The Exchanges

Q really good article that, a blog post article, that you wrote in 2019 about kind of your reflections on Gumroad, um, at a point in time where kind of the trajectory changed relative to what you thought it was initially going to be. Before we hop into it, I just want to set the foundation for listeners. Can you share what Gumroad is, um, and how big it is today?

A Yeah. So Gumroad, we help people sell digital products and memberships. Uh, we started in 2011. I wanted to sell something to my Twitter audience, an icon, and basically just solved my own problem, built it over a weekend, launched Monday morning, and has kind of grown, uh, since then. Now we do about a hundred and sixty million dollars a year in annualized GMV. So that's sort of like the marketplace volume of that we take. 10% ends up being our revenue, and that's how we make money. Um, and about half of that ends up being our margin. Um, so you can do the math, we make about eight million dollars a year in like net income, uh, and Yeah, that's Gumroad.

AI assessment note: “we help people sell digital products and memberships... do about a hundred and sixty million”

Q if my company is going to grow right now, I think that the obvious next question is what do I do? Do I simply just ask this question or Who do I ask this question to? How often do I ask the question? What is kind of the step by step playbook for actually embedding this way of measurement around product market fit into your business on an ongoing basis?

A I'll use superhuman as a running example, and the process is about five steps. Step one is survey. Step two is segment. Step three is analyze. Step four is implement, and step five is track. So let's just go through these steps, each one in turn. And starting with, of course, step one, survey. In this step, you email four questions to every user. How would you feel if you could no longer use the product and give people three possibilities? A very disappointed, somewhat disappointed, not disappointed. What type of people do you think would most benefit from the product? That's a freeform answer. What is the main benefit you receive from the product? Also freeform. And how can we improve the product for you? Also freeform. Now, you should send these questions when users have experienced the core of your product. At Superhuman, we wait until they've had about three weeks. They've sent a certain number of emails. If this was Uber, it would be after you've taken your first ride. If it was Airbnb, it would be after you've, uh, done your first stay. Then analyze the results to this question. For Superhuman, in the summer of 2017, we ended up with 22% very disappointed, 52% somewhat disappointed, and 26% not disappointed. So the core number there is 22. We very clearly did not have products market fit. Now that may seem sad, but I could at least explain our situation to the team, and m…

AI assessment note: “the process is about five steps. Step one is survey. Step two is segment.”

Q Nicole as your HXC and you use these paragraphs to describe her, is that Are you using those two paragraphs to then ask yourself, what are the personas that most exemplify this, uh, HXC, and is it that founder, manager, uh, executive, and business development? Your belief is those, it's these classifications of personas that are most similar to the person that Nicole is describing, or are these separate ideas?

A They are ideas that are sort of tied up in a loop. So, Take your survey results. Focus on the ones where people said, I'd be very disappointed without your product. Look at their answers to question number two. Who do you think this is best for? Use the insights that happy users will almost always describe themselves. Use those words to come up with the HXC. Go back to the list of the entire survey results. You now have your HXC. Discard All those folks who, uh, who are somewhat disappointed and who are not disappointed, who the HXC doesn't describe, you'll have some HXCs in there who may be, um, somewhat disappointed or not disappointed, and you'll now have a subset of your survey results. Then recalculate your very disappointed score, and it will be significantly higher than where you started. In our case, we jumped from 22% to 32%. And what this is telling you is that if you focus your positioning, your pricing, your marketing, and your product development solely on the highest expectation customer, you're so much closer to product market fit.

AI assessment note: “They are ideas that are sort of tied up in a loop.”

Q Can you make that tangible? Why is that? Like, what does that look like in practice?

A So I'll give you two very easy ones. This is just at the top of my head, which is just like, you're always better off as a business owner than not. One example is as a business owner, you get something called a QBI deduction, which is the automatic 20% deduction on your income right there. It's part of the Trump jobs act in 2017. There's some nuance to it, but 20% right off the top. Another simple one is if you If you live in a high tax state like New York or California or whatever, you used to be able to deduct your state taxes from your federal return. But if you're not a business owner, you're capped at only being able to deduct 10,000 dollars. So if you live in California, make half a million bucks a year, you're paying 50,000 to the state, but you can only deduct 10,000. But if that same income was business owner income, it would flow through your business return and you'd get the entire 50,000 dollar deduction. That's just two quick examples right there, both of which mean same exact setup, meaningfully less tax for business owners.

AI assessment note: “One example is as a business owner, you get something called a QBI deduction”

Q Signatures from every single person. How, if, let's say you want to involve a lot of people in a round now, how do you do that in a smart way as a company?

