Hard truths about building in the AI era | Keith Rabois (Khosla Ventures)

- The idea of a PM makes no sense in the future. The skill is more like being a CEO now, which is what are we building and why? - There's a lot of anxiety in the job market. - AI is gonna radically reorient. Lots of people's careers, maybe including mine. What I've noticed in some of the best organizations is the number one consumer of tokens is the CMO. They don't need to rely upon deputies and deputies and deputies to get actual work product. - When I hit on some new contrarian takes that you have year advice, you don't actually want to be talking to customers. - I hate talking to customers. I refuse to allow colleagues might have talked to customers. - You have this idea of criticizing and public versus in private. - I perform its machines, don't have psychological safety. They're about winning. - You're uniquely great at helping companies build world-class teams. - And a founder shows the ability early in his or her career to assess talent ruthlessly and accurately. Here's where you can go very far with no other abilities whatsoever. - It feels like it's never been harder to attract the best talent. - Really talented people. When things are going well, they're not happy. Tomorrow actually does go down when people are skating. The single role for the CEO is offsetting that complacency. It's a better year doing. The war the CEO should push. - Today my guest is Keith Roboi. Keith's resume, both as an operator and investor, is absurd. He was an early investor in Stripe, Palantir, Airbnb, YouTube, DoorDash, ramp and dozens of other companies. He's part of the famous PayPal Mafia where he was executive vice president, business development and policy. He's also been chief operating officer at Square, VP of Corporate Development at LinkedIn. He's also co-founded two companies, and he's currently managing director at Coastal Adventures. It's safe to say that Keith is in the 99.9th percentile at identifying talent, building teams, and operating world-class companies. Before we get into it, don't forget to check out Lenny's product pass.com for an incredible set of deals available exclusively to Lenny's newsletter subscribers. With that, I bring you Keith Roboi. Keith, thank you so much for being here and welcome to the podcast. - It's a pleasure to be with you. - Okay, so when we were starting this recording, you told me you're doing this from an iPad, which I've never had, and you shared a crazy fact that you haven't used a computer in years. Talk about what's going on there. - Yeah, so when I started working at Square, Jack Dorsey was running the company off an iPad. And so I immediately converted in September 2010, and have a look back, I haven't touched a computer since September 2010. Everything I do in my life is either done for my phone, my watch, or my iPad. - What's so interesting about this, as you were talking, is just there's this trend of engineers starting to code from their phone. Like I had Boris Trinion and Simon Wilson, these two engineers that are like 10x engineers, and they're just like coding from their phone, talking to AI. And I feel like you've been preparing for this for a long time. - Yeah, trying to be ahead of the curve. Jack's very good at being here at the curve. If you could just watch what Jack's doing and follow, pretty good city-based technology. - And just understand the benefit as it just avoid distractions? - Yeah, partially distractions. Partially just the flexibility, like taking an iPad with you anywhere, is just super easy. Some laptops have improved since then, but like the screen flexibility angles, but like just the weight, like I carry my iPad with me everywhere. So there's no reason. There's nothing you can't perform. Maybe if you're doing heavy-duty engineering, which I honestly is not been my forte in life, although I may have to start. There's no reason to use a more powerful, heavier weight, less flexible machine. - Wow, iPad Maxing, Keith Roboi. - So if you got my Apple, as long as it's an Apple product, it works. - It looks so appropriate. - This episode is brought to you by our season's presenting sponsor, Work OS. What do open AI and Theropic cursor, Versel, Repplet, Sierra Clay, and hundreds of other winning companies all have in common? They are all powered by Work OS. If you're building a product for the enterprise, you've felt the pain of integrating single sign-on, skim, R-back, audit logs, and other features required by large companies. Work OS turns those deal blockers into drop-in APIs with a modern developer platform built specifically for B2B SaaS. Literally every startup that I'm an investor in, that starts to expand up market, ends up working with Work OS. And that's because they are the best. Whether you are a seed-stage startup, trying to land your first enterprise customer, or unicorn expanding globally, Work OS is the fastest path to becoming enterprise-ready and unblocking grow. It's essentially striped for enterprise features. Visit workos.com to get started, or just hit up their slack where they have actual engineers waiting to answer your questions. Work OS allows you to build faster with the light-full APIs, comprehensive docs, and a smooth developer experience. Go to workos.com to make your app enterprise-ready today. As I was preparing for this chat, there's just like so many directions we could have gone with this. You are so smart, so many things. I want to focus on something that I think you're uniquely great at, which is helping companies build world-class teams. And I want to start in particular with attracting the best talent. And what's really interesting these days from what I can tell is there's just like a lot of people that are struggling to find a job. It's taking a lot longer to find a job. It's just there's all these layoffs. On the other hand, it feels like it's never been harder to attract the best talent. There are so many amazing companies doing amazing things. There's so much money flying around. These $100 million offers and things. And so from the companies that you are closest to that you see are best at attracting the best talent, what have they figured out? What are they doing differently? What are some creative things they do? Well, let's start with first principles. The most important lesson I learned when I was working at Square from my board was Vinod Kostel, who was on my board. And he said, "The team you build is the company you build." And that adage is the most important thing when you're creating a startup. People get distracted with the market, with customers, with the product, with technology. Ultimately it's a team. If you have the right people, everything else will be easy. And if they're wrong people, everything else is gonna be difficult. So I actually learned this Vinod distilled it, but I actually learned this back on my PayPal days. So in the early 2000s, why was PayPal so successful? Why were there such a subsequent generations of successful and interesting companies for 25 years now? It's because Peter, Tiel, and Max Lovchen martyled an incredible density of talent. So it allowed PayPal to succeed, where possibly we wouldn't know. And these people went on with interesting ideas, ambition and talent, to build Epic companies, and all kinds of verticals. So from day one of my technical career, technology career, I've always been focused on how the importance of critical density talent, how do you identify, retain and promote people with that talent. Back in the PayPal days, when I first started my career in technology, I actually truly was not very good at this. Fortunately Peter and Max were. So Max basically hired all the technical talent in the organization, Peter pretty much hired everybody else. They used their network primarily. So it was very difficult to get a job at PayPal, unless you had a first degree or second degree connection to the engineering team or to Peter through Stanford, which is a different type of recruiting model. It works really well if you have a strong network. I wouldn't recommend it for everybody, but if you have a network that has unique talent, there's no substitute. Interviews are not a great substitute, or there are some how strong we are at interviewing. But when I started my career, I was mediocre, let's say, hiring people, probably 50/50, you know, some good people, some mediocre people. That doesn't allow you to scale team with an unfair advantage. But what I learned to do is steal people from other people's organizations within PayPal, very successfully. So I got feedback from David Sacks, who was the COO at the time that I wasn't gonna get promoted again until I could demonstrate leverage, like leadership leverage, which hit an equation for one plus one, plus equal three or more. So for every incremental person you hire, you have to show that you produce disproportionate returns, non-linear returns. And because I wasn't hiring that well, I wasn't really succeeding at that leverage. So when I went around, took the feedback into a catalyst, and said, "Okay, I really wanna get promoted, what do I do?" So I found people within the organization that felt a hard talent that were not being leveraged to the highest potential in addition, and I recruited them to my team. And that was very successful. And then I did get promoted actually fairly quickly because a couple actually went up to speed, they rolled them one really fast, and we produced a lot of really important results for the company. The lesson though that I took away was, "Well, that's great, because what it showed to me is, I actually could identify talent, I just couldn't identify strangers with talent." So people that were in the building that I have lunch with or dinner with, or go for one around the PayPal campus with, I was accurate at diagnosing their abilities. I just couldn't do it in a 20 minute, 30 minute, 45 minute interview. So the first thing I did was just double down the people I know. That doesn't scale perfectly, but learn to be excellent at. If I had context assessing people's abilities, superpowers, and weaknesses, then over the next six years, tried to identify a different technique for identifying, assessing random people, because old delivered ability organizations, old delivered ability to see, you can't just embossed in people you already know. So that took some years and requires training. Anyway, I think you can teach some of this to a founder, but one advantage a founder has that's gonna thrive is if a founder shows the ability early in his or her career to assess