The Exchanges

Q um, uh, set new resolutions and make decisions about things I'm going to do this year and what I'm going to change. Um, and for some people it's framed as a fresh start. Um, can you talk about, um, what a fresh start is in your world? And as, as we are setting intentions and resolutions for the year ahead, what's going to be most effective in making them stick?

A Yeah, I'm so glad that you brought up fresh starts. This is actually something that I've studied extensively with my collaborator Heng Shen Dai at UCLA and Jason Reese at Wharton. We, um, we have done research looking specifically at this peculiar phenomenon that drives not only New Year's resolutions, but actually our tendency to be healthier and set more goals at the start of new weeks, um, following birthdays, at the start of new months, and following holidays that we associate with New beginnings. So at moments in our lives that feel like chapter breaks, we have this sense that we're turning the page and that there's a clean slate that awaits us. Um, January first is sort of the biggest of all fresh starts. It's the one where 40% of Americans step back and set resolutions. Now, of course, There's no actual change, right? January one is no more different from December 31st than December 31st is from December 30th. But in our minds, those kinds of shifts, just like a Sunday shifts to a Monday that demarcate a new period in our life, they make us feel more separated from who we used to be. But a big problem with fresh starts is that all they do is they give us a temporary boost in motivation. So they're actually really great moments to do something that's sort of a one and done. If you're thinking about starting saving in, uh, say, a tax-advantaged retirement savings fund, and…

AI assessment note: “So at moments in our lives that feel like chapter breaks, we have this sense”

Q Well, and so, if these are kind of the seven deadly sins that keep us from achieving change, what, what are the most effective things that tend to knock out, you know, a, a significant portion of these, these seven deadly sins?

A First of all, you need to achieve, set a goal. I'm just sort of taking that for granted. So critically, you have to know what it is you're trying to achieve, and then you need to plan how you're going to get there. So say you want to exercise more regularly. Uh, some people think planning means saying something like, well, I'm going to exercise more regularly by joining a gym and going. That is not a plan. A plan is detailed. A plan has an if then statement. You would stipulate, you know, exactly when will you go to the gym and for how long? So, you know, Thursdays, Fridays, and Saturdays at five PM, that's when you'll find me at the gym and I'll stay for 30 minutes and I'll do, you know, a cardio workout on the elliptical. That's what I mean when I say a plan. You also might stipulate, how will you get there? You know, do you, and do you need to arrange childcare so that you can get there? So the more you get into those details, the better. Another thing that people overlook that comes up a lot is just finding a way to make your goal progress pleasant. If you find it miserable to pursue your goal, if you're just sort of hating every second of it, you will quit very quickly. So, it's in contrast to sort of the, the Puritan, Puritan work ethic ethos of Americans sometimes, and certainly the Nike Just Do It mantra. We think we should just push through pain, and maybe pain, in fac…

AI assessment note: “critically, you have to know what it is you're trying to achieve, and then you need to plan”

Q is how do I affect change, um, In the overall organization when it's not necessarily the nature of the organization to go where I want things to go. Um, for leaders who are in big organizations and are trying to drive change from, from below, from the middle, from near the top, um, are there, are there specific pieces of advice for, for them that you think are really helpful?

A Yes, there are many. Um, I do think, I do think it's a bit of a different kind of change than what we've been talking about, right? So now we're shifting from the person wants to change and what are the tools we can give them to support their success to, I need to persuade the person to change. And then of course, once they're persuaded, they may need all the same kinds of tools, but the persuasion challenge is the first challenge when it comes to leading an organization and trying to facilitate change. My favorite research on persuasion comes from Robert Cialdini, who sort of wrote the book on influence. It's called Influence, the Psychology of Persuasion, and it has a series of principles it walks through that are evidence-based on how we can be more persuasive, um, not in a yucky way. Actually, it's sort of, it's really wonderful, and, and, um, you know, a lot of it, it is, is focused on avoiding, you know, undue, um, influence and sort of Coercive attempts at persuasion. How do you dodge that? And also, how can you ethically persuade others to join, um, in a direction that, uh, that's good for everyone? So, I highly recommend that book. Probably my favorite tool of persuasion, which Relates to some of the barriers to internal change as well is understanding the power of conformity or the power of pointing to others who are, say, early adopters and are making progress. So it…

AI assessment note: “understanding the power of conformity or the power of pointing to others”

Q There's a lot of research showing that, um, teams that are diverse, um, in every respect, um, racially, ethnically, religiously, socioeconomically, et cetera, um, tend to have stronger outcomes. Um, uh, and, and yet a lot of organizations that want to achieve diversity goals are struggling to get there. Thoughts on, on how to nudge organizations, um, in the direction of achieving those diversity goals?