A Yeah, absolutely. So we did this, we did what's called an RUV on AngelList, but really just pools together all these small check investors into a single line on the cap table. And the best part is you control their voting interests. So they get the same economic stake, But from a voting perspective, all their votes are consolidated into one single entity that you can sort of run the way you want. And this is great for us because what we did is part of our first round of funding was done for my fund. The rest, we wanted to get other people involved. So we had 200 investors involved, each putting in about 10,000 dollars each, various two million dollars with 200 people. And it's one line on our cap table. So right now, if I want to do anything, all I need is two signatures, my fund and this entity, and we're good to go.

AI assessment note: “we did what's called an RUV on AngelList, but really just pools together”

Q Well, can you start it with lowest risk investments? Because I think, at least for my age group, there's so much focus on the equity markets and single name stocks, but people don't realize actually like the bond market is bigger than the stock market, but it's just covered in a different manner. So can you start with the lowest risk investment?

A So the stock market has like 10,000 issues. The bond market has nine million individual CUSIPs. It's huge. And that includes issuers like The federal government of the United States. Treasury bonds. That would be your lowest risk investment because it's backed by the good faith and credit of the U.S. government. No different than the currency is, except it pays interest. And when you buy a bond, what no one realizes, you're just lending the money to the government, and at maturity, you expect to get that money back. Bonds are, you're given, uh, at a thousand dollar increment, and the interest is paid semi-annually, spoken of annually, and that's the long and short of owning Treasury bonds. And then from there, you could scale up on the risk, but that's what people consider risk-free investing. But of course, there is no such thing as risk-free.

AI assessment note: “Treasury bonds. That would be your lowest risk investment”

Q hive has become, even though it's such a crowded space. But I, I, before we get into kind of how you've done that, I want people to have a snapshot of the business today. So can you just kind of describe what does the business look like today? And then take me through kind of like The core metrics that you're most focused on and your team's most focused on.

A Yeah, for sure. So right now we are 45 full time employees. We're totally remote. We're across eight different countries. I believe right now we are coming up on our second year anniversary since launching. So we launched November of 2021. We have, we're doing about 750,000 dollars a month in revenue. It's about 85% SAS revenue to break down our business and like how we make money. We are SaaS primarily, so like any of these other newsletter providers that you're used to, we charge a flat rate monthly fee based on how many subscribers you have. We're extremely affordable, so we have a free plan, a 49 dollar a month plan, and a 99 dollar a month plan. If you have under a 100,000 subscribers, you're on the 99 dollar plan that comes with every feature from the referral program, growth tools, monetization tools. Above a 100,000 subscribers. We have enterprise, but that's like more bespoke, um, but still like by far the most cost efficient solution in the market. Um, the core product itself, what it does, it's a little bit of expanding on what I just kind of hit on, but you go to create content, you send a newsletter, we host a website. It's much more advanced than what we went to market with. So there's tons of different layouts and customizations, both on the website side and on the email side. We have growth tools to help you scale your newsletter from the referral program, very …

AI assessment note: “we are 45 full time employees... doing about 750,000 dollars a month in revenue”

Q Love it. Okay, so one of the businesses within GatewayX is Growth Assistant. So, uh, what is Growth Assistant, and how did you come up with the idea?

A Yeah, so, you know, when you think about how industries have evolved, I think of, like, software engineering 30 years ago, and everyone said, whoa, everyone needs, we need software engineers, they need to write software, we need websites, and there just was so much demand for that skill, but not enough supply, and that gave rise to Hey, let's go to India. Let's go to China. Let's go to any other country where maybe the labor's cheaper. There's just more labor. And it created this, what's called the BPO industry business process outsourcing. And so software engineering was the first wave. Then like 10 years ago or 15 years ago, we realized all these, you know, customer service moved there. And we saw an opportunity for digital marketing where we said, well, there's the same issue. There's tons of demand for that talent and the needs, but not enough supply. So Growth assistant, uh, helps great brands and agencies get high quality offshore digital marketing talent. Um, and the business is roughly ten million dollars in, in run rate kind of revenue. And we have over 350 people in the Philippines already and over a hundred customers.

AI assessment note: “Growth assistant, uh, helps great brands and agencies get high quality offshore digital marketing talent.”

Q as a business, like Not only what it offers to customers, but the business model, but you brought up loyalty programs, which was kind of the jumping off point. And I think actually the most, the best foundational way for people to understand your business is to understand loyalty programs first. So can you explain how loyalty programs work? And you can use the example of airlines and credit cards.