talent. breathlessly and accurately. Hiring is like a muscle. You need to exercise it. You need to try, learn what worked, what did it, what could you have known, what you missed, why, and riff on that and try to get better at it. There are tactics you can learn. I think the tactics work pretty well within the middle of a bell curve distribution of moving yourself 10, 20 degrees within that bell curve. I don't think the tactics can really teach you how to identify, call it like top 10 basis points, top 50 basis points of talent. There you have to deviate from the norm. I think that's actually true of most lessons in life. If you're going to be extraordinary in any skill, you can't follow a playbook otherwise by definition lots of other people would be the top 10 basis points, but you can get a lot better by learning techniques. Let's share a couple. One thing I think you can learn to do is be excellent at references. It doesn't work for hiring people right out of college or something because the reference context is going to be a little awk. But I think without getting better at interviewing and assessing, if you just learn to extract the right information from Ruthless referencing. Ruthless referencing to me means Tony at DoorDash does 20 references on every single senior hire. I bet you he's pretty good. She's been pretty accurate too. I think you can learn that. That's like a skill that's teachable that being absolutely incredibly dedicated to your craft, you can just get better at. Back in the day, there was an investor at Graylock who's on my board at LinkedIn, David Z. Very successful investor, notable for both LinkedIn and Facebook investments. He used to teach at Graylock. You couldn't stop reference in a founder until you hit a negative reference. So you know you'd exhausted the reference when you finally hit a negative reference. And so I think there are tactics there in muscle building. How do you get the right information from the right people? How do you frame the questions, etc? That will lead you in the right direction. Now you have to be careful. Let's say I'll give you an example where this can go wrong. I'm in a long time investor from the seed round of company called Fair, founded by two of my colleagues at Square. Max Reads and Jeff call this and worked for me at Square and then the two other co-founder also worked at Square. When people were reference checking Max, often most of you see is asked the wrong question, which was, Max was Max a good employee. The answer to that is very mixed. And so some venture capitalists, including some very good ones, were nervous about investing in Fair. If they frame the question slightly differently, which is Max capable of being a world-class entrepreneur, the answer was yes. So again, it's like a tactic. You have to understand what exactly am I trying to extract. Same person, wrong question, wrong result, and many people passed on Fair and they were grudging. And these are actually quite talented investors. They just didn't frame the question correctly when they were calling someone like Jack Dorsey up for the reference. Any other questions you find really helpful in extracting the right information? When I interviewed candidates for senior people and leadership positions, I always asked them, look at whatever company they're out and say, if you were CEO, what would you have done differently? And you get a feel for the strategic mindset of can they drive value creation? Because almost by definition they've come from a company that's had some traction success. So for your case, I would have asked you, if you were CEO of Airbnb, what would you have done differently? And you learn a lot from that question. On references specifically, I think a general arc that's pretty good is asking the person, what would lead to this person being most successful? And if something were not to work out, what would be the primary root cause that you can identify if something going wrong? I think generally proving on those two arcs leads to a lot of insight. And that first question is for the candidate or is that in the reference? For the candidate. That's what it candidates specifically. Because it's not, I don't want them to criticize Airbnb. I don't think that's that productive. But you can tell how much of the current business model have they absorbed? How much do they understand trade-offs? And then they can they create an unfair advantage? You know, they have insights into afterburners. And then I have a follow-up question which is usually gold, which is let's say I asked you this question about Airbnb and you can be this great answer. I'm like, well, why weren't you able to persuade Brian to do it? So you made this interesting point that there's like tactics that can help you get better at finding and identifying talent. A lot of this is just the feedback loop of doing it a bunch. It sounds like I find the feedback loop is so like it's hard to actually like like most people interview higher and then don't really learn much from how and ends up going. Like there's this gut thing that happens, but they're not like really thinking about it. Do you have any advice for just how to make the most out of the lesson of seeing how something went? So I've read some research on the topic and if you ask yourself 30 days after any higher, would you make the same decision that 30 day loop is pretty pretty useful and it basically it's as accurate as measuring in a year or two years out. So you've got to pretty check the feedback loop and you can ask the entire hiring team. So I think that is just the technique that every company should use. I want to talk about this framework that you have barrels and ammunition because this is really mind-expanding and helping people understand who to even hire. So look, most companies raise money, they have some traction, they just see brown, they get some launch, they get some traction, then they raise a long money whether it's a serious error for it would be. And then they hire a lot of people infallibly or at least historically. And then the CEO, almost without exception, gets frustrated because they've hired a lot of people, the burn rate has increased a lot and they don't feel like that's more getting accomplished per unit of time per day per week per month or quarter. And they get frustrated and so then they sit around at a dinner with other CEOs or people like me, one-on-one conversation with me, and are incredibly unhappy and disappointed that I'm spending all those money on those people, but we're getting lost on or in the same none, why, why, why, why. After years of sitting through these conversations at dinner with other CEOs or CEOs, I realize that the fundamental driver of this is that the number of people that can independently drive an initiative from beginning, from inception to success is very limited within any company. And if you hire more people without expanding the number of what I call barrels that can drive from inception to success, all you're doing is stacking people behind the same initiatives. And so you're wasting time, energy, and increasing your collaboration tax, your coordination tax, and so that's what causes the drag coefficient. So for example, at PayPal, we had about 254 people in Mountain View when we were required. Of those people, depending on how strict you really want to be, it is considered one of the best talent rich networks in all time and technology. There is between 12 to 17 barrels in the organization. That's like an infinite number. I once asked Jack Altman on a podcast at Lottis, who's pretty damn big company, how many barrels of company the answer was two. That's a more common answer for a very good company. So you have between two and let's say 15 barrels that accompany. That defines unique number of things you can do in parallel versus sequentially. And just hiring more people is not going to change that and many things just going to cause a collaboration, a coordination tax, and you're going to have a drag coefficient, you're going to do less. So the key is to me is if you want to do more or need to do more, you market a car, you do more, your business model requires you to do more, VCs require you more, you need to get more barrels. Now the question is how and when and you know this is a lot of details there, but fundamentally the ratio of barrels to ammunition is what dictates the number of important initiatives that can be pursued simultaneously. And you're not saying you don't want ammunition, like it's valuable, it's a make an impact, you need ammunition in addition to that. Yeah, you definitely need ammunition, and it depends on what kind of project there are types of projects where an individual barrel may be able to succeed with very limited or no ammunition. Sometimes you may be a designer, an engineering team, a PM, a data analysis, blah, blah, blah. To depends on what the project is, what the problem you're trying to solve is what's the proper amount of ammunition. But once you think about the ratios of ammunition to the problem, you can be much more constructive and deliberate and intentional about the team structure. Most people hearing this, assume they are barrels, what that helps you understand if someone's truly a barrel. Can they take an idea and make it happen? Basically, we're going up that there's a hill over there, that's the hill, get us over that hill. And one way or the other, they will motivate people if they need to, they will accumulate resources if they need to, they will measure what they need to, and they're going to get your company across that hill. That's a barrel. Anything less than that is not an arrow. And so this is skills like internal polyoric stuff, resource, like strat, like what, yeah, it's kind of the collection of all the things to get collection of all those things. So basically there's an outcome. CEO wants, CEO found her once an outcome and come hell or high water. This person is going to deliver that outcome. Then the outcome can be, you know, fairly narrow and not that difficult in the beginning. And then you expand the scope, the complexity, the difficulty that you basically entrust to your barrels. And Sometimes they have no line of sight of how to solve it when you start. Sometimes you have a preliminary idea. So it ranges, but ultimately it's that skill of I'm going to take this off your plate. You can fire and forget and this is going to happen. And it's not going to happen. I come back to you proactively with the issues I'm confronting. Whatever I've already tried, the diagnosis of the root causes and ask