A Yeah. It turns out that a lot of the science that we can use to achieve other goals also is relevant in this context. Um, one of my favorite findings that's a really simple one is just that related to how we hire. So when we make hiring decisions, often it's sort of one off one at a time. We're making choices, you know, does this person fit, you know, should I hire this person to join my team? And, and sometimes that's by necessity and there's no other way To proceed. You know, you have turnover and you have to replace head count of one. But what we have shown in our research is that when people, um, hire in sets, meaning, you know, let's hire five at a time as, you know, everybody will bring on all our new folks together. We'll hire five people all at once in April instead of sort of one person per month, uh, from January through May. Um, when people hire in sets, they actually tend to hire more diverse Groups of people than when they hire one off over time. And the reason for that is when we look at a set, we start to think about the value of diversity and recognize the property of a set that, like, maybe I don't want five people who sort of have the same background in terms of their training and, and their upbringing and, and, you know, where they, they worked before, and that might not be optimal, and I want some diversity in that. And if you hire one at a time, There's no …

AI assessment note: “when people, um, hire in sets... they actually tend to hire more diverse”

Q two other terms, um, that come up a lot in your work and in the field. Uh, somewhere on the bookshelf behind me is a book by my, uh, law school professor Cass Sunstein or coauthored by Cass, um, uh, called Nudge. Um, you talk about nudges. What, what are nudges and what are the most effective nudges to generate the behavioral change you want to make in your life?

A I love that you brought up Cass. He's one of my favorite people and my favorite co-authors of mine. Um, Cass is amazing. So, so right, nudges are, uh, tools that motivate behavior change without changing your, uh, incentives or the information you have, sort of not using the typical policy levers that we think of, right? Like, oh, I'll tax sugary beverages, and that's how we'll get people to drink less of them, or I'll, uh, you know, I'll ban them entirely. Those are the kinds of tools policymakers usually use, but a nudge would just make something more psychologically attractive, uh, without actually making it, um, more expensive or, or say, you know, sharing calorie count information that might update your beliefs. So, uh, there are quite a lot of nudges that can be effective when it comes to behavior change, and actually this whole research body is really at the heart of what I study. So, um, Cass's co-author on the best-selling book Nudge, Richard Thaler, likes to say my, my research is all about snudging, self-nudging, uh, which, you know, I'm glad I didn't name my book Snudge, because I don't think it would have been a bestseller, but you never know. You know, Richard is brilliant. He won a Nobel Prize. Maybe, maybe his title would have been superior to mine. Um, we talked a little about making a plan, you know, sitting down and saying, like, when will I do it? Where will…

AI assessment note: “nudges are, uh, tools that motivate behavior change without changing your, uh, incentives”

Q is Masters of Scale. I'm your host, Reid Hoffman. Hasbro CEO Chris Cox and I had a blast reflecting on all the entrepreneurial skills D&D instilled in us from an early age. And don't worry, even if you've never played, there are plenty of business lessons baked into this adventure for you too. What's the origin story, you know, of D&D? Like what's the, where did this all come from?

A I think the origin of D&D, man, it's a tale, it's a tale as old as time. It goes back to sharing stories around campfires, uh, around, you know, things that happened, uh, you know, around the village or around the hunt, um, and usually, uh, frequently involving some embellishment. Um, and, you know, I think it moves forward over time in terms of, you know, the earliest fantasy literature, kind of like, you know, epics from like, you know, the, You know, Beowulf and, uh, the Canterbury tales, and, you know, you can go way back into all kinds of different cultures and canons, and really kind of comes to full circle around, you know, the world wars when J.R.R. Tolkien starts to take a lot of, like, these ancient kind of myths and turns them into a big fantasy epic that we know today as the Lord of the Rings trilogy. And then, uh, Gary Gygax, uh, In a small town in Wisconsin, basically took all of those concepts and gamified them. And really, what the team at, uh, TSR did, which is Gary's company that he founded in Wisconsin, is they came up with all of these kind of basic game mechanics that today feels like they've always existed, but prior to 1974, no one had ever heard of a hit point Before. No one had ever heard of like levels before. No one had ever heard of like classes, uh, before. And it really founded, you know, I think a lot of the basics of both modern tabletop games, b…

AI assessment note: “Gary Gygax, in a small town in Wisconsin, basically took all of those concepts and gamified them.”

Q say, like, look, we, like, we're, we're, we're participants in the world creation and in a platform for this, and so enabling developers is a really good thing. And that's one of the ways that we could take the level of scale on this to, to another level. Um, so what kinds of things are you guys doing, thinking of doing, et cetera, on the tool enablement side of this?