A So again, the funny, the funny secret again is that airlines are really just loyalty programs and credit card programs that happen to lease airplanes. Right? And so if you take a business like United Airlines, they have their, their passenger consumer airline, they have their cargo airline, and they have the loyalty program and credit card program. What they've done is they've created a currency, miles, that has outsized value to the customer because the ways you can use those miles and the gamification of those miles. Right? So the ability for you to now take those points and book free flights. Once people get hooked on earning miles, because every time you fly, the airline actually buys the miles from the loyalty program business, right? So it's a really important thing to know. The flying passenger company buys the miles from the loyalty program. The loyalty program issues it like, like a currency and sells it to the airline. What they realized is that it was such a big driver of consumer behavior that the banks who are looking to drive spend on their cards could actually use miles as a way to incentivize you to pick their credit card over others. And so they, all these airlines started partnering with banks, and as now you and I use every day, as you earn points on your card, you can transfer them into miles and use that to book free flights. So when you use your credit car…

AI assessment note: “airlines are really just loyalty programs and credit card programs that happen to lease airplanes”

Q a man slicing a bullet, uh, using his katana. But first, a quick break. Okay, so, I was on your YouTube today, and most popular video is this Jacked guy, no shirt on, slicing a bullet in midair with a katana. How do you think of this idea? Or how did someone on your team think of this idea? And did you know it would crush before you posted it?

A Yeah. So this has been done before. Just for like, there's, there's a guy in Japan that did this. So we're not original here. Uh, we just like, I think filmed it better. Um, but I, so that video, we knew it would do well. We wouldn't know it would do that well. We never know how well a video is going to do. Like, that's kind of hard to figure out. Um, it's all just rolling the dice, but I will say that video was also kind of a negative video, and that always shocks people, because what ended up happening is we got record views that month, sure, for that year, but also we got record low conversions, because that video was too low intent. It's like severely low intent, and it crowds out every other video that's high intent.

AI assessment note: “this has been done before... we knew it would do well.”

Q thing, uh, that I'm also interested about, and this is kind of nuanced to what you guys built, but there's a lot of people trying to build networks and marketplaces out there. Obviously the thing, the, the now old adage that, uh, Andrew Chen talks about and has written about in his book, you know, the cold star problem. How did you guys crack that problem in the early days?

A Yeah. So you either have to get supply or demand and, uh, ultimately you have to get both. And so we started with supply cause we said, Hey, if we get demand and there's no, no service pros, then this doesn't work. And so we, uh, S we tried a number of different ways of acquiring service pros, but one way really worked. And that was, uh, Craigslist. And so all these service pros were listing their jobs on Craigslist. We went out and found them and said, Hey, there's a new platform for you. You can sign up with us. And instead of posting a job ad every week on Craigslist, which is really dumb, you post with us once and then, uh, we'll help you find jobs forever. And so we actually created a way for the pros to sign up and create their profile on Thumbtack and then auto post that on Craigslist as well. Cause that's where the demand was. And this scaled up to a point where it, it was like a quarter of all Craigslist service volume, all these auto posts from, uh, Thumbtack pros. And then, you know, not surprisingly, we got a cease and desist that told us, uh, we, we should stop this and we'd been banned from Craigslist. And that was one of those moments where like, shit, uh, this was working. We were signing up, you know, tens of thousands of pros a week. Um, and now this main channel has been shut down and we had to find a new way. And you know, the question we asked ourselves is …

AI assessment note: “we started with supply... and so all these service pros were listing their jobs on Craigslist.”

Q you have not just amazing story around entrepreneurial success, but also you have a story around what it means to build something for a long time, stay committed to a long-term vision, and also be ruthless about fighting for doing something that you love doing, even when it's not easy. Not everyone knows your story. So can you just start by sharing how you got into the business of junk?

A Well, it started 34 years ago. I was in a McDonald's drive-through of all places. A beat-up old pickup truck was in front of me with plywood sides built up on the box, and it said Marks Hauling on the side. This truck was filled with junk, and I looked at that, and I'm like, that's my ticket. My ticket to start a business that would fund my way through college. I was one course short of graduation from college. All my friends talk their way, or Were registered for college. I had to talk my way into college, but my parents were not going to fund that education if I didn't finish high school. And so I went out and bought a truck. I started a company called The Rubbish Boys. It was a week after I got that idea, went on to the classifieds, found a truck, 700 bucks, boom, off I went. And ironically, what funded my college education and got me started inspired me to drop out three years in. I had a year left in my Bachelor of Commerce, my business degree, and I just said, you know what? I'm learning much more by running a business more than I am studying in school, and I Sat my dad down. I said, I got some good news for you. He failed to see it as good news. And I said, I'm quitting school. Found my passion.

AI assessment note: “Well, it started 34 years ago. I was in a McDonald's drive-through”

Q It's amazing. So just to give listeners a sense of the trajectory over time, and then we'll work our way backwards to talk about moments throughout the history. Talk about what your business looks like today in terms of size, number of businesses, like what's the profile?