for your help, which is efficient time for you to intervene and try to brainstorm with me to get us to the right answer. Agency is the word that comes to mind when you talk about this role. Yeah, I think agencies accurate. The problem I have in terms of agency is it's a little bit like strategy because even one year a lot of people went out the other year and they don't really process the meetings. Yeah. Where are some examples of barrels that make this real to people in our sandwich store? I talked to my YC lecture in 2014 about how to operate. They can be as simple as the now somewhat famous in technology, smoothly test, which is, you know, we used to have engineers work pretty hard at the square and pretty late. And I always wanted them to have like food so they wouldn't be famous, they wouldn't be distracted. And I didn't really want them to eat like junk food because I actually think junk foods bad for you, bad for your brain, etc. So settled on delivering and really wanted to provide like 9 p.m. like cold smoothies. And we had a at that time, a pretty substantial team at Square, office team, EA's, you know, this was not a lean mean organization. And so I tried through the office team, EA's, and nothing. We never got healthy, delicious, and cold smoothies delivered at 9 p.m. Just kept that one. It's getting frustrated because if you, the, smoothies are cold, then no, no, it's going to eat them. They don't arrive at 9. They know it can really bake on, you know, the refresh rate and the refreshments, everything worked well. And then I had this intern, they tell our Francis, and I was explaining just my frustration. It was like a second day at work. And he's like, I'll solve it. And I was like, okay, kid, you look at that. Like I was like, sure, keep trying, try. Anyway, Dave goes by, now he plots arrives, and they'll be whole smoothies show up at 9 p.m. Deliver it on the standing desk table where the engineers in the congregate. I sample them, they're cold, they taste great. And I'm like, oh my god, I found a barrel. And I later gave him almost everything to do. I want to go back to actually the first question. We did, you sure it's an amazing advice for how to identify great talent. But I'm still curious when you find that barrel, for example, when like everyone's throwing money at them, there's all these amazing teams to join. What are some things that companies do to attract and convince them to join their team? The standard stuff is still true. Mission, selling the vision of mission is indispensable. Most people have proven talent anyway. At least in the current world are going to attract offers from multiple opportunities. And so you've got to convince them that your opportunity is very special. I think one way to do that that's a little bit more nuanced is convince them that their particular skill overlaps with the critical blockers to the current company, meaning they're betting on themselves. So for example, if they are super bad, let's say marketing, if the biggest blocker of the company in the company's current success is not technology, not the product, but we believe it's marketing. It's really easy to go to a world class marketing person and say, not only is this great company building something really cool and interesting that you'll be proud of, but your particular ability is very unique and differentiated and you can solve this. This is actually how I wound up at Square. Back in 2010, I was actually, I just been aquaherding to Google and was planning on being of the sea actually next after I was kind of like, investing whenever Google is going to compensate us. And then the investors in Square called me up and they said, hey, we've been looking for almost a year now. For someone who knows something about financial services, he had his still entrepreneurial. And they're okay. There's only three of these at the time. There's like, there's only really two or three of you in the world. You know, so would you be interested? I said, well, maybe. But that was the argument to me that made me leave Google early like after two weeks and infuriate everybody. And bypass, you know, venture for another three years, which had been my plan was because they made the argument that, hey, I was one of three people in the world that actually do this job. So there's like, I don't know if it's ego, but it's also just like impact. Yeah, well, exactly. In fact, you have talents. You want to use them and you want to feel that your challenge every day and that what you're doing really, really matters. So that I think that can be extremely helpful. You know, my more important arc in this is I think you have to build a company on undiscovered talent. Like I don't think you really want to compete for the people that everybody else wants. And you know, I learned this a PayPal. Peter taught me this literally the first day, the first week of my job at PayPal, that the way to build a company, we were jogging around the Stanford campus is we've got to find these undiscovered talent. That's the only way to scale organization against these large and calmness with infinite money, etc. And, you know, I've been on the line. I've been on the line. I've been on the line for 25 years for those who are interested. You can link to it. I gave a speech. I've ramped, you know, how to hire, but talks in detail. I also recommend Eric, CEO of ramps, speech, which is fairly similar of both videos are online. All right. That's such interesting advice and make so much sense. You're not going to be able to afford the people that have done the thing at top companies. And also they're just probably not the people to join it early. Well, they're also not maybe the people you want. There's a adverse election. But, you know, it's like a salary cap. Most sports these days have salary caps. And when you're starting up, not only do you have a salary cap, you probably have one tenth of a salary cap of the people you're competing with. So you've got to figure out how to leverage, you know, less assets to more success. What's just one tip when you're looking when you're looking for a discovered talent that's a sign of, okay, this person is really special. I know you have a lot to talk about here, but just like what's one tip? I think it's basically isolating why other people aren't going to process them correctly. Like most of the Korean large organizations become sort of homogenous function. And so if you understand why this person is going to get thrown into this block box kind of thing and not get processed accurately, it's pretty easy. So I always think about, you know, let's say this person was interviewing a meta or Google or block these days or Coinbase. What are they going to miss? And then why? And then that leads to, oh, perfect. So sometimes it's just lack of information. Like one of the reasons why, you know, sometimes it's controversial say this, but one of the reasons why the net impact of my higher underscored talent is you wind up skewing younger. It's not because you need young people. It's that younger people have by definition less data. It's like a, you know, we use credit scoring, like a scores. It's the same thing for employment. By the time you're over 30, some of the other things, there's so many data points about you that this block box machine is usually going to process you like many other people. If there's no data points, it's very hard for a block box machine that does homogenous evaluation to evaluate you. So there is alpha, so to speak, by definition, for people who have like no data points. It's interesting how this is the same skill as being an investor. Picking startups to invest in. Yeah, absolutely. Okay. I want to talk about something else. I asked a few people that know you well that work with you at various companies. What's talked to you about? And one person said that when I asked him what to talk about, he said, my immediate reaction is that he is a bar razor. No matter what kind of numbers we put up, he pushes us to do more. In fact, often it seems like the better we do the harder he pushes. Does that resonate? Yeah, I think that's true. I mean, I think look, ultimately, I'll, I'll, I'll try to know someone else's feedback, but it's the same thing. So a friend of mine is a CEO once asked Mike Moritz, like, what's the most common denominator of the best CEOs ever? And he said it's the relentless application of force. Quote, I think that's the job of the CEO. People eventually get comfortable complacent. The more success you have, the more complacent the organization tends to get in the single role for the CEO is offsetting that complacency. So put a point, the more success you have, the better you're doing the more complacency naturally kicks in. And unless you've erected a network of facts, you do not want to get complacent, even then to be whether you should. But like fun and mentally, most businesses are not network of our businesses. They are not going to run on, you know, on their own for a long time. So I think that's one insight is the better you're doing the more the CEO should push. Secondly, it's a little bit like sports when you're growing up. People when they're winning take advantage of feedback better than when they're losing usually. Like, so for example, now what I do is mostly the most of these see mostly a board member, we'll say I could consider each up founder. And when the company's struggling, maybe what's less intuitive and you may have picked up on this senior research and interviews of people to know me, when the company's struggling, I'm actually using a very non-critical and more like a coach and supporter because the company, the founder knows they're struggling. Being critical doesn't really help them solve their problems. That's when being supportive can actually somewhat countertutably more important. But when the company's thriving, it's really important to be critical and isolated in things that will eventually be problems while everybody in the company's really happy and borderline complacent. So you kind of want to be the opposite as a default. And that's like a really good sports coach. When you're winning is when to polish everything and really master the details. When you're losing, you definitely also have to be exciting people and embracing the future and selling the future. So is the advice say someone's listening a founder or product leader. The advice here is just keep pushing harder set the bar higher as things. Even if you're doing great. Yeah, if you're doing great. Well, also, you have to remember, like I remember giving a speech