The Exchanges

Q I want to move to the third, which is again, kind of completely different one, is future vision. What is future vision and how does that compare?

A So future vision is a place where you have some deep Expertise in some area that causes you to see a world that not everybody else sees yet. And so this is, you know, think Elon Musk, think Jensen Huang, you know, think these, these are the types of folks that not only see a product that can change people's lives, but a paradigm that can change people's lives. And the really, the thing, you know, we said in the first path, the hurdle to overcome was competition. In the second, the hurdle to overcome is habit. In the third, it's actually Disbelief. It's sure. I'd love flying cars. I'd love teleportation. I'd love all kinds of things. Great. Yeah. But I'll believe it when I see it. Um, and I think your job as a founder in this path is, is mostly kind of validation to prove the validity of your kind of vision of the future. A like almost literal technical validity. And then secondly, applying that and finding the right stepping stones to your ultimate vision. Um, and like, you know, people say, what does that mean? I like to use open AI as an example here. Their ultimate vision of the future is that AGI exists, right? And so it's crazy to think that ChatGPT and all their GPT models were a stepping stone to realizing the vision of AGI. They found a commercial application that solved problems that people were compelled by, uh, to adopt for, you know, one use case or another on their…

AI assessment note: “future vision is a place where you have some deep Expertise in some area”

Q I want to move to the third, which is again, kind of completely different one, is future vision. What is future vision and how does that compare?

A So future vision is a place where you have some deep Expertise in some area that causes you to see a world that not everybody else sees yet. And so this is, you know, think Elon Musk, think Jensen Huang, you know, think these, these are the types of folks that not only see a product that can change people's lives, but a paradigm that can change people's lives. And the really, the thing, you know, we said in the first path, the hurdle to overcome was competition. In the second, the hurdle to overcome is habit. In the third, it's actually Disbelief. It's sure. I'd love flying cars. I'd love teleportation. I'd love all kinds of things. Great. Yeah. But I'll believe it when I see it. Um, and I think your job as a founder in this path is, is mostly kind of validation to prove the validity of your kind of vision of the future. A like almost literal technical validity. And then secondly, applying that and finding the right stepping stones to your ultimate vision. Um, and like, you know, people say, what does that mean? I like to use open AI as an example here. Their ultimate vision of the future is that AGI exists, right? And so it's crazy to think that ChatGPT and all their GPT models were a stepping stone to realizing the vision of AGI. They found a commercial application that solved problems that people were compelled by, uh, to adopt for, you know, one use case or another on their…

AI assessment note: “future vision is a place where you have some deep Expertise in some area”

Q Okay, final one, and you can have a second to think about it if you need to. Which product strategy recently have you been most impressed by?

A Linear? Linear is a really interesting one because they took this thing that is normally mostly used by, you know, issue tracking, mostly used by PMs and managers, EMs, and they targeted the engineer instead because those people hate this thing. And I've worked with so many teams, and the more senior I've gotten in my product career, the more senior engineers around me have gotten, and the more jaded Specifically around process and stand up and issue tracking tickets and things like this. They're like, they want none of it. And I was in this position where we adopted linear here at Sequoia with my team. Um, and we actually had another issue tracking tool that we also, you know, had licenses for. Some teams use this, some teams use that, but EPD solely use linear. And we were being, there was a threat of us consolidating. You know what? There's more seats open here. Why don't we just take everybody from linear and move them over here? My team revolted. They wrote, A like four page manifesto on why you cannot take linear from them. Uh, and like literally it was a memo. We actually ended up sharing it with the linear team. Um, they cared about this so much. They'd been through the trend. These are jaded big tech survivor type engineers. Like I've seen every issue tracking tool and like, I've never actually not hated one except for this one. And what's really fascinating is I think…

AI assessment note: “Linear is a really interesting one because they took this thing”

Q What would an example of that be? Would that be like, be the number one CRM provider for SMBs?