A Mm-hmm. So, one 800 got junk, the first baby in the family, so to speak, is about six hundred million in revenue. We added on, 22 years later, a painting business where we go and paint people's homes in a day. No disruption. And that's called Wow One Day Painting, and that's about a fifty million dollar business. We have another fifty-ish million dollar business called Shack Shine. Windows, gutters, power washing, and Christmas lights. Those three brands, very similar, but a very fragment, they're each in fragmented mom and pop type spaces. We have about 600 employees in the head office, about 250 franchise owners across Canada, the United States, and Australia, sold out with the one 800 got junk, still plenty of territory left, and wow, one day in shot shine.

AI assessment note: “one 800 got junk, the first baby in the family... is about six hundred million”

Q the conversation you had with Mike from Traba, and I think it was with Harry Stebbings a few months ago, and, you know, he talks about the Olympian mindset in their culture and working 12 to 12. But until you actually see him work in that way, how did you know that he would have that level of tenacity? And you could use him as an example or basically anyone.

A Sure. I'll be telling you about Mike. Mike is very tenacious. I described him more recently as the most persistent person I know, which is close cousin, but I think persistent is slightly more accurate. You know, the trait that came up in the first two weeks I knew him when he wasn't even a founder, he was just a PM at Uber. Was, he told me a story about how he considered to go to business school. I was like, thank God you didn't go to business school. But the second reaction was, he told me that he took the GMAT eight times. And I was, uh, I was a explorer. He was like, I didn't even think it was like humanly possible. I thought it was like an illegal sort of thing. Um, and so I don't know who the hell would ever do that. But his persistence of getting like the ideal score was like, if he was going to take the GMAT, if he was going to get the ideal score, and he would take it like The absolute maximum limit. That's humanly possible. So once you see that trait, you know that that's what he's going to apply to everything in his life. And in fact, he does like pretty much everything that way. He runs the company that way. He runs his own life that way. And it's all, you know, it's kind of everywhere you look.

AI assessment note: “he told me that he took the GMAT eight times.”

Q investors who have different incentives. So how did you deal with your existing investors once you came to the reality of your situation, that you weren't going to be able to raise Series B, that wasn't going to be the path? What was the type of conversation you had with them to get them on board or not on board with kind of the direction you were going to head?

A Yeah. So in 2017, when, you know, in 2015, when we failed to raise the money, I just sent everyone an email and said, Hey, we failed to raise the money. Good news. We're not going to die. Uh, I'm going to just let everyone go and run the business myself and keep you in the loop basically. And so every quarter or whatever, I would email them and say, Hey, you know, this is how the business is doing. Uh, and then, and yeah, when I moved to, to Provo, as I mentioned, that was like the big thing where I was like, okay, this is really not recoverable in the sense that like next quarter, it wasn't going to like, I was going to hire a team and get an office in San Francisco. It was really gonna, gonna take a while. Right. And so I just sent them an email and said, Hey, I'm moving to Provo, like, you know, uh, going to do this class. Let me know if you have any questions, blah, blah, blah. Kept doing that. And then out of the blue, uh, basically like Investors would start reaching out and, and Kleiner at one point, I think we had one conversation before, but basically they were like, hey, we, you know, we'd be interested in selling our stake back to you, um, for a dollar. And I was like, okay, sounds good. You know, like, I think they invested six million in the A and a dollar for that. Great. Uh, but you know, they get a tax write off. They simplify their books. They had some internal…

AI assessment note: “I just sent everyone an email and said, Hey, we failed to raise the money.”

Q sort of quantitative way or leading way to look at product market fit and embed it into how you build your business and understanding if your product is working or not working for the customers you care about. So can you just break down basically how you arrived at even writing this article or thinking about calculating product market fit as a metric? Like what drove you to doing this?

A You're right. We certainly did not intend the article To blow up in the way that it did. And it's now become the most shared article on first round review and the standard way that entrepreneurs define and measure products market fit. But it all started with asking the question, what is products market fit? And the glib answer is that it's the number one reason why startups succeed. And the lack of products market fit is also the number one reason why startups fail. But what really is it? And so I started looking around at, uh, startup gurus to see what they say. Paul Graham, the founder of Y Combinator, would say it's when you made something that people want. Sam Altman would say it's when users spontaneously tell other people to use your product. But it's Marc Andreessen who has perhaps the most vivid definition. He would say, you can always feel it when product market fit is not happening. Customers aren't quite getting value, users aren't growing that fast, word of mouth is not spreading, press reviews are kind of blah, and the sales cycle takes too damn long. But you can always feel it when product market fit is happening. Customers are buying as fast as you can add servers, you're hiring sales and support as fast as you can, reporters are calling you about your hot new thing, investors are staking out your house, and money is piling up in your checking account. And so tha…

AI assessment note: “staring at through tears in the summer of 2017, because it seemed so subjective”

Q I love it. And I believe there's one last step in the process, so I'd love to finish with that. So you've gone through the survey, you've segmented, uh, you've gotten responses from the users that matter about what they want, what's holding them back, or what more magic they want. That's informed your product roadmap. What's the final step in basically understanding if things are working?

