The Exchanges

Q I heard someone say, like, yeah, we grew from 50 to 2000 over the last, like, three years. I'm like, why do I ever want to have a company with 2000 people if I could have the same company with 200?

A I don't even want to have a company with 200. There are some situations in which I would accept that. I like where we're at now. We started this company last November. We got to three million in revenue in 12 months. We have five full-time employees. I think we'll be able to double this year, at least maybe a little bit more without hiring anybody. And that's a really good business, you know, and like, it will be valuable at the end of this year. And somebody will buy that for some eight figure number. It's so pleasant. Like when you have a company with 40 people and you're trying to hire 10 people a month, you have to start doing things like, oh, if we had a book club and we're in a kickball league and we had kombucha on tap, then we're going to be able to hire these people from Yelp and Yext, right? Whereas like if you have five people and they all have skin in the game and they're all smart, like that doesn't even remotely enter the equation. Right? And if you have to, like, hire one other really key person, like, they're interested in the fact that your company grew from zero to three million in 12 months, and, like, don't give a shit about the kombucha, right? Like, they're like, wow, we could really make this thing, you know, we could, like, Create a hundred million dollars in value over the next couple of years. And like, I could be one of the six people who did that.

AI assessment note: “I don't even want to have a company with 200.”

Q Like. You're preaching to the choir. So, did you get into entrepreneurship because of 2008, or were you already thinking of an exit before?

A The real reason, the real because, is I graduated from college in 2003. I went to Rice University in Houston, moved to New York, worked for Lehman Brothers. And I was living with these guys in my first apartment in New York who started Vimeo and College Humor in the apartment we were living in. So, like, Vimeo, like, I don't know, it was like a top 10 website on the internet at one point. Like, this is like a real thing these guys were doing, you know? It wasn't quite like starting Facebook, but like, these guys, they were working in this really cool apartment with really young people, and like, then they moved to this amazing office in Union Square, and it like, just looked so Cool. The job that I had was also awesome, but it was awesome because, you know, it was very smart and talented people that were doing it. But like, at the end of the day, it's kind of like trading is like taking money out of the system for you. And like, there's no building. Like I never interviewed anybody in 10 years being there. I never managed anybody. Like I had a couple of trading assistants. It was entrepreneurial in a way because like you either succeeded or you got fired, but there wasn't this idea that like, You know, you're slowly peeling back layers of the onion, and you like, you know, years go by, and you look back on what you've accomplished, and it's like, wow, that's amazing.

AI assessment note: “living with these guys in my first apartment in New York who started Vimeo”

Q through in testing different ways to validate your market and get people to pay for your, your product for Robley. Why don't we take a step back and talk about the thought process and the planning and the strategy for how to figure out what's the first thing to do? If it doesn't work, what's the next thing to do? And Et cetera, et cetera, until you hit that fit.

A There's a great book called the four steps to the epiphany that I would recommend anybody who's starting a startup read. I just agree with this philosophy about building things. The philosophy is this, and I think a lot of, a lot of startups that do really well, the guy has done this and he didn't even realize that he was doing it really. A lot of people have heard of the lean startup. This book is like the academic version of the book that the lean startup sort of like distilled into something that you could, you know, read in a day or whatever. But the idea is this, the, the root human flaw that this guy is saying we all have this wrong is that, uh, your intuition is often a horrible indicator of market validity. So instead of building something, thinking that there's buyers for it and then marketing it, On this big launch, when you're done building it, you need to find the buyer. You need to come up with a product hypothesis and then start building that product. And as you're building it, you need a separate team going out there and making sure there's actually demand for what you're building. And he's got all these steps. And if you make it to a certain step and you're not above a certain threshold, you have to stop and you have to pivot. You have to change your product hypothesis. And start the whole process over again. And he's, he's a stickler about like, it's not about …

AI assessment note: “if you're not above a certain threshold, you have to stop and you have to pivot.”

Q you back, saying something is different than doing something. From psychology, I know that people are very good at basically either lying to your face to make you feel good, or not really understanding their own behavior in order to give you the correct information you need. And so you have to observe their behavior in order to see what they actually want. So, so how did you observe that?

A So there's a few tools to do this. Fortunately, we have someone who's really good at product who like Ran Robley for me for a few years. Like the user of Robley makes you really good at product because they're like a really unsophisticated person. So like you have to design things in a way where it's impossible, impossible to misunderstand. There's tools that help great product people. Full story is a great one. You can literally watch the sessions, right? Full story. Write that down. Um, and they have a startup program. It's not cheap, but it's not that expensive. It's like a couple thousand bucks a year and you can watch video sessions of your users. So that is, man, when you've made your first cut at UI, it's amazing to watch people explain to you through their clicks, how bad you are. You know what I mean? So that's a great one. One thing that like we have tried to employ a couple of times and never Successfully. And I don't know why, like, maybe it's just cause like, we never had like a really mass market product in a sense that we didn't have enough people coming through to where I felt like the data coming out of it was like statistically significant, but things like mixed panel or amplitude, these are meant for product people to observe basically where people are getting hung up going through the activation and conversion process. So you send events to these softwares, …

AI assessment note: “Full story is a great one. You can literally watch the sessions, right?”