A Oh, that's a perfect, yes. Ok, so there's two core things I think that make a great product mission. One is that it's customer centric. So it should describe what it changes for the customer and their world, how it changes the customer's world. Two is that it is a thing that you can imagine working against or working towards For the next decade, not the next quarter. So one problem statement that a lot of early stage founders have is that they're so hyper-focused on what's right in front of them. This week, this inbox, this meeting, this feature, this ship date. Um, and it's really, really hard to think way bigger than that. And when we see way bigger, we don't mean before your series A, we mean the next decade or two. Um, so the one great example I use that because, you know, most of us are customers of this company is Airbnb. Um, their mission is belong anywhere. And I think that just immediately kind of like grounds the idea of, okay, for you as a customer, they're hoping that they can produce experiences and places for you to stay that help you feel like you belong, um, wherever you go, wherever you travel in the world. It is a customer focused statement, and it is pretty massive in terms of, I can imagine 10 years from now, maybe Airbnb doesn't feel like that box has been checked, right? It's something that you kind of almost work towards, but never achieve.

AI assessment note: “Oh, that's a perfect, yes.”

Q What was the biggest product mistake that you made, and what was your biggest lesson from it? If we think about tactics, hypotheses, I'm just intrigued. I think we learn a lot from things that don't work out.

A I think I actually fell into the trap early on when I was at Instagram, um, adopting the mindset of, I kind of, like, failed one of the first tests, I would say, which is to build the product for the customer. Don't build the product and then find a customer for it. And, like, we really did just take this big, massive ad platform and try to water it down, um, for SMBs. And you're imagining, you know, you have big, deep-pocketed advertisers that have millions of dollars It's agencies, whole teams that are working on their ad platform. Your whole job title is to work on Facebook ads on behalf of this advertiser. And we're taking this platform and then we're shoving it into the hands of a baker who is running, you know, a local bakery and they're baking cakes and, and, you know, Queen Ammons. And then they're trying to figure out this like ad platform during the day. In what world do we actually think that that would work? I think this was kind of before the awakening or the realization that Hey, like diluting this product for this person is not going to work. Even if that's the most efficient path, it is not the most effective path. And I think it took a few cycles to actually break out of the growth mindset and then break out of the, hey, let's take what we have off the shelf and see what we can do with this. We really had to kind of rethink.

AI assessment note: “diluting this product for this person is not going to work”

Q What do you think is an example of that? It is what it is.

A I think marketplaces actually fall into this mindset very clearly in that I need a cab. Um, and if there's no yellow cab on the street, I'm standing out here for five minutes. Can't find a cab. Guess I have to take the subway or walk. And it's just like, it is what it is. That's just how it works, right? And you have something like Uber come along and say, actually, there's a completely different source of supply that you have not thought of for getting you from point, point A to point B. I actually started my career in investment banking. Um, and I used to work in downtown San Francisco. And so I would get out of the office at two or three AM. I would call up a cab company and I lived, um, not in the city, but I lived like across the bridge and in Berkeley. And, um, these cabs would come and show up to the office and then they would see that I'm going over the bridge and they're like, I don't want to go over the bridge. And they would just leave me. Um, and I'd have to call off sometimes two, three, four cabs at two or three in the morning to get one to agree to take me across the bridge. And that's how I lived my life. And I think that's one of these things about hard fat companies is why was I living my life that way? Yeah.

AI assessment note: “I think marketplaces actually fall into this mindset very clearly in that I need a cab.”

Q Love it. Is it Uh, measurable. Is there any, you could look at customer MPS, but different customers like different things, um, so it may not actually suggest home from home. How do you think about the importance of whether it's measurable in a mission statement?

A What a great segue, Harry. The next, uh, kind of part of this framework, the four part framework is actually the metric. So the whole point of the mission is kind of inspiration, aspiration, also clarity around what it is that you want your team to achieve. The metric is the quantification. Of that aspiration. So at any given point, there is one number that is the best determinant. And if you're talking about the mountain analogy, the best compass to tell you what is up the mountain and what is down the mountain. And that thing can change over time. So pre product market fit, for example, we give, um, our arc founders, the strong advice to pick a number that represents customer happiness. And you mentioned MPS. I recommend not using MPS. I recommend using for this purpose. I recommend using a metric that's specifically an action in your product. So imagine any time this user takes this action, they're pressing a button that says, this product is great. I love this product, or I I'm using this product. So it could be an API call. It could be, uh, you know, a dashboard that's created. It could be a query. It could be a image that's created. There's something that they're doing in your product that is the core action of your product that suggests that they're finding value out of it. Um, and that is the thing that is the quantification of their happiness at this current stage.

AI assessment note: “The metric is the quantification. Of that aspiration.”