A The fifth and final step is ongoing tracking. As I've said, the framework will work, But of course, there are no silver bullets. So as you double down on what users love, and as you address what holds users back, you should constantly survey new users. And I recommend tracking your products market fit score every week, month, and quarter. And to give you an idea of how fast this can work, in the summer of 2017, after the resegmentation, our products market fit score was 33%. A quarter after that, It was 47%. A quarter after that, it was 56%. And a quarter after that, so a year later, it was 58%. So a year after starting this engine, 58% of our users would have been very disappointed without Superhuman. So the Product Market Fit engine really does work. It gives you this way to define Product Market Fit. It gives you a metric to measure Product Market Fit. And it gives you a methodology to increase products market fit, and it can even create this roadmap for you that will basically make this number go up, and you can also use to rally your team.

AI assessment note: “The fifth and final step is ongoing tracking.”

Q in 2017 and you saw 22%, uh, classifying themselves as very disappointed because I'm almost imagining myself what I would feel and I'd almost feel like this drop in my stomach But also to your point, it's, it's actually, it's so encouraging and helpful in the sense of, like, you actually have a benchmark now. There's actually something you can do. I'm curious, was that your feeling at the time?

A It was, and it's a complicated set of feelings. 22% as a starting point, as we'll see, is actually not that bad. 22 or 20% plus, I would say, tweak your market, tweak your product. You can iterate your way there. It's when you're sort of in the 10 to 15% range That I start to think, well, you know, maybe you should just have an entirely different market or an entirely different product. So it was a feeling of cautious optimism and one where I think you're an entrepreneur. Almost everyone listening to this is or will be an entrepreneur. We've all had that feeling of Something is there, and it's kind of bubbling along under the surface, and I knew it was there. So it was kind of a cautious, excited optimism.

AI assessment note: “It was, and it's a complicated set of feelings.”

Q product features within the business and how that actually worked within the contracts of construct of running the company. So at least in the article, you talk about November of, uh, you shipped, uh, Gumroad memberships. You can use that as an example, or if there's a more recent one, but can you walk me through like, How big product features and are shipped within the business in this model?

A Totally. Yeah. So most things come from our customers, our creators say, Hey, we really want a feature like Gumroad memberships, which was basically like, okay, we have products for sale on Gumroad. We have like a really hacky way of changing the price to do memberships. We want like a custom memberships, first class citizen. Uh, and that's like one line and my job basically as, as sort of the PM of the company is, Is to basically turn that into like a set of atomic subtasks. It's like, okay, if we want to get there, what does that actually mean? And I do a little bit of maybe design. I do a little bit of engineering as part of that, but I come up with an often like a Figma prototype of like what I mean, I back it out in notion. And then I basically ping a designer and an engineer. And I say, Hey, I'm thinking about working on this, like Gumroad are doing this. What do you think? They kind of look at the scope. And we refine it together. And then once the scope is in a good place, we move to design. We kind of repeat the process with the scoper and the engineer contributing, and then it moves to engineering building. And then the builder builds it with the scoper and the, and the designer contributing and then shipped to production. And so we basically have these like three roles, right? We have scoper designer and builder. And like, it's very much like kind of like this assemb…

AI assessment note: “we basically have these like three roles, right? We have scoper designer and builder.”

Q Yeah. I mean, you talk about this idea of spies, like your spies that are on the internet that are helping you mine for these ideas. What are kind of your favorite tools that you use as Greg's personal spies to bring back ideas to you?

A So I'll give one mini playbook on one tool that pretty much everyone listening knows, but probably doesn't use it to come up with business ideas. And it's Product Hunt. So not many people know this, but on Product Hunt, there's a, uh, tab under the product, on the product tab that says Launch Archive. And basically, Product Hunt's been around for 10 plus years, and it's basically an index. There's a calendar view. You can actually go and check, so you can go and scroll down, On Product Hunt and go to like, I don't know, uh, January, 1620 14. And it'll list all these, uh, top products. So I'm looking right now, I see first opinion, text the doctor for free, kimono, never read a web scraper again, founder suite, tools to get startup shit done. So you can see that there's a bunch of these ideas, um, that have been out there and have been validated in the sense that they have some amount of consumer demand. The interesting thing is, well, it's actually a few things. One is A bunch of ideas, like, people just post on Product Hunt, it gets traction, and then this, like, indie hacker just gives up on it for whatever reason. It could be they got a full-time job, it could be, uh, they were able to build the product but not get sustainable growth, um, but it doesn't mean that that isn't a good business idea to take and remix as your own. So, um, My playbook to people is, if you're lookin…

AI assessment note: “I'll give one mini playbook on one tool... And it's Product Hunt.”