once it's where is like, you get to a certain financial crisis in fluxion. Momentum gets you to certain, you know, valuation and all these attributes. But it's kind of like winning a Super Bowl. You get the last year was great. Last four quarters wonderful. It's like winning a Super Bowl. You got to come back next year and start your record zero is zero again. And you remember that actually adventures like that. You know, I'm only as good as my last investment. I've had like 13 years or whatever. Pretty damn good investments. But like truth, I have to wake up every day and find some uniscovered founder that's going to change the world. And if I don't do that, it doesn't matter what I've done the last 13 years. And the company's kind of like that. The company can skate on on a pilot for a while. Venture you really can't ever skate. I definitely saw this with Brian Chesky. It just felt like things were going great. And we just shipped amazing products and growth is up. And he's just just always like pedal to the metal, no matter what. Just like, come on, when are we going to take a little break? And it's interesting because when we did have the little breaks here and there, more else actually went down because people are like, what am I working on? I don't know. That's not that exciting. Yeah, Brian and I are usually in sync a lot. There's a really good interview where I interviewed him also at the same conference. I've had a higher when he talks mostly about founder mode. But I generally subscribe to virtually all of Brian's views. He even taught me some of these things himself. But the more important point, I think you identified, which is very subtle is really talented people are like super about these. And when things are going well, and people are really kind of coasting, they're not happy. They have an internal claw tempo. They just want to create things and create value and drive drive. And like, you know, that the morale actually does go down for the best people in the world, with people skating. Okay, so actually along those lines, there's a lot of anxiety in the market, in the job market about the future of careers. Are I going to have a job? Am I going to like where things go in? And it just feels like people are working very, very hard. They're just putting a lot of hours, especially the most AI-pelt people. It just feels like they're working harder than ever. I don't know if you saw this thing Tyler Cohen put out of just like work harder. Now is the time to work harder because AI is eating away at your value. You know, you probably talked to a lot of people looking for career advice of just like this feels scary. And I feel like I'm working too hard. And what should I do? I don't know. Do you have any just like advice for folks? Well, I just think AI is going to radically reorient, you know, lots of people's careers meeting, including mine. So I think that's actually true. And I think the way to thrive in a rather the emerging technology world is to be in talks like Curious. So for example, you know, I'm a business person, historically, you know, I did actually could when I was really young, but that basically professionally just a business person. The people are intellectually curious. And so they're like, wow, there's all these cool things I can do now with my hands. Either I had to rely on other teams or never got access the way I wanted and blah, blah, blah, blah, and they just do it. This is actually true at Open Door. It's true in another great company than all of the board of that's incredible. And so I think you can be intellectually curious and future crew for yourself more than just yes, you can work harder and a big subscriber to like no days off and working all the time and all that stuff. But fundamentally, the intellectual curiosity is I want to learn new things. And that is how you embrace the future. So and you said CMO is whose DMO, both these two companies, both, both massive, you know, also company is with lots of engineers. And I think that's that's very encouraging. You know, for one of the executive particularly, but this is definitely like the best exact thing that the company. And what are they building? Is it like landing pages and pay tests? Stun, but sometimes it's like more like we would have thought of analytics. Sometimes it's actually campaigns like actual campaigns is just like they don't need to rely upon deputies and deputies and deputies to get actual work product. And so they're just like shipping things and like or shipping you address the things or giving the CEO insights into things themselves. I want to get your take on the future of specifically the product triad. You work with a lot of product people, engineers, designers, everyone's always wondering what the hell is going to happen like rear thoughts on just the future of those three specific roles. Well, I saw this podcast or listen to this podcast at Peter Fendt and he convinced me that the idea of a PM makes no sense. Basically in the future. If you think about decomposing the logic is what is the PM usually do? They take these inputs from customers. They create this sequential road map that's well organized over the next year. But that world is like for NIC and us like right now, the capabilities of foundation models or companies like lovable and you know, things like that are just so improving such a rapid rate that it makes no sense to have a year long road map. And they just like in coherent, there are things that were impossible to do in November. They're actually pretty easy to do right now in March. And so I think you need to build an organization that's incredibly adept at people say nimble and all that stuff, but incredibly adept at changing the road map almost on the fly. And I think intermediaries like conventional PMs don't make a lot of sense versus being prepared intellectually, embracing and exploiting noticing. So someone needs to notice that, oh, wow, we can actually do this. But then exploiting it this week is the future of a very high bro of stellar startup. We'll notice that something's now possible this week and create new features and new value for customers next week. That's such an interesting area of discussion. A lot of people is anything's RPM. So when I try to defend that role just to see, see if I can convince you otherwise. And by the way, I will say Mark and recent had this really good visual of just what's happening here is like every, all those three functions. It's like the standoff where they're all like, I'm good taking the future is my role. The future is designed. That's engineering is the future. So the way I see it is as AI makes it easier to build and kind of eats the middle of the software development process. Just anyone can build, he told AI. Here's what I want. The hard part, the gap at least for now is figuring out what to build and then aligning everyone around what to build. I agree with that. I actually think like whether you talk about someone who used to be a PM or someone used to be a designer or called an engineer, the skill is more like being a CEO now, which is what are we building and why? Exactly. And to be a successful engineer, that treats critical to be a successful designer because the tools and the ability to actually create the thing, an object is going to be easier and easier. But the art is knowing what to build. You know, another competitor of mine, Alfred Lynn, it's quite likes to talk about being a chef. When you're a chef at like a prime restaurant, you're not actually cooking the dish. You're sampling, you know, your colleagues and editing their work a little bit, but fundamentally, it's half a commercial role. Being a chef in a famous restaurant is what's our value proposition? How do we differentiate yourself? How do we brand ourselves? What's our segment? What's our pricing, you know, et cetera? What's our location? Even that's what makes, you know, a famous chef. It's not, they're literally cooking the dish all the time. Okay. I 100% agree. Interestingly enough, PMs are called mini CEOs often. And I think the important thing is, it's not like what do you call this person? I think the question is what skill will be most like where human brain is still going to be necessary? Business occupying. It's basically business occupying. Right. Like what will help this company grow and succeed? And exactly. I don't know the company's business equation where we're trying to go and what the inputs and connection outputs are. And I can on my own create things that move the needle or potentially move the needle. It's very exciting because, you know, you can actually drive impact like much more easily now as an individual. My conclusion based on what you just shared is of the three roles, which role is best at that. And in historically, it'd be PMs. Obviously, I think the important thing here is it's like the best, you know, it's like great pms or great engineers, designers will do well. But I think interestingly what you're describing to me is what it sounds like. What a great PM would be really good at basically. If they were exceptional, I think that's right. But I think the best a lot of the best engineers I've worked with have commercial instincts like Max Levton has this on steroids, Jeremy Stoppelman, he's worked with me very closely at PayPal before he started Yelp and government to be engineering director and vice president of PayPal has commercial instincts, you know, that's what I'm saying. when he was an individual contributor. So I think there are great engineers who are technically proficient that have always understood the business building. - Yeah, I think that's like the ultimate unicorn as an engineer that has also varied business minded. - It's gonna put a premium. I think this, at the age of AI, we'll put an incredible premium on that because they're not gonna need a large team. You're not gonna be marshalling the forces that another example is a good friend of mine who's a director of engineering at RANTH. He ships as much code personally. So he has a team of about 20 people. He personally ships as much code. He has used to as an individual contributor while he's managing a team of 20 because the tools are so great and he's become a leading pioneer in the usage of AI. And he's basically using AI as a second team. He's basically like, okay, you're the team manager. You do this, you do this, you do this, this, this together, check this out. - Well, well, and I think that is definitely in the future. - I want to represent agree. Engineers that are very good at that are just extra valuable. What's