Q Okay, before we dive into that, because we could jump around, Polyvore, again, did incredibly well. It turned the fashion community, uh, into this incredibly monetized, largely by banner ads, a two hundred million acquisition by Yahoo. Uh, what was the biggest product lesson from that and the experience with Polyvore?

A Yeah, as I mentioned, uh, I had a little bit of a track record of jumping into something that isn't the main thing, and then, you know, being asked, hey, can you, can you turn this into something interesting? And at Polyvore, it was actually, you know, we were a vibrant social community, fashion lovers, people were coming to the site every day to share their style, support each other and their expression of style. So it was like a really positive and fun kind of social community. But we were actually previously monetizing via banner ads. These people were coming shopping minded. They literally were using products, manipulating this jacket goes well with this top goes well with this scarf. They're already partway through the shopping funnel for you. You know, the second they even opened the site. And so why would we, isn't there that we've gotta be able to build a performance marketing engine here. Like there's gotta be a better monetization model than homepage takeovers, which is literally what we, what we started with, but monetization. And it's just, that wasn't part of the DNA of the team, right? It was, it was very much, Community, and love, and sharing, and that was like the magic of Polyvore that was so supportive, and I came in talking about click-through rate, and CPC, and conversion funnels, and, and, you know, analytics dashboards, and performance marketing, you know,…

AI assessment note: “prove to people that you can preserve the magic of the community while also building”

Q But I mean, it, it's a perfect segue there. Cause I want to go into kind of that North star metric, how to really know what to focus on. I do just want to touch on the, you know, the pivot to venture and pivot to move into Sequoia. Why did you decide to make that? And how did that transition come to be?

A There are kind of two parts to that story. One is kind of like a personal relationship and one is You know, the possibility of, of, you know, what was in front of me here. Um, the personal story is that what at Polyvore, uh, Jess Lee was the founder and CEO of Polyvore, and I was one of the first PMs she ever hired, um, at that company. So we went through that. I stayed through the acquisition. And so we go way back. And Jess, of course, after she left Polyvore, came to Sequoia. Uh, and so she, you know, she, once again, this pattern of building belief, um, you know, she and a few other partners at the firm had a thesis. Like, you know, we, At Sequoia spent all day investing in outlier technology companies. What happens if we look more like a technology company? Would that help us do the business of Sequoia better? If we had our own technology asset or technology platform, wouldn't that amplify a bunch of the work that we do? But that is basically as far as that went, uh, in terms of having the thesis and it's like, let's bring in some people and test this hypothesis out. And so Jess kind of thought of me for this role and kind of pitched it to me. It took a little convincing, but I would say like the thing that really brought me over the line was this is, you know, Sequoia is 50, 50 plus year old firm. Um, but what got us through the first 50 years isn't going to get us throug…

AI assessment note: “There are kind of two parts to that story. One is kind of like a personal relationship”

Q What would an example of that be? Would that be like, be the number one CRM provider for SMBs?

A Oh, that's a perfect, yes. Ok, so there's two core things I think that make a great product mission. One is that it's customer centric. So it should describe what it changes for the customer and their world, how it changes the customer's world. Two is that it is a thing that you can imagine working against or working towards For the next decade, not the next quarter. So one problem statement that a lot of early stage founders have is that they're so hyper-focused on what's right in front of them. This week, this inbox, this meeting, this feature, this ship date. Um, and it's really, really hard to think way bigger than that. And when we see way bigger, we don't mean before your series A, we mean the next decade or two. Um, so the one great example I use that because, you know, most of us are customers of this company is Airbnb. Um, their mission is belong anywhere. And I think that just immediately kind of like grounds the idea of, okay, for you as a customer, they're hoping that they can produce experiences and places for you to stay that help you feel like you belong, um, wherever you go, wherever you travel in the world. It is a customer focused statement, and it is pretty massive in terms of, I can imagine 10 years from now, maybe Airbnb doesn't feel like that box has been checked, right? It's something that you kind of almost work towards, but never achieve.

AI assessment note: “so the one great example I use... is Airbnb. Um, their mission is belong anywhere.”

Q We have the mission. We have the metric. Okay. Product strategy wise, again, I'm pretty naive here bluntly. What's the first step in defining a good product strategy?