Q And what are those, out of curiosity? When does, uh, synchronous communication make sense? Obviously you talked about off-sites, but when else, especially in a digital environment?

A Yeah, I can give, I think maybe I'll give some specific examples, and then maybe we can try to extract a principle from that, but, uh, one is, say, a project kickoff. It's something that I personally like to do. Not every project has one of these, but it's like, we are officially starting this group of people on this project on this timeline, and we're all here. We can all answer questions, and we, there's like an emotional resonance of that Moments of like, we're starting this project for the next eight weeks. We're going to be working on this together. Uh, another is daily standups. We default to doing them async, but if you're working on a really high velocity project, just having 30 minutes of sync time in the morning really makes a big impact. And we found for a lot of our projects, people might do two weeks of daily standups that are synchronous live Answer questions, get more context, higher velocity, and then they eventually transition into async standups, where at the end of the day, they just say, this is what I worked on. If you have any questions, let me know. And so, uh, I think other aspects, if we do a lot of our code review live, we default to async. You might record a loom walking through the code, but if it's a really big pull request with, I don't know, a thousand lines of code changed and It's on a part of the code base that people are unfamiliar with, and y…

AI assessment note: “one is, say, a project kickoff. It's something that I personally like to do.”

Q And out of curiosity, when you were doing these back channel references, what would you ask other founders, uh, to be able to, to better understand their experience with the investor that you're looking into?

A Yeah, my most effective question is one that I've actually adapted from, um, for candidates, but it works just as well for, for investors, which is I ask the person who I'm, I'm doing a back channel reference with. I ask them, let's say I take this money from NEA, and I tell you in, in six months, it didn't work out. What's your first instinct as to why? And, uh, and sometimes I'll even frame, like, let's say you and I bump into each other in San Francisco, and I turn to you, and hey, it just didn't work out. Uh, you know, I make it really real. I tell, I mean, I want them to feel the consequences of if they give me bad advice, uh, what it might feel like. And usually when you ask somebody their first instinct, and you ask them in this hypothetical, you get to some truth that you might not otherwise get when you ask about strengths and weaknesses. And, um, so that's one, probably my most effective question is, uh, this hypothetical of why wouldn't it work out in six months?

AI assessment note: “my most effective question is... let's say I take this money from NEA”

Q days for your business? Are there any, like, kind of best principles or rules that either EOS defines or that you follow for setting effective ninety-day goals in terms of, is there an owner of these goals? Are they done at the company level? Are they done at the individual, uh, person level? Um, what makes a goal a good goal? Elaborate on what a good ninety-day rock looks like.

A Yeah, so EOS has rules for everything, and I follow, like, 95% of them. Sometimes. So I'm very, I'm very entrepreneurial. So then it's just like, okay, well, we're not gonna do that, but I believe in the way they do. I believe in the way they do their goals. And, um, so the EOS rule is every goal that's written, which they call rocks for no good reason whatsoever, other than to make you feel like you're part of a cult, but the, um, the, they have an acronym to describe them that they're smart goals. They're specific, measurable, achievable, relevant, and time bound. So You know, if you look at goals, it's like, okay, we will create a marketing program that will generate a thousand leads by the end of the year. Okay. Does it pass specific, measurable, achievable, relevant, and time bound? Absolutely. In the end, that's the way EOS defines how you should build these goals. They have other rules around goals as well. I think you hinted about Alex, which is great. A lot of companies will just say like, here's our goal. And then like, nobody's actually responsible for it or two people are responsible for it, which when you apply, you know, you assign a goal to multiple people, then that means nobody's responsible for it. So, like, they will say, like, one person has to take ownership of this particular goal and go for it that way. So, um, I think those are most of the goals. The oth…

AI assessment note: “one person has to take ownership of this particular goal and go for it”

Q And if I, I can't remember off the top of my head, but isn't there a way to basically evaluate if someone is the right person for the right seat? Isn't it like, uh, has it, wants it, uh, there's like basically three things to determine if someone's in the right seat.

