tech reminds him of the green tech and clean tech days of 2000 to 2003. Do you agree with this statement and the potentially concerning elements of investors entering markets they maybe don't know so well?

A I would agree with that. Yeah, I'd absolutely agree with that statement. I think it's more happening on the angel and kind of seed fund level where you have people that are, they're trying to find the next big opportunity and they think, they think that's where it is. Every investor is looking for their, their Facebook, their Uber, their, their massive 10,000 X return. I don't think there are opportunities in, in social or photo sharing apps right now. So the, Especially with the, the, the issues Snapchat's had in the IPO. So people are looking elsewhere and deep tech is the most interesting thing happening right now. I think artificial intelligence is the wave. It's that's the trend right now that's forming new companies. So you have a lot of people that are investing in teams that probably aren't the best teams to be going after those opportunities. I think there are going to be a lot of losses, but there will be a few winners.

AI assessment note: “I would agree with that. Yeah, I'd absolutely agree with that statement.”

Q Can I ask, you mentioned the learnings from those iterations. What were the big learnings from really kind of stress testing those 25 ideas?

A Well, we ended up getting a really good feel for what people liked and what they didn't like. One of the main things we were testing for idea was the value proposition. So Gigster itself was basically a landing page that said, hire a quality developer in five minutes. And then it had a simple chat application on the backend that you could use to chat with us and hire said developer. So typically the applications involved were pretty simple and it was mostly a test of the idea. In some cases we were trying something that was more More of a feature that we were exploring. We built something called pseudo, which was an app that developers could use to get real time help. So that was more a test of, okay, they understand the concept. Everyone likes the concept on the surface, but, and they'll tell us that they'll use it, but then will they actually use it? It turns out in practice, they would use it once and then never again. So we would learn anything from validating the value proposition to seeing if users engage. One of our ideas, we had people engage, but they wouldn't pay. So kind of all along the value chain, we, we wanted to, you know, make sure we stress tested.

AI assessment note: “we would learn anything from validating the value proposition to seeing if users engage”

Q You spoke about value within companies there, and one unique aspect of your Corporations that I'd love to hone in on is your ability to both angel invest and to be CEO at Gigster. You've tweeted before, works smarter and harder. I agree with you there, but a question from Andy Rankin. How do you have time, and how do you prioritize what's important with such kind of dual hats?

A Good question. Part of it is I, I angel invest far less now than I used to. There are a few different ways to invest. My, my focus these days is more reactive than proactive. If there's a Founder who I know who's starting a business. If there's a great idea that I happen to see, I'll reach out to the founders. If I'm at a demo day, like a Y Combinator demo day, and I see a great idea, I'll, I'll write a check. I I'm not proactively going after founders anymore. I'm not taking pitches in industries. I don't understand. I tend to cluster around certain themes. I've already done a great deal of research on. So if I see a great founder, who's going after that theme, I don't have to diligence the market anymore. I don't have to diligence the company as much. I really just diligence that founder.

AI assessment note: “Part of it is I, I angel invest far less now than I used to.”

Q I'm interested. You've said about backing the founder no matter what. So how do you analyze the company first versus founder first dilemma, and really the differences between the two in light of all recent events?

A I feel like there's been a shift here in the last five years ago, or there used to be this mantra, you always back the team. I forget who said it first, and you know, one of the great investors Brad Feld, Fred Wilson, you know, maybe it was Ron Conway. I think he said that, and then the whole ecosystem adopted that mantra. What I've heard more recently, maybe, maybe five years ago around that time was, I think, I think this might've been Peter Thiel or somebody who said, who said that the market is actually the first thing that they look at. I believe in, you know, in the stack of things you look at from, you know, market to founding team, to the actual products, to the traction they have. The team they've managed to hire. Of all those things, market is the first thing I look at when I'm making an angel investment because I've, I've actually seen, I've now been investing long enough that I've seen great founders pursue terrible markets and the businesses just don't go anywhere.

AI assessment note: “market is the first thing I look at when I'm making an angel investment”

Q Do you think more founders and CEOs should be actively investing in startups?

A I think so. I think it's been very, it's been very valuable to me to get exposure outside of my company to other founders, how they're running their companies, the challenges that they're running into. I think, I think I'm now in about 70 companies as an angel investor, so I regularly get investor updates from companies that I'm in, able to regularly mentor other founders. They say one of the best ways to learn is to teach, so I found that When I help out other founders, I'm able, I'm able to learn a lot about how to be a better founder myself, and I, I love learning from founders as well, and there's always something to learn from the people I've invested in, so it tends to be a great way to just look more broadly at how to, how to be a good founder than, than just in the echo chamber of my own company.

AI assessment note: “I think so. I think it's been very, it's been very valuable”

Q I guess I was asking them, how do you analyze market creation?