A Yes. Okay. So it follows from the mission and the metric. The product strategy piece is the most mystical black box thing. Like people either think you have product intuition or you don't, or you can't follow a formula because every product is different. So you just kind of wing it. Okay. From my perspective, product strategy is actually a kind of, um, you can break it down into its component parts. The first component is to have the mission, the second is to have the metric, and the third is to understand the metric. So basically, let's say we have repeat monthly active advertisers, or maybe it's retention, pick a number. You basically analyze your metric and determine why and what the gap is between what the level is today and what the optimal or ceiling of that number is. So if you know your monthly retention is I don't know, 20%. And you know that amazing world class monthly retention is 60 or 70%. There's a huge difference there. And so you have to either break down the gap and understand or have a hypothesis as to why there's a gap. And the key there is that there's a user facing hypothesis. So this is, users are not coming back. They're voting with their feet and their behavior that this product is not sticky and they don't want to return. What are the top three reasons why that is true?

AI assessment note: “the third is to understand the metric. So basically, let's say we have”

Q What was the biggest product mistake that you made, and what was your biggest lesson from it? If we think about tactics, hypotheses, I'm just intrigued. I think we learn a lot from things that don't work out.

A I think I actually fell into the trap early on when I was at Instagram, um, adopting the mindset of, I kind of, like, failed one of the first tests, I would say, which is to build the product for the customer. Don't build the product and then find a customer for it. And, like, we really did just take this big, massive ad platform and try to water it down, um, for SMBs. And you're imagining, you know, you have big, deep-pocketed advertisers that have millions of dollars It's agencies, whole teams that are working on their ad platform. Your whole job title is to work on Facebook ads on behalf of this advertiser. And we're taking this platform and then we're shoving it into the hands of a baker who is running, you know, a local bakery and they're baking cakes and, and, you know, Queen Ammons. And then they're trying to figure out this like ad platform during the day. In what world do we actually think that that would work? I think this was kind of before the awakening or the realization that Hey, like diluting this product for this person is not going to work. Even if that's the most efficient path, it is not the most effective path. And I think it took a few cycles to actually break out of the growth mindset and then break out of the, hey, let's take what we have off the shelf and see what we can do with this. We really had to kind of rethink.

AI assessment note: “take this big, massive ad platform and try to water it down, for SMBs.”

Q What do you think is an example of that? It is what it is.

A I think marketplaces actually fall into this mindset very clearly in that I need a cab. Um, and if there's no yellow cab on the street, I'm standing out here for five minutes. Can't find a cab. Guess I have to take the subway or walk. And it's just like, it is what it is. That's just how it works, right? And you have something like Uber come along and say, actually, there's a completely different source of supply that you have not thought of for getting you from point, point A to point B. I actually started my career in investment banking. Um, and I used to work in downtown San Francisco. And so I would get out of the office at two or three AM. I would call up a cab company and I lived, um, not in the city, but I lived like across the bridge and in Berkeley. And, um, these cabs would come and show up to the office and then they would see that I'm going over the bridge and they're like, I don't want to go over the bridge. And they would just leave me. Um, and I'd have to call off sometimes two, three, four cabs at two or three in the morning to get one to agree to take me across the bridge. And that's how I lived my life. And I think that's one of these things about hard fat companies is why was I living my life that way? Yeah.

AI assessment note: “I think marketplaces actually fall into this mindset very clearly in that I need a cab”

Q Do you agree with the other statement that to, to scale, you have to do things that don't scale? I think it's PG that commonly said that at YC.

A I think so. I think, or at least open your mind to the possibility. We actually do have this PMF, um, this kind of, um, scoping MVP framework that we, uh, teach during ARC that I teach during product week. And it talks about, there's three columns, of course, there's three pillars, uh, that we break it into. And the first is what does the product actually need to do? And the second is what can you Fake. And that's when people say unscalable things, we're talking about things you could fake operationally, Wizard of Oz, behind the curtain. What are the things you can do that maybe someday your product can do, but it doesn't have to do it today for you to learn the thing that you need to learn.

AI assessment note: “I think so. I think, or at least open your mind to the possibility.”

Q Love it. Is it Uh, measurable. Is there any, you could look at customer MPS, but different customers like different things, um, so it may not actually suggest home from home. How do you think about the importance of whether it's measurable in a mission statement?