your take on design in the future of design, the value of design? - Well, you know, it's interesting. Designed code emerging and it's not clear to me who triumphs of like, is it code becomes design or design just translate automatically into code? I'd be some investments that bet on both in some ways, but I think they're merging in a way where they're not separate, you know, fiefdoms anymore. - I am so excited to tell you about this season's supporting sponsor, Vanta. Vanta helps over 15,000 companies like Cursor, Ramp, Duolingo, Snowflake, and Atlassian earn and prove trust with their customers. Teams are building and shipping products faster than ever things to AI. But as a result, the amount of risk being introduced into your product and your business is higher than it's ever been. Every security leader that I talk to is feeling the increasing weight of protecting their organization, their business, and not to mention their customer data. Because things are moving so fast, they are constantly reacting, having to guess at priorities and having to make do without data solutions. Vanta automates compliance and risk management with over 35 security and privacy frameworks, including SOC2, ISO27001, and HIPAA. This helps companies get compliant fast and stay compliant. More than ever before, trust has the power to make or break your business. Learn more at vanta.com/lennie. And as a listener of this podcast, you get $1,000 off Vanta. That's vanta.com/lennie. - When I'm seeing something really interesting happening with design, on the one hand, I just did some analysis on the job market for design, and it's basically plateaued in terms of the number of open design roles over the past three years. Just hasn't gone anywhere. It's flat. We had the head of Claude design Jenny went on the podcast and she had this kind of insight that the design process, there's no time for the design, the traditional design process. There's like engineers are shipping 17 things a day. There's no time to sit there and help mock in prototype and all these things. - Well, let me give you a couple of concrete examples. So at Shopify, the way they develop, they've been doing this for over two years now. So this may seem normal, but they have not let PMs provide like PowerPoint or keynote presentations on product for like two years. Every presentation on product has to be a workable demo and they just expect the PMs to create the products. And does the execs just refuse to look at static, you know, we're gonna have this feature? No, I want everything working. This is for two years. - So I think that, you know, again, like everything's just merging together. - And so interesting. You would think though, because there are so many products launching every single day, like there's just endless things to pay attention to, you think design would be a differentiator more and more. - I do agree with God. I do agree with that. Actually, I think the alpha is in design just like in marketing. It's not the tools, it's not the channels, not the metrics. It's storytelling. It's how do you cut through the clutter in the snappyest most compelling possible way? There's kind of an NP problem. There's so many different words you can use to express the same concept. But the person who can say, this is the way to frame it, you know, the proverbial thousand songs in your market is worth like all the tools in the world. - Yeah, so that's the other part of my insight recently is just as AI makes it easier to build, it's kind of expanding from the middle out and what remains is figuring out what to build and making it iterating on the idea. And then it's at the other end of the spectrum, which is distribution. Getting anyone to pay any attention to what that you've done, 'cause again, there's so much happening every single day. - Yeah, cutting through the clutter. I mean, that's always been critical. I mean, one of the people pitching me as an investor is one of the things I'm dialing into, you know, immediately is how the hell the hell is just gonna cut through the clutter. And it's whether or not I don't like to take like customer feedback into a cow because by definition when you put something in front of a customer, that's not a proxy for the real world. In the real world, you have to cut through the clutter while they're going to their berries boot camp, while they're doing their job, while they're raising their kids. You know, et cetera, et cetera. And while they're walking, while they're on the subway, like that, you know, an isolated fake experiment doesn't give you actionable insights and often is directly brought. - Interestingly on that line, there's a few companies that are launching Simuli is one that is simulating humans. I don't know if you heard about this company. They basically are building AI models of the actual people so that you can simulate your marketing launch and your product experience with people before you launch. I don't know if I've seen that specific company. I have seen one or two sort of pitches. Like general question as a refrain on those type of companies is what are they training on? Because again, if they're not turning on the right data, it's dangerous to say you're simulating humans. - Yeah, that is the question. Oh man, what a weird world. - Along these lines actually, I don't know if you call it a hot take that AI content is going to surpass human content and that's just the future. - Oh yeah, but that's inevitable. - So I was talking to someone and she was saying like the Chinese TikTok app, it's just like all AI videos now and it's like very good. She actually enjoys watching these videos and these stories. - I think it'll be like a binary sort maybe. I could see products and content thriving that is clearly still human generated and that there's some desire for authenticity. Just like for example, you know, this piece of art is a war hall. Anybody could create this now, high fidelity, but there's still an appreciation for this was created by Andy Warhol. I think there's going to be a curated experience with a pre-known of provenance, you know, that you know, as human created. And then there's just going to be a sort of a rank filtering of what's the best content and whether it's AI generated or not. It's a little bit like the Ben Thompson's trajectory thing of curation, you know, versus algorithm. There's going to two polls and the curation may be for human created stuff and then there's going to be the algorithm, which is just what's the best? - I 100% believe that, that makes so much sense. I was just thinking the other day, it's so interesting that AI is getting very good at video. Like videos are actually fun to watch that are AI generated and then like images are getting really good, but writing is still really bad. That is AI generated in, in ironic that it's called the large language model, it's all context, text, text, trained and it's just like, that's the thing it's least good at, which is really weird. - Well, I think part of that's the economic decision of token rationing by the LLMs. Like they basically are, when you prompt, they're kind of trying to make their economics work within the belt curve distribution. And so for example, I've used a prompt in LLM to write something that's very short. The quality is significantly better than if it's a page, paragraph, I mean, page to chapter to book. I think it's token rationing versus actual quality. - You would think though, you know, like I don't know if it was Hemingway of just like if I had more time, I would have made it shorter. Like it's more worth it. - Yeah, but then you have, I think the writing, right now what works best is short, many short examples and then you can be picking editing, the prompting. It's a little bit like when I used to be a litigator 25, let's hear a second go. The hardest part of writing a brief, or all the art, and all the magic was the first paragraph. If I could write that first paragraph really well, the chance I would win the case and convince the judge would go through the roof. So what I would actually do is I might have three weeks to write a brief. I might spend the first week or more walking around the office, thinking through how am I going to nail the first three sentences. Once I figured out how I want to frame those first three sentences, I could write 30 pages in like two days. But getting that right could take a week or two. Sometimes it would occur to me in the shower, or literally the shower or in the middle of a run. It's like, oh my God, here's how I distill it. Then I could just sit down and power through the rest of the brief. And I think it's a little bit like that, the power through the rest of the brief first. Well, you still need the first three sentences. - The first story from that time in your life that would be interesting to share. I didn't even know about that. - So yeah, about everybody knows, I spent the first four and a half years in my professional career as a law clerk and the litigator. But you can't usually come in handy, truthfully, like sometimes trading off business risk and your legal risk is a valuable thing to do. Sometimes it's not accidental that many of my best investments, or in financial services in heavily regulated areas because I think I can sort of do the legal risk assessment in my own brain. This is definitely true back in the day when I invested in YouTube. But I think most things that lawyers were very inconsistent with being entrepreneur. So when you're graded as a lawyer, you learn every exam in law school virtually is issue spotting. So you get credit for identity. There's like a thought pattern. I don't know if I hold these issues and then resolve them. So you learn to identify everything that can go wrong. Modernly useful, but very not useful as an entrepreneur. I mean, sure, you can identify all the reasons that company could fail, not that difficult to do. The art is solving those. So not the best training. And then you also measure your productivity by hours worked. Literally you build per hour. It took me two years, a maybe a year and a half after converting to technology to stop tracking all my time. I used to do it literally right down in my notebook. A half hour of this meeting, 20 minutes on this, blah, blah, blah. It's to get into my brain. - That is so funny. And David Sax was a lawyer too. It's like interesting. - That's true. - Peter, there's a lawyer. Peter was smart enough to quit after five months and four days. I think David never practiced. It made me even smarter than both of us. - Okay. I'm gonna hit on some