A Well, I think, you know, to the, maybe the less digital to the more digital, like, you know, D&D was an early proponent of an open games license and kind of opening up the rule set and opening up a bunch of the content to help, uh, users be able to explore their own kind of worlds and their own creations. So, you know, RSRD, which is kind of like the core content for the game, is now in the Creative Commons. Uh, the open game license is perpetual and out there for people to be able to use, so that's enabled a whole bunch of content creation over the last couple decades. I think what we're also doing, you know, starting to get maybe more digital, is we've taken D&D Beyond and we're starting to open it up from just a closed ecosystem of Wizards content to bringing on more and more user-generated content. We're starting off with like, you know, Independent publishers, but I think over time you can see that we'll open it up to more and more people and have more and more APIs for them to be able to access that. And I think we'll take that model, which is starting off now in like, kind of like the, the adventures or like the scenario modules, like basically digitized books. And as we have, you know, this, uh, this new, uh, digital tabletop, which is codenamed Sigil, And as in friends and family right now, you can see a world where we can start taking it away. We can start expanding i…

AI assessment note: “we've taken D&D Beyond and we're starting to open it up”

Q remember like a, almost like a, like, like kind of badly printed paper sets as, you know, kind of like homebrew computer hackers were playing it. But now, like, with Wizards of the Coast and Hasbro, there's much more of a, you know, like a scale, like a scaled industry, um, and, you know, production and product lines, and, and kind of what have been some of the scaling lessons?

A Yeah, I, um, about five years ago, I discovered a white paper that, uh, the McKinsey Institute did, and they basically looked at They basically looked at, uh, startups over, like, the last 30 years or so. You might have seen something similar to it. Uh, and they basically looked at, okay, who was successful at going from zero dollars to a hundred million dollars, and then who was able to go from a hundred million dollars to a billion dollars, and then who was able to scale, like, hyperscale to a billion dollar plus, and what did they have to do? And I think the general lesson, or at least that I took away from that paper is, You know, what got you here, uh, won't get you to the next stage, and what gets you to the next stage won't be the thing that gets you even farther. And I think that's been true with the history of D&D. You know, D&D came out of the gates, uh, really strongly in the seventies and eighties as kind of like this tabletop game with, uh, four, you know, gaming enthusiasts, mostly men at the time. Um, it kind of had a, it waned in the nineties and 2000, and then came back in a big way around 2014 with the, uh, release of fifth edition, and it's just been on a growth tear since. And so, you know, I think, what did we do in that 2014 time range, uh, when we, we released fifth edition? And how did we go from it being, you know, before that it was like a ten million …

AI assessment note: “I think the big things were for us were, A, let's embrace a broad audience.”

Q Um, like many of the founders we have on Masters of Scale, you have a non-obvious journey to where you are, um, uh, where you didn't grow up dreaming of being an entrepreneur. Um, can you talk about, kind of, where you started, and how you got, how you began on this journey?

A Yeah, so I moved to San Francisco when I was 25 years old, and I worked in, uh, tech, and I worked in non-profit, And through those two networks, I started meeting some really, really big entrepreneurs in the valley. And I, you know, I'm from a small town in Georgia and really never, ever, ever wanted to be an entrepreneur. My family was food insecure at certain points in my life. Um, I'm the oldest of five kids, the first to go to college, a pretty common story on your show. And in retrospect, it always seems so obvious to everyone else in the room. Like, of course you thought of this. Like, it seems so obvious, but no one else was paying attention to this space. And I, I had this one really obvious problem in my life, which was I was getting infections from tampons every single month for 15 years of my life.

AI assessment note: “I moved to San Francisco when I was 25 years old, and I worked in”

Q Right. So, so when, when you, when you say it almost killed the company, like, what, what, what happened, and how did you solve for it?

A So we launched into a major retailer, um, in 2018, and there was a new person on the desk who put an order in that was three times larger for our initial set order was three times larger than we thought that it was going to be. And, um, and at the time, um, we had this tool on our manufacturing line that cut breaking. So we were having production issues. That we were trying to parallel path and fix at the same time we got an order that was three times larger than we thought, but the fines, if you don't make the order, and we had tried pushing back, but we're an early company, you don't want to push back on, like, a really big retailer, so I didn't have enough cash to be able to produce their orders, um, and there weren't any lenders for a company like mine at the time, and I went out and hired a really experienced controller from CPG, um, that was a referral from a friend, And so he and I went and talked to a number of banks, and they all wanted personal guarantees. And I had a Subaru lease, and an apartment in Venice, like, where are you gonna take my dog? I don't even have a four one K anymore. Guarantee you what? Uh, so that wasn't, you know, it was a non-starter for me. Um, we eventually found a non-traditional lender, um, that, that lent us money and helped Helped us get over the hump, but that wasn't for another year.