A What a great segue, Harry. The next, uh, kind of part of this framework, the four part framework is actually the metric. So the whole point of the mission is kind of inspiration, aspiration, also clarity around what it is that you want your team to achieve. The metric is the quantification. Of that aspiration. So at any given point, there is one number that is the best determinant. And if you're talking about the mountain analogy, the best compass to tell you what is up the mountain and what is down the mountain. And that thing can change over time. So pre product market fit, for example, we give, um, our arc founders, the strong advice to pick a number that represents customer happiness. And you mentioned MPS. I recommend not using MPS. I recommend using for this purpose. I recommend using a metric that's specifically an action in your product. So imagine any time this user takes this action, they're pressing a button that says, this product is great. I love this product, or I I'm using this product. So it could be an API call. It could be, uh, you know, a dashboard that's created. It could be a query. It could be a image that's created. There's something that they're doing in your product that is the core action of your product that suggests that they're finding value out of it. Um, and that is the thing that is the quantification of their happiness at this current stage.

AI assessment note: “The next, uh, kind of part of this framework... is actually the metric.”

Q But I mean, it, it's a perfect segue there. Cause I want to go into kind of that North star metric, how to really know what to focus on. I do just want to touch on the, you know, the pivot to venture and pivot to move into Sequoia. Why did you decide to make that? And how did that transition come to be?

A There are kind of two parts to that story. One is kind of like a personal relationship and one is You know, the possibility of, of, you know, what was in front of me here. Um, the personal story is that what at Polyvore, uh, Jess Lee was the founder and CEO of Polyvore, and I was one of the first PMs she ever hired, um, at that company. So we went through that. I stayed through the acquisition. And so we go way back. And Jess, of course, after she left Polyvore, came to Sequoia. Uh, and so she, you know, she, once again, this pattern of building belief, um, you know, she and a few other partners at the firm had a thesis. Like, you know, we, At Sequoia spent all day investing in outlier technology companies. What happens if we look more like a technology company? Would that help us do the business of Sequoia better? If we had our own technology asset or technology platform, wouldn't that amplify a bunch of the work that we do? But that is basically as far as that went, uh, in terms of having the thesis and it's like, let's bring in some people and test this hypothesis out. And so Jess kind of thought of me for this role and kind of pitched it to me. It took a little convincing, but I would say like the thing that really brought me over the line was this is, you know, Sequoia is 50, 50 plus year old firm. Um, but what got us through the first 50 years isn't going to get us throug…

AI assessment note: “There are kind of two parts to that story. One is kind of like a personal relationship”

Q I think the biggest problem that people try and make is they try and go too broad too quickly, which is like, mean a lot to a small number of people. Do you agree with that? And how do you think about that first initial ICP and whether it's too targeted and too small or too big?

A Yeah, I think there is a, that's a little bit of an art more than a science, I think, in terms of you want somebody to deeply, deeply care about the product that you put in front of them, and if you haven't met that bar, it's gonna be really hard to, you know, get to PMF. But I think to your point about having too niche of a product audience, then the question is how many more of those people are out there? And you do have to actually almost calculate this both bottoms up and tops down, right, at the same time. If I only ever make Harry Stebbings happy with my product, How many Harry Stebbings or Harry Stebbings like people are there out there? And if there's only one of you, then I'm zero, right? That's not a, that's not a very big business, Harry.

AI assessment note: “you do have to actually almost calculate this both bottoms up and tops down”

Q We have the mission. We have the metric. Okay. Product strategy wise, again, I'm pretty naive here bluntly. What's the first step in defining a good product strategy?

A Yes. Okay. So it follows from the mission and the metric. The product strategy piece is the most mystical black box thing. Like people either think you have product intuition or you don't, or you can't follow a formula because every product is different. So you just kind of wing it. Okay. From my perspective, product strategy is actually a kind of, um, you can break it down into its component parts. The first component is to have the mission, the second is to have the metric, and the third is to understand the metric. So basically, let's say we have repeat monthly active advertisers, or maybe it's retention, pick a number. You basically analyze your metric and determine why and what the gap is between what the level is today and what the optimal or ceiling of that number is. So if you know your monthly retention is I don't know, 20%. And you know that amazing world class monthly retention is 60 or 70%. There's a huge difference there. And so you have to either break down the gap and understand or have a hypothesis as to why there's a gap. And the key there is that there's a user facing hypothesis. So this is, users are not coming back. They're voting with their feet and their behavior that this product is not sticky and they don't want to return. What are the top three reasons why that is true?