A There are certain elemental markets that have, have been around for, for centuries or even, even millennia. And as a founder, those are the market That's what I like to go after. You know, I think it depends on how you define a market to you. You look at Uber. Is that a new market? Well, we'll know it's personal transportation, which, you know, used to be served by taxis in other parts of the world. I'm sure for thousands of years, there've been people that will carry you around on a cart, at least since the wheel was invented. So, you know, I think Uber is just the most recent, most modern evolution of, of a product that can address that market when it comes to software development. You know, Gigster is just providing a different way to hire software developers. I think there are some markets that are created, but those, those markets are pretty risky to get into as an investor. The ideas that I find the most compelling are what I would call A plus B ideas. Proven market A with deep existing demand plus novel technology or concept B. So Uber would be taxis meets mobile phones. Airbnb would be vacation rentals meets an online marketplace. Ideas like that tend to be the most valuable.

AI assessment note: “Proven market A with deep existing demand plus novel technology or concept B.”

Q Can I ask, what are those learnings, and you said about headway, what are those inflection points that really cement the freelance economy in the labor market in society?

A Well, it's been a fairly marked trajectory for us, so when, when we first started We were doing 5000 dollar projects, 10,000 dollar projects, you know, even doing six and 700 dollar projects. I remember two projects we did that were that small, you know, and people were asking us to build simple web pages that pulled from APIs or web scrapers, very simple mobile application prototypes. This is back in 2015. We've, we've since seen the average size of project that we're able to handle go up dramatically. Between our series A and our series B, which is roughly 20 15 to 20 16, we saw our Our average project size go up from 15 or 20,000 to about a 150,000. At the same time, you know, you'd expect if the model wasn't working, you'd expect that our customer satisfaction would go down, that our delivery on time rate would go down, our margin rate would go down. And we actually saw all those metrics go up, which was, which is pretty stunning that as we address more and more complex projects, the model has these network effects. It has these inherent efficiencies of scale that allow us to get even better as we do more complex types of work. That's a marker to me that shows, that shows the systems working when we can do 500,000 dollar project for a fortune 500 client, and they rate us 10 out of 10 on every, on every milestone that we deliver.

AI assessment note: “average project size go up from 15 or 20,000 to about a 150,000”

Q Can I ask, what are those learnings, and you said about headway, what are those inflection points that really cement the freelance economy in the labor market in society?

A Well, it's been a fairly marked trajectory for us, so when, when we first started We were doing 5000 dollar projects, 10,000 dollar projects, you know, even doing six and 700 dollar projects. I remember two projects we did that were that small, you know, and people were asking us to build simple web pages that pulled from APIs or web scrapers, very simple mobile application prototypes. This is back in 2015. We've, we've since seen the average size of project that we're able to handle go up dramatically. Between our series A and our series B, which is roughly 20 15 to 20 16, we saw our Our average project size go up from 15 or 20,000 to about a 150,000. At the same time, you know, you'd expect if the model wasn't working, you'd expect that our customer satisfaction would go down, that our delivery on time rate would go down, our margin rate would go down. And we actually saw all those metrics go up, which was, which is pretty stunning that as we address more and more complex projects, the model has these network effects. It has these inherent efficiencies of scale that allow us to get even better as we do more complex types of work. That's a marker to me that shows, that shows the systems working when we can do 500,000 dollar project for a fortune 500 client, and they rate us 10 out of 10 on every, on every milestone that we deliver.

AI assessment note: “when we can do 500,000 dollar project for a fortune 500 client”

Q Can I ask, you mentioned the learnings from those iterations. What were the big learnings from really kind of stress testing those 25 ideas?

A Well, we ended up getting a really good feel for what people liked and what they didn't like. One of the main things we were testing for idea was the value proposition. So Gigster itself was basically a landing page that said, hire a quality developer in five minutes. And then it had a simple chat application on the backend that you could use to chat with us and hire said developer. So typically the applications involved were pretty simple and it was mostly a test of the idea. In some cases we were trying something that was more More of a feature that we were exploring. We built something called pseudo, which was an app that developers could use to get real time help. So that was more a test of, okay, they understand the concept. Everyone likes the concept on the surface, but, and they'll tell us that they'll use it, but then will they actually use it? It turns out in practice, they would use it once and then never again. So we would learn anything from validating the value proposition to seeing if users engage. One of our ideas, we had people engage, but they wouldn't pay. So kind of all along the value chain, we, we wanted to, you know, make sure we stress tested.

AI assessment note: “we would learn anything from validating the value proposition to seeing if users engage.”

Q I'm interested. You've said about backing the founder no matter what. So how do you analyze the company first versus founder first dilemma, and really the differences between the two in light of all recent events?

A I feel like there's been a shift here in the last five years ago, or there used to be this mantra, you always back the team. I forget who said it first, and you know, one of the great investors Brad Feld, Fred Wilson, you know, maybe it was Ron Conway. I think he said that, and then the whole ecosystem adopted that mantra. What I've heard more recently, maybe, maybe five years ago around that time was, I think, I think this might've been Peter Thiel or somebody who said, who said that the market is actually the first thing that they look at. I believe in, you know, in the stack of things you look at from, you know, market to founding team, to the actual products, to the traction they have. The team they've managed to hire. Of all those things, market is the first thing I look at when I'm making an angel investment because I've, I've actually seen, I've now been investing long enough that I've seen great founders pursue terrible markets and the businesses just don't go anywhere.