hot takes, contrarian takes. Do you have any of the number of these? I heard you share in a podcast recently. They asked you, why don't you have as many contrarian takes these days? And you're like, well, they just thought, well, I'll be improve it right. - And that's a problem is, you know, if you have good ideas, eventually you want them to be adopted. It's a little bit like, you know, when you're an investor you want to be contrarian. And so Airbnb, you start with a contrarian take. But as soon as the company is going to succeed, it has to become consensus. Like everybody in the world has to use it and believe in it and trust it. So you want that in flexion. Like you don't want to just have contrarian takes and then nobody believe it. So you do need to refresh rate. And then the question is, how do you have, you know, how do you find new ideas? But you want to actually exhaust them. - Okay, so one that I think people still disagree with is that your advice is for, unless you're building an enterprise company, you don't actually want to be talking to customers. - Yeah, I hate talking to customers. I refuse to allow colleagues, but I don't talk to customers. You know, there's the famous, you know, you can talk to the famous stuff and the Steve Jobs, you know, the horses and the old faster horses and all the stuff. But I think it's more important is, it's often directly wrong. Customers don't know what they want and they're very bad because it's a subconscious decision, especially for consumers. Like what I purchase, what I wear is not a conscious decision. And when you're consciously trying to answer a subconscious decision, you actually give misleading information even when you're trying. You know, the proverbial example I like to use, but it's instructive is ask anybody who drives a super fancy car like a Porsche or Lamborghini, like why they bought the car? 99% of the time, they will tell you every reason except the real reason. That once you realize that, you're like, I've never asked in customer getting anything. Now, it's hardcore enterprise, customer development does work because there is a, there is a decision maker. And the decision maker is mostly making utilitarian decision and yes, there's political forces within the organization that they may or you may or may now be able to tap into those. But fundamentally, the extracting that information is valuable but a consumer, SMB, micro-emergent product, omitigated disaster. And so the implication here is you need to rely on your instincts and God and experience. Yeah, I mean, humans are humans. I have this other line I like, which is everything important you need to learn about humans was written by Shakespeare. Just reach Shakespeare, like that's better than all the customer research. Now, you are producing a movie and ultimately this movie doesn't just need to be critically acclaimed, you have to solve tickets. So if you're not selling tickets, you have to question, okay, is the trailer wrong? Is our distribution, you know, where we're trying to meet people to let them know about the movie, is that wrong? Fortunately, unlike a movie, you can go back and say, have I casted this somewhat incorrectly? Is the scripts lightly off, you know, et cetera? But the goal is selling tickets and that's what you want to optimize for. But if you don't sell tickets successfully, economically, efficiently, you definitely want to go back in a loop and try to reorient things so that you are selling tickets. So this is like catcal TV kind of stuff. Is what I'm hearing here. And so your insight here is just like, it's not only like, it's like, it's not gonna help you, you're saying more so, it's actually harmful. It's harmful. And then people will say, yeah, like I've sounded so many meetings and this would be a favorite, but where people would be like, I talk to eight customers, blah, blah, blah, blah. And I know that this isn't statistically represented, but then they might get for an hour. And then they're like, oh, I know this is not, you know, blah, blah, blah. But once you hear this stuff, it's like, you can't take this out of your brain. And then every other subject we're meeting is like, this stuff is just locked in the customer's brain. So yes, in the enterprise, when you have like, I work with a company in AI, that has 30 must win accounts. That's like the goal for the company over the next two years, make sure all 30, and we're doing really well, we've got all 30 using our problem. Great, we actually can talk to all 30 customers. And we can actually meet the decision maker, all 30 customers. And we can influence the CEO, right, all 30 customers. That is a useful exercise. If you're targeting a billion people on the planet, you are not getting your representatives 50 times. Being a contrarian, take many people with not believe this is good advice. If you have a story, maybe your example of just like, wow, someone talking to a customer's name, we're going in the wrong direction for a while. Oh, all the time, they're called health companies. You know, there's a reason why, I mean, there's a Darwinistic efficiency to this too, which is just like, hey, there are things you can, that like, is it feasible to do X-Wire? Is he so far like, let's get a door dash? I don't think customers told us that we want a button on our phone to click to deliver food. But you could talk to restaurants and say, hey, would you put this plocker here so that people walking just door and no in the future, they can get to live them? Okay, yeah, maybe. Then could you run an experiment of how many deliveries per hour would you have to do to break even? And is there enough density within this? Like, there are ways to improve the odds that you can make the business work. But they don't think launching the company saying, hey, we found 10 people in Palo Alto, you know, do you want this button on your phone? So, you know, when Tony and Evan walked into my office originally, the epiphany I had was, well, they had a stat, which is 93% of restaurants that I stayed don't deliver. But I was like, okay, seems like it should be a higher percentage than seven convinced. And then when they were describing what they wanted to create, Andrew Mason of Groupon fame had famously said, these phones, these devices shut up two buttons on board and on hungry. And I was like, oh my God, you're the on the hungry button. And then sort of just clicked on my brain and it was like, okay, now we need to make it economically possible to scalably do this. Good luck guys. And this advice is not just consumer. You're also talking like DoorDash has like SMB-ish. Yeah, like Square and things like that. Square, yeah. Square is a good example. Like anything sub mid market, I think is it's directionally gain from us. And the advice here is basically trust your insights. Like you need to have the insight yourself. He can't find it. I think typically the best company is, there's a foundational insight. And you know, people don't necessarily want to hear that. But like there's logic, you can acid test a pressure test the logic. Like there aren't, like, you know, to some extent, like when Brian first pitched me on Airbnb, there was some interesting evidence here already had that this was going to be successful. The number one that once stuck with me at the time was he gave me the exact number of Craigslist listings that said, I want to rent someone's bedroom. And it was actually a reasonable number. It was like 30 in the Bay Area. But given that you had to literally type it in and sort of have the epiphany yourself, I was like, that's a lot actually. That's like probably a real market there. And I was already, like as soon as he said that, I was already leaning in and by the time he finished his three-minute monologue, though, it was like, this is the coolest thing ever, I need to invest. - Yeah, and I think every music and exemplaries was solving his own problem. Saw an opportunity wasn't like talking to people, "Hey, would you do this or anything?" - And people would have said, you know, if you'd sampled them on people, definitely would have got feedback that was like, no. Like very, very high risk. Like that's a good example where you had sampled 10 random people. Good chance at 90 plus percent. I was like, no, I don't want to do that. - You know what's really interesting? I was just watching Taylor Swift's acceptance speech at this award show. I heard media, something or other. And she gave this really powerful speech that when she was starting out, she was just kind of at home working on songs, learning piano, just in a room on her own, and had thousands of hours to just iterate and learn and get better. Versus today, if you were to do this, you'd be posting it, sharing it, people giving you feedback constantly. And her advice is just like, find ways to just not expose yourself to people for a long time. - So I have a couple of friends who are like, an artist and a music industry. And I think what she's saying, is one of the reasons why it's sometimes difficult for artists who had success to recreate the success. Because the first success was not data driven, was not customer feedback driven. It was like, I'm creating this and it's resonating. Then because they have an audience, someone either they or their manager or whoever, or their label, blah, blah, blah, blah, blah, wants them to get feedback. And it creates derivative sort of works, not strictly legally, but like derivative works, they're less inspired. There's a podcast that Jack Almond did with my friend, Alex from the Change Spokers. He actually talks about this at some length that they created the song that actually didn't resonate with a core, their normal audience, but actually resonated with a different audience, which is interesting. So I think you can get trapped with success if it's a good illustration actually. - There's also this concept of the ugly baby in Creativity Ink at enough of you with that book at Katmol about every idea at Pixar, like every great idea starts as a ugly baby, then no one wants to like help and pay attention to and just like, get those out of here. - It's like a stanna. I mean, that is actually the stanna. Like I use this prism as an investor, which is when I make a seed investment, or she hears the investment, let's say, I want half of my friends who are VCs to laugh at me. Like literally laugh, 'cause I know most of people I can compete with pretty well. And so I'm running this algorithm through my brain. Are these people gonna laugh? If so, like this is a great investment, potentially a great