AI assessment note: “the third is to understand the metric. So basically, let's say we have”

Q Challenge accepted. That was the most interesting. You were like, I'm challenging. I'm like, oh, I didn't realize it was a challenge or a duel. Uh, how wonderful. Uh, I, I want to go to the second, which is a hard fact. What's a hard fact, Vicki?

A Yeah, a hard fact. I think I would, I, I love that this comes right after Hair on Fire because these people are, you know, please help me now. Hard fact customer mindset is literally, we use the phrase, it is what it is. It's just resignation. It's not the best. Yes, it's a problem statement, but I hacked together something. I'm using something that has existed for 20 years. There's no better way to do it. You know, I've got what I've got. It is what it is. And this is a hurdle of not noise and crowded and competition, but this is a hurdle of habit. It's a hurdle of inertia. It's a hurdle of people who have just lived their lives this way, and they're not. And this is, this is, I think, the most, um, eye opening path, I think, for many of the founders that we walk Um, through this framework with that there is any other path outside hair on fire, because I think the conventional wisdom is build something people want. And so that means you go out and build a thing that people urgently are saying that they need, um, which is not what hard fact is. Hard fact is somebody has accepted that this is just a hard fact, a hard truth of their life. And you're trying to get them to accept that. No, this is a hard problem that I have now solved for you.

AI assessment note: “Hard fact customer mindset is literally, we use the phrase, it is what it is.”

Q God, I love DevTools. Um, what would you say is the biggest mistake founders make when hiring product teams?

A The thing that I actually warn both founders and product operators against is joining as a product leader too early in a company. And what I mean by that is there's kind of three layers of product. Um, there's product vision, there's product strategy, and there's product execution. And when you're very, very early on in a company, I would hope that at least the first two come from the founding team. Um, some is anchored on the founding team, and if you're joining as, like, to provide one or more of those things, you may run into, there, there's often some tension, basically, between what swim lanes people live in, um, and I've seen that happen, where the founder thinks that they're ready to give up product vision or product strategy, and it turns out that that's not actually the case, and it's a, it's a difficult conversation to have once you find yourself there.

AI assessment note: “joining as a product leader too early in a company”

Q I love that. That's a great way to phrase it. And of course there's threes. I feel like McKinsey could also have been a sponsor for this show. Um, but I, I want to move to the final segment really being Instagram in terms of the operating career. You're scaling, you know, SMB ads from two hundred million to a billion. What was the biggest takeaway from that?

A Once again, this, continuing this parade of building belief, you know, most of the, the vast majority of the ads business was focused on, obviously makes sense, more concentrated, larger, deeper pocket advertisers. And if you have any experience with Facebook or Instagram's ad platform, it is complicated. It's very sophisticated. There are lots of, you know, knobs and dials and levers that you can pull. And when you apply that to the SMB space, you know, people are saying, Hey, this is a long tail. They're a secondary audience. Like, let's leave them by the wayside and maybe kind of just retrofit or dilute what we have and ship it to them and it'll work. Um, and so I think it was always a little bit of a second order, you know, customer. And I inherited this team that basically was saying, you know, our, our goal is to grow because this is the long tail we make up for. Price with volume. Like they're not going to have the budgets, but there's millions of them. So let's go get a million of them. Right? So the problem statement is acquisition. It's growth. Our metric is monthly active advertisers. And you just want that number to go up into the right. And I think the thing that I most learned there is the power of asking the question, what problem are you trying to solve? And I now have become known, I think at Sequoia for just stopping in the middle of a meeting where there's so…

AI assessment note: “the thing that I most learned there is the power of asking the question”

Q Challenge accepted. That was the most interesting. You were like, I'm challenging. I'm like, oh, I didn't realize it was a challenge or a duel. Uh, how wonderful. Uh, I, I want to go to the second, which is a hard fact. What's a hard fact, Vicki?

A Yeah, a hard fact. I think I would, I, I love that this comes right after Hair on Fire because these people are, you know, please help me now. Hard fact customer mindset is literally, we use the phrase, it is what it is. It's just resignation. It's not the best. Yes, it's a problem statement, but I hacked together something. I'm using something that has existed for 20 years. There's no better way to do it. You know, I've got what I've got. It is what it is. And this is a hurdle of not noise and crowded and competition, but this is a hurdle of habit. It's a hurdle of inertia. It's a hurdle of people who have just lived their lives this way, and they're not. And this is, this is, I think, the most, um, eye opening path, I think, for many of the founders that we walk Um, through this framework with that there is any other path outside hair on fire, because I think the conventional wisdom is build something people want. And so that means you go out and build a thing that people urgently are saying that they need, um, which is not what hard fact is. Hard fact is somebody has accepted that this is just a hard fact, a hard truth of their life. And you're trying to get them to accept that. No, this is a hard problem that I have now solved for you.