AI assessment note: “market is the first thing I look at when I'm making an angel investment”

Q at kind of a very interesting intersection of two foundational shifts in society, being AI and the freelance economy and the rise of it. So talking about the future of work, Naval Ravikant said on the show, on a long enough timescale, everyone will be working for themselves. To what extent do you agree with this, and how do you expect to see some serious shifts in the labor market?

A I love this topic, and this is right at the nexus of why we founded Gigster. We look across industries, and, you know, we've seen marketplaces start to address and start to transform several industries, several spaces, but I think it's still very, very early. So you, you look at marketplaces like eBay. Now you have buyers and sellers that can easily transact, and eBay's been around now, I don't know, 1520 years almost. You have You have Uber, which is, you know, the personal transportation market that connects, uh, riders and drivers. Marketplaces these days are connecting people to do fairly simple transactions, often fairly short transactions. Even sites like Odesk, Elance, they've tried to expand on this a little bit. You're, you're able to hire people that you work with for a long time, but the platform itself is more of a, more of a matchmaker. And matchmaking isn't, it's, it's not the whole, it's not the whole value chain. It's the very beginning of the value chain. We look more broadly across white collar labor. And when we think, For more complicated engagement, for a legal transaction, for a tax advisor, management consulting firm, a creative agency, or a development service, which is the first area we're addressing, how could the freelance economy start to move in and be the labor market for an industry like that? Early, early on, we tried to figure out how do we take…

AI assessment note: “how could the freelance economy start to move in and be the labor market”

Q I'm also very interested, and this is getting into slightly nerdy finance, but as an angel investor, and then as a founder, and then also as an LP, how do you assess kind of your personal portfolio allocations? And kind of horizons and timelines associated, especially with the LP part being the 10 year lockup.

A Well, I think the typical advice is to not invest more than five to 10% of your assets in private technology companies, because they're so speculative. Your money's locked up for such a long time, even in the best case scenario, really any number of things could happen that are hard to predict. You know, imagine being an Uber investor right now, like who would have thought that one of the investors would be suing the CEO for fraud? None of these are things you can see in advance. Let alone the fact that Uber, Uber was a 10,000 X return on the investment up until recently, who knows if it's going to get marked down. So it's, it's very hard to predict what happens. It's the kind of thing most people shouldn't really be doing expecting a financial return. So in, in, in my case, I have 40 or 50 companies that probably, probably 50 plus companies that haven't returned yet. And that's, that's a good and a bad thing, right? They haven't returned. It means they haven't failed, but I also haven't seen any money come out of those opportunities.

AI assessment note: “typical advice is to not invest more than five to 10% of your assets”

Q I'm also very interested, and this is getting into slightly nerdy finance, but as an angel investor, and then as a founder, and then also as an LP, how do you assess kind of your personal portfolio allocations? And kind of horizons and timelines associated, especially with the LP part being the 10 year lockup.

A Well, I think the typical advice is to not invest more than five to 10% of your assets in private technology companies, because they're so speculative. Your money's locked up for such a long time, even in the best case scenario, really any number of things could happen that are hard to predict. You know, imagine being an Uber investor right now, like who would have thought that one of the investors would be suing the CEO for fraud? None of these are things you can see in advance. Let alone the fact that Uber, Uber was a 10,000 X return on the investment up until recently, who knows if it's going to get marked down. So it's, it's very hard to predict what happens. It's the kind of thing most people shouldn't really be doing expecting a financial return. So in, in, in my case, I have 40 or 50 companies that probably, probably 50 plus companies that haven't returned yet. And that's, that's a good and a bad thing, right? They haven't returned. It means they haven't failed, but I also haven't seen any money come out of those opportunities.

AI assessment note: “in my case, I have 40 or 50 companies that probably, probably 50 plus”

Q at kind of a very interesting intersection of two foundational shifts in society, being AI and the freelance economy and the rise of it. So talking about the future of work, Naval Ravikant said on the show, on a long enough timescale, everyone will be working for themselves. To what extent do you agree with this, and how do you expect to see some serious shifts in the labor market?

A I love this topic, and this is right at the nexus of why we founded Gigster. We look across industries, and, you know, we've seen marketplaces start to address and start to transform several industries, several spaces, but I think it's still very, very early. So you, you look at marketplaces like eBay. Now you have buyers and sellers that can easily transact, and eBay's been around now, I don't know, 1520 years almost. You have You have Uber, which is, you know, the personal transportation market that connects, uh, riders and drivers. Marketplaces these days are connecting people to do fairly simple transactions, often fairly short transactions. Even sites like Odesk, Elance, they've tried to expand on this a little bit. You're, you're able to hire people that you work with for a long time, but the platform itself is more of a, more of a matchmaker. And matchmaking isn't, it's, it's not the whole, it's not the whole value chain. It's the very beginning of the value chain. We look more broadly across white collar labor. And when we think, For more complicated engagement, for a legal transaction, for a tax advisor, management consulting firm, a creative agency, or a development service, which is the first area we're addressing, how could the freelance economy start to move in and be the labor market for an industry like that? Early, early on, we tried to figure out how do we take…

AI assessment note: “how could the freelance economy start to move in and be the labor market”