AI assessment note: “we eventually found a non-traditional lender, um, that, that lent us money”

Q So how does Jerry Yang end up on your wall as a young woman with the entrepreneurial bug in, in Australia?

A You know, Australia is a very remote country in that it's literally on the other side of the world from the U.S. and surrounded by water. So my, my window was really magazines, which ended up being business magazines, which was what the library had at the time. And so I would read about all the exciting things that were happening in the world. And yeah, this story of Yahoo was one that really caught my imagination. Here was this Young person right out of school who was finding a way to democratize information and make it accessible to everyone. And by the way, he did it in a very fun, you know, down to earth way. And he also looks like me. And I, it made me feel like that was something that I would like to do one day.

AI assessment note: “this story of Yahoo was one that really caught my imagination”

Q So almost every company, when they start out, they get some things really right, they get some things really wrong. What did you get right and what did you get wrong at the beginning?

A So my co-founder Nobu and I are very much product people. We are focused on the, the customer, the couple, and we believe the best product always wins. And so I think what we got right was laser focusing on how can we design and build the best possible product for our couples. And we also didn't want to distract ourselves with doing a lot of different products or features. Until we felt like we had really nailed the first one, which was the wedding registry. Now, I think what we got wrong was that maybe we waited a little too long to respond to couples requests to expand beyond wedding registry. Um, the, we, we spent the first four years on that one product, but we heard from day one of launch, oh, could you please help me with this and You know, in my wedding planning, can you also help me with my wedding website, because my registry already has all my information. If I could just add a few more things, it could all be in one place. And, you know, I would say if I could do it all over again, I would react faster to those, those couple requests.

AI assessment note: “what we got right was laser focusing... what we got wrong was that maybe we waited”

Q What is a non-obvious, unusual wedding gift that you, that you saw, or that you've given, or that you've, like, what's one thing that, that people should think about giving as a wedding gift that they might not otherwise think about?

A Yeah. Every registry, At the, you know, towards the end, there's a lot of, there's a bunch of things that people aren't as excited by. And one of those things is a Dyson vacuum cleaner. And, you know, as a guest, I understand, I don't really want to gift a vacuum cleaner either. It's not one thing that you want to walk into someone's house and say, oh, I feel so great because I gave you that vacuum cleaner. But, you know, every couple always says, I really hope someone gets me that vacuum cleaner, because I've always wanted a Dyson, but I've never wanted to buy, you know. Spend that for myself, but I would, I would love to get it. And so.

AI assessment note: “one of those things is a Dyson vacuum cleaner”

Q defense. Um, and yet there remains this extraordinary fear about speaking out. Um, go back to Michael Jordan, Republicans buy sneakers too. Um, what do you say to business leaders who are struggling with when to take that public position, um, or even internally with their team when to say something about, um, an issue that is going to inflame passions on one side or the other, if not both?

A So I've been on the board of seven public companies, I think, 17 or 18 private companies, and generally speaking, I tell them not to. And that is, for the most part, like if you're Ben and Jerry's, or, you know, Hobby Lobby or whatever, and part of your identity or your REI as a political position, fine. But for the most part, I think the American corporation is meant to be a platform to help people garner economic security for them and their families. And I feel like the tech sector got a little out over its skis in that as CEOs started virtue signaling and trying to appeal to their younger employees by emoting and articulating these fairly progressive values that sometimes are disingenuous, and that is that when really push came to shove, they weren't just honest. I, I, I like a CEO who says, I'm here to make money and, and create shareholder value that you'll share in. And we're gonna be good citizens, we're gonna be ethical people, we're gonna be respectful of one another, but we don't have to take a political stand on everything, and I don't need to weigh in on George Floyd as the CEO of a company just because it happened, and I, I don't, I, I like kind of the wrap of trying to, unless it's part of your identity, stay out of it, and at the same time, I think government and citizens make the mistake of believing that we've personified companies, Companies are for profit. Th…

AI assessment note: “generally speaking, I tell them not to.”

Q dozens of board seats you've held. Um, uh, Sally from our audience wanted to know, as a board member, Scott, how do you assess whether a company has a strong company culture, whether it is a healthy company culture? Um, is it something you, you even are caring about and are trying to figure out, and is it a forward-looking financial indicator for you when you're sitting on a board?