Q What's something I haven't asked you that you wish I would ask?

A Here's a good question. You know, as a person who started being an entrepreneur eight years ago versus who you are now, what are some of the philosophical changes that have occurred in your psyche in that period of time? And I have some good answers. Yeah. I have some good answers to this because my girlfriend started her own company last year. Yeah. My wife started her own company last year and like, You know, I just find myself very subtly, like, telling her these anecdotes of things that I did that I'm sort of seeing her do, you know, that I think a lot of people do because, you know, your friends come and talk to you about stuff, and like, so, a major one, I think, is if you can sort of get yourself to not do things that you know you have to do, but don't do them until the last possible minute, and when I'm talking about things, it's like, you think you need an LLC. You don't actually need an LLC unless your company's working. So like, don't go out there and spend time and money creating. It makes you feel good because you have this thing that you own. Just wait. Things that I did way too early. I hired someone six months before I should have. Like I should, I hired someone for customer support before we had customers, just because like I told her that she was going to start in October, but like, Your startup, like you can't forecast when that's going to happen. You can't l…

AI assessment note: “Here's a good question. You know, as a person who started being an entrepreneur”

Q So would you say that was the hardest thing you learned was figuring out how to get people to buy it?

A There were just so many lessons that came from that. If we're talking about like things that I will forever avoid in the future, like the hardest thing that I ever had to do was fire all those people at once. After ramping up on a decision that I had made, right? Like, like what lesson came from that? Like, I don't know. I was probably It's very easy. And with this new company, I'm sure you will see like separating your emotion from this thing that's growing in front of you is like such a difficult thing. It's, you know, especially like these people that you're hiring. It's a, it's a vanity metric. Like it's, it's horrible. It's not, it does not sign of a company doing well. Right. But like it does something to your soul when over the course of six months, your company goes from six to 39 people. If the people are growing faster than the revenue, even it still makes you feel like the business is like growing super fast because it's just in front of your eyes. It went from six to 39 people and some totally different thing. That was probably a great lesson. My personal attitude towards it now is that less people and more revenue is the goal, right? Like at that point, That was not necessarily the case. It was, I was, it was very exciting and fulfilling seeing this thing grow with headcounts in front of my very eyes.

AI assessment note: “the hardest thing that I ever had to do was fire all those people”

Q So do you think through using these kinds of services that it's possible to get enough information to decide whether or not you should pivot or continue down the road?

A The biggest motivation to pivot would be my tip top of the funnel. I just can't even get people to care. Does that make sense? Like whoever I'm trying to talk to about this, they are unenthusiastic and they are not willing to give me the time even to try my thing. Get emails. We had a little bit of like the other problem in the beginning, like everybody was willing to try it and they were so excited for the first six weeks. But unless you were a really talented email marketer, a small business couldn't make the emails convert very sophisticated email marketers can, because the emails are cheap, but like, if you're not good at converting on email, it's never going to work. So I would say, however, you're creating demand. Even if it's in the beginning and you're like literally manually finding your first 10 customers, which like, you know, if you read this Y Combinator stuff, like that's what you do. You find people by hand to, to like who you're, you think are your ideal people and however you do it, you find them. And it's usually over format like this. It's a video call now. Right. You can see in someone's face if they care, which is why I love video calls right over the phone. It's more difficult. I'll just quickly go back to, like I mentioned, I tried to create an enterprise email marketing application. We went to a trade show. I pulled this big stunt and we're going around …

AI assessment note: “The biggest motivation to pivot would be my tip top of the funnel.”

Q Thank you. So putting that aside now, if ever I say my wife, people won't go, wait a minute, you have a wife and a girlfriend? Wait a minute, what? So let's get a little bit closer to the topic, which is validating ideas and things like that. So what gave you the idea for your first company?

A So I think this is probably like a really hard one for a lot of people that want to be entrepreneurs. Cause like, where do you even start? I had this massive problem and like my solution, which didn't end up being a good one because I basically set aside a pile of money that I made. And I was like, instead of going to business school, I'm going to use this to try to educate myself in startups, invest in stuff and get involved with people that I thought could help me move along this journey. Right. Like buy my way into situations that ultimately hopefully would, would end up being a tech entrepreneur from an investor. My idea was like, and I had a guy that, uh, sort of mentor that has caused me to, to lose a lot of money, but sort of did this at Lehman brothers. Like while he was a sales guy, he like was sort of actively involved in like a portfolio of like private equity slash venture investments. And I thought that was like really cool when you're sitting there trading securities, that idea sounds like the coolest thing in the world. A diverse portfolio of businesses that you're sort of owning, running, whatever. I lost a ton of dough. I put money in like five things, like four of them, like went to zero, you know, just, and then the annoying thing was the stuff that I passed on. Like they're literally like billion dollar exit companies that I just got, you know, I'm like, I'm…

AI assessment note: “instead of going to business school, I'm going to use this to try to educate myself”