AI assessment note: “Hard fact customer mindset is literally, we use the phrase, it is what it is.”

Q Do you agree with the other statement that to, to scale, you have to do things that don't scale? I think it's PG that commonly said that at YC.

A I think so. I think, or at least open your mind to the possibility. We actually do have this PMF, um, this kind of, um, scoping MVP framework that we, uh, teach during ARC that I teach during product week. And it talks about, there's three columns, of course, there's three pillars, uh, that we break it into. And the first is what does the product actually need to do? And the second is what can you Fake. And that's when people say unscalable things, we're talking about things you could fake operationally, Wizard of Oz, behind the curtain. What are the things you can do that maybe someday your product can do, but it doesn't have to do it today for you to learn the thing that you need to learn.

AI assessment note: “I think so. I think, or at least open your mind to the possibility.”

Q you know, you said before, like, is your customer compelled by your difference as a kind of clarifying statement around that? Again, the difference is the really hard part. Product marketing, I think, I think it's actually done really poorly today. Again, I'm going to get in trouble for this. How do you think about advising founders on standing out in supremely competitive markets and what works and what doesn't?

A I think I would go back to using their words, not your words. The number of times that I have seen a founder, you know, describe this is what my product does. This is what it is. This is, you know, the category we're in. This is, uh, the feature set we have. And then you go and ask the customer and say, how would you describe this product? And it is completely orthogonal to the way that the founder either describes it or thinks it exists in the world. And then they think, you know, it fits, for me, it fits here. For me, it is this useful. For me, this is the biggest benefit. And the, the words just don't align necessarily.

AI assessment note: “I think I would go back to using their words, not your words.”

Q Question for you. What do you do when you've got horizontal products? You know, I look at your notions, I look at your air tables. They're not vertically applied to problem statements. And so it's like very difficult to come up with compelling, uh, catch all statements that you can put on a billboard. How do you think about effective horizontal product marketing?

A I would actually, I would challenge that in that at least every, every truly engaged and evangelist customer has a way that they describe notion and why they think notion is head and shoulders above the rest. And I would, Basically what you have with a horizontal product is you have to collect that data point across a lot of different customer profiles and use cases and pull together a thread of similarity across those. But you still have to do the work of understanding how a customer uses that product. Same thing with, I always use Excel as the example, because Excel is, you know, there's so many different ways that you could use Excel, but it didn't start as a, Hey, here's a spreadsheet, you know, use it for whatever you want, right? There was somebody that was like a more compelling and deeper use case for that. Whether that was, you know, financial analysts or people that really needed to manipulate data, um, you know, to do their day to day job, you have to actually pull the true value prop and the evangelism out of people that actually see that value prop clearly.

AI assessment note: “collect that data point across a lot of different customer profiles and use cases”

Q I love that. That's a great way to phrase it. And of course there's threes. I feel like McKinsey could also have been a sponsor for this show. Um, but I, I want to move to the final segment really being Instagram in terms of the operating career. You're scaling, you know, SMB ads from two hundred million to a billion. What was the biggest takeaway from that?

A Once again, this, continuing this parade of building belief, you know, most of the, the vast majority of the ads business was focused on, obviously makes sense, more concentrated, larger, deeper pocket advertisers. And if you have any experience with Facebook or Instagram's ad platform, it is complicated. It's very sophisticated. There are lots of, you know, knobs and dials and levers that you can pull. And when you apply that to the SMB space, you know, people are saying, Hey, this is a long tail. They're a secondary audience. Like, let's leave them by the wayside and maybe kind of just retrofit or dilute what we have and ship it to them and it'll work. Um, and so I think it was always a little bit of a second order, you know, customer. And I inherited this team that basically was saying, you know, our, our goal is to grow because this is the long tail we make up for. Price with volume. Like they're not going to have the budgets, but there's millions of them. So let's go get a million of them. Right? So the problem statement is acquisition. It's growth. Our metric is monthly active advertisers. And you just want that number to go up into the right. And I think the thing that I most learned there is the power of asking the question, what problem are you trying to solve? And I now have become known, I think at Sequoia for just stopping in the middle of a meeting where there's so…

AI assessment note: “the thing that I most learned there is the power of asking the question”

Q you know, you said before, like, is your customer compelled by your difference as a kind of clarifying statement around that? Again, the difference is the really hard part. Product marketing, I think, I think it's actually done really poorly today. Again, I'm going to get in trouble for this. How do you think about advising founders on standing out in supremely competitive markets and what works and what doesn't?