A Yeah, but generally it's hard for the board, because the board doesn't spend that much time in the company, and the company, everything about the company is filtered through the CEO. When you, when you terminate a CEO, I'm going through this right now on one of my boards, you find out all this stuff about the CEO, because all of a sudden you're forced to speak to the people below that person. And generally, when you deal with the CEO of a public company, you're generally dealing with the rush chairman or the rush chairwoman, and that is the most popular person in his or her fraternity or sorority, and they become very good friends with the board, because the board's in charge of their compensation, And they edit and manicure kind of the messaging that the board gets. And I demand, or I ask of every board member that at least two or three of his or her reports or other people in the company come in and present something, because we just want to get to know these people. Generally speaking, the way a board, kind of, the board gets very few indications of culture. They can go on Glassdoor, but generally the way we evaluate culture through a shareholder lens, quite frankly, is retention. And that is, you should have eight to 12% turnover a year. And if you have a lot more than that, something's wrong with the culture of the compensation. We don't know how much we don't know. We don…

AI assessment note: “generally the way we evaluate culture through a shareholder lens, quite frankly, is retention.”

Q There we go. Uh, so, um, why socks?

A Randy and I were working together at a media company, and I was scrolling on Facebook, as one does back in 2011, and I came across a post from the Salvation Army that said socks are the number one most requested clothing item in homeless shelters, and it kind of stopped me in my tracks, where I was like, wow, here's an item of clothing that I don't spend more than a few seconds a day thinking about, and yet, This is being perceived as like a luxury item for 600,000 people living here in the U.S. and even more globally. And I remember, you know, thinking like, that's pretty sad. And I walked over to Randy's desk and I was like, did you know this fact? And obviously he hadn't. And I watched a similar reaction.

AI assessment note: “socks are the number one most requested clothing item in homeless shelters”

Q What, what it means to make the implicit explicit, like, can you give us an example of that?

A Yeah, for example, at Nasty Gal, right, the brand was just, Like lived in me, right? And as it exploded, I had people buying and curating, you know, there was a person who bought knits and dresses and, you know, uh, wovens and planners and a creative director and photographers and people styling stuff and hair and makeup people and people doing casting and locations and all of like a huge creative team in an in-house studio and All of those people were trying to decode what the brand was, and we, it was very late by the time we had this thing that was like, this is the brand book, this is how you use the logo, this is the voice of the brand, it's this, not that, like, it's irreverent, but it's not snarky, it's warm, but it's not saccharine, right? Like, all of these things where you can point at them, and when somebody writes some copy, or when someone takes a photo, Or when something is out there that represents the brand, it's not, oh, Sophia wouldn't like this, or, oh, it's my opinion, and I think that's ugly, right? It's like, here's what it is.

AI assessment note: “this is the brand book, this is how you use the logo”

Q men to talk about these things, uh, openly. Um, so grateful for your candor on it. Um, Dave, just a, a few questions before we, we come to a close, um, uh, as we, as we look to help our audience, uh, grow in their own careers. Um, I'm curious, other than your own books, uh, what's one book that you think every entrepreneur, business leader ought to be reading?

A This is an old one, but I, I think it's one of the best books I've ever read. It's called Walk the Talk. Okay. And it's a, it's, it's a great book because it doesn't take you long to read it. It's a parable. Uh, and, uh, and it's about this guy who becomes president of a company. And he's practicing his speech. And he hears these keys drop in the auditorium. It was the, he's practicing his speech the night before. And he hears these keys drop in the auditorium. And he looks out there, and it's the janitor. The janitor's name's Clarence. And he said, so you listen to my speech, huh? And he says, yeah. He says, well, what'd you think of it? Well, I've heard it before. And, you know, it's a, it's a great book about how, you know, people, you know, many times leaders will judge themselves by their intentions, but people will, your, your people will only judge you by your actions. So, you know, this guy, um, you know, goes around with this, you know, and, and, and goes on sort of a, I'd say an experiential tour, and then he ends up writing a totally different speech in the end.

AI assessment note: “It's called Walk the Talk.”

Q And were you at all concerned that this wasn't a full service salon? That the, I mean, the, the, the, this didn't exist before, right? Like come in, quote unquote, just for a blowout.