A Yeah. So it's a, it's a framework exactly as you're talking about to evaluate fit. Um, it's called GWC or GCW. Um, I'll start backwards. C stands for can do it. Like, can they do the job? Um, so that's pretty straightforward. Like, do you have the skills, the ability, like physical ability, mental ability, all that kind of stuff. Want it. Like, do they want to do the job? Like, is this something they're passionate about? Like, put me in accounting. I will not want to do the job. Sounds terrible. And then gets it is like the other stuff. Like, it's like the cultural fit. Like, do they understand the broader context of why they're doing what they're doing? Um, and so those three things together, you want to have everyone in your organization to have a hundred percent GWC. And sometimes you'll see people that can't do it, but they want it and they get like the culture and they're a great fit and everybody loves them, but they're in the wrong seat, right? Or they're potentially on the wrong bus with you. So those are things where like you can use that framework to go through and evaluate your whole team and see like, okay, do we have the right people on the bus and, and are they in the right seat?

AI assessment note: “it's called GWC... C stands for can do it... Want it... gets it”

Q Incredible. And then, I don't know if you want to briefly talk about it, because I feel like this is like QSBS Kung Fu, but like, there's this whole world of QSBS stacking as well, right?

A Correct. So now, let's level up, right? Next level, let's say you're, yeah, again, this gets crazy. Let's say you want to, you're going to make 20, 30, or forty million dollars. There's actually multiple strategies you can use to multiply your ten million dollar QSBS limit to 20, 30, or forty million dollars. The simplest of which is, honestly, if you have family members that you'd like to give shares to, the QSPS limit is per company, per shareholder. So what I've done this time around is given shares to my brother, my mom, my dad. So if the company were to ever have a successful outcome, each of them would have their own ten million dollar limit. So super powerful, super effective. Um, that's part one. Part two is you can Set up trusts, different types of trusts, each of which can serve as their own taxpayer that gets their own ten million dollar dollar limit. For instance, you can set up, I set up, I set up two trusts. I set up a trust for the benefit of my future children and family, and I made a gift of my shares to the trust, and as a result, that trust got its own ten million dollar limit, and then I set up another trust, which is called a charitable remainder trust, which works by Giving the share, giving the shares to this trust that does not pay taxes. It pays me out an income stream every year for 20 years, and what's left over goes to charity. And that got its own t…

AI assessment note: “There's actually multiple strategies you can use to multiply your ten million dollar QSBS limit”

Q is understanding problems that exist for people is important. So you're not just building ideas that are in search of a problem, but it sounds like to you, you want to marry that with the things you're really good at, and then there's enough ambition to the idea as well. So what is your process for doing this? And even feel free to use examples of businesses that you've built.

A Yeah. So I think it's exactly right. You can't, you know, Paul Graham's correct. Like you can't build things people don't want. Businesses are built on repeatedly solving people's problems. So, you know, for example, um, earlier this year, we used the effectuation process to go build a, um, a CEO peer network. It's called, uh, it's called Scale Path. Doing very well. Six months old now. Um, and I have a co-founder in it. He runs the business, and I'm like the, sometimes the talent, and then we've brought another talent. So the talent level is increasing. And, you know, the idea of Scale Path was we first looked at the things that we had as strengths for us. And then married that with observations about the world. And so like I built an audience on social media, like I know a lot about, um, how to run businesses, especially small businesses and how to grow them. Like I've done all that. Like I've studied it. I'm a nerd about it. So we had that kind of strength about it. And then we married that with realizing that we kept hearing these things and these hints, and this is one of the things that happens a lot in the effectuation process is you take your strength and you kind of hear these hints that there might be something interesting to go look at. And we would see these hints like post COVID everybody was much more comfortable with online communities, right? Which you and I are…

AI assessment note: “we used the effectuation process to go build a, um, a CEO peer network”

Q in the coming years, and I'm always thinking about what does it actually look like to be setting up Your family or specifically your kids for a life of financial freedom. So for a listener like myself, who is looking to do the right thing for their future kids, how can I start investing for my kids today? Or how can someone do it when they've just had a child?

A So there are plenty of account types that are tax advantaged for investing for miners, like UGMA accounts, five 29. So a UGMA account stands for unified gift to miners account, where you're putting in investments and those can grow tax deferred, and eventually, once those funds are used, then you're paying the taxes on the way out, or a five 29 account, which you set up through any of the states, and You're putting those funds in specifically for college. It's for higher education. But what I did for my kids, I actually did zero coupon muni bonds in my taxable account. Now, I'll break that down. So, muni bonds, to start with, those are bonds issued by a state of municipality, and you can buy them, and they're tax-free in the state you live in, in one of the regions of the United States, like D.C., Guam, U.S. Virgin Islands, Samoa. So there's all these different ways to grow those Tax free in your taxable account. And the other reason I did that was the idea of having zero coupon. Zero coupon means I'm collecting no interest. So I'm thinking about the dates when I'm going to have maturity are going to fall, hopefully, just when all the tuition is due. And I'll have a lump sum ready for that date. Now, of course, there's no perfect investment. Like, I don't know exactly what the tuition will be. I don't know if my kids will go. But that's okay. One of my kids, I have four kids. O…

AI assessment note: “there are plenty of account types that are tax advantaged for investing for miners”

Q You talked about some of the, the biggest surprises that you had when you went back and looked at two years worth of data. Can you talk about a few of those surprises, things that you weren't expecting to see when you looked at the information?