investment because it's an ugly baby. And ugly babies were the ones where there's real alpha. - That's so interesting you say that. I did some research recently on what are signs. We interviewed this me and Terence Rohan, I don't know if you know how I'm VC. We interviewed early employee, people that have joined early generational companies many times, and like they opened the opening, the joint opening early before anyone knew about it, Palantir really, really striped. And so we asked them what did you look for? And there's three patterns. And one of them was exactly that. The idea, people laughed at them. They thought it was crazy. This is never gonna work. Palantir, for example, open AI, for example. - Yeah, my parents used to laugh at almost all my jobs in tech. (laughs) You know, these would be very funny. They thought I was gonna be homeless because most of them did not make sense to them. - Classic parents, no idea what the hell people do in tech. - They did appreciate Stripe though. My mom always appreciated Stripe. And it was always trying to lobby me to invest. And I finally listened. - Nice, good job, mom. She earned her keep. Okay, we just shifted perspective because Ipad was dying. Classic, that's maybe the downside of the iPad. - The downside of the iPad is I use it too much. - That's like, that's product market fit. Okay, I wanna actually follow up on this discussion we're having about just finding great companies. A lot of people are starting AI companies now. There's so many launching. As an investor, I'm just curious, what's the sign that this is a worthwhile idea considering the endless number of startups launching? And maybe what are some just like flags that like, okay, maybe don't work on that idea? - Well, the existential question everybody talks about these days is, you know, are the foundation labs just gonna be so proficient that there's no oxygen? Because if you're building a successful startup, you need to build for like eight to 20 years into the future. Like whether you just discount a cash flow analysis or some other prism, it doesn't matter. Ultimately, you have to build for something that's durable for decades. And the rate of progress by the foundational labs and not just one, multiple of them really does start creating questions about the sustainability of even companies that are look like they're thriving in the short term. So that's one question. - The second question I'd ask is very typical of those asked this question for like 25 years, which are what are the accumulating advantages of this startup? You do want to believe that over time, you create an unfair advantage and there are different species of accumulating and manages, you know, the one that people immediately gravitate to, but it's only one illustration of a set of options is network of acts. But you want something that over time makes the business better and better and better, arguably easier and easier at some point. Do you see those sorts of things at the beginning, like when you're seeing a seed stage start up? - Yeah, it's a great question because I think people can conflate two things. There's a difference between seeing it and understanding the potential. So what I'm looking for when I need a founder is, can they articulate where the accumulating advantages can be in theory, conceptually? They don't have to have demonstrated it. Yes, there's an occasional example once every five years, you might find one where you can actually point your finger on it and empirically, but that's way too strict as a bar for an early stage investor. But I personally want the founder to articulate to me where they can build accumulating advantages and maybe even sequentially identify when they would start either taking advantage of them leveraging them or measuring them. So when you're evaluating startups these days, I know this is like a very hard question to answer, but just what do you, is there anything in particular you're looking for that you get really excited about? - I'm a founder driven investor. So the only thing I really care about is, does this founder have a non-zero chance of changing an industry of the world? And if they do for a seed or series A investment, I'm in period, don't ask any of the other questions. That's all I need to identify. Not every investor who's been successful has the same algorithm they're running. There are technology driven investors, like I would say Mark and Dreson's probably like something like that. The nodes and mix, he's both founder driven and a technology driven investor. There are investors who are sort of products that's market driven investors. My colleague David Wyden, I'd say is that, I think Alfred Lynn, it's of course mostly that. So you can have different sort of approaches, mental models, paradigms. But for me, is this founder extraordinary? Do I have reason to believe that this founder is an ex-Brian Chesky? - You mentioned that you're an investor in all these companies you listed are doing incredibly well. And you work with a lot of, you're on the boards of a lot of really successful and incredibly good teams and companies. Is there just something they are doing the way they operate that is different from companies that are not as successful? - I think the subtle signal, let's say very early, is speed. And you know, it's one of those things that's easy to say, but let me try to be more concrete. There's a tempo, an operating tempo that a successful company develops. That is, that develops very early in a company's trajectory and is incredibly impressive. I remember when Rolloff Boatau was on my board at Square, he led the series B. So he joined our board. And six months in, two board meetings and he said to me, he's like, I haven't seen this kind of tempo since our PayPal days. And he'd been a VC at that point for nine years. And I was curious, I said like, you know, what are you noticing? And he's like, at board meeting acts, you guys identify an opportunity or problem. And by the next board meeting, you've shipped solutions, addressed it, featured, because constantly, consistently. And I think that's right. Like Sue, the time between the seed and series A at fair was pretty tight. And I remember at the time, my chief of staff was Delian Osperoth and Delian said to me after the second fair board meeting that he shadowed me at, he said, if there's one company in Silicon Valley that calls me to leave being a VC, it'd be fairer. And I was like, interesting. Why? It's like the pace of execution. And his answer was exactly the same as Ross. He's like, there is something slightly off. And by the next board meeting, meeting not only have they identified the root causes, but they've shipped and reacted and measured the impact of the solution. And that compounds, that speed really does come out. So that's just one trait. And but you see it, it, and they could, it did lead me to, for example, preempt the series A of ramps. So I led this seed in like Mayish of 2019 and gave a term sheet to preempt the A in September. So pretty quick. One of the two signals was how fast ramp was able to be on the precipice of shipping the cards. I've been working in financial services for a long time at that point, you know, 19 years or so. And there's just a lot of moving pieces to ship a card. You need these program managers, you need the sponsoring bank, you need this and this and this. It usually takes nine to 12 months, best case nine. ramp was on the precipice in like three months. And I was like, oh my god, like I'm just never seen that velocity. That was one of two, maybe three inputs. And I was like, yes, make sense to double down already, even if we haven't shipped anything yet. So I think that's one critical density of talent. You see, companies just creating an unfair advantage. The team was asked when you invested. It was now, wow, this team is getting better, you know, a deeper better, et cetera. So that, that's another signal. The third thing that I've noticed though, you know, is, I think they have a different hiring philosophy, ultimately. And maybe there's exceptions to this, but most of the companies that work with that are thriving have basically skipped hiring senior people, senior experienced people. It's mostly internally good talent. And I think that model has worked really well, staff leave. true of ramp, definitely true of trade or public. It seems to be mostly common ingredient, but there's public exceptions. Wow. That is an incredible answer. Instead of traits, just to be clear what you're saying on that third piece. So it's not higher like fan CVPs from other successful companies and instead develop people internally as a trade of. Internally? Internally. And almost turned it into a competitive advantage being your strategy. Like, we're just not even going to interview people. We're not going to try. We're just going to promote from within. And I think in some roles, you know, it's not like you're higher at GC, you know, typically right out of law school. But although we have done that once and it worked out pretty well, I believe it or not. But I wouldn't recommend that. You know, I have this blog post, well, Delian wrote this blog post of Lessons See Learn from Keith and one talks about hiring senior people and the rough prism is are hiring for value creation or value preservation. If you're hired for value preservation, typically some experience is useful. On the value creation side, it's probably not. It's interesting how much of this comes back to just your initial point about hiring and the team being everything step. So number two is talent density. Three is helping people develop and be, you know, into the role versus finding someone. And then obviously speed all trickles down from just who you're hiring. Yeah, I mean, I've watched people use like even chief of staff roles to group talent. One company born meaning I was out this week. I'm just phenomenal on any metric. And the last to his head, his CMO, whose his fantastic is performing miraculously, was his last chief of staff and his new head of product. Probably this is last chief is his current chief of staff and just like created this institution of factory where it can absorb ambitious talented people in over one, two years in osmosis, train them to be senior successful leaders. When you talk about speed, I think about ramp for sure. When Jeff was on the podcast, their CPO, he just like our title was velocity, velocity, velocity. And I know they have like days. If you go to days.ramp.com, it's like the number of days since they launched and they're just always looking