A I wasn't concerned, but everybody else was, you know, I mean, that was the common question was like, how do you make this business, this concept work? The name of the game was volume. Ironically, there's so many puns in this world of mine, but. You know, and at the time I thought if we could do 30 to 40 blowouts a day that that would, you know, get us to a good point. Not, not even really making that much money. That was more like breaking even. Um, but, but it would work, you know, and, and, and, and, you know, I didn't have big lofty dreams at that point. I was just like, I wanted to open one shop for myself, like something for me to go and do that I loved. And, You know, and I, I loved the environment of the salons that I'd worked in, and so I was really excited about it, and not thinking I was gonna turn it into this massive multi-million dollar empire, blowout empire. What I thought was gonna be 30 to 40 blowouts a day turned out to be, like, between 60 and 80 blowouts a day, which we were completely unprepared for, by the way. Like, we didn't have enough stylists. Like, it was a total disaster in the beginning, even though it was so popular. It was like, we were completely unprepared for what was coming.

AI assessment note: “I wasn't concerned, but everybody else was”

Q So how do you go from one store in Brentwood to literally within a few years, you're at like 40 locations around the country. Like what, what happened that you were able to accelerate so quickly?

A Well, you know, we, we realized very quickly, very quickly, like within the first few days, like we had captured lightning in a bottle. It was like, holy shit. Like women were coming in in quite literally droves. I mean, we were turning people away left and right, which sucked. The first couple of stores were really clunky, like getting those open and figuring out how to get, you know, people into those stores. Uh, and then we, we eventually like started hiring people who were smarter than us, who had like knew how to do this. You know, we eventually took, You know, angel investment from some friends and family and customers. And then we realized that we needed to, to really, if we were going to really expand this, because I think we got to like 10 or 11 stores, like bootstrapping it ourselves. And then we raised about twenty six million was our first big tranche from Castaneda with the intention of, you know, opening a lot more stores and starting a product line. And that was about, I don't know, two-ish years in.

AI assessment note: “we raised about twenty six million was our first big tranche”

Q So, w, was that part of the original vision? Did that come in later? W, w, where did that originate, and how, cause that's a whole other business you gotta figure out.

A Yeah, and really, I mean, You know, I, I don't know if you're, you know this, but like we sold the product division for two hundred and fifty five million. We didn't sell the whole enchilada for, which is an important distinction because the product was like a little bit of an afterthought for everybody else, not for me. I knew very early on I wanted to do product because what I was finding, because I was in the store every day and I was touching hair and I was doing blowouts myself and whatever, that the assortment we had, which was a bunch of my favorite product lines, weren't all working well together. And so I felt like we really needed a product line that really, you know, supported a perfect blowout. Like what we were doing, making the blood last as long as humanly possible. So every product was developed through the lens of like crafted for the perfect blowout. That's really what it was for. So, you know, when we raised the money with Castaneda, they, you know, I think we earmarked like a million dollars, which is like more or less what you need to start a product of that scale. Scale and size.

AI assessment note: “I knew very early on I wanted to do product because what I was finding”

Q What's one book that you think everyone should read?

A Oh, goodness. Um, there, there's Man's Search for Meaning. Frankl. Victor Frankl. Super famous book. Um, uh, He, he was a concentration camp survivor, and surviving a situation like that, you know, you have to have a reason to live, and so kind of the thesis of the book is you need to find a reason to live, and it doesn't even matter what it is, but you do need to find it and make that your reason for living. Um, that one really helped me get through a difficult period in my life where I was very stressed, And I, and I was constantly chasing this idea of like, how do I eliminate stress? And I think it's impossible to eliminate stress. The, and what that book kind of flipped around for me is the sort of stress that I have in my life as a result of the work that I do and the job that I have. Which is truly a privilege. I have a special job. I have my dream job and it's hard. And so if I didn't have that stress, what's the alternative? I'd be bored. And so that book helped me basically say thank you that I get to be stressed. Um, and so, and then as a result, I felt a lot less stressed. You know, it's funny how those things work out. So that's a, um, Uh, that's a big one.

AI assessment note: “there's Man's Search for Meaning. Frankl. Victor Frankl. Super famous book.”

Q So how, how do you make that happen?

A Well, the first thing that I did was people in the industry, on the spirit side, they had this belief that awards don't matter. If you got San Francisco double gold, gold, best in class, that was the only one that they believed mattered. Again, I like going against the grain, and I like Proving people wrong. I don't know what that trait comes from, but it is just in me. And so my thought process was, well, maybe people don't care about winning an award, but if we became the most awarded bourbon in the world out the gate, they would care. And I knew we had a head of whiskey operations with 31 years of experience. I knew that we could make an incredible product, that we could blend an incredible product, And so I decided, I told Kate, our chief business officer, I said submit us into every award competition around the world. We began doing that before we ever put a bottle in the marketplace.

AI assessment note: “I said submit us into every award competition around the world.”