A Yeah, I think, The biggest surprise, if I had to pick a singular one, is how there were things that I assumed took up a lot more of my time than they actually did. Uh, specifically recruiting was one where I felt like I had been spending a huge chunk of my time on recruiting. And it was actually a tiny, tiny fraction of my time. And I write a lot of memos. I write a lot of strategy. In fact, right after the end of this podcast, I'm going to be writing a strategy document. And I assume this was, you know, 20, 30% of my time, some very large number, because I, the output is so high, but it was really, again, five percent, some small number. And so, uh, it, it made me realize that it's, having these feedback loops, measuring things is super important. Uh, if you, and I'll give a specific example recently, I was talking to a CEO friend of mine who was saying he's probably spends 20% of his time on just board management. And that might be true. What is definitely true is that he feels like he's spending 20% of his time on board management, which means it is sucking the life energy out of him, and that, that alone is a problem, but he might be surprised to discover maybe it's one percent, maybe it's 40%, but he really doesn't know how much of his time is being pulled into that, because he doesn't measure it. So, uh, I think having an empirical record when you have a, a stated set of …

AI assessment note: “specifically recruiting was one where I felt like I had been spending a huge chunk”

Q so you guys have a good foundation for his story and, like, the origins of Beehive, but I really want to focus this on kind of what he's learned, uh, around building early stage companies, uh, that can help you build your early stage company, uh, So let's just, uh, set the foundation for a few minutes. Give, um, give your short story. So like, what, what is your story?

A Cool. Short story. I went to the University of Maryland, did technology entrepreneurship minor, studying mechanical engineering, taught myself how to code while in school. While in school and teaching myself how to code, me and two co-founders built a company called VentureStorm. It helped connect entrepreneurs and startups to software developers, ideally on the same campus. So the thinking was a lot of really smart business school students, very entrepreneurial, a lot of really great computer science students looking for opportunities. Let's connect them on the same campus. Campuses are known to be like a big entrepreneurial hub from everything from like Stanford and Harvard and everything else that you hear. Um, that was not a wildly successful startup, but got my feet wet in terms of what does it take to actually build something from zero to one? How do you take nothing? Talk to users or potential users, understand Their pain points, what would solve their problems, and then turn that into a product via code, and then market with more or less no budget whatsoever. So as students, we weren't venture-backed. We didn't have any money. We created content on Medium, on Quora, found any way that we could basically grow our user base, and sponsored hackathons, showed up to everything from University of Michigan to University of Harvard, sleeping on dorm room floors, trying to get i…

AI assessment note: “Short story. I went to the University of Maryland, did technology entrepreneurship minor”

Q their wallet to pay for it. Um, I want to talk about the two times that you left, let's call it corporate jobs. Well, one time you didn't even go into a corporate job. The other time you actually left a corporate job. How easy or hard was the decision of not going to Deloitte and joining the brew? Like when you were trying to go through that decision-making process?

A Yeah, and so I kind of skipped over that part in like my quick backstory, but basically during the summer while I was doing contract work with Morning Brew, I was applying for full-time jobs, partially because there was like no guarantee that Morning Brew was going to be a full-time job, partially because Austin, when I visited New York, said he was looking at ex-Google and Facebook engineers to hire at the brew, and I was like, well, that's definitely not me. So I just assumed that that wasn't in the cards. Um, so I was applying for different jobs that entire summer. Got a full-time offer to do technology consulting at Deloitte. Um, really, I mean, a lot of people from the University of Maryland, especially in engineering, just kind of filter into Washington, D.C. tech consulting jobs. And so that was a good opportunity. I had a girlfriend that lived in D.C. I had an apartment and a friend and, like, a good, well-paying, secure job. One of the best pieces of advice I ever received from another friend named Austin, actually, was when I was weighing between the two opportunities, he was like, You could be one of 20,000 people at Deloitte in that exact same role, or you could be one of one, the only person building what you're building at Morning Brew and make a real difference. And so I think everyone has a different appetite of risk. For me, doing something where I wasn't compl…

AI assessment note: “when I was weighing between the two opportunities, he was like, You could be one”