at that number. How long is it? Oh, yeah. Every board meeting starts with that. The first line day, day 1184. And they're like, what are they worth? Like a hundred billion. Not quite. Probably not quite that much. But it's a reasonable fraction of that. Okay. That was incredibly valuable. Okay. One last hot take that I know you have that I want to make sure we share is this idea of criticizing in public versus in private. Talk about that. Yeah. So this is a lesson I actually absorbed from one of the great founders at work with. And you know, he had like many great founders that their own management philosophy. And one of the most important tenants is criticized people in public. And when you decompose the logic of it, it's so obviously true. But almost no one does this and very few people talk about it, even if they do it. So if you think about it, when you give people feedback negative individually, you're optimizing for the atomic unit, not the system. The reason why to do it in public is it's more important for all the colleagues to understand that there's an issue. It's being addressed versus like they they usually have suspicions, let's say, or concerns. And if you've channeled the negative feedback to the individual, they don't know that you're addressing this that you're on top of you're aware you're addressing it. Now it's a collaborative. And then also let's other people kind of raise their hand and say, you know, I can kind of help with that or, you know, et cetera. And so it becomes like a team building at your size in some way versus like, oh, you have this deficiency. Go fix it yourself. And then the rest of the company, you know, is nervous about why this problem is persisting. When people hear this, they may feel like, oh, wait, I'm just it's like, it feels aggressive to be criticized every in public. Call out any advice for just like, how do you not make it this like, I don't know, scary environment? Or is that part of it? Well, I think you want to win, you know, and there's probably an in arc to this, like I would say, you know, some of the best coaches in sports probably do a bit of both. Like there's things they will say in front of the team. And then there's things that probably, you know, channeled to the individual player. So probably a mix, you know, it could be very effective, it feels like you're not a focus on psychological safety as a core. No, no, I don't believe in that at all. Like high performance machines don't have psychological safety. Like it for those who want to, you know, a good book that's off central casting for you is read Jordan rules or watch the last dance if you like, but like fundamentally read Jordan rules. If you want to be a Michael Jordan, you got to act like Michael Jordan. Do you feel like that's negatively correlated to this idea of psychological safety with success? And it's just for the most part. Yeah, interesting. I'm going to take us to failure corner. Okay. So failure corner. So that, you know, you talk about all these things you've done that are incredibly well. All these companies you invested, all these businesses you built, PayPal, all these things. People don't realize there's also a lot of failures along the way. Is there a story of a time you failed in your career or investing that might illuminate the doubt? You know, one thing's done. Well, I mentioned one. I alluded to one by accident. I talked about being aqua hired or whatever into Google and being stuck there. I'm so clearly not successful. That was a slide. I say, you know, we did sell for like 187 million, but not no more nearly ambition. You know, didn't really achieve any of our goals product wise or company wise. Investing teaches you mostly about failures. You know, if you're a world world class investor in the early stages, 30 to 40% hit rate is great and golden by definition. That's like 50 to 60, you know, 70% failing. There's a little bit like those old Nike commercials where there's the Michael Jordan one where it's like, you know, missed 109 game winning shots in my career or there's the tennis one. I think it's better that's like, you know, I, something like I win 60% out of my coins. I just made up like the best times player ever, but I use 40% so there's a lot of that in venture. You definitely have failures all day long. I think one of the arts is like not getting too caught up in failure actually. I think over and I actually gave the feedback in the board meeting recently, which is someone, you know, well mentioned, well, meaning what are two board members like, well, let's do ratios on our failures. And the companies do really well. So I was like, you know what? Honestly, I'm not sure I would do this. I was like, I don't want to deter people from taking ambitious shots on goal. And if you overemphasize failures and you know, really people think they're going to get criticized. This is where the psychological safety made he has some validity, which is, the ambitious be bold. Don't worry about the failing part unless there's things you miss that, you know, could have been factored in, but you want people to take risk and you want people to be excited about raising their hands for very difficult problems and challenges, because that's how you create value. And so I was like, no, let's let's really not do these retro's. Let's just focus on winning. Control and take all around. Keep is there anything else you want to share anything else you want to leave listeners with before we get to our very exciting lightning round? I'm excited for your lightning round. This is usually like one of the best parts you're podcasted. Okay, first question. What are two or three books that you find yourself recommending most other people? So the number one one is called the Upside Is Stress by Kelly McDougall's Professor of Stanford. And basically it argues in an incredibly compelling way that if you want to be happy, healthy or wealthy, you need more stress in your life, not less. So it's magic. The evidence she marshals is effectively uncredecapable at the outcome level, at the biochemical level. It is transformative to people to read this book. So highly recommend it. Favorite recent movie or TV show you've enjoyed? TV actually just watched Nuremberg trial. Highly recommend Nuremberg. There's a lot of lessons there that are applicable to the modern world. So I won't spoil it all, but even I'm a kind of a student of history and politics. And watching the movie I've probably learned five or ten things that I'd ever knew before. So high they in its extreme. I mean, obviously not an exciting thrilling movie, but extremely well-produced movie and incredibly useful to understand some of the travesties of history and how to prevent them in the future. Where do you find this is not one of the streaming services? It's either on Netflix or iTunes or both. Sweet. Okay. Is there a product that you've recently discovered that you really love? Rarely. I do find products that I've addicted to. Now this is for say about eight sleep, which is another one of my conventions is, you know, you must sleep eight hours a day. You must prioritize sleep even when you're very busy. I am an investor in some somewhat biased in eight sleep, but it transforms people's lives. So I'm still addicted to that one. I don't know if there's like a new product that, you know, been fanatically addicted to recently. It's sleep counts. Do you have a life motto that you find yourself coming back to and work or in life? No days off. House chat, no days off. I don't believe in taking days off from workout. I don't believe taking days off from work, period. Derivation for those are interested is when Bill Belichet won the Super Bowl for like whatever of billions of times with the page fans. As back-to-back Super Bowl wins, I think he started that championship celebration parade with this chance of no days off. So that's that's kind of on mantra. And when you say no days off, uh, are you saying like work every day like, you know, like work the weekends or the thing or or what do you? That too. But like, so in some of the workouts, I believe I've missed seven days and seven years of working out. And it still kills me like half of those, I still am annoyed that I missed, like a story. If I really, really had reoriented my schedule, I should have been able to hit these four of those and I measure it and I posted at the end of every year. Um, last year I missed none. So I was very happy. But I don't believe in excuses. Basically no days off is a proxy for I don't believe in excuses. Mm hmm. And do you work out every day? Is that the rule? I mean, literally, there's only seven days in the last seven years. I haven't worked out. That includes all kinds of illness, sickness, travel, international times of travel, weddings. It's like no excuses. Like actually, every day. All right. And more than once, typically more than once a day, but and you told me before we started recording, you had a Barry's class this morning of another one later today. I do. Uh, and, and a lift. Okay. Final question. So you were famously part of the PayPal mafia. I'm curious if there's someone there that's like overperformed someone that you worked with that you never thought would be that good. Honestly, no. I want to be investing in, you know, most of the derivative companies and stuff. And so I think I had a good spidey sense of which people, you know, had, had had at least founder level and mission and could potentially build something. Sorry. We said could give you a better answer. Look, they would have been mad at you anyway. So this is the safe answer. Well, it's pens. If they've been super successful, they'd be. It's Peter T. Oh, just. Yeah. Elon Musk. Uh, Keith, thank you so much for doing this. I learned so much. Uh, that's going to help a lot of founders, a lot of people building stuff. Two of our questions where it can folks find the online if they want to reach out. And how could listeners be useful to you? Yeah. So at dot com, I treat prolifically, um, you mentioned my pin tweet. So that's probably the easiest way. Sweet. Keith, thank you so much for being here. Pleasure to be with you. Thanks for the invitation. Uh, thanks for accepting it. Bye, everyone. Thank you so much for listening. If you found this valuable, you can subscribe to the show on Apple podcasts, Spotify or your favorite podcast app. Also, please consider giving us a rating or a leaving review as that really helps other listeners find the podcast. You can find all past episodes or learn more about the show at Lenny's podcast. See you in the next episode.