Q And so what, what happened that night that gave birth to what became TaskRabbit?

A So, um, I was getting ready to go out to dinner. I had called a taxi to come pick me up. We were meeting friends, and, uh, we realized we were out of dog food, and we had this hundred pound yellow lab named Kobe at the time. Amazing. Amazing dog. Um, And I thought, you know what? How are we going to get this dog food? This is such a stupid problem. We're going to be late for a reservation. Are we really going to stop on the way home while the stores will be closed? The iPhone had just come out four months earlier. I grabbed my iPhone and I thought, why can't I use this device to connect with someone right now in real time and get the dog food? You know, at that time, no one was using location-based awareness in their tech stacks to pinpoint where people were, right? Because the iPhone had just come out. Uh, Facebook was just sort of breaking out of the college scene, becoming more mainstream, but no one was really leveraging the social graph to build trust between users, but for me as an engineer, I saw these three technologies, social, location, and mobile, and I thought, there's a lot here. There's a lot that we can do, and so that was really where the idea for TaskRabbit was born. I, I used my iPhone at that moment, and I thought, Okay, if such a site existed, what would it be called? And I typed in the domain name runmyeran.com, and it was available on GoDaddy for six 99, s…

AI assessment note: “we realized we were out of dog food... that was really where the idea for TaskRabbit was born”

Q You have the perspective of having worked at Google, Facebook, Salesforce, um, and then also being a startup person. What would be the thing that you would, you would say, hey, people should think this way differently about these large tech companies?

A I've lived through, uh, the transition from technology companies being Largely beloved to sort of a vibe shift in, you know, popular culture. I remember when I was on airplanes and I had my Facebook bag early on, the worst someone would say is like, you need to have a like button. I want to dislike button. You know, I don't always like everything. And that was like the, the harshest criticism. And now, you know, if you got on an airplane with a Facebook bag, someone might be like, why did you cause the downfall of Western civilization? You know, And I am much more of an optimist around technology, which is why I'm in this industry. And when I think about some of the largest tech companies, um, I'm not saying they're without flaw, uh, but I also am very grateful for as both a consumer and as a business, you know, what I get from these amazing technologies, whether it's Google search or the Chrome browser, Amazon web services, or Amazon, the commerce, um, platform, or, you know, Microsoft Azure, where we have a number of our, Models hosted today. Uh, all of these companies have really, I think, um, democratized access to technology for businesses and consumers in ways I'm very grateful for. So if there's any high level thing is I, I think people should focus a lot on how to enable a healthy startup ecosystem if they're concerned about big tech more than they should be concerned a…

AI assessment note: “I think people should focus a lot on how to enable a healthy startup ecosystem”

Q Where, where, I mean, growing up in a family with alcoholism, with, um, you know, only your dad, who was an alcoholic, um, working a white collar job, everyone else, blue collar jobs or no jobs. Where, where did this drive, this work ethic come from for you?

A Think. You know, who knows, really, nature-nurture, but my best assessment as I reflect Is one, I viewed work as honorable. Like, work was cool. And for me, work, any work, cleaning gym equipment, working in malls, it was both the income part, but also the skills piece felt like a path to independence. And I didn't want to rely on my past, uh, my father's track record. I just didn't want to be stuck. And my currency was learning. And so, as long as I had income, I had some degree of independence and flexibility, as long as I was learning new skills, also feeding that independence and flexibility, and in every company I joined, very quickly, I started at the bottom and worked my way up, as the great poet Drake articulates. Um, and, and so I, I, I did that, like, over and over at, and at the body shop when I was I started as a sales associate, worked my way up to a senior sales associate, got president's awards for sales, even though I was only part-time on the weekends. And then at Hooters, started as a hostess, and then a waitress, and then a certified trainer, bartender, cook, shift leader, ended up opening franchises by the time I was 19, ultimately ended up being an executive in that company. So there was something about getting in and moving up, taking on more responsibility. Um, not that you get to just take it, it's earned and Given. Um, that was just my ticket. My ticket…

AI assessment note: “the skills piece felt like a path to independence. And I didn't want to rely”

Q And this wasn't daunting. This wasn't like, um, I mean, so many people would have imposter syndrome, or like, I don't know what I'm doing. How do I even manage this? You were, you just said yes, and you went, and you did?

A Yeah, I mean, the, the idea of saying no, or hesitating, or someone else stepping into that opportunity was a far greater risk than The work to figure out what I didn't know. You know, it was definitely all figureoutable. It's not like I'm the first person to ever get on a plane. And so I knew that I didn't know what I didn't know, but it was very easy to ask people for help and then just be willing to do the work. I mean, I had never opened a restaurant. I'd never been to Australia. I had never met any of the people I was going to be working with at this event. We met in the LAX airport. And before we all converged on that very long magical flight to Sydney on Qantas Airlines.

AI assessment note: “saying no, or hesitating... was a far greater risk than The work to figure out”

Q don't need to go into that because we're going to talk about inflection and ideas. So kind of quality recognition of good inflection points, um, of kind of like what Or when do you know you've got one? And that's cause that's part of what you were doing is trying to make it more close to the metal for entrepreneurs to be going, okay, how am I thinking through this?

A Yeah. So the, the, the term that I settled on was the stress test. And so you might remember the 2008 financial crisis, Timothy Geithner would do the stress test of the banks. And I, I was like, I like that term. And so I thought, okay, I could stress test an idea for the power of its inflections and the power of its insight. And the, So with a stress test, I can say there's some things that we need to answer here. The first is what is the specific new thing? And so like, let's say, let's say somebody comes to me and says, AI is a revolution. It's going to change the world. I'm like, okay, I agree. What's the specific new thing that's an inflection? And they might say LLMs and I'll say what specific LLM? When was it introduced? What empowerment does it provide? What is the differential empowerment? Why is it not going to be leapfrogged next week, next month? So the first thing you want to know is what was the specific new thing? Uh, was it the, you know, a new law that was passed to enable telemedicine visits? Was it a new chip that was embedded in the iPhone four S? Uh, those, those would be examples. And so then the second thing I ask in the stress test is why is it radically empowering and who benefits from the empowerment? So like in the case of GPS chips in the smartphone, uh, A whole lot of people are going to have smartphones and anybody who wants to be located potential…

AI assessment note: “I could stress test an idea for the power of its inflections”

Q think that's the interesting question, of course, on your, well, is it pattern matching? Is it prediction? Is it, you know, is it, is it classification? Is it, you know, is all, but then which ones, you know, down to your inflection points are the ones that are going to be the things that a startup can go do. And it's, Definitely fast moving through the fog at the moment.

A Yeah. And so, so there's a couple of things I've just noticed, uh, and I, I wish I had it all figured out, but the first thing I've noticed is the AI startups that pitch me much more often have inflections than insights. And so I get pitched by startups all the time where I'm like, I can totally see why people will want this. I can totally see why it's empowering. I would want to use it myself. But I don't understand why there's not gonna be 10 just like it. You know, forget incumbents for a second. I don't even understand why there won't be 10 startups, and I don't understand why Sam Altman's not gonna have a demo in 90 days that puts you out of business. And so, like, that to me is a, is a great example of an inflection without an insight. And, and, you know, in those situations, it may make the world a better place, but all the surplus will flow to the consumer, right? Um, so that's the first kind of thing that I've, that I've noticed, uh, about AI. I do think that there will be counter-positioned opportunities. Uh, I've seen some, you know, Sarah Tovell at Benchmark talks about sell the work, not the software. And so you're, you, you sell the result of the cognition rather than a seat of software for everybody. I could see that. Um, there are enterprise companies like, so I'm involved with a company called Applied Intuition, and they're, they're applying AI for EVs and auto…

AI assessment note: “I do think that there will be counter-positioned opportunities.”

Q And, you know, in the Valley, most often inflection points are talked about as technology, right? It's like, it's now AI, it's now mobile, it's now, and you talk about this a little bit in the book. But give me some sense of kind of how to think about technology inflection points, and then also how to think about other than technology inflection points.

A Yeah. So, so first of all, you're right. That is a big part of my theory is that the founders who have breakthrough startups, even if they change their idea, the idea embodies inflections. And the reason is that business is never a fair fight. The only question is who fights unfair. And so the default assumption is the incumbents will fight unfair. The status quo has the advantage. And so the entrepreneur needs some mechanism to change the subject, you know, If, if your product can be compared to the incumbents, you lose. You want to force a choice and not a comparison. You want to show up with something radically different that denies the premise of the rules. And inflections are the magical weapon that the founder has to do that, right? So founders don't care about moats. They don't have anything to protect. They have the ability to disrupt by bending the arc of the present to a different future. So When I talk about inflections, I'm pretty precise as you point out, right? So like an inflection would not be LLMs. Um, an inflection would be more like the iPhone four S had a GPS locator chip in it that allowed people to locate people algorithmically for the first time. And so inflection as a term means turning point in math. It's a turning point where the derivative changes in a curve in technology or, or just social, Adoption. It's a turning point either in a technology's abil…

AI assessment note: “turning point either in a technology's ability to empower in a new way... or societal”