A I think I would go back to using their words, not your words. The number of times that I have seen a founder, you know, describe this is what my product does. This is what it is. This is, you know, the category we're in. This is, uh, the feature set we have. And then you go and ask the customer and say, how would you describe this product? And it is completely orthogonal to the way that the founder either describes it or thinks it exists in the world. And then they think, you know, it fits, for me, it fits here. For me, it is this useful. For me, this is the biggest benefit. And the, the words just don't align necessarily.

AI assessment note: “I think I would go back to using their words, not your words.”

Q So what are the three different types of PMF?

A A lot of PMF content talks about Your product as if it existed in a vacuum. It's like, how do you get your product in front of the right customer? How do you get your product used? How do you get your product to the retention number? How do you get your product to hit this benchmark? But what about the market and specifically what about the customer mindset? So that's really what this whole framework is anchored on is the product that you build has to follow from the mindset that your customer and the relationship that your customer has with the problem that you're solving and how they, how actively or either actively, they're trying to solve it urgently. They're trying to solve it. Or how even aware of the problem they are really factors into how you build the right product and how you get to PMF. So that's kind of the core insight of, of the framework. Um, and so there are three basically archetypes of customer mindsets that we kind of revealed through just almost like back testing, looking through so many companies that we've worked with and thinking through what are the themes that are emerging here specifically as it relates to customer mindset on this problem statement. So the three archetypes, uh, we'll start with the first one, which is hair on fire. Uh, I think that's Pretty self-explanatory in terms of a name, but this customer obviously is in the mindset of help me n…

AI assessment note: “the three archetypes, uh, we'll start with the first one, which is hair on fire.”

Q Do you not ever want to be somewhere where the belief just is from day one?

A I do. Yeah, it's, it's an interesting, to your point, yes, I think you hit the ground running easier and you say, hey, we all believe in this, like, let's go. But at the same time, I think the, the act of seeing the tide turn, you know, the, the feeling of being kind of like a rebel or a pirate or a startup within a startup, and then slowly you see traction and slowly you see customers and slowly we start popping up in those farm games and people that were skeptical saying, wait a second, this is us, this is our product, like this works here in this context. And you see the wheels turning and people kind of opening their eyes to, oh, I see. I believe too. Um, you know, and I think that is so rewarding. And I think during, you know, obviously I'm at Sequoia now and I work with a lot of our early stage founders, um, all the time. And for them, one of the through lines that we talk them through in ARC, our pre-seed and seed stage company building immersion program is the importance of story. Like your job as a founder is to build the thing. But it's also to tell a compelling story to all the people that need to hear that story. And people over, maybe not overestimate the building of the product, but they underestimate the power of the story and the building of that story.

AI assessment note: “I do. Yeah, it's, it's an interesting, to your point, yes”

Q I would say 90% of the companies that I see as an investor are in the first category, which is obviously the hair on fire. Yeah. Is that true for you?

A When we actually look through our portfolio, I would say it was actually pretty representative across The different paths, surprisingly enough, hard fact is really, um, comes through a lot, I would say actually, surprisingly so. A lot of founders find, that's why I think a lot of founders found it so illuminating because they realized, wait a second, so all this struggle I have with skepticism and kind of waking people up to like, you doesn't have to be this way. It's because I am actually not on the hair on fire path. And so I think that was the biggest aha moment I saw from founders that actually were on the hard fact path, not realizing that that path Existed. So the portfolio is actually pretty representative, I say, I would say across the paths. One interesting thing I would add is that some, I would say both kind of from a founder perspective and also from an investor perspective, certain investors kind of like really gravitate towards certain paths.

AI assessment note: “When we actually look through our portfolio, I would say